The Making of General Electric in the Era of Finance Capital

Maher, Stephen

doi:10.1007/978-3-030-83772-3_2

Stephen Maher⁴

Part of the book series: Marx, Engels, and Marxisms ((MAENMA))

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Abstract

This chapter examines the formation of the modern capitalist state in the United States and its relationship to the development of corporate organization. As it shows, this process of state-corporate institutional formation took place especially through a series of large-scale, capital-intensive public projects: the construction of the railroads, electrification, and World War I. This chapter traces how bank power overtook the early capitalist entrepreneurs through an examination of the conflict, leading up to the establishment of the General Electric Company in 1892, between Thomas Edison and J. P. Morgan, as the system of finance capital was politically enhanced and legally codified with the enactment of the Sherman Antitrust Act of 1890. Then it develops a picture of how the era of managerialism emerged from the era of bank control, as the loosening of finance capital networks enhanced the role of internal managers in the structure of corporate control.

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Notes

1.
Miguel Cantillo Simon, “The Rise and Fall of Bank Control in the United States: 1890–1939,” American Economic Review 88, no. 5 (1998): 1077.
2.
Ron Chernow, House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (Boston: Atlantic Press, 1990).
3.
David Harvey, The Limits to Capital (New York: Verso, 2006), 143–4.
4.
William G. Roy, Socializing Capital: The Rise of the Large Industrial Corporation in America (Princeton, NJ: Princeton University Press, 1999), 41–77.
5.
John Scott, Corporate Business and Capitalist Classes (Oxford, UK: Oxford University Press, 1997); Panitch and Gindin, The Making of Global Capitalism, 29–31; Simon, “The Rise and Fall of Bank Control in the United States.”
6.
Simon, “The Rise and Fall of Bank Control in the United States,” 1091, 1080; This theory of competition is developed in Shaikh, Capitalism: Competition, Conflict, Crises.
7.
Martijn Konings, The Development of American Finance (Cambridge, UK: Cambridge University Press, 2011); Charles Post, The American Road to Capitalism: Studies in Class-Structure, Economic Development and Political Conflict, 1620–1877 (Chicago: Haymarket Books, 2012).
8.
Stephen Skowronek, Building a New American State: The Expansion of National Administrative Capacities, 1877–1920 (Cambridge, UK: Cambridge University Press, 1982), 121–62.
9.
William J. Hausman, Peter Hertner, and Mira Wilkins, Global Electrification: Multinational Enterprise and International Finance in the History of Light and Power, 1878–2007 (Cambridge, UK: Cambridge University Press, 2008). The account here draws especially on pp. 3–34 of this text.
10.
Hausman, Hertner, and Wilkins, Global Electrification, 21–22.
11.
William E. Rothschild, The Secret to GE’s Success (New York: McGraw Hill Professional, 2007), 7–8; Chandler, The Visible Hand, 427–28.
12.
Rothschild, The Secret to GE’s Success, 9–11; Patrick McGuire, Mark Granovetter, and Michael Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” in Explorations in Economic Sociology, ed. Richard Swedberg (New York: Russell Sage Foundation, 1993), 228.
13.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 224–30; Hausman, Hertner, and Wilkins, Global Electrification, 52–55; Chandler, The Visible Hand, 310.
14.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 213.
15.
Norman S. Buchanan, “The Origin and Development of the Public Utility Holding Company,” Journal of Political Economy 44, no. 1 (1936): 31–53.
16.
Hausman, Hertner, and Wilkins, Global Electrification, 11; McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 224.
17.
Quoted in: McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 217. According to the Edison papers, the Edison Lamp Company was originally known as the “Edison Lamp Works” when it was formed in 1881. By May of that year, it changed its name to the “Edison Lamp Company.” It became a corporation in 1884, before merging with other Edison companies to become the Edison General Electric Company in 1889.
18.
Rothschild, The Secret to GE’s Success, 5–6.
19.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 218.
20.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 218.
21.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 218, 222.
22.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 222–26; Katherine White, “Preserving the Patent Process to Incentivize Innovation in the Global Economy,” Journal of Science and Technology Law, March 18, 2006; Thomas Hughes, Networks of Power: Electrification in Western Society, 1880–1930 (Baltimore: Johns Hopkins University Press, 1983), 21.
23.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 226.
