The Visible Hand

"The author of this book, Alfred DuPont Chandler was the Professor of Business History at Harvard Business School. As his middle name implies, he was a scion of the family which founded the great chemical company DuPont. In the 1920s, one of its principal customers was General Motors, to which it supplied paint. When the car maker went bankrupt because it was poorly managed, DuPont went to its rescue. DuPont installed good management and created one of the greatest companies of all time. The Visible Hand was published in 1977. Its name is derived from Adam Smith’s ‘invisible hand’ – an expression which implied that free markets were largely self-correcting. Chandler takes a different view, arguing that whatever relevance Smith’s theories may have had in 1776, they did not describe the American economy after 1850. By that time, in his view, ‘administrative co-ordination’ had taken over from ‘market co-ordination’. The former ‘invisible hand’ had been replaced by a ‘visible’ one. His analysis of the limits of free market economics fell on stony ground when it materialised in 1977. This was a period when the Chicago school of monetarist economics was dominant – people believed that the market could do no wrong. As a result of our current great recession, however, the central thesis of The Visible Hand has come back into its own. Both Drucker’s and Chandler’s books fill in gaps in free market ideology by highlighting the importance of the practice of management."