Harvard University Faculty

"The advent of the new political economy marked a decisive moment in the demise of the republican strand of American politics and the rise of contemporary liberalism. According to this liberalism, gov­ernment should be neutral as to conceptions of the good life, in or­der to respect persons as free and independent selves, capable of choosing their own ends. Keynesian fiscal policy both reflected this liberalism and deepened its hold on American public life. Although those who practiced Keynesian economics did not defend it in precisely these terms, the new political economy displayed two features of the liberalism that defines the procedural republic."

"The Second World War supplied the occasion for the spending, and Keynesian economics supplied the rationale. But Keynesian fiscal policy had political appeal even before the war demonstrated its economic success. For unlike the various proposals for structural reform, such as vigorous antitrust action or national economic planning, Keynesian economics offered a way for the government to control the economy without having to choose among controversial views of the good society. Where earlier reformers had sought economic arrangements that would cultivate, citizens of a certain kind, Keynesians undertook no formative mis­sion; they proposed simply to accept existing consumer preferences and to regulate the economy by manipulating aggregate demand."

"Not egoists but strangers, sometimes benevolent, make for citizens of the deontological republic; justice finds its occasion because we cannot know each other, or our ends, well enough to govern by the common good alone. This condition is not likely to fade altogether, and so long as it does not, justice will be necessary. But neither is it guaranteed always to predominate, and in so far as it does not, community will be possible, and an unsettling presence for justice."

"Why study this fringe area …? If one considers it worthless, lacking in veracity, won't discussing it give it more credibility than it deserves? If we ignore it, perhaps it will go away."

"Men's mind and abilities grow and expand with use of responsibilities."

"There are very few scholars who can legitimately say that they founded a discipline. Al Chandler is one of them. Prior to Chandler, business history tended to be the study of individual businesses or entrepreneurs with little theoretical importance. To paraphrase one criticism of history as "damn fact after another," business history tended to be "damn business after another." Histories came out in conjunction with anniversaries of companies: They were highly celebratory, sometimes informative, but not very useful to practitioners. Studies of entrepreneurs were just hagiographies.Chandler developed for business history a coherent theoretical framework built around his "3-pronged investment" in manufacturing, marketing, and management, and the notion of "organizational capabilities." The firm was something much more than a network of individual contracts or the vision of its entrepreneur. The people inside firms learned, developed effective routines, and innovated. While we have sophisticated theories of competition in economics, the cooperative teamwork inside firms is just as important. Chandler stressed the importance of organizational capabilities, technological innovation through R&D, problem solving, knowledge, and continuous learning—investment in human capital and technology that only firms could generate. Chandler placed the issue of managerial coordination squarely in the center of understanding economic life."

"Increase on productivity and decrease in unit costs (often identified with economies of scale) resulted far more from the increases in the volume and velocity of throughput then from a growth in the size of the factory and plant."

"The minutest details of cost of materials and labor in every department appeared from day to day and week to week in the accounts; and soon every man about the place was made to realize it. The men felt and often remarked that the eye of the company were on them through the books."

"Effective coordination of throughput required the placing of vigorous management controls over these despots."

"In most British enterprises senior executives worked closely in the same office building, located in or near the largest plant, having almost daily personal contact with, and thus directly supervising middle and often lower-level managers. Such enterprises had no need for the detailed organization charts and manuals that had come into common use in large American and German firms before 1914. In these British companies, selection to senior positions and to the board depended as much on personal ties as on managerial competence. The founders and their heirs continued to have a significant influence on top-level decision-making even after their holdings in the enterprise were diminished."

"To maintain and continue a high volume of flow demanded organizational innovation. It would be achieved only by creating an administrative hierarchy operated by many full-time salaried managers."

"In the 1850s and 18605 the modern commodity dealer who purchased directly from the farmer and sold directly to the processor took over the marketing and distribution of agricultural products. In the same years the full-line, full-service wholesaler began to market most standardized consumer goods. Then in the 1 870s and 188os the modern mass retailer — the department store, the mail-order house, and the chain store — started to make inroads on the wholesaler's markets."

