The Vanishing American Corporation: Navigating the Hazards of a New Economy
Gerald F. Davis
Oakland: Berrett-Koehler, 2016, 222 pp.
In his Introduction to The Vanishing American Corporation, Gerald F. Davis, the Wilbur K. Pierpont Collegiate Professor of Management at the Ross School of Business at the University of Michigan, succinctly expresses the core theme of his book: "Today, the compact between corporations and employees is increasingly under siege by low-cost alternatives that make the traditional corporation unsustainable [emphasis added]." Davis spends the first three of the four parts of his book explaining the rationale behind his conclusion, beginning with an evolutionary history of the corporation in America, proceeding to the "why" behind the impending "disappearance" of the American corporation, and concluding with the consequences resulting from the demise of this American legal and economic institution. The final part of the book is his take on a postcorporate America and how future Americans should educationally prepare to navigate this emerging economy.
In Part I, Davis reviews the legal and economic foundations of the modern American public corporation (the legal form that Davis focuses on) and its organizational variation among many developed economies. Throughout most of the 20th century, public corporations, such as General Motors, Exxon, and ITT, controlled the majority of economic activity in the United States. Yet public corporations (hereafter "corporations") differ globally by both board make-up--in Germany, for example, half of the supervisory board is elected by employees--and by the development of stock exchanges--the Netherlands has only 130 publicly traded companies listed, while half the world's economies do not even have operating stock markets. By the early 20th century, the structure of the American corporation resembled what it would look like for the remainder of the century, yet it would grow larger through the continued application of mass production technology and the emergence of post-World War II conglomerates, such as ITT.
Davis notes that "taming the American corporation" was a primary goal of the American Progressive movement in the early 20th century. The federal government's enactment of the Clayton Act of 1914, the Glass-Steagall Act of 1933 (addressing the banking sector), and the National Labor Relations Act of 1935 were considered crucial for restricting the growing power and political influence of the American corporation. Subsequently, the "Treaty of Detroit"--negotiated between General Motors and the United Auto Workers in 1949--was considered an apex point for U.S. labor management relations. That new "social contract" established an employer responsibility to provide health and guaranteed retirement...