Reflection - Assignment Essays

Follow the instruction Pdf, label each quesiton.

Meaning and Significance
Looking ahead to your midterms

Meaning
The “meaning” of a concept is something like its definition – a simple summary of the gist of a concept.

Significance
“Significance” refers to the implications and broader ramifications of a concept — what makes it important. Under this heading, you could discuss, among other things…
whose concept or idea it is;
the place or role of the concept in an author’s arguments — in their article or book;
what arguments lead to this idea or concept;
what arguments follow from this idea or concept;
examples and applications of a concept, either an author’s or yours;
similar or contrasting concepts or ideas, in the work of this or other authors, and how these other concepts shed light on the meaning of the concept in question;
The place or role of the concept in the course or unit of the course;
why it matters that an author uses or espouses this concept.

image1

ALL THE LIVE LONG DAY N O V. 3 0 , 2 0 2 2

By Eric Levitz, senior writer for Intelligencer who covers politics and economics

Why America’s Railroads Refuse to Give Their
Workers Paid Leave

https://nymag.com/intelligencer/tags/all-the-live-long-day/

https://nymag.com/author/eric-levitz/

https://nymag.com/intelligencer

A freight train travels through Mojave, California on November 15, 2022. Photo: George Rose/Getty Images

For months, the world’s largest economy has been teetering on the brink of collapse because
America’s latter-day robber barons can’t comprehend that workers sometimes get sick.

Or so the behavior of major U.S. rail companies seems to suggest.

Since last winter, railroad unions and the managers of America’s seven dominant freight-rail
carriers have been struggling to come to an agreement on a new contract. The key points of
contention in those talks have been scheduling in general and the provision of paid leave in
particular. Unlike nearly 80 percent of U.S. laborers, railroad employees are not currently
guaranteed a single paid sick day. Rather, if such workers wish to recuperate from an illness or
make time to see a doctor about a nagging complaint, they need to use vacation time, which
must be requested days in advance. In other words, if a worker wants to take time off to
recover from the flu, they need to notify their employer of this days before actually catching
the virus. Given that workers’ contracts do not include paid psychic benefits, this is a tall order.

When management refused to give ground on leave earlier this year, rail workers threatened to
strike. If they went through with such a labor action, the rail workers would not merely erode
their employers’ profits but also upend the broader U.S. economy. Rail lines remain key
arteries of American commerce, carrying 40 percent of the nation’s annual freight. A single
day without functioning freight rail would cost the U.S. economy an estimated $2 billion. And
such costs could multiply overtime. When fertilizer goes undelivered, crop yields decline and

https://www.vox.com/policy-and-politics/2022/9/14/23353627/railroad-strike-updates-2022-amtrak-unions-congress

https://www.bls.gov/opub/ted/2021/paid-sick-leave-was-available-to-79-percent-of-civilian-workers-in-march-2021.htm

https://www.cnbc.com/2022/09/08/deadline-for-rail-strike-which-could-cost-2-billion-a-day-nears.html

the price of food rises. When retailers can’t access new goods shipments, shortages ensue, and
so on.

Congress has long recognized the social costs of railway-labor disputes. In 1926, the federal
government gave itself broad powers to impose labor settlements on the rail industry. In
September, the Biden administration utilized such power to broker a tentative agreement
between the leaders of a dozen unions and the railroads. Under that bargain, the companies
agreed to a 24 percent pay increase by 2024, annual $1,000 bonuses, and a freeze on health-
care costs. On the key point of leave, however, the railroads conceded only a single paid
personal day, plus the removal of some disciplinary penalties for time missed as a result of a
medical emergency.

When the deal was put to a vote before all members, four of the 12 unions declined to ratify
the compromise. With multiple unions voting down the agreement — and others promising
solidarity if their peers decide to walk off the job — the threat of an impending rail shutdown
once again hangs over the U.S. economy.

In recent days, the Biden administration has sought to nullify that threat by asking Congress
to impose the tentative agreement on the industry before the strike deadline of December 9.
Progressives in the House and Senate are pushing to add seven paid sick days to the tentative
agreement. But any legislative resolution to the crisis will need to overcome a Republican-led
filibuster in the Senate, which means ten Republicans would need to join a unified Democratic
caucus in imposing a settlement more pro-union than that which the Biden administration

https://www.vox.com/policy-and-politics/2022/11/29/23484623/congress-rail-strike-biden-sick-days

Jake Sherman
@JakeSherman · Follow

UPDATE: @JohnCornyn, who expressed openness
yesterday to increasing rail paid leave from 1 to 7
days, says he’s now opposed.

“I just think it’s a bad idea for Congress to try to
intervene and renegotiate these collective bargaining
agreements between labor and management.”
8:14 AM · Nov 30, 2022

572 Reply Share this Tweet

Read 228 replies

brokered. As of this writing, the odds that Senate Majority Leader Chuck Schumer can
assemble such a coalition look long.

All of which invites the question: Why do these rail barons hate paid leave so much? Why
would a company have no problem handing out 24 percent raises, $1,000 bonuses, and caps
on health-care premiums but draw the line on providing a benefit as standard and ubiquitous
throughout modern industry as paid sick days?

The answer, in short, is “P.S.R.” — or precision-scheduled railroading.

P.S.R. is an operational strategy that aims to minimize the ratio between railroads’ operating
costs and their revenues through various cost-cutting and (ostensibly) efficiency-increasing
measures. The basic idea is to transport more freight using fewer workers and railcars.

One way to do this is to make trains longer: A single 100-car train requires less track space
than two 50-car ones since you need to maintain some distance between the latter. More
critically, one very long train requires fewer crew members to run than two medium ones.

Another way to get more with less is to streamline scheduling so that trains are running at full
capacity as often as possible.

All this has worked out poorly for rail workers writ large. Over the past six years, America’s
major freight carriers have shed 30 percent of their employees. To compensate for this lost

https://twitter.com/JakeSherman?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1597987428362760193%7Ctwgr%5Ecc0a4da0c2923e6c304e91046da51b5fb5af688b%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fnymag.com%2Fintelligencer%2F2022%2F11%2Frail-strike-why-the-railroads-wont-give-in-on-paid-leave-psr-precision-scheduled-railroading.html

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UPDATE: @JohnCornyn, who expressed openness yesterday to increasing rail paid leave from 1 to 7 days, says he’s now opposed.

“I just think it's a bad idea for Congress to try to intervene and renegotiate these collective bargaining agreements between labor and management.”

— Jake Sherman (@JakeSherman) November 30, 2022

https://twitter.com/JohnCornyn?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1597987428362760193%7Ctwgr%5Ecc0a4da0c2923e6c304e91046da51b5fb5af688b%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fnymag.com%2Fintelligencer%2F2022%2F11%2Frail-strike-why-the-railroads-wont-give-in-on-paid-leave-psr-precision-scheduled-railroading.html

UPDATE: @JohnCornyn, who expressed openness yesterday to increasing rail paid leave from 1 to 7 days, says he’s now opposed.

“I just think it's a bad idea for Congress to try to intervene and renegotiate these collective bargaining agreements between labor and management.”

— Jake Sherman (@JakeSherman) November 30, 2022

https://help.twitter.com/en/twitter-for-websites-ads-info-and-privacy

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UPDATE: @JohnCornyn, who expressed openness yesterday to increasing rail paid leave from 1 to 7 days, says he’s now opposed.

“I just think it's a bad idea for Congress to try to intervene and renegotiate these collective bargaining agreements between labor and management.”

— Jake Sherman (@JakeSherman) November 30, 2022

https://www.stb.gov/news-communications/latest-news/pr-22-21/

staffing, remaining workers must tolerate irregular schedules and little time off since the
railroads don’t have much spare labor capacity left.

Of course, the railroads are in the business of moving freight, not creating jobs. In theory, if
these firms could cut labor costs without degrading service, the broader economy could
benefit. The railroads could pass on their savings to shippers in the form of lower rates,
thereby putting downward pressure on a wide range of consumer prices. Furthermore, the
more cost-competitive freight rail becomes relative to trucking, the lower the American
economy’s carbon emissions will be.

Thus, according to the rail barons’ boosters, P.S.R. represents an innovation that is good for
shippers, consumers, and the planet but bad for America’s least productive rail workers. The
rail unions’ opposition to P.S.R. is therefore, in this account, myopically self-interested and
contrary to the greater good.

Unfortunately, P.S.R. works better in theory than in practice — at least for every stakeholder
besides the activist investors who imposed P.S.R. on the industry in the first place.

For shippers, the problems with P.S.R. are twofold. First, and most fundamentally, the
dominant rail firms feel little need to pass on the fruits of their “efficiencies” to their
customers. Decades of consolidation have left the U.S. with only seven Class I railroad
companies. Four of those companies collectively control more than 83 percent of the freight
market. And the vast majority of train stations in the U.S. are served by exactly one railroad.

Thus, most shippers can’t credibly threaten to take their business elsewhere. At the margin,
rail customers could shift their transport needs toward trucking, but most are reliant on the
inherent scale and efficiency of rail transport. So when freight carriers reduce their operating
costs, they’re less inclined to pass on those savings in the form of improved customer service
or lower rates than to simply shower their shareholders in dividends.

Last year, the seven dominant North American railways had a combined net income of $27
billion, nearly twice their margin a decade ago. In the interim, the railways have collectively
doled out $146 billion in dividends and stock buybacks while investing only $116 billion into
their businesses.

The second problem with P.S.R., from the shippers’ standpoint, is that its scheduling is less
precise than advertised. Eliminating spare labor or train cars may render railroads more
efficient mechanisms for translating investment into profits. But such fragile systems aren’t

https://fortune.com/2021/07/09/biden-railroads-anticompetitive-unions-executive-order/

https://prospect.org/economy/how-americas-supply-chains-got-railroaded/

necessarily efficient for bringing freight from one place to another, especially in a world where
natural disasters and public-health crises exist.

In early 2021, when the acute phase of the COVID pandemic ended and economic demand
spiked, freight carriers’ operations were derailed by their own “efficiencies.” For a week last
July, Union Pacific had to suspend service between Chicago and Los Angeles while it reopened
shuttered rail ramps and reconfigured operations in order to keep pace with rising orders.
Similar disruptions afflicted the other major carriers, as The American Prospect details.

By summer 2022, the freight carriers were still failing to meet customer expectations. In a
July survey from the American Chemistry Council, 46 percent of chemical manufacturers said
rail service was getting worse, while just 7 percent said it was getting better. “Freight rail has
been a constant thorn in our side and been a significant challenge for our members for quite
some time,” Chris Jahn, the council’s chief executive, told the New York Times in September.

And this is why the freight carriers won’t give ground on paid leave: Already understaffed and
underperforming, the railroads cannot allow unanticipated absences to become significantly
more prevalent without either pulling back from P.S.R. or suffering even more frequent
disruptions and customer complaints.

And the track to a more resilient (if less “precise”) operating system is blocked by the
company’s shareholders.

A decade ago, the activist investor Bill Ackman won a proxy battle at Canadian Pacific and
proceeded to replace its management with a team led by Hunter Harrison, the railway
executive who’d pioneered P.S.R. After imposing the gospel of “more with less” at Canadian
Pacific, Harrison left to spread the good news to the freight giant CSX. At each firm, P.S.R.
succeeded at generating higher returns. Pretty soon, major investors in other railroads started
calling on their firms to imitate Harrison’s methods. Testifying to the government’s Surface
Transportation Board about freight rail’s performance last spring, industry analyst Rick
Paterson said, “Lurking in the background is the constant threat of shareholder activism if any
of the railroads’ operating ratios become outliers on the high side.”

The freight carriers can afford to make concessions on pay. It isn’t that painful to increase
wages by a sizable amount when you’ve recently slashed your head count by 30 percent (and
hope to continue innovating your way to a smaller payroll in the years to come). But providing
rail workers with ordinary time-off benefits would threaten the industry’s core business

https://prospect.org/economy/how-americas-supply-chains-got-railroaded/

TA G S : P O L I T I C S L A B O R T H E R A I L R O A D S A L L T H E L I V E L O N G D AY M O R E

1 4 3 C O M M E N T S

strategy, an operating procedure that has helped to nearly double its profits over the past
decade.

That strategy is predicated on treating rail workers as if they were nearly indistinguishable
from the railcars they drive. The typical railcar requires maintenance at predictable intervals
and does not require an unanticipated day off to see a doctor about an unexplained pain or to
visit a loved one in the hospital. But workers often do.

