ANOTHER GIANT PASSES. Alfred D. Chandler, 1918-2007.

Before Mr. Chandler, the bulk of business histories were morality plays that portrayed executives as heroic or damnable. He helped redirect the field toward dispassionate analysis of the anatomy of business. He emphasized the transformative power of technology as railroads and the telegraph spawned big business. These corporations needed what Mr. Chandler called "a new subspecies of economic man -- the salaried manager."

In some ways, Professor Chandler made formal the dynamics of industrial development that Karl Marx grappled with, sometimes unsuccessfully, in Das Kapital.

Mr. Chandler developed this theme most famously in "The Visible Hand: The Managerial Revolution in American Business" (1977), which won the Pulitzer Prize for history and the Bancroft Prize. His thesis was that managers, functioning as a "visible hand," had replaced the "invisible hand" of Adam Smith's free market in allocating resources.

I've long been a fan of The Visible Hand, and my one-minute summary is a regular feature in my antitrust class. Put simply, the large industrial enterprise that became the engine of accumulation in Das Kapital and the possible motivation for antitrust laws required the convergence of four elements: sufficient mechanization to permit large-batch, high-volume, continuous production, sufficient transportation so as to be able to get that volume into the hands of buyers, sufficiently rapid communication that customer orders and management requests could be passed through the organization in time to respond properly to opportunities or correct errors before they proved fatal, and sufficiently clever managers to recognize opportunities and errors and give the appropriate instructions. It's not really a replacement of the invisible hand, although the coexistence of top-down clockwork organizations ("lumps of power," in Ronald Coase's phrasing) with self-organizing markets continues to present economists with research questions. And yes, those four elements could converge in such a way as to make a factory capable of producing more stuff than the consumers could buy. Inventory management appears to have provided business with a way out that doesn't necessarily involve the accumulation of surplus value and the periodic crises of overproduction and accumulation superficial readers of Das Kapital point to.

My library also holds Professor Chandler's Scale and Scope, and I have read through it, although I must confess that nothing stuck with me in quite the same way Visible Hand did, certainly not in class presentations. The title refers to two core concepts of industrial organization, the first referring to advantages in producing a single output in a larger facility (greater production rates and volumes) and the second referring to advantages of producing multiple outputs. There are even some very rigorous ways of thinking about economies of scale in firms with economies of scope, including something called the transylvanian cost function. At one time my empirical research on multi-product firms was pretty state of the art, but the work involved in getting data together proved daunting. I see the struggle continues.