Miracles for export

Over a short period after 1945, this story tells us, the American model of corporate capitalism was transferred to European countries. The European countries examined are France, West Germany and Italy; and corporate capitalism is taken to mean large companies.

After the second world war, about 45 per cent of US companies were large (that is employed more than 500 people). At the other end of the spectrum was Italy, where only 20 per cent of companies were of that size. France and Germany were closer to Italy in this respect than the US. In less than 20 years, this picture had changed. In France and Germany, more than 40 per cent of companies were then large; Italy did not change much.

The purpose of the book is to explain the change - the move to large companies. The book starts by making much of the idea that after 1945, countries decided that economic strength was important and they looked around for the best means of achieving this. One obvious way, it is asserted, was to import the American model of corporate capitalism, since that must explain the success of the US. No mention is made of free trade, other institutions nor any of the other items in a long list that might be thought to be important. The fact that Italy did not change and that its economic performance in this period was probably superior to the other two is not allowed to upset the argument.

A body of "theory" is outlined that is said to be useful in helping our understanding. Some background economic history follows on the 19th and early 20th centuries. (If anything, this shows that moves to large companies in many countries, including those examined here, were already under way.) Some background economics and politics on the immediate postwar world completes the scene.

Next we are told: "Dense webs of personal and institutional elites were then spun between the US, and France or West Germany" - though we never discover who were in these webs. This did not work for some reason in Italy, where "the eliteI strongly resisted cooperation with the American end of the network". Although at another point we are told that in Italy, "the elite lackedI the sense of crisis and urgencyI" necessary.

In order for the transfer to be effected, three things are said to be necessary: a "traumatic disruption" (in the potential importer), a "synergy of objectives", and an available foreign model. Well, yes, certainly the last. According to this story, countries had to choose between the two dominant models then available: the American and the Soviet. Three suggested means of transfer are proposed: "coercive", "mimetic", and "normative". The first is imposed, the second imitated and the third "embedded".

That framework is then used to examine how in France and Germany the change in corporate structure took place. In the end, it is completely unconvincing. For one thing, the structure is said to be peculiar to US capitalism. No mention is made of Britain, where something of a half-way house could have been found.

More important, the Italians appear to have ignored the model altogether and yet, as noted, done just as well or better than the other two. So no need for a US or Soviet model.

A claim is made for this study's contribution to theory. But the claim is rather damned by just one illustration: "The idea of the embeddedness of the economic sphere, for example, has undeniably and repeatedly been validated throughout this book." I am afraid that not many people will know what that means, and they will not be able to discover by reading this book.

Forrest Capie is professor of economic history, City University.