24.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 229–30.
25.
Hausman, Hertner, and Wilkins, Global Electrification, 79.
26.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 231.
27.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 231–32.
28.
Joshua Barkan, Corporate Sovereignty: Law and Government Under Capitalism (Minneapolis, MN: University of Minnesota Press, 2013), 56; Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890–1916: The Market, the Law, and Politics (Cambridge, UK: Cambridge University Press, 1988), 93–105.
29.
Chandler, The Visible Hand, 319; Barkan, Corporate Sovereignty, 56–57.
30.
Barkan, Corporate Sovereignty, 57.
31.
Barkan, Corporate Sovereignty, 57.
32.
Chandler, The Visible Hand, 320. See also Sklar, The Corporate Reconstruction of American Capitalism, 105–45.
33.
Roy, Socializing Capital, 197–198.
34.
Panitch and Gindin, The Making of Global Capitalism, 29.
35.
Roy, Socializing Capital, 198, 272.
36.
Chandler, The Visible Hand, 428.
37.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 232.
38.
Rothschild, The Secret to GE’s Success, 11–18.
39.
Rothschild, The Secret to GE’s Success, 14–15.
40.
Leonard S. Reich, “Lighting the Path to Profit: GE’s Control of the Electric Lamp Industry, 1892–1941,” The Business History Review 66, no. 2 (1992): 307; Rothschild, The Secret to GE’s Success, 25.
41.
Reich, “Lighting the Path to Profit,” 306–7.
42.
Rothschild, The Secret to GE’s Success, 22.
43.
Rothschild, The Secret to GE’s Success, 22.
44.
McGuire, Granovetter, and Schwartz, “Thomas Edison and the Social Construction of the Early Electricity Industry in America,” 233.
45.
Simon, “The Rise and Fall of Bank Control in the United States,” 1079.
46.
Christopher D. McKenna, “The Origins of Modern Management Consulting,” Business and Economic History 24, no. 1 (1995): 53.
47.
Harvey, The Limits to Capital, 149.
48.
McKenna, “The Origins of Modern Management Consulting,” 53.
49.
Rothschild, The Secret to GE’s Success, 20.
50.
Chandler, The Visible Hand, 430.
51.
Chandler, The Visible Hand, 431–32.
52.
Rothschild, The Secret to GE’s Success, 23.
53.
Rothschild, The Secret to GE’s Success, 23.
54.
Panitch and Gindin, The Making of Global Capitalism, 35.
55.
Panitch and Gindin, The Making of Global Capitalism, 35.
56.
Reich, “Lighting the Path to Profit,” 305–6.
57.
Reich, “Lighting the Path to Profit,” 308.
58.
Reich, “Lighting the Path to Profit,” 308.
59.
Rothschild, The Secret to GE’s Success, 27–28.
60.
See Rothschild, The Secret to GE’s Success, 26, and Reich, “Lighting the Path to Profit,” 308.
61.
Reich, “Lighting the Path to Profit,” 309.
62.
Reich, “Lighting the Path to Profit,” 313.
63.
Reich, “Lighting the Path to Profit,” 311.
64.
Buchanan, “The Origin and Development of the Public Utility Holding Company,” 36–7.
65.
Rothschild, The Secret to GE’s Success, 29–30.
66.
Buchanan, “The Origin and Development of the Public Utility Holding Company,” 37, 50.
67.
Reich, “Lighting the Path to Profit,” 43.
68.
Rothschild, The Secret to GE’s Success, 30.
69.
Rothschild, The Secret to GE’s Success, 29.
70.
Buchanan, “The Origin and Development of the Public Utility Holding Company,” 37.
71.
Buchanan, “The Origin and Development of the Public Utility Holding Company,” 41–42. See Table 1.
72.
Richard Hume Werking, “Bureaucrats, Businessmen, and Foreign Trade: The Origins of the United States Chamber of Commerce,” The Business History Review 52, no. 3 (1978): 328.
73.
Skowronek, Building a New American State, 183.
74.
Skowronek, Building a New American State, 177–78.
75.
Werking, “Bureaucrats, Businessmen, and Foreign Trade,” 322.
76.
Werking, “Bureaucrats, Businessmen, and Foreign Trade,” 328.
77.
Werking, “Bureaucrats, Businessmen, and Foreign Trade,” 330.
78.
Werking, “Bureaucrats, Businessmen, and Foreign Trade,” 338.
79.
Werking, “Bureaucrats, Businessmen, and Foreign Trade,” 332.
80.
Reich, “Lighting the Path to Profit,” 314.
81.
Reich, “Lighting the Path to Profit,” 314.
82.
Rothschild, The Secret to GE’s Success, 28.
83.
Reich, “Lighting the Path to Profit,” 315.
84.
Reich, “Lighting the Path to Profit,” 315; Rothschild, The Secret to GE’s Success, 28.
85.
Reich, “Lighting the Path to Profit,” 315.
86.
Reich, “Lighting the Path to Profit,” 315.

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Political Science, Ontario Tech University, Oshawa, ON, Canada
Stephen Maher

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Maher, S. (2022). The Making of General Electric in the Era of Finance Capital. In: Corporate Capitalism and the Integral State. Marx, Engels, and Marxisms. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-83772-3_2

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DOI: https://doi.org/10.1007/978-3-030-83772-3_2
Published: 29 March 2022
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-83771-6
Online ISBN: 978-3-030-83772-3
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