Are the Economies of Scale Unlimited?

Abstract

Theshort answer to this question is, of course, no. If it were otherwise, the structure of industry would be different from what it is. If size, automatically and without qualification, were an advantage — as weight in a boxer — there would be many fewer cases in history where large industrial units, particularly those which have come into existence full grown or have attained their size swiftly, find that the very magnitude of their operations, far from being an unmixed blessing, is the source of their sharpest and most persistent anxieties.¹ The best analyses of the administrative process itself have shown that, with increasing size, the complexities of the task of maintaining proper interrelations between the parts inevitably and progressively increase.² And all subjective experience suggests that as the human brain is subjected to the strain of absorbing more and more information and integrating it for the purpose of making decisions, there is a point at which its synthesizing power will begin to fail.