Neil H. Jacoby Quotes

If big businesses in concentrated industries truly behaved as oligopolists, one would find higher prices, persistently higher profits, more extensive advertising, and less product innovation among such industries than among unconcentrated industries. However, the facts show either the contrary or insignificant differences. During the period of price inflation from 1965 to 1970, prices rose most in the unconcentrated industries.

The multinational corporation is, beyond doubt, the most powerful agency for global economic unity that our century has produced. It is fundamentally an instrument of peace. Its interest is to emphasize the common goals of peoples, to reconcile or remove differences between them. It cannot thrive in a regime of international tension and conflict. The instrumentality of multinational business is man’s best hope of achieving political unity on this shrinking planet.

The multinational corporation is leading Europe toward a more egalitarian, homogeneous, and democratic society. While traditionalists will deplore the gradual blurring of class and national distinctions, such segmentations cannot in the end withstand the onslaught of technological and economic changes.

Private business investment is inherently superior to governmental aid as an instrument of development because it combines transfers of managerial and technical assistance with that of capital.

The Multinational corporationis, among other things, a private ‘government,’ often richer in assets and more populous in stockholders and employees than some of the nation-states in which it carries on business. It is simultaneously a ‘citizen’ of several nation-states, owning obedience to their laws and paying taxes to their treasuries, yet having its own objectives and being responsive to a top management that may be located in another nation. Small wonder that some critics see in the multinational corporation an instrument of irresponsible private economic power, or even an agent of economic ‘imperialism’ by its home country. Others view it as an international carrier of advanced management science and technology, an agent for the global transmission of cultural values, bringing closer the day when a common set of ideals will unite mankind.

A corporate manager, interested in playing a numbers game with stock price-earnings ratios for quick profits, is able to inflate current reported profits at the expense of future profits. The methods are legion: shift from accelerated to straight-line depreciation; defer or stretch out maintenance expense; deplete inventories held at low cost; sell assets for ‘one-shot’ income. Excessive flexibility in permissible accounting methods creates opportunities for misleading reports of profits.

Because some conglomerate, and other, mergers have proved to be unsound and failed. It has been proposed that government should prohibit such mergers. But there is no feasible way to identify bad mergers in advanced; only time and the test of market competition reveal them.

A fourth factor underlying the merger wave of the 1960’s was the steep rise in the load of corporate income taxation since World War II. In 1940, the effective federal corporate income-tax rate was 27 percent; in 1968, it was 50 percent. Rates of state and local taxes on business incomes have risen commensurately.

The 4,400 business corporations that disappeared by merger during 1968 were a small number compared with the 12,000 that disappeared by failure, or the 207,000 new corporations that were formed. Even the $43 billion in securities exchanged in mergers that year were only 3.3 percent of the market value of corporate securities.

During 1968, more than forty-four hundred companies disappeared by mergers involving an estimated $43 billion in securities—an all-time record. In this tidal wave of mergers, which subsequently crested and receded, conglomerate firms accounted for either a substantial or a preponderant fraction, depending upon the definition of ‘conglomerate’ adopted.

Still another trend supports greater emphasis upon the social responsibilities of business firms and greater interest in the interactions between business and public policies. The great problems of contemporary society, such as environmental pollution, waste disposal, unemployment, poverty, urban renewal, and mass transit, are most likely to be solved by combining the organizational discipline of the action-oriented business corporation with the legal and taxing powers of government. Private corporations will more frequently be used to attain public purposes. At the same time, the public has made it clear that it will no longer tolerate the thrusting of private cost upon itself.

Modern management science has made it feasible for corporations to expand the scope and variety of their operations. It has created new economies of scale through which larger aggregations of men, materials, and funds can be efficiently deployed and controlled over larger areas.

During the recent nineteen-year period from 1950 to 1969, corporate profits, both before and after taxes, formed a shrinking proportion of the national income.

It is widely believed that big business firms collectively own the preponderance of America’s wealth and are steadily expanding their share. The facts show the contrary. Corporate business owns about 28 percent of the tangible wealth of the United States, and its share has not changed much during the past fifty years. The bulk of the nation’s tangible wealth is held by the household and government sectors of the economy and is not employed in profit-seeking enterprise, corporate or noncorporate. …If the character of a society were to be designated by its major wealth-holding institution, the United States could more appropriately be described as a ‘household state’ than a ‘corporate state’.

It comes as a shock to many, therefore to learn that the majority of the labor force in the United States works for government, unincorporated business, nonprofit institutions, or are self-employed. Less than half of the total labor force was employed in the entire corporate sector in 1969.Less than one-quarter worked for ‘large companies,’ defined for present purposes as those employing more than two hundred people.