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Toward a History of Management Thought
Charles Howell
The history f managementhought uffers rom a constricted efinitionofits subject. onstituentields marketing) ndcognateields economics nd aw) areoftenneglectedn studies f thesubject. he term"thought"ends o be equated to knowledge, ndthusgivena positivist ast,or describedn instrumentalerms
and herebyeducedo a generalizedormof practice. he historyof management thought, n short, nvitesmoreexpansivereatmenthan t hashitherto eceived. Thispaperexploreshepotential enefits f an enlarged efinition. The paper ocuses n two economists,dwinGay of HarvardandRichard Ely of the University of Wisconsin,who influenced he developmentofmanagementhought, nd whosecareerslluminate spects f it that havebeen neglectedn previous istories. othareassociated ith institutionshatpromoted scholarship,ducation,ndpublicdiscourseboutbusinessnd tssocial unction-- institutionshose ole n shapingmanagementhought as eceivedittle attention.
Both showeda keen nterest n the role of the state n economic ife. Their advocacy
of regulatory ndfiscalpoliciessuggestshat deasabout echniques f managing
grewup alongsidedeas boutpoliticalandsocial ife, and hat n any satisfactory account f managementhoughthesewo strands ustbe nterwoven. othplayed
a role in the professionalizationf economicsn the early twentieth entury: heir
contributiono managementhought ighlightsnterconnectionsetweenhe two fields hathaveyet to be explored.
Gay and Ely are not the most prominent iguresof their era, either inmanagementducation r in anyof theother ieldswith which heyare associated. Their intellectual ommitments, owever,are representativef thoseof manyof theircolleagues, nd he themesof their work point owardan enlarged istoryof management houghtand a more nuancedaccountof how ideas about the
administrationf businessave nfluenced olitics ndsocial ife.
Gay, Ely, and the Influence of the German Historical School
The backgrounds f both Gay and Ely point to an influenceon thedevelopmentf managementhoughthathasnotbeen tudiedn depth.Economists
by profession,othGay andEly did graduatework in Germanyandwere attracted
to HistoricalEconomics, hichoffereda method ndphilosophy ery different
fromtheneoclassicalpproachhengaining round n the United States.Members of theHistoricalSchool--Schmoller,ombart, ndWeber amongothers--criticized the classicalsystem or overdependencen deductive easoning nd urged an
inductiveapproachn the studyof economicorces.Historicaleconomistslso
BUSINESSAND ECONOMIC HISTORY, Volume wenty-four, o. 1, Fall 1995.
Copyright 1995 by theBusiness istoryConference.SSN 0849-6825.
promotedstate nterventionn economicaffairs and regarded he principle of
laissez-faireas a veiled expression f the self-interestof business. he German
economists'nterest n the social effectsof business nd in inductive nquirymergedn the amous eries f statistical ompilations ublished y the Verein for
Sozialpolitik--anassociation f scholars ommitted o social reform and to the
provision f a factual oundationor publicpolicy.
As Jones ndMoniesonpointout n their studyof early marketing hought, studentsof the German historicaleconomistsncluded many future leadersof
American conomics:esides ay andEly, thesenclude rankTaussig t Harvard, HenryC. Adamsof Michigan,JohnBatesClark andE.R.A. Seligman f Columbia, andEmoryJohnson,oseph ohnson, olandFaulkner,SimonPatten,andEdward Jones t the WhartonSchool 10, p. 14; 14, p. 104]. Many of the German-trainedeconomists lso played important oles in the evolutionof management s an
In the caseof Ely andGay, the most mportantnfluence f the Historical School appears o have been its stimulus o inductive work. Ely stronglyemphasizedmpirical tudyof economic henomenaothat JohnsHopkins,where he taught fter eturningrom Germany, ndat theUniversityof Wisconsin,where he spentmostof the rest of his career.Ely encouraged tudentso look to local economicconditions or thesisand paper topics; studentwork on marketing institutionsnd heeconomicsf publicutilities oreshadowedhe development f several reas f applied conomics19, p. 25; 14, p. 104].Jones ndMonieson ote
thatEly believedheempirical ndpractical mphasisf hisGerman rainingwere
essential ot ust for the studyof economics ut also or business ducation. heypoint out that SamuelSparling,an early studentof Ely's who went on to teach publicadministrationnd o writean early extbook nbusiness,viewedmarketing as part of the science f businesshat wouldbe developed y usingan inductive, comparative, istorical pproach"14, pp. 104-105].
