History Of Management Thought: Genesis And Development From Ancient Origins To The Present Day [1st Edition] 303062336X, 9783030623364, 9783030623371

Table of contents :
Preface to the Current Edition......Page 7
Acknowledgments......Page 9
Contents......Page 11
About the Author......Page 15
1.1 Introduction to the History of Management Thought......Page 16
1.2 Introduction into the ``Organization´´ and into ``Management of an Organization´´......Page 22
1.3 On Attitude to ``the Past´´ in Historical and Managerial Research......Page 38
1.4 Historic and Managerial Research as the Basis of ``Management as Science´´......Page 44
1.5 Issues in Research of the History of Sciences......Page 53
1.6 Specific Issues in the History of Management Thought as Science......Page 61
1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the Early Twenty-First Century......Page 70
References......Page 84
Additional Literature......Page 88
Part I: Genesis and Development of World Management Thought from Ancient Times to the End of the XIX Century......Page 89
2.1 The Origins and Sources of Management Thought......Page 90
2.2 Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia......Page 102
2.3 Development of Management Issues in Ancient China......Page 108
2.4 Views on Management of the State Economy in Ancient India......Page 131
2.5 The Development of Management Issues in Ancient Greece and Ancient Rome......Page 144
2.6 Management Thought in the Old Testament and the New Testament......Page 159
References......Page 164
Additional Literature......Page 165
3.1 Origins and Sources of Management Thought in the Fifth to Eighteenth Centuries......Page 166
3.2 Byzantine Management Thought......Page 172
3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)......Page 177
3.4 Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries......Page 190
3.5 Ideas of Entrepreneurship in Western Europe......Page 195
3.6 The Classics of the Political Economy on Management (Eighteenth to Nineteenth Centuries)......Page 197
3.7 Robert Owen and Social Responsibility of Business......Page 204
3.8 Charles Babbage on Specialization and the Division of Physical and Mental Labor......Page 206
3.9 Andrew Ure on Replacement of Labor with Capital......Page 210
3.10 Lorenz Von Stein´s ``The Doctrine of Management´´......Page 211
References......Page 222
Additional Literature......Page 224
4.1 The Sources and Origins of the Emergence of Management Thought in Russia......Page 225
4.2 ``Russkaya Pravda´´......Page 239
4.3 Ideas for Organizing of Local Management in Moscow Centralized State......Page 243
4.4 On the Management of the Private Sector in Silvester´s ``The Domostroy´´......Page 248
4.5 Major Factors in the Development of Management Thought in Russia of the Seventeenth Century......Page 251
4.6 Yurij Krizhanich......Page 255
4.7 Afanasij Ordin-Nashchokin......Page 265
4.8 Reforms of Peter Great as a Stage of the Development of Management Thought......Page 271
4.9 Ivan Pososhkov......Page 274
4.10 Mikhail Lomonosov......Page 281
4.11 Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship......Page 284
References......Page 296
Additional Literature......Page 298
5.1 The Sources and the Main Directions of Management Thought in Russia in 1800-1917......Page 299
5.2 The Characteristics and Achievements of the Noble Management Thought......Page 307
5.3 Management Ideas of the Revolutionary Democrats and the Populists......Page 323
5.4 Management Ideas of the Representatives of the Bourgeoisie......Page 346
5.5 Management Training Courses at Russian Universities in 1880s......Page 372
5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas......Page 392
5.7 Vladimir Lenin and the Proletarian Management Thought......Page 403
References......Page 414
Part II: New and Newest History of Management Thought......Page 421
Chapter 6: Western Schools of Management of the Twentieth Century......Page 422
6.1 Frederick Taylor´s School of Scientific Management and His ``Followers´´......Page 426
6.2 Organizing and Principles of Effectiveness of Harrington Emerson, Morris Cook, and Wallace Clark......Page 442
6.3 Henry Fayol´s Administrative School of Management......Page 446
6.4 The School of Human Relations......Page 453
6.5 Motivation: As a Content and a Process......Page 461
6.6 Empirical School of Management......Page 481
6.7 School of Social Systems......Page 488
6.8 The New School of Management Science......Page 509
6.9 The Situational Approach in Management......Page 515
6.10 The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans......Page 523
References......Page 530
7.1 The Formation of Soviet Management Thought in the 1917-1930s......Page 535
7.2 Soviet Management Thought in the 1930-1950s......Page 560
7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the 1960-1970s......Page 568
7.4 Developing of Management Issues in the USSR in the 1960-1980s......Page 603
7.5 Development of Views on Management in Russia since 1990......Page 613
References......Page 623
Additional Literature......Page 626
Chapter 8: Actual Problems and Concepts of Management......Page 628
8.1 Organizational Culture: Measurement, Change, and Management......Page 630
8.2 Leadership Concepts: From Leadership Qualities to Learning and Service......Page 649
8.3 The Ethics of Business and Management......Page 671
8.4 Digitalization of Management: Nirvana or Nemesis?......Page 688
References......Page 703
Additional Literature......Page 708
List of Scientific Research Directions, Subjects of Course and Graduate Works, and Scientific Reports on History of Management.........Page 709
Development of Views on Management or the Management Continuum......Page 711

Citation preview

Contributions to Management Science

Vadim I. Marshev

History of Management Thought Genesis and Development from Ancient Origins to the Present Day

Contributions to Management Science

The series Contributions to Management Science contains research publications in all fields of business and management science. These publications are primarily monographs and multiple author works containing new research results, and also feature selected conference-based publications are also considered. The focus of the series lies in presenting the development of latest theoretical and empirical research across different viewpoints. This book series is indexed in Scopus.

More information about this series at http://www.springer.com/series/1505

Vadim I. Marshev

History of Management Thought Genesis and Development from Ancient Origins to the Present Day

Translated from Russian by O. Geraschenko

Vadim I. Marshev Faculty of Economics Moscow State University Moscow, Russia Translated by Oleg Geraschenko Citizen of United Kingdom and Russia Moscow, Russian Federation

Translated from the Russian original: Marshev V. I.(2005) History of Management Thought, ISBN 5-16-00215-2 © Faculty of Economics Moscow State University, 2005 © Design. INFRA M, 2005 ISSN 1431-1941 ISSN 2197-716X (electronic) Contributions to Management Science ISBN 978-3-030-62336-4 ISBN 978-3-030-62337-1 (eBook) https://doi.org/10.1007/978-3-030-62337-1 © Moscow State University Lomonosov 2021 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

For Ella and our children

Preface to the Current Edition

In the new edition of the textbook History of Management Thought, as in previous editions, starting in 1987, we are talking about the multi-thousand-year world history of management thought (HMT). The main difference from the 2005 edition is the updating and addition of part of the textbook sections with the results of the latest research in the history of management, business, and management thought. Among the sources of updates and supplements are the works of international conferences on the History of management thought and business (HMT&B) conducted since 1996 at the Faculty of Economics of Lomonosov Moscow State University (FE MSU), the work of the annual International Business History Conference sponsored by the Harvard Business School (USA), materials of the meetings of the Academy of Management (AOM USA), the author’s research papers, and studies of my learners—students and master’s and postgraduate students at the Faculty of Economics of MSU. It was recent researchers who encouraged the reissue of the textbook, offered the results of their studies as materials for the new textbook, and thus helped update it. Management issues have been and continue to be the focus of attention of business circles, political elites, the public, educators, and management consultants. Representatives of these communities have often been the authors and implementers of management ideas. The main motives of search, formation, and development of management ideas have always been to ensure the well-being, welfare, and safety of members of the social organization (family, enterprise, state, society) and hence the increase of efficiency and effectiveness of management decisions, continuous improvement of management of the organization, and increase of efficiency and effectiveness of the activities of organizations. It is this process of emergence, formation, and development of management ideas on a long time interval in different regions of the world that this tutorial is devoted to. This tutorial attempts to analyze and synthesize the theoretical and applied developments devoted to management of various organizations in different specific historical eras. The authors of the developments were representatives of civilizations of the ancient East, China, India, Greece, and Rome, feudal medieval states, the first capitalist states, and the modern states of Germany, England, Austria, the United vii

viii

Preface to the Current Edition

States, Russia, and others. Covering a long period of time (the IV millennium B.C. to the beginning of the twenty-first century) and limited by the scope of the textbook, the author did not always collate the enunciated material or perform a comparative analysis of the views on management and sent the reader to relevant literature or to carry out independent research and projects on the proposed topics (see Appendix 1). The tutorial is intended for teachers and students. The textbook is the basis for the “history of management thought” in the bachelor’s and master’s programs at economics faculties, management faculties, business schools, and management schools at higher education institutions, for students in management of an organization, general and strategic management, business management, entrepreneurship, public administration, financial management, innovation management, regional management, industry management, and other managerial specialties. Moscow, Russia Moscow, Russian Federation

Vadim I. Marshev Oleg Geraschenko

Acknowledgments

In the preparation of the new textbook, the author’s colleagues, staff from the Department of Management of an Organization and the History of the National Economy of the Faculty of Economics of Lomonosov Moscow State University, and, of course, as mentioned above, participants of international conferences on HMT&B provided professional assistance with advice and suggestions. The author expresses his special gratitude to three persons: – Professor David Borisovich Yudin, who took me after graduating from the Faculty of Mechanics and Mathematics of the Moscow State University MSU to the postgraduate study of the Faculty of Economics of the MSU, fascinated me with modeling economics and stochastic programming, supervised me in graduate school, and “brought” me to defend my Ph.D. thesis in 1971 on the topic “Static models of economic equilibrium” – Professor Gavriil Kharitonovich Popov, who accepted me to the Department of Management of the Faculty of Economics of MSU for the position of Head of the Laboratory for Simulation Modeling of Social Production Management and blessed me in the 1970s for research on the history of management thought – My friend and colleague in the Faculty of Economics, MSU Management Department, Boris Anatolyevich Korobov, mathematician, who had convinced me that the history of management and history of management thought are a necessary and sufficient means not only for scientific proof of “the past” but also of an explanation of “the present” and even a possible prediction of the “future” in the management of human communities In addition, the author expresses his gratitude to his students—bachelor’s, master’s, and graduate students, doctoral students, and colleagues of the Faculty of Economics of the Moscow State University named after M.V. Lomonosov and other organizations for discussions and conversations, as well as materials of joint research with them on HMT. Among them are Irina Zhukova, Svetlana Karpova, Elena Bogomolova, Eduard Kasabov, Irina Matyukhina, Grigory Vysotsky, Galina Baranovskaya, Nurguyana Fedorova, Helen Baranova, Dmitry Kuzin, Abduragim Abduragimov, Alexander Tarasov, Marat Bogatyrev, Evgeny Savelonok, Natalia ix

x

Acknowledgments

Podvoiskaya, Nicholay Pasholok, Dmitry Suslov, Mikhail Vasiliev, Gleb Ivashchenko, Svetlana Shchelokova, Tatiana Alifanova, Naila Agaeva, Roman Gridin, Oleg Vikhasky, Algirdas Manyushis, Sergey Chernov, Victor Bogachov, Dmitry Platonov, Andrey Kuzmichov, Sergey Altukhov, Vladimir Sarayev, Vladimir Chernykh, Ivan Dvoluchansky, Ivan Arkhipov, Zhamol Otaboev, and Vladislav Kornyshev. The author wants to express his particular gratitude to Oleg Geraschenko for professional translation into English and to Oleg Berlosky, who provided financial assistance in the translation of my textbook into English.

Contents

1

Issues of Historical and Managerial Research . . . . . . . . . . . . . . . . . . 1.1 Introduction to the History of Management Thought . . . . . . . . . . 1.2 Introduction into the “Organization” and into “Management of an Organization” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 On Attitude to “the Past” in Historical and Managerial Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Historic and Managerial Research as the Basis of “Management as Science” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 Issues in Research of the History of Sciences . . . . . . . . . . . . . . . 1.6 Specific Issues in the History of Management Thought as Science . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the Early Twenty-First Century . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part I 2

1 1 7 23 29 38 46 55 69

Genesis and Development of World Management Thought from Ancient Times to the End of the XIX Century

The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1 The Origins and Sources of Management Thought . . . . . . . . . . 2.2 Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia . . . . . . . . . . . . . . . . . . . . . . . 2.3 Development of Management Issues in Ancient China . . . . . . . 2.4 Views on Management of the State Economy in Ancient India . . 2.5 The Development of Management Issues in Ancient Greece and Ancient Rome . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 Management Thought in the Old Testament and the New Testament . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. .

77 77

. 89 . 95 . 118 . 131 . 146 . 151 xi

xii

3

4

5

Contents

World Management Thought in the Fifth to Nineteenth Centuries . 3.1 Origins and Sources of Management Thought in the Fifth to Eighteenth Centuries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Byzantine Management Thought . . . . . . . . . . . . . . . . . . . . . . . 3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries) . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Ideas of Entrepreneurship in Western Europe . . . . . . . . . . . . . . 3.6 The Classics of the Political Economy on Management (Eighteenth to Nineteenth Centuries) . . . . . . . . . . . . . . . . . . . . 3.7 Robert Owen and Social Responsibility of Business . . . . . . . . . 3.8 Charles Babbage on Specialization and the Division of Physical and Mental Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.9 Andrew Ure on Replacement of Labor with Capital . . . . . . . . . 3.10 Lorenz Von Stein’s “The Doctrine of Management” . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. 153 . 153 . 159 . 164 . 177 . 182 . 184 . 191 . . . .

The Emergence and Formation of Management Thought in Russia (Ninth to Eighteenth Centuries) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 The Sources and Origins of the Emergence of Management Thought in Russia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 “Russkaya Pravda” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Ideas for Organizing of Local Management in Moscow Centralized State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 On the Management of the Private Sector in Silvester’s “The Domostroy” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 Major Factors in the Development of Management Thought in Russia of the Seventeenth Century . . . . . . . . . . . . . . . . . . . . . 4.6 Yurij Krizhanich . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Afanasij Ordin-Nashchokin . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 Reforms of Peter Great as a Stage of the Development of Management Thought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.9 Ivan Pososhkov . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10 Mikhail Lomonosov . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

193 197 198 209 213 213 227 231 236 239 243 253 259 262 269 272 284

Management Thought in Russia in 1800–1917 . . . . . . . . . . . . . . . . . 287 5.1 The Sources and the Main Directions of Management Thought in Russia in 1800–1917 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 5.2 The Characteristics and Achievements of the Noble Management Thought . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

Contents

xiii

5.3

Management Ideas of the Revolutionary Democrats and the Populists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4 Management Ideas of the Representatives of the Bourgeoisie . . . . 5.5 Management Training Courses at Russian Universities in 1880s . . . 5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 Vladimir Lenin and the Proletarian Management Thought . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Part II 6

7

8

311 334 360 380 391 402

New and Newest History of Management Thought

Western Schools of Management of the Twentieth Century . . . . . . . 6.1 Frederick Taylor’s School of Scientific Management and His “Followers” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Organizing and Principles of Effectiveness of Harrington Emerson, Morris Cook, and Wallace Clark . . . . . . . . . . . . . . . . . . . . . . . . 6.3 Henry Fayol’s Administrative School of Management . . . . . . . . . 6.4 The School of Human Relations . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Motivation: As a Content and a Process . . . . . . . . . . . . . . . . . . . 6.6 Empirical School of Management . . . . . . . . . . . . . . . . . . . . . . . 6.7 School of Social Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 The New School of Management Science . . . . . . . . . . . . . . . . . . 6.9 The Situational Approach in Management . . . . . . . . . . . . . . . . . 6.10 The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Development of the Scientific Basis of Management in the USSR and in Russia in Twentieth Century . . . . . . . . . . . . . . . . . . . . . . . . 7.1 The Formation of Soviet Management Thought in the 1917–1930s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Soviet Management Thought in the 1930–1950s . . . . . . . . . . . . 7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the 1960–1970s . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Developing of Management Issues in the USSR in the 1960–1980s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Development of Views on Management in Russia since 1990 . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

411 415 431 435 442 450 470 477 498 504 512 519

. 525 . 525 . 550 . 558 . 593 . 603 . 613

Actual Problems and Concepts of Management . . . . . . . . . . . . . . . . 619 8.1 Organizational Culture: Measurement, Change, and Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621 8.2 Leadership Concepts: From Leadership Qualities to Learning and Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640

xiv

Contents

8.3 The Ethics of Business and Management . . . . . . . . . . . . . . . . . . 662 8.4 Digitalization of Management: Nirvana or Nemesis? . . . . . . . . . . 679 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 694 Annexes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Annex 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701 Annex 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703

About the Author

Vadim I. Marshev is the Distinguished Professor of the Moscow University and a Professor at the Faculty of Economics of Moscow State University (Russia). Vadim Marshev is a musician, teacher-sport trainer and mathematician by education. In his youth, he was a member of the Soviet Union OlympicTeam in athletics, also directed the jazz ensemble, and then graduated from the Faculty of Mechanics and Mathematics at the Moscow University and headed the Laboratory of Simulation modeling of the National Economy management at the Faculty of Economics, the Moscow University. Currenlty his research and teaching expertise span across organization theory, general management of organization, strategic management, history of management thought, change management, scenario-based management, family business management, and sport management. Prof. Marshev is also a renowned consultant in the fields of general management, restructuring, and strategy development. He is a member of the National Association of Independent Directors (Russia) and the Russian Institute of Corporate Directors. On the academic side, he is a member of the Editorial Board of the journal Management Sciences (Russia) and a member of the Academy of Management (Management History division and Organization and Management Theory division).

xv

Chapter 1

Issues of Historical and Managerial Research

Abstract This chapter introduces the main methodological issues in the formation and development of the History of Management Thought (HMT). Here are the main questions that the history of management thought should answer: “Why and for What purpose has one or another management idea been proposed?” Why was it proposed at specifically this time and place? “Which conditions and circumstances have affected the emergence of a new management idea?” Here emphasis is being made on the relevance of increasing scientific validity in management decisions, the general and specific characteristics of HMT as a scientific, applied and educational discipline, the role and place of HMT in the history of science, issues of organization of research and methods of HMT development, source study and other issues of HMT are disclosed. Here the reader will get acquainted with the three main concepts of management thought—the models of the police, legal, and cultural states.

1.1

Introduction to the History of Management Thought

Recalling the history of real management and ideas about management is every time verification of your own hypothesis and ideas, search for analog solutions, and evaluation of decisions made. In today’s burgeoning business environment, in almost every business magazine you’ll be quoted from historical manuscripts of ancient thinkers, statements by the leaders of states and military warlords of the past on the management of human beings, relations with subordinates, strategies and tactics of management, power, conflict and leadership, control and accountability in management, and many others that remain relevant managerial issues. In the current world financial, economic, and social crisis, it is clear that the root cause of the crisis is the lack of professionalism and incompetence of those who take management decisions in these “crisis” areas, in other words, it is a management crisis. This is essentially due to the timeliness and relevance of the publication of this textbook, drawing the reader’s attention to the richest millenary legacy and heritage of management ideas. The only thing left is to realize that management is a unique professional activity that absorbs the achievements of practically all other sciences, synthesizing public practice and requiring respect, study, and correct usage in © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_1

1

2

1 Issues of Historical and Managerial Research

solving both scientific problems and practical tasks in the management of organizations, such as socio-economic communities to which we, dear reader, are classified. Speaking of managers, it should be noted that in the society of managers reading historical literature on management has always been considered a superfluous occupation. In an era of almost turbulent changes in the external environment and sharp changes in their organizations, it is very difficult to force oneself to seek answers or advice in the works of ancient thinkers and even their compatriots who lived 100–200 years ago. As a result, modern managers and even theorists of management began to gradually forget the ideas of Charles Babbage (nineteenth century) and Frederick Taylor (early twentieth century) about the study of labor movements, and today we present ideas about rational allocation of a manager’s time as a discovery of science; we gradually began to forget Henri Fayol’s law on management functions, and today we are struggling to explain the sustainability of functional organizational structures of management; we have not promoted the general organizational science (tectology) of Alexander Bogdanov, and today we admire the naive arguments about synergistic effects and defects in corporate mergers and acquisitions, etc. The mentioned examples refer to the history of management ideas; however, there are no less facts in the history of real management as well, which could be useful lessons for those who are ready to learn from it. A modern educated manager cannot afford to disregard wise advice regardless of the origin of the source of this advice—whether it’s advice on strategic management of Sun Tzu expressed in the fifth century BC, or the recommendations of the ancient Romans on management of the agrarian economy, or the method of SWOT developed by management consultants in the 1970s, or modern concepts and technology of scenario management as a means of development of options of management decisions under conditions of complete uncertainty of the business environment. Of course, based on the principle “you cannot embrace the immensity,” the tutorial includes not all even already known ideas and concepts of management, the works of not all authors of management concepts are characterized. However, along with well-known authors and typical, most popular concepts in the tutorial also present little-known authors and their development of management issues. The textbook uses materials from International conferences on the History of Management Thought and Business (HMT&B), regularly held since 1996 at the Faculty of Economics of the Lomonosov Moscow State University. During this time, 20 conferences were held; moreover, each time they were held according to the same scenario: “yesterday, today, tomorrow” and were devoted to topical problems of managing organizations and were discussed in the historical and scientific context [1]: 1. Development of management concepts: yesterday, today, tomorrow (1996) 2. Restructuring enterprises in the transition economy: theory and practice (1998) 3. The State and Entrepreneurship (2000) 4. Development of management personnel (2001)

1.1 Introduction to the History of Management Thought

3

5-6. Issues of measurement in the management of an organization (2002, 2003) 7-8. Scientific concepts and real management (2004, 2005) 9. The Russian model of management (2008) 10. National models of management (2009) 11. Business models: yesterday, today, tomorrow (2010) 12. Social Responsibility of Business and Management Ethics (2011) 13. Ethics of business and management: comparative analysis of national models (2012) 14. From stratagems to strategies, from strategic planning to strategic thinking and enlightenment (2013) 15. Issues in training managers (2014) 16. National models of management personnel training (2015) 17. Scenario Management and Leadership (2016) 18. Scenario management: sources, problems, solutions (2017) 19. Managerial work and Roles of Managers: past, present, future (2018) 20. Management and Roles of Managers: yesterday, today, tomorrow (2019). The conference materials were traditionally published before the conference and distributed to the participants or posted on the website of the Faculty of Economics of Lomonosov Moscow State University.1 The HMT&B conferences were attended not only by teachers, researchers, practicing managers, consultants but also by bachelors, masters, and postgraduates of Russian and foreign universities—of United States, Canada, Italy, Australia, Portugal, South Korea, Ukraine, Belarus, Kazakhstan, Uzbekistan, etc. At the last conference in June 2019, Professor Bradley Bowden, editor-in-chief of the journal “Management History,” was among foreign participants, who made a presentation on the materials of his monograph on criticism of the postmodern approach to research on history, in general, and on the history of management and business in particular.2 In addition, he actively participated in discussions on the reports of other participants, and at the end of the conference invited a large group of Russian authors (12 persons) to prepare articles for the publication in 2021 of a special issue of the “Management History” Journal on the topic of “Development of Management Thought in Russia.” The main difference between this tutorial and published history on managerial thinking is that it presents not only structured views on management but also some interesting “element” ideas and management concepts that have been applied in actual practice. This way, the textbook presents not only, and not so much, the history of management science, but rather the history of management ideas, views, theories that have been constantly redefined to address the real management objectives of a particular class. This is why the beginning of the presentation dates from 1

See the materials of conferences on the HMT&B on the website of the Faculty of Economics of Lomonosov Moscow State University: https://www.econ.msu.ru/science/conferences/mciumb/. 2 Bowden Bradley. Work, Wealth & Postmodernism: The Intellectual Conflict at the Heart of Business Endeavour. Palgrave Macmillan, 2018.

