Classical Economists and the Corporation

Abstract

The purpose of this article is to explain why economists have neglected the corporation in their theorising. Adam Smith is the founder of mainstream economic theory. In Smith's eighteenth‐century world most things were produced by individuals or by family firms. Smith naturally took the individual entrepreneur as his theoretical unit of analysis, and Smith's theory was at least adequate for the times. But even though the economies of the English‐speaking world have evolved beyond the free enterprise of competing individual capitalists to the current system of corporate capitalism, economic theory has remained much the same. While the American economy is now composed mainly of huge corporate units of production, mainstream economic theory is still referring to “individual” producers. Other social sciences focus a great deal of attention on organisational and individual behaviour within the corporate form of organising economic activity. The work of sociologist Rosabeth Moss Kanter and of psychologist Michael Maccoby are excellent recent examples. Yet economics, at least the mainstream of the discipline, focuses upon the behaviour of individual entrepreneurs rather than corporate managers. In short, orthodox economic theory lacks a serious treatment of the corporation.

Citation

Dugger, W.M. (1983), "Classical Economists and the Corporation", International Journal of Social Economics, Vol. 10 No. 2, pp. 22-31. https://doi.org/10.1108/eb013931