Gay, too, looked o the ocaleconomyor raw datafrom which to construct
a theoryof business.ndustrialists ere nvited o address lasses, nd ield trips olocal irmswereorganized. ay helped o found he Bureauof Business esearch,
whichcollected tatistics n business perations. he accounting racticesnstituted
by theBureauo ensure onsistentataproved ohelpful hatproprietorsrequently adoptedhemasregular perating rocedure.he Bureau'sesearchnfluenced ot
onlymanagementractice, ut alsomanagementducationhroughpublication f its famous eries f casestudies,which orm an important art of the pedagogy fmanagement own o the present ay [6, pp. 216-220].Though n principle mpiricalmethods eednotentailcommitmento social
action, both men were drawn inexorably oward ssuesof public policy and
ultimately o advocacyof a larger role for governmentn economic ife. The
Historical chool ad aid the ntellectual roundworkor this ransition,eaching
that the idea of a custodial tatewasa specifically nglishcreation,a theoretical
construct nd representationf class nterest ather han a consequencef the
naturalorderdiscoverablehroughobjective tudy. Once the conceptof limited government ad been called into question,government tself proved willing to supplyan alternativevision.While still in
Germany. Ely was recruitedby United StatesAmbassador ndrew D. White, on
leave from the presidency f CornellUmversity, o conduct tudies f the Berlincity administrationnd he nationalization f Prussianailroads; ly idealizedhis
subjects o suchan extent hat White warnedagainst he "generalsurrender f individualism"hathe fearedsuch nextensive ureaucracy ightentail 19, p. 15]. Ely, however,was not deterredby the dangerof state ntervention. or him, the
facts of economic ife were to be considered in the contextof a plastichuman
nature ndan ethical deal" 19, p. 25]. On return o theUnitedStates, e advocated public ownership of natural monopolies, ncluding railroads, purchasebymunicipalities f unusedand to socialize he profitsof urbandevelopment, nd publicworksbureauso ensure ull employment. erviceon tax commissionsor theStateof Marylandand he City of Baltimoreallowedhim to suggest trategies
for public inancehatcouldultimately e used o fundsuchprojects. e proposed
that property axesshouldbe allocatedexclusively o local governmental nits,
whichcouldbe expectedo assess roperty aluesmorestringently; t state evel, a graduatedncome ax wouldprovide moreampleandreliablestream f revenue.
Suchproposals re significantnot becausehey were unusual t the time--
politicians nd economistslike debated imilarmeasures--butatherbecause f Ely'spositionn thehistoryof managementhought. ookingback o the originof managementsan academic iscipline, istorians ill discovern at leastoneof the field's early strandsan overarching thical commitmentand a zest for stateintervention n economicaffairs quite different from the ethos implied bypresent-dayefinitions f managementr representedn recenthistorical ccounts of its development. or Ely, the studyof business as irst the studyof economic
facts, construed o include business trategy,and second, he studyof the state
action hat hose acts equired.Modernorganizationalheorynotwithstanding,he
idea of managementhought s a setof decisionools,applied n a dispassionate
searchor efficiency, epresentsbreak romoneof the field's ounding raditions. Gay, too,wassympathetico thepopular ocial eformsof his day:as Dean
of the Harvard Graduate School of BusinessAdministration, he collaborated with
Henry Dennison,Chairmanof the BostonChamberof Commerce, o form the Massachusettsranchof theAmericanAssociation f LaborLaws,whichpromoted
legislationgainst hild aborand or a minimumwageandworkers' ompensation
[9, pp. 89-90]. Gay's primary contribution o an American-style ozialpolitik,
however, ay in the introduction f statisticalmethods o government gencies.nWorld War I, he servedon various conomic lanning nd radegroups, ddinghis
expertise o that of GeorgeGoethals,BernardBaruch,and HerbertHoover,and coordinating is effortswith thoseof otherbusinessacultymembers,ncluding A.E. Swansonof Northwestern,C.K. Leith of Wisconsin,Henry Hatfield of Berkeley,andArch Shaw,Henry Dennison, ndMelvin Copelandof Harvard 9,
pp. 98, 110].Eventually ay wasnamedby PresidentWilson o direct heCentral
Bureauof Planning nd Statistics,whichwas o ensurenteragency oordination.
After the war, Herbert Hoover, now Secretaryof Commerce,appointedGay, WesleyMitchell, anda numberof othereconomistso his AdvisoryCommitteeon
Statistics, hichurged timelypublication f dataon key sectors f theeconomy"-- informationwhich Hoover believedcould help rationalize business lanning,
moderatecyclicalfluctuations, nd providea statistical asis or government stimulationf theeconomy3, p. 8]. This advisory ommitteewasa forerunner f
the National Bureauof EconomicResearch,which Gay and Mitchell helped o foundand which Hoover,as president, ommissionedo conduct tudies losely resemblinghose hat he AdvisoryCommittee adrecommended3, p. 20].

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