4

1 Issues of Historical and Managerial Research

the most ancient available textbook written sources of human thought, where the first thoughts about management of the economy and organizations were discovered. And for the same reason, the textbook introduces ideas and concepts relating to specific elements, characteristics and aspects of the management system (methods, functions, objectives, personnel, organizational structures of management, management decision-making, power, leadership, conflict, motivation, strategic management, organizational development, organizational change, etc.). And, finally, more than in similar earlier published textbooks, a Russian managerial idea is presented, which so far has not found dignified reflection in either Western or domestic literature. Each chapter of the tutorial is accompanied by control questions and topics for abstracts, updated extensive bibliography, numbering several hundred sources, work with which will allow the reader to prepare and conduct training sessions on HMT, performing independent work and homework, conducting independent research and projects on HMT. Particular mention should be made of the applied aspect of the study of the HMT and the proposed tutorial. Today, almost no research on management, (starting from a bachelor coursework or thesis and ending with a doctoral dissertation), in which there would be no section “Level of topic development.” Most often these sections are of an overview nature, sometimes the form of a comparative analysis of texts of works of different authors, but without sufficiently deep identification of the reasons for changing the views of these authors on the subject of research. The author of the tutorial also sees some training characteristic in the tutorial, when a student, choosing the topic of his thesis or a topic from Annex A and using the materials of the tutorial, can try to answer the traditional questions of HMT: In what part has the studied concept changed? Why has it changed? Who is the author of the change? What factors of change are most significant? etc. Research that began in the late 1970s at the Department of Public Production Management of the Faculty of Economics of Lomonosov Moscow State University on historical and management issues and discussion of the results at annual all-Union seminars on management topics organized by the Department,3 publication of the author’s article on methodological issues of management science in 1985,4 publication in 1987 of the author’s tutorial “History of Management Thought,”5 publication in 1988 of the Vikhansky O.S. Educational-methodical manual “Historical experience of the development of the USSR national economy management system,”6 defense in 1988 of the first two doctoral One of the seminars on the topic of “Problems of historical development of planned economic management” was held in January 1986, at which the author of the tutorial made a presentation titled “Methodological problems of historical and management research” (see [2]). 4 Marshev V.I. On methodological issues of social production management science. News of the USSR Academy of Sciences, Economics Series, 1985, № 5, pp. 3–16. 5 Marshev V.I. History of management thought. Moscow, MGIAI, 1987 (see [3]). 6 Vikhansky O.S. The historical experience of the development of the USSR national economy management system // Educational-methodical manual. Moscow: Moscow State University, 1988. 3

1.1 Introduction to the History of Management Thought

5

dissertations7 in Russia on the “History of Management”8 and the “History of Management Thought”9 served as the most important argument for the introduction of the two mentioned historical and managerial areas of research in the list of scientific directions in Science Specialty №08.00.05 “Economics and management of the national economy,” Areas of research “№10. Management,”10 and the discipline “History of Management Thought” in the number of mandatory training disciplines in the direction of Management in all of Economic universities of the USSR, and then post-Soviet Russia. The Logic and Structure of the Tutorial Extensive material on HMT can be presented differently depending on the logic chosen. With regard to all differences, one should be common in the material exposition, which is the selected one of three levels of the subject area of HMT. In relation to the general question of logic, there are private issues relating to the most important factors and characteristics of the chosen logic of the statement. More specifically, the following question arises: Which of the following factors to choose as the main factor in the presentation of training material: • time (and then to present the material filiatively, synchronously, diachronically); • staff (as has been recently written about the “management guru”); • branches of the economy (industry concepts of management); • countries (regional management concepts); • size of business (micro, small, medium, large) • organizational and legal form (state, public, private, mixed organizations); • management of a system as a whole (synthetic theories); • management functions, methods, personnel and/or other elements of the management system (one-dimensional theory); • functional areas of an organization, that is, the development of views on marketing, finance, personnel, etc. (content and/or functional theories); • aspects of management—economic, legal, political, psychological, sociological, etc. (faceted theories); • other historical and scientific studies—history of economic, political, legal, psychological, sociological, administrative and other doctrines (comparative approach); • organization theories (theoretic-organizational approach); • management paradigms, in the style of I.T. Prigozhin, T. Kun, and other science theorists (paradigm approach);

7 In 1988 at the intersection of two specialties 08.00.05 and 08.00.02 (History of economic doctrines). 8 Vikhansky O.S. on the topic “The content and logic of development of public production management systems”. 9 Marshev V.I. on the topic “Development of views on the management of the Russian economy (1861–1900)”. 10 10.24. History of management thought. The emergence and development of views on management within individual scientific schools. The relationship between the development of theoretical understanding of management and processes taking place in economic systems. 10.25. Historical development of management systems. The logic of development of management systems, factors that determine dynamics and direction of evolution of control systems. Comparative analysis of management systems in different socio-cultural and political environments. Historical experience of development of management systems in selected countries.

6

1 Issues of Historical and Managerial Research •

backgrounds—civil history, economics, politics, sociology, demography (contextual theories)?

The list of factors may be continued, but in this material exposition one factor has been selected as the primary driver in the list. Of course, a combined approach to the exposition of learning material, which in some sections has been used, is possible. This is due, on the one hand, to the desire for systematic and multidimensional exposition, and, on the other hand, unfortunately, to the presence of unexplored areas of HMT, gaps, and “white spots” in HMT in the selection of any of the factors. In exposition we sought to answer the main questions of HMT: “Why and for What purpose has one or another management idea been proposed?” Why was it proposed at specifically this time and place? Which conditions and circumstances have affected the emergence of a new management idea? How did the author of management ideas take into account and reflect in these ideas the changing conditions and circumstances and, generally, public practice? Given that the textbook is intended for bachelors and masters, we have tried to set it up in a simple and straightforward language, with good historical background, chrestomathy, a sufficiently complete bibliography, regardless of the chosen logic of exposition. For those interested in research on HMT, the textbook’s conclusion suggests topics for research papers and projects on HMT (see Annex A). Tutorial Plan The textbook consists of eight chapters. In the first chapter, the main definitions used in the textbook are given—Organization, Management of Organization, Management History, History of Management Thought, Historiography of Historical, and Management Studies. Besides the first chapter introduces the main methodological issues in the formation and development of the History of Management Thought (HMT). First of all, this part emphasizes the relevance of increasing scientific validity in decision making, the general and specific characteristics of HMT as a scientific, applied and educational discipline, the role and place of HMT in the history of science, issues of organization of research and methods of HMT development, source study and other issues of HMT are disclosed. The second chapter describes the main sources and origins of global management thinking over the centuries, from the emergence of the first human civilizations to the early feudalism era; Managerial aspects of the ancient world’s management monuments—treatises of thinkers, statesmen, leaders of economies, social, religious and military leaders—are disclosed. The third chapter further describes the main directions and works that reflect the development of management ideas, attitudes, and concepts in Western countries in the fifth to nineteenth centuries. This chapter is perhaps one of the first special treatises on management, the authors of which were organizers of industries, statesmen, academics, high school teachers, including the first business schools. The fourth chapter examines genesis and the development of management thinking in Russia of the nine to eighteenth centuries. The authors of ideas here are state and religious figures, academics, representatives of various Russian categories and classes, including representatives of the nascent third word. The sources were

1.2 Introduction into the “Organization” and into “Management of an Organization”

7

ancient records and tales, legislation, monographs of scientists and thinkers, archival documents, and memoirs. The fifth chapter reflects the development of management thought in Russia in the 1800–1917. At this time, the works of M. Speransky appeared, for the first time in the history of Russia cameralist branches were opened in Russian universities, treaties on the management of representatives of higher education and materials of the-trade and industry and Industrial Congresses (which focused on relevant issues of management) were published, management reforms led by Russian government officials were implemented, proletarian management thought was born. The sixth chapter introduces the main Western schools of management of the twentieth century. In all known works in the history of public opinion, this era is referred to as the era of scientific management. The characteristics of management schools show both their continuity with the management ideas of the past and their fundamentality and paradigmality in terms of future theories and concepts of management. In this chapter, from Chapter 8 of the 2016 textbook, on the recommendation of Bradley Bowden, the reviewer of our textbook, the paragraph “Motivation—content and process,” has been moved. In the same chapter, added a paragraph on the roles of managers. The seventh chapter is devoted to the history of Soviet management thought, from the work of the promoters of Taylor’s system to the original work of Soviet academics and practitioners of management on issues of effective management of the planned socialist economy before 1990. It also presents the results of research on the development of views on governance in post-reform Russia since the 1990s. The eighth chapter describes some of the modern management theories based on the achievements of social and psychological research and the latest concepts of management, some of which are still of a production stage. In comparison with the previous edition, the eighth chapter contains the results of research of Russian and foreign scientists and the development of views on the ethics of business and management, on the digitalization of management, on scenario approach in management and on the role of managers. The tutorial contains two annexes: Annex A. List of directions of scientific research, topics of course papers and thesis and scientific abstracts reports on HMT Annex B. Chronology of “Western” managerial thought

1.2

Introduction into the “Organization” and into “Management of an Organization”

An Organization and Its Attributes If the reader ever makes himself count how many organizations, he “deals with” in one working day simply on the way from home to work, he will easily count a few hundred of these. The words “dealing with” regarding organizations mean those items and services that the reader consumes

8

1 Issues of Historical and Managerial Research

and/or uses while heading for work, and which have been produced by various organizations. Starting with breakfast, the elevator in the house, the newspapers and magazines bought in the nearest kiosk (don’t forget the kiosk itself, produced by someone, delivered and installed next to your house), train tickets or an underground card, a transportation vehicle, etc., and so on, and at the entrance door to your office, it is actually easy to count a hundred goods/services and organizations. In the treatise “Management,” the management guru Henry Mintzberg assessed the objectivity of a myriad of organizations: “Our society has become a society of organizations. We are born in organizations and learn in organizations, then go to work in a particular organization (or create a new organization—M.V.). At the same time, organizations provide us with everything we need, entertain us, manage us and bother us (sometimes doing it almost simultaneously). And at the end of our journey, organizations bury us” ([4], 9). The emergence of organizations is due to the fact that no person can alone fulfill most of the actions necessary to keep on living (or—“satisfy natural needs”), and therefore is forced to seek those of his kind, create an organization, or to join an existing organization. As a result of a millennium of human existence, the majority of human activities have taken the form of joint efforts. The peculiarity of the present time is that large and complex organizations emerge, which are engaged in many activities and dominate the social world. We create these human formations so that they could create for us what we need—consumer goods and services. We learn and/or work for them to earn funds to acquire these goods and services. In other words, we have long been “captives” of multitude of organizations, and therefore are inevitably wondering about issues of their survival and well-being. Why do people socialize, unite into organizations? In Plato’s words: as we have many wants, and many persons are needed to supply them, one takes a helper for one purpose and another for another; and when these partners and helpers are gathered together in one habitation the body of inhabitants is termed a state.11 And Aristotle seconded him: “man by nature is a social animal, society is something that precedes the individual,12” rather “a political animal” or “an animal that lives in cities (polis13),” however, human beings are “naturally inclined to form couples even more than to form cities.14” So, there are two key reasons: First, natural needs that have to be satisfied in order to reproduce, and this is the biological origin of man. Second, “innate inequality of people’s capabilities” that encourages each person to seek a corresponding partner in order to ensure one’s life. And therefore organizations were, are, and will continue to be created.

Plato. Republic. Thesis: In 4 vol. М.: Thought, 1994, vol. 3, p. 130. Aristotle. Nikomakhova ethics. Thesis.: In 4 vol. М.: Thought, 1983, vol. 4., p. 259. 13 As written in annotations by the editor of Aristotle’s (ibid, p.696). 14 ibid, p.238. 11 12

1.2 Introduction into the “Organization” and into “Management of an Organization”

9

In order to recognize and understand organizations as management objects, the principles of their functioning and behavior, to compare their effectiveness and performance, it is necessary to develop and continually improve the specific tools for the analysis and synthesis of organizations. Such instruments are, of course, developed and refined. But on the basis of the author’s assumption on the primary cause of failure in organizations’ behavior, it seems that this process is far from being completed, and therefore our suggestions will be to improve the basic tools of study of organizations and organizational behavior invariable with respect to any organization in order to eliminate “misunderstanding” and eventually the ignorance of the organizations. The first tool is the definition of the term “organization,” and the second tool is the model of an organization used to observe, experiment, explain, and predict the behavior of people in an organization. Note that the recognition of the weakness of the science of “organizational conduct,” which studies the behavior of people in an organization and the behavior of the organization among its own kind, was announced at a recent annual Congress of the American Academy of Management (8–13 August 2008, Anaheim, California, United States). It is noteworthy that, for the first time in the history of these congresses, rather than a single relevant issue in management science and practice, the whole circle of The Questions We Ask15 has been recognized as a topic. Accordingly, many basic questions, due to the lack of answers to which scientists, educators, and management consultants are unable to help practitioners in their daily lives, the science of management has stalled in its development, and management teachers do not teach the same things and in the same way actual management requires. In the view of the organizers of the Congress, the discussions within her work should have helped to understand “What we do not know, about the world of organization and management—and what questions, we might dare for ask”? Among the issues that were discussed at the Congress were, for example,—what in the world of organizations and management is incognizable? Are there limitations in understanding the behavior of people in organizations? What is it best way to translate the accumulated theoretical results into management practice? Is it possible to teach future managers practical wisdom? [5]. And at the last 79th Congress of the Academy of Management in August 2019 (Boston, United States), the topic was “Understanding the Inclusive Organization,” and participants were invited to discuss the challenges and opportunities of Involvement (“inclusiveness”) of staff to participate fully in the activities of the organizations. “Inclusive organization” refers to open systems of opportunities in which all stakeholders of the organization have access to information, resources, and other opportunities in order to fully facilitate the functioning of the organization. In order to understand the essence and technologies of formation of inclusive organizations in 25 divisions of the Academy, which gathered over 11,000 participants in 5 days (from 9 to 13 August, 2019) were inter alia, the following issues were brought forward: What are the key characteristics of inclusive organizations? Are these

15

Almost by Socrates.

10

1 Issues of Historical and Managerial Research

characteristics invariant and/or generalized in different cultures? How does the organizational structure, organizational culture and/or other identities of an organization contribute to or hinder organizational inclusiveness? Do the meaning and significance of inclusiveness differ in various groups of stakeholders? Are there scientific and applied critical points of view on “organizational inclusion” that go beyond the possibilities of managing an organization as a science and practice? As we see, even on the experience of the Academy of Management and holding annual (since 1940) meetings involving an international audience of thousands of researchers, consultants, students, and teachers of management, many issues related to organizations as objects of management remain unresolved. So, let’s bring in the generally accepted in science and practice of management interpretations and definitions of the terms: organization and model of an organization. Interpretation of the Term “Organization” 1. A social institution or facility (examples—an institution, a firm) 2. The property, attribute of an object (examples—an organized/unorganized firm) 3. The process (or function) associated with an impact on an object Definitions of an Organization as an Object 1. An organization is an aggregate of individuals who, for the purpose of achieving their specific goals, must be formalized, have a formal structure (P. Blau and W. Scott). 2. An organization is a type of cooperation of human activity that differs from other social groups by consciousness, predictability, and purposefulness (C. Barnard). 3. Organizations are composed of individuals who seek, in order to achieve certain goals, to influence other people who create materialized values that increase social well-being through diverse processes, technologies, structures, and cultures (D. Boddy, R. Peyton). 4. An organization is a community of interacting human beings, which is most common in society and contains a central coordinating system. The highly specificity of the structure and coordination within an organization distinguish it from diffuse and disordered links between unorganized individuals. All this makes an organization look like a stand-alone, complex biological organism (emphasis added—M.V.). From a management perspective, an organization is a system for adopting and implementing management decisions, where people are decision-making mechanisms (G. March, H. Simon). Examples of Organization Models Today, three models of an organization are popular among researchers and management consultants. The first is H. Leavitt’s model (the so-called “Leavitt’s Diamond”), who in 1965 [6] expressed the hypothesis that the diversity of unique organizations derives from four elements: People (Individuals), Structure, Tasks, and Technology. The second is the McKinsey company 7S model, which added three other elements to the former: Systems, Style, and Shared values.

1.2 Introduction into the “Organization” and into “Management of an Organization”

11

The third is the integral model of D. Boddy and R. Peyton, which (compared to Leavitt’s model) replaced Technology with Business processes and added new elements—Technique (more specifically, it was distinguished from Technology as “buildings, structures, equipment, etc.”), Power, and Culture. But all three models underline a single general thought that it is about interrelated and interdependent elements (blocks) of the model and their characteristics. That is why, as a matter of fact, Levitt called his model “the diamond.” Further research has refined these three models, most often by adding new elements and/or functional areas, but without enhancing the effectiveness of research and consultancy projects aimed at improving the management of organizations. Nevertheless, in this part, I would like to offer original author’s wording of the definitions of “organization” and “model of organization,” following; however, the advice of Albert Einstein: “Everything should be made as simple as possible, but no simpler.” I hope that these clarifications will improve the understanding and functioning of organizations as well as modeling and explaining the behavior of organizations and thus contribute to the development of knowledge on organizations and the management of organizations. Definition 1 We shall consider an Organization as a combination of two or more “persons16” with two attributes: a “common” purpose (mission) and formalized structured17 relationships. Each time, when speaking in Russian, it is necessary to underline the sense of the word “organization”—as an object or as a process. Notice, that in English this problem doesn’t arise, since “an organization as a subject” is referred to as “organization,” and as a process (meaning “organizing some event”) is called “organizing.” At the same time, an “organization as an object” must be represented in static and dynamic. An organization in static is individuals who possess the two abovementioned organizational attributive characteristics. An organization in dynamics is the purposeful interaction of individuals and/or the performance by individuals of their roles in accordance with coordinated rules (prescribed in the structure18) and the influence of the business environment. An organization in dynamics is the “life of the organization,” manifested in the following key roles: 1. 2. 3. 4.

Search for and acquiring of resources Converting resources to “products”: goods/services Distribution of “products” Exchange of products with other organizations or individuals (or sale of products to consumers/customers) 5. Consumption of the acquired in the exchange process

16

In a game-theoretic meaning, i.t. individuals or legal entities. The term “structure” means a combination of elements and links between them. 18 Or in a “Responsibility statement” with a written scope of authority and duties. 17

12

1 Issues of Historical and Managerial Research

It is evident that the mentioned five objective subsequent actions by the organization require a deliberate impact on the members of the organization, enable them to achieve their goals, achieve results and eventually reproduce the organization. Examples of organizations include state enterprises, public associations, private companies of various sizes, different regional and sectoral affiliations, unions, associations, family, the state, society as a whole. Examples of goals of an organization are reproduction, welfare and safety of the members of the organization, rational management of the economy, maximization of profits, increase in the value of the company, penetration to new markets, customer satisfaction, ensuring longlasting competitive advantage. Examples of resources of an organization are finance, raw materials, land, semi-finished products, components, scientific developments, information, time. We deliberately excluded “people” from the list of resources of an organization, considering people as the only elements of the organization, and everything else in that list as resources or means of achieving the goals of the organization. In other words, let us repeat, people and only people are elements of an organization as a system. In order to achieve organizational goals and in accordance with the formal structure, the members of the organization (individuals or legal entities) play numerous roles, creating and gradually forming specialized, so-called functional areas of the organization or functionalities. Key roles (or functional areas) of an organization are the search for various kinds of resources, the use and/or transformation of resources into products (goods or services) and the exchange (sale) of products for necessary resources to sustain the continued existence (or reproduction), growth and development of the organization, to ensure longlasting competitive advantage. Definition 2 An organization model is a combination of the following three elements: – “Individuals,” – “Goals of the Organization” – “Structure of the Organization” A synonym for an organization’s structure is targeted roles of individuals and their execution scenarios. In each specific organization, these structures (i.e., “roles and scenarios”) are specified, prescribed, processed, approved, and eventually formalized in various kinds of documents—solemn promises and vows, incorporation treaties (oral or written), Articles of Association, regulations, Organizational structures, Duty Instructions (DIs), Contracts, Plans, Standards, Descriptions of business processes, etc. The definition of the term “organization” does not define a list of roles (through the structure). In real life, the composition of the roles and, accordingly, their number is determined by individuals’ understanding of the state of the internal environment of the organization and the situation in the external environment, as well as the need to “fulfill roles.” This explains the diversity in organizational structures of organizations, even with many similar key features (such as the scale

1.2 Introduction into the “Organization” and into “Management of an Organization”

13

of the organization, industry and region). For example, by comparing the structures of two midsize business firms in the same region, you may not find the role of “marketing” in one of them and the role of “PR”: in another (neither in organizational structures, nor in DI, nor in other core documents). Nothing surprising about that. One explanation is that the understanding of the internal and external environment by individuals of two organizations is reflected precisely that way. This is the manifestation of the need for execution of some or other roles, in the relevant scenarios, and/or ultimately in the life activities of an organization. In my lectures on the Theory of Organization, I demonstrate the organizational structures of modern organizations, which have over 40 functionals! It must be admitted that these elements actually take place in real organizations. For example, along with the functions of purchasing, production, sales in organizations, there are such areas as Finance, Marketing, After-sales, HR, Public Relation, Government Relation, Client Relation, Media Relation, Security, IT, Social Responsibility, and even Diversity of HR, the implementation of which is conditioned primarily by minimizing the risk of reducing the competitiveness of the organization and, as a result, the effectiveness and efficiency of the management of the organization. H. Fayol once presented this process of functional formation in the form of a complete set of six complex activities carried out by any organization: 1. 2. 3. 4. 5.

Technical activities (manufacturing and production) Commercial activities (procurement, sales, and exchange) Financial activity (including search of optimal sources of capital) Security work (to prevent fire, theft, flood and public disorder) Accounting activities (including data collection, financial reporting and statistical information) 6. Management activity, which meant to predict, plan, organize, direct, coordinate and control [7]. Today, there are over 40 of these activities. The reader should not be frightened by their abundance. It is about the fact that there are objective reasons and awareness that they need to be implemented, and there are examples of their implementation in organizations, based on the criterion of minimization of the risk of loss of competitiveness. Another thing is that in many cases even an understanding of their usefulness does not lead to implementation due to lack of resources and competences. At the same time, today there are already companies in the organizational structures of which there are several dozens of functions that generate so-called “internal environment of the organization” (see Table 1.1). We call them functionals (and not functions that depend on the independent variable), since each of the functionals depends on a set of dependent variables. If you add to the set of functionals any interactions between functionals in the form of five so-called intra-organizational processes19:

19 Making and implementing of managerial decisions, communication, conflicts, leadership and business processes.

14

1 Issues of Historical and Managerial Research

Table 1.1 The roles of individuals ! functionals of an organization ! internal environment of an organization 1. Shareholders 2. HR 3. Marketing 4. Management 5. Accounting 6. Finance 7. Security 8. Purchase 9. Production 10. Sales 11. Post-Sales Service 12. Corporate Culture

15. Social responsibility 16. IT-active 17. Public Relation 18. Government Relation 19. Finance Relation 20. Investor Relation 21. Client Relation 22. Scientific Relation 23. Media Relation 24. Potential Client Relation 25. Potential Suppliers Rel.

29. Knowledge 30. Infrastructure 31. Risks 32. Insurance 33. Compliance 34. Corporate Governance 35. Logistics 36. Communications 37. Technologies 38. Change 39.Decision Making Control

26. “Competitive” Intelligence 27. Development 28. Ecology

40. Diversity of HR (2017, Apple)

13. R&D 41. Digitalization (2018-2019) 14. Law 42. Security & Insurance of ArtIntellect and other functionals implemented in the organization in order to minimize the risks of loss of viability (Сompiled by the author of the textbook) Note the meaning of italicizing the words “and other functionals.” This only means that the list of functionals is essentially unrestricted and can be continued according to the criterion—“risk minimization ...”

“Making and implementing management decisions,” “Communications in the organization,” “Conflicts,” “Leadership,” “Business processes,” it becomes clear that ensuring vital activity of organizations objectively requires conscious purposeful intervention in these processes, which will be discussed in the “Management of an organization” section. About “Life Cycles” The focusing of our attention on people as the only element of an organization is justified to some extent by the use of biological analogies in the study of organizations, in particular the terms “an organization’s life cycle” (OLC), the “life cycle of a team,” the “life cycle of an organization’s product,” the “life cycle of the organization’s management model,” and so on. Many of the developed OLC models have themselves been the subject of historical and scientific research in recent years, and the paradigm of OLC has become a subject area of historiography. The idea of describing human communities through natural life cycles is known from the works of philosophers and public figures of the ancient world,20 but

The creator of the term “cyclicality” of three forms of state government is considered the ancient Greek philosopher Polybius (see, his treatise “Universal History”, second century BC [8]).