Last June, one middle-aged union engineer postponed a doctor’s visit for work then died of a
heart attack on the job weeks later. A conductor who spoke with the Times began feeling
rundown last year but declined to see a doctor for fear of being disciplined for taking an
unplanned day off. Instead, he waited months for the next doctor’s appointment that aligned
with a scheduled day off. He then learned he’d been suffering from an infection that could
have been treated with medication weeks earlier but would now require surgery.

With a combined $27 billion in net income, the railroads can afford to give their workers paid
leave and hire more staff to ensure the stability of their operations. Tolerating such slack might
well improve customer service by rendering the railroads more resilient against disruptions.

But that would require the railroads’ owners to accept a cut in their passive income. They do
not want to do that. And if all goes well on Capitol Hill in the next few days, they won’t have
to.

https://nymag.com/intelligencer/tags/politics/

https://nymag.com/intelligencer/tags/labor/

https://nymag.com/intelligencer/tags/the-railroads/

https://nymag.com/intelligencer/tags/all-the-live-long-day/

https://www.washingtonpost.com/business/2022/09/17/railroad-strike-attendance-workers/

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The Suntory and Toyota International Centres for Economics and Related Disciplines

The Nature of the Firm
Author(s): R. H. Coase
Source: Economica, New Series, Vol. 4, No. 16 (Nov., 1937), pp. 386-405
Published by: Wiley on behalf of The London School of Economics and Political Science and The Suntory
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ENOVEMBER

The Nature of the Firm
By R. H. COASE

ECONOMIC theory has suffered in the past from a failure
to state clearly its assumptions. Economists in building
up a theory have often omitted to examine the foundations
on which it was erected. This examination is, however,
essential not only to prevent the misunderstanding and
needless controversy which arise from a lack of knowledge
of the assumptions on which a theory is based, but also
because of the extreme importance for economics of good
judgment in choosing between rival sets of assumptions.
For instance, it is suggested that the use of the word ” firm ”
in economics may be different from the use of the term
by the “plain man.”” Since there is apparently a trend
in economic theory towards starting analysis with the
individual firm and not with the industry,2 it is all the
more necessary not only that a clear definition of the word
” firm ” should be given but that its difference from a
firm in the ” real world,” if it exists, should be made clear.
Mrs. Robinson has said that “the two questions to be
asked of a set of assumptions in economics are: Are they
tractable ? and: Do they correspond with the real world ? “3

Though, as Mrs. Robinson points out, ” more often one set
will be manageable and, the other realistic,” yet there may
well be branches of theory where assumptions may be
both maniageable and realistic. It is hoped to show in
the following paper that a definition of a firm may be obtained
which is not only realistic in that it corresponds to what
is meant by a firm in the real world, but is tractable by
two of the most powerful instruments of economic analysis
developed by Marshall, the idea of the margin and that of
substitution, together giving the idea of substitution at

1 Joan Robinson, Economics is a Serious Subject, p. 12.

2 See N. Kaldor, “The Equilibrium of the Firm,” Economic _ournal, Mllarch, 1934.
8 Op. cit., p. 6.

386

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1937] THE NATURE OF THE FIRM 387

the margin., Our definition must, of course, “relate to
formal relations which are capable of being conceived
exactly.”2

It is convenient if, in searching for a definition of a firm,
we first consider the economic system as it is normally
treated by the economist. Let us consider the description
of the economic system given by Sir Arthur Salter.3 ” The
normal economic system works itself. For its current
operation it is under no central control, it needs no central
survey. Over the whole range of human activity and human
need, supply is adjusted to demand, and production to
consumption, by a process that is automatic, elastic and
responsive.” An economist thinks of the economic system
as being co-ordinated by the price mechanism and society
becomes not an organisation but an organism.4 The economi

system ” works itself.” This does not mean that there is
no planning by individuals. These exercise foresight and
choose between alternatives. This is necessarily so. if there
is to be order in the system. But this theory assumes that
the direction of resources is dependent directly on the price
mechanism. Indeed, it is often considered to be an objection
to economic planning that it merely tries to do what is
already done by the price mechanism.5 Sir Arthur Salter’s
description, however, gives a very incomplete picture of
our economic system. Within a firm, the description does
not fit at all. For instance, in economic theory we find
that the allocation of factors of production between different
uses is determined by the price mechanism. The price
of factor A becomes higher in X than in r. As a result,
A moves from r to X until the difference between the
prices in X and r, except in so far as it compensates for
other differential advantages, disappears. Yet in the real
world, we find that there are many areas where this does
not apply. If a workman moves from department r to
department X, he does not go because of a change in relative
prices, but because he is ordered to do so. Those who

1 J. M. Keynes, Essays in Biography, pp. 223-4.
2 L. Robbins, Nature and Significance of Economic Science, p. 63.
3 This description is quoted with approval by D. H. Robertson, Control of Industry,

p. 85, and by Professor Arnold Plant, ” Trends in Business Administration,” ECONOMICA,
February, I932. It appears in Allied Sbipping Control, pp. i6-17.

4 See F. A. Hayek, “The Trend of Economic Thinking,” ECONOMICA, May, 1933.
r See F. A. Hayek, op. cit.

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388 ECONOMICA [NOVEMBER

object to economic planning on the grounds that the problem
is solved by price movements can be answered by pointing
out that there is planning within our economic system
which is quite different from the individual planning
mentioned above and which is akin to what is normally
called economic planning. The example given above is
typical of a large sphere in our modern economic system.
Of course, this fact has not been ignored by economists.
Marshall introduces organisation as a fourth factor of
production; J. B. Clark gives the co-ordinating function
to the entrepreneur; Professor Knight introduces managers
who co-ordinate. As D. H. Robertson points out, we find
“islands of conscious power in this ocean of unconscious
co-operation like lumps of butter coagulating in a pail of
buttermilk.”‘ But in view of the fact that it is usually
argued that co-ordination will be done by the price mechanism,
why is such organisation necessary ? Why are there these
” islands of conscious power ” ? Outside the firm, price
movements direct production, which is co-ordinated through
a series of exchange transactions on the market. Within
a firm, these market transactions are eliminated and in
place of the complicated market structure with exchange
transactions is substituted the entrepreneur-co-ordinator,
who directs production.2 It is clear that these are alternative
methods of co-ordinating production. Yet, having regard
to the fact that if production is regulated by price movements,
production could be carried on without any organisation
at all, well might we ask, why is there any organisation ?

Of course, the degree to which the price mechanism is
superseded varies greatly. In a department store, the
allocation of the different sections to the various locations
in the building may be done by the controlling authority
or it may be the result of competitive price bidding for
space. In the Lancashire cotton industry, a weaver can
rent power and shop-room and can obtain looms and yarn
on credit.3 This co-ordination of the various factors of
production is, however, normally carried out without the
intervention of the price mechanism. As is evident, the
amount of “vertical ” integration, involving as it does

I op. cit., p. 85.
2 In the rest of this paper I shall use the term entrepreneur to refer to the person or

persons who, in a competitive system, take the place of the price mechanism in the direction
of resources.

5 Survey of Textile Industries, p. 26,

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I937] THE NATURE OF THE FIRM 389

the supersession of the price mechanism, varies greatly
from industry to industry and from firm to firm.

It can, I think, be assumed that the distinguishing mark
of the firm is the supersession of the price mechanism.
It is, of course, as Professor Robbins points out, ” related
to an outside network of relative prices and costs,”‘ but
it is important to discover the exact nature of this relation-
ship. This distinction between the allocation of resources
in a firm and the allocation in the economic system has
been very vividly described by Mr. Maurice Dobb when
discussing Adam Smith’s conception of the capitalist:
“It began to be seen that there was something more
important than the relations inside each factory or unit
captained by an undertaker; there were the relations of
the undertaker with the rest of the economic world outside
his immediate sphere . . . . the undertaker busies himself
with the division of labour inside each firm and he plans
and organises consciously,” but ” he is related to the much
larger economic specialisation, of which he himself is merely
one specialised unit. Here, he plays his part as a single cell in a
larger organism, mainly unconscious of the wider rle he fiUS.1″2

In view of the fact that while economists treat the price
mechanism as a co-ordinating instrument, they also admit
the co-ordinating function of the ” entrepreneur,” it is
surely important to enquire why co-ordination is the work
of the price mechanism in one case and of the entrepreneur
in another. The purpose of this paper is to bridge what
appears to be a gap in economic theory between the assump-
tion (made for some purposes) that resources are allocated
by means of the price mechanism and the assumption
(made for other purposes) that this allocation is dependent
on the entrepreneur-co-ordinator. We have to explain
the basis on which, in practice, this choice between alternatives
is effected.3

O op. cit., p. 71.
2 Capitalist Einterprise and Social Progress, p. 20. Cf., also, Henderson, Supply and Demand,

pp. 3-5.
3 It is easy to see when the State takes over the direction of an industry that, ils planining

it, it is doing something which was previously done by the price mechanism. What is
usually not realised is that any business man in organising the relations between his depart-
ments is also doing something which could be organised through the price mechanism. There
is therefore point in Mr. Durbin’s answer to those who emphasise the problems involved
in economic planning that the same problems have to be solved by business men in the
competitive system. (See ” Economic Calculus in a Planned Economy,” Econosnic Yournal,
December, 1936.) The important difference between these two cases is that economic
planning is imposed on industry while firms arise voluntarily because they represent a more
efficient method of organising production, In a competitive system, there is an ” optimum
a,mount of planning!

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390 ECONOMICA [NOVEMBER

Our task is to attempt to discover why a firm emerges
at all in a specialised exchange economy. The price
mechanism (considered purely from the side of the direction
of resources) might be superseded if the relationship which
replaced it was desired for its own sake. This would be
the case, for example, if some people preferred to work
under the direction of some other person. Such individuals
would accept less in order to work under someone, and
firms would arise naturally from this. But it would appear
that this cannot be a very important reason, for it would
rather seem that the opposite tendency is operating if one
judges from the stress normally laid on the advantage of
” being one’s own master.”‘ Of course, if the desire was
not to be controlled but to control, to exercise power over
others, then people might be willing to give up something
in order to direct others; that is, they would be willing
to pay others more than they could get under the price
mechanism in order to be able to direct them. But this
implies that those who direct pay in order to be able to
do this and are not paid to direct, which is clearly not true
in the majority of cases.2 Firms might also exist if purchasers
preferred commodities which are produced by firms to
those not so produced; but even in spheres where one
would expect such preferences (if they exist) to be of negligible
importance, firms are to be found in the real world.3
Therefore there must be other elements involved.

The main reason why it is profitable to establish a firm
would seem to be that there is a cost of using the price
mechanism. The most obvious cost of ” organising”
production through the price mechanism is that of discovering
what the relevant prices are.4 This cost may be reduced
but it will not be eliminated by the emergence of specialists
who will sell this informationi. The costs of negotiating and

1 Cf. Harry Dawes, ” Labour Mobility in the Steel Industry,” Ecossi,-tic ournzal, Marels
1934, who instances ” the trek to retail shopkeeping and insurance work by the better paid
of skilled men due to the desire (often the main aimn in life of a worker) to be independent”
(p. 86).

2 None the less, this is not altogether faliciful. Somiie small shopkeepers are said to earn
less than their assistants.

G. F. Shove, ” The Imperfection of the Market a Fturther Note,” Econotnic journal,
starch, 1933, p. m6, note i, points out that such preferences may exist, although the

example he gives is almost the reverse of the instance given in the text.
I According to N. Kaldor, ” A Classificatory Note of the Deternminateness of Equilibrium,”

Review of Ecoanonic Stuzdies, February, 1934, it is one of the assumptions of static theory
that ” All the relevant prices are kno-wn to all individuals.” Blit this is clearly not trsme
of the real world,

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1937] THE NATURE OF THE FIRM 39I

concluding a separate contract for each exchange transaction
which takes place on a market must also be taken into
account.’ Again, in certain markets, e.g., produce exchanges,
a technique is devised for minimising these contract. costs
but they are not eliminated. It is true that contracts are
not eliminated when there is a firm but they are greatly
reduced. A factor of production (or the owner thereof)
does not have to make a series of contracts with the factors
with whom he is co-operating within the firm, as would be
necessary, of course, if this co-operation were as a direct
result of the working of the price mechanism. For this
series of contracts is substituted one. At this stage, it is
important to note the character of the contract into which
a factor enters that is employed within a firm. The contract
is one whereby the factor, for a certain remuneration (which
may be fixed or fluctuating), agrees to obey the directions
of an entrepreneur within certain limits.2 The essence of
the contract is that it should only state the limits to the
powers of the entrepreneur. Within these limits, he can
therefore direct the other factors of production.

