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Introduction Part I Socialism and Central Planning 1 Planning And Notes Introduction 1 . Summers (2014). 2 . Einstein (1949). Part I Socialism and Central Planning 1 . Auerbach (1992), p.10; footnote omitted. 1 Planning and Spontaneous Order 1 . Marx (1867), pp. 283–4. 2 . Descartes (1637), pp.7–8. 3 . See Israel (2011), part II. 4 . Kula (1986), chapters 21–3. 5 . Acemoglu et al. (2011). 6 . Carlisle (1974), p. 451. 7 . Gide and Rist (1948), p. 232. 8 . Such banks represented ‘the realization of Saint-Simonian plans’ Hayek (1952), p. 316, footnote omitted. 9 . Gerschenkron (1962a), pp. 11–14. 10 . The terms ‘liberal’ and ‘liberalism’ will be used throughout this book in their British, free-market sense, as when Friedrich Hayek and Milton Friedman referred to themselves as liberals. When the term is used, as in American English, to denote a mild form of social democracy, it will be qualified – ‘American liberal’. 11 . Gerschenkron (1962a), pp. 22–3; Gide and Rist (1948), pp. 236–8. 12 . Carlisle (1968), p. 434. 13 . Kunstler (2001), p. X. 14 . Kunstler (2001) p. 32; Shapiro (1982), p. 486; Gandy (1999), pp. 23–4, 27. 15 . Porter (1999), p. 416. 16 . Simon, as quoted in Halliday (2007), p. 119; Halliday’s insertions. 17 . Spencer (1843), pp. 244–5, 247. 18 . Porter (1999), p. 412; Halliday (2007), pp. 26–7. 19 . Spencer (1857), p. 290; Spencer (1853), pp. 279–80, 304. 20 . See Evans (2005). 21 . Fogel (2004), p. 37. 22 . Bauman (1976), pp. 13, 15; see as well Hayek (1982), volume 1, pp. 64–5. 23 . Hayek (1944). 24 . Hayek (1982), volume 1, p. 118. 25 . Hayek (1982), volume 3, p. 167; emphasis in original. 26 . Hayek (1960a), pp. 397–8, 399. 27 . Hayek (1982), volume 2, p. 136; footnote omitted. 28 . Hayek (1952), pp. 49–50. 29 . Hayek (1982), volume 2, p. 5. 432 Notes 433 30 . Hayek (1952), p. 154. 31 . Hayek (1960), pp. 24–5. 32 . Hayek (1982), volume 2, p. 5. 33 . Hayek (1982), volume 1, pp. 84–5. 34 . Hayek (1982), volume 1, p. 82. 35 . Hayek (1982), volume 2, pp. 9, 109 (footnote omitted); Hayek (1952), p. 249. 36 . Hayek (1952), p. 179. 37 . Hayek (1982), volume 1, p. 22. 38 . Hayek (1982), volume 1, p. 25 and note 37. 39 . Hayek (1982), volume 1, pp. 11–12. 40 . Hayek (1952), p. 392. 41 . Hayek (1952), pp. 173–4; see also pp. 221–2. 42 . Hayek (1977). 43 . See, for instance, Graaff (1967). 44 . In 1951, Kenneth J. Arrow elaborated upon the possibility, pointed out in the eighteenth century by the Marquis de Condorcet, that majority voting proce- dures might not converge with a consistent ordering of preferences on the part of the public (Arrow, 1963). 45 . See Hayek (2011), pp. 35–7. 46 . Scott (1998), pp. 59–61, 82. 47 . Shapiro (1982), p. 487; on dispossessions, see as well Caro (1998). 48 . Josephson (2002). 49 . Scott (1998), p. 5. 50 . Kunstler (2001), pp. 45–6. 51 . Scott (1998), p. 104. 52 . Jacobs (1961), pp. 238, 241, quoted in Scott (1998), p. 142. 53 . Jacobs (1961), pp. 158–9, 167, 241–3. 54 . Hayek cites Jacobs’ Death and Life of Great American Cities in Hayek (1982), volume 1, p. 15. 55 . Gans (1968), p. 33. 56 . Hayek (1960), pp. 340–1. 57 . Hayek (1960), pp. 349–50. 58 . Coase (1960). 59 . Stigler (1966), pp. 110–14; Chung (1996). 60 . Jacobs (1961), p. 241. 61 . Acemoglu et al. (2005). 62 . Horwitz (1977) substantiates this argument for the evolution of the law in the pre-Civil War US, as does Skowronek (1982), chapter 1. 63 . Polanyi (1944), pp. 181–2. 64 . Polanyi (1944), pp.141–2. 65 . See Simons (1948). 66 . Pareto improvements: Hayek (1982), volume 2, p. 139; equality and stagnation: Hayek (1982), volume 2, pp. 6, 122, 188, note 24; Hayek (1960), pp. 42, 49, 430, notes 9 and 12. 67 . Cronon (1991), pp. 109–19. 68 . Hayek (1982), volume 2, pp. 33, 142. 69 . Jacobs (1961), p. 241. 70 . Hayek (1944), pp. 72–6; see also Sowell (1980), pp. 213–14. 2 The Giant Firm and the Plan 1 . De Vries (1994). This notion had been anticipated by the ‘aspirational principle’ of Sir James Steuart in the eighteenth century: see Allen (2009), pp. 12–13. 434 Notes 2 . Voth (2003). 3 . Chandler (1992). This article is perhaps the clearest expression of his distance from mainstream theorising on the nature of the giant firm. Chandler reiterated these themes many times, most notably in Chandler (1977) and Chandler (1990). 4 . Chandler (1992), p. 81, quoting Chandler (1990), p. 24. 5 . The modern notion of perfect competition, in which advertising and marketing are an impossibility, only emerged with the publication of Frank Knight’s Risk, Uncertainty and Profit of 1921: see Stigler (1957). 6 . Hughes (2007), p. 1. 7 . Leonard (2009). 