"The swift victory of the railway over the waterway resulted from organizational as well as technological innovation. Technology made possible fast, all-weather transportation; but safe, regular, reliable movement of goods and passengers, as well as the continuing maintenance and repair of locomotives, rolling stock, and track, roadbed, stations, roundhouses and other equipment, required the creation of a sizable administrative organization. It meant the employment of an administrative command of middle and top executives to monitor, evaluate, and coordinate the work of managers responsible for the day-to-day operations. It meant, too, the formulation of brand new types of internal administrative procedures and accounting and statistical controls. Hence, the operational requirements of the railroads demanded the creation of the first administrative hierarchies in American business."

"The systems and controls developed at the armory were as critical to the development of what became known as the 'American System of Manufacturing' as the new metalworking machinery and machine tools."

"Modern factory management (but not it must be stressed the management of large modern multi-unit enterprises) had the genesis in the United States in the Springfield Armory."

"Complete accountability is established and enforced throughout; and if there there is any error committed, it will be discovered on a comparison with the books and can be traced to its source."

"Multi-unit business enterprise replaced small traditional enterprise when administrative coordination permitted greater productivity, lower costs, and higher profits than coordination by market mechanisms."

"The market remained the generator of demand for goods and services, but modern business enterprise took over the functions of coordinating flows of goods and services through existing processes of production and distribution, and of allocating funds and personnel for future production and distribution. As modern business enterprise acquired functions hitherto carried out by the market, it became the most powerful institution in the American economy and its managers the most influential group of economic decision makers. The rise of modern business enterprise in the United States, therefore, brought with it managerial capitalism."

"Strategy can be defined as the determination of the long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals"

"Whenever undiscussables exist, their existence is also undiscussable. Moreover, both are covered up, because rules that make important issues undiscussables violate espoused norms... It is very difficult to manage [organizational defense routines]. They continue to exist and proliferate because they are relegated to the realm of “underground management” and all sides tacitly agree to this state of affairs. As a result, organizational defense routines often are very powerful"

"But today's dilemmas are even harder to deal with: autonomy vs. control; innovation vs. no surprises; participation and ownership vs. meeting deadlines; and job security vs. excess employees through job design"

"Once employees base their motivation on extrinsic factors they are much less likely to take chances, question established policies and practices, or explore the territory that lies beyond the company vision as defined by management."

"Human beings hold two types of theories of action. There is the one that they espouse, which is usually expressed in the form of stated beliefs and values. Then there is the theory that they actually use; this can only be inferred from observing their actions, that is, their actual behavior."

"There are two dominant mindsets in the world of business or any kind of organization.One is a productive mindset, and it says it's a good idea to seek valid knowledge, it's a good idea to craft your conversations so you make explicit what you are thinking and trying to examine. You craft them in such a way that you can test, as clearly as you can, the validity of your claims. Truth is a good idea. All the managerial functions—accounting, all of them—have a fundamental notion that the productive mindset is what ought to be used to manage human beings.Then there's another mindset I call the defensive mindset. The idea is that even if you are seeking valid knowledge, you are seeking only that kind of valid knowledge that protects yourself or your organization or your department—it is defensive. From a defensive mindset point of view, truth is a good idea when it isn't threatening or upsetting. If it is, massage it, spin it. But if you massage it and spin it, you're violating the espoused theory of good management. When you spin, you have to cover up the fact that you're spinning. And in order for a cover up to work, it too has to be covered up."

"Most people define learning too narrowly as mere “problem-solving”, so they focus on identifying and correcting errors in the external environment. Solving problems is important. But if learning is to persist, managers and employees must also look inward. The need to reflect critically on their own behaviour, identify the ways they often inadvertently contribute to the organisation’s problems, and then change how they act."

"Success in the marketplace increasingly depends on learning, yet most people don't know how to learn."

"Managers who are skilled communicators may also be good at covering up real problems."

"Learning can be defined as occurring under two conditions. First, learning occurs when an organisation achieves what it intended; that is, there is a match between its design for action and the actual outcome. Second, learning occurs when a mismatch between intention and outcome is identified and corrected; that is, a mismatch is turned into a match.... Single-loop learning occurs when matches are created, or when mismatches are corrected by changing actions. Double-loop learning occurs when mismatches are corrected by first examining and altering the governing variables and then the actions."

