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This type of concern ran into difficulties in the 70s,
superficially because of what it produced - steel, motor cars-
but probably also because of its internal organisation.
It provIS^unsiiilble for innovation, for R&D work? the
research staff tended to leave the big concerns and
go to smaller establishments where they found a more suitable
working climate. In the smaller high tec indsjutries there
arose a new type of manager, inimical to hierarchies,
to mass organisation, to trade unions, government and
i 1 •'
all kinds of bigness. The importance of the changes
can bejdocumented by reference to the well known fact
that the big concerns in many cases try to reorganise
by dcentralsjlation; the aim is to give the managers of sub-units
as far as possible an independent position ressembling
that of an entrepreneur.
What has to interest us especially in the context of stagnation
is,however, a very peculiar shift of interest in industry.
Many of the big concern^have shifted their interest from
production to finance, real estate and speculation.
Instead of investing in machines they invest in bonds^-
or in real estate. They speculate in foreign exchange.
And from time to time, they engage in take-overs, they raid
other firms, hoping to gain by aquiring assets which fetch more
than the price they paid for the share of the company taken over.
The price of the shares is bid up by the raider, it is paid
by bank credits or by the sale of "junk bonds", bonds which
are not tradecj/on the exchange and which carry a very high yield.
The effect of the merger is that the share capital is replaced
by debt. This is reinforced by the strategy of those concerns
who try to protect themselves against the threat of a raid: