Managerial Economics Quotes

Managerialism has become the pretext for creating a new covert form of feudalism, where wealth and position are allocated not on economic but political grounds

Managerialism has become the pretext for creating a new covert form of feudalism, where wealth and position are allocated not on economic but political grounds - or rather, where every day it's more difficult to tell the difference between what can be considered 'economic' and what is 'political.

Bullshit jobs proliferate today in large part because of the peculiar nature of managerial feudalism that has come to dominate wealthy economiesーbut to an increasing degree, all economies. They cause misery because human happiness is always caught up in a sense of having effects on the world; a feeling which most people, when they speak of their work, express through a language of social value. Yet at the same time they are aware that the greater the social value produced by a job, the less one is likely to be paid to do it.

Managerialism has become the pretext for creating a new covert form of feudalism, where wealth and position are allocated not on economic but political grounds—or rather, where every day it’s more difficult to tell the difference between what can be considered “economic” and what is “political.

I want economists to quit concerning themselves with allocation problems, per se, with the problem, as it has been traditionally defined. The vocabulary of science is important here, and as T. D. Weldon once suggested, the very word "problem" in and of itself implies the presence of "solution." Once the format has been established in allocation terms, some solution is more or less automatically suggested. Our whole study becomes one of applied maximization of a relatively simple computational sort. Once the ends to be maximized are provided by the social welfare function, everything becomes computational, as my colleague, Rutledge Vining, has properly noted. If there is really nothing more to economics than this, we had as well turn it all over to the applied mathematicians. This does, in fact, seem to be the direction in which we are moving, professionally, and developments of note, or notoriety, during the past two decades consist largely in improvements in what are essentially computing techniques, in the mathematics of social engineering. What I am saying is that we should keep these contributions in perspective; I am urging that they be recognized for what they are, contributions to applied mathematics, to managerial science if you will, but not to our chosen subject field which we, for better or for worse, call "economics.

Different peoples have different cultures, beginning with their language. This is bound to become more of a problem as the world economy becomes more universal. The more homogeneous economically the world becomes—in its appetites, at least, if not in its actual economic conditions—the more will local and cultural roots be needed. People need a home—and even the most luxurious 2,000-room hotel is not a “home.” Managing the multinational corporation is therefore largely a problem of integrating political and cultural diversity into managerial unity.

Human labor, in general, is still divided into two exclusive categories: the first—solely intellectual and managerial—includes the scientists, artists, engineers, inventors, accountants, educators, governmental officials, and their subordinate elites who enforce labor discipline The second group consists of the great mass of workers, people prevented from applying creative ideas or intelligence, who blindly and mechanically carry out the orders of the intellectual-managerial elite This economic and social division of labor has disastrous consequences for members of the privileged classes, the masses of the people, and for the prosperity, as well as the moral and intellectual development, of society as a whole.

The economic crisis and subsequent bailout exacerbated inequality by every metric and did not lead to significant reform of the financial sector. Bailed-out banks continued to foreclose on the homes of working-class families while refusing to make new loans to creditworthy borrowers. Under an Ivy League–educated African American president, African American family wealth had collapsed. In fact, it is common knowledge that African American and Latino homeowners were hit hardest by the 2008 financial crisis: by 2018, an African American family owned $5.00 in assets for every $100.00 owned by white families.6 Obama’s identity politics did not translate into economic policies that benefited minorities and working-class people.

A Clinton or a Bush was president, vice president, or secretary of state in every year between 1981 and 2013, an era in which working-class incomes stagnated, offshoring devastated US and European manufacturing, the world suffered the worst economic collapse since the Great Depression of the 1930s, and the US plunged into multiple disastrous wars in the Middle East and Central Asia. Trump became president by running against a Bush in the Republican primaries and a Clinton in the general election. The desire of many American voters to disrupt the quarter-century cycle of nearly identical versions of technocratic neoliberalism under alternating Bushes and Clintons is quite sufficient to explain the presidential election of 2016.

