The Evolution of Capitalism: From Family Businesses to Modern Networks
This text explores the changes that capitalism has undergone in the last thirty years, drawing upon the opinions of several authors. It compares texts from the 1960s, which critique family capitalism, with texts from the 1990s, which acknowledge the emergence of large, planned organizations and hierarchies.
Objective Management in the 1960s and 1990s
In the 1960s, two major problems arose in relation to Objective Management:
- Strong dissatisfaction among “Cadres” (managers).
- Management problems linked to the giant size of companies.
Cadres questioned their value within companies. They were caught between the roles of “technical expert” and “relay management,” transmitting orders from above and addressing problems from below. They aspired to share decision-making power, gain more autonomy, and be informed about business progress.
By the 1990s, the concept of “Cadres” had evolved into a new social body accompanying the growth of companies. The separation of ownership became less relevant as the desire for a decline in family capitalism had been fulfilled. Defining the most modern management category was no longer a priority.
Managers added more levels of hierarchy without granting any real power. Large businesses inspired fear, perceived as a threat to freedom in democratic countries. Some viewed capitalists as having similarities to fascist enterprises. Decentralization, meritocracy, and management by objectives were proposed as solutions to these problems.
The New Spirit of Capitalism
, the authors describe two new methods ofmanagement. Management by objectives serves to give the Cadres the autonomy they wantand to decentralize decision-making, as this will benefit the interested.All Cadres are autonomous but still controlled : on the one hand, by job descriptions whichallow the detailed specification of the autonomy granted and , setting objectives in line withthe general policy of the enterprise.Now, the “ Cadres” will be evaluated by the degree of success in their work. They are givengreater autonomy, given resources and monitored for the overall outcome. In this way, Cadreshave autonomy and companies have a motivated workforce. Promotion will be given to thosewho meet its objectives.The new evaluation systems , have the same objective of eliminating preference for seniorityreasons, which rewards only loyalty and not efficiency, and also reducing the role played bysocial relations in professional success.On the other hand, in the 1960s, the legitimization of the “Cadres” had as a negative point thedelegitimization of traditional employers with criticism of their authoritarianism andirresponsibility. Especially for small employers.
At the beginning of the 1980s, large-scale restructuring led to redundancies being accepted asnormal management acts. Therefore, a manager inspires and encourages, and the Cadresshould not be led to believe that they can decide everything and comment on everything justbecause they are allowed to participate.In the 1990s, the authors come to a conclusion: hierarchy is a form of coordination that mustbe excluded to the extent that it is based on domination, in order to liberate both the Cadresand the wage-earners. The rejection of the hierarchy in the 1990s, consists in the fact that thebig groups and multinationals have great difficulties in dispensing hierarchies. The reasons forthis accusation relate to an irremediable process of social evolution. Another importantfeature of this decade is that technological change and competition are very important.In the 1960s, there was a world represented by:-the free and capitalist world ( Western Europe and the United States)- Socialist countries with a planned economy.In the 1990s, one could see the old capitalist countries facing the rise of the capitalist world inAsia, where Japan was the most important country.The mechanisms proposed by the authors in the 1990s to address the challenges were :companies have to work with many participants, organizing teamwork, with the aim ofachieving customer satisfaction , etc. To achieve these methods , they speak of : Just in time,total quality, autonomous production equipment …The image of a modern firm is a mixture of suppliers, subcontractors, temporary staff, serviceproviders … That’s why they say it works like a network.It is said that workers have to organize themselves into teams , to be more qualified, moreflexible, more autonomous … and their employer is the client and they have a coordinator nota boss.Teams are a place of self-organization and self-control. Thanks to this , the hierarchicalprinciple is eliminated and organizations are more flexible and innovative. It also has aspecialisation advantage, as a company has many functions and has to maintain thoseoperations in which it has a competitive advantage, so you have to focus on your core businessleaving the rest of your activities for subcontracting.Faster information flow and innovation are very cost-effective. With the effects of learning andinformation transfer between different , the level of information is improved.The vision, guarantees the commitment of workers are to resort to orders, making everyone’swork important. The key point in this mechanism is the leader, who has to be able to see,communicate and get others to support him. It’s got to work like a coach.