Modern Business Enterprise as a Capital-Saving Innovation

The introduction and diffusion of what Alfred Chandler called modern business enterprise had a profound capital-saving impact on the American economy. Given the availability of the railroad and telegraph, purchasing more managerial labor services paid off principally via increased speed of production and inventory turnover, which spread costs of holding capital over a larger volume of output. This article challenges the consensus that nineteenth- and early twentieth-century technological change in the United States was overwhelmingly labor saving and interprets the factor-saving bias of modern business enterprise as representative rather than anomalous.