There are, however, other disadvantages-or costs-
of using the price mechanism. It may be desired to make
a long-term contract for the supply of some article or service.
This may be due to the fact that if one contract is made
for a longer period, instead of several shorter ones, then
certain costs of making each contract will- be avoided.
Or, owing to the risk attitude of the people concerned,
they may prefer to make a long rather than a short-term
contract. Now, owing to the difficulty of forecasting, the
longer the period of the contract is for the supply of the
commodity or service, the less possible, and indeed, the
less desirable it is for the person purchasing to specify what
the other contracting party is expected to do. It may well
be a matter of indifference to the person supplying the
service or commodity which of several courses of action
is taken, but not to the purchaser of that service or com-
modity. But the purchaser will not know which of these
several courses he will want the supplier to take. Tlierefore,

1 This influence was noted by Professor Usher when discussing the development of capitalism.
He says The successive buying and selling of partly finished products were sheer ivaste
of cescrgy.” (Introduction to the Industrial History of England, p. 13). But he does not
develop the idea nor consider why it is that buying and selling operations still exist.

2 It would be possible for no limits to the powers of the entrepreneur to be fixed. This
sWouLld be voluntary slavery. According to Professor Batt, The Lao of Master anld Servant,
p. 6S, such a contract would be void and unenforceable.

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392 ECONOMICA [NOVEMBER

the service which is being provided is expressed in general
terms, the exact details being left until a later date. All
that is stated in the contract is the limits to what the persons
supplying the commodity or service is expected to do.
The details of what the supplier is expected to do is not
stated in the contract but is decided later by the purchaser.
When the direction of resources (within the limits of the
contract) becomes dependent on the buyer in this way,
that relationship which I term a ” firm ” may be obtained.’
A firm is likely therefore to emerge in those cases where a
very short term contract would be unsatisfactory. It is
obviously of more importance in the case of services-
labour-than it is in the case of the buying of commodities.
In the case of commodities, the main items can be stated
in advance and the details which will be decided later will
be of minor significance.

We may sum up this section of the argument by saying
that the operation of a market costs something and by
forming an organisation and allowing some authority (an
” entrepreneur “) to direct the resources, certain marketing
costs are saved. The entrepreneur has to carry out his
function at less cost, taking into account the fact that he
may get factors of production at a lower price than the
market transactions which he supersedes, because it is
always possible to revert to the open market if he fails
to do this.

The question of uncertainty is one which is often considered
to be very relevant to the study of the equilibrium of the
firm. It seems improbable that a firm would emerge without
the existence of uncertainty. But those, for instance,
Professor Knight, who make the mode of payment the
distinguishing mark of the firm-fixed incomes being
guaranteed to some of those engaged in production by a
person who takes the residual, and fluctuating, income-
would appear to be introducing a point which is irrelevant
to the problem we are considering. One entrepreneur may
sell his services to another for a certain sum of money,
while the payment to his employees may be mainly or
wholly a share in profits.2 The significant question would

1 Of course, it is not possible to draw a hard and fast line which determines whether
therc is a firm or not. There may be more or less direction. It is similar to the legal
question of whether there is the relationship of master and servant or principal and agent.
See the discussion of this problem below.

2 The views of Professor Knight are exsrnined below in more detail.

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1937] THE NATURE OF THE FIRM 393

appear to be why the allocation of resources is not done
directly by the price mechanism.

Another factor that should be noted is that exchange
transactions on a market and the same transactions organised
within a firm are often treated differently by Governments
or other bodies with regulatory powers. If we consider the
operation of a sales tax, it is clear that it is a tax on market
transactions and not on the same transactions organised
within the firm. Now since these are alternative methods
of ” organisation “-by the price mechanism or by the
entrepreneur-such a regulation would bring into existence
firms which otherwise would have no raison d’etre. It would
furnish a reason for the emergence of a firm in a specialised
exchange economy. Of course, to the extent that firms
already exist, such a measure as a sales tax would merely
tend to make them larger than they would otherwise be.
Similarly, quota schemes, and methods of price control
which imply that there is rationing, and which do not apply
to firms producing such products for themselves, by allowing
advantages to those who organise within the firm and not
through the market, necessarily encourage the growth of
firms. But it is difficult to believe that it is measures such
as have been mentioned in this paragraph which have
brought firms into existence. Such measures would, however,
tend to have this result if they did not exist for other
reasons.

These, then, are the reasons why organisations such as
firms exist in a specialised exchange economy in which it
is generally assumed that the distribution of resources is
” organised ” by the price mechanism. A firm, therefore,
consists of the system of relationships which comes into
existence when the direction of resources is dependent on
an entrepreneur.

The approach which has just been sketched would appear
to offer an advantage in that it is possible to give a scientific
meaning to what is meant by saying that a firnr gets larger
or smaller. A firm becomes larger as additional transactions
(which could be exchange transactions co-ordinated through
the price mechanism) are organised by the entrepreneur
and becomes smaller as he abandons the organisation of
such transactions. The question which arises is whether
it is possible to study the forces which determine the size
of the firm, Why does the entrepreneur not organise foie

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394 ECONOMICA [NOVEMBER

less transaction or one more ? It is interesting to note
that Professor Knight considers that:

” the relation between efficiency and size is one of the
most serious problems of theory, being, in contrast with
the relation for a plant, largely a matter of personality
and historical accident rather than of intelligible general
principles. But the question is peculiarly vital because
the possibility of monopoly gain offers a powerful incentive
to continuous and unlimited expansion of the firm, which
force must be offset by some equally powerful one making
for decreased efficiency (in the production of money
income) with growth in size, if even boundary competition
is to exist.”,

Professor Knight would appear to consider that it is impossible
to treat scientifically the determinants of the size of the
firm. On the basis of the concept of the firm developed
above, this task will now be attempted.

It was suggested that the introduction of the firm was
due primarily to the existence of marketing costs. A
pertinent question to ask would appear to be (quite apart
from the monopoly considerations raised by Professor
Knight), why, if by organising one can eliminate certain
costs and in fact reduce the cost of production, are there
any market transactions at all ?2 Why is not all production
carried on by one big firm ? There would appear to be
certain possible explanations.

First, as a firm gets larger, there may be decreasing
returns to the entrepreneur function, that is, the costs of
organising additional transactions within the firm may
rise.3 Naturally, a point must be reached where the costs
of organising an extra transaction within the firm are equal
to the costs involved in carrying out the transaction in
the open market, or, to the costs of organising by another
entrepreneur. Secondly, it may be that as the transactions
which are organised increase, the entrepreneur fails to
place the factors of production in the uses where their value

1 Risk, Uncertainty and Profit, Preface to the Re-issue, London School of Economics Series
of Reprints, No. 16, 1933.

2 There are certain marketing costs which could only be climinated by the abolition of
” consumers’ choice ” and these are the costs of retailing. It is conceivable that these costs
might be so high that people would be willing to accept rations because the extra product
obtained was worth the loss of their choice.

3 This argument assumes that exchange transactioins on a market can be considered as
homogeneous; wvhich is clearly untrue in fact. This complication is taken into account
below.

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I937] THE NATURE OF THE FIRM 395

is greatest, that is, fails to make the best use of the factors
of production. Again, a point must be reached wlhere the
loss through the waste of resources is equal to the marketing
costs of the exchange transaction in the open market or
to the loss if the transaction was organised by another
entrepreneur. Finally, the supply price of one or more of
the factors of production may rise, because the ” other
advantages ” of a small firm are greater than those of a
large firm.’ Of course, the actual point where the expansion
of the firm ceases might be determined by a combination
of the factors mentioned above. The first two reasons
given most probably correspond to the economists’ phrase
of ” diminishing returns to management.”2

The point has been made in the previous paragraph that
a firm will tend to expand until the costs of organising an
extra transactioni within the firm become equal to the costs
of carrying out the same transaction by means of an exchange
on the open market or the costs of organising in another
firm. But if the firm stops its expansion at a point below
the costs of marketing in the open market and at a point
equal to the costs of organising in another firm, in most
cases (excluding the case of ” combination this will
imply that there is a market transaction between these
two producers, each of whom could organise it at less than
the actual marketing costs. How is the paradox to be
resolved ? If we consider an example the reason for this
will become clear. Suppose A is buying a product from
B and that both A and B could organise this marketing
transaction at less than its present cost. B, we can assume,
is not organising one process or stage of production, but
several. If A therefore wishes to avoid a market transaction,
he will have to take over all the processes of production
controlled by B. Unless A takes over all the processes of

o For a discussion of the variation of the supply price of factors of production to firms
of varying size, see E. A. G. Robinson, The Strsscture of Competitive Industry. It is some-
times said that the supply price of organising ability increases as the size of the firm increases
because men prefer to be the heads of small independent businesses rather than the heads
of departments in a large business. See Jones, The Trust Problem, p. 53I, and Macgregor,
Istdustrial Cosmbination, p. 63. This is a common argument of those who advocate Rational-
isation. It is said that lar,er units would be more efficient, but owing to the individualistic
spirit of the smaller entrepreneurs, they prefer to remain independent, apparently in spite
of the higher income which their increased efficiency under Rationalisation makes possible.

2 This discussion is, of course, brief and incomplete. For a more thorough discussion
of this particular problem, see N. Kaldor, ” The Equilibrium of the Firm,” Economic Journal,
March, I934, and E. A. G. Robinson, “The Problem of Management and the Size of the
Firm,” Economic ssournal, June, 1934.

3 A definition of this term is given below.

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396 tCO-NoMtCA [NOVEMBER

production, a market transaction will still remain, although
it is a different product that is bought. But we have
previously assumed that as each producer expands he
becomes less efficient ; the additional costs of organising
extra transactions increase. It is probable that A’s cost
of organising the transactions previously organised by
B will be greater than B’s cost of doing the same thing.
A therefore will take over the whole of B’s organisation
only if his cost of organising B’s work is not greater than
B’s cost by an amount equal to the costs of carrying out
an exchange transaction on the open market. But once
it becomes economical to have a market transaction, it
also pays to divide production in such a way that the cost
of organising an extra transaction in each firm is the same.

Up to now it has been assumed that the exchange trans-
actions which take place through the price mechanism are
homogeneous. In fact, nothing could be more diverse
than the actual transactions which take place in our modern
world. This would seem to imply that the costs of carrying
out exchange transactions through the price mechanism
will vary considerably as will also the costs of organising
these transactions within the firm. It seems therefore
possible that quite apart from the question of diminishing
returns the costs of organising certain transactions within
the firm may be greater than the costs of carrying out the
exchange transactions in the open market. This would
necessarily imply that there were exchange transactions
carried out through the price mechanism, but would it
mean that there would have to be more than one firm
Clearly not, for all those areas in the economic system
where the direction of resources was not dependent directly
on the price mechanism could be organised within one
firm. The factors which were discussed earlier would seem
to be the important ones, though it is difficult to say whether
” diminishing returns to management ” or the rising supply
price of factors is likely to be the more important.

Other things being equal, therefore, a firm will tend
to be larger:

(a) the less the costs of organising and the slower these
costs rise with an increase in the transactions organised.

(b) the less likely the entrepreneur is to make mistakes
and the smaller the increase in mistakes with an increase
in the transactions organised.

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1937] THE NATURE OF THE FIRM 397

(c) the greater the lowering (or the less the rise) in
the supply price of factors of production to firms of larger
size.
Apart from variations in the supply price of factors of

production to firms of different sizes, it would appear that
the costs of organising and the losses through mistakes will
increase with an increase in the spatidl distribution of the
transactions organised, in the dissimilarity of the trans-
actions, and in the probability of changes in the relevant
prices., As more transactions are organised by an entre-
preneur, it would appear that the transactions would tend
to be either different in kind or in different places. This
furnishes an additional reason why efficiency will tend to
decrease as the firm gets larger. Inventions which tend
to bring factors of production nearer together, by lessening
spatial distribution, tend to increase the size of the firm.2
Changes like the telephone and the telegraph which tend
to reduce the cost of organising spatially will tend to increase
the size of the firm. All changes which improve managerial
technique will tend to increase the size of the firm.3-4

It should be noted that the definition of a firm which
was given above can be used to give more precise meanings
to the terms “combination” and ” integration.”I There
is a combination when transactions which were previously

‘ This aspect of the problem is emphasised by N. Kaldor, op. cit. Its importance in
this connection had been previously noted by E. A. G. Robinson, The Structure of Com-
petihive Industry, pp. 83-106. This assumes that an increase in the probability of price
movements increases the costs of organising within a firm more than it increases the cost
of carrying out an exchange transaction on the market-which is probable.

2 This would appear to be the importance of the treatment of the technical unit by
E. A. G. Robinson, op. cit., pp. 27-33. The larger the technical unit, the greater the
concentration of factors and therefore the firm is likely to be larger.

