Michael addressed the 20s and 30s and Tavis jumped to the 80s and 90s. I
want to insert the 60s.
In the mid 1960s European steel makers, and I think the Japanese,
were building capacity with new technology, the BOF. US steel companies --
and as I recall, specifically United States Steel as it was still named at
the time -- were also adding capacity, but adding what was well accepted
as obsolete technology. So the issue wasn't industrial vs. finance, they
WERE adding capacity, but obsolete. Just dumb? Unaware? No, not unaware,
a lot of people questioned the choice of technology at the time.
>Michael--
>
>Your piece on US Steel was interesting. Thanks. It raised a bunch of
>questions, though:
>
>You describe one view of production (unit cost-minimizing) as "industrial"
>and the other (revenue maximizing through rents) as "financial." While
>the classification has some aesthetic appeal (your industrial capitalist
>would spend more time in the shop cutting tools and your financial
>capitalist in the field analyzing and influencing markets), it seems to
>me that the difference really just reflects a difference between
>competitive and monopolistic behavior. Both capitalists are maximizing
>markups times quantity over capital; the first one assumes little market
>power and the second one a lot. They certainly adopt different choices
>of technique, and the "financial" capitalist adopts one that is grossly
>inefficient. But the "financial" capitalist is still solving a
>profit-maximization problem based on steel production, not on speculative
>activity. So it isn't necessarily an explanation of why the nature of
>work in the steel industry might have changed, unless there
>are huge numbers of market analysts, which I doubt.
>
>Getting back to Louis' original point: It seems an interesting hypothesis
>that steel companies have switched their operations toward market control
>and away from production techniques. Your case for the 1920s and 1930s
>seems clear. In the 80s and 90s, though, the new rage is these
>mini-mills that produce as much output with a fraction (like a tenth) of
>the production workers of the previous mills. As far as I am aware,
>there are a number of these mills and price-fixing has become much more
>difficult. So we may be back to more "competitive" conditions. Why,
>then, have firms not dropped non-production workers? Is there more R&D
>to do? Have computer advancements not really been implemented in
>non-production work? I'm just being pesky.
>
>Cheers,
>Tavis
>
>
>
>On Thu, 1 May 1997, Michael Perelman wrote:
>
>> In the extract I posted, the technology in question was from the 1920s and
>> the charge came from Fortune magazine, writing only a few decades after
>> the formation of U.S. Steel.
>>
>> Under Carnegie, new technology came at a furious pace, so much so that
>> Morgan and others wanted to buy out Carnegie who was undermining the value
>> of their invested assets. At one point, he destroyed an unfinished
>> factory because he had just learnt of a better technology.
>>
>> Under U.S. Steel, innovation more or less ceased. Some of the Youngstown
>> plants shut down in the early 70s predated World War I.
>>
>> My point was that the company ceased to have a productionist mentality and
>> adopted a more banker-like mentality.
>>
>> --
>> Michael Perelman
>> Economics Department
>> California State University
>> Chico, CA 95929
>>
>> Tel. 916-898-5321
>> E-Mail [EMAIL PROTECTED]
>>
