Big Wheels Turning

By Norman Pearlstine

"Make money, be proud of it; make more money, be prouder of it." --Henry R. Luce, 1937

With those words, this magazine's co-founder joined Calvin Coolidge ("The chief business of the American people is business"), former General Motors president Charles E. Wilson ("What is good for the country is good for General Motors, and what's good for General Motors is good for the country") and, alas, Wall Street's Gordon Gekko ("Greed...is good. Greed is right. Greed works") in defining and defending the 20th century as the century of business.

This issue, TIME's third in a series of five that chronicles the 100 most influential people of the century, is devoted to the 20 remarkable builders and titans who most embody capitalism and its triumphs. It also creates the occasion for this writer, who has covered business for more than three of this century's decades, to make a few observations and bestow a few honors of his own.

From Henry Ford at one end of the century to Bill Gates at the other, these 20 people influenced lives far beyond the business world. Indeed, TIME defines the business realm broadly, including anyone who works for a living, and our list extends to the world of sports and the National Football League's Pete Rozelle, organized labor and the United Auto Workers' Walter Reuther, and even organized crime's Lucky Luciano, whose syndicate was certainly better managed than was Al Capone's.

It is no accident that our list is almost entirely American. It does include Sony's Akio Morita, and it arguably could include a handful of other leaders from abroad, notably Japan's Soichiro Honda and Eiji Toyoda (Toyota), Italy's Giovanni Agnelli (Fiat) and Australia's Rupert Murdoch (now a U.S. citizen). But if the 20th century was, as Luce also said, the American Century, it was largely because our system, espousing freedom of markets and freedom of the individual, rewarding talent instead of class and pedigree, bred a group of leaders whose single-minded fixation on getting rich--and creating great products in the process--led to unheard-of levels of productivity and prosperity. It was America's industrial might that enabled it to win wars and rebuild continents. Other countries may have had the capital, the natural resources or the skilled workers needed to industrialize, but their economic and political systems usually favored consensus management and faceless bureaucrats while denigrating the kind of individual initiative required to take an idea and turn it into an industry. The 21st century will no doubt include a larger number of great business leaders from outside the U.S. as more nations embrace capitalism and come to understand the importance of rewarding individual initiative.

It is also no accident that the list includes only one woman, Estee Lauder, and only one industry, cosmetics, in which other women--including Elizabeth Arden, Helena Rubinstein and Mary Kay Ash--also flourished as entrepreneurs. And although this issue includes an article on an influential black entrepreneur, no people of color make our Top 20. Through most of this century, American business has been dominated by men, white men, despite more than 25 years of modern feminism and some ambitious corporate efforts to achieve racial equality. The next century will certainly be different, although I don't see meaningful change coming soon enough. Yes, our sister publication FORTUNE recently assembled a credible list of the 50 most powerful women in business. But only two women head companies included in FORTUNE's annual list of America's 500 largest firms. Meanwhile, many of America's most talented female executives, tired of trying to fit into the boys' clubs, are leaving large corporations to start their own businesses. The statistics on African Americans and other racial minorities are, if anything, even more dismal. The diversity of America's population and the entry of women into the workplace give the U.S. an important competitive advantage over other countries. But that advantage will be squandered if our largest corporations don't figure out how to benefit from these resources more fully.

Financiers, including A.P. Giannini (Bank of America) and Charles Merrill (Merrill Lynch), make our list, but some might argue that finance is underrepresented, since it was the availability of capital, as much or more than individual genius or initiative, that so often created the conditions for business success. By that measure, Drexel Burnham's Michael Milken, who raised billions for the likes of Ted Turner, Rupert Murdoch and MCI Corp., should be included, notwithstanding his conviction for violating securities laws and his time spent in jail. Other financial innovators who changed the way we spend and save might also have made the list, including Dee Hock, a little-known businessman who brought the Visa credit card to prominence, and Peter Lynch, who as head of Fidelity's Magellan Fund was America's most successful money manager.

J.P. Morgan, a titan of the 19th century who helped set the stage for the 20th (see following article), acted in his day as a cross between today's Federal Reserve Board and the Goldman Sachs' mergers-and-acquisitions department, providing the money and acumen needed to launch the prototypes of modern industrial corporations. Under Morgan's leadership, this century began much as the 19th century ended, with heavy industry--steel, rails, electricity, and oil--ascendant. Automobiles were in short supply until 1913, when Henry Ford introduced the assembly line and mass production, making ours a consumer as well as an industrial society. As the century progressed, the service economy began to compete with industry as fortunes were made in soft drinks (Coca-Cola), processed foods (Heinz), insurance (Travelers, AIG) and retail (Sears, Wal-Mart). The information age began in the 1920s, when Walt Disney, Louis B. Mayer and the rest of Hollywood began to build businesses of scale. But it wasn't until the 1950s, with the emergence of television as a mass medium, and the two most recent decades, with the computer's coming of age, that information has replaced manufacturing as the primary source of growth. In fact, it is really too soon to pass judgment on most of the information age's brightest lights, among them Apple's Steve Jobs, America Online's Steve Case and Netscape's Marc Andreessen, who may wind up contributing even more to the 21st century than to the 20th.