Yochai Benkler says that while an inordinate amount of attention is being placed on free software, it is in fact only one example of a much broader social-economic phenomenon. I suggest that we are seeing the broad and deep emergence of a new, third mode of production in the digitally networked environment. I call this mode “Commons-based peer-production,” to distinguish it from the property- and contract-based modes of firms and markets. Its central characteristic is that groups of individuals successfully collaborate on large-scale projects following a diverse cluster of motivational drives and social signals, rather than either market prices or managerial commands.43

The invasion of government and the courts by behavioral scientists has produced what Thomas Szasz calls “the therapeutic state.” Psychiatrists and social psychologists have been given social status, according to Szasz, and their moral and political judgments, though not always founded on hard, empirical science, are taken to the “expert.” These experts today can affect decisions about the responsibility of criminals, the right to control property, and the custody of children. “Psychiatric theologians” have been able to impose their private political opinions as “scientific” truth, and Szasz cites the fact that the American Psychiatric Association now defines the involuntary treatment and incarceration of mental patients as “health rights.” Szasz also observes, “If people that health values justify coercion, but that moral and political do not, those who wish to coerce others will tend to enlarge the category of health values at the expense of moral values. “Health values” have also become socialized through a global managerial culture. Since 1976 the United Nations, through its International Covenant on Economic, Cultural and Social Rights, has elevated “the enjoyment of the highest standard of mental health” to a sacred entitlement. Henceforth governments must ensure a sound state of mind as a “human right.

The invasion of government and the courts by behavioral scientists has produced what Thomas Szasz calls “the therapeutic state.” Psychiatrists and social psychologists have been given social status, according to Szasz, and their moral and political judgments, though not always founded on hard, empirical science, are taken to the “expert.” These experts today can affect decisions about the responsibility of criminals, the right to control property, and the custody of children. “Psychiatric theologians” have been able to impose their private political opinions as “scientific” truth, and Szasz cites the fact that the American Psychiatric Association now defines the involuntary treatment and incarceration of mental patients as “health rights.” Szasz also observes, “If people that health values justify coercion, but that moral and political do not, those who wish to coerce others will tend to enlarge the category of health values at the expense of moral values. “Health values” have also become socialized through a global managerial culture. Since 1976 the United Nations, through its International Covenant on Economic, Cultural and Social Rights, has elevated “the enjoyment of the highest standard of mental health” to a sacred entitlement. Henceforth governments must ensure a sound state of mind as a “human right.

It is largely irrelevant whether the propertied elite acquires managerial skills, takes an active part in managing corporate enterprise, or has assimilated non-propertied elite manager into its own class and interests. What Mills and his disciple, William G. Domhoff and their school do not sufficiently perceive or appreciate thoroughly is that the interest of the propertied elite have changed substantially with the revolution of mass and scale. The propertied elite or “grand bourgeosie” of the bourgeois order may not have changed significantly in family composition, and certainly it retain wealth and status. Its economic interests, however, have changed from being vested in the hard property of privately owned and operated entrepreneurial firms, usually comparatively small in scale, to being intertwined with and dependent upon the de-materialized property of publicly owned, state-integrated, managerially operated mass corporations.

Post-bourgeois groups manifest hostility not only to the ideology of the soft managerial regime and to the psychic and behavioral patterns of its elite but also to the manipulative style of dominance that characterizes the elite and the tendency to acceleration on which the elite relies for the preservation and enhancement of its power. The managerial use of manipulation and acceleration not only alienates post-bourgeois groups culturally and morally but also threatens their economic position and social status.

The formal mechanisms of mass liberal democracy – regular elections, competing political parties, universal suffrage, and legal and political rights – do not significantly mitigate the monolithic and uniform concentration of managerial power. The “despotism” of the regime – its tendency toward the monopolization of political, economic, and cultural power by a single social and political force of managerial and technical skills and the expansive, uniform, and centralized nature of its power – is a direct consequence of the contracted composition of the lite and the restriction of its membership to element proficient in managerial and technical skills. The narrowness of the elite that results fro this restriction insulates it from the influence of non-managerial social and political forces and reduces their ability to gain positions within the elite fro which they can moderate, balance or restrain its commands. Their exclusion from the elite contributes to the frustration of their aspirations and interests and encourages their alienation from the conflict with the elite and the destabilization and weakening of the regime.