8 . Maddison (2006), pp. 184–7. Tooze (2007), chapter 5, casts an even more nega- tive view of the progress of living standards of German workers in this and later periods. 9 . Japanese per capita income approximately doubled over this period (Maddison, 2006, p. 206). 10 . Chandler (1977), part II. 11 . Landes (1983), pp. 285–7. 12 . See Alexander (1929), chapter III ‘Company Standardization’. The authorship of this book is ambiguous: ‘The present investigation was made, and this volume was prepared, under the supervision of the Conference Board’s Staff Economic Council, by Mr. Robert A. Brady of the Conference Board’s Research Staff’ (p. vii). 13 . Hughes (2007), p. 210. A faith in the ability to monitor the performance of the divisions within large firms with financial measures probably reached a peak with the fashion for conglomerates in the 1970s (see Chapter 5). There then emerged an emphasis on firms pursuing their ‘core competencies’ and using, where possible, a comparison with market alternatives as a mechanism for judging the efficiency of the firm’s diverse activities. 14 . Jacob (1997), chapter 9 and Mokyr (2002), chapter 3. 15 . Nelson and Wright (1992), p. 1941. 16 . On the evolution of the role of science in technology since 1860, see Mowery and Rosenberg (1989), chapters 2 and 3. 17 . Noble (1977). This issue will re-emerge in later chapters. 18 . Gerschenkron (1962a). 19 . ‘Un jour M. de Fontanes [le Grand-Maître de l’Université] vantait à Napoléon Ier la centralisation admirable de l’organisation universitaire: “Sire, il est trois heures: eh bien, je puis assurer à Votre Majesté que dans ce moment même les écoliers de toutes les classes de quatrième de l’Empire font un thème latin” ’ (Le Clère, 1864, p. 955). 20 . The discussion below is reliant on Noble (1977), chapter 5, Hughes (2007), chapter 5 and Auerbach (1988), pp. 274–8 (and references therein). 21 . Sawyer (1954). Its roots have been traced to the procedures of the eighteenth- century French arms-making industry: Friedel (2007), pp. 322–6. 22 . Noble (1977), pp. 72–3; Wengenroth (1997), pp. 146–7. 23 . Noble (1977), pp. 69–70; and see Smil (2005), pp.83–9, concerning Edison’s (losing) battle to defend electrical transmission using direct current. 24 . Adams (1919). 25 . Alexander (1929); a brief biography of Alexander may be found in Noble (1977), pp. 52–4. 26 . Hawley (1974), pp. 117–25; Noble (1977), pp. 81–3; see Alexander (1929), p. 11 and all of chapter 3. Notes 435 27 . Noble (1977), p. 79; Hughes (2007), p. 203. 28 . Hughes (2007), pp. 204–5, 207. 29 . Smil (2005), p. 126. 30 . Kanigel (1997), pp. 494–9. 31 . On the links between scientific management and cost accounting: Kaigel (1997), pp. 267–9, Alexander (1929), pp. 30–2 and Auerbach (1988), pp. 108–18. 32 . In Marxian theory, the value of the labour power embodied in a pair of shoes is not linked to the number of labour hours that happen to be used in their fabri- cation, but to a socially normed accounting of the necessary labour hours, one that emerges through unspecified economic processes representing, presumably, ‘typical’ effort (enforced or voluntary) and manual facility. 33 . Chandler (1977). 34 . Coase (1937). 35 . Williamson (1971), pp. 117, 122. Williamson’s major statement on these ques- tions is to be found in Williamson (1976). 36 . Lamoreaux et al. (2002) put forth a new synthesis to account for the demise of the Chandlerian system in later decades, an issue to be discussed in the following chapters. 37 . Chandler (1992), p. 87. 38 . Chandler (1992), pp. 92–3. 39 . Lazonick (1991), p.8. 40 . Chandler (1992), pp. 86–7; the notion of learned routines was originally devel- oped in Nelson and Winter (1982). 41 . Chandler and Hikino (1997), p. 25. 42 . Chandler (1992), p. 83. 43 . McGraw (2007); Schumpeter (1911), p. 64. 44 . See Baumol (2002), chapters 2 and 3. 45 . Schumpeter (1928), pp. 384–6. 46 . Schumpeter (1947), chapters VII and VIII; Hayek (1949a). 47 . Rosenberg (1976), pp. 63–5; Auerbach (1988), pp. 265–7; Smil (2006). 48 . Smil (2005), p. 11. 49 . Wengenroth (1997), pp. 143–4. 50 . Hughes (2007), pp. 150–1. 51 . Friedel and Israel (1987), p. 117. 52 . Smil (2005), p. 49; Friedel and Israel (1987), pp. 69, 227. 53 . See Smil (2005), pp. 58–9 for sources of this quotation. 54 . Smil (2005), p. 50 and Friedel and Israel (1987), p. 67. 55 . Friedel and Israel (1987), pp. 52, 228. 56 . Friedel and Israel (1987), p. 40. 57 . Elbaum and Lazonick (1986a). 3 Technocratic Planning and the Emergence of a Socialist Orthodoxy 1 . Bairoch (1993), pp. 32–51. 2 . Cain and Hopkins (1993), pp. 209–25; Zebel (1967). 3 . Stocking and Watkins (1948), p. 19. 4 . See the discussion in Lazonick (1991), chapter 5.
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