Nor do we honor economists here, preferring to include them in a subsequent issue devoted to scientists and thinkers. But surely our nation and the world would be less strong today, and many of our most famous business leaders would seem less prescient, absent the guidance of the Federal Reserve Board's Alan Greenspan. John Maynard Keynes, who convinced us of the value of fixed exchange rates and the need to use deficit financing to spend our way out of recessions, had tremendous influence over economic policy through the Depression and in the years after World War II. Although his name is back in vogue as many nations cope with the most serious economic crisis since the Depression, my own vote for economist of the century goes to Milton Friedman, whose books, including Capitalism and Freedom and Free to Choose (written with his wife Rose), articulate the importance of free markets and the dangers of undue government intervention. Our list, recognizing only 20 people, is by definition subjective, especially since we sought to recognize leadership in several different industries. If, as I believe, the automobile is the product of the century, we could easily have filled the list with the names of famous automakers, including Alfred P. Sloan, Charles Kettering and William Durant (all from General Motors), Walter Chrysler, Ferdinand Porsche (Porsche and Volkswagen), Ransom Olds, Clement Studebaker and the Dodge brothers. Henry J. Kaiser not only built cars but also played a key role in shipbuilding, construction, housing and hospitals. In the end, however, we settled on Henry Ford because his individual genius was so responsible for automating the assembly line and building the industry.

Our bias toward innovators and company founders and against managers kept several famous names off the list--not only Sloan, whose organizational and management skills helped consolidate several disparate automakers into General Motors, but also a number of chief executives best known for their ability to manage large enterprises and increase shareholder value. It should be remembered that Ford Motor Co. was foundering when Henry Ford died, and it was left to his grandson Henry Ford II to revive the company after World War II with the help of a group of button-down managers, the "Whiz Kids," including Robert McNamara, Arjay Miller and Charles Thornton. Similarly, Walt Disney wouldn't be so well thought of today had Michael Eisner not saved the company and its founder's name in the 14 years that he has run the company.

My own choice for company of the century is General Electric, which began the century as an industrial company with sales of less than $16 million and, catching almost every wave, evolved into a diversified manufacturing and finance colossus with strong positions in media and information. This year's sales are expected to exceed $100 billion, and with market capitalization of $302 billion, the company is in a close race with Microsoft for the title of Most Valuable. GE chairman Jack Welch isn't the innovator that GE's founder Thomas A. Edison was, but this son of a railroad conductor and lifelong GE employee would certainly get my vote for CEO of the century.

While our issue venerates business leaders and the economic system that allows them to flourish, we should be mindful of the limitations of both. In the years after Vietnam and Watergate, many of us lost faith in our politicians and our military leaders. Instead, we mistakenly looked to the business community to fill the void. Most successful entrepreneurs and executives benefit from their single-minded focus on creating wealth, and when talking about their businesses, they do so with passion. But when discussing society's broader issues, they are too often simplistic and uninformed, and they rarely understand that government's stakeholders have different interests from their own company's shareholders'. Moreover, they tend to be authoritarian, and they aren't often very tolerant of contrary opinions. Lee Iacocca, the charismatic auto executive who did great work at Ford and Chrysler, was one CEO who recognized his limitations. Following publication of his autobiography, Iacocca, which sold 7 million copies, he flirted briefly with making a run for the presidency. In the end, Iacocca decided against it, realizing he would never have the patience required to deal with Congress. Compromising to achieve consensus wasn't his long suit, he told me. It would be good if others seeking the presidency, such as Ross Perot and son-of-a-businessman Steve Forbes, better understood this handicap.

Finally, we must recognize that markets are messy--frequently overshooting or undershooting desired targets--and that it is ordinary working people, not investors, bankers and business leaders, who suffer most when they do. When that happens, as may be the case in the final years of this century, it is worth remembering that there is a role for government in protecting society's weakest members from the markets' excesses while encouraging the animal spirits that free markets unleash. Getting that balance right will be a challenge for business and government in the century ahead.

Norman Pearlstine is the editor-in-chief of Time Inc. and former managing editor of the Wall Street Journal