The Allure of Capitalism

An Ethnography of Management and the Global Economy in Crisis

Emil A. Røyrvik

• Publisher: Berghahn Books
• Year: 2011
• ISBN:
  9780857451866
• Edition: 1
• Topic: Economia
• Subtopic: Economia politica

The "managerial revolution, " or the rise of management as a distinct and vital group in industrial society, might be identified as a major development of the modernization processes, similar to the scientific and industrial revolutions. Studying "transnational" or "global" corporate management at the post-millennium moment provides a suitable focal point from which to investigate globalized (post)modernity and capitalism especially, and as such this book offers an anthropology of global capitalism at its moment of crisis. This study provides ethnographically rich descriptions of managerial practices in a set of international corporate investment projects. Drawing also on historical and statistical data, it renders a comprehensive perspective on management, corporations, and capitalism in the late modern globalized economy. Cross-disciplinary in outlook, the book spans the fields of organization, business, and management, and asserts that now, in this period of financial crisis, is the time for anthropology to yet again engage with political economy.

Part I

CONSTRUCTION AND CULTURES OF CREATION

Chapter 1

SITUATING “GLOBAL CORPORATE MANAGEMENT”

… there are always, in any society, conflicts between symbolic powers that aim at imposing the vision of legitimate divisions…

—Pierre Bourdieu, “Social Space and Symbolic Power”

Follow your nose wherever it leads you.

—Max Gluckman, “The Extended Case”¹

But fools with tools are still fools…

—Norman O. Brown, Apocalypse and/or Metamorphosis

The current phase of the cultural history of capitalism seems to provide particularly favorable conditions for studying the ambiguities and dilemmas, the creations and destructions of capitalism, and the multiplicities and complexities of “a” capitalism turned planetary. One of the primary characteristics of contemporary capitalist societies is the thriving development and excess multiplication of organizations. The “modern world” is “a society of organizations,” and arguably chief among them is the corporation—a key capitalist institution since the invention and widespread establishment of the “limited liability joint-stock company,” incorporated as a “legal person,” in the latter half of the nineteenth century (Micklethwait and Wooldridge 2003; Bakan 2004). As Berle and Means contemplated in 1932, the development and multiplication of what they called the “quasi-public corporation,” so as to differentiate it from the private company “proper,” caused a revolution in socioeconomic organization. The most radical invention was the “separation of ownership from control,” in that it “produces a condition where the interests of owner and of ultimate manager may, and often do, diverge, and where many of the checks which formerly operated to limit the use of power disappear” (1991: 7). Writing from the premises of neoclassical economic theory’s assumptions about individual ownership and private property, Berle and Means correctly identified the emergence of something qualitatively new: “In creating these new relationships, the quasi-public corporation may fairly be said to work a revolution. It has destroyed the unity we commonly call property.… Thereby the corporation has changed the nature of profit-seeking enterprise” (ibid.). In separating owners from control, the neoclassically perceived “holy” unity was broken, and managers were created as a new and previously unknown consequence of the invention of the modern corporation. Below I discuss more thoroughly the neoclassical foundations and tensions of the corporation, and of management.

Corporate management has by now become a key institution in modern societies, and while Peter Drucker, arguably the most influential thinker on management theory and practice, expressed ample reasons for studying modern organizational management thoroughly half a century ago, there is still no tradition of anthropological management research. Drucker wrote:

The emergence of management as an essential, a distinct and a leading institution is a pivotal event in social history. Rarely, if ever, has a new basic institution, a new leading group, emerged as fast as has management since the turn of the century. Rarely in human history has a new institution proven indispensable so quickly; and even less often has a new institution arrived with so little opposition, so little disturbance, so little controversy. (1954: 3)

The inception of management can be traced to the American discourse among engineers in the US in the years from 1880 to 1932 (Shenhav 1999), the latter year being the date when Berle and Means announced the “managerial revolution” (1991; cf. Dalton 1959; Mintzberg 1973). Shenhav exposes the “process by which managerial rationality crystallized to become the unquestioned pacemaker of the modern social order” while playing a critical role in “diffusing repertoires of instrumental rationality worldwide” (1999: 2). A study of corporate management is thus a study of key aspects of modernization and modern forms of rationality. And while there is indeed ethnography of formal organizations and corporations, and a rich variety of occupational ethnographies, there are but a few comprehensive ethnographies specifically focusing on corporate management, where Watson (1994) and possibly Jackall (1989) serve as examples.