20

1.2 Introduction into the “Organization” and into “Management of an Organization”

15

precedence in the systematic study of the analogies of cyclicism in wildlife and in the life of organizations, is given by historians of scientific thought to representatives of the Age of Enlightenment—C. Montesquieu, G. Vico, E. Burke, M. Condorcet, and others. So, G. Vico distinguishes three stages of development for each nation, which he in his language calls the century of the Gods, the Century of heroes, and the Century of men, and M. Condorcet proposed a ten-year cycle of historical development of nations. In the nineteenth century, as the Russian historian Pavel N. Miliukov wrote, “the new sociology fastened this notion of monotone progress of national histories, drawing the analogy between animal and social organism.” [9] In the twentieth century Spengler’s “The Decline of the West” (1919) and A. Toynbee’s “Study of History” (1946) were published, in which an analogy and a life-cycle model for the study of world civilization and the explanation of human organizations are used. Commercial organizations in the context of OLC naturally began to be actively studied in the twentieth century by representatives of the Tavistock school of science and especially by E. Erikson, who studied the stages of human development. Works on the typology, stages of organizational development and management dynamics by J. Schumpeter, M. Weber D. MacClelland, P. Drucker and A. Chandler then emerged. At the same time, studies that criticize the analogy of biological life and the lives of organizations have emerged. The most severe criticism may be found in Edith Penrose’s article, which revealed serious discrepancy between the life of biological organisms and OLC. The notion on the limitations of the “life-cycle” paradigm regarding organizations and their elements has a long history. Here is one of the remarks by the Guru of organizational theories, Miss Edith Penrose: “Reference to biological analogies often occurs in order to discover the laws that define human actions. The discovery of such laws would have given social sciences an opportunity to foresee, plan various events and their consequences. But biological analogies not only do not facilitate understanding of social phenomena, but sometimes only complicate analysis. The behaviour of different organisms involves chemical processes, heat reactions, etc., rather than consciously made decisions. And their application does not always have practical benefits” [10]. Nevertheless, the idea of OLC continues to attract researchers. The most popular of authors nowadays are L. Greiner [11] and I. Adizes [12]. Among the models of the life cycle of various objects of management, the model of Peter Special emphasis should be given to the work of Peter Capezio [13], where the idea of the “life-cycle” is applied to the study of a project team of employees of an organization. About the Management of the Organization In this tutorial, we shall talk about the history of the ideas of management of any social organization, which are at different stages of the Life Cycle of the Organization in a specific historical period. The purposeful performance of the above-mentioned roles by the members of the organization objectively generates the informed participation of future “members of the organization” in the creation of the organization (e.g., the ancient Greek polis or

16

1 Issues of Historical and Managerial Research

of the modern family), and then “influencing its behavior” by a certain “entity,”21 assisting members of the organization to achieve the goals of the organization through certain decisions, possessing the rights to do so (or authority), but with mandatory responsibility for the decisions taken. One of the problems of management research as an activity is that each time it is necessary to realize the coexistence or duality of management as a universal activity and professional activities. For the “distinction” of these concepts, we will introduce an original definition of the term “management of an organization,” which we will further use. Definition 3 By “Management of an organization,” we would understand the impact22 of a particular “subject” on an organization that implements the behavior of that organization and has the following seven attributes: it is permanent, conscious, meaningful, purposeful, systematic, authorized, and responsible. The given definition specifies seven attributes of management as an impact of the entity (or person with the right and duty to make a decision) on the organization that needs to be interpreted. 1. “Permanent” is the obligation of the subject of influence or decision maker (DM) regarding the organization (as an object of management) 2. “Conscious” is an “influencing” individual (subject) or DM 3. “Meaningful”—an impact that has meaning, an idea 4. “Purposeful”—purpose/mission in the definition of the organization 5. “Systemic”—impact based on the representation of both the organization and Management as systems 6. “Authorized”—the possibility of independent commission of actual and legally significant actions by the entity 7. “Responsible”—for its obligations for the committed actions.23 It is the attributes (or essential characteristics) of “management” as “systemic” (№5), “authorized” (№6) and “responsible” (№7) influence that fundamentally distinguish management (or the impact of a certain “subject” on other people) as a “professional activity” from management as a “activity inherent in all of humanity.” It is not very difficult to cite numerous examples of the impact of one subject on another (or other subjects) without these three characteristics, that is, examples of management as a universal human activity. For example, the impact of a capricious crying child on parents, requesting the purchase of a toy. It is obvious that the tears of the child affect and eventually change the behavior of the parents. Mentally remembering his childhood, the reader can give a lot of examples of management of the behavior of other people as examples of the common human activity.

21

Person or legal entity. In the form of a verbal or non-verbal command or decision. 23 The following types of responsibility of the decision maker are identified: moral, material, legal, political. 22

1.2 Introduction into the “Organization” and into “Management of an Organization”

17

Fig. 1.1 Three key questions of the management of an organization (сompiled by the author of the textbook)

Another matter is a professional manager who has the right (and/or authority) for this influence (in the form of verbal or non-verbal decision) and bears responsibility for the consequences and aftereffects of his decision. Thus, the fundamental difference between one type of management activity and another will consist only in the simultaneous existence of the two mentioned attributes of the term management as professional activity. Management of an organization, in reality, is a set of solution of a triple problem or search for answers to three questions: 1. A ¼ What is the current status of the organization (or in the organization)? 2. B ¼ How do we want to see it in N years? 3. C ¼ How to manage an organization to move from state A to state B or “How to reach state B from any starting point?” (see Fig. 1.1)? Dotted arrows on the left side of Fig. 1.1 emphasize and illustrate the property of so-called “Non-Markov Decision of social processes” (or dependence of social process on the past and inertia of the social process) which manifests itself in the consequence and after effects of the made managerial decisions, including the vital activity of organizations! The seeming simplicity of the first task is quite deceptive. The future, of course, is often easily articulated as the desired24 state of the organization and then strategies are developed as a means of achieving the goal. However, the solution of the first problem, as shown by the analysis of the historical experience of organizations,25 due to incorrect analysis, evaluation, and diagnosis of the current state of the business environment of the organization (and this is the answer to question A) and the subsequent application of strategies (as the answer to question C) does not lead to the achievement of the goal and is therefore much (above all, morally) “more

24 25

And much more complex, but with less risk of achieving, as achievable. Some examples will be given below.

18

1 Issues of Historical and Managerial Research

responsible” for the state of the organization in future and thus initially requires the implementation of competent and/or professional management of the organization. Further, when using the term “management,” we will consider it only as a professional activity, and in Chap. 7 we will explain in more detail the meaning of the attribute “systemic” impact on the organization, where the notion “Management as a System” will characterize the meaning, ideology, objectives, managers, functions, methods, management process, and other elements of the system. Let us return to the process of socialization of humans and subsequent administration of created organizations. The paradox of the socialization process is that the parties to the process are also aware of its negative aspects. Stressing this, in the 1930s Russian philosopher Nikolai Berdyaev noted with bitterness that with the advent of modern technologies the world lost communities as social units of society and they were replaced by “organizations.” Up to date, organizations still (and quite often) disappoint their creators, customers, and the world around them. On a daily basis, thousands of organizations both appear26 and disappear (often, deliberately), go bankrupt and face liquidation, while others lose customers’ trust by recalling (and more often not) defective products (medicines, automobiles, foodstuffs, etc.) and refusing to comply with their obligations. In the past ten years the largest financial corporations, banks and insurance companies have “lost their lives,” in most countries recently successful production, construction, and trading companies have drastically reduced their activities and dismissed tens of thousands of their employees.27 What’s the matter? Why do people who create organizations lead them to bankruptcy and liquidation themselves? Why do great managers push organizations from “good to great” (monograph author J. Collins), present them as “Built to last” (authors J. Collins and J. Porras), and then begin to commit folly, lead them to collapse, purposefully carrying out “Creative destruction” (authors R. Foster and S. Kaplan)?28 Is it only the heads of these firms who, at times of exacerbation of their firms’ situations, for some reason act according to a known fatal rule: “When they don’t know what to do, they’re more diligent in doing what they know”? If this rule is correct, it seems we’re dealing with management masochism. Here are some examples of this disease. 1. It is known that despite adverse sales figures and the warnings from colleagues and competitors’ actions (primarily, A. Sloan at General Motors), Henry Ford Sr. firmly followed his favorite dictum: “A customer can have a car painted any color he wants as long as it’s black,” until it led to a sharp fall in the demand for

26

For example, family marriages registered in Civil Registry Offices and/or marriage unions registered in notary offices. 27 See https://www.fresher.ru/2015/09/13/desyat-gromkix-bankrotstv-poslednix-let/. 28 What many analysts, following Joseph Schumpeter, see the progressive refreshment of the market as a result of the disappearance of companies leading “economically useless lives”.

1.2 Introduction into the “Organization” and into “Management of an Organization”

2.

3.

4.

5.

6.

7.

19

Ford vehicles and an almost 6 times reduction in market share (from 56% in 1921 to 10% in 1927). In the 1990s, Cisco had one of the most advanced forecasting systems and demonstrated excellent sales results at a time of increased demand for its products. But as soon as demand began to decline, it was difficult for management to believe that trouble was underway. Customers started declaring bankruptcy, suppliers warned of a fall in demand. The company CEO, Mr. J. Chambers, continued to forecast a 50% growth stating in the end of 2000: “I’m as optimistic as ever on our industry as a whole and Cisco in particular.” He was delusional up until April 2001, when sharply falling sales forced Cisco to record $2.5 billion as illiquid reserve and temporarily dismiss 8500 employees. December of the same year—the sensational story with the collapse of the Enron and, at the same time arrogant behavior of CEO J. C. Skilling, whom colleagues called a “fanatic of the utmost control,” and who was caught in the situation by surprise. He did resign, though, for “personal reasons” 3 months before the collapse; however, his assessment of the collapse situation is distinctive: “I had no idea that the company was in anything but excellent shape.” The Russian pharmacy network “36.6,” which had increased its assets by several times annually since 2004, acquiring pharmacies throughout Russia and not considering any management changes or personnel replacements at new pharmacies. More recently (autumn 2008), realizing the crisis situation—declining sales, growing debts, banks rejecting credit—the network began to sell its liquid assets. During the first ten years of the twenty-first century, even large cities, once considered centers of industrial development (such as Detroit in the United States), regions, and entire countries began to feel signs of bankruptcy (e.g., signs of bankruptcy in Greece, Portugal, Spain). The largest investment banks and insurance companies in the world, which had provided loans under the circumstances of an unstable hedge system, became bankrupt and went into liquidation during 2008–2009 for reasons of mortgage and then financial and economic crises in the United States and other countries. And, finally, according to Russian Federal State Statistics Service (Rosstat) for July 2018, the share of organizations in Russia that showed a loss in January-June 2018 increased by 0.6 p.p. (compared to the same period of 2017). This is evidenced by Rosstat data on the financial activities of organizations.

Their number was 32.2%, Rosstat said. That is, 33.3 thousand organizations received profit in the amount of 7.75 trillion rubles, and 15.8 thousand organizations had a loss of 1.38 trillion rubles. It is a net financial result (profit minus loss) of organizations (excluding small businesses, banks, insurance organizations and state institutions) in the first half of 2018.29 But was it really true that in each of these examples it was necessary to wait passively for years for signs of an impending crisis to become apparent? The

29

Link: https://rg.ru/2018/08/28/rosstat-dolia-ubytochnyh-organizacij-uvelichilas.html.

20

1 Issues of Historical and Managerial Research

COVID-19 situation has exacerbated the problem of the competence of managers making decisions in the face of uncertainty and unpredictability. The author argues that the “fault” of both effective and ineffective (and, most importantly, nonresultative) behavior of organizations are the persons who make decisions about the behavior of people in the world around them, in other words, macro-level managers and managers of specific organizations. Moreover, having reviewed the history of management and observed the bankruptcy processes currently underway and the nationalization of the major financial institutions in developed countries, where the best analytical minds of financial management are concentrated, the following may be argued. In the past two decades a certain financial system (such as a facility for provision of financial services using state of the art financial instruments) has been built in the world, but a system managing the financial system was not! More precisely, there total illiteracy emerged of so-called financial managers at all levels who were unable to take advantage of the ideas and technologies of classical strategic management, strategic risk management, scenario planning, were not able to anticipate the effects of “soft noise” in the business environment and did not prepare alternative scenarios for the development of financial and other systems under crisis circumstances and conditions of limited resources. Evidence of incompetence are the predictions made by domestic analysts of financial institutions regarding an increase in stock indices that had been made in February/March 2008, according to which an increase of these indices by 50–60% by the end of 2008 was expected. However, by the end of October, the indices had actually fallen by over 70%. In vicinity (in terms of accuracy of projections) are the oil sector analysts, who had “promised” 200 dollars per barrel by the end of 2008, and “encountered” 30 dollars per barrel in February-March 2009. There are many reasons for mistakes, but in those years the main one was the financial crisis. But even in the “peaceful” time, analysts “promised” 100 dollars per barrel by the end of 2018 (in the first half of 2018, indeed, there was a real increase) and traders made bets on it, but in the end of 2018 the price collapsed by almost 2 times—to 53.8 dollars! The global financial system and, as a consequence, other sectoral systems have been shattered to such an extent that none of the managers in the world, not even any of the Nobel laureates for economics, could nor can still offer rational actions for their acceleration. Today, in response to the question “What do we do?” scientists silently lift their hands in dismay while “financial managers,” without waiting for a response, flee to their “parents”—rulers of states, begging on their knees for financial help. It appears that, following the tragic mistakes of incompetent airline managers, in financial management complete incompetence of managers of the world and national financial systems has become apparent (so far, thank God, without many human casualties). In other words, professor Lawrence Peter and his principle of “total incompetence” triumph.30 Here is a historical example of incompetence from L. Peter’s book:

30

Peter Lawrence J. The Peter Principle, or Why things always go wrong. M.: Popurri; 2003.

1.2 Introduction into the “Organization” and into “Management of an Organization”

21

“Historian Macaulay quotes Samuel Pepys’ review of the state of the English Navy in 1684: “The naval administration was a prodigy of wastefulness, corruption, ignorance, and indolence. . .no estimate could be trusted. . .no contract was performed. . .no check was enforced... some of the new men of war were so rotten that, unless speedily repaired, they would go down at their moorings. . . The sailors were paid with so little punctuality that they were glad to find some usurer who would purchase their tickets at forty per cent discount. Most of the ships which were afloat were commanded by men who had not been bred to the sea.”31 And the mentioned principle sounds as follows: “In the hierarchy, every employee strives to reach his level of incompetence,”32 and we call it “managerial masochism.” Managers of other branches of economics are spared such sharp criticism solely because they appear as victims of the “domino” effect in a crisis situation, for instance, when a dismissed employee of an automobile business inadvertently causes the dismissal of hundreds of employees in the supplier business. But the suppliers should have had a “piano in the bushes,” having foreseen the consequences of the alternative development of the business environment, by developing appropriate scenarios and strategies, and by building competent risk management within their organizations. And today, they’re firing tens of thousands of employees, referring to the digitalization of the economy and/or COVID-19. Unwittingly, the wise words of Henri Fayol, who back in the mentioned work “General and Industrial Administration” [7], referring to the training of managers, called for “the necessity to introduce” “foresight,” apparently following the assertion of his compatriot “Gouverner c’est prevoir” (Napoleon). The reasons for the many thousands of layoffs were supplemented by the “successes” of the digital economy, the robotization of most technological processes. In this regard, the modern guru of Management, Henry Mintzberg, is worthy of the Nobel Prize for management (rather than economics) only for the title of one of his recent monographs—“Managers needed, not MBA graduates” (in the original— “Managers Not MBA’s” [14]). The general conclusion on the reading of Mintzberg is roughly that, in the world a surplus of narrowly focused specialists is disclosed— MBA students in finance, accounting, auditing, marketing, advertising, branding, sales, production and other more than 30 functional areas of companies that are proficient in the tools of these functional areas, but at the same time an acute lack of strategically thinking and systematically acting competent managers of these organizations’ functionalities is evident. It appears that people who have a millennial history of organizations’ existence, and who have potentially large human time record (but not expertise) of managing, never learned how to manage organizations, and essentially—themselves, as creators and participants in organizations. What are the reasons? We shall repeat the above stated assertion with some clarification—errors and failures in the

31 32

Ibid., p.2. Ibid., p.8.

22

1 Issues of Historical and Managerial Research

management of the organizations are determined by two interrelated reasons. First, ignorance and/or misunderstanding of the organization itself. And second, ignorance and inability to manage an organization. This section of the tutorial specifically focuses on the first reason because most scientists, consultants, and managers naïvely anticipate the “organization” to be a long-known and understood “subject” of research and management. All their efforts are directed at “subject areas” and within them at functional areas (e.g., finance, production, marketing, personnel) rather than “changes” in the organization or “management relations” in the organization. And the “long-known” organization throws up its regular unknown sides, aspects, and other surprises every time, stymieing helpless managers with their unpredictable behavior and changes occurring within it. Author agrees with the position of the Russian sociologist Pitirim Sorokin, who, in the middle of the last century, in the work “Principle of inherent changes in sociocultural systems and conglomerates” argued and proved that the primary cause of changes in social systems was their internal environment [15]. The relevance of management today is increasing, the anxiety about discrepancy of the level of competences of managers with the tasks that they have to solve, connected with the development of technologies, is increasing significantly that speeds up the management decision-making process. This is about the formation of Big Data complexes, the digitalization of public practice, development and implementation of artificial intelligence into this practice. The forecasts of Nasim Taleb about the emergence of new Luddites [16, 17], known to us by the industrial revolution in England in the end of the eighteenth century. In other words, increasing the level of technological processes of production of goods and services generates robotics and a sharp increase in layoffs of workers replaced by robots. How to manage such enterprises? Will managers be robotic? If Yes, will it concern managers of all levels (lower, middle and top)? And layoffs of employees due to uselessness of usual professions (and corresponding redundancy of employees) every year aggravates the situation with the retraining of production personnel, professionals and managers. On the other hand, new technologies create the need for new professions and specialists. This gives rise to the so-called “skills mismatch,” which in Russia alone, according to estimates of consulting firms in 2018, already got 33.9 million people, in the Americas—87.6 and 58.6 million people respectively, and by 2030, according to the OECD document, the effect of this pit will spread to more than 1.4 billion workers.33 If these forecasts become closer to reality, then current and future managers have something to think about. After all, socialization was, is and will be, that is, people, 33 See materials of the Organization for Economic Cooperation and Development-2018 and the XI International Forum “AtomEXPO-2019” of the Rosatom State Corporation together with the “WorldSkilssRussia” Union and the BCG company: https://worldskills.ru/media-czentr/novosti/ rosatom,-worldskills-russia-i-bcg-obedinyayut-usiliya-dlya-resheniya-globalnoj-problemyikadrovogo-deficzita.html and https://news.ru/economics/eksperty-poschitali-chislo-izbytochnyhrabotnikov-v-rf/.

1.3 On Attitude to “the Past” in Historical and Managerial Research

23

including and, above all, the dismissed, will unite in organizations. And how will these organizations be managed (even in terms of self-governance)? Who will manage them? Robots? How to train new managers to manage high-tech and, in a sense, traditional (e.g., sports, educational, medical) organizations? In Sect. 5.4 we shall discuss the problems of training competent personnel, including managers, using materials of trade and industrial congresses of Russia in the nineteenth century. And in these materials, we shall “hear” practically the same questions that we have just formulated, and some suggestions as how to answer them. And the research on the topic of the consequences and aftereffects of the digitalization of the economy and the digitalization of management will be discussed in Sect. 8.4 of the textbook. Moreover, counterarguments aimed at opposing the meaning of the term Management, understood by some experts and businessmen, also require a more attentive and strict attitude to the term and its interpretations of researchers of management. For example, as businessman Ricardo Semler understands the meaning of “Management in the Future,” speaking at the prestigious TED venue: “The key to management is to get rid of the managers,” suggesting to introduce new terms and technologies: “industrial democracy,” “corporate reengineering.”34 It is important to note that Mr. Semler is not an expert in management theory, he is the CEO of a successful industrial company. His views hardly reflected the basic idea of governance and organizations. For example: “it is time to redefine the term “manager” and ask whether the idea of “management,” in the sense that it was inherited from the industrial era, has become useful?” This question is for all the researchers of management, including you, dear reader. If you understand management only as control of subordinates, then the phrase of the critics of management: “Trying to control people in a corporate environment can be counterproductive” is true. But once again recalling Napoleon’s words about management: “Gouverner c’est prevoir” (“To manage is to foresee”), managers will not only have to control, but also carry out functions such as prediction, motivation, coordination and a number of other functions, as will be discussed in more detail in Chaps. 6–8.

1.3

On Attitude to “the Past” in Historical and Managerial Research

As already noted, this tutorial will mention the history of the ideas of management of any social organization as a professional activity. On the basis of the definition of the organization, it can be hypothesized that management of an organization is one of the oldest types of human activities, more precisely, since the appearance of two people on Earth there has been a need for a purposeful impact of one of them on the other. If that is the case, it is obvious that, in the course of its existence, mankind has accumulated both great practical experience and many management ideas. It is now 34

https://sheer-capital.pt/2018/09/02/is-the-era-of-management-over/.

24

1 Issues of Historical and Managerial Research

necessary to search for these ideas, identify, collect, store, process, analyze, synthesize, systematize and, if possible, apply to modern management tasks. Having read the tutorial, the reader will be convinced that for many millennia the issue of an organization’s effective and efficient management was a vital one and concerned the minds of practitioner economic executives, public figures, organizers of production, military warlords, businessmen, and academic-philosophers, legal experts, political scientists, sociologists, psychologists, economists, managers, historians, etc. This textbook attempts to summarize and illustrate the notion of “the past of science or knowledge” as it relates to the study of management thought in examples. Because of the novelty and the usefulness of this approach, we have to elaborate on the characteristics of “the past.” In itself, the historiography task of applying the notion of “the past,” even relating to the study of civil history, while at the stage of presenting specific civil events, is not trivial, much less with regard to identification, presentation and study of knowledge about governance or management ideas. The fact is that there are still at least two of the most popular views on the understanding of the “past” and how it differs from the present and the future. An HMT teacher ought to know and thereafter understand these differences in “the past of management knowledge” in exposition of historical-management material in order to avoid contradictions and paradoxical assessments of the past, both overly delightful and unjustly forgotten because of the “nothing new” assessment. According to the first point of view, the present differs from the past in any study only in real or physical time. In other words, events that are analyzed by any scientist, not even a historian, always belong to the past in some way. Here are three examples. First: a natural scientist captures the voltage in the circuit via a voltmeter, and this fact is, of course, separated by time from the fact. Second: let’s imagine an astronomer’s observations via telescope in the Solar flare. It is also obvious that light travels the distance from the Sun to Earth in a certain period of time, so the astronomer captures the past by observing Solar flares today. Third: after listening to Philip Kotler’s lecture on “A new approach to marketing in the 21st century” at Moscow’s Radisson-Slavyanskaya Hotel on 31 October 2003, only after the lecture does the researcher begin to analyze the recordings. According to the second point of view, all the above-mentioned examples, while clearly illustrating the events that “occurred in the past” in terms of physical time, does not mean that a researcher can consider himself a “witness of the past,”, that simple fixation that events take place in time does not mean the necessity to classify them as the “past,” that the notions of “past” and “present” are not related to the fixation of physical time. Proponents of the second point of view cite as arguments examples of fairly long periods of human history of ancient people who had no idea of the past at all. Moreover, in ancient times, as the historian G.J. Withrow wrote in “Natural Philosophy of Time” [18]: “In the first conscious thought of time, man instinctively tried to surpass or eliminate time.” In particular, each ritual victim was considered to be a repetition of the original divine victim and to coincide with her... “The Life of ancient man was characterized by the repetition of the archetype acts and continuous recurrence of the same original myths, so that he sought to live in a continuing

1.3 On Attitude to “the Past” in Historical and Managerial Research

25

present. . .(highlighted by us — M.V.)... Of course, all primitive people have some idea of the time and some method of its calculating, usually based on astronomical observations. For example, Australian aborigines will fix the time for the intended action by placing a stone, say, in the fork of a tree so that the Sun illuminates it at the right hour. However, it is noteworthy that “Russo, who exalted the “noble savage,” loathed time and hours. When he lost his pocket watch, he thanked the sky for the fact that he would no longer know what the time was.” ([19], 74–75) What do these researchers offer to understand “the past,” how do they articulate the specifics of “the past,” how to distinguish it from the present and the future? First, to distinguish concepts, they introduce categories of reproducibility and non-reproducible events and the boundaries between them. Second, they postulate (and illustrate with examples) the emergence of a culture of human awareness of these notions and boundaries between them at a certain period of development. Third, they propose using the life-cycle model in history (compare to the life-cycle model of the organization as outlined in this chapter) or the evolution of mankind, similar to that of an individual. For instance, the famous Augustine model consisting of seven steps: 1. 2. 3. 4. 5. 6. 7.