3 It should be noted that most inventions will change both the costs of organising and
the costs of using the price mechanism. In such cases, whether the invention tends to
make firms larger or smaller will depend on the relative effect on these two sets of costs.
For instance, if the telephone reduces the costs of using the price mechanism more than
it reduces the costs of organising, then it will have the effect of reducing the size of the
firm.

4 An illustration of these dynamic forces is furnished by Maurice Dobb, Russian Economic
Development, p. 68. “With the passing of bonded labour the factory, as an establishment
where work was organised under the whip of the overseer, lost its raison d’etre until this
was restored to it with the introduction of power machinery after 1846.’ It seems important
to realise that the passage from the domestic system to the factory system is not a mere
historical accident, but is conditioned by economic forces. This is shown by the fact that
it is possible to move from the factory system to the domestic system, as in the Russian
example, as well as vice versa. It is the essence of serfdom that the price mechanism is
not allowed to operate. Therefore, there has to be direction from some organiser. When,
however, serfdom passed, the price mechanism was allowed to operate. It was not until
machinery drew workers into one locality that it paid to supersede the price mechanism
and the firm again emerged.

This is often called ” vertical integration,” combination being termed ” lateral integrationi.”

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398 ECONOMICA [NOVEMBER

organised by two or more entrepreneurs become organised
by one. This becomes integration when it involves the
organisation of transactions which were previously carried
out between the entrepreneurs on a market. A firm can
expand in either or both of these two ways. The whole
of the ” structure of competitive industry ” becomes tract-
able by the ordinary technique of economic analysis.

III

The problem which has been investigated in the previous
section has not been entirely neglected by economists and
it is now necessary to consider why the reasons given above
for the emergence of a firm in a specialised exchange economy
are to be preferred to the other explanations which have
been offered.

It is sometimes said that the reason for the existence
of a firm is to be found in the division of labour. This is
the view of Professor Usher, a view which has been adopted
and expanded by Mr. Maurice Dobb. The firm becomes
” the result of an increasing complexity of the division of
labour . . . . The growth of this economic differentiation
creates the need for some integrating force without which
differentiation would collapse into chaos; and it is as the
integrating force in a differentiated econiomy that industrial
forms are chiefly significant.”‘ The answer to this argument
is an obvious one. The ” integrating force in a differentiated
economy ” already exists in the form of the price mechanism.
It is perhaps the main achievement of economic scienGe
that it has shown that there is no reason to suppose that
specialisation must lead to chaos.2 The reason given by
Mr. Maurice Dobb is therefore inadmissible. What has
to be explained is why one integrating force (the entrepreneur)
should be substituted for another integrating force (the
price mechanism).

The most interesting reasons (and probably the most
widely accepted) which have been given to explain this
fact are those to be found in Professor Knight’s Risk,
Uncertainty and Profit. His views will be examined in
some detail.

1 Op. cit., p. io. Professor Usher’s views are to be found in his Introduction to the
Industrial History of England, pp. i-iS.

2 Cf. J. B. Clark, Distribution of Wealth, p. I9, who speaks of the theory of exchange as
being the ” theory of the organisation of industrial society.”

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1937] THE NATURE OF THE FIRM 399

Professor Knight starts with a system in which there
is no uncertainty:

“. acting as individuals under absolute freedom but
without collusion men are supposed to have organised
economic life with the primary and secondary division
of labour, the use of capital, etc., developed to the point
familiar in present-day America. The principal fact
which calls for the exercise of the imagination is the
internal organisation of the productive groups or establish-
ments. With uncertainty entirely absent, every individual
being in possession of perfect knowledge of the situation,
there would be no occasion for anything of the nature
of responsible management or control of productive
activity. Even marketing transactions in any realistic
sense would not be found. The flow of raw materials
and productive services to the consumer would be entirely
automatic.”‘
Professor Knight says that we can imagine this adjustment

as being ” the result of a long process of experimentation
worked out by trial-and-error methods alone,” while it
is not necessary ” to imagine every worker doing exactly
the right thing at the right time in a sort of ‘ pre-established
harmony ‘ with the work of others. There might be managers,
superintendents, etc., for the purpose of co-ordinating the
activities of individuals” though these managers would
be performing a purely routine function, ” without responsi-
bility of any sort.”2

Professor Knight then continues
” With the introduction of uncertainty-the fact of
ignorance and the necessity of acting upon opinion rather
than knowledge-into this Eden-like situation, its character
is entirely changed . . . . With uncertainty present doing
things, the actual execution of activity, becomes in a
real sense a secondary part of life; the primary problem
or function is deciding what to do and how to do it.”3
This fact of uncertainty brings about the two most

important characteristics of social organisation.
” In the first place, goods are produced for a market,
on the.’ basis of entirely impersonal prediction of wants,
not for the satisfaction of the wants of the producers
themselves. The producer takes the responsibility of

I Risk, Uncertainty and Profit, p. 267.
2Op. cit., pp. z67-8. 3Op. cit., p. 2.68.

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400 ECONOMICA [NOVEMBER

forecasting the consumers’ wants. In the second place,
the work of forecasting and at the same time a large
part of the technological direction and control of production
are still further concentrated upon a very narrow class
of the producers, and we meet with a new economic
functionary, the entrepreneur … . When uncertainty
is present and the task of deciding what to do and how
to do it takes the ascendancy over that of execution the
internal organisation of the productive groups is no
longer a matter of indifference or a mechanical detail.
Centralisation of this deciding and controlling function
is imperative, a process of ‘ cephalisation’ is inevitable.”‘
The most fundamental change is:
” the system under which the confident and venturesome
assume the risk or insure the doubtful and timid by
guaranteeing to the latter a specified income in return
for an assignment of the actual results. . . . With human
nature as we know it it would be impracticable or very
unusual for one man to guarantee to another a definite
result of the latter’s actions without being given power
to direct his work. And on the other hand the second
party would not place himself under the direction of
the first without such a guarantee. . . The result of
this manifold specialisation of function is the enterprise
and wage system of industry. Its existence in the world
is the direct result of the fact of uncertainty.”2
These quotations give the essence of Professor Knight’s

theory. The fact of uncertainty means that people have
to forecast future wants. Therefore, you get a special
class springing up who direct the activities of others to
whom they give guaranteed wages. It acts because good
judgment is generally associated with confidence in one’s
judgment.3

Professor Knight would appear to leave himself open
to criticism on several grounds. First of all, as he himself
points out, the fact that certain people have better judgment
or better knowledge does not mean that they can only
get an income from it by themselves actively taking part
in production. They can sell advice or knowledge. Every
business buys the services of a host of advisers. We can
imagine a system where all advice or knowledge was bought

1 Op. cit., pp. 268-95. 2 Op. Cit., Pp. 269-70.
3 Op. cit., p. 270.

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1937] T11-. NATURE OF THE FIRM 401

as required. Again, it is possible to get a reward from
better kno,wledge or judgment not by actively taking part
in production but by making contracts with people who
are producing. A merchant buying for future delivery
represents an example of this. But this merely illustrates
the point that it is quite possible to give a guaranteed
reward providing that certain acts are performed without
directing the performance of those acts. Professor Knight
says that ” with human nature as we know it it would be
impracticable or very unusual for one man to guarantee
to another a definite result of the latter’s actions without
being given power to direct his work.” This is surely
incorrect. A large proportion of jobs are done to contract,
that is, the contractor is guaranteed a certain sum providing
he performs certain acts. But this does not involve any
direction. It does mean, however, that the system of
relative prices has been changed and that there will be a
new arrangement of the factors of production.’ The fact
that Professor Knight mentions that the ” second party
would not place himself under the direction of the first
without such a guarantee” is irrelevant to the problem
we are considering. Finally, it seems important to notice
that even in the case of an economic system where there
is no uncertainty Professor Knight considers that there
would be co-ordinators, though they would perform only
a routine function. He immediately adds that they would
be ” without responsibility of any sort,” which raises the
question by whom are they paid and why ? It seems that
nowhere does Professor Knight give a reason why the price
mechanism should be superseded.

It would seem important to examine one further point

and that is to consider the relevance of this discussion to
the general question of the ” cost-curve of the firm.”

It has sometimes been assumed that a firm is limited
in size under perfect competition if its cost curve slopes
upward,2 while under imperfect competition, it is limited

1 This shows that it is possible to have a private enterprise system without the existence
of firms. Though, in practice, the two functions of enterprise, which actually influences
the system of relative prices by forecasting wants and acting in accordance with such fore-
casts, and management, which accepts the system of relative prices as being given, are
normally carried out by the same persons, yet it seems important to keep them separate
in theory. This point is further discussed below.

2 See Kaldor, op. cit., and Robinson, The Problem of Management and the Size of the Firm.

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402 ECONOMICA [NOVEMBER

in size because it will not pay to produce more than the
output at which marginal cost is equal to margina1 revenue.1
But it is clear that a firm may produce more than one product
and, therefore, there appears to be no prima facie reason
why this upward slope of the cost curve in the case of perfect
competition or the fact that marginal cost will not always
be below marginal revenue in the case of imperfect competi-
tion should limit the size of the firm.2 Mrs. Robinson3
makes the simplifying assumption that only one product
is being produced. But it is clearly important to investigate
how the number of products produced by a firm is determined,
while no theory which assumes that only one product is
in fact produced can have very great practical significance.

It might be replied that under perfect competition, since
everything that is produced can be sold at the prevailing
price, then there is no need for any other product to be
produced. But this argument ignores the fact that there
may be a point where it is less costly to organise the exchange
transactions of a new product than to organise further
exchange transactions of the old product. This point can
be illustrated in the following way. Imagine, following
von Thunen, that there is a town, the consuming centre,
and that industries are located around this central point
in rings. These conditions are illustrated in the following
diagram in which A, B and C represent different industries.

1 Mr. Robinson calls this the Imperfect Competition solution for the survival of the small firm.
2 Mr. Robinson’s conclusion, op. cit., p. 249, note s, would appear to be definitely wrong.

He is followed by Horace J. White, Jr., ” Monopolistic and Perfect Competition,” Americais
Economic Review, December, 1936, p. 645, note 27. Mr. White states ” It is obvious that
the size of the firm is limited in conditions of monopolistic competition.”

3 Economics of lInperfect Competition.

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I937] THE NATURE OF THE FIRM 403

Imagine an entrepreneur who starts controlling exchange
transactions from x. Now as he extends his activities in
the same produce (B), the cost of organising increases until
at some point it becomes equal to that of a dissimilar product
which is nearer. As the firm expands, it will therefore
from this point include more than one product (A and C).
This treatment of the problem is obviously incomplete,”
but,it is necessary to show that merely proving that the
cost curve turns upwards does not give a limitation to the
size of the firm. So far we have only considered the case
of perfect competition; the case of imperfect competition
would appear to be obvious.

To determine the size of the firm, we have to consider
the marketing costs (that is, the costs of using the price
mechanism), and the costs of organising of different entre-
preneurs and then we can determine how many products
will be produced by each firm and how much of each it
will produce. It would, therefore, appear that Mr. Shove2
in his article on “Imperfect Competition.” was asking
questions which Mrs. Robinson’s cost curve apparatus
cannot answer. The factors mentioned above would seem
to be the relevant ones.

Only one task now remains; and that is, to see whether
the concept of a firm which has been developed fits in with
that existing in the real world. We can best approach the
question of what constitutes a firm in practice by considering
the legal relationship normally called that of ” master and
servant ” or ” employer and employee.”3 The essentials
of this relationship have been given as follows:

“<(i) the servant must be under the duty of rendering personal services to the master or to others on behalf

1 As has been shown above, location is only one of the factors influencing the cost of
organising.

2 G. F. Shove, ‘The Imperfection of the Market,” Economic Journal, March, l933, p. I 15.

In connection with an increase in demand in the suburbs and the effect on the price charged
by suppliers, Mr. Shove asks “. . . . wvhy do not the old firms open branches in the
suburbs ? ” If the argunment in the text is correct, this is a question which Mrs. Robinson’s
apparatus cannot answer.

3 The legal concept of ” employer and employee ” and the economic concept of a firm
are not identical, in that the firm may imply control over another person’s property as well
as over their labour. But the identity of these two concepts is sufficiently close for an
examination of the legal concept to be of value in appraising the worth of the economic
concept.

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404 ECONOMICA [NOVEMBER

of the master, otherwise the contract is a contract for
sale of goods or the like.

