Managerialism: Its History and Dangers

Historically Speaking · September 2003 gotthemfirsthand from The Wealth ofNations or from some other source. Economic historiansignore ideologyand cultural beliefs at their peril. It seems ironic thateconomicscience todayshould settle for a historical materialism in which beliefs and' knowledge have no autonomous existence, in which rhetoric, argument, persuasion, and the intellectual life ofnationshaveno impact on institutional change. Whether or not the Enlightenment "caused" the American and French Revolutions, itis hard to thinkoftheir courseswithoutthepowerofenlightenedideology . Tb quote one rather influential 20thcenturyeconomist : "I am sure thatthe power ofvested interests isvastlyexaggerated comparedwith the gradual encroachmentofideas ___ soon or late, it is ideas, notvested interests , which are dangerous for good or evil.»6 JoelMokyrisRobertH. Strotz Professorof Artsand Sciencesandprofessorofeconomics and history atNorthwestern University. HL· The Enlightened Economy: An Economic History ofBritain, 1700-1850 will bepublishedbyPenguin Pressin 2004. 1 Forinstance, Oded Galorand DavidWeil, "Population , Technology, and Growth,"American Economic Review 90 (2000): 806-828; Robert E. Lucas, Jr., Lectures on Economic Growth (Harvard UniversityPress, 2002); Charles I.Jones, "Onthe Evolution of the World Income Distribution," Journal ofEconomicPerspectives \\ (1997): 19-36; andWilliam Easterly, TheElusive QuestfarGrowth (MTT Press, 2001). 2 DannyT. Quah, "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics" The EconomicJournal 106 (1996): 1045-1055. 3 Onthe matterof"growthasanormal condition" and the blockages and obstacles to it, see especially Eric L. Jones, Growth Recurring (Oxford University Press, 1981) and Stephen L. Parente and Edward C. Prescott, Barriers to Riches (MTT Press 2000). 4 Robert B. Ekelund, Jr. and Robert D. Tollison, PoliticizedEconomies:Monarchy, Monopoly, andMercantilism ÇTassAStM UniversityPress, 1997), 14. s Kenneth Alder, "A Revolution to Measure: The Political Economy of the Metric System in France," in M. Norton Wise, ed., The Values of Precision (Princeton University Press, 1995). 6 John Maynard Keynes, The General Theory of, Employment, Interest, andMoney (Harcourt, Brace, 1936), 383-84. Managerialism: Its History and Dangers James Hoopee Abouttwenty-fiveyears ago the United States began to be a business civilization in a new, largely unnoticed, and subtlyundemocratic way. The rise in corporate power over the past quarter centuryhas been obvious. Ithas been less clear, however, how radically our time differs from previous periods ofbusiness preeminence in American history. In the past the nation's democratic political tradition had intellectual resources—Puritanism, republicanism, individualism , pragmatism—withwhich to challenge business power. But now corporations themselves possess a sophisticated social philosophy that speaks the language ofdemocracy . This new corporate social philosophy— managerialism, Iwill call itin this essay—had its origins in the 1920s and 1930s at the Harvard Business School. The school's dean, Wallace Donham, aimed to create a managerial worldview that would be central not only to business but to society at large. His vision nowseems to be comingto realization. Witness George Bush, our first president with a master's degree in business administration , which he earned at Harvard. New York Mayor Michael Bloomberg is another businessman become politician with a Harvard MBA. Ditto for Massachusetts Governor Mitt Romney. Those old enough to remember Mitt Romney's father, George, understand atleast the surface difference between the previous and present generations ofcorporate politicians . George Romney, governor ofMichigan in the 1960s and president ofthe American Motors Company in the 1950s, was a liberal Republican who wrecked his chance ofwinning the presidency in 1968 with his famous gaffe that military brass had "brainwashed " him into his initial support of the Vietnam War. He and other CEOs who went into politics in that era suffered terriblyfrom foot-in-mouth disease—one thinks of "Engine" Charlie Wilson, Eisenhower's defense secretary, and his much lambasted remark: "What's good for General Motors is good for America." Corporate politicians of that era often came across—somewhat unfairly in the cases ofGeorge Romney and Charlie Wilson—as less prepared to answer to a sovereign people than to give itits marching orders. Our latter-day corporate politicians are far more sensitive to the nuances of democratic politics than their predecessors, thanks in part to their MBA educations. In their graduate business studies Bush, Bloomberg, and Mitt Romney learned the mélange of democratic and elitist ideas that is today's managerial ideology. That ideology enables manythousands ofpowerful CEOs and managers to conceive ofthemselves as democrats, both in corporate life and in the political arena...