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American Entrepreneurship: Its Rise and Decline
| Article
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19572 |
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Section : |
MODERN THOUGHT
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| Issue
Date : |
11 / 1991 |
11,298 Words |
| Author
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Stanley Rothman
Stanley Rothman is Mary Huggins Gamble Professor of
Government and director of the Center for the Study of Social
and Political Change at Smith College. |
The luster is fading and tarnish is setting in on America's economic reputation. The United States no longer epitomizes an efficient industrial capitalist country to the rest of the world, or even to her own citizens.
Japan, Korea, and Taiwan are clearly outpacing America in the growth of productivity and quality of product. In Germany, too (or at least what was West Germany), growth in per capita productivity in recent years has been higher than in the United States. The quality of German products is often superior to those produced in this country.
Alfred Chandler, in his magisterial study of the growth of modern business enterprise in the United States, England, and Germany, argues that the key variable was innovative management that took advantage of the economies of scope and size. Recently, an MIT study of American industry laid some of the blame for America's relative economic decline at the feet of management. American managers, the authors argue, seek quick profits, and their horizons are narrow. They have little sense of commitment to the larger community and little concern for the future of the firm itself. On the other hand, the study reports:
Executives in other countries tend to be less preoccupied with earnings, dividends, and share prices. Japanese and European firms hold that managers are not only responsible to shareholders, but also have a commitment to the larger community of employees, customers, neighbors, and suppliers and to the continuity and growth of the firm itself.
Is the MIT study correct? The authors are not the only ones who have placed at least some of the blame for the decline of America's competitive edge upon the character of its business class. Indeed, this notion has become part of the conventional wisdom of the informed public. I believe that the conventional wisdom in this case has some merit, and the goals of this essay is to contribute to an understanding of why American managers have lost their competitive edge, drawing upon both psychological and sociological hypotheses.
Briefly, I more or less accept the sociological perspective of Max Weber and, more recently, Daniel Bell writing in The cultural Contradictions of Capitalism (1976). Contrary to the beliefs of those who are primarily familiar with The Protestant Ethic and the Spirit of Capitalism, Weber did not argue that Protestantism was responsible for the development of capitalism and the modern world. Not only did he believe
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