This financial and industrial distiction is somewhat simplistic, even though the verdict appears to be the former for US Steel. True US Steel was dominant but there were other big players. True USS led oligopoly was more effective in price stability (upward rigid) and high financial returns, but any historical analysis shows that US firms did innovate. See Gold et al, Paskoff, among a few. Otherwise you cannot explain the US dominance in the industry (including technology transfers worldwide). If you believe in path-dependence then there is plenty to say about why US firms have been slow in adopting new innovations (the BOF for example) in the postwar period relative to the Japanese. The structure of the industry is important but so were the actions (and idiosncratic factors like sudden jumps in war-related demand and therefore investment in true and tried technology, the OHF). The assessment of minimills development is largely correct. But higher labor productivity has to do with different technology and therefore different products. scale of operations is about a 10th of the large-scale mills (though there are few in the US). They are mostly in Japan, Korea, etc. The US integrated industry is relatively labor-intensive (although that has been changed quite a bit from the 1980s) whereas the minimill is capital intensive, using state of the art electric furnaces, continuous casting, high-tech process controls. Internal organizational structures and work practices are also very different (more flexible if you will) because of smaller scale. So in some products integrated production cannot compete with minimills. But price fixing still possible even if competition has increased. steel supplies are not that elastic. After getting rid of obsolete capacity the overall supply situation is somewhat belanced but around the world demand is increasing and periodic shortages are common. Price gouging is more common and US steel companies (the large ones are notorious for that). There will be supply shortages in South East Asia, hence the Japanese are reluctant to put out the blast furnaces. Anthony P. D'Costa Associate Professor Senior Fellow Comparative International Development Department of Economics University of Washington National University of Singapore 1103 A Street 10 Kent Ridge Crescent Tacoma, WA 98402 USA Singapore 119260 On Fri, 2 May 1997, Tavis Barr wrote: > > 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] > > >