Foundations of Marketing Thought

The Influence of the German Historical School

D.G. Brian Jones, Mark Tadajewski

• Publisher: Taylor & Francis
• Year: 2017
• eBook ISBN: 9781317295952
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

The study and teaching of marketing as a university subject is generally understood to have originated in America during the early 20th century emerging as an applied branch of economics. This book tells a different story describing the influence of the German Historical School on institutional economists and economic historians who pioneered the study of marketing in America and Britain during the late 19th and early 20th centuries.

Drawing from archival materials at the University of Wisconsin, Harvard Business School, and the University of Birmingham, this book documents the early intellectual genealogy of marketing science and traces the ideas that early American and British economists borrowed from German scholars to study and teach marketing. Early marketing scholars both in America and Britain openly credited the German School, and its ideology based on social welfare and distributive justice was a strong motivation for many institutional economists who studied marketing in America, predating the modern macro-marketing school by many decades.

Challenging many traditional beliefs, this book provides an authoritative new narrative of the origins of marketing thought. It will be of great interest to educators, scholars and advanced students with an interest in marketing theory and history, and in the history of economic thought.

1
Introduction

This book is about the intellectual foundations on which the academic discipline of marketing was constructed. Ever since the 1930s, when our predecessors began to reflect on the history of the subject, it has been widely accepted that it emerged as a specialized field of applied economics. This interpretation lacks considerable nuance and is a function of the influence of Robert Bartels. He wrote the major work on the history of marketing thought (Bartels, 1962) which is now a seminal reference point. Its comprehensiveness has ensured that it has rarely been challenged. However, what we get with Bartels is a limited interpretation of the development of marketing. He leaves us with the unmistakable impression that early marketing academics were trained in, and influenced by, classical, and to some extent, neoclassical economics. Bartels was wrong.

We now know that many of them were heavily influenced by the German Historical School of Economics (GHSE). They were fluent in the philosophy, concepts, and language that underwrote this school of thought – areas that are now discussed more formally using the terms of axiology (core values), epistemology (theory of knowledge), and methodology (general approach to the study of the topic and phenomena of interest). We track the influence of this school of thought in America and Britain.

During the 1980s there was a renaissance of sorts in historical research. Much more work was being done, more seriously, more rigorously, and more critically than before. Historians were starting to be openly critical of Bartels’ work. Dixon (2002) described his claims that marketing thought originated in the United States in the twentieth century as “a myth” (p. 737) and ridiculed Bartels for suggesting that the term “marketing” emerged between 1906 and 1911 (p. 738). He urged scholars to “stop ignoring, or at least stop denying, the existence of a rich heritage of marketing literature” prior to that articulated by its most prominent historian (1981, p. 26). The actual nature of the content being explored and claimed as the foundations of the discipline was also questioned.

Much of the discussion centered around twentieth century textbooks. This material was often descriptive. It told us what had been said and by whom and buttressed this with extensive descriptive statistics. Put otherwise, we gained a great deal of description about the world of marketing theory and practice without any substantive insight into the background factors, the environmental influences, and the intellectual motivations that generated the discipline and the practices that were being chronicled. Ron Savitt (1980) put this nicely when he wrote that much marketing history was not analytical – it did not analyze the enabling factors that contributed to the emergence of the discipline. Since Savitt’s fairly damning critique, productive marketing scholars have continued to shake Bartels’ pantheon. Shaw and Tamilia (2001) do an excellent job of summarizing the critiques of his work.

[It overlooked] the influences on the early marketing pioneers, misstating the time and place of the origin of marketing thought, using fixed time periods to characterize marketing history, [there were] inconsistencies in [his] bibliography, including too much chronology and description and not enough analysis and evaluation … [and it was limited] … almost exclusively to marketing authors of American textbooks.

(p. 162)

Yet, there was no other work that offered us such a panoramic sweep of marketing thought in the twentieth century. It deserved kudos for the broad-brush perspective it provided. And this leaves us with a rich tapestry whose threads need tightening, reworking, and unpacking in varying proportions. This is something we undertake in this book.

To go beyond Bartels, we have to move beyond pure description – although description has its place in marketing history and the history of marketing thought – towards greater analysis. Focusing largely on the twentieth century, moreover, was overly limiting. Scrutinizing the end result – the published work – means we bypass the enabling conditions, the factors that helped intellectually form the people writing the work – whether these were personal influences or important ideas gleaned from lectures, reading, and general discussion with colleagues. In this book we want to foreground these factors.