Infancy—mankind masters’ language; Childhood—memory emerges; Adolescence—development of the lower mind, awakening of family instinct; Youth—the awakening of the higher mind, moral consciousness; Courage—religious consciousness; The beginning of old age—the soul comprehends God; The last period is merger with God.

In this model there is an end goal (merging with God), but neither “end” nor “irreversibility.” Irreversibility and non-reproducibility are the most important attributes of the second view to the “past.” In other words, where a researcher or an ordinary person can reproduce one or another phenomenon with precision and interchangeability in practical custom, they act as the present. “The past” begins where there is a way out of reproducibility and substitution. In such a case, researchers in natural sciences are in most cases studying the present, as they are studying phenomena that are constantly reproduced in experimentation and monitoring. In fact, all experimental sciences live in the present and do not divide the reality into “past” and “present” because experiment in principle ensures that the phenomena studied are reproducible. Where science is confronted with non-reproducible phenomena, but for one reason or another must learn and have knowledge of them, there is a “present” and “past” division, but the problem of reconstruction of the past emerges (reconstruction of the “historical climate” in geology, reconstruction of “the past landscape of the Earth” in geography, reconstruction of long-extinct species in biology, etc.). It is believed that “the perpetrators” of the rebuilding of “the past” in the second sense are historians, when, with the will of the times and circumstances, being at a high level of centralization in the development of social memory, they have learned

26

1 Issues of Historical and Managerial Research

to recreate stories of inimitable events of civil society. The first of these was “the father of history” Herodotus, who, in his famous “The Histories,” called for this laborious revitalization of “the past” by saying that the once deeds of people should not be “forgotten forever,” that “Herodotus of Halicarnassus collected and recorded this information, that the events that occurred over time will not come to oblivion, and the great and astonishing acts of both Hellenes and barbarians are not left in obscureness, and especially why they were fighting each other.” In reconstruction of the past (more precisely, the systematization of the elements of individual memory), though, Herodotus had succeeded more in the example of multiple military battles, but, however, he had not only embodied the unique event of his time, but ventured to present the causes of these wars. And in his “The Histories,” he gave an example of capturing the social memory of a unique event of civil life. Much later, researchers have learned to recreate the images of non-reproducible events of social and spiritual life [20]. The term “social memory” was also developed by historiographers. Today, the notion of “social memory,” which the historian of management thought has to work with, reveals itself at three levels (stages) of its development in three appropriate forms. Initially, the memory of events is purely individual, and only language is used as a means of exchanging memory. With language communication, memory content elements can be transmitted to each other. Sometimes this content is successfully broadcasted, passed from generation to generation, but sometimes it can be irretrievably lost. The second level of social memory development is the “information market,” at which information, knowledge and experience are exchanged in accordance with institutionalized or traditional norms, standards and procedures. An interesting example of the information market is found in “The Histories” of Herodotus: “The following custom seems to me the wisest of their (Babylonians’) institutions next to the one lately praised. They have no physicians, but when a man is ill, they lay him in the public square, and the passers-by come up to him, and if they have ever had his disease themselves or have known anyone who has suffered from it. They give him advice, recommending him to do whatever they found good in their own case, or in the case known to them; And no one is allowed to pass the sick man in silence without asking him what his ailment is” [20]. There is another example in the “Gaul” of Julius Caesar, where it is said that “it is the custom of that people (Gaul) to stop travelers even against their will, and inquire of them what they have heard and know relating to any affair; and in their towns on the arrival of a foreign merchant, they gather round him in crowds, and oblige him to tell what country he comes from, and how things stood at his departure.” At the third level is centralization of social memory. An example of this level is again “The histories” of Herodotus, in which the author, having collected and documented individual bits of information, has committed them to common heritage. This is not yet a rebuilding of the past, for which it is still necessary to establish an epistemological relationship between the “present,” which is the source (“data” rather than “information”) and “past,” the former becoming a means to gain knowledge of the latter. Herodotus himself did not claim reconstructing the past,

1.3 On Attitude to “the Past” in Historical and Managerial Research

27

understanding the possibility of error in the veracity of the stories and warning the reader with the words: “As far as I am, I am obliged to record the things I am told, but I am certainly not required to believe them. This remark may be taken to apply to the whole of my account” [20]. Soon or later, in the phase of centralization of memory, even on civil events various kinds of “inconsistencies” between elements of memory content had to emerge. Then the question arises, what was the actual case? The disappointment of historians who have faced such a problem is usually illustrated by a well-known story, allegedly with a politician and historian of the seventeenth century, Sir Walter Raleigh, described by V. Hvostov in his “Historical process theory” (1919). This gentleman was imprisoned in the Tower of London for a political case. “He conceived the idea in prison to present the historical events in which he himself had taken an active part. However, he did not finish the work and threw the manuscript in flames under the influence of the next incident. From the window of his cell, Raleigh witnessed the fight and controversy occurring in the courtyard. Another day, he had to hear stories about the event from two eyewitnesses, and it turned out that each of those individuals had put a different complexion to the case, and that both stories did not correspond to what Raleigh had seen. Following this incident, Raleigh decided that if eyewitness testimony of a simple incident was so unreliable, he, as a witness of more complex historical events, could not claim to be accurate and authentic” ([21], 372). The story that historians would have wanted to write to social memory appeared in such contradictory testimonies that it posed a serious problem in developing rational techniques for separating fiction from the truth in these testimonies. So, the problem of building social knowledge remained, but now in the form of validation of the event described. And since it is not simply a question of centralizing social memory (in the form of fixation of “evidence” in this memory), but of a reliable description, historiographers began to realize that “evidence” and “event” are not the same thing, and the purpose of the historian is to record reliable evidence. Management thought historians, as users of different types of data sources, should be aware that they are reconstructing past knowledge, that is, labor-intensive work to verify the validity of the evidence available to them. To this end, it is possible to use all possible means of “criticizing sources,” ranging from the first recommendations of Petrarch, Boccaccio and Bruni, to the most advanced “critical techniques” of philological clustered text analysis. At the same time, it must be understood that even historians of civil events still have a lot of problems with reconstruction of the past (e.g., there is still no complete scientific answer to the question “ Why was the Aurora warship fired on a certain day, hour and minute in 1917, which led to the revolution in Russia?”). Historians of thought have even more difficulty in answering the classical questions of W. Whewell raised in the “History of the Inductive Sciences” (1867): “. . . How was each of the important successes by which sciences had achieved their present state made, when and by whom were each of the great truths obtained, the convention of which is now precious scientific treasure?” ([22], 3). We can add at least two more to these questions—why and for what purpose are scientific discoveries made?

28

1 Issues of Historical and Managerial Research

While continuing the discussion in the spirit of the second interpretation of “the past,” we note that the objective criterion of the boundary between “past” and “present” in the history of management thought should be found, most likely in the development of managerial thought itself (at the primary stage) and then of management science, for only on that border does the studied text become a historical source, which means replacing “reading and understanding” operations with a “historical reconstruction” operation. Psychologists, when describing the process of understanding, say that the incumbent must conduct a corresponding “predication,” that is, to assign the thought of a specific predicate (property) to the object. Understanding is described as “inclusion into the connection” or “integration into thought.” But it’s easy to show that the prediction itself or the means of attributing a certain property to the object in different eras are completely different. As we read medieval thinkers, we face expressions that are often unacceptable to us, which leads to a misunderstanding of the text. It seems that, in the first reading of the text of the past, we will always have misunderstandings, since we do not know the meaning of the text at first. But, in an effort to understand, we will translate the texts into the language of modern management science. For instance, the author of the Textbook “translated” (interpreted) some texts of Han Fei-Tzu, Arthashastra, “Russian Justice,” Silvester’s “Domostroy,” the New Trading Charter of 1667, Juraj Križanić’s “On politics,” P. Lavrov’s archival documents and materials from many other sources. As we learn to highlight the predicates in the development of management thought, we learn (and perform) reconstruction of normative systems of the views and ideas of the past. Again, in the language of psychology, this means that we are in a position then to highlight the patterns of the predication of the past, and the actual evolution of management thought is described as changing the predication schemes. Using I. Prigozhin and T. Kuhn’s term, it can be said that the present, in this sense, has a border on the replacement of “paradigms” (or the change of one system of dominant views, streams, scientific schools to another) [23]. Thus, the paradigm approach to identifying stages in the development of management thought emerged. At the same time, it is clear that each HMT researcher rethinks the past through the prism of modern scientific canons, training courses and education system. Each further stage in the development of management science involves the assessment and awareness (reflexing) of all previous texts in the light of new targets, their “rewriting” and “translation” into a new conceptual language with special, specific for this particular stage reading and understanding standards. Texts written in this language are the “present” of science. Science assimilates (likens) the past, but, like any assimilation, the material is reprocessed, transformed into elements of this organism. But such a rethinking should not be equated with historical and scientific reconstruction. In order to do this, the historian of management thought must still understand the studied text, in the face of perhaps a radical change in the patterns of predication of theoretical thinking.

1.4 Historic and Managerial Research as the Basis of “Management as Science”

1.4

29

Historic and Managerial Research as the Basis of “Management as Science”

At all times, management of organizations has been a complex process that includes elements of both science and art. Today, this process is even more complicated, primarily due to rapid and often unpredictable changes taking place both within organizations and in the external environment. Increased knowledge of the behavior of the individual in organizations and public processes, the temporal and spatial extent of business processes, the continuous expansion of the information field and capabilities of information technology to manage organizations, multivariance in management options and the objective remoteness of their results—all of these factors characterize the modern business environment. They, on the one hand, enhance the capabilities in the scope of organizations’ activities and, on the other, emphasize the need to enhance the scientific validity of selection and assessment of the consequences and the aftereffects of the managerial decisions taken. Thus, despite the slogan “Management is dead,” the role of the scientific component in an organization’s administration remains rather significant confirming the words of Lorentz von Stein quoted in the epigraph to this chapter. This circumstance, in turn, requires both the further development of methodological foundations of management science and the solution of fundamental problems of management science itself. These include, for example, the still controversial issue of the subject of management science, a number of categories and concepts of science; the problem of the interrelation between management science and other sciences; The problem of the methods of organizing complex scientific research, the problem of the relationship between art and science in management; The problem of measurement in the management of socio-economic facilities. Even a cursory analysis of research and management textbooks enables becoming assured that there are different interpretations of the category “subject of the science of management,” definitions of “governance,” “management,” “organization,” “management system,” “management functions,” “organizational structure,” “management mechanism,” “leadership,” “organizational culture,” “strategic management,” “organizational behavior,” “organizational development,” “change management,” and “management effectiveness.” Several reasons may be pointed out for the existence of such a multifaced state of management science, which naturally does not contribute to its development and generates complete confusion in the minds of users of its recommendations. Let’s specify one, but the most important, in our view, methodological reason. It is the lack of established (real and experimental) procedures to verify the validity of scientific hypothesis and ideas in the management sciences. The stated reason, in turn, is based on the methodological specificity of management science—the complexity (and sometimes inability) of performing multiple management experiments, fundamental singularity, uniqueness of specific real conditions, difficulty in measuring characteristics and results of experiments.

30

1 Issues of Historical and Managerial Research

This has been the situation in most social sciences. However, there is a way out of this provision, it has been discovered long ago and has quite successfully been used in some of sciences (political economics, history, demography, legal studies, etc.). It is as follows. In scientific research on management the real-life process should be considered as material for experiment, such as empirical material subject to specific scientific processing for use in the formation of science. In doing so, we do not equate a real-life process, that is, public practice, and a management experiment. The ratio is the same as between “data” and “information” or between “inheritance” and “heritage,” respectively. In other words, not all societal practices (“data,” “inheritance”) are management experiments (“information,” “heritage”), but every experiment has a purposefully selected and scientifically treated part of public practice. A management experiment requires specific procedures for past public practice. In this case, on the basis of certain scientific concepts (or patterns of speculation) and in order to achieve the scientific objective, the researcher chooses a certain era and a specific region to “conduct” a management experiment, that is, to collect certain data on social practices, on management activities to obtain scientific or practical results. However, the necessary “recurrence” of this kind of experiment is implemented first, due to the unique property of management as an activity—the properties of constant reproduction at all times, and second, by corresponding specific examination of real facts and processes related to the subject of management science that took place at different specific time periods and under specific historical circumstances. Since management, as a conscious human activity in organizing production in order to meet needs of various kinds, has a long history, it is clear that the knowledge, ideas, attitudes and perceptions of management that have constantly accompanied these activities, have a history just as longstanding. The study of the history of both real management and management ideas is necessary and relevant at all times when it comes to forming management science, assessing the level of its achievements and trends in further development. After a brief update of the problems of real management it is asked, “Why flutter the chronicle of past knowledge on management?” or “Why should we look back and study the present in order to prepare for the future?” The answer is quite simple: “That’s because in principle there is nowhere else to look”! Unfortunately, we have to admit that the science of management is perhaps the only one of the social applied Sciences, which until the end of the 1960s did not carry out purposeful Historical and Managerial Research. (The beginning was the publication of a treatise by Claude S.George [24]), despite the fact that the management activity itself existed for more than 7 millennia. You will not find “historical” sections in any classification of the scientific basis of managing an organization in works published before 1988. Fortunately, in this science, “the ice broke,” as we wrote in the Preface. In connection with these circumstances, we define our thesis once again. We believe that, due to the uniqueness of the subject and the objects of study, historical and management studies are one of the most important and richest sources of forming science and good management practices. And the fundamental task of management historians is to constantly turn management inheritance, that

1.4 Historic and Managerial Research as the Basis of “Management as Science”

31

Table 1.2 Classification of the scientific basis of management of social production 1. Fundamental (methodological) science Philosophy Economic theory History Geography Praxeology Sociology Psychology Politics Demography and others

2. Applied sciences Planning Statistics Finance Accounting Law Management Psychology Management Sociology Investigation of Operations Cybernetics and others

3. General theoretical and historical sciences 3.1. Science of Management of Social Production 3.1.1. Guidance Theory 3.1.2 Theory of Management Art 3.2. History of Management of Social Production 3.3. History of Management Thought 3.4. Historiography of historical and managerial research

(Сompiled by the author of the textbook)

is, the accumulated centuries-long, rich and largely untouched empirical and theoretical material in the field of organization and business management, into theoretical heritage, that is, meaningful, systematically completed historical and scientific notion (called HMT). In 1988, we proposed an expanded interpretation of the scientific foundations of management, which is shown in Table 1.2 and which takes into account the above ideas about historical and managerial research. The originality and fundamental difference between the proposed classification and the former known is the presence of two more equal sections in part three, along with the Management Science itself: the History of Management of Social Production (and an Organization, as one of the manifestations of the Social Production) and the History of Management Thought, which we consider the foundations of Management Science. For the first time this understanding of the Scientific Foundations of Management with the introduction of historical and managerial sections No. 3.2 and 3.3 in the block “General theoretical and Historical sciences” was published in the abstract of our doctoral dissertation in 1987 ([25], p. 13) Here are the key definitions of Historical and Managerial Sciences in the original version that we proposed in an article ([26], p. 4), published in 1985, and then in 1987 in the above abstract of a doctoral dissertation ([25], cc. 13–14). Definition 4 The History of Management means either the process of emerging, developing, combating and changing specific management systems for an organization (or its individual elements) and management relations in organizations in specific historical conditions in the past, or a system of scientific knowledge of these processes. Definition 5 The subject of the History of Management (as a science) is the process of emerging, developing, combating and changing specific management systems for an organization (or its individual elements of a system) and management relations in organizations in specific historical conditions in the past.

32

1 Issues of Historical and Managerial Research

Definition 6 The History of Management Thought refers either to the process of emerging, developing, combating and changing of doctrines, concepts, theories, attitudes, ideas, perceptions of the management of an organization (in general or its individual functional areas) under various specific historical conditions, or a system of scientific knowledge of these processes. Definition 7 The subject of the History of Management Thought (as a science) is the process of emergence, development, struggle and change of doctrines, concepts, theories, views, ideas, notions on the management of an organization (as a whole or its separate functional areas) in various specific historical conditions. Definition 8 The Historiography of historical and managemerial research means either a set of historical management research (HMR) carried out from ancient times to the present day, either a critical review of the HMR sources and a comparative analysis of the HMR in order to identify the development of historical and managerial knowledge about the management of a social object (as a whole or its individual functional areas) in various industries, in different regions of the world in specific historical conditions. In this textbook, the goals, objectives, content and methods of shaping the history of management thought, as well as the most important steps and results in the development of HMT will be stated. An assessment of the overall state of management thought may be expressed in the following words: “Management has a long background, but a very short history.” Indeed, on the one hand, it is clear that, since the emergence of the need to organize basic production for the purpose of meeting human subsistence needs, the first thoughts and ideas on rational management of production appeared. On the other hand, it is also clear that the history of managerial thought is still too “young” as science. Only in recent decades did special monographs begin to emerge in this field and most recently, articles whose authors attempt to identify some patterns, cyclicism of emergence and disappearance of management ideas on a large historical pattern. The main source and database array of the history of public scientific thought prior to that was the history of political, legal, sociological, economic and ethical teachings. In this series history of management thought should occupy a rightful place. Based on the current perception of the subject of management science, as relationships that arise in the process of managing an organization, some specific areas of historical and management research can be formulated (see also Annex A): • Development of the methodological issues of the two historical and management sciences (subject, goals, objectives, methods, etc.); • Periodization and cyclicism in history of management and history of managerial thought; • The study of the history of management systems as a structure and process (in general, and on individual characteristics and elements of the system); • The study of issues on organizing established procedures for recording and storing data on ongoing management affairs (programs, reforms, transformations, experiments, etc.) with a goal, first of all, to conduct a multiple assessment of

1.4 Historic and Managerial Research as the Basis of “Management as Science”

33

these affairs prior to their implementation, in the process of implementation and after the some results have been achieved; • The study of the history of management research. The importance of assessing the past, present and future state of the HMT was presented as the topic of discussion at a Round table at the Management History Division at the 78th Congress of the Academy of Management (August 2018, Chicago). The theme was as follows: “Where we were? Where we are? Where we will?” The author of the tutorial also participated in the discussion and search for answers to these questions. One of the theses of our speech was that it is necessary to pay attention to the development of ideas of management in Russia and other countries, especially when some researchers are in a hurry to assign primacy in creation of “Scientific management” to specialists who were busy in creation in the early twentieth century. Not to mention the fact that management as an activity has been systematized and reflected in written documents for several thousand years, “hasty” researchers do not bother to look for archival materials, to stop identifying the “pioneers” of managerial thoughts, ideas and even concepts and teachings, which are always fraught with mistakes and even incorrect. As an example, it was necessary to remind the participants of the Round table that when Frederick Taylor won the U.S. Tennis Championship in doubles in 1881 (Taylor was 26 years old, and his article “Principles of Scientific Management” [27] was published in Russia in 1911), a young associate professor of the Imperial Moscow University Victor Goltsev (he was then 31 years old) already held the “Doctrine of Management” course at the Faculty of Law of the University [28]. One may say that the object of V. Goltsev’s training course (and therefore the object/subject of management) was to a greater extent the state, rather than private companies of F. Taylor. But Goltsev’s works are available, open to review and criticism. By the way, as well as the works of his teacher—Professor Lorenz von Stein, the author of the 7-volume treatise Die Verwaltungslehre (“Doctrine of Management”), published in the 1860s [29, 30]. So just a little remained—to conduct a comparative analysis of the texts of these scientists and find not only discrepancies, but also intersections in views on goals, methods, functions, management personnel and other elements of the management system, and thus contribute to the development of our science — the history of management thought. While the development of history of management thought is important for management theory and practice, the study of HMT has a very important ideological aspect, since it enables understanding the nature of science as a phenomenon of universal human culture. The historicity of scientific thinking, recognition of the situation, the specific historical nature of scientific truths—these are the preconditions from which the historical and managerial study should begin and be based on. Is it not interesting to identify the causes of emergence of literally a barrage of scientific concepts, theories and even schools in recent decades (the type of H. Mintzberg’s “ten strategy schools”), emerging and disappearing for 2 or 3 years, which does not occur in any other branch of human science and practice?

34

1 Issues of Historical and Managerial Research

In this regard, questions will be of interest to us such as: “Who or what drives the minds of management guru, the creators of ideas and theoretical concepts of governance?” Why is it that yesterday “Managing for purposes” was proclaimed, today, with no less intoxication it is “strategic management”; yesterday, “a systemic approach to management,” and today, “situational”; yesterday “restructuring,” today, “reengineering” and “change management”; yesterday, “staff training and development,” today “self-learning and a learning organization”; yesterday “costdriven management,” and today “value-based management” and “knowledge management”?. Can this be because management, as a combination of theoretical notions, has a strictly applied purpose and even a serviceable nature, such as knowledge, developed, for instance, for the benefit and whims of the pharaohs of the ancient city state, or the owners of a modern company? Although, on the other hand, a modern discussion on the state of Management health (on the topic of “Is management alive or dead?”) suggests a possible analogy with the continuous process of creating new and new medicines to treat the same human diseases that have been known for many millennia. It seems that the goals and criteria are changing (from “simply survive” through “wanting to get better more quickly and securely” to “live longer”) and new medications are emerging. The same applies for business. There’s always a desire to just “do business,” then “earning” compliments that criteria, then “make a lot of money,” then “exit the crisis,” and then “make a lot of money quickly and for long”, etc., and so on, and each time according management concepts emerge. But there is no reason to think that any goal has the means to be achieved. It is likely that the purpose and the criteria, as well as corresponding means, are being adjusted each time (most often it is necessary to abandon unachievable goals, “spread target” along the trajectory of motion towards it, “lower” the criteria), and “relatively better means of achieving the adjusted target appropriate for the time” are found, if you remember our axiom that “Any new means are a new combination of old, previously known means under new conditions.” Historiography of Historical and Managerial Research Human society has a large “heritage” in the form of “historical samples” of management, which are the basic material for forming management science and which should be treated not only as illustrative examples of management, but also used for verification of theoretical management concepts. By “Historiography of historical and managerial research” (HHMR) we mean the totality of historical and managerial research (HMR). The object of these research are the History of management and/or the History of management thought, carried out from ancient times to the present day. The methods of HHMR is the source study of HMR, and the result of HHMR is knowledge about the development of HMR. Having some experience in conducting historical and scientific research, we may say that there have been repeated attempts in the history of public thought to begin developing a History of management thought. The first studies in this area appeared in the eighteenth to nineteenth centuries. In the studies of Russian and foreign

