Both... the separation of labor from control and of the owner from control... have made possible the continuing development of the size of the individual enterprise, have reduced the area within which economic processes is organized through the interplay of prices and have increased the area within which production is organized... and the coordination of production on a planned basis.
In traditional economic writings dealing with the economy as a whole, it is usually assumed that prices are highly flexible and that economic adjustment is brought about through price changes. We are going to examine inflexible prices.
The increasing discussion of the importance of inflexible prices in the. American economy has been somewhat stimulated by previous articles by the present writer. In one of these, material was presented on inflexible administered prices and their importance for monetary policy.
Economic and political developments have forced upon us a great problem of analysis in the field of politico-economic organization. The center of this problem lies in the midground between the science of politics and the science of economics and its scope is coterminous with the scope of both. It demands the best minds of both science to forge a new pattern of thinking which will weld the elements of politics and economics into an integrated whole having validity in the present day.
It is in the development of further administrative coordination that we must come to political scientists for aid. We ask that you apply to the field of economic administration the technique of analysis and principles of organization which you have developed in the study of administrative organization in the form of the state.
Gradually but steadily, great segments of economic activity have been shifted from the market place to administration.
Earlier writers have recognized that economic activity is only in part trading and that the element of administration enters in, but they have tended to minimize this administrative aspect. The modern corporation has not only increased this aspect by bringing a greater part of economic activity within the administrative limits of single units, has altered the character of the market by making price not an outgrowth of trading but of administration.
The Modern Corporation has undermined the preconceptions of classic economic theory as effectively as the quantum undermined classic physics at the beginning of the 20th century.
We now have single corporate enterprises employing hundreds of thousands of workers, having hundreds of thousands of stockholders, using billions of dollars' worth of the instruments of production, serving millions of customers, and controlled by a single management group. These are great collectives of enterprise, and a system composed of them might well be called "."