We will make the axiological, ontological, epistemological, and methodological discussions and the view of human nature that appear in this work as clear as possible. In order to do that, we will examine the heritage of academic writing about marketing. We move beyond Bartels by journeying into the late nineteenth century, to investigate the origins of modern academic marketing ideas and describe the intellectual foundations of those ideas.

Historical research in marketing

Historical research in marketing can be segmented into roughly two separate but related fields: marketing history and the history of marketing thought. The former examines the history of marketing practice. What we mean by this is what practitioners have done or how they have articulated their practice, putting their tacit knowledge into a form for wider dissemination. This can include – but is not limited to – histories of advertising, retailing, branding, distribution, consumption behavior, and so on. The history of marketing thought involves the study of ideas, concepts, theories, schools of thought, and the lives and times of great thinkers. That the two fields are, of course, related will be evident in the pages that follow.

There is a considerable literature on marketing history (for recent reviews, see Jones and Shaw, 2006; Jones et al., 2009; Tadajewski and Jones, 2014; Jones and Tadajewski, 2016). Although scholars have studied it as far back as ancient Greece, most of the research has focused on the period running from the eighteenth to the twentieth century. It explores the practices of retailing and channel management, product management (e.g. branding, market segmentation), promotion (e.g. advertising), market research, as well as the marketing strategies used by companies or industries which furnish considerable information about the interplay between all of the foregoing elements (Tadajewski and Jones, 2014).

High profile contributions to marketing history and the history of marketing thought unpack marketing’s role in defining our political-economic present. In contributing to this literature, we argue that marketing is a key vehicle in ensuring the ordering of society. It plays a significant role in system maintenance and, in doing so, rethinks and reaffirms capitalist economic relations. In situating marketing within the wider sphere of political economy, we link the intellectual figures connected to the GHSE with the emergence of marketing research and education at the university level. This project consequently requires us to interpret these people, their lives, and writings against the socio-political context in which they were embedded. We are not saying that context simply shapes lived experience. It does this and more, offering up inspiration and problems that require solutions. Context is a background and generative mechanism implicated in the trajectory of marketing thought (Morgan and Rutherford, 1998; Rutherford, 1997; Tadajewski, 2006a, 2006b).

Connecting the influence of the GHSE with marketing education is not as easy as it sounds. There were multiple threads of influence and not all thinkers held the same views about the market, marketing, and the social welfare benefits that flow from them. We will document that one strand takes a more critical stance towards the market, whilst other threads were underwritten by a more optimistic, and psychologically egotistic (Crane and Desmond, 2002) perspective regarding the beneficence of this distribution mechanism.

To set the scene a little, marketing as we understand it today originated in ancient times from about 2700 BCE (Jones and Shaw, 2002), with the Agora (the Greek marketplace), in sixth century Athens, being one of the earliest and most impressive exhibits in the ancient world:

There were products of every description, meat, fish, fowl, wheat, bread, cakes, vegetables, fruits, wine, oil, flowers, textiles, shoes, slaves, crafts and money lenders. Price was negotiated between retailers and customers, with sellers eager to undercut the competition. Peddlers walked among the shops, and some of the earliest advertisements were market vendors in Athens crying their wares in the Agora. Crying (a cross between talking and singing) was an early form of advertising; and a forerunner of the town criers of medieval times…. The Athenian Agora of 2,500 years ago probably resembled the hustle and bustle of an American, European, or Asian flea market of today.

(Shaw, 2016, p. 31)

The ancient Greeks also contributed to the history of marketing thought via their written commentary. Naturally, they did not use the term “marketing”. Plato and Aristotle, for instance, reflected extensively on buying and selling activities (Cassels, 1936; Dixon, 1978). These were assuming increased importance in society courtesy of the steady differentiation of labor. People were undertaking more specific, more focused work, and were thereby reliant on other specialists for their daily provisions. These effects reverberated throughout society and the economy. As Shaw (1995) explains,

The division of labor … results in a separation of producers and consumers. To bridge this gap, market exchange – selling and buying – is necessary. The exchange process requires work, work takes time, and time has an opportunity cost. Hence, marketing intermediaries emerge because of their increased efficiency in market exchange.

(p. 10)

Nevertheless, marketing thought was, at best, a small part of the Socratic philosophic system, rather than a well-integrated body of knowledge.