1.4 Historic and Managerial Research as the Basis of “Management as Science”

35

scholars of the eighteenth century, especially in the area of on civil history, history of law, sociology, economics, politics and political science, there are chapters and entire sections containing historical analysis of the development of managerial thought. This analysis begins at times with an analysis of the treatises of the Ancient world, which dealt with and addressed issues in organizing management mainly of the state economy. In other words, the History of management thought and the History of management have attracted the attention of scientists and practitioners since ancient times, which was reflected in their publications, thus, the beginning of the historiography of historical and managerial research was laid long ago. Let us point out the works of the authors of the eighteenth to twentieth centuries. Among foreign authors of the eighteenth to nineteenth centuries, the best-known historiographers in management thought were the French De la Mar [31], German scientists H.G. Justi [32], J. von Sonnenfels [33], G.Zimmermann [34], E. G. Bröcker [29], Lorenz von Stein [30]. Among Russian authors it is primarily worth noting the studies of N. Rozhdestvensky [35], I. Platonov [36], V. Leshkov [37], I. Babst [38], I. Andreevsky [39], B. Chicherin [40], B. Goltsev [28], E. Berendts [41], A. Gorbunov [42], and B. Ivanovsky [43]. In the early twentieth century the studies of F. Taylor [27], F. and L. Gilbreth, F. Parkhurst, G. Gant, H. Fayol [7], which together constituted a new direction of managerial thought—“scientific management.” Naturally, the studies of these authors attracted the attention of Russian scientists and practitioners. Many of the works had been translated into Russian. In the early twentieth century in Russia, magazine articles and monographs containing assessments of scientific management were made, which could be attributed to the historiography of HMT, begin to emerge. The authors of these studies were A. Gastev [44], M. Tugan-Baranovskiy [45], O. Ermansky [46], N. Vitke [47], V. Dobrinin [48], F. Dunaevsky [49], and others. There have been few monographs in Soviet scientific literature that could be attributed to the HMT. Among them, the studies of O.A. Deyneko [50], D.M. Berkovich [51], D.M. Kruk [52], Y.A. Lavrikov and E.B. Koricky [53], D.M. Gvishiani [54], E. Koritskiy, G.Nintsieva, V.SHetov [55], E.B.Koritskiy, YU.A.Lavrikov, A.M. Omarov [56], Latfullin G.R., Radchenko YA.V. [57]. All of these are devoted to the History of Soviet Management Thought (HSMT), with the exception of the study of D.M. Gvishiani devoted to the history of foreign management theories of the twentieth century, and the study of D.N. Bobryshev and S.P. Sementsov [58], which also briefly characterizes the developments of the prerevolutionary period. At the same time, many articles appeared that characterize certain periods in the development of management thought emerged including those published in the Proceedings of International conferences on the History of Management Thought and Business, held since 1996 at the Moscow State University [1]. Among major foreign studies it is worth mentioning the works of Claude.S. George “History of Management Thought” [24], W. Jack Duncan “Great Ideas in

36

1 Issues of Historical and Managerial Research

Management” [59], Morgen Witzel “History of Management Thought” [60], Daniel A. Wren and Arthur Bedeyan “The Evolution of Management Thought” [61], A. Bedeyan “Laureates of Management” [62], which contain a lot of valuable information about little-known researchers and works on management theories. In our textbook, we will often use the unique materials presented in [24, 54, 55, 59–62]. Unfortunately, despite the fundamental nature of the coverage of epochs and countries, in the works of foreign authors says nothing on the development of management thinking in Russia, although it is known that Daniel Wren and Arthur Bedeian studied the history of the spread of Taylor and Gantt’s ideas in the young Soviet republic and published articles [63, 64]. In 1980, another US researcher, Richard Widmer, also published an article on the development of management science in the USSR in the context of The Role of “Americanizers” [65]. In recent years specialized Russian studies on the History of Management and HMT emerged. In particular, the monographs of the A.I. Kravchenko “History of Management” [66], collective monograph E.M. Korotkov with colleagues “Universal History of Management” [67] as well as I.N. Makashov’s and N.V. Ovchinnikova’s monograph “Worldwide history of managerial thought” [68] have been published in Russia, but they are more reflective of the History of Management (HM) rather than the History of Management Thought. Among foreign publications, one should also name the Proceedings of international conferences on Business History, annually held in the United States and other countries under the aegis of Harvard University, where history of management thought may be found, materials of “Business History,” “Management and Business History” and “Management History” magazines, materials of annual (since 1940) meetings (congresses) of the Academy of Management mentioned in the Preface, in the structure of which are 25 areas (divisions), among them divisions (subdivisions) “Organization and Management Theory” and “Management History.” At the head of the latter from 2013 to 2018 was the mentioned professor Bradley Bowden, editorin-chief of the magazine “Management History.” The study of the various development periods of HMT in all its depth and breadth of grasped issues is clearly not the same. In the case of the Soviet authors and Postsoviet authors, for instance, surprising as it is, the most in-depth studies were carried out on foreign HMT and to a much lesser extent on domestic HMT. And if the history of Soviet management thought had been given a rightful place in the management of an organization, there are practically no studies on the development of managerial thought in Russia prior to the twentieth century. Besides, the typical “weakness” of most publications in HMT, which bares a methodological nature and is related to blurry distinction of two interrelated but different subjects of research in these studies—the subject of History of Management and the subject of HMT, should also be pointed out. The main reason for this “incompleteness” of HMT is, as has already been pointed out, that HMT has not yet become a scientifically recognized historical and scientific activity. About the Gnoseology of HM and HMT Research of a particular system of management (the state, national economy, public production, an organization)

1.4 Historic and Managerial Research as the Basis of “Management as Science”

37

must necessarily follow the principle of scientific historicism, according to which the process of learning is structured as follows. • First of all, it is necessary to identify the socio-economic factors or causes of the emergence of a management system (or its individual element, for example, “methods of management”) or the studied management thought (in terms of ideas, concepts, theories, schools, paradigms); • then examine the forms of manifestation of the studied phenomenon or process, depending on the identified causes, in particular historical context; • and, finally, to establish significant differences and similarities, functional links and relationships of the present (studied) state of the system with the past, and to identify and assess their manifestations in the subsequent states of a management system. Depending on the objectives of the scientific study, historical facts and management experience can be used for different purposes.35 First, to illustrate the explanation of scientific thought, interpretations of practical details of management, which evade in a purely theoretical, abstract notion of the study’s material. Second, for the purpose of proving, the possibility of the existence of any element (or system) of management of an organization and/or the efficacy of the scientific and practical means. And, third, to establish consistency (or vice versa) with a theoretical concept of management. The historical experience in management used in the first case will be referred to as, respectfully, the historical example of management, in the second—historical evidence, in the third—historical prophecy. Notice that the methods of exposition and presenting historical experience in scientific study differ in the three cases. In the first case, it is usually sufficient to simply mention a historical fact, sometimes with some details. In the second case, it is sufficient to refer to a historical fact, but necessarily credible and plausible. In the third case, which is most important for the development of Management science, historical experience of management must be detailed and extensive in time and space, reproduced in the smallest detail relevant to the above-mentioned theoretical statement, made and proved. The gnoseologic meaning of the term “historical prophecy” that we introduced means that a researcher, knowing the historical accomplished fact or the outcome of a process, turning to the past, restores in detail the specific historical conditions and environment and, on the basis of some theoretical pattern of speculation, logically inconsistently predicts the fact or outcome of the process as a necessary outcome of the considered process. The term “prophecy” is also justified by the fact that a historically verifiable concept of management (in the case of consistency) can be usefully used in future to

35

Further, we generalize and substantially supplement the similar theoretical considerations of K. Clausewitz, expressed by him about military historical experience in the treatise “On War” ([69], pp. 113–114).

38

1 Issues of Historical and Managerial Research

anticipate the development of a management system, which is the practical meaning of management science. Of course, the most complex and difficult process for a researcher is that of the forming of historical facts used in their third quality. And one of the difficulties that a modern researcher of management has to face is the specifics of the basic scientific method—“observations,” since essentially only the text (often of a non-scientific nature) is under “observation.” Below we will define a range of possibilities to solve problems that arise at this stage of research. In Sect. 1.5, we will return to the gnoseological problems of HMT.

1.5

Issues in Research of the History of Sciences

Science is a sphere of human activity the function of which is to develop and theoretically systematize objective knowledge of reality. In the course of history, it has acquired productive force. The process of transforming science, altogether, and knowledge in particular, into immediate productive force began from the late eighteenth century with the development of capitalist relations in society, and has since successfully been continued. Modern management paradigms—knowledge management, beginning organizations, knowledge is power, knowledge-based management, etc. once more confirm this. Under these conditions, the process of changing the self-awareness of science, which accompanies its development, has become more intense and complex. Science itself is becoming a subject of comprehensive scientific analysis. Naturally, science studies are emerging and developing—a field of research that studies and researches scientific knowledge itself, analyzing the structure and dynamics of scientific activity, the relationship between science and other social institutions and the areas of material and spiritual life in society. The history of science is an important part of a special set of disciplines, such as the theory of knowledge, the psychology of scientific creativity, sociology and the economics of science, which study the development of science in various aspects. In relation to the growing role of science, there is increasing interest in analysis of the history of science, identification of causes, patterns and trends in its development. The history of science can and should serve as a starting point, a sort of empirical basis for generalizations of any kind, both for the creation of a general theory of science and for practical recommendations for the management of science and its organization. Therefore, the development of the history of science as an independent discipline is now becoming more relevant. The longstanding world-wide experience of historical and scientific research (HSR) enables formulating a number of common methodological problems. In this paragraph, we will briefly refer to the most important ones: we shall describe the three traditional stages in the development of all HSR, outline the areas of problematics expansion, focus on the issue of sources, further describe the scope of the HSR subject area, the specific features of “science,” such as

1.5 Issues in Research of the History of Sciences

39

reflexing systems, and the stages of possible conceptualization of HSR’s subject’s understanding. Specialists in the field of historical and scientific research believe that the history of science as an independent scientific discipline was recognized in 1892 in France, where the first special department for the History of science was established. As of 2000, there were already about 140 such departments, 60 research institutions and scientific societies in the world. There has been a significant increase in the number of scientists dedicating their research to this field, that is, to say, professionals in the history of science, that have transformed historical and scientific research into an independent and large branch of knowledge. Three stages can be distinguished in the development and modification of the main content of the history of science. In the first stage—the stage of birth—the dominant type of historical and scientific research is primarily a chronological systematization of the success in a particular branch of science. Almost all of the histories of Science developed today (history of physics, mathematics, psychology, sociology, history of economic thought, history of political and legal thought, etc.) have passed this objectively required initial stage of birth. At this stage, the logic of the development of science, the conditions and factors of its dynamics are usually not revealed. The results of the historical and scientific research at this stage are often a description and enumeration of the “acts” of individual scientists, who had performed as if they were out of time and space, which obscures the real, complex process of developing the researched science. On the second stage—the formative stage—the focus is on describing the development of ideas and issues in a given area of knowledge, but at the level of filiation of ideas. This is a step forward in the establishment of the history of science. As A. Einstein put it: “The history of science is not a drama of people, but a drama of ideas.” However, the complexity of science as a social phenomenon is still unclear at this stage since science only identifies a direct, linear, irreversible procession of the human mind, that is, scientific ideas exist as if regardless of the people, their world, relations, etc. On the second stage, historians have little or no interest in the social soil or personality of the scientist. On the third stage—the stage of development—attention intensifies on the public and human element of science. Society, public production, the level of industrial forces and the nature of industrial relations (including relations in the scientific community), the personality of the scientist becomes the dominant factor in explaining the “turns” in the development of any science in its history. Today, the goal of historical and scientific study is to clarify the pattern of scientific development, taking into account all the causes, conditions and factors that contribute to it. At the same time, the growing social role of science has led to a considerable expansion and deepening of the issues of historical and scientific research. The expansion of research in the history of science has been carried out in such areas as: 1. Changing the objective of study, which now involves not merely recreating the past, but also studying it to better understand the present and foreseeable future.

40

1 Issues of Historical and Managerial Research

In so doing, the rebuilding of the past transforms from the ultimate goal of the study to only a step towards its achievement. And the goal is to discover the pattern of science development. 2. Historical and scientific studies increasingly include the social dimension of the history of science—the genesis and development of science in relation to the development of society, the changing social functions of science, it’s place and role in the history of mankind. Coverage is given to issues such as the interaction of science at different stages of its history with ideology, politics, economics, culture, etc. 3. An integral part of special historical and scientific analysis is now the study of internal patterns of scientific knowledge. The factors, conditions and nature of the process of forming and changing scientific theories, the evolution of the structure of science and its methods, the changing of styles of scientific thinking, the language of science and the very notion of “science” are considered here. The History of Science, as an actively developing sector of knowledge, also creates new methodological issues, the number and diversity of which are large. Particular complexity of the work of a historian scientist is the compulsion to reconstruct a complete picture of a distant age in science, using scattered and incomplete sources. Scientific work usually contains only the result of the creative process of research, and the course that the scientist persisted, the motives of his activities are almost never documented. Even more blurred, scattered in written material, written “between the lines” are scientific thoughts, hypotheses and judgments. The study of the history of scientific thought requires the researcher not to confine himself to highly specialized works, but to examine the whole range of documents and materials that characterize the authors’ views relevant to the scientific discipline considered. And if the author is neither scientist nor a specialist in the studied scientific (or scientific and practical) area of activity, it can be assumed how difficult it is to find such sources of scientific thought, to collect, study, confront and compare them based on indirect data, to analyze the selected materials and derive objective historical and scientific results from them. A historian of science must be prepared for such painstaking work, for the kind of “historian’s craftsmanship,” which often leads to success. In a scientific history study, it is necessary to understand the specifics of the thinking of the period under investigation, to penetrate its spirit, get accustomed to the role of the studied author. And this “rebirth,” “change of roles,” has to be done at least as many times as the number of thinkers of the past are being studied. The methodological difficulty also lies in the fact that the study cannot be limited to describing the development of scientific thought and community development as parallel series. The challenge, on the other hand, is to specifically reveal in each case the relationship between them, how they interact, their forms of interaction, to show how the socio-economic, political, ideological, social and cultural and historical context, and the mindset of the scientist influence the style and direction of his scientific thinking.

1.5 Issues in Research of the History of Sciences

41

The need to search for conditions of scientific discovery expresses the indivisibility of the historical path in the internal logic of the development of science and the relationship between historical and logical. What other methodologically important aspects in the study of the history of science need to be taken into account? Consider how the understanding of the subject and the objectives of historical and scientific research in the methodology of the modern historical school has developed and changed in the context of change in both the understanding of science in general and its individual disciplines. Primarily, there has been an expansion of the subject area to include new aspects of the development of science. The most ancient and traditional subject of the history of science is the development of scientific knowledge, including the development of knowledge of scientific methods. For the purpose of a more complete understanding of the development of science, it is necessary to study not only changes in the area of scientific knowledge. The subject of historical and scientific research now includes the development of specific relations between members of the scientific community that are engaged in scientific activity and are in a peculiar historically changing connections with each other. It must be stressed that in this case the object under consideration is not the entire aggregate of relations between members of a community, which is the subject of sociology and the history of society, but only the development of the specific relationships that generate scientific knowledge. Hence the new definition of the subject of the history of science. It includes the development of the scientific community, a history of relations within it, the development of science as an autonomous institution, rather than just scientific knowledge. In this case, the development of the forms of communication between scientists, the history of the logical, psychological, ethical and other aspects of the relationship between them; the history of scientific schools and scientific publications; the history of standards and criteria of value in the scientific community; the history of scientific conventions, societies and scientific institutions; the history of scientific activity planning, etc. And, finally, science is now understood as a functional aggregate incorporated into society and serving its specific needs and ultimately determined by social and historic practice. Science is a subsystem of this social order, while remaining specific and peculiar to internal trends. The unprecedented in the degree of financial, economic and moral and political incentives that science receives from society for its development have an invaluable impact on its continued progress towards new scientific and technical knowledge, and vice versa, the development of all spheres of society is increasingly dependent on the development of science. Hence the natural need, when studying of the history of science, to explore the development of the “science and society” relationship in general and the various facets of this relationship, for instance, “science-production,” “science-technology,” “science-culture,” “science-traditions,” “science-national features.” Thus, three major “substantive” levels of historical and scientific research can be identified:

42

1 Issues of Historical and Managerial Research

1. History of scientific knowledge and methods; 2. History of the scientific community and the social institution of science; 3. History of the “science-society” relationship. If you compare the subject as well as the goals and methods at each of these levels, it is obvious that they differ significantly (see [70]). The differences in the subject are mentioned above. Note also that the subject of the previous level is included in the subject of the next level, without disrupting the specifics of each level. This circumstance shows the integrity of the subject area and its complexity at the same time. In specific historical-scientific studies, the various subject levels are often hard to separate, specifically, it is more difficult to “remain” within in one subject area. This complicates the work of historiographers in historical and scientific research. Apart from the overall goal—identifying patterns in the development of science, specific research epistemological goals arise at each level, for example, the search for new scientists and doctrines, new scientific communities and links between them, the assessment of the impact of political, economic and other factors on the development of a particular science, and so on. These goals generate research objectives and methods and change the relative importance of the stages of the epistemological process. In addition to the process of broadening the notion of the subject, the process of conceptualization of the understanding of the subject of historical and scientific research was underway—from vaguely appreciated intuitive notions of the subject to the rational reconstruction of the scientific process (in its history) based on a welldeveloped theoretical framework for the development of science. The first attempts were built on the naïve (by today’s standards) desire to restore “what was,” which was a historically unique reality. The basic method was empirical, but the narrowmindedness in understanding the subject in more complex tasks (to understand the patterns of science) inevitably led to and lead followers to a “realistic” approach to subjective relativism. The next step in theorizing perceptions of the subject of the HSR is gradual introduction of a growing number of political, socio-economic, demographic, cultural, and other factors into the study, identification of the causes of events, the consideration of general laws of science development (not only the often obvious uniqueness of a particular scientific discovery) and, based on them, a causal explanation of the development of science. The subject area is clarified, and hypothetical “concepts and models for the development of Science,” which are actually tested based on historical material, are used as research methods. And, finally, the theorization process itself, the conceptualization of the notion of the subject of HSR can and will become the subject of the researcher’s attention and scientific interest, gradually becoming a complex and important scientific task. That is, from identifying the causes and factors (socio-economic, etc.) influencing the development of science, the researcher moves to their systematization, classification and other sort of streamlining processes. This inevitably introduces the researcher to the realm of the so-called “ahistoric knowledge,” that is, the area of his own attitudinal positions, his ideological attitude and social class position, to his thinking. The differences in ahistoric knowledge naturally affect the understanding of the

1.5 Issues in Research of the History of Sciences Real life (public practice)

43 Levels of research

Science First-level study (system with reflection)

History of Science

Second-level study

Historiography of science studies

Third-level study

Fig. 1.2 Relationship between science and the history of science (сompiled by the author of the textbook)

subject of HSR, the pattern of its discourse, and, on the other hand, require a large arsenal of research methods. This is perhaps the most difficult level and stage of synthesizing knowledge in the development of a particular science. A few words about a specific, unique property of “science” as an object of scientific research. The point is, “science” is a reflexive system, that is, a system that contains its own awareness. Researchers, as creators of science, have always attempted to combine a particular study with the knowledge, understanding and rational display of the essence of their scientific activities, in the form of formulation of goals and objectives of the study, of a list and discussion of methods of research, the presentation of the logic, stages and the results of the study. These, so to say, “companion elements” of a scientific study are essentially a mass of the main research results, its specificity, its novelty, difference from preceding, old results, and eventually, what the idea of the historian of science is primarily focused on (see Fig. 1.2). Naturally a historiography researcher who is at the second level comes up with the question: what attitude to have to the reasoning of a researcher of the first level, to his assessment of and acknowledgment of the results he achieved? Ignore them, study and assess only the scientific result itself, achieved at the first level, or consider the self-assessment of the result’s author, trust him, without fear of being captures by this self-assessment? The complexity and importance of these issues are obvious; however, they cannot be avoided by the historian of science. In order to fully understand these epistemological issues, apart from the knowledge of general notions on studying reflexive systems, it is necessary to conduct specific historical and scientific research with the goal of gaining and accumulation of experience with such systems. We believe that in each specific historical and scientific research there is trust to the author of the studied scientific concept, and critical assessment, requalification of the scientific

44

1 Issues of Historical and Managerial Research

results brought forward. That is, the historian of science constantly switches from one position to another, appearing “within a system with reflex” (often consciously) at times, and then beyond the system, observing it from outside. In fact, an opponent or reviewer of the same type of scientific work, thesis, diploma or course work acts in such a dual role each time. The next level of research, the historiography of science studies, is, sooner or later, generated in the process of accumulating historical and scientific results. Thus, the “history of physics history” and “history of mathematics history” are already known, historiography studies of sociology and law have emerged as well as methodological studies on the historiography of scientific knowledge. For professionals in history of management thought, this stage is still ahead, but we need to prepare for it by studying the results of colleagues and accumulating knowledge of the historiography of science. Note, however, that, at this level, the subject of the study is a dual-reflex system, which is a new quality and a new problem in itself. In this tutorial, there are sections that contain material related to the historiography of management thought, but, of course, it’s just “material,” not the historiography itself. The HSR Audience Historical and scientific research (HSR) is conducted by scientists in every individual area, but together it is systematic knowledge of the emergence, development and establishment of various sciences, which can be combined into a single concept: The History of Science. Highlighting the history of science into a scientific discipline has resulted in part of its audience being the historians of science themselves. As in other disciplines, professionalization has brought to life specialized literature and special standards for the selection and training of researchers. For professionals, such standards (e.g., careful study of the primary source) seem self-evident and absolutely necessary for the research area to be scientific. At the same time, the abundance of details and the degree of precision that the usage of these standards provides limit the audience of historians of science the extreme. Another consequence of professionalization is the growing disagreement between science historians and subject scientists (natural scientists, economists, psychologists, scholars, managers, etc.) on the purposes of the history of science and who it is for. Simply put, historians complain that scientists give historical knowledge less value than natural science, economics, law, etc., and scientists accuse historians of not giving enough attention to what they consider to be the core of science—the progress of true knowledge of nature, society and politics. These disagreements relate to the dispute over the objectives of scientific knowledge, which had in its own time divided historians and philosophers of science. The main reason was that historians of science, focusing on the gathering of evidence of the past and explaining events and views from the context, became closer to historians in general and were driven away from philosophers, who attributed the development of science to the progress of rationality and objective knowledge. While historians wrote about the past, philosophers of science used specific cases

1.5 Issues in Research of the History of Sciences

45

to confirm their epistemological arguments. If the historians were at risk of trivialization of knowledge, philosophers were under the threat of historical infidelity. As a result, uncertainty with the audience of the history of science remains. This problem is not purely academic, relations between scientists and the public, and the mediating role of science in them is widely discussed. There are disputes about the kind of science that should be conveyed to a wide audience. This controversy is exacerbated when, as in the case of museum exhibitions, the question of the image of science has a commercial, political or educational value. The complexity of the issue is well illustrated by the European Union’s initiative to support the history of science. The conference, held in Strasbourg in 1998, entitled “History of science and technology and education in Europe”, was attended by several groups with different interests. One of them wanted and suggested developing the history of science in order to help teachers of natural disciplines (the lack of motivation of students is a constant concern for teachers). Another group offered to teach the history of science to students studying humanitarian and social subjects in order to give our technological age a generation literate in the history of science and technology. Others sought to teach the history of science to natural science students in order to inculcate a sensitivity to cultural aspects. Finally, the fourth group— academic—could be suspected of wanting to continue its specialized research and not to teach anyone. As an example of the heterogeneity of the scientific history audience, a review process in Britain of books in this scientific area can be cited. When the books, sent to the Times literary app (one of the leading book review magazines), land on the desk of an editor of the Science division, he often chooses those who see the purpose of the history of science as serving science, as reviewers of natural-scientists. In contrast, history books of other humanitarian industries are sent for review to historians specializing in relevant matters; for instance, books on the history of art are sent to historians of art, not to artists, and books on the history of economic thought to historians of thought, not to economists. As a result, historians of science sometimes complain that their reviewers are not interested in the subject, and the reviewers accuse historians of not writing about true science. Based on the uncertainty of the HSR audience, it can be argued that the status of historical and scientific research is uneven throughout the world. For example, in Western countries, the status of scientific and historical research has received much more attention than in Russia. It was part of professionalization, separation from natural sciences, and the development of their own standards of practice and teaching. The new discipline critically viewed the amateur interest in great people, discoveries and contributions to scientific knowledge or digging in details that have only local significance. During this positive development, there were many solid studies that transformed the knowledge of the history of science.