SCANDALS AND MISMANAGEMENT If Secretary Clinton’s political career had ended with her defeat for the Democratic presidential nomination in 2008, her skills as a manager would have been judged by her disorganized and drama-filled campaign for the presidency and her disastrous Health Care Task Force as First Lady. President Obama, who defeated her calamitously run campaign, should have been wary of nominating Clinton to a post that was responsible for tens of thousands of federal employees throughout the world. While her tenure in Foggy Bottom didn’t have the highly publicized backstabbing element that tarnished her presidential campaign, Secretary Clinton’s deficiencies as a manager were no less evident. There was one department within State that Secretary Clinton oversaw with great care: the Global Partnerships Initiative (GPI), which was run by long-time Clinton family aide Kris Balderston. Balderston was known in political circles for creating a “hit list” that ranked members of Congress based on loyalty to the Clintons during the 2008 presidential primaries.[434] Balderston was brought to Foggy Bottom to “keep the Clinton political network humming at State.”[435] He focused his efforts on connecting CEOs and business interests—all potential Clinton 2016 donors—to State Department public/private partnerships. Balderston worked alongside Clinton’s long-time aide Huma Abedin, who was given a “special government employee” waiver, allowing her to work both as Secretary Clinton’s deputy chief of staff, and for other private sector clients. With the arrangement, Abedin would serve as a consultant to the top Clinton allied firm, Teneo, in a role in which, as the New York Times reported, “the lines were blurred between Ms. Abedin’s work in the high echelons of one of the government’s most sensitive executive departments and her role as a Clinton family insider.”[436] Secretary Clinton and her allies have placed great emphasis on the secretary of state’s historic role in promoting American business interests overseas, dubbing the effort “economic statecraft.”[437] The efforts of the GPI, Abedin, and Balderston ensured that Secretary Clinton’s “economic statecraft” agenda would be rife with the potential for conflicts of interest reminiscent of the favor-trading scandals that emanated from her husband’s White House. While the political office and donor maintenance program was managed with extreme meticulousness, Secretary Clinton ignored her role as manager of the rest of the sprawling government agency.[438] When it came to these more mundane tasks, Secretary Clinton was not on top of what was really going on in the department she ran. While Secretary Clinton was preoccupied with being filmed and photographed all around the world, the State Department was plagued by chronic management problems and scandals, from visa programs to security contractors. And when Secretary Clinton did weigh in on management issues, it was almost always after a raft of bad press forced her to, and not from any proactive steps she took. In fact, she and her department’s first reaction in certain instances was to silence critics or intimidate whistleblowers, rather than get to the bottom of what was actually going on. The events that unfolded in Benghazi were the worst example of Secretary Clinton neglecting her managerial responsibilities. This pattern of behavior, which led to the tragedy, was characteristic of her management style throughout her four years at Foggy Bottom. “Economic Statecraft” A big part of Secretary Clinton’s record-breaking travel—112 countries visited—was her work as a salesperson for select U.S. business interests.[439] Today, her supporters would have us believe her “economic statecraft” agenda was a major accomplishment.[440] Yet, as always seems to be the case with the Clintons, there was one family that benefited more than any other from all this economic statecraft—the Clinton family.

Nevertheless, most governments remain wary of running the risk of slowing down the drive towards economic expansion or decelerating the treadmill of production (Novek & Kampen 1992). Caught in a contradictory position as both promoter of economic development and as environmental regulator, governments often engage in a process of environmental managerialism (Redclift 1986), in which they attempt to legislate a limited degree of protection sufficient to deflect criticism but not enough to derail the engine of growth. By enacting environmental policies and procedures that are complex, ambiguous and open to exploitation by the forces of capital production and accumulation (Modavi 1991: 270) the state reaffirms its commitment to strategies for promoting economic development.

Avoid Paternalism: do not do things for people that they can do for themselves."" They go on to explain five ways that we in North America sometimes act paternally. •Resource paternalism: believing that throwing money at global problems will solve them. •Spiritual paternalism: believing that since we are materially rich and they are economically poor, we must have the deeper walk with God. •Knowledge paternalism: believing that we are the teachers and they are the learners. •Labor paternalism: doing work for people that they could (and should) do for themselves. •Managerial paternalism: taking charge when things are not moving at a pace that satisfies us.9 For effective North American-global partnerships to exist, we need to revise our paradigms, or the ways we look at things. Several partnership-related paradigms needing revision stand out.

While the rich became richer, the taxation policy of the government, instead of correcting this trend, actively strengthened it. One of the first decisions of the first Modi government was to abolish the wealth tax that had been introduced in 1957. While the fiscal resources generated by this tax were never significant, the decision was more than a symbolic one.126 The wealth tax was replaced with an income tax increase of 2 percent for households that earned more than Rs 10 million (133,333 USD) annually.127 Few people pay income tax in India anyway: only 14.6 million people (2 percent of the population) did in 2019. As a result, the income-tax-to-GDP ratio remained below 11 percent. Not only has the Modi government not tried to introduce any reforms to change this, but it has instead increased indirect taxes (such as excise taxes), which are the most unfair as they affect everyone, irrespective of income. Taxes on alcohol and petroleum products are a case in point. As some state governments have also imposed their own taxes, this strategy means that India has one of the highest taxation rates on fuel in the world. The share of indirect taxes in the state’s fiscal resources has increased under the Modi government to reach 50 percent of the total taxes—compared to 39 percent under UPA I and 44 percent under UPA II.128 Modi’s taxation policy, a supply-side economics approach, is in keeping with the managerial rhetoric of promoting the spirit of enterprise that the prime minister, who readily presents himself as an efficiency-conscious “apolitical CEO,” relishes. One of the neoliberal measures the Modi government enacted in the name of economic rationality, right from his very first budget in 2015, was to lower the corporate tax.129 For existing companies it was reduced from 30 to 22 percent, and for manufacturing firms incorporated after October 1, 2019 that started operations before March 31, 2023, it was reduced from 25 to 15 percent—the biggest reduction in twenty-eight years. In addition to these tax reductions, the government withdrew the enhanced surcharge on long- and short-term capital gains for foreign portfolio investors as well as domestic portfolio investors.130