After the fall of Rome in about 500 CE, early medieval churchmen such as Saint Jerome, Pope Leo, and Saint Augustine claimed that traders made a social contribution by creating “place utility” and the profit they earned represented nothing more than a wage paid for labor (Dixon, 1979). Later medieval church fathers wrote about the morality of marketing, some condemning as sinful a variety of practices that are illegal today (Dixon, 1979). Others, such as Alexander of Hales and Saint Thomas (thirteenth century), stressed the beneficial nature of marketing (Dixon, 1979, 1980). Thus, from the earliest Greek philosophers to the close of the medieval period, there were scholars who understood the basics of marketing but they framed it within the context of discussions of moral philosophy, rather than as a separate and distinct subject matter.

Moving forward in history, Nicholas Barbon, John Carey, Simon Clement, John Hales, Edward Misselden, Sir William Petty, and others writing from the fifteenth to eighteenth centuries continued to discuss “marketing”. This was often undertaken in conjunction with theories of economic development (Dixon, 1981). Dixon credits the late eighteenth century classical economist Adam Smith with a clear understanding of the so-called “marketing concept”, a bedrock piece of our discipline to the present day. To demonstrate his argument, Dixon cites a famous quote from Smith’s Wealth of Nations: “The real and effectual discipline which is exercised over a workman is not that of his corporation but that of his customers” (Smith, quoted in Dixon, 2002, p. 741). During the mid-nineteenth century, “liberal” American economists such as Edward Atkinson, David Wells, and Arthur and Henry Farquhar echoed Smith’s position and promoted laissez-faire (i.e. free market capitalism). This was what was known as “classical” economics (Coolsen, 1960).

The late nineteenth century economists differed in their approach to the marketplace. It brought them closer to what we now understand as thinking about marketing. What we mean is that they connected their understanding of the wider macro-environment with the abstract, individual consumer and their attempts to maximize personal utility. Among the most important commentators in this tradition, Alfred Marshall, and Austrian economists such as Carl Menger and Eugen von Böhm-Bawerk, wrote about the consumer, production and exchange, marketing effort, and marketing system-environment interactions in their writings (Dixon, 1999). However, these reflections are still distinct from, and predate, the study of marketing as an academic subject legitimized by its place within the university. And most importantly, excepting Alfred Marshall, their writings were not a key influence on those now viewed as the founders of our discipline.

As mentioned above, most scholarship on marketing history has focused on the period since the eighteenth century. The reason for this is obvious. The industrial revolution had triggered massive changes in business and marketing practice (Boorstin, 1974; Chandler, 1977; Fullerton, 1988; Funkhouser, 1984; Strasser, 1989) – practices that were recorded by those involved in them who wanted to document their contributions to social change, development, and progression. Beyond the ruminations of business people and their associates, there were large numbers of observers eager to express their opinions, some of which were pro-business, others not so certain that the rapid changes taking place were equally benefitting all members of society. This outpouring of literature, in turn, generated a substantial amount of archival material available for consultation at some later juncture.

Strasser (1989), for example, describes how the development of mass production in the mid-to-late nineteenth century required the concurrent development of mass marketing in America. During that period, marketing strategies including segmentation, brand positioning, and product differentiation were developed. The refinement of packaged, branded products with sophisticated national promotion campaigns accompanied a dramatic change in distribution channels. In this context, the size and extent of operations were transformed. There was a transition from small, family-owned businesses to large corporations (although the latter did not completely replace the former). Small-scale independent retailers were yielding to mail-order houses, chain stores, and department stores. But this is only a tiny snapshot of the disruptive changes that were engulfing practitioners in the period between the nineteenth and twentieth centuries. Industry, rather than agriculture, assumed greater importance. The division of labor accelerated and this was reflected in functional specialization in production, marketing, human resources, and accounting. Connected to this, there was an emerging management tier hired to help deal with the strategic and operational issues these firms confronted.

Technological changes reverberated throughout multiple sectors. The founding of a national rail system and development of refrigerated rail cars, as well as the mass production of the automobile, all revolutionized distribution. New methods of printing technology and photography, combined with the invention of the telephone and radio, dramatically changed communications and promotion. Even mundane facets of products – the packaging we routinely take for granted – were transformed. This period witnessed the development of paper bags, tin cans, cardboard boxes, and glass bottles...

Table of contents

• Cover
• Title
• Copyright
• Dedication
• Contents
• Figures
• Tables
• Preface
• Acknowledgements
• 1 Introduction
• 2 The German Historical School of Economics
• 3 Foundations of marketing thought at the University of Wisconsin
• 4 Foundations of marketing thought at the University of Illinois
• 5 Foundations of marketing thought at the University of Birmingham, UK
• 6 Foundations of marketing thought at Harvard and beyond
• 7 Conclusions
• 8 Epilogue: the contradictions of progressivism and future research
• References
• Index