"Argyris is best known for his theory, in collaboration with the late philosophy scholar Donald Schön, on the two types of learning — single-loop and double-loop. This theory refers to the way people respond to changes in their environment. Single-loop learning is the repeated attempt at the same problem by an organization or individual, without varying the method or questioning the goal. Double-loop learning goes beyond that, modifying the goal in light of the experience.Argyris’s work raises profound questions about how organizations run, and casts doubt on what is widely accepted as good practice. But he offers management a profound exploration of the fundamental principles of organizational behavior and human interaction in the workplace."

"I disbelieve in both cycles of history and ends of history. History is the interaction of many complex systems. There are certain long-run processes (notably exponential gains in productivity through the development of technology and the “suprasecular” decline of nominal and real interest rates as a result of capital accumulation) punctuated by, well, one disaster after another. These disasters are either randomly distributed or follow a power law (i.e. there are lots of little earthquakes, pandemics or wars, but a few cataclysmic ones). At unpredictable intervals, the global system is tipped into a major transition by a disturbance that can be quite small, if not quite as small as Edward Lorenz’s famous butterfly in the Amazon setting off a tornado in Texas. Russia’s war in Ukraine — destructive certainly, but still a relatively small conflict by 20th-century standards — can be enough to trigger a “conflict avalanche.”"

"I remember 1989 vividly, having spent much of that summer in Berlin before the Wall fell. And while largely peaceful revolutions swept through Central and Eastern Europe that year (it was only three years later, in Yugoslavia, that the death of Communism sparked war), there was no such turning point in China, where 1989 also saw the Tiananmen Square massacre. With the benefit of hindsight, the survival of Communism in China was a more significant historical phenomenon than its collapse east of the River ."

"A defining feature of history is that there are many more black swans — not to mention what Didier Sornette calls “dragon kings,” events so large in scale that they lie beyond even a power-law distribution — than a normally distributed world would lead us to expect. All such events lie in the realm of uncertainty, not of calculable risk. Moreover, the world we have built has, over time, become an increasingly complex system prone to all kinds of random behavior, nonlinear relationships and “fat-tailed” distributions. A disaster such as a pandemic is not a single, discrete event. It invariably leads to other forms of disaster — economic, social and political. There can be, and often are, cascades or chain reactions of disaster. The more networked the world becomes, the more we see this."

"Trump is a demagogue and a would-be tyrant whose disregard for the rule of law and encouragement of sedition and insurrection have, very fortunately for us all, been thwarted by his own incompetence and, of course, the separation of powers and other constitutional checks the founders devised."

"I watched the events in Washington last Wednesday, as a mob whipped into revolutionary fervor by President Donald Trump overran the Capitol in attempt to disrupt the congressional certification of the Electoral College’s votes, the final step in the constitutionally prescribed process of presidential election. It does not matter which foreign term you wish to use: coup, putsch, autogolpe — take your pick. Since Nov. 3, Trump has attempted to overturn the result of the presidential election he lost, using mafia tactics. ...On Wednesday, he not only egged on the mob; he later said he "loved" them for what they had done. This clearly violated his oath of office."

"The rise of China is the great economic and political fact of our lifetime — a rude awakening for those of us who thought it was the fall of the Soviet Union. In 1951, China was an impoverished backwater with a revolutionary government that Joseph Stalin easily duped into fighting on his behalf in Korea. Today, thanks to the biggest and fastest industrial revolution in history, China is the superpower, Russia its junior partner."

"Back when China and America were the best of friends — or at least when their economic relationship seemed almost symbiotic — and I came up with the idea of “Chimerica,” which unlike the rival “G2” had the advantage of being a pun on the word “chimera,” signalling that we didn’t think it could last. Well, Chimerica now looks well and truly dead. But what is taking its place? Cold Wok? Sweet and Sour War? The hunt for a catch-phrase continues. Actually, I’m not sure why I bother. In the end, it too will probably be Made in China."

"European centrists are deeply confused about immigration. Many, especially on the centre-left, want to have both open borders and welfare states. But the evidence suggests that it is hard to be Denmark with a multicultural society. The lack of social solidarity makes high levels of taxation and redistribution unsustainable."