46

1.6

1 Issues of Historical and Managerial Research

Specific Issues in the History of Management Thought as Science

The management of various objects, including organizations, is the real, concrete, conscious activity of people to achieve certain goals, to meet certain needs in a particular historical period. It follows that Management Science, which studies managerial relations, is a secondary entity in relation to real, specific management activity of people. Based on the characteristics of results (or statements) of the Management Science (depending on the place, and/or on the time, and/or on the researcher), this science belongs to the class of idiographic sciences, thereby differing from the nomographic sciences. It is the subject of management science— “managerial relations” in specific, literally unique organizations that generates a specific dependence on the three listed factors (reasons). At one time, the famous Polish scientist Jerzy. Starostsyak in his treatise “Elements of Management Science” (1965) wrote about the subject of management science as follows: “Some imagine that the science of organization and supervision is intended to be a catechism of certain recipes: how to organize how to act so that the organization and activities would be as correct as possible, and that this is the practicality of our sciences. But that, of course, is a clear misunderstanding. It is not possible to provide such a set of specific advice. It is not possible, for each agency operates in different circumstances at any given time. We therefore have no prescription for the right organization or proper activity. We’re rather looking for common patterns.” ([71], pp. 82–83). For more information about the semantic difference between the terms nomographic and idiographic sciences see [72–75]. In turn, the History of Management Thought, deals with the history of this secondary formation. It studies the “managerial” idea in its historical development (in a broad sense), reconstructing the past, restoring the emergence and change of thoughts and discourses, different views, attitudes, management theories, transitions in them and the logic of each of these transitions, exposing them to the necessary character. It is very important to note that the subject of historical and scientific reconstruction is everything that has occurred in the history of management thought, that is, not only what has been included in the subsequent development of science, but what has been discarded, left as a false build. For the history of any science, including management, it is not so much a chronological statement of the positive results of science, rather the identification of causes and, on the basis of this, an understanding of the course and patterns of its development, which involves analyzing not only the achievements of scientific thought, but also its errors, wrong moves and trajectories in development. Because of the dialectic connection of the subject and method of science, the transition to methodological issues of HMT allows for a more specific description of its subject, which is not simply the aggregate of management ideas and theories, namely their history. Clarifying the meaning of this historicity is important both in terms of the subject of HMT and its methodology. Below a specification of the

1.6 Specific Issues in the History of Management Thought as Science

47

directions of expansion of the subject area of historical and scientific research in relation to HMT will be given. About the Factors of HMT Development Thought activities aimed at finding rational forms and methods of managing society, the economy, an organization and production have always been carried out as a specific, historical by its nature, social activity. Beyond society, there is no management science, it is social in nature, it is the offspring and the organic component of society. Moreover, management thought, management science has always served society, reflecting certain sociocultural conditions in which it originated, evolved and disappeared. What is the basis of these sociocultural conditions, where is the source of the spiritual life of society, the origin of public ideas, theories and attitudes? There are different answers to this question, one of which is the search for the most significant factors in the development of public thought, including HMT. In our view, the set of objective material conditions in the life of society and the corresponding material industrial relations constitute the “real basis” on which the political, social, legal and managerial superstructure is uplifted and which corresponds to certain forms of public consciousness. So, the source of all management ideas, theories, views must be found, first and foremost in the material life of society, at the level of production, in public existence, which is what these ideas reflect. Consequently, the difference between theories, concepts, judgements about management at different times in the history of society is and can be explained, first and foremost, by the differences in the material conditions of society during these periods. We consider these conditions to be the first factor in the development of HMT. At the same time, the add-on relationship, which is based on the basis of the baseline, is relatively autonomous, interacting with each other and having a mutual influence. They have an active reverse effect not on the basis, contributing to its progressive development or, conversely, retarding such development. Moreover, in the development of HMT, there are times when management ideas, concepts and theories have outstripped the level of development of the material forces in society, reflecting the state of scientific research, including in the area of governance. The object and dialectic method of HMT research, based on the principle of historicism, requires acknowledging the accomplishments of the thinkers of the past, while emphasizing the historical and classical nature of their teachings, evaluating the vision position of the authors of these teachings. At the same time, nihilism and subjectivism are inadmissible when assessing the cultural heritage of the past in the area of management theories. This assessment should be objective and specifichistorical. That is why, as a second factor of HMT development, the aggregate of demographic, religious, cultural, ethnic and national characteristics, the social structure of society, the political and social strata of societies and their relationship to society in a specific historical period should be considered. A social class-specific historical approach to managerial views enables revealing not only the thoughts of the “past,” specific to their time, but also a great deal of what

48

1 Issues of Historical and Managerial Research

has proven to be invariant about historical periods, specific social formations and class structures. This circumstance should be taken into account in assessing the “contribution” of an author of a management idea to the overall development of HMT. One of the tasks of the HMT researcher is, in order to keep in mind the enormous and undeniable importance of the applicative aspect of the science on management, that at all times thinkers have tried to address the most pressing issues of humanity— issues of rational management of society, the state economy and an individual organization. The pragmatic importance of management concepts and theories has always played a decisive role in the development of various management issues. At the same time, it should not be forgotten that theoretical designs and practical proposals for governance that emerge from them are directly dependent on the author’s ideas, his worldview. In any doctrine, one way or another, there is a theoretical expression of the ideological attitude of its author towards the surrounding social reality, his ideological and political sympathy and antipathy, his predilections and aspirations, an assessment of the current state of affairs in the management of contemporary society and a vision of how it could be effectively developed. An objective dialectical relationship between the historical and logical, as well as the existence in any subject of a scientific study of the characteristics of a universal, special and singular nature, require consideration of a number of external factors of HMT development—they are the level of development and state of public thought in the studied society (or country); the internal and external state policy of the studied country in the areas of economics, science, culture, international relations, etc.; the level of development and state of management thought in the society in preceding periods; The level of development and state of world management thought in both preceding and period under review. In this approach, it is inevitable that a historical and comparative method of study is used, since an adequate description and assessment of the place and relevance of individual regional exercises and views of the individual scientist is possible only in the context of the whole, within the framework of world management thought. Thus, the following diagram of the epistemological process is drawn in HMT. Having embarked on a study of a certain management exercise, the significant developmental factors of HMT are carefully studied: the specific historical situation of a given region or country, sociocultural conditions in which the management thought was born and developed (concept, doctrine, theory, school of science), the country’s socio-economic situation, the totality of the objective material conditions of society and the condition of the other factors listed above (relative to the author of the managerial concept) of the external environment. The result of this analysis is a background to the emergence and development of a specific concept (theory, doctrine, school of science) of management. It is further necessary to familiarize yourself with the author of a managerial concept, to study his biography, to ascertain his social origin, to which category (or class) in society and the scientific community he belonged. It is very important to know what the scientist’s place in society was and what was his main activity—

1.6 Specific Issues in the History of Management Thought as Science

49

whether it was limited to the development of scientific theories alone or there was practice in management (in a government, public or commercial organization). With this information, it is easier to understand and appreciate the author’s worldview, and, knowing the sources of the scientist’s views, to evaluate his ideas. It is also important to consider what forms, models and thought structures are reflected in the concept, whether they are the leading and determinant of a given thinker, or are introduced for the first time in theory and largely untreated. All these points need to be taken into account in order to give an objective and rigorous scientific assessment of the concept being studied, to determine its significance for the past (i.e., the time it emerged and developed) present and future. The creativity of thinkers’ activity in the area of management and of the very ideas of governance cannot be overlooked. Indeed, the larger the institutional system of society, the more important the issue of its effective management became. Humanity cannot develop without improving orderliness, without using the lever of management. All this required and will require the developers of management ideas to give a creative nature to new ideas, concepts and theories. And this creative nature of management concepts should not be left aside from the attention of the historian of management thought. This is why it is necessary to be very attentive and cautious about the various types of utopian (for this period) views. They often prove to be very valuable and useful for a later period. Even a brief description of the “groups of complex HMT factors”—Politics, Economy, Demographics, Ecology, Law, Sciences, state and trends in the development of the Scientific environment, Personal characteristics and life path of the Author, Concrete historical environment, etc.—emphasizes that HMT depends on these complex variables, which in turn depend on many parameters, for example, demographics depend on such parameters as population structure, fertility, morbidity. And as a result, the HMT is actually, in formal language, not just a “function of the listed factors,” but a functional, since the HMT depends on dependent variables. This ratio can be written as follows: HMT ¼ F ð f 1ðxÞ, f 2ðxÞ, . . . , fnðxÞ, t Þ,

ð1:1Þ

where fi(x) is the i-th dependence factor of HMT, which in turn is a function of many variables (as, for example., Economy, Culture or Demography, Personality of the author of the concept) and concrete-historical moment (t). Adhering to this formalized approach, the task of the HMT researcher is to identify the dependence of HMT on a set of factors expressed by the equation (analog of the Altman model): HMT ¼ F ð f ðxÞÞ ¼ A1f 1ðxÞ þ A2f 2ðxÞ þ ⋯ þ AnfnðxÞ þ at,

ð1:2Þ

more precisely, to identify the coefficients Ai before each factor (or the significance of the corresponding factor in the change of the corresponding management thought).

50

1 Issues of Historical and Managerial Research

For all the love of the author of the tutorial to mathematics and to formalization of phenomena and processes in public practice,36 I will allow myself (as a mathematician) to make a non-standard statement: “Maths is not a science. Maths is a language,37” spoken in the world by several tens to hundreds of million people (out of the nearly 8 billion who inhabit Earth according to 2020 data). And it is not surprising that formalization, as just one way of verbalizing our view of the environment, cannot express everything that characterizes, and even more so, explains the configuration, the essence of the “environment” (and in business it is the business environment defined by us above as the algebraic sum of the “internal environment of the organization” and “the external environment of the organization” doing business). The objective weakness of the mathematical language, in which we have written ratios (1.1) and (1.2) above, as a reflection of the functional dependence of HMT on multiple factors, could hardly be spoken about better than Abraham Maslow. So Abraham Maslow, in 1954, in the Comments on his world-famous treatise “Motivation and Personality,38” put it this way: “More sophisticated scientists and philosophers have now replaced the causality notion with an interpretation in terms of “functional” relationships, that is, A is a function of B, or If A, then B. By so doing, it seems to me that they have given up the nuclear aspects of the concept of cause, that is to say, of necessity, and of acting upon. Simple linear coefficients of correlations are examples of functional statements, which are, however, often used as contrasting with cause-effect relationships. It serves no purpose to retain the word “cause” if it means the very opposite of what it used to mean. In any case, we are then left with the problems of necessary or intrinsic relationship, and of the ways in which change comes about. These problems must be solved, not abandoned nor denied nor liquidated” ([76], pp. 444–445). A. Maslow’s words and the idiographicness of management as a science do not seem strange, give space to researchers of management, both in search of causes of occurrence and in the fairness of evaluations of achievements of management thought. In any case, it becomes clear that any historian of management thought in search of answers to the main question of the IUM: “WHY did the views on the management of social objects change?” should be guided by Aristotle’s warning to the researcher of any science: “Since our research is undertaken for the sake of knowledge, and we know, in our opinion, each [thing] only when we understand “why [it] ”(which means to understand the first reason ), then it is clear that we must do this with respect to every emergence, annihilation and every physical change, so that, knowing their origins, we can try to reduce to them every thing under study”([77], T. 3, Ch. 3, p. 87).

that is — life. Just like music or sports. 38 First edition in 1954: Maslow, Abraham. Motivation and Personality. N.Y., Harper & Brothers, 1954. 36 37

1.6 Specific Issues in the History of Management Thought as Science

51

Particular mention should be made of the source problem of HMT. From source “observations,” the first introduction to the object of HMT begins. As noted above, only the empiricism of historical and scientific research is to be “observed,” that is, to say, only text. And prior to deciding on the veracity of the source and the plausibility of the observed fact, which is already the subject of HMT, careful and thorough work with multiple texts (written, documentary, scientific, epistolary, archival, etc.) is required. Special written sources containing material describing the level of managerial thought development may be divided into two groups: those reflecting the direct business activities of organizations and represent an attempt to reflect on the management of business. The written sources belonging to the first group reflected day-to-day business activities, established the management decision-making processes or the data needed for the preparation, adoption, implementation and monitoring of management decisions and regulated the business activity management processes. These are numerous business records; minutes of the meetings of the collective administrations of an organization; various legal acts regulating property, contractual and other relations between the parties of the management process; population census, etc. Such documents have been formed since ancient times. Thus, the earliest written documents in the form of hieroglyphic texts reflecting business activities in the states of the Ancient kingdoms relate to the age of copper and bronze, that is, to say, 5 millennium B.C. Unfortunately, the second group’s documents began to appear only in the seventeenth to eighteenth centuries, which makes it difficult to study the management ideas of previous eras, particularly the management of the same ancient kingdoms where business activity was quite intense. At the very least, there are still no sources, such as the special works of past scientists, issued before the middle of the nineteenth century, which were entirely devoted to understanding and thinking about management as a special area of activity. The most significant work is the above-mentioned seven-volume product of Lorenz von Stein, the “Doctrine of Management” [29]. But these facts do not mean that the political, scientific, economic and cultural actors of the different times and peoples have not generalized or systematized managerial experience, or have not resorted to known concepts of governance of society, the state, organization or production. On the contrary, large amounts of material on management issues is contained in books and manuscripts on philosophy, sociology, military, politics, law, political economics and other scientific literature, fiction, memoirs and in other sources. It should be recognized that the information source research subject area is the least developed of the methodological issues of historical and scientific research in general, HMT in the least. That is why here we will show only our understanding of the source problems and the ways in which they are made. Traditional HSR issues include: How to classify multiple HMT sources? Are there specifics in the study of various types of sources? Are the sources of different types comparable and what is the measure of their comparison? How can a rational search for sources be organized? What does “attaining new knowledge” from a source?—as well as others also important for HMT.

52

1 Issues of Historical and Managerial Research

In the search for management ideas, multiple types of sources have to be worked on, each of which in turn consists of several subtypes. These are periodic literature (scientific, popular magazines, newspapers), monographs; compilations of scientific articles; proceedings of congresses, symposia, conferences, etc.; legislative acts; provisions and statutes; the works of scientific societies; the works of state sectoral commissions; ministerial journals (including scientific committees of ministries and departments); protocols and materials of plant management; archival materials and documents; letters, memoirs and journals; programs of political circles and societies; socio-economic statistics; fiction; curricula, programs, courses, etc. There are many different features used to classify sources. But one feature—the specifics of research with the source—should be highlighted. The fact is that there is a certain specificity of research, search work with different types of sources, immersion into the historical background of the source, which every time requires a kind of “switching” of the research mood, in organizing the research itself. Typically, “switching” is made from the state of a modern independent observer, reasoning from beyond the analyzed system (and most importantly in terms and achievements of modern management science), to the state of “immersion,” “dissolution” in the spirit and time of the analyzed system of economic society, the scientific community and the entire environment of management knowledge, with a goal of reconstructing the past in all its diversity and uniqueness. In fact, both extreme positions of the researcher are options for translating “the past” into two languages. In the first case an re-evaluation of the achievements of the past in the course of the development of modern science occurs, in the second case—a reconstruction of the past in the language of the past. Both extremes are necessary, but clearly not sufficient to meet the challenges of HMT, to discover the knowledge of governance in the past and to assess the development of that knowledge. That is why it is worthwhile abiding by one or another research regime, and make ambiguous conclusions about the evaluated concept, doctrine, theory and “thought.” The first approach demonstrates the “advantage” of the present over the past, at least to draw attention to achievements in the past. After all, it was the first approach—the achievements and challenges of modern management science—that gave us the impetus to HMT, more precisely, the importance and the need to form HMT as a scientific direction. In turn, the second approach often demonstrates the total helplessness of the present in trying to explain the past merely from a modern perspective. The reason for this is the specific historicity and uniqueness of the past. In general, we prefer the second approach and adhere to it in our studies, but not in pure form, naturally, but with a stock of modern knowledge and taking advantage of the achievements of the modern methodology of historical and scientific research. The criterion of the truth of the knowledge reconstructed in the analysis of the past should always be the practice of managing the same period and subsequent periods. With regard to the “relationship” of the subject of HMT with the subjects of other historical and scientific studies (and, first of all, with the subjects of the history of economic thought, political and legal teachings, sociology and psychology), the distinction is evident in the definition of the subject, as well as the methods and goals of the science of management, political, law, psychology, sociology, statistics, etc.

1.6 Specific Issues in the History of Management Thought as Science

53

But because before the beginning of the twentieth century there has been no substantive and institutionalized “science of management,” the search for managerial ideas, concepts and even exercises have so far been carried out by scientists (and often completed successfully) in related historical and social sciences. Therefore, one of the difficulties the researcher of management thought faces is to find a reflection of the subject matter of the history of management in the many sources of historical and scientific research that have long been “rented” and even monopolized by other well-established and specialized sciences. These include the history of sciences such as state improvement (welfare) and deanery (security), economic policy, practical economics (economics of various industries), sectoral legal sciences (police, state, public, financial, administrative law, etc.), administrative science, political science, public administration, political economics, sociology, statistics, military science, cybernetics, systemology, psychology, etc. As we accumulate, first, an understanding of the nature of management, as a special professional activity, and, second, a clearer highlighting on the subject of management and HMT, as a science, the naturalness and specificity of this epistemological process have become clear, at the least due to management being ontologically the most eclectic of all types of professional activity, and managers in their activities “enjoy” the achievements of all other sciences, “spawning” their new and an immensely difficult to study subject of management science. Often, the relationship of management science with other sciences was also inverse in terms of the impact of these sciences on the science of management. In other words, the same historical and comparative method applied to a rather large historical period in the development of sciences, for example, political economy and management, enables detecting a modification of the known or even the emergence of new categories in political economy in connection with objective changes in real activity of management of an economy or production and corresponding changes in theoretical management perceptions. A striking example of this kind of feedback is in the third volume of “Capital” by Karl Marx, where he showed how at first the capitalist’s performance of the management function gives entrepreneurial income the form of “supervision fees” (or “for management”), creating the illusion of a labor source of profit of capitalist entrepreneurs. With the separation of the same management functions from “ownership of capital,” especially in connection with the formation of joint stock companies, this illusion disappears, the capitalist becomes a figure superfluous for production, he becomes a purely monetary capitalist, and in the end, these facts have brought to life a new category — “remuneration of hired managers” ([78], Т. 25, с. 418). Of particular note is the relationship between the management science and the management training process as well as management science and management consulting. The first pair of relationships has emerged clearly since the realization that management is a special, specific activity and a profession that can and should be taught. In different countries, special training for managers (priests, scribes, demagogues, cameralists, administrators, managers, entrepreneurs) came at different times. References to the first targeted courses and training programs for priests in the administration of the state treasury (in the eighteenth century they were called

54

1 Issues of Historical and Managerial Research

cameralists) are available in treatises of religious and public figures and thinkers of ancient civilizations of Mesopotamia and Sumer (5000 BC). The programs reflected the current needs for a particular class of people, and the implementation of these training programs, in turn, contributed to the expansion of management ideas, their adaptation and improvement. It is now evident (at least, easy to prove) that this relationship has almost always been a two-way enrichment. Many training organizations have emerged over the centuries with the goal to train managers and entrepreneurs. In Russia in 1772, at the expense of the owner of the mining manager Prokofy Demidov, the first commercial school was opened in Moscow. And in 1828 the “St. Petersburg Practical Technological Institute of Emperor Nicholas I” was opened, the purpose of which, according to the approved Regulation on its opening, was to prepare people already “to manage factories or separate parts thereof” (emphasized by us—M .V.) [79]. In the United States the first school of business was opened in 1881. There are now tens of thousands of organizational forms of annual training and retraining for millions of managers and entrepreneurs (faculties in higher education, business schools, business administration schools, special seminars and courses, scientific and practical conferences, etc.). No less a close and mutually beneficial relationship exists between the management of science and management advice. One can even speculate that whereas, prior to the emergence of the first consulting companies (roughly before the early nineteenth century), the creators of management science were practitioners and scientists, since the emergence of these companies, the main scientific ideas and concepts of management have emerged as results of consulting projects, such as the work of consultants. Of course, most of the consultants had had positive practical experience as managers, but as authors of management ideas they became known as consultants. In their activities, consultants tested new ideas on “living” material, advising the management of firms and enterprises and, in essence, performing pure experiments on a “client” base. It was through these activities that the principles of the effectiveness of management were formulated by consultant G. Emerson, that management functions were discovered by the consultant H. Fayol, that the principles of the scientific organization for management work were identified by abovementioned consultants P. Krezhentsev, O. Yermansky, and A. Gastev, that state of the art technologies of strategic management were developed by the Boston Consulting Group, the consulting firms McKinsey and Arthur D. Little, and the technology for reengineering business processes by M. Hammer and others. Thus, the second pair of relationships is more fruitful in terms of the development of the science of management than the former, although without the first couple the managers society would not have had developed and creative creators of this science.

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

1.7

55

The Main Streams of Management Thought from the Fifth Millennium B.C. to the Early Twenty-First Century

It is the unanimous opinion of the researchers that management ideas have constantly preconceived or accompanied specific managerial activities. Of course, many of the ideas perished without having been reflected in written sources because of the lack of literacy or the need to record them. Therefore, arguing and judging what ideas and perceptions of management existed in the age of ancient human communities—the tribes of herdsmen and farmers of 20–5000. B.C.—without the availability of written documents, it is quite difficult. At the same time, on the basis of the monuments found, as well as perceptions of economic activity in those distant times and results (products) of these activities, it can be assumed that such ideas existed, if the root cause of rational thinking human beings’ life on Earth is acknowledged to be the satisfaction of natural physiological, biological and other inborn and acquired needs. And the latter also naturally led to the need for organizing collective work (e.g., in the ancestral communities), which significantly reduced the cost of producing vital and necessary products and tools. For instance, the monuments of agricultural and pastoral communities in Lower and Upper Egypt are known from 20–5000 B.C., which settled in the fertile lands of the Nile Valley. The inhabitants of these settlements used the food resources available here, hunted wild bulls and deer using silicon-tipped arrows and wooden boomerang, engaged in fishing with bone harpoons and fishing rods with bone hooks, cultivated wild animals, bred small and great cattle. They engaged in agriculture, loosened earth using hoes with silicon tips, harvested crop with reaping knives made of silicon and a wooden handle and used special clay pots and pits, lined with clay and paved with matting for storing grain. It is obvious that the production of these kinds of tools required certain organized activities, at least at the level of an individual, that is, self-management. But the most compelling evidence of the implementation of targeted professional management activities that require the performance of a number of management functions by groups and collectives of people are the traces of large irrigation systems found in Egyptian territory (numerous channels and dams for the apprehension and diversion of water) and the famous “Great Pyramids.” Both required sufficient knowledge of construction and engineering arts, technology, mathematics, very serious work on building ideas and plans, the participation of thousands of construction workers and their organizers, the design of work and specialization of workers, large material and financial resources. On the basis of these facts, as well as the findings of civil history researchers, it can be suggested that in the era of the early class-divided society, even before writing, management ideas were raised about the exercise of separate managerial functions—planning, organizing, motivating, tracking and monitoring. In the mid-4th millennium B.C., the contours of the layers and classes of the Egyptian society emerged, leading to the emergence of the first states as regulators of the

56

1 Issues of Historical and Managerial Research

relations between new social groups, as well as the organizers of the creation and maintenance of the life-sustainment systems of these states. The first states emerged within small areas (noma), which covered several settlements united around the center of the policy city, where the chief’s residence and the sanctuary of the principal deity revered here were located. With the advent of writing and states, the sense of management became increasingly systemic in nature. Since in the era of policy states the state (public) economy, Temple (sacred) economy and private economy continued to exist, it can be assumed that most of the time (if not always), managerial thought evolved in two or three coexisting streams serving the public, temple and private economy. It is only natural that these streams often intersected, enriching one another with their achievements, borrowing managerial ideas and attitudes, often creating utopian projects of ideal states and managing them. It was also in the designs of ancient thinkers and philosophers of the last centuries (e.g., “The state” of Plato, the project of the perfect state of Hippodamus, the model of state policies in the “Policy” of Aristotle, Projects of F. Bacon, C. Marx, modern models of market economies—Swedish, Japanese, American. The managerial thought itself, being largely service-related by purpose, has always been in the interest of the subject of management, for instance, to improve the overall efficiency of management of the coordinating facility. The criteria for effectiveness were, as already noted, initially psychological (meeting needs), other criteria were then increasingly manifested—economic (efficiency of production and rationality in its organization), political (the need for power), social (balance of terms and classes in society), legal (preservation of the rule of law in society). In the view of Plato, for instance, in accordance with a multitude of objective human needs, in the city there must be numerous branches of public production. Thus, in the model of the ideal state, Plato theoretically justifies (perhaps for the first time in HMT) the division of public labor as a means of improving governance: “People are born not too similar to one another, and their nature is different, so they have differing abilities to do one or another deed...” “You can do all in more quantity, better and easier if you do a single job in accordance with your natural gifts and in good time, without distracting yourself to other jobs.” The idea of a division of labor and specialization (after Plato or owing to Plato’s remarks) will become very popular on all continents. Thus, in mid-third century B.C., the famous representative of the Chinese school of lawyers, the scientist Han Fei, addressing its major issue—how to ensure maximum effectiveness of the state’s infinite power?—counseled: “when advisers carry out their duties and all the people they serve are at their post, and the ruler uses each and everyone according to their abilities, it is called” acting as a continuity. “So it says: So calm! As if dwelling nowhere. So empty! You can’t figure out where he is.

