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Enterprise & Society 4.3 (2003) 565-566

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Charles Perrow, Organizing America: Wealth, Power, and the Origins of American Capitalism. Princeton, N.J.: Princeton University Press, 2002. ix +259 pp. ISBN 0-691-08954-X, $34.95.

I found this book difficult to read, and more difficult to review. Charles Perrow is an "organizational sociologist" who has entered the camp of those scholars who deprecate the findings of Alfred D. Chandler, Jr., and his followers. In this study of nineteenth-century American capitalist development, smaller is better than larger, regional is better than national, and success of larger and national business and economic institutions was the result of the exercise of concentrated organizational power. Venal capitalists who bribed, cajoled, and threatened, and thus diminished democracy, to aggrandize power and build national and bureaucratic economic institutions serving their own interests, corrupted American government institutions, which could have exercised a regulatory and countervailing force. We could have had (should have had?) a society of small firms, local and regional railroads, and personal management of manufacturing workers through a system of subcontracting. Instead, we got what we got, and mostly (if not all) because of the exercise of organizational power. Business historians have missed this central reality of American historical development because they wrote in "awe" (p. 164) of bureaucracy and "celebrated" (p. 170) its formation. Economic historians have missed the main story because they are "mostly conservative" (p. 174). [End Page 565]

My summary of Charles Perrow's argument as "The Robber Barons Redux" is too crude and simple to do his views justice, but the quotations are nevertheless accurate. Perrow has enjoyed faculty appointments at distinguished universities, has benefited from opportunities at fine research institutes, and is clearly accomplished. I do not mean to suggest that business historians should disregard this book. For a work of social science nowadays, the book is remarkably free of arcane jargon. Perrow surveys a substantial body of literature in formulating his argument, admiring those scholars such as Walter Licht, Philip Scranton, and Gerald Berk whose work seems supportive of his argument, and attacking other scholars whose work does not. The latter group have missed the central feature of the development of American capitalism: the aggrandizement and subsequent exercise of organizational power, especially as it centered on Wall Street in New York City.

My difficulty with the book is not that I do not get the argument, but rather that I think it is plain wrong. As a political and business historian, I have no doubt about the exercise of organizational and other forms of power in American life. I read about such exercises every day in my morning newspaper. But I cannot accept the argument that the exercise of power is the main factor in understanding the dynamics of history in general, and certainly not in the formation of American capitalist institutions in particular. We got big, capitalist, bureaucratic business institutions because we developed big national markets. And now that we have developed big global markets, we are getting big, capitalist, bureaucratic business institutions. Surely the exercise of organizational power is part of the mix in understanding this history. But it is only part of it, and Perrow places too much stock in his argument.

It is always risky for a scholar in one academic discipline to tread on the territory of another, and Perrow is to be applauded for doing so. Even though his work is deeply, even fatally, flawed, it is nevertheless informed, informative, and provocative. I urge that it be read. We will be reminded that, in the development of American capitalism, power played an important role—along with economic logic, developments in technology, and changes in markets.


K. Austin Kerr
The Ohio State University



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