Why Is American Capitalism A Dynamic System?

Capitalism is a dynamic system. If there is one thing that characterizes this system above all others, it is the ubiquity of change. From Marx, to Weber, to Schumpeter, analysts of capitalism have emphasized its dynamic qualities. Several sources of this dynamism have been proposed. For Marx it was the conflict between classes, for Weber it was the continuing development of rationalization and for Schumpeter, it was innovation, both technological and organizational.

Around the turn of the twentieth century, capitalism (American capitalism in particular) went through a major transformation, with various dimensions contributing to it. Firstly the capitalist society gave birth to the large capital-intensive firm. Second, together with the large size of key players, there emerged oligopolistic competition policed by antitrust regulation. The constitution of large firms was made possible by and required a change in legal status. The joint stock corporation with dispersed ownership became quite common in American capitalist society. Eventually, these joint stock corporations were listed on stock exchanges where they found a large share of the vast capital they required. Such corporations also soon came to be ruled by professional managers, whose legitimacy did not reside in ownership rights. This separation between ownership and the everyday handling of company affairs turned out to be a major
Entrepreneurs, by definition of those who initiate and develop firms, spurred the growth of the American economy in the nineteenth century. The most successful entrepreneurs eventually steered their firms into a new organizational form that came to dominate by the turn of the twentieth century: the large corporation. The large corporation may have been created by entrepreneurs, but its development ultimately led to what many believed to be a qualitatively new system, known as corporate, or managerial,