Big business and community welfare : Revisiting a classic study by C. Wright Mills and Melville Ulmer

I Introduction IN THE DECADES AFTER WORLD WAR II, American social scientists consistently demonstrated in their research and writing that larger-scale, capital-intensive, industrial enterprises were not only "good" for the economic health of the country as a whole (Galbraith 1967; Kerr 1960), but also enhanced the social and economic well-being of workers, families, and communities (Averitt 1968; Falk and Lobao 2003; Hodson 1983; Lobao 1990). A conceptual framework to explain the positive effects of large firms on individuals and communities was provided by labor market segmentation theorists (Doeringer and Piore 1971; Beck, Horan, and Tolbert 1978), who showed that the lowest paid, least desirable jobs were most often found in smaller, labor-intensive, peripheral firms. In contrast, firms within the core, because they are, by definition, larger, more productive, more capital intensive, and associated with national or multinational corporations, have been able to pay their workers higher wages than firms on the periphery. Falk and Lyson (1989), Lobao (1990), and others revealed that localities in which the economy is dominated by core sector enterprises had higher levels of welfare than communities affiliated with the secondary labor market or the periphery. The current restructuring of the American economy toward increased global integration is premised on the assumption that core firms (i.e., large national and multinational corporations) will be the primary engines of change and development (Barber 1995; McMichael 2004). According to this perspective, over the long run, rising productivity should translate into higher wages and presumably more prosperous communities (Thurow 1996), even though over the short run some workers and communities may fare less well than others. In a system tending toward global accumulation and regulation, the nation-state's role in directing economic development and in protecting the welfare of workers and communities has been weakened (Leana 1992; McMichael 1996). In the United States, for example, the deindustrialization of large segments of the manufacturing economy in the 1970s and 1980s showed that the state did little to prevent large, core sector, multinational corporations from succumbing to competition from lower-cost competitors in other parts of the world (Bluestone and Harrison 1982; Cowie and Heatchcott 2003). The lessons for local communities were clear. As Tolbert et al. (1998: 402-403) note: History suggests that large corporations rarely, if ever, make good neighbors. From the coal mining communities of Appalachia (Caudill 1962), ... to the automobile and steel cities of the Midwest (Bluestone and Harrison 1982), and even to the so-called "high-tech" enclaves in the Northeast (U.S. Congress 1995), the story has been the same. The social and economic fate of the community is integrally tied to the competitive position of the corporation in the global economy. Over the long term, the vitality of all globally oriented industries and the communities that are dependent on them will be challenged. Since at least the early 1980s, the task of sheltering workers and communities from the disruptions of the marketplace has increasingly devolved from the nation-state to local communities (Grant 1995; Mander and Goldsmith 1996; Warner and Gerbasi 2004). This devolution has sparked a reexamination of the "bigger is better" model as the favored blueprint for economic development. A small but growing body of scholarship has focused attention on smaller firms, regional trade associations, industrial districts, and local entrepreneurs as potentially important, though often neglected, agents of development. Piore and Sabel (1984) set forth a set of precepts by which advanced industrial societies organized around smaller-scale, flexibly organized, municipally supported production enterprises can contribute to both economic growth and individual and community welfare (see also Perrow 1993; Bagnasco and Sabel 1995; Pyke and Segenberger 1992). …