The enlightened ruler, inactively dwelling above, his officials trembling from fear downstairs. This is the path of the enlightened ruler: he encourages the

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

57

knowledgeable to present their ideas and makes decisions himself, so his mind is never exhausted. He inspires the worthy to reveal their abilities, so his dignity will never depleted” [80]. Systemic views on the management of public economics (in a broad sense) with the emergence of large state policies and up to the end of the twentieth century, have gone through three main stages: The administration of a police state (and/or “in the police state”), the administration of the state of law and management of the cultural state. In all three concepts, the object of the management was the entire economy of the corresponding state, and the subject of administration is most commonly the government. The first stage, the longest, continued until the end of the eighteenth century and begins with the first-ever theory of natural law brought forward in ancient China— social, political and legal theory. According to this theory and the doctrine of hedonism (the doctrine of happiness) developing in ancient Greece, the state’s goal was “the common good, happiness, and improvement of society”. The theoretical socio-political grounds gave rise to the concept and corresponding model of management of a police state, from the ancient Greek term “πoλιτεια,” meaning the art of policy economy management and covering the entire range of management and economic activities carried out in ancient cities (and then in noma and states). A specific feature of the philosophy of the “natural law of the state” was the petty state regulation and the guardianship of the life of the citizens of policies, both public and private. This was a period in which Monarchs identified the state with their own personality (“The state Is Me”), so there was no sphere of activity that would not be affected (directly or indirectly) by state intervention. At that time, there were legitimized “state regulations,” state quality standards, according to which, for instance, weavers were to use exactly a certain number of threads in manufactured fabric, seamstresses were to use golden threads with a strictly fixed price for a sleave, chandlers were to mix suet of certain varieties in precise proportions, etc. Violators of the regulations were fined or even imprisoned and their products were confiscated and destroyed. The works of state nobles, scribes and ancient thinkers contain demands, instructions and wishes to rulers, the implementation of which is, in the opinion of their authors, the prosperity of states, the welfare and security of the citizens of the “police” states. To be able to rule, the pharaoh, king or other ruler of the state was instructed to study the science and the art of management. “The philosophy, the teachings of the three Vedas, the teaching of the economy, the doctrine of public administration is all science. The three sciences root in the science of public administration, which is the means to possess what we do not have, to preserve the acquired and increase the saved, and it distributes the adhered good among the worthy” ([81], pp. 19–20). “Those who know the three Vedas (to be studied) ... the original art of management” ([82], p. 130). The term “art of management” is found in most treatises and monuments of ancient culture, although they differ in content. For example, in Indian treatises it means the art of punishment or guidance in the possession of the stick (dandaniti),

58

1 Issues of Historical and Managerial Research

and in the work of the ancient Chinese, “the art of government is the ability to appoint officials to perform (certain) duties, request for performance in accordance with the name, to dominate life and death (of people), to determine the abilities of officials,” “The art of management is hidden deep in the heart (of the ruler)” and “it should not be shown as opposed to the law that is written in books, stored in government institutions and what is declared to the people” ([80], p. 497). The concept of police administration was developed in the agrarian projects of ancient Romans and, in the era of feudalism, in the regulations-instructions for the management of feudal estates, in the work on rational organization of major forms of production that had already arisen in the early medieval period (patrimonial enterprises). In the classical Medieval era (eleventh to fifteenth centuries), issues of good organization and management of the feudal economy are further complicated. These issues were addressed, in particular, by the implementation of a strict state policy of fixing obligations (serfdom and levy payments). As a result, the organization of the economy became sustainable, which in turn allowed for the recording and planning expenditure of the enterprise’s resources, more active implementation of planning, accounting and control functions. But on the other hand, the punctual regulations made management of feudal production insufficiently elastic and adaptable to the various kinds of effects and changes in the external environment that fettered the initiative of individuals. In the early seventeenth century, the first treatises on management in the spirit of constabulary in Germany, which were theologic and biblical in nature, emerged. In Russia some of the first politseists were Y. Krizhanich [83], G. Kotoshihin [84], and I. Pososhkov [85]. The studies of the mentioned authors contain extensive material, describing the causes of the imperfect management of the Russian state economy and containing a list of activities and recommendations to improve public management of domestic industry, agriculture, domestic and foreign trade, transport, education and other sectors of the national economy. An analysis of the published work on management of the police states era shows that, along with a description of the existing state of public administration, reform work was intermittently performed with models of better management of the system, as well as the development of effective private economy management within the police state. In addition to the broad interpretation of the term “police” as “the art of public administration,” there were also narrower in terms of content definitions. Of over 100 definitions of this term, known, for example, by the beginning of nineteenth century [36], there are very brief ones, such as “police activity (or deanery) is the management of different businesses, according to the views and intentions of the state” ([36], 11) and rather extensive. Such as: “Police is a woman.” Although not a single professor has explained the substance of her, she is the real and sole hostess of the state. The best hostess is regarded to be one no one speaks about, which no one can see or notice. The same goes for the hostess of a state. She should not, however, regard human gossip. To some it may seem that there is too much order, to others— one is not enough; and which hostess would equally please her husband, children, employee and neighbors” ([86], 41–42).

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

59

In general, most of the treaties on the management of the economy in police states prior to the late eighteenth century, in the coverage of almost all the elements of the public economy (public production), however, were often a mechanical set of information, guidance, advice and recommendations of political, economic, natural and technical, legal and other kind. It was in that era (the late eighteenth century) that special schools for training of government cameralist officials (from Lat. camera— palace treasury) began to emerge again in various countries of Europe. As noted above, mankind has already had experience in the training of this kind of expertise in ancient Mesopotamia and Sumeria. At universities, lycées and special schools of Austria, Germany, England and later, Russia39 cameralists—specialists in the management of the various “cameras”—palace treasuries, administrative institutions, state property and branches of the public sector, were being trained [87, 88]. Cameral science taught to trainees included three types of disciplines: economy or study of economic and practical disciplines (agriculture, mining, forestry, trade, etc.), the doctrine of public administration, financial science. The main textbooks in cameral ranks (faculties) of educational establishments have been the works of policeists, and educational material took the form of multiple manuals, recommendations and advice from policeists. The range of subjects and issues studied was as extensive and diverse as the areas and forms of “police intervention” in the affairs of society and individuals. And because of the diversity of the issues, the prescriptive nature of proposals, their weak elaboration, “eventually, cameralistics emerged—some jumble of various stuff served with eclectic-economic sauce—what is required to be known for the state exam of a government official” ([78]; vol. 13, p. 490). In this state of purely practical and empirical discipline, the science of police, which is part of the “management of the public economy,” remained until the end of the eighteenth century, when the second phase of the development of the management science began. It was born first and foremost by the contradictions of the police state’s firm activity. “Personality, ...without finding protection and even mercy with one’s reasonable desires, had turned against the existing order of things. The fight against the police state was mostly dominated by the third social stratum, the resurgent bourgeoisie. Petty regulation has become a barrier to technological progress, impeded free competition and became a brake on the growth of the emerging capitalist industry in England, France, Germany and other countries. Based on the facts and scientific results of philosophy, sociology, law, political economics, management theorists and economists-physiocrats have begun to promote the doctrine of “natural law” and “natural order,” to formulate and defend the so-called natural human rights. They put forward the idea of objectivity and the pattern of social development, considering society as a living organism, the economic life of society as a natural process with internal patterns, and public forms as physiological forms, that is, derived from the natural necessity for production itself

39 Since 1840, at the initiative of the famous mathematician, rector of the Kazan University Nikolai Lobachevsky.

60

1 Issues of Historical and Managerial Research

and independent of will, politics and form of government. Demands arose for the state to stop treating society as a passive mass, and to recognize the inviolable personal dignity of the citizen and his rights. So, the still “police” state has been opposed by the “legal” state. The new object of management, new management objectives and new developments in other sciences have led to a new concept and corresponding model of management of a law state. The non-class “dogmatic law,” to which the state should be subordinated and which should guarantee full freedom of the individual from arbitrary administration, was chosen as principal means of combating the police state. In the legal state the law, local self-government and non-interference in the private life of individuals were opposed to feudal government. The methodological basis of the concept of administration of the rule of law was Immanuel Kant’s doctrine on the state as a union under law, J.J. Russo’s doctrine of a social contract, justified by T. Hobbes, the teachings of bourgeois political economy ideologists F. Quesnay, A. Smith and D. Ricardo, the representatives of the Manchester School of Political Economy and the theory of the separation of powers of J. Locke and С. Montesquieu. The influence of changes in state and private economy management and also the stated teachings of the police science gave an impact in the form of the subject of the science narrowing significantly and a change in the science category. The former name of police generally and welfare police in particular had lost their original meaning. The police have ceased to cover all internal functions of the state, and the term “administrative activity” or “internal management” was used to refer to the totality of the latter. The term “police” is retained only to indicate the state’s activities to ensure the safety of citizens and property. Often, this state activity in scientific treatises on public administration was described as a negative activity of internal administration, and the positive work in its content became consistent with the continuing notion of welfare police. This change in the designation of management entrenched itself in the names of internal authorities—the internal affairs board, the internal affairs board, the ministry of internal affairs, the internal affairs committee, etc. Among scientists who had for the first time clearly and substantially made distinctions in the subject of police science, G. Berg, E. Weber, H. Lotz, and R. Mohl should be highlighted. In Russia, the concept of the rule of law was developed later in relation to scientists of European states, by M.Speransky [89, 90], I. Platonov [35], N. Rozhdestvensky [36], V. Leshkov [37]. But perhaps most systematically and comprehensively the concept of managing the state of law was presented to the public by the German scientist Lorenz von Stein, who published the seven-volume study “The Doctrine of Management” [29, 30]. In it, L. Stein was one of the first to introduce the term “management doctrine” instead of “police science,” revealing the content of certain particular categories of the teaching—the art of management, management functions, management methods, etc. L.Stein approached the development of a teaching on management from the standpoint of a more general science on the state, which, in his view, examines human relations that arise within the state, including relations

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

61

created by the state apparatus and administration. Stein encouraged scientists to study management issues emphasizing the richness and importance of management. According to Stein, the subject of management is “the internal administration of the state, which is the aggregate of those parties to the state’s activities that bring to the individual the conditions for his individual development, unattainable by his own energy and efforts.” The object of internal management according to Stein is the physical, spiritual, social and economic life of the individual, and the “study of the economic life of a personality”—it is a study of the issues of provision by the state of conditions for the creation of the material wealth of an individual. Since some conditions are necessary for all sectors of economic life, while others are required for some, Stein divides the considered area into a common and special part. In general, it includes managerial activities of the State, which are caused by all kinds of natural forces (flood control, fire, insurance organization, etc.), administration of all modes of transport and communications, management of credit, monetary circulation and loan capital. A special part of the “actual difference between capital and labor” includes the management of extractive, manufacturing, farming, forestry, manufacturing and other industries, trade, and also the management of “spiritual production” (education, literary activities, censorship, visual arts, inventions). In the last quarter of the nineteenth century, in Germany and in the Russian liberal-bourgeois and liberal-populist environment, a modification of the concept of the rule of law—the concept and model of management of the cultural state, which began to evolve, marking the beginning of the third stage in the development of management thought. The ideologists of the new direction—V. Goltsev [28], L. Gumplovich [91], V. Levittsky [92]—attributed this phenomenon to the fact that even the constitutional legal state had deceived the expectations of those who had previously advanced the idea of a state of law; it did not meet the new demands and needs of the citizens of the state. This is how one of the creators of the new stream, Victor Goltsev, L. von Stein’s learner, explained it’s emergence: “Public welfare issues have attracted more and more attention from modern scientists and public persons.” Every educated person now understands that the state cannot stand idly by and see the profound economic phenomena that are occurring in society. While preserving the best features of the rule of law, respect for human thought, the sanctity of the human person, the state of our time takes on the execution of such tasks of well-being as are beyond the capabilities of an individual citizen or a public alliance of people. The State of law shall thus be replaced by a cultural state” [28]. The methodological foundations of the new concept have been the historical schools of political economy and law, which have called for the consideration in science of the influence of specificities and characteristics of national cultures, habits, customs, forms of government, laws that have a distinctive historical destiny for certain people. Within the first historical school, applied economy (Practische Economie), which the representatives of the legal sciences considered to be an economic part of police law, was developed. Besides, applied economy was credited in “highlighting the ethical importance of the cultural state as a body of social reform.” Proponents of this concept have seen the task of a cultural state in

62

1 Issues of Historical and Managerial Research

“mitigating the brutal struggle for existence by providing the beginnings of ethics and justice into the public relationships framework, along with the active role in this direction of personal and social activity” [93]. In the last quarter of the nineteenth century, the development of management thought was generally twofold: fundamental and applied research. The developments of methodological issues in management are known within the framework of political economy, legal and administrative science (I. Tarasov [94], A. Gorbunov [42], De Bernardo [95]), social and psychological aspects of management (L. Gumplovich [92], J. Vackelli [96]); content and classifications of the principles and functions of management (V.V. Ivanovsky [43], G. Barthélemy [97]); economic, legal, political and other management methods (K.T. Inama-Sternegg [91], Fr. Persico [98]). Thus, in Germany, L. Stein’s learner Karl Theodor Inama-Sternegg devotes a lot of attention to the characterization of various methods of management in his work— “material,” “moral,” legal, police, and others. In France and Italy, development was performed within administrative and legal sciences and was of a purely methodological nature. In France, the most famous are T. Ducrocq [99], M.Hauriou [100], G. Barthélemy [97]. The work of the latter is particularly interesting. In his view, the purpose of management of a cultural state should be to ensure the well-being of all its citizens. However, state interference in the private life of citizens must have certain boundaries. This thesis served as the basis for dividing many functional areas of public administration into two groups—mandatory (“essential”) and optional (“specific”). The former include military, judicial, police and public property administration (financial management); the latter include management of the economy, public education, transport, mail, mining, forestry, insurance, arts. In Italy, social and psychological issues of governance were particularly under intense development in the years. The classics of this direction include F. Persico (1890), whose management system consisted of four parts: • • • •

The concept of an administrative organization; A doctrine of financial management; The concept and doctrine of military and police administrative justice; A study on social administration (with sections on methods of public management of economic, intellectual and moral development in society) [98].

Other representatives of this direction are de Bernardo [95] and J. Vaсkelli [96]. The former examined the management system (including the management a community) from a sociological point of view. In his view, management science studies “the forces that make up the administrative organism, the reasons for their activities and the conditions for their development.” The ultimate goal of this science is to disclose laws governing the phenomena of administrative life. According to J. Vaсkelli, there should be a single management science, examining both socio-psychological and administrative and legal aspects of administrative bodies. He was the first to formulate the notion of administrative psychology, as opposed to the psychology of the individual, and as a complex symbiosis of

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

63

“individual personalities” employed in the administration. The science that examines psychological aspects of administration, in addition to all other aspects of administration—economic, legal and social—is, according to J. Vaсkelli, the science of management. Among applicative developments special attention of scientists and practitioners during that period was devoted to two problems: the problem of management personnel training (for public sector and private companies) and managerial personnel motivation issues. Alongside, issues of relationship between centralization and decentralization in management, organizational structures, perfectibility of management, as well as others were also developed. These studies have been published in various types of national and international conventions, usually in conjunction with industrial exhibitions, in the work of the special commissions, and in special magazines. In all the work that characterizes the last two stages in the development of management thinking (until the end of the nineteenth century), the state was most often still considered as the subject of governance, and the national economy as a whole (state, public, and private) or individual elements of it (industries, regions, enterprises) as the object. In addition to studies of public administration issues in the spirit of the police and rule of law states, from the second half of the eighteenth century and during the nineteenth to twentieth centuries, so-called national concepts for the management of a private capitalist economy were actively being developed. One of the first results of the studies were published, of course, in England and France. The works of the future founders of the classical school of political economy, W. Petti, P. Boisguilbert, F. Quesnay, and A. Smith [101], were dedicated to national economy management and labor organization issues in national enterprises. And just as management objects began to acquire a national connotation, and in economic teachings studies on French feudalism or English capitalism began to emerge, national models of management were constructed in management, which then became the subject of HMT studies. The national specificity of the subject of HMT (and this is, as we already know, the third, most difficult level of the subject matter) allows not only national and/or country specificities to be taken into account but also for identifying the genetic features of national management systems and related management systems, and explaining the evolution of governance systems. It is likely that “national” has at all times been a significant part of the real management of any country’s economy, but it was not immediately the specific attribute of the subject of historical and managerial studies, only after the scientific foundations of management (including economic theory, law, civil history) and the methodology of management research itself were methodologically “strengthened.” An example of a study of the national management system at the industrial enterprise level is the treatise by Charles Babbage “On the Economy of Machinery and Manufactures” (1832) [102], an English researcher, the creator of the first computational (more precisely, “analytical”) machine. The author outlined the results of his ten-year observation and experiments in the management of enterprises in various industries for the purpose of obtaining scientific generalizations and

64

1 Issues of Historical and Managerial Research

recommendations for improving the organization of work and production. The treatise has many valuable ideas and discourses about the division of physical and mental work, specialization in production and management, the siting of enterprises, and the use of counting machines. C. Babbage can rightfully be considered a pioneer of “business management research,” long before F. Taylor, who revealed many principles of rational organization of production. Following Babbage in 1835 in England, the fundamental work of A. Ure, “Philosophy of production” [103], in which the author characterizes his modern state of the factory system in England and sets out the general principles on which, in his opinion, material production should be organized. Following Babbage’s ideas of specialization, A. Ure calls for organizers of production to increase the mechanization of production and use of self-sustaining machinery, with the goal, first of all, of reducing the abuse of child labor, relieving the worker of hard physical work, increasing job satisfaction, and increasing overall productivity. The fundamental principle, as formulated by A. Ure, was to “replace manual production with mechanical science.” In the 1850s, in the United States, the so-called “American production system,” comprising the ideas of Europeans for the creation of mechanized factories and the production of interchangeable parts for enterprises of different industries began to thrive. The center for industrial management issues research moves (and for long) from Europe to the United States, and the most important research subject is the creation and management of mechanical and machine production, which relieves a person from hard labor. In the second half of the nineteenth century in the United States, the textile, mining, steel, and railway industries were the objects of research. It was in these years that Henry Towne’s article “Engineer as Economist” was published in 1886 [104] in the Journal of the American Society of Mechanical Engineers, which outlines the principles of the functional structure of management as engineering management, and where H. Towne encourages managers to regularly upgrade their skills, to acquire management knowledge. At about the same time, a series of production activity H. Emerson’s articles on the effectiveness of appeared in The “Engineering Magazine.”40 As a consultant H. Emerson reorganized several American and foreign companies (Burlington Railroad, Archison, Topekau Santa Fe Railroad and others), being guided by the idea of efficiency, for which he was called the “efficiency engineer.” He is one of the first to associate efficiency with the organizational structure. Traveling as a consultant all over the world, H. Emerson gathered facts to corroborate his idea of the ineffectiveness of large, cumbersome organizations, which resulted in “a reduction in the impact of scale,” and restructured such organizations to reduce their size, staff, number of production units. In the nineteenth century in Russia, even before the abolition of serfdom, the process of corporatizing enterprises in a number of industries began: textiles, paper, sugar, glass, and others. This process had preconceived or accompanied the thoughts

40

About H. Emerson will be discussed in more detail in Sect. 6.2 of the textbook.

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

65

and ideas of Russian businessmen and managers on the rational organization of private economies. The specific nature of the Russian economy until 1861 was characterized by the presence in the country of a large army of unskilled serfdom workers, which delayed technological progress, the introduction of Babbage and Ure’s known ideas in Russia. And yet, enterprise merchants, without waiting for the abolition of serfdom, were already creating modern capitalist enterprises, often entering into an alliance with landlords, buying and using new technology, and introducing methods of material stimulation by hiring the most qualified of the serfs in the early nineteenth century. And the famous example of the Alexander Cotton Manufacturing (c. (Petersburg), which was already in the early nineteenth century equipped with modern mechanical equipment for filature of cotton and linen and marked the creation of the first factory in Russia, bypassing manufacturing, suggests that the development of management systems in Russia had indeed been on its national path. Indeed, the increase in the number of factories in pre-reform Russia in the course of 150 years (from 1710 to 1861), almost by 100 times (from 150 to 14 148 state and private factories and plants), with the number of workers in an enterprise sometimes reaching several thousand, attest to the progressiveness of business and management national thinking. For instance, decrees of Russian Emperors, which contributed to the creation, support and development of a domestic large industry, are known. For example, the plants and factories that Peter I “recognized as being particularly useful—mining, weapons, cloth, linen and the sailing factories”—were established by the treasury itself and then handed over to private individuals. In other cases, the treasury loaned substantial capital without interest, and supplied the tools and workers of individuals who hosted the factories at their own peril; skilled craftsmen emerged from abroad, fabricants were granted significant privileges. In general, under Peter I and his immediate successors (which could not be said about Catherine II), factory arrangement was viewed almost as a public service. “The State has therefore recognized as its duty, by all possible means, to promote and reward fabricants who carried out the task of superior state importance.” And this was also a national specific of the economy. After the abolition of serfdom, the organization of production and management of enterprises in various industries at special congresses began to vigorously discuss in Russia, as well as to publish magazines and publish works on management topics [105–108]. Of particular note is the treatise of Ivan Time “Fundamentals of engineering. The organization of machine-building factories in technical and economic relations and the production of mechanical works,” published in two volumes in 1883–1885 [109], far ahead of similar systematic works on production management published by his foreign colleagues. So, in the period from 5000 B.C. to the end of the nineteenth century, managerial thought went from a mosaic composition of management ideas, a description of individual management functions and recommendations for successful implementation, the development of so-called “one-dimensional teachings” of individual management elements (goals, functions, methods, processes, etc.) and/or aspects of governance (economic, psychological, legal, etc.) to “synthetic exercises” or

66

1 Issues of Historical and Managerial Research

systemic views on the management of the economy, organization, groups, collectives, an individual, and the management system as a whole. During the twentieth to twenty-first centuries, such a variety of scientific concepts, theories, and doctrines of management had been developed, so many schools and directions emerged, that it could overwhelm by all the previous 6–7 millenniums, of which we briefly narrate in this section. Nevertheless, we will introduce the reader to the main ones. As noted, since the late nineteenth century, the center for research on theoretical and practical issues in management moved to the United States. As a result, the emergence of new scientific discoveries in the management of organizations had not been a long wait. In the early years of the twentieth century, a number of works by F. Taylor were published, that had given birth to so-called “scientific management.” “Science” in the work of F. Taylor was expressed, first of all, in the methods that he had developed and proposed for the study of industrial and managerial activities in US industrial enterprises. The essence of these methods was that they allowed for the monitoring of individual labor movements and production activities in general, and measurement of the results of these activities. These results were then used to rationalize working operations, work standardization to develop and justify work assignments, to improve the management of the enterprise, the shop, section, to improve organizational structures, and to improve the implementation of individual management functions. In order to develop these methods and to test his own ideas, F. Taylor performed a series of experiments at various enterprises, which resembled the aforementioned experiments of C. Babbage, but were more systematized and justified. With his experiments Taylor attempted to prove that the best management is true science, based on strictly defined laws, rules, and principles that are invariant and applicable to all areas of human activity, and that management, as the science of governance, can, if applied correctly, increase workers’ productivity, maximize both “profit for the entrepreneur” and the income for workers [108]. However, there was one significant flaw in the management concept of F. Taylor—there was no human being in it. More specifically, a human being was present in the same inanimate form as all other resources. In Chaps. 5 and 7, we present the transformation of V. Lenin’s estimates and relationship to Taylor’s “Scientific Management” during 1913–1918 (in other words, before and after the revolution of 1917 in Russia). Here we shall just repeat that many Western researchers wrote about the influence of Taylorism on the development of managerial views and management practices in the young Soviet republic, including, as mentioned, guru of the history of management thought— Claude George, Daniel Wren, and his pupil and co-author Arthur Bedeian, and also Carl Phillips [110], Rainer Traub [111], Diana J.Kelly [112], Russian engineer Walter Polyakov [113].41 If F. Taylor had chosen workshop of an industrial enterprise as the object of the study, “rationalizing labor operations as a means of improving management” as the subject, the other management theorist, Henri Fayol’, in 1916, made a discovery at

41

Who emigrated to the USA in 1906.