In the longer term, business itself will be harmed by shifting from R&D to financial manipulations. In earlier days, that might have been a concern. But managerial ethic has shifted from the time when viability of the firm was a serious concern to today’s focus on gain tomorrow. The long-term prospects for the firm become lesser considerations—or for human society generally. Nothing could reveal this shift with more brilliant clarity than a matter already discussed: the virtually reflexive decisions to race toward destruction, with eyes open, if it yields short-term gain. Right now profits are spectacular and CEO salaries have skyrocketed to the stratosphere, dragging other managerial rewards with them, while for the general population, real wages stagnate, social spending is meager, unions and other interferences with “sound economics” are dismantled. The best of all possible worlds. So why care if my firm will go under after I’ve moved to greener pastures, or for that matter, why care if I leave to my grandchildren a world in which they have some chance for decent survival? Capitalist mentality gone insane. There is, of course, the usual problem. The rascal multitude. They’re not too happy about the undermining of functioning democracy and basic rights. I should add the same is true in Europe. In fact, even more so. The attack on democracy in Europe is even sharper than here. Significant decisions about society and politics are out of the hands of the population. They’re made by unelected bureaucrats in Brussels: the IMF, the Central Bank, the European Commission. All of this, all over the world, is leading to anger, resentment, and bitterness. You see it right now in the Yellow Vest movement in France, but it’s everywhere. In election after election, the centrist parties are collapsing. It’s happening here, too. Parties happen to be keeping their names in our rigid two-party system, but the centrist elements are losing their grip.

The successes of organizations that take risks and are directed at large goals are often unpredictable. Innovation itself is often characterized by unpredictable spillovers: the search for one thing leads to the discovery of another – unexpected technological benefits from R&D that can also produce wider managerial, social and economic benefits. Viagra, for example, was initially intended to treat heart problems and then was found to have another application. Innovation is fuelled best when serendipity is allowed, so that multiple paths are pursued, bringing advances in unknown areas. Embracing that uncertainty and serendipity is key for any entrepreneurial organization, whether in the public or private sphere. And as the story below illustrates, such serendipity in technological innovation can also bring great societal benefits.

That fish taken out of the water several continents away could in a matter of hours be here in a warehouse in Northamptonshire is evidence of nothing short of logistical genius, based on a complex interplay of technology, managerial discipline and legal and economic standardisation.

Our society is run by a managerial bureaucracy, by professional politicians; people are motivated by mass suggestion, their aim is producing more and consuming more, as purposes in themselves. All activities are subordinated to economic goals, means have become ends; man is an automaton—well fed, well clad, but without any ultimate concern for that which is his peculiarly human quality and function. If man is to be able to love, he must be put in his supreme place. The economic machine must serve him, rather than he serves it. He must be enabled to share experience, to share work, rather than, at best, share in profits. Society must be organized in such a way that man’s social, loving nature is not separated from his social existence, but becomes one with it. If it is true, as I have tried to show, that love is the only sane and satisfactory answer to the problem of human existence, then any society which excludes, relatively, the development of love, must in the long run perish of its own contradiction with the basic necessities of human nature. Indeed, to speak of love is not “preaching,” for the simple reason that it means to speak of the ultimate and real need in every human being. That this need has been obscured does not mean that it does not exist. To analyze the nature of love is to discover its general absence today and to criticize the social conditions which are responsible for this absence. To have faith in the possibility of love as a social and not only exceptional-individual phenomenon, is a rational faith based on the insight into the very nature of man.

Have not these chief executives carried through a silent revolution, a managerial revolution from the top, and has not their revolution transformed the very meaning of property? Are not, in short, the old expropriators now expropriated by their salaried managers? Maybe the chief executives are trustees for a variety of economic interests, but what are the checks upon how fair and well they perform their trusts? And was it not the state, subject to the control of a free electorate, that was to be the responsible trustee, the impartial umpire, the expert broker of conflicting interests and contending powers?

