The Economics Book

IN CONTEXT

FOCUS

Markets and firms

KEY THINKER

Alfred Marshall (1842–1924)

BEFORE

1776 Adam Smith explains how large firms can lower unit costs through labor division.

1848 John Stuart Mill suggests that only large firms can adapt successfully to certain business changes, and that this can lead to the creation of natural monopolies.

AFTER

1949 South African economist Petrus Johannes Verdoorn shows that increasing growth creates increasing productivity through economies of scale.

1977 Alfred Chandler publishes The Visible Hand: the Managerial Revolution in American Business, which describes the rise of giant corporations and mass production.

From the beginning ...