Although anthropological efforts to discuss managing, for example in relation to “meaning” (Gowler and Legge 1983) and “magic” (Cleverley 1971), have ensued, and Sørhaug (2004) addresses managing in the knowledge economy in terms of his concise concept of “mangementality,” none of these are based on in-depth ethnographic investigation. Thus Linstead notes: “There is no extensive tradition of sociological participant observation in management research” (1997: 96). The ethnographically based collection of essays in Dubinskas (1988) touches upon issues of managing by way of studying technologically advanced organizations, but only marginally, and the focus is on time or temporality in organizing. Ho’s in-depth discussion of managerialism in relation to financial work is an exception in this overall picture (2009). In particular, few if any ethnographies have been especially focused on “global corporate management.” And ethnography is in great demand in management and organizational research, importantly as an alternative to the increasing convergence, especially in American journals, on a positivistic “factor analytic” version of grounded theory that “commonly reduces large amounts of qualitative data into meaningful ‘factors’ that are theoretically derived from the data but can also be generalized to other similar contexts” (The Editors 2011: 198).

There are thus ample reasons for ethnographically based anthropological contributions to the study of corporate managing in the globalized economy. As such, this volume is also a contribution to an anthropology of contemporary expert and professional elites, a study that is, according to Holmes and Marcus, long deferred and awaited, and that “by this time is belated” (2005: 248). While discussing the study of management more thoroughly below, I will ground the present study also in a dialogue with the other contingent theoretical fields in which an anthropology of global corporate management is situated. In addition to the emergence and dominance of management itself, I discuss most notably economic anthropology and the neoclassical economic theories and neoliberal premises within which both contemporary corporate management and global economic relations are dominantly constituted. Finally I will briefly outline the research approach and perspective.

Hydro’s Ambiguous Position

During the unfolding of my research process, increasingly I came to realize that Hydro Aluminium² proved to be an exemplary corporate context for illuminating some of the most basic ambiguities, asymmetries, and complexities of the developmental processes and contemporary predicament of economic globalization. Hydro illustrates a vast range of the tensions and paradoxes of the world economic canvas. Its history reflects the complex transformations of the industrial society into the so-called “knowledge society”: Hydro is presently viewed both as a “traditionally industrial” and a “knowledge firm,” with a leg in both the “old” and the “new” economy. Hydro furthermore manifests the tensions between the national and the supranational, because it is a flagship national company of Norway and at the same time a multinational or “global” company with a presence in more than thirty countries. Hydro may also educationally illustrate some of the basic mechanisms by which asymmetries and inequalities of contemporary economic life on the global scale came about and are reproduced and expanded. Just as the massive circulation and accumulation of money worldwide is in fact concentrated mainly in a few rich countries, so are the bulk of Hydro’s activities.

In the wake of the establishment of the modern Norwegian state by the end of the nineteenth century, Hydro was conceived and quickly developed the role of a major locomotive in the Norwegian industrialization process, and subsequently the welfare state. Hydro has arguably been the single most important industrial company in Norwegian history. And quite contrary to the economic structures and processes that enabled Norway’s transition out of poverty, the rules Hydro must play by today are prescribed by the hegemony of a financialized economic order that is ideologically legitimated by neoliberalism or neoliberalization (see below and Part II). This climate is upheld by what “pro-globalizer” Bhagwati (2004) has labeled the “Wall Street–Treasury complex,” including the Washington institutions of the IMF and the World Bank. Whatever complex processes “globalization” is a shorthand designation for, what is historically remarkable in the present situation, as Edelman and Haugerud note, “is the celebration of a particular form of globalization—economic neoliberalism” (2005: 23). Over the last thirty years or so the neoliberalized playbook has accelerated the devastating global economic inequalities (see below and Chapter 6).

Hydro, also in its capacity as being partly state-owned, is a formidable exploratory example and thinking device in making sense of the complex and historically changing relationships between the state and interstate system on the one hand and the market economy on the other, which in different configurations have constituted the various capitalisms that so profoundly shape the contemporary globalized world order. Although partly state-owned, Hydro might also be seen to exemplify bourgeois society (economy), as demarcated to include both the family and the private sphere on the one hand, and on the other the democratic state (politics), in Hegel’s trilateral differentiation.

Hydro’s status in the contemporary capitalist mode of production is certainly ambiguous, not only because the Norwegian state owns 34.26 percent of the company (as of 2011), but also because of its uneasy positioning in a cultural and economic matrix increasingly defined by finance and consumerism. As will be discussed at length, while Hydro’s “production capitalism” is increasingly defined in terms set by a financialized economic order, it cannot ultimately feel at home in the stereotypical idioms of “consumer culture” (Douglas and Isherwood 1996; Miller 1997a). As noted by Comaroff and Comaroff: “As consumption became the moving spirit of the late twentieth century, so there was a concomitant eclipse of production; an eclipse, at least, of its perceived salience for the wealth of nations” (2001: 4, italics in original).³ Hydro, as a knowledge-based, industrial corporation that does not produce directly for consumer markets, is to some extent, and differently so, positioned in a tensional relationship with both “cultures of finance” and “consumer culture.”

