New Papers: Chandler, Leijonhufvud, Phelps, Summers

26 September 2006 at 10:37 am Peter G. Klein Leave a comment

| Peter Klein |

The current issue of Capitalism and Society (volume 1, number 2) features an all-star cast. Alfred D. Chandler, Jr., leads off with his newest article, “How High Technology Industries Transformed Work and Life Worldwide from the 1880s to the 1990s” (abstract below). Chandler recently celebrated his 88th birthday, so new Chandler paper — while perhaps not quite as significant as a new Coase paper — is a major event.

In the same issue is a piece by Foss hero Axel Leijonhufvud, “Understanding the Great Changes: A Comment,” which is a comment on Edmund Phelps’s “Understanding the Great Changes in the World: Gaining Ground and Losing Ground since World War II.” The journal also contains a comment on Chandler by Richard Sylla, a paper by Richard Zeckhauser on “Investing in the Unknown and Unknowable,” and a comment on Zeckhauser by Lawrence Summers.

Here is the Chandler abstract:

This essay falls into three parts. The first reviews the Second Industrial Revolution based on the commercializing of electrical and steam power and lasted from the 1880s through the 1920s. The leaders here were concentrated along the Rhine Valley from Basel in Switzerland to the Low Countries. That technology permitted these pioneering enterprises to market their products worldwide. Because World War I cut the Rhine Valley off from most markets, high technology enterprises in the United States and much of Europe were forced to build their own research and development units. The Rhine Valley re-entered global markets in the 1920s and precipitated what Joseph Schumpeter has termed “The decade of creative destruction.” The 1929 Wall Street crash and the coming of the 1930s’ Great Depression marked the close of the Second Industrial Revolution.

The second part is based on the new science of electronics and had its beginnings in the 1920s. The Radio Corporation of America commercialized new audio and video technologies. In the 1960s, RCA became a conglomerate and self-destructed allowing the Japanese firms Matsushita and Sony to capture markets world wide. In the 1950s, International Business Machines Company (IBM) commercialized four new electronic devices which led to the creation of Information Technology (IT) in the 1960s with the System 360 followed by the System 370 that dominated world markets. Then in the 1980s, largely by accident, four leading Japanese computer manufacturers successfully challenged the U.S. in the world market for computers.

The third part rests on the fact that high technology industries continue to depend on the commercializing of scientific learning as had occurred in the field of chemistry in the 1960s. Chemical companies in the 1960s were forced to commercialize new products based only on existing technologies. Biology, on the other hand, was creating the wholly new disciplines of microbiology and enzymology and then new sciences arose with the discovery of the double helix. Molecular biology and its offshoots of biotechnology and genetic engineering are just beginning to evolve.

I close with a review of four recent articles with a heading High Technology Ignored. Historical reality is reviewed here.