(2) The master must have the right to control the
servant’s work, either personally or by another servant
or agent. It is this right of control or interference, of
being entitled to tell the servant when to work (within
the hours of service) and when not to work, and what
work to do and how to do it (within the terms of such
service) whichl is the dominant characteristic in this
relation and marks off the servant from an independent
contractor, or from one employed merely to give to his
employer the fruits of his labour. In the latter case,
the contractor or performer is not under the employer’s
control in doing the work or effecting the service; he
has to shape and manage his work so as to give the result
he has contracted to effect.”‘

We thus see that it is the fact of direction which is the
essence of the legal concept of ” employer and employee,”
just as it was in the economic concept which was developed
above. It is interesting to note that Professor Batt says
further

“That which distinguishes an agent from a servant is
not the absence or presence of a fixed wage or the payment
only of commission on business done, but rather the
freedom with which an agent may carry out his employ-
ment.”2

We can therefore conclude that the definition we have given
is one which approximates closely to the firm as it is considered
in the real world.

Our definition is, therefore, realistic. Is it manageable
This ought to be clear. When we are considering how
large a firm will be the principle of marginalism works
smoothly. The question always is, will it pay to bring an
extra exchange transaction under the organising authority ?
At the margin, the costs of organising within the firm
will be equal either to the costs of organising in another
firm or to the costs involved in leaving the transaction to
be ” organised” by the price mechanism. Business men
will be constantly experimenting, controlling more or less,
and in this way, equilibrium will be maintained. This
gives the position of equilibrium for static analysis. But

I Batt, The Law of Master and’Servant, p. 6.
2 op. cit., p. 7.

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1937] TH. NATURE OF THE FIRM 405

it is clear that the dynamic factors are also of considerable
importance, and an investigation of the effect changes have
on the cost of organising within the firm and on marketing
costs generally will enable one to explain why firms get
larger and smaller. We thus have a theory of moving
equilibrium. The above analysis would also appear to have
clarified the relationship between initiative or enterprise
and management. Initiative means forecasting and operates
through the price mechanism by the making of new contracts.
Management proper merely reacts to price changes, rearrang-
ing the factors of production under its control. That the
business man normally combines both functions is an obvious
result of the marketing costs which were discussed above.
Finally, this analysis enables us to state more exactly what
is meant by the ” marginal product of the entrepreneur.
But an elaboration of this point would take us far from
our comparatively simple task of definition and clarification.

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Article Contents

p. 386

p. 387

p. 388

p. 389

p. 390

p. 391

p. 392

p. 393

p. 394

p. 395

p. 396

p. 397

p. 398

p. 399

p. 400

p. 401

p. 402

p. 403

p. 404

p. 405

Issue Table of Contents

Economica, New Series, Vol. 4, No. 16 (Nov., 1937), pp. 371-488

Front Matter

Technical Improvements, Unemployment and Reduction of Working Hours [pp. 371-385]

The Nature of the Firm [pp. 386-405]

A New Approach to the Methodology of the Social Sciences [pp. 406-424]

Some Aspects of Discrimination by Public Utilities [pp. 425-439]

The Principle of Increasing Risk [pp. 440-447]

Parenthood and Poverty [pp. 448-454]

“Essays in the Theory of Employment” [pp. 455-460]

Book Reviews

Review: untitled [pp. 461-462]

Review: untitled [pp. 462-463]

Review: untitled [pp. 463-465]

Review: untitled [pp. 465-466]

Review: untitled [pp. 466-467]

Review: untitled [pp. 467-468]

Review: untitled [pp. 469-470]

Review: untitled [pp. 470-472]

Review: untitled [pp. 472-476]

Review: untitled [pp. 476-477]

Review: untitled [pp. 477-478]

Review: untitled [pp. 478-479]

Review: untitled [pp. 480-481]

Review: untitled [pp. 482-483]

Recent Important Foreign Books on Economics [p. 484]

Books Received [pp. 485-488]

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Ethnic and Racial Studies

ISSN: 0141-9870 (Print) 1466-4356 (Online) Journal homepage: https://www.tandfonline.com/loi/rers20

When work disappears: new implications for race
and urban poverty in the global economy

William Julius Wilson

To cite this article: William Julius Wilson (1999) When work disappears: new implications for
race and urban poverty in the global economy, Ethnic and Racial Studies, 22:3, 479-499, DOI:
10.1080/014198799329396

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When work disappears: new
implications for race and urban
poverty in the global economy

William Julius Wilson

Abstract

This study highlights some of the main arguments raised in my latest book,
When Work Disappears (1996), and discusses their implications for under-
standing issues related to race and urban poverty in Britain and other Euro-
pean countries. I emphasize that public understanding of these issues has
been hindered by two pernicious effects of racial ideology in America: (1) a
tendency among those on both the left and the right to disassociate the high
inner-city jobless and welfare receipt rates from the impact of changes in the
global economy, and (2) weak support for government programmes to
alleviate economic distress in the inner city. I argue for a vision that acknow-
ledges racially distinct problems and the need for certain race-speci �c reme-
dies, but at the same time emphasizes the importance of transracial solutions
to share problems.

Keywords: Inner city; racism; joblessness; poverty; public policy; labour demand.

Introduction

It was a pleasure to return to the LSE to address an issue that I care
deeply about, the decreased relative demand for low-skilled labour and
its implications for the urban poor and race relations. In drawing out this

We publish below the seventh Annual ERS/LSE Lecture, given by
William Julius Wilson before an invited audience in the Old
Theatre at the London School of Economics and Political Science
on Thursday 25 June 1998. The chair was taken by LSE Director
Anthony Giddens. The event was held in association with the
ESRC Centre for the Analysis of Social Exclusion.

issue, I want, �rst, to highlight some of the main arguments raised in my
latest book, When Work Disappears (1996). Then, secondly, I want to
discuss how to shape the policy debate in United States and Britain so
that the problems of the low-skilled labour force, including the low-
skilled minority labour force, are not isolated from those that stem from
global economic change.

Inner-city jobless poverty

There is a new poverty in American metropolises that has consequences
for a range of issues relating to the quality of life in urban areas, includ-
ing race relations. By the ‘new urban poverty,’ I mean poor, segregated
neighbourhoods in which a majority of individual adults are either unem-
ployed or have dropped out or never been a part of the labour force. This
jobless poverty today stands in sharp contrast to previous periods. In
1950 a substantial portion of the urban black population in the United
States was poor but they were working. Urban poverty was quite exten-
sive but people held jobs. However, as we entered the 1990s most poor
adults were not working in a typical week in the ghetto neighbourhoods
of America’s larger cities. For example, in 1950 a signi�cant majority of
adults held jobs in a typical week in the three neighbourhoods that rep-
resent the historic core of the Black Belt in the city of Chicago – Douglas,
Grand Boulevard and Washington Park – the three neighbourhoods of
Chicago that received the bulk of black migrants from the South in the
early to mid-twentieth century. But by 1990 only four in ten in Douglas
worked in a typical week, one in three in Washington Park, and one in
four in Grand Boulevard. In 1950, 69 per cent of all males aged fourteen
and over who lived in these three neighbourhoods worked in a typical
week, and in 1960, 64 per cent of this group were so employed. However,
by 1990 only 37 per cent of all males aged sixteen and over held jobs in
a typical week in these three neighbourhoods.

The disappearance of work has adversely affected not only individuals
and families, but the social life of neighbourhoods as well. Inner-city job-
lessness in America is a severe problem that is often overlooked or
obscured when the focus is mainly on poverty and its consequences.
Despite increases in the concentration of poverty since 1970, inner cities
in the United States have always featured high levels of poverty, but the
levels of inner-city joblessness reached during the �rst half of the 1990s
was unprecedented.

I should note that when I speak of ‘joblessness’ I am not solely refer-
ring to of�cial unemployment. The unemployment rate, as measured in
the United States, represents only the percentage of workers in the
of�cial labour force, that is, those who are actively looking for work. It
does not include those who are outside or have dropped out of the labour
market, including the nearly six million males aged twenty-�ve to sixty

480 William Julius Wilson

who appeared in the census statistics but were not recorded in the labour
market statistics in 1990 (Thurow 1995).

These uncounted males in the labour market are disproportionately
represented in the inner-city ghettos. Accordingly, in my book, When
Work Disappears (1996), I use a more appropriate measure of jobless-
ness that takes into account both of�cial unemployment and non-labour-
force participation. That measure is the employment-to-population ratio,
which corresponds to the percentage of adults aged sixteen and older
who are working. Using the employment to population ratio we �nd, for
example, that in 1990 only one in three adults aged sixteen and older held
a job in the ghetto poverty areas of Chicago, areas with poverty rates of
at least 40 per cent and that represent roughly 425,000 men, women and
children. And in the ghetto census tracts of the nation’s 100 largest cities
for every ten adults who did not hold a job in a typical week in 1990 there
were only six employed persons (Kasarda 1993).

The consequences of high neighbourhood joblessness are more devas-
tating than those of high neighbourhood poverty. A neighbourhood in
which people are poor, but employed, is very different from a neigh-
bourhood in which people are poor and jobless. In When Work Dis-
appears (1996) I attempt to show that many of today’s problems in
America’s inner-city ghetto neighbourhoods – crime, family dissolution,
welfare, low levels of social organization and so on – are in major
measures related to the disappearance of work.

It should be clear that when I speak of the disappearance of work, I
am referring to the declining involvement in or lack of attachment to the
formal labour market. It could be argued that in the general sense of the
term ‘joblessness’ does not necessarily mean ‘non-work.’ In other words,
to be of�cially unemployed or of�cially outside the labour market does
not mean that one is totally removed from all forms of work activity.
Many people who are of�cially jobless are none the less involved in infor-
mal kinds of work activity, ranging from unpaid housework to work in
the informal or illegal economies that draw income.

Housework is work; baby-sitting is work; even drug dealing is work.
However, what contrasts work in the formal economy with work activity
in the informal and illegal economies is that work in the formal economy
is characterized by, indeed calls for, greater regularity and consistency in
schedules and hours. Work schedules and hours are formalized. The
demands for discipline are greater. It is true that some work activities
outside the formal economy also call for discipline and regular schedules.
Several studies reveal that the social organization of the drug industry in
the United States is driven by discipline and a work ethic, however per-
verse (Bourgois 1995; Venkatesh 1996). However, as a general rule, work
in the informal and illegal economies is far less governed by norms or
expectations that place a premium on discipline and regularity. For all
these reasons, when I speak of the disappearance of work, I mean work

When work disappears 481

in the formal economy, work that provides a framework for daily behav-
iour because of the discipline, regularity and stability that it imposes.

In the absence of regular employment, a person lacks not only a place
in which to work and the receipt of regular income but also a coherent
organization of the present: that is, a system of concrete expectations and
goals. Regular employment provides the anchor for the spatial and tem-
poral aspects of daily life. It determines where you are going to be and
when you are going to be there. In the absence of regular employment,
life, including family life, becomes less coherent. Persistent unemployment
and irregular employment hinder rational planning in daily life, a neces-
sary condition of adaptation to an industrial economy (Bourdieu 1965).

Thus, a youngster who grows up in a family with a steady breadwinner
and in a neighbourh ood in which most of the adults are employed will
tend to develop some of the disciplined habits associated with stable or
steady employment – habits that are re�ected in the behaviour of his or
her parents and of other neighbourhood adults. These might include
attachment to a routine, a recognition of the hierarchy found in most
work situations, a sense of personal ef�cacy attained through the routine
management of �nancial affairs, endorsement of a system of personal
and material rewards associated with dependability and responsibility,
and so on. Accordingly, when this youngster enters the labour market,
he or she has a distinct advantage over the youngsters who grow up in
households without a steady breadwinner and in neighbourhoods that
are not organized around work; in other words, a milieu in which one is
more exposed to the less disciplined habits associated with casual or
infrequent work.

With the sharp recent rise of lone-parent families in the United States,
black children who live in inner-city ghetto households are less likely to
be socialized in a work environment for two main reasons. Their
mothers, saddled with child-care responsibilities, can prevent a slide
deeper into poverty by accepting welfare. Their fathers, removed from
family responsibilities and obligations, are more likely to become idle as
a response to restricted employment opportunities, which further
weakens their in�uence in the household and attenuates their contact
with the family. In short, the social and cultural responses to limiting con-
straints and changing norms are re�ected in the organization of family
life and patterns of family formation; there they have implications for
labour force attachment as well.

Explanations of the growth of inner-city jobless poverty

What accounts for the much higher proportion of jobless adults in
America’s inner cities since the mid-twentieth century? An easy expla-
nation would be racial segregation. However, a race-speci�c argument is
not suf�cient to explain recent changes in such neighbourhoods. After

482 William Julius Wilson

all, the historical black belt neighbourhoods that I have just discussed
were as segregated by skin colour in 1950 as they are today, yet the level
of employment was much higher then. One has to account for the ways
in which racial segregation interacts with other changes in society to
produce the recent escalating rates of neighbourhood joblessness.
Several factors stand out.