"Increasingly, I believe that the issue of migration will be seen by future historians as the fatal solvent of the EU. In their accounts Brexit will appear as merely an early symptom of the crisis. Their argument will be that a massive Völkerwanderung overwhelmed the project for European integration, exposing the weakness of the EU as an institution and driving voters back to national politics for solutions."

"A century ago it was the West’s great blunder to think it would not matter if Lenin and his confederates took over the Russian Empire. Incredible as it may seem, I believe we are capable of repeating that catastrophic error. I fear that, one day, we shall wake with a start to discover that the Islamists have repeated the Bolshevik achievement, which was to acquire the resources and capability to threaten our very existence."

"Beginning in the late 1970s, China overcame centuries of stagnation precisely because Mao’s successors understood that they had to decentralise the People’s Republic, giving economic if not political power to the people. If western commentators are right, Xi Jinping wants to go in the opposite direction. If the Chinese are lucky, he will turn out to be an enlightened absolutist, like Singapore’s Lee Kuan Yew. If they are unlucky, he will be just another emperor who fondly dreamt of controlling a fifth of humanity."

"Like the Roman Empire in the early fifth century, Europe has allowed its defenses to crumble. As its wealth has grown, so its military prowess has shrunk, along with its self-belief. It has grown decadent in its shopping malls and sports stadiums. At the same time, it has opened its gates to outsiders who have coveted its wealth without renouncing their ancestral faith."

"Protestantism made the West not only work, but also save and read. The Industrial Revolution was indeed a product of technological innovation and consumption. But it also required an increase in the intensity and duration of work, combined with the accumulation of capital through saving and investment. Above all, it depended on the accumulation of human capital. The literacy that Protestantism promoted was vital to all of this. On reflection, we would do better to talk about the Protestant word ethic."

"Because of the central importance in Luther’s thought of individual reading of the Bible, Protestantism encouraged literacy, not to mention printing, and these two things unquestionably encouraged economic development (the accumulation of ‘human capital’) as well as scientific study. This proposition holds good not only in Prussia but also all over the world. Wherever Protestant missionaries went, they promoted literacy, with measurable long-term benefits to the societies they sought to educate; the same cannot be said of Catholic missionaries prior to Vatican II."

"It was an idea that made the crucial difference between British and Iberian America – an idea about the way people should govern themselves. Some people make the mistake of calling that idea ‘democracy’ and imagining that any country can adopt it merely by holding elections. In reality, democracy was the capstone of an edifice that had as its foundation the rule of law – to be precise, the sanctity of individual freedom and the security of private property rights, ensured by representative, constitutional government."

"The consumer society is so all-pervasive today that it is easy to assume it has always existed. Yet in reality it is one of the more recent innovations that propelled the West ahead of the Rest. Its most striking characteristic is its seemingly irresistible appeal... The result is one of the greatest paradoxes of modern history: that an economic system designed to offer infinite choice to the individual has ended up homogenizing humanity."

"Between 1980 and 2000 the number of patents registered in Israel was 7652 compared with 367 for all the Arab countries combined. In 2008 alone Israeli inventors applied to register 9591 new patents. The equivalent figure for Iran was 50 and for all majority Muslim countries in the world with 5657."

"Was there something distinctive about American civil society that gave democracy a better chance than in France, as Tocqueville argued? Was the already centralized French state more likely to produce a Napoleon than the decentralized United States? We cannot be sure. But it is not unreasonable to ask how long the US constitution would have lasted if the United States had suffered the same military and economic strains that swept away the French constitution of 1791."

"No civilization, no matter how mighty it may appear to itself, is indestructible."

"So much of liberalism in its classical sense is taken for granted in the West today and even disrespected. We take freedom for granted, and because of this we don't understand how incredibly vulnerable it is."

"I think it's hard to make the case, which implicitly the left makes, that somehow the world would have been better off if the Europeans had stayed home. It certainly doesn't work for north America, that's for sure. I mean, I'm sure the Apache and the Navajo had all sorts of admirable traits. In the absence of literacy we don't know what they were because they didn't write them down. We do know they killed a hell of a lot of bison. But had they been left to their own devices, I don't think we'd have anything remotely resembling the civilisation we've had in north America."