Does Chandler Have a Point?

After our discussion last week on The Visible Hand, I thought a bit more of Chandler's underlying thesis that the visible hand of a managerial class replaced the invisible hand of a Adam Smith's marketplace in the allocation of resources.  At first I had difficulty with such a sweeping statement, but something from my own experience makes me wonder if Chandler has it right. 

I grew up in Minneapolis where my father worked as an internal auditor and financial controller for a Fortune 500 food business, a competitor to Pillsbury.  One of the business lines of his firm was grain merchandising, the buying and selling of wheat on the grain exchanges either for speculation or for use by the flour milling division of the company.  For several years, he was engaged in acquiring local grain elevators through Montana, North Dakota, and northern Minnesota, along the railroad lines to Duluth.  From there the grain would be transported by ships through the Great Lakes to flour mills in Toledo, Cleveland, and Buffalo.  Other companies were also engaged in these markets, include Archer Daniels Midland, General Mills, and Pillsbury. 

What struck me was that it seems likely that simply the presence of several large companies purchasing grain, moving that product to mills, and in turn selling the finished flour in the US and international markets, altered the allocation of agricultural resources in the Upper Midwest for some set of economic actors.  Had those companies not been doing this, undoubtedly farmers would have grown wheat and sold it to independent elevator operators, but in a different way and in different quantities.  (I suspect that farmers would have had an incentive to grow less wheat, would have marketed it in a more limited way, or would have done so at different market prices.)  

Of course the technological predicate to this business was the railroad, large-volume shipping on the Great Lakes, and rapid communication, but it was a relatively small number of middle managers in some large corporations that planned and executed the business.  Questions of resource allocation are not just how much goods and services are allocated at some price, but what opportunities are foreclosed because resources were allocated one way and not another.  In my case study, it is likely that the actions of Chandler's regiment of middle managers altered the allocation of resources on a microeconomic (or firm) scale, which remains true even if those managers did not alter resource allocation on a macroeconomic scale (i.e., for the entire economy).  

Discuss!