The disappearance of work in many inner-city neighbourhoods is in
part related to the nation-wide decline in the fortunes of low-skilled
workers. The sharp decline in the relative demand for unskilled labour
has had a more adverse effect on blacks than on whites in the United
States because a substantially larger proportion of African Americans
are unskilled. Although the number of skilled blacks (including man-
agers, professionals and technicians) has increased sharply in the last
several years, the proportion of those who are unskilled remains large,
because the black population, burdened by cumulative experiences of
racial restrictions, was overwhelmingly unskilled just several decades ago
(Schwartzman 1997).

The factors involved in the decreased relative demand for unskilled
labour include the computer revolution (that is, the spread of new tech-
nologies that displaced low-skilled workers and rewarded the more
highly trained), the rapid growth in college enrolment that increased the
supply and reduced the relative cost of skilled labour, and the growing
internationalization of economic activity, including trade liberalization
policies which reduced the price of imports and raised the output of
export industries (Katz 1996; Krueger 1997; Schwartzman 1997).
Whereas the increased output of export industries aids skilled workers,
simply because skilled workers are heavily represented in export indus-
tries, increasing imports, especially those from developing countries that
compete with labour-intensive industries (for example, apparel, textile,
toy, footwear and some manufacturing industries) hurt unskilled labour
(Schwartzman 1997), and therefore would have signi�cant negative
implications for American black workers. For example, 40 per cent of the
workforce in the apparel industry is African American.

But, inner-city workers in the United States face an additional problem:
the growing suburbanization of jobs. Most ghetto residents cannot afford
an automobile and therefore have to rely on public transit systems that
make the connection between inner-city neighbourhoods and suburban
job locations dif�cult and time consuming. Although studies based on
data collected before 1970 showed no consistent or convincing effects on
black employment as a consequence of this spatial mismatch, the employ-
ment of inner-city blacks relative to suburban blacks has clearly deterio-
rated since then. Recent research, conducted mainly by urban and labour
economists, strongly shows that the decentralization of employment is
continuing and that employment in manufacturing, most of which is
already suburbanized, has decreased in central cities, particularly in the

When work disappears 483

Northeast and Midwest (Holzer 1991; Ihlanfeldt, Keith and Sjoquist 1991;
Zax and Kain 1992; Holzer, Ihlanfeldt and Sjoquist 1994).

As pointed out in When Work Disappears, blacks living in central cities
have less access to employment, as measured by the ratio of jobs to
people and the average travel time to and from work, than do central-
city whites. Moreover, unlike most other groups of workers across the
urban/suburban divide, less educated central-city blacks receive lower
wages than suburban blacks who have similar levels of education. And
the decline in earnings of central-city blacks is related to the decentral-
ization of employment, that is, the movement of jobs from the cities to
the suburbs, in metropolitan areas.

Although the relative importance of the different underlying causes in
the growing jobs problems of the less-skilled, including those in the inner
city, continue to be debated, there is little disagreement about the under-
lying trends. They are unlikely to reverse themselves. In short, over a sus-
tained period the labour market in the United States has twisted against
disadvantage d workers – those with limited skills or education and/or
from poor families and neighbourh oods – and therefore greatly dimin-
ished their actual and potential earnings (Katz 1996).

Changes in the class, racial and demographic composition of inner-city
neighbourhoods have also contributed to the high percentage of jobless
adults in these neighbourhoods. Because of the steady outmigration of
more advantaged families, the proportion of non-poor families and
prime-age working adults has decreased sharply in the typical inner-city
ghetto since 1970 (Wilson 1987). In the face of increasing and prolonged
joblessness, the declining proportion of non-poor families and the overall
depopulation have made it increasingly more dif�cult to sustain basic
neighbourhood institutions or to achieve adequate levels of social
organization. The declining presence of working- and middle-class blacks
has also deprived ghetto neighbourhoods of key resources, including
structural resources, such as residents with income to sustain neighbour-
hood services, and cultural resources, such as conventional role models
for neighbourhood children.

On the basis of our research in Chicago, it appears that what many high
jobless neighbourhoods have in common is a relatively high degree of
social integration (high levels of local neighbouring while being relatively
isolated from contacts in the broader mainstream society) and low levels
of informal social control (feelings that they have little control over their
immediate environment, including the environment’s negative in�uences
on their children). In such areas, not only are children at risk because of
the lack of informal social controls, they are also disadvantaged because
the social interaction among neighbours tends to be con�ned to those
whose skills, styles, orientations and habits are not as conducive to
promoting positive social outcomes (academic success, pro-social behav-
iour, employment in the formal labour market, etc.) as are those in more

484 William Julius Wilson

stable neighbourhoods. Although the close interaction among neigh-
bours in such areas may be useful in devising strategies, disseminating
information and developing styles of behaviour that are helpful in a
ghetto milieu (teaching children to avoid eye-to-eye contact with
strangers and to develop a tough demeanour in the public sphere for self-
protection), they may be less effective in promoting the welfare of chil-
dren in the society at large.

Despite being socially integrated, the residents in Chicago’s ghetto
neighbourhoods share a feeling that they have little informal social
control over the children in their environment. A primary reason is the
absence of a strong organizational capacity or an institutional resource
base that would provide an extra layer of social organization in their
neighbourhoods. It is easier for parents to control the behaviour of the
children in their neighbourhoods when a strong institutional resource
base exists and when the links between community institutions such as
churches, schools, political organizations, businesses and civic clubs are
strong or secure. The higher the density and stability of formal organiz-
ations, the less illicit activities such as drug traf�cking, crime, prosti-
tution, and the formation of gangs can take root in the neighbourh ood.

A weak institutional resource base is what distinguishes high jobless
inner-city neighbourh oods from stable middle-class and working-class
areas. As one resident of a high-jobless neighbourh ood on the South Side
of Chicago put it,

Our children, you know, seems to be more at risk than any other chil-
dren there is, because there’s no library for them to go to. There’s not
a center they can go to, there’s no �eld house that they can go into.
There’s nothing. There’s nothing at all.

Parents in high jobless neighbourhoods have a much more dif�cult task
of controlling the behaviour of their adolescents, of preventing them
from getting involved in activities detrimental to pro-social development.
Given the lack of organizational capacity and a weak institutional base,
some parents choose to protect their children by isolating them from
activities in the neighbourh ood, including the avoidance of contact and
interaction with neighbourhood families. Wherever possible, and often
with great dif�culty when one considers the problems of transportation
and limited �nancial resources, they attempt to establish contacts and
cultivate relations with individuals, families and institutions outside the
neighbourhood, such as church groups, schools and community recre-
ation programmes.

It is just as indefensible to treat inner-city residents as super heroes
who overcome racist oppression as it is to view them as helpless victims.
We should, however, appreciate the range of choices, including choices
representing cultural in�uences, that are available to inner-city residents

When work disappears 485

who live under constraints that most people in the larger society do not
experience.

In the eyes of employers in metropolitan Chicago, the social conditions
in the ghetto render inner-city blacks less desirable as workers, and there-
fore many are reluctant to hire them. One of the three studies that pro-
vided the empirical foundation for When Work Disappears included a
representative sample of employers in the greater Chicago area who pro-
vided entry-level jobs. An overwhelming majority of these employers,
both white and black, expressed negative views about inner-city ghetto
workers, and many stated that they were reluctant to hire them. For
example, a president of an inner-city manufacturing �rm expressed a
concern about employing residents from certain inner-city neighbour-
hoods: ‘If somebody gave me their address, uh, Cabrini Green I might
unavoidably have some concerns’.

Interviewer: What would your concerns be?

Respondent: That the poor guy probably would be frequently unable to
get to work and . . . I probably would watch him more carefully even if
it wasn’t fair, than I would with somebody else. I know what I should
do though is recognize that here’s a guy that is trying to get out of his
situation and probably will work harder than somebody else who’s
already out of there and he might be the best one around here. But I,
I think I would have to struggle accepting that premise at the beginning.

In addition to qualms about the neighbourhood milieu of inner-city
residents, the employers frequently mentioned concerns about appli-
cants’ language skills and educational training. An employer from a com-
puter software �rm in Chicago expressed the view

that in many businesses the ability to meet the public is paramount and
you do not talk street talk to the buying public. Almost all your black
welfare people talk street talk. And who’s going to sit them down and
change their speech patterns?

A Chicago real estate broker made a similar point:

A lot of times I will interview applicants who are black, who are sort of
lower class. . . . They’ll come to me and I cannot hire them because their
language skills are so poor. Their speaking voice for one thing is poor
. . . they have no verbal facility with the language . . . and these . . . you
know, they just don’t know how to speak and they’ll say “salesmens”
instead of “salesmen” and that’s a problem. . . . They don’t know punc-
tuation, they don’t know how to use correct grammar, and they cannot
spell. And I can’t hire them. And I feel bad about that and I think
they’re being very disadvantaged by the Chicago Public School system.

486 William Julius Wilson

Another respondent defended his method of screening out most job
applicants on the telephone on the basis of their use of ‘grammar and
English’.

I have every right to say that that’s a requirement for this job. I don’t
care if you’re pink, black, green, yellow or orange, I demand someone
who speaks well. You want to tell me that I’m a bigot, �ne, call me a
bigot. I know blacks, you don’t even know they’re black. So do you.

Finally, an inner-city banker claimed that many blacks in the ghetto
‘simply cannot read. When you’re talking our type of business, that dis-
quali�es them immediately, we don’t have a job here that doesn’t require
that somebody have minimum reading and writing skills’.

How should we interpret the negative attitudes and actions of employ-
ers? To what extent do they represent an aversion to blacks per se and to
what degree do they re�ect judgements based on the job-related skills
and training of inner-city blacks in a changing labour market? I should
point out that the statements made by the African-American employers
concerning the quali�cations of inner-city black workers do not differ sig-
ni�cantly from those of the white employers. Whereas 74 per cent of all
the white employers who responded to the open-ended questions
expressed negative views of the job-related traits of inner-city blacks, 80
per cent of the black employers did so as well.

This raises a question about the meaning and signi�cance of race in
certain situations; in other words, how race intersects with other factors.
A key hypothesis in this connection is that given the recent shifts in the
economy, employers are looking for workers with a broad range of abili-
ties: ‘hard’ skills (literacy, numeracy, basic mechanical ability, and other
testable attributes) and ‘soft’ skills (personalities suitable to the work
environment, good grooming, group-oriented work behaviours, etc.).
While hard skills are the product of education and training – bene�ts that
are apparently in short supply in inner-city schools – soft skills are
strongly tied to culture, and are therefore shaped by the harsh environ-
ment of the inner-city ghetto. For example, our research revealed that
many parents in the inner-city ghetto neighbourhoods of Chicago warned
their children not to make eye to eye contact with strangers and to
develop a tough demeanour when interacting with people on the streets.
While such behaviours are helpful for survival in the ghetto they hinder
successful interaction in mainstream society.

If employers are indeed reacting to the difference in skills between
white and black applicants, it becomes increasingly dif�cult to discuss the
motives of employers: are they rejecting inner-city black applicants out
of overt racial discrimination or on the basis of quali�cations?

None the less, many of the selective recruitment practices do repre-
sent what economists call statistical discrimination: employers make

When work disappears 487

assumptions about the inner-city black workers in general and reach
decisions based on those assumptions before they have had a chance to
review systematically the quali�cations of an individual applicant. The
net effect is that many black inner-city applicants are never given the
chance to prove their quali�cations on an individual level because they
are systematically screened out by the selective recruitment process.

Statistical discrimination, although representing elements of class bias
against poor workers in the inner city, is clearly a matter of race. The
selective recruitment patterns effectively screen out far more black
workers from the inner city than Hispanic or white workers from the
same types of backgrounds. But race is also a factor, even in those
decisions to deny employment to inner-city black workers on the basis of
objective and thorough evaluations of their quali�cations. The hard and
soft skills among inner-city blacks that do not match the current needs of
the labour market are products of racially segregated communities, com-
munities that have historically featured widespread social constraints and
restricted opportunities.

Thus, the job prospects of inner-city workers have diminished not only
because of the decreasing relative demand for low-skilled labour in the
United States economy, the suburbanization of jobs, and the social
deterioration of ghetto neighbourhoods, but also because of negative
employer attitudes.