1.7 The Main Streams of Management Thought from the Fifth Millennium B.C. to the. . .

67

the level of a management system as a whole, when he formulated the invariant management functions of any object, formulated the subject-matter functions of management, which are independent from the object, namely forecasting, planning, organization, direction, coordination, and control. Something similar was formulated by Russian Professor V. Ivanovsky in 1883 in his internal management training course [43], but the interests of V. Ivanovsky were limited to state organization and functions of public administration. Criticism of F. Taylor’s work in the spirit of the assessment of the “squeezing sweat theory,” as well as the apparent neglect of the human factor by “scientific management,” were the main reasons for the emergence in the 1920s of the “school of human relations” in the United States. The major results of E. Mayo and F. Roethlisberger’s experiments contradicted “scientific management” and concluded that the ever-increasing goal of managing an enterprise—to raise and maintain a high level of productivity—depends on socio-psychological factors. More precisely, high productivity was due to the social conditions that workers faced, the human relationship in the organization—between workers in the group and between workers and managers. Even more precisely, a business organization is essentially more than just economic institutions, they are social organizational structures composed of human beings, and should be managed accordingly. At the same time, the two main goals of any human community, similar to ancient Egyptian, were expressed by the representatives of this school: the first is to ensure the material and economic existence of all its members; the second is the maintenance of “spontaneous cooperation” in the entire social structure. The challenge is to work out ways to achieve these goals. And if in classical economic theory, to which management thought had long belonged to, relied on an “invisible hand,” the powerlessness of that “hand” became apparent, and the solution was seen in activation of management as a rather “visible hand.” The “knowledge-proficiency-skills” triad began increasingly adding the missing link—“the will of the manager,” to turn that potential into forceful power. It is because of the awareness of the paramount-importance of this link in real management that the research on leadership, power, decision-making (and especially in the part of the process where the decision was implemented) became attractive. The School of Human Relations has led to a multitude of studies in the fields of human behavior, consumer behavior, human needs, motivations, etc. Eclecticism of management had begun a gradually increasing, involving psychologists, sociologists, and physiologists. A kind of social and psychological extreme of the school of human relations had not been without criticism of the realist scientists. In the 40–60s of the twentieth century as systematic approach to management had been developed. In these years, so-called synthetic teachings emerged—the school of social systems, socio-technical systems, the new school, study of operations, the situational approach.

68

1 Issues of Historical and Managerial Research

As a result, a boom in management research took place—aspectual (economic, sociological, legal, political, ethical42), regional (Europe, Asia and other continents), national (USSR, United States, England, France and other countries), industrial (industry, service areas), elements of management (functions, principles, goals, methods, managers, management techniques), process (including decision making under uncertainty43), organizational and behavioral,44 functional (HR Management, Sales Management, Manufacturing Management, Financial Management, Marketing Management, etc.) management issues. Some of them are described in detail in the classical work of Daniel Wren and Arthur Bedeian “Evolution of management thought” [61], in the six-volume treatise of Arthur Bedeyan “Management Laureates” [62], in treatise Witzel Morgan “History of Management Thought” [60] and will be explained in subsequent chapters of our tutorial. Thus, in Sect. 1.7 on the example of the mainstreams of management thought in the period from 5000 BC to the beginning of the twenty-first century, illustrations of the property of non-Markovian of social processes mentioned at the beginning of this chapter, which include the processes of HM and HMT, were given Test Questions 1. Formulate a notion of how an organization is managed in the form of a system. 2. What is the current notion of the scientific framework of management? 3. What is the relationship between management practice and science? 4. What is the relationship of management science with management consulting and management education reflected in and how is it reflected? 5. Outline the main categories of historical and managerial sciences: the subject, methods. 6. Describe the major problems of Historical and Scientific Research (HSR). 7. Determine the subject areas of the History of Management Thought (HMT). 8. Formulate specific research issues of HMT. 9. What is the relationship between HMT and other historical and scientific studies? 10. What does the “paradigm approach in HMT” mean in the context of management revolutions? 11. Describe the gnoseologic process of HMT. 12. How to interpret the meaning of “paradigm approach in HMT” if HMT is an idiographic science? 13. Formulate source study problems in the HMT. 14. What is the role and place of HMT in addressing relevant management issues and in promoting public opinion? 15. Give the characteristics of the “historiography of HMT.”

42

See [114]. See [16, 17]. 44 See [115–117]. 43

References

69

16. Describe the relationship and interrelatedness of the “Management science— Learning management” relationship. Illustrate in examples. 17. Describe the relationship and interrelationship between “management science— management consulting.” Illustrate in examples. 18. Give a brief description of the main streams of management thought as filiation of ideas (4 millennium B.C. - twentieth century). 19. What is the methodological framework and what is the content of the concept of management in a police state? Name the developers of the concept in different countries? 20. What is the basic methodological framework and what is the content of the concept of management in a state of law? Name the developers of the concept in different countries? 21. What are the basic methodological frameworks and what is the content of the concept of management in a cultural state? Name the developers of the concept in different countries? 22. Name the main scientific schools, concepts, and theories of management in the eighteenth to nineteenth centuries and the major developers? 23. Briefly summarize the content of the scientific schools, concepts, and management theory of the nineteenth to twentieth centuries and the major developer. Which patterns of HMT development emerge in the content of these developments?

References 1. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU ((pod nauchnoj red. V.I.Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www.econ.msu.ru/science/conferences/mciumb/ 2. Marshev VI (1986) Metodologicheskie problemy istoriko-upravlencheskih issledovanij. V sb. tezisov dokladov simpoziuma “Problemy istoricheskogo razvitiya planovogo upravleniya ekonomikoj” (15-17 yanvarya 1986 g.). Pushkino, Izd-vo Ekonomicheskij fakul’tet MGU, ss 3–6 3. Marshev VI (1987) Istoriya upravlencheskoy mysli. M., MGIAI 4. Mintzberg H (2009) Management. M. : EXMO 5. http://www.meeting.aomonline.org/2008 6. Leavitt HJ (1965) Applied organizational change in industry. In: March JG (ed) Handbook of organizations. Rand McNally, New York 7. Fayol’ A (1924) Obschee i promyshlennoe upravlenie. L.-M. 8. Polybius (1890–1899) Vseobshchaya istoriya. Perevod i primechaniya F.G.Mishchenko. SPb 9. Milyukov PN (1993) Ocherki po istorii russkoy kul’tury. M., Progress, T.1., s. 47 10. Penrose E (1952) Biological analogies in the theory of the firm. Am Econ Rev 42 (5):r 808 11. Greiner LE (1967) Patterns of organizational change. Harvard Business Review, May-June 12. Adizes Ickhak (2007) Upravlenie zhiznennym ciklo korporacii. M.: PITER 13. Kapecio Piter (2005) Komandy, kotorye vyigryvayut: kak iz gruppy absolyutno nepohozhih lyudej sozdat’ sverheffektivnuyu komandu. Izdatel’stvo: AST, Astrel’ 14. Mintzberg H (2008) Managers not MBA’s. M., Olimp-Bizness 15. Sorokin P (2000) Sotsial’naya i kul’turnaya dinamika. SPb, s. 731 i dalee

70

1 Issues of Historical and Managerial Research

16. Taleb N (2007) Chernyj lebed’. Pod znakom nepredskazuemosti. M., Kolibri 17. Taleb NN (2014) Antihrupkost’. Kak izvlech’ vygodu iz haosa. M.: Izd. Kolibri, AzbukaAttikus 18. Whitrow GJ (1961) The natural philosophy of time. Thomas Nelson, London 19. Uitrou Dzheral’d (2003) Estestvennaya filosofiya vremeni. M.: Editorial URSS, 400s 20. Gerodot. Istoriya. Perevod G. A. Stratanovskogo, Leningrad, Nauka, 1972 21. Hvostov V (1919) Teoriya istoricheskogo processa. Moskva 22. Whewell W (1837) History of the inductive sciences, from the earliest to the present times, vol 1. J.W. Parker, London 23. Kun T (1977) Struktura nauchnyh revolyutsiy. M 24. George CS (1972) The history of management thought (1st edn, 1968; 2nd edn). Prentice-Hal, Upper Saddle River, NJ 25. Marshev VI (1987) Razvitie vzglyadov na upravlenie hozyajstvom Rossii(1861-1900 gg.). Avtoreferat dissertacii na soiskanie uchenoj stepeni doktora ekonomicheskih nauk. Moskva, MGU imeni M.V. Lomonosova 26. Ivanovskiy VV (1883) Vstupitel’naya lektsiya v kurs ucheniya o vnutrennem upravlenii. Kazan’ 27. Teylor F. Upravlenie predpriyatiem. M., 1903; Printsipy nauchnogo upravleniya. M., 1911; Administrativno-tekhnicheskaya organizatsiya promyshlennyh predpriyatiy. SPb, 1912; Nauchnye osnovy organizatsii promyshlennyh predpriyatiy. SPb, 1912 28. Gol’tsev V (1880) Uchenie ob upravlenii. ZH-l YUridicheskiy vestnik, Spb, №6, p 263 29. Stein L (1863–1868) Die Verwaltungslehre. Bd. I – VII, Stuttgart 30. fon Shteyn L (1874) Uchenie ob upravlenii i pravo upravleniya s sravneniem literatury i zakonodatel’stv Frantsii, Anglii i Germanii. (Per. s nemetskogo I. Andreevskogo). Spb 31. De la Mare (1722–1738) Traite de la Police. I–IV, Paris 32. Yusti GG (1772) Osnovaniya sily i blagosostoyaniya tsarstv, ili Podrobnoe nachertanie vsekh znanij, kasayushchihsya do gosudarstvennogo blagochiniya. CH. I-IV. SPb 33. Zonnenfel’s I (1787) Nachal’nye osnovaniya politsii ili blagochiniya. M 34. Zimmermann G (1848–1849) Die deutsche Polizei des neuzehnten Yahr hunderts. Hannover: Schlüter, Bd I–III 35. Rozhdestvenskiy NN (1840) Osnovaniya gosudarstvennogo blagoustroystva s primeneniem k rossiyskim zakonam. SPb 36. Platonov I (1856) Vstupitel’nye ponyatiya v uchenie o blagoustroystve i blagochinii gosudarstvennom. Har’kov 37. Leshkov VN (1885) Drevnyaya russkaya nauka o narodnom bogatstve i blagosostoyanii. M 38. Babst IK (1872) Izlozhenie nachal narodnogo hozyaystva. M 39. Andreevskiy IE (1883) Lektsii po istorii politseyskogo prava i zemskih uchrezhdeniy v Rossii. Spb 40. Chicherin BN (1903) Istoriya politicheskih ucheniy. M 41. Berendts EN (1913) O proshlom i nastoyaschem russkoy administratsii. Spb 42. Gorbunov AV (1899) Metodologicheskie osnovy ucheniya Lorentsa fon SHteyna ob upravlenii. ZH-l M-va yustitsii. Spb, yanvar’ 43. Ivanovskiy VV (1899) Vstupitel’naya lektsiya v kurs ucheniya ob upravlenii. Odessa, 1893; Voprosy gosudarstvovedeniya, sotsiologii i politiki. Kazan’ 44. Gastev AK (1927) Industrial’nyy mir. Har’kov, 1919. Ustanovka proizvodstva metodom TSITa. M 45. Tugan-Baranovskiy M (1922) Russkaya fabrika v proshlom i nastoyaschem. M., Moskovskiy rabochiy 46. Ermanskiy OA (1922) Nauchnaya organizatsiya truda i sistema Teylora. M 47. Vitke NA (1925) Organizatsiya upravleniya i industrial’noe razvitie. M 48. Dobrynin VV (1926) Osnovy nauchnogo upravleniya predpriyatiyami i uchrezhdeniyami. L 49. Dunaevskij FR (1928) Kompleksnost’ v organizacii. Predposylki racional’noj organizacii. V sb: Trudy Vseukrainskogo instituta truda. Vyp. 2. Har’kov, ss 3–92

References

71

50. Deyneko OA (1967) Nauka upravleniya v SSSR. M 51. Berkovich DM (1973) Formirovanie nauki upravleniya obschestvennym proizvodstvom. M 52. Kruk DM (1974) Razvitie teorii i praktiki upravleniya proizvodstvom v SSSR. M 53. Lavrikov YUA, Koritskiy EB (1982) Problemy razvitiya teorii upravleniya sotsialisticheskim proizvodstvom. L 54. Gvishiani DM (1998) Organizatsiya i upravlenie. (2-e izd). M 55. Koritskiy E, Nintsieva G, Shetov V (1999) Nauchnyy menedzhment. Rossiyskaya istoriya. SPb, Piter 56. Koritskiy EB, Lavrikov YUA, Omarov AM (1990) Sovetskaya upravlencheskaya mysl’ 20-h godov. Moskva, Ekonomika 57. Latfullin GR, Radchenko YAV (1998) Organizatsionnye idei upravleniya v Rossii i ih znachenie dlya sovremennosti/ Trudy Pervoy mezhdunarodnoy konferentsii po istorii upravlencheskoy mysli i biznesa (pod red. V.I. Marsheva). M, MGU, TEIS, ss 49–54 58. Bobryshev DN, Sementsov SN (1985) Istoriya upravlencheskoy mysli. M 59. Dzhek Dunkan U (1996) Osnovopolagayuschie idei v menedzhmente. M., Delo 60. Witzel M (2012) A history of management thought. Routledge, London 61. Wren DA, Bedeian AG (2018) The evolution of management thought. Wiley 62. Bedeian A (2018) Management laureates (in 6 volumes) 63. Wren DA (1980) Scientific management in the USSR, with particular reference to the contribution of Walter N. Polakov. Acad Manag Rev 5(1):11 64. Wren DA, Bedeian A (2004) The Taylorization of Lenin: rhetoric or reality? Int J Soc Econ 31 (3):287–299 65. Vidmer RF (1980) Management science in the USSR. The role of “Americanizers”. Int Stud Q 24(3):392–414 66. Kravchenko AI (2000) Istoriya menedzhmenta. M., Akademicheskiy proekt 67. Korotkov EM (2007) i dr. Vseobschaya istoriya menedzhmenta. M., Elima 68. Makashov IN, Ovchinnikova NV (2007) Vsemirnaya istoriya upravlencheskoy mysli. M., RGGU 69. Klauzevits K (1932) O voyne. M.-L. 70. Kuznetsova NI (1982) Nauka v ee istorii. M 71. Staros’cyak E (1965) Elementy nauki upravleniya. Pod redakciej YAmpol’skoj C.A. Perevod s pol’skogo. M, Progress 72. Vindel’band V (1904) Prelyudii, SPB 73. Pikkept G (1905) Granicy estestvenno-nauchnogo obrazovaniya ponyatij, SPB 74. Chuprov AA (1910) Ocherki po teorii statistiki, 2 izd., SPB 75. Alekseev NN (1919) Ocherki po obshchej teorii gosudarstva. Osnovnye predposylki i gipotezy gosudarstvennoj nauki. Moskovskoe nauchnoe izdatel’stvo 76. Maslou AG (2001) Motivaciya i lichnost’. Sankt-Peterburg: Evraziya, 425c 77. Aristotel’. Sochinenia: v 4 t.M., 1981, T3. S. 87 78. K. Marks, F. Engel’s Polnoe sobranie sochinenij (v 50 tomah) (1955–1981) M.: Politizdat 79. Vysochajshe utverzhdennoe polozhenie ob ustrojstve S.Peterburgskogo prakticheskogo tekhnologicheskogo instituta // Polnoe sobranie zakonov Rossijskoj imperii, sobranie vtoroe. — SPb.: Tipografiya II otdeleniya Sobstvennoj Ego Imperatorskogo Velichestva kancelyarii, 1830. — T. III, 1828, № 2463. — S 1034—1038 80. Ivanov AI (1912) Materialy po kitayskoy filosofii. Perevod Han’-Feya. SPb 81. Arthashastra. M.-L., 1959 82. Zakoni Manu. Moskva, Izdatelstvo vostochnoi literature, 1960 83. Krizhanich Yuriy (1997) Politika ili besedy o pravlenii. M., Novyy svet 84. Kotoshihin Gr. O Rossii v tsarstvovanie Alekseya Mihaylovicha. Spb, 1906 85. Pososhkov I (1842) Kniga o skudosti i bogatstve. Sochineniya, chast’ 1, M 86. Breker EG (1828) Mneniya o politsii, nauke politseyskoy i politicheskom prave. Severnyy arhiv. SPb, №5 87. Ushinskij KD (1848) O kameral’nom obrazovanii. Moskva

72

1 Issues of Historical and Managerial Research

88. Bogomolova Elena (1985) Issledovanie opyta podgotovki kadrov upravleniya v Rossii v XIX veke. Dissertaciya kandidata ekonomicheskih nauk. — M.: MGU 89. Speranskij MM (1809) Vvedenie k ulozheniyu gosudarstvennyh zakonov. Plan vseobshchego gosudarstvennogo preobrazovaniya. SPb 90. Speranskij MM (1961) Proekti i zapiski. M.-L. 91. Inama-Shterneg KT (1870) Kratkoe uchenie ob upravlenii. Vena 92. Gumplovich L (1892) Sotsiologiya i politika. Leyptsig 93. Levitskiy VF (1893) Predmet i metod nauki politseyskogo prava. Har’kov, s 12 94. Tarasov IT (1908–1915) Osnovnye polozheniya L.SHteyna po politseyskomu pravu v svyazi s ego ucheniem ob upravlenii. Kiev, 1864; Lektsii po politseyskomu (administrativnomu) pravu. V 3-h tt. M 95. De Bernando (1883–1893) La amministrazione pubblica e la sociologia. Roma 96. Vacelli C. La scienza della amministrazione come scienza autonoma. Roma, 1893; Le basi psihologiche del diritto pubblica. Roma, 1896 97. Barthelemy G (1901) Traite du droit administrative. Paris 98. Persico F (1890) Principi di diritto amministrativo. Napoli 99. Ducrocq T (1861) Cours de droit administrative. Paris (на с.70 русской версии ИУМ-2020) 100. Hauriou M (1907) Précis de droit administratif et de droit public. Sirey, Paris 101. Vsemirnaya istoriya ekonomicheskoy mysli (nauchnyi redactor Victor Cherkovetz)/v 6 tomah. M., Mysl’, 1987–1997 gg 102. Babbage C (1832) On the economy of machinery and manufactures. Charles Knight, London 103. Ure A (1835) The philosophy of manufactures: on an exposition of the scientific, moral, and commercial economy of the factory system of Great Britain. Charles Knight, London 104. Towne HR (1886) Engineer as an economist. Trans Am Soc Mech Eng:428–432 105. Promyshlennost’. ZH-l manufaktur i torgovli. Spb, 1861 g. i dalee 106. Trudy Komissii dlya osmotra fabrik i zavodov. Izd. Obschestva dlya sodeystviya russkoy promyshlennosti i torgovli. Spb, 1872 g 107. Trudy torgovo-promyshlennogo s”ezda, sozvannogo Obschestvom dlya sodeystviya russkoy promyshlennosti i torgovle v Moskve, v iyule 1882 g. Spb, 1883 108. Zhurnal “Tekhnicheskoe i kommercheskoe obrazovanie”. Spb, 1892 g. i dalee 109. Time IA (1883–1885) Osnovy mashinostroeniya. Organizatsiya mashinostroitel’nyh fabrik v tekhnicheskom i ekonomicheskom otnosheniyah i proizvodstvo mekhanicheskih rabot. V 2-h tt., M 110. Bedeian AG, Phillips CR (1990) Scientific management and Stakhanovism in the Soviet Union: a historical perspective. Int J Soc Econ 17:28–35 111. Traub R (1978) Lenin and Taylor: the fate of ‘scientific management’ in the (early) Soviet Union. Telos 37:82–92 112. Kelly DJ (2004) Marxist Manager amidst the Progressives: Walter N Polakov and the Taylor Society. J Ind Hist 6(2):61–75 113. Polakov WN (1932) Myths and realities about Soviet Russia. Harv Bus Rev 11:1–13 114. Donaldson T (1999) Ties that bind. A social contracts approach to business ethics. HBS Press, Boston 115. Luthans F (2010) Organizational behavior: an evidence-based approach (12th edn). McGrawHill/Irwin, New York 116. Luthans F, Youssef-Morgan CM, Avolio BJ (2015) Psychological capital and beyond. Oxford University Press, Oxford 117. Luthans F, Youssef-Morgan CM (2017) Psychological capital: an evidence-based positive approach. Annu Rev N4:17.1–17.28

References

73

Additional Literature Allen J. A critical history of management thought of Witzel Morgen. http://libcom.org/library/ critical-history-management-thought Antologiya sotsial’no-ekonomicheskoy mysli v Rossii (20-30-e gody HKH veka). M., Academia, 2001 Boddi D, Pejton R (1999) Osnovy menedzhmenta. SPb., PITER Bowden B (2018) Work, wealth & postmodernism: the intellectual conflict at the heart of business endeavour. Palgrave Macmillan Boyett DG, Boyett DT (2001) Putevoditel’ po tsarstvu mudrosti. Luchshie idei masterov upravleniya. M., Olimp-biznes Chandler AD Jr (1977) The visible hand: the managerial revolution in American business. Harvard University Press, Cambridge, MA Cummings S (2005) Recreating strategy. SAGE, London Foster R, Kaplan S (2005) Sozidatel’noe razrushenie. M., Al’pina Biznes buks Friedslieb (1614) Prudentia politica christiana. Goslar Hazhinski A (2002) Guru menedzhmenta. SPb, Piter Hodgetts RM (1975) Management: theory process and practice. Philadelphia Iskusstvo upravleniya. Izbrannye glavy iz knigi “Han’ Fey-tszy”. Novye perevody V.V.Malyavina. M., Astrel’, 2003 Istoriya politicheskih i pravovyh ucheniy. V 3-h kn. M., Nauka, 1985, 1986, 1989 gg Kollinz Dzh (2001) Ot horoshego k velikomu. Stokgol’mskaya shkola ekonomiki v SPeterburge Kollinz D, Porras D (2008) Postroennye navechno. M., Mann, Ivanov i Ferber Kozlovoy OV (pod red) (1983) Teoriya upravleniya sotsialisticheskim proizvodstvom . M Kuz’michev AD (2007) Luchshie knigi dlya biznesa. M., Dobraya kniga Lenin VI (1967) Razvitie kapitalizma v Rossii. Polnoe sobranie sochinenij (v 54 tomah), M.: Izdatel’stvo politicheskoj literatury, T.3 Luchshie idei 2019, Harvard Business Review Rossiya, yanvar’-fevral’ 2019. https://hbr-russia.ru/ Mayo GE (1933) The human problems of an industrial society. Macmillan, New York Metodologicheskie problemy istoriko-nauchnyh issledovaniy. M., 1982 Mikulinskiy SR(1976) Sovremennoe sostoyanie i teoreticheskie problemy istorii estestvoznaniya kak nauki. M Obrecht G (1617) Funff unter schiedliche secreta fon Austellung. Strassburg Platon. Gosudarstvo. Soch. v 4-h tt., T.3. M., Mysl’, 1994 Popova GH (pod red) (1984) Organizatsiya upravleniya obschestvennym proizvodstvom. M Roethlisberger FJ (1968) Man-in-organizations. Harvard University Press, Cambridge, MA Rosenberg N (1969) The American system of manufactures (1854-1855). University of Edinburgh Press, Edinburgh, Scotland Scheglov NP (1829) O pol’ze soedineniya s zemledeliem manufakturnoy i zavodskoy promyshlennosti. Spb Shafritz JM, Ott JS (2001) Classics of organization theory. Harcourt, Fort Worth, TX Smetanin SI (2002) Istoriya predprinimatel’stva v Rossii. M., Paleotip Starostin BA (1982) K voprosu o nachale istoriografii znaniya. M Uornera M (pod red) (2001) Klassiki menedzhmenta. SPb, Piter Valovogo DV (pod red) (1997) Istoriya menedzhmenta. M., Infra-M Waterman