The context of the present study, the “production” of corporate capitalist investment projects, also highlights some of the shortcomings of much of economic anthropology. A major problem lies in its almost exclusive focus on barter, exchange, and transactions, and on consumption, at the expense of production in various forms, not least “knowledge-based” production.⁴ As Reidar Grønhaug notes: “In terms of economy… contemporary anthropologists have by and large abdicated the task, with the exception of some studies on consumption and identity” (2001: 66, my trans.). Industrial production has, however, received its fair share of attention in industrial sociology and anthropology, often with a Marxist outlook. The approach in the present work also draws to some extent upon Marxist notions of capital. However, for all their differences, Marxist theory and classical (and to some extent neoclassical) economic theories share one basic fundamental premise: the labor theory of value.⁵ As Reinert argues, production, knowledge, and invention were lost in the economic theory of Adam Smith, because he reduced both production and trade to “labor hours.” David Ricardo, following Smith in this respect, created an “even more abstract theory of ‘labor’—a concept devoid of any qualities—as the measuring rod for value” (Reinert 2007: 41). Because the proper interpretation of Marx theory of value, as Harvey notes, “is a matter of great contention” (2006: 35), I shall here just note that although significant differences exist among Marxist and liberal labor theories of value, their common premise on variants of the labor theory of value overshadows some other important possibilities.

The present analysis thus illustrates the “predicament of production” in this climate, and as Reinert notes, “It is in the sphere of production that the best arguments both against and for globalization are to be found” (2004: 75, my trans.). Hydro still keeps the “banner” of knowledge-based production high, in the midst of an economic and cultural context of consumer and finance pressures and expansions, and its investment projects epitomize its ambiguous positioning at the crossroads of production and finance capitalism. Choosing to gloss over many of the “great contentions” in these debates, an overall focus on qualitatively void labor hour accounting consequentially reduces and conflates the modern economic sphere of activities because it downplays notions of human creative powers, imagination, knowledge, and wisdom—of the “human spirit,” as stressed in, for example, Germany’s historical school of economics and its engineering tradition. This latter domain is vividly described by Goethe’s term Willenskraft and Nietzsche’s Geist und Willenskapital, man’s “wit and will” (Reinert and Reinert 2006).

Some of these notions, including those of Schöpfungskraft and Schöpfungslust (the power, desire and joy of creation), akin to possibly more familiar constructs like Homo faber and Homo ludens, man the maker and player, were continuing ideas in the German economic and philosophical tradition. Articulated by thinkers like Henri Bergson, Hannah Arendt, and Max Frisch, Homo faber refers to humans as controlling the environment through tools. Henri Bergson referred to it in his Creative Evolution as defining intelligence in its original sense: as the “faculty of manufacturing artificial objects, especially tools to make tools, and of indefinitely varying the manufacture” (2007 [1907]: 153–154). Homo faber identifies “man as the tool-making animal,” but it also indicates “the working man,” who is confronted and completed by Homo ludens, the “playing man” concerned with joy, humor, and leisure. Homo faber is also related to the concept of deus faber, God the creator or the “making God.” In this sense we can also recognize the notion of man the creator, Homo creator, who like God may create and bring new things into the world, that emerged during the Renaissance (Larsen 2009). The power to create is related to both the joy and pain of the process of creation. A notion captured by the old Hindu conceptions of creation and destruction and introduced to nineteenth-century European discourse as “creative destruction” by Nietzsche, it was brought into economics by Werner Sombart and subsequently made famous by Schumpeter (Reinert and Reinert 2006).

These ideas, perceived as major, spiritually based “productive powers” that create innovations and fundamentally different types of economic activities, are reflected in Schumpeter’s twentieth-century notion of the “entrepreneur” (1982 [1939], 2008 [1942]), with different types of consequences in turn for bourgeois society, and for economic and social life. Schumpeter’s entrepreneur, whom he sees as the most vital force in capital formation, is not a risk-taking speculator but an innovator driven by the joy of creation, the drive to introduce the new. Indeed, Schumpeter foresaw the “obsolescence of capital’s entrepreneurial function and its replacement by a mechanized, routine form of economic progress dictated by management rationality and the faceless gray suits that populate board-rooms” (Hardt and Negri 2009: 297). And if it loses its innovative and entrepreneurial power, capital cannot survive for long either, according to Schumpeter: “We have seen that the function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention or … an untried technological possibility.… It consists in getting things done.… This social function is already losing importance” (Schumpeter 1942: 132). Should this function be lost, the vitality of capitalist e...