Public policy challenges

The foregoing analysis suggests that the passage of the recent welfare
reform bill in the United States, which did not include a programme of
job creation, could have very negative social consequences in the inner
city. Unless something is done to enhance the employment opportunities
of inner-city welfare recipients who reach the time limit for the receipt
of welfare, if the economy slows down they will �ood a pool that is
already �lled with low-skilled jobless workers.

New research into urban labour markets by the economist Harry
Holzer (1996) of Michigan State University reveals the magnitude of the
problem. Surveying 3,000 employers in Atlanta, Boston, Detroit and
Los Angeles, Holzer found that only 5 to 10 per cent of the jobs in
central-city areas for workers who are non-college graduate require very
few work credentials or cognitive skills. This means that most inner-city
workers today not only need to have the basic skills of reading, writing,
and performing arithmetic calculations, but need to know how to
operate a computer as well. Also, most employers require a high school
degree, particular kinds of previous work experience, and job refer-
ences. Because of the large oversupply of low-skilled workers relative
to the number of low-skilled jobs, many low-educated and poorly
trained individuals have dif�culty �nding jobs even when the local

488 William Julius Wilson

labour market is strong (Center on Budget and Policy Priorities 1996;
Holzer 1996).

The problem is that in recent years tight labour markets have been of
relatively short duration, frequently followed by a recession which either
wiped out previous gains for many workers or did not allow others to
recover fully from a previous period of economic stagnation. It would
take sustained tight labour markets over many years to draw back those
discouraged inner-city workers who have dropped out of the labour
market altogether, some for very long periods of time.

The United States is now in one of the longest economic recoveries in
the last half century, a recovery that has lasted almost eight years and
generated more than fourteen million net new jobs and the lowest of�cial
unemployment rate in twenty-four years. This sustained recovery is
beginning to have some positive effect on the hard-core unemployed.
The ranks of those out of work for more than six months declined by
almost 150,000 over a two-month period in early 1997. And, as reported
in early 1998, since 1992 the unemployment rate for high school dropouts
declined by �ve points from 12 to 7 per cent and two-�fths of this decline
has come in the last year (Nasar 1998).

How long this current period of economic recovery will continue is
anybody’s guess. Some economists think that it will last for at least
several more years. If it does it will be the best antidote for low-skilled
workers whose employment and earning prospects have diminished in
the late twentieth century. For example, in America’s inner cities the
extension of the economic recovery for several more years will signi�-
cantly lower the overall jobless rate not only for the low-skilled workers
who are still in the labour force but also for those who have been outside
the labour market for many years. It will, in addition, enhance the job
prospects for many of the welfare recipients who reach the time limit for
the receipt of welfare.

But, given the decreased relative demand for low-skilled labour, what
will happen to all these groups if the economy slows down. Considering
the changing nature of the economy, there is little reason to assume that
their prospects will be anything but bleak. Why? Simply because the
economic trend that has twisted against low-skilled workers is unlikely
to reverse itself, thereby diminishing in the long term their job prospects
and earnings.

The growing problems facing low-skilled workers are not unique to the
United States. With changes in technology and the globalization of the
economy, knowledge-based industries are growing more rapidly than
other industries in the economies of Western nations. While many edu-
cated workers bene�t from these changes, the demand for low-skilled
workers has plummeted to the lowest depths in human history.

As I have pointed out, in the United States the decreased demand
for low-skilled labour has elevated jobless rates in the inner cities.

When work disappears 489

Furthermore, in both the United States and Britain it has resulted in
growing wage differentials between the economic haves and have-nots .
Outside of Britain, in most of continental Europe, wage inequality has
grown more slowly because of powerful trade unions and a thicker social
safety net, but the decreased demand for low-skilled labour has shown
up in higher levels of unemployment.

The decline in the relative demand for low-skilled labour has had a
more adverse effect on minorities (including immigrant minorities in
Europe) because a substantially larger proportion of them are unskilled.
As their jobless rates and related social dislocations rise, will the policy
discussions to address the jobs problems focus on matters pertaining to
race instead of those involving class? A brief look at recent developments
in the United States may suggest an answer.

Addressing jobless poverty in the face of the new racism

National and international economic transformations have placed new
stresses on families and communities in the United States, stresses that
are hardly con�ned to blacks. Along with African Americans, large seg-
ments of the white, Latino, Asian and Native American populations have
also been plagued by economic insecurities, family break-ups, and com-
munity stresses. Such conditions are breeding grounds for racial and
ethnic tensions.

In this social climate, some conservatives in the United States have
attempted to unite white Americans around anger at the government and
racial minorities. Their political messages seem plausible to many white
taxpayers, who see themselves as being forced to pay for programmes,
such as welfare for the jobless poor, that are perceived as bene�ting pri-
marily racial minorities. Why have such messages resonated with many
in the white population during the 1990s, especially the �rst half of the
1990s?

The typical liberal response to this question is that these messages are
effective because they trigger underlying feelings of American racism.
Accordingly, many American liberals are pessimistic about public policy
initiatives to address the inner-city jobs problem. Racism – a term fre-
quently used, but lacking precision, in discussions of the conditions of
racial minorities in the United States, especially the conditions of African
Americans – should be understood as an ideology of racial domination.
This ideology features two things: (1) beliefs that a designated racial
group is either biologically or culturally inferior to the dominant group,
and (2) the use of such beliefs to rationalize or prescribe the racial
group’s treatment in society, as well as to explain its social position and
accomplishments.1

Feelings about the treatment of a particular racial group can range
from the most extreme view that it should be denied the same rights and

490 William Julius Wilson

privileges available to the dominant group, to the milder view that the
society should make no special efforts to help the group overcome its dis-
advantages. Regardless of how closely the view represents the extreme
or the milder position on how a racial group should be treated, it is racist
only if it is justi�ed by beliefs that the racial group is biologically or cul-
turally inferior. Accordingly, I identify two types of racism – biological
racism and cultural racism. The use of the belief system in these two types
of racism may vary depending upon the treatment that is prescribed for
the racial group.

In the United States there is no question that the more categorical
forms of racist ideology – that is, those that represent biological racism –
have declined signi�cantly (Bobo, Kluegel and Smith 1997). Unlike in
the Jim Crow segregation era from the late 1890s to shortly before mid-
twentieth century, hardly anyone today is willing to endorse categorical
beliefs in the biological inferiority of African Americans (Bobo, Kluegel
and Smith 1997), including beliefs that blacks should be denied equal
rights and privileges because they are biologically inferior or that the
relative performance and social position of blacks in the United States
can be explained in terms of biological capabilities. Racial ideology still
prevails, however. In recent years, the General Social Survey, conducted
by the National Opinion Research Center of the University of Chicago,
changed the questionnaire format it had been using since 1940 to gauge
racial stereotypes. In rating blacks, respondents were no longer asked to
agree or disagree with ‘blunt categorical assertions’, but, instead, were
requested to rate blacks, whites, Hispanics and Asians using bipolar trait
rating scales (Bobo, Kluegel and Smith 1997, p. 30). Thus, African
Americans were compared with the other racial groups in terms of the
work ethic, preference for welfare and degree of intelligence.

These relative, as opposed to categorical, judgements reveal that

blacks are rated as less intelligent, more violence prone, lazier, less
patriotic, and more likely to prefer living off welfare than whites. Not
only are whites rated more favorably than blacks, but on four of the
�ve traits examined (except patriotism), many whites rated the
majority of blacks as possessing negative qualities and the majority of
whites as possessing positive qualities (Bobo and Kluegel 1997, p. 118).

None the less, despite these negative stereotypes, over the past � fty
years, there has been a steep decline in white support for racial segrega-
tion and discrimination. For example, although in 1942 only 42 per cent
of white Americans supported integrated schooling, by 1993 that �gure
had skyrocketed to 95 per cent. Public opinion polls reveal similar pat-
terns of change during the last �ve decades in white support for the inte-
gration of public accommodations and mass transportation and the
principle of integrated residential areas (Bobo and Smith 1994).

When work disappears 491

However, the virtual disappearance of Jim Crow attitudes in support
of racial segregation has not resulted in strong backing for government
programmes to aggressively combat discrimination, increase inte-
gration, enrol blacks in institutions of higher learning, or enlarge the
proportion of blacks in higher-level occupations. Indeed, as evidenced
in the public opinion polls, whites overwhelmingly object to govern-
ment assistance targeted at blacks. For example, ‘Support for the prin-
ciple of equal access to jobs stood at 97 percent in 1972 [the last time
this particular question was asked]. Support for federal efforts to
prevent job discrimination, however, had only reached 39 per cent’
(Bobo, Kluegel and Smith 1997, p. 25). Whereas eight of every ten
African Americans now believe that the government is not spending
enough to assist blacks today, only slightly more than one-third of white
Americans feel this way. The idea that the federal government ‘has a
special obligation to help improve the living standard of blacks’ because
they ‘have been discriminated against so long’ was supported by only
one in five whites in 1991 and has never exceeded more than one in four
since 1975. And the lack of white support for this idea is unrelated to
background factors such as age and education level (Bobo and Kluegel
1993).

How much of this opposition to government programmes can be
attributed to stereotypes about black cultural traits? In other words, how
much of the opposition represents the milder form of cultural racism, the
form of racial ideology that Lawrence Bobo and his colleagues have
referred to as ‘laissez-faire’ racism (Bobo, Kluegel and Smith 1997; Bobo
and Kluegel 1997)? In this connection, James Kluegel’s study of trends
in whites’ explanations of the black-white economic gap revealed that
throughout the period of 1977 to 1989, the most frequently stated reason
for the economic gap between blacks and whites was the lack of moti-
vation on the part of African Americans (Kluegel 1990). In other words,
African Americans were blamed for their own poorer economic position.
This prevalent denial of social responsibility and the high level of nega-
tive stereotyping in the recent General Social Surveys suggests ‘that for
many White Americans, blacks are viewed as undeserving of special
treatment from government’ (Bobo and Kluegel 1997, p. 119; also see
Kluegel and Smith 1983; Kluegel 1990).

Conservative supporters of welfare reform implicitly communicated
this message in their explanations of the high jobless and public assist-
ance rates in the inner city and in their opposition to af�rmative action
programmes. Thus, when American conservatives try to account for the
high welfare rates of the jobless inner-city poor they maintain that it
re�ects the shortcomings of individuals, including their lack of work
ethic. There is little or no appreciation for the harmful behavioural
effects that emerge when lack of job opportunities results in persistent
joblessness. This is not a problem unique to inner-city blacks.

492 William Julius Wilson

One of the earliest studies to examine the effects of persistent unem-
ployment was conducted over �fty years ago by Marie Jahoda, Paul F.
Lazarsfeld and Hans Zeisel in Marienthal, a small industrial community
in Austria ‘at the time of a depression that was much worse than any-
thing the United States went through’. During the period of the
research, the entire community of Marienthal was unemployed. ‘One of
the main theses of the Marienthal study was that prolonged unemploy-
ment leads to a state of apathy in which the victims do not utilize any
longer even the few opportunities left to them’ (Jahoda, Lazerfeld and
Zeisel 1972, p. vii).

Before this economic depression, when people in the community were
working, political organizations were active. People of the town read a
lot, ‘entered eagerly into discussions, and enjoyed organizing a variety of
events’. The factory was at the centre of this lively community. It ‘was
not simply a place of work. It was the center of social life’ (Jahoda, Lazer-
feld and Zeisel 1972, p. vii). All this disappeared when the factory shut
down. Describing the situation during their �eld research in 1930, the
authors stated:

Cut off from their work and deprived of contact with the outside world,
the workers of Marienthal have lost the material and moral incentives
to make use of their time. Now that they are no longer under any pres-
sure, they undertake nothing new and drift gradually out of an ordered
existence into one that is undisciplined and empty. Looking back over
any period of this free time, they are unable to recall anything worth
mentioning.

For hours on end, the men stand around in the street alone or in small
groups, leaning against the wall of a house or the parapet of the bridge.
When a vehicle drives through the village they turn their heads slightly;
several of them smoke pipes. They carry on leisurely conversations for
which they have unlimited time. Nothing is urgent anymore; they have
forgotten how to hurry (Jahoda, Lazerfeld and Zeisel 1972, p. 66).

The idleness and lack of discipline due to persistent joblessness in
Marienthal is not unlike the idleness and undisciplined behaviour associ-
ated with persistent joblessness in today’s inner-city neighbourhoods.
But these are not issues that cultural racists highlight when they argue
against government programmes to aid the jobless poor.

However, I maintain that it would be a mistake to focus on this new
form of racial ideology, however widely endorsed, when discussing the
willingness of Americans to address the jobs problem in the inner city.
Why? Simply because we need to consider, for social policy purposes, the
extent to which situational economic and political factors mediate the
effects of racial ideology. Allow me to elaborate.