The primary test of managerial economic performance is the achievement of a high earnings rate on equity capital employed (without undue leverage, accounting gimmickry, etc.) and not the achievement of consistent gains in earnings per share. In our view, many businesses would be better understood by their shareholder owners, as well as the general public, if managements and financial analysts modified the primary emphasis they place upon earnings per share, and upon yearly changes in that figure.

Veblen’s overall evolutionary framework was one that stressed the cumulative and path-dependent nature of institutional change, the role of new technology in bringing about institutional change (by changing the underlying, habitual ways of living and thinking), and the predominantly “pecuniary” character of the existing set of American institutions (that is, expressing the “business” values of pecuniary success and individual gain by money making, to the virtual exclusion of all other values). For Veblen, as for other institutionalists, institutions were more than merely constraints on individual action, but embodied generally accepted ways of thinking and behaving, and worked to mold the preferences and values of individuals brought up under their sway. Within this framework, Veblen developed his analyses of “conspicuous consumption” and consumption norms; the effect of corporate finance on the ownership and control of firms; the role of intangible property and the ability to capitalize intangibles; business and financial strategies for profit making, salesmanship and advertising; the emergence of a specialist managerial class; business fluctuations; and many other topics (Veblen 1899; 1904).

Over the past thirty years the orthodox view that the maximisation of shareholder value would lead to the strongest economic performance has come to dominate business theory and practice, in the US and UK in particular.42 But for most of capitalism’s history, and in many other countries, firms have not been organised primarily as vehicles for the short-term profit maximisation of footloose shareholders and the remuneration of their senior executives. Companies in Germany, Scandinavia and Japan, for example, are structured both in company law and corporate culture as institutions accountable to a wider set of stakeholders, including their employees, with long-term production and profitability their primary mission. They are equally capitalist, but their behaviour is different. Firms with this kind of model typically invest more in innovation than their counterparts focused on short-term shareholder value maximisation; their executives are paid smaller multiples of their average employees’ salaries; they tend to retain for investment a greater share of earnings relative to the payment of dividends; and their shares are held on average for longer by their owners. And the evidence suggests that while their short-term profitability may (in some cases) be lower, over the long term they tend to generate stronger growth.43 For public policy, this makes attention to corporate ownership, governance and managerial incentive structures a crucial field for the improvement of economic performance. In short, markets are not idealised abstractions, but concrete and differentiated outcomes arising from different circumstances.

Psychological pricing is a set of strategic and tactical managerial pricing actions designed to influence consumers’ perceptions, decisions, and behaviors through processes of thinking and feeling. Its goal is to deliver a high degree of value to target consumers, while concurrently generating healthy revenue and profit for the business.

Those who are seriously concerned with love as the only rational answer to the problem of human existence must, then, arrive at the conclusion that important and radical changes in our social structure are necessary, if love is to become a social and not a highly individualistic, marginal phenomenon. The direction of such changes can, within the scope of this book, only be hinted at.[34] Our society is run by a managerial bureaucracy, by professional politicians; people are motivated by mass suggestion, their aim is producing more and consuming more, as purposes in themselves. All activities are subordinated to economic goals, means have become ends; man is an automaton—well fed, well clad, but without any ultimate concern for that which is his peculiarly human quality and function. If man is to be able to love, he must be put in his supreme place. The economic machine must serve him, rather than he serves it. He must be enabled to share experience, to share work, rather than, at best, share in profits. Society must be organized in such a way that man’s social, loving nature is not separated from his social existence, but becomes one with it. If it is true, as I have tried to show, that love is the only sane and satisfactory answer to the problem of human existence, then any society which excludes, relatively, the development of love, must in the long run perish of its own contradiction with the basic necessities of human nature.

When the managerial classes in the US and, to a lesser extent Britain, possess such economic, political and ideological power that they can manipulate the market and pass on the negative consequences of their actions to other people, it is an illusion to think that executive pay is something whose optimal levels and structures are going to be, and should be, determined by the market.

A Clinton or a Bush was president, vice president, or secretary of state in every year between 1981 and 2013, an era in which working-class incomes stagnated, offshoring devastated US and European manufacturing, the world suffered the worst economic collapse since the Great Depression of the 1930s, and the US plunged into multiple disastrous wars in the Middle East and Central Asia. Trump became president by running against a Bush in the Republican primaries and a Clinton in the general election. The desire of many American voters to disrupt the quarter-century cycle of nearly identical versions of technocratic neoliberalism under alternating Bushes and Clintons is quite sufficient to explain the presidential election of 2016. —