GETTING TO CATASTROPHE: CONCENTRATIONS, COMPLEXITY AND COUPLING,
The Montréal Review, Charles Perrow, Dec. 2012.
' . . . Eight years later I published a book on a totally different topic: the 19th Century origins of the United States' distinctive form of capitalism,
Organizing America. But there was a connection with the accident book, though I did not make it at the time. The first mass production organizations in the new country were the textile mills of New England. They were fully integrated systems; huge companies with highly specialized tasks, mass producing cheap fabrics, with a frozen technology. The firms owned the towns, the water supply that drove the mills, and, in effect, owned the workers and their families. Highly centralized, very efficient, and very profitable, they were all giants, though vulnerable to economic downturns and to disastrous fires and floods.
'In contrast, the textile industry around Philadelphia, as large as the New England one, was made up of small firms, decentralized, innovative technologically, emphasizing high quality and producing more expensive fabrics. The firms were small, family owned, and constantly changing their ownership and employees. The towns in New England were barren of infrastructure, while those in Pennsylvania had good streets, technical schools, no worker dormitories, and generally good public services. If a firm did not get enough business to survive, its workers merely moved to another nearby that did get orders; owners became workers, as workers became owners; innovations spread rapidly as the experimenters - not locked into a huge mass production machine - moved about. "Renting rooms with power" resembled "changing jobs without changing your car pool," as in Silicon Valley a century later.
'One important reason for the different industrial system was that laws of Massachusetts favored capital accumulation while Pennsylvania had laws that favored investments in public services such as transport, thus less capital was available for private ventures. With concentrated capital the Boston wealthy could build huge mills; with distributed capital, only small firms could prosper in Philadelphia. Prosper they did, until the end of the 19th Century when both New England and Philadelphia textile firms went into a slow decline because of foreign competition and cheaper labor in the southern states. . . '