When work disappears 493

How the situational context in�uences public policy discussions of
jobless poverty

The degree of support for social policies to address racial inequality is in
no small measure related to feelings of economic anxiety. Take the situ-
ation in the United States from 1990 to 1995, the period in which the
country was staggering from the effects of the 1990–92 recession. The
decline of real wages (that is, wages adjusted for in�ation) that had begun
in early 1973 continued uninterrupted during the �rst half of the 1990s.
Working-class Americans felt economically pinched, barely able to main-
tain current standards of living even on two incomes. Ten million workers
held two or more jobs in 1995, a �gure that had increased 70 per cent
since 1980. Indeed, in six million households two adults hold four jobs to
make ends meet. By 1995 the time on the job for the average worker has
increased 163 hours a year since 1980, or roughly an extra month a year.
(Schor 1992). Work time had risen for the great majority of employed
Americans – not only Wall Street lawyers, but hospital orderlies and
assembly-line workers as well (Hewlett and West 1998).

Many were insecure about keeping their jobs. For example, a 1994
nationwide poll revealed that 40 per cent of the workers in America
worried that they might be laid off or have their wages reduced. Many
feared that they would never be able to afford to send their children to
college. Many believed that for all their hard work, their children’s lives
would be worse than theirs. For example, a 1995 Harris poll, conducted
for Business Week, revealed that only half of all parents expected their
children to have a better life than theirs; nearly seven out of ten believed
that the American dream has been more dif�cult to achieve during the
past ten years; and three quarters felt that the dream would be even
harder to achieve during the next ten years (cited in Bronfenbrenner et
al. 1996).

This economic anxiety evident during the �rst half of the 1990s lingers
on during the current more robust economic period, albeit in a reduced
form, and perhaps explains why there has been so much worker restraint
during the mid- to late-1990s in the face of a prolonged economic
recovery. As I indicated previously, since 1993 the US economy has
added roughly fourteen million jobs and the unemployment rate has
declined to 4.3 per cent, the lowest in thirty years. Yet, prices have not
increased very much because wages, the main element of costs, have not
increased much either.

Despite high levels of employment and labour shortages in some areas,
workers have been surprisingly hesitant to demand higher wages. Few
would have predicted that kind of behaviour in such a favourable job
market. As the M.I.T. economist Paul Krugman recently pointed out
‘apparently the recession and initially jobless recovery left a deep mark
on the national psyche’ (1997, p. 21). Workers’ con�dence has been

494 William Julius Wilson

shaken by downsizing and the spectre, real or imagined, that many of
their jobs can be done for a fraction of their salaries by workers in Third
World countries (Krugman 1997).

In a recent survey of a random sample of the American public, 68 per
cent of the respondents overall and 72 per cent of the non-college gradu-
ates expressed concern about the sending of jobs overseas by American
companies. Commenting on this �nding, the Princeton economist Alan
Krueger states, ‘The fact that the public is so scared of globalization may
mean that wage demands have been moderated as a result’ (Krueger
1997, p. 7).

Workers in the United States feel that they cannot rely on weak unions
to bargain effectively for higher wages, and if they lose their jobs they
feel compelled to take other employment soon on whatever terms they
can get. Krugman states:

With such a nervous and timid workforce, the economy can gallop along
for a while without setting in motion a wage/price spiral. And so we are
left with a paradox: we have more or less full employment only because
individual workers do not feel secure in their jobs. . . . The secret of our
success is not productivity, but anxiety (Krugman 1997, p. 22).

Unfortunately, during periods when people are beset with economic
anxiety, they become more receptive to simplistic ideological messages
that de�ect attention away from the real and complex sources of their
problems, and it is vitally important that political leaders channel citi-
zens’ frustrations in more positive or constructive directions.

During the �rst half of the 1990s, a period of heightened economic
anxiety, just the opposite frequently occurred. The poisonous rhetoric of
certain highly visible spokespersons increased ethnic tensions and chan-
nelled frustrations in ways that divide groups in America. Instead of as-
sociating citizens’ problems with economic and political changes, these
divisive messages encouraged them to turn on each other: race against
race, citizens against immigrants, ethnic group against ethnic group.

We must understand that ethnic and racial antagonisms are products
of situations – economic situations, political situations and social situ-
ations. Average citizens do not fully understand these complex forces.
They are looking for answers as they cope with their own anxieties.
Unfortunately, the most powerful and persuasive answers recently, as far
as the general public is concerned, have come not from progressives who
are more likely to associate the problems of these citizens with the
complex changes of the late twentieth century. Rather, they have come
from conservative spokespersons with effective sound-bite messages that
de�ect attention from the real sources of our problems, including mes-
sages that blame inner-city residents themselves for their high jobless and
welfare rates.

When work disappears 495

These messages rang loud and clear in 1994 and 1995, especially in the
months leading up to and following the Congressional election of 1994,
when conservative Republicans gained control of the United States’ Con-
gress. However, in the last two years the frequency and intensity of these
messages have noticeably decreased. I think that we can thank continued
improvement in the economy for that. People are still economically
anxious and are still worried about their future, but public opinion polls
reveal they are more satis�ed with the state affairs today than they were
in 1994 when the Republicans took over the United States Congress and
in 1995 when conservative political leaders perceived that their messages
about the adverse effects of welfare, immigration, and af�rmative action
programmes would resonate with the general population. Is it now time
for progressives to build on this shift in the public’s mood? I think so.

I am convinced that despite the new form of cultural racism, we can
create a climate in the United States that could lead to a constructive dia-
logue on how problems associated with the disappearance of work among
certain segments of our population can be addressed. It is important to
appreciate, �rst of all, that the poor and the working classes of all racial
and ethnic groups struggle to make ends meet, and that even the middle
class has experienced a decline in its living standard. These groups make
up about 80 per cent of the American population. And unlike the top 20
per cent, they are struggling. Indeed, despite improvements in the
economy, these Americans, representing different racial and ethnic
groups, continue to worry about unemployment and job security, declin-
ing real wages, escalating medical and housing costs, the availability of
affordable child care programmes, the sharp decline in the quality of
public education, and crime and drug traf�cking in their neighbourhoods.

Despite being of�cially race-neutral, programmes created in response
to these concerns – programmes that increase employment opportunities
and job skills training, improve public education, promote better child
and health care, and reduce neighbourhood crime and drug abuse –
would disproportionately bene�t the inner-city jobless poor, but they
would also bene�t large segments of the remaining population, including
the white population as well.

United States national opinion poll results suggest the possibility of a
new alignment in support of a comprehensive social rights initiative that
would include such programmes. If such an alignment is attempted,
perhaps it ought to feature a new public rhetoric that would do two
things: (1) focus on problems that af�ict not only the jobless poor but the
working and middle classes as well, and (2) emphasize integrative pro-
grammes that would promote the social and economic improvement of
all groups in society in need of help, not just the truly disadvantage d
jobless segments of the population.

Groups ranging from the inner-city poor to working- and middle-class
Americans who are struggling to make ends meet will have to be

496 William Julius Wilson

effectively mobilized in order to change the current course taken by
policy-makers. There is a growing awareness in America that perhaps the
best way to accomplish this is through coalition politics.

Because an effective political coalition in part depends upon how the
issues to be addressed are de�ned, I want to repeat that it is imperative
that the political message underscore the need for economic and social
reform that bene�ts all groups in need of help, not just America’s minor-
ity poor. The framers of this message should be cognizant of the fact that
changes in the global economy have increased social inequality and
created situations which had enhanced antagonisms between different
racial and ethnic groups, and that these groups, although often seen as
adversaries, are potential allies in a reform coalition because they suffer
from a common problem: economic distress caused by forces outside
their own control.

If inner-city blacks are experiencing the greatest problems of jobless-
ness in the United States, it is a more extreme form of economic mar-
ginality that has affected most low-skilled workers in America since 1980.
Unfortunately, there is a tendency among policy-makers, black leaders
and scholars alike to separate the economic problems of the ghetto from
the national and international trends affecting American families and
neighbourhoods. If the economic problems of the ghetto are de�ned
solely in racial terms they can be isolated and viewed as only requiring
race-based solutions as proposed by those on the left, or narrow politi-
cal solutions with subtle racial connotations, such as welfare reform, as
strongly proposed by those on the right.

Race continues to be a factor that aggravates inner-city black employ-
ment problems. But the tendency to overemphasize the racial factors
obscures other more fundamental forces that have sharply increased
inner-city black joblessness. As the late black economist Vivian Hender-
son put it several years ago ‘it is as if racism having put blacks in their
economic place step aside to watch changes in the economy destroy that
place’ (Henderson 1975, p. 54). To repeat, the concentrated joblessness
of the inner-city poor represents the most dramatic form of the growing
economic dislocations affecting many Americans that stem in large
measure from changes in the organization of the economy, including the
global economy.

Conclusion

I end with this point. My re�ections on the scene in America lead me to
the conclusion that as Britain and other nations in Europe confront the
problems of urban poverty and joblessness in the global economy, they
ought to appreciate that discussions emphasizing common solutions to
commonly shared problems promote a sense of unity, regardless of the
different degrees of severity in the problems af� icting different groups.

When work disappears 497

Such messages bring ethnic and racial together, not apart, and are especi-
ally important during periods of ethnic and racial tension.

Because the problems of the new social inequality (the gap between
the expanding have-nots and the haves) are growing more severe, a
vision of that acknowledges racially distinct problems and the need for
remedies like af�rmative action to address the underrepresentation of
minorities in valued positions, but at the same time emphasizes the
importance of transracial solutions to shared problems, is more impor-
tant now than ever. Such a vision should be developed, shared and pro-
moted by all progressive leaders, but especially by political leaders.

A new democratic vision must reject the commonly held view that race
or ethnicity is so divisive that groups from different nations and ethnic
backgrounds cannot work together in a common cause. Those articulat-
ing the new vision must realize that if a political message is tailored to a
white audience, racial minorities draw back, just as whites draw back
when a message is tailored to minority audiences. The challenge is to �nd
issues and programmes that concern the families of all racial and ethnic
groups, so that individuals in these groups can honestly perceive their
mutual interests and join in a multi-ethnic coalition to move a country
forward.

Note

1. This de�nition of racism is a modi�ed version of an earlier de�nition in Wilson
(1973).

References

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the Next, New York: The Free Press
CENTER AND BUDGET AND POLICY PRIORITIES 1996 ‘The Administration’s $3
Billion Jobs Proposal’, Washington DC

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WILLIAM JULIUS WILSON is Lewis P. and Linda L. Geyser Uni-
versity Professor at Harvard University.
ADDRESS: John F. Kennedy School of Government, Harvard Uni-
versity, Cambridge, MA 02138, USA.

When work disappears 499

Format: Black font; 12-point font; double-spaced. Place your full name at
the top of the first page or on a cover sheet.

Each answer should be approximately 200-300 words. The entire midterm
should be 800-1200 words.

For help understanding what I mean by “meaning and significance,” see
the slide on this subject that I have shown in class and posted on the
course website in the same module that contains the syllabus.

Each answer should include:

1.Reference (of course) to the author most associated with concept
or term;

2.At least one reference, with a citation, to another assigned author,
for the purpose of contrast and/or comparison

3.Total of three to five correct citations to the relevant assigned
reading(s), with specific page numbers; citations can be appended to
quotations or paraphrasing;

Citations, Reference List Forma

1.Use the author-date system, with page numbers, as described here
on this webpage:
https://research.wou.edu/c.php?g=551307&p=3784519

2.Include a reference list at the end of the midterm, using the same
model linked above.

https://research.wou.edu/c.php?g=551307&p=3784519

Questions

1. Explain the meaning and significance of “fictitious
commodity.”

2. Explain the meaning and significance of “noxious
markets.”

Notes :

– Satz-Some-Things-Intro-Noxious-Markets
– Hayek-Market-Order-or-Catallaxy

3. Explain the meaning and significance of the “firm.”

Notes:

– Coase-Nature-Firm

4. Explain the meaning and significance of “spatial
mismatch”

Notes:
https://www.epi.org/blog/corporate-profits-have-contributed-disproportionately-to-i
nflation-how-should-policymakers-respond/

https://www.latimes.com/california/story/2022-10-19/los-angeles-history-overcrow
ding-united-states

BOOK:
https://www.gutenberg.org/files/3300/3300-h/3300-h.htm

Corporate profits have contributed disproportionately to inflation. How should policymakers respond?

https://www.latimes.com/california/story/2022-10-19/los-angeles-history-overcrowding-united-states

https://www.gutenberg.org/files/3300/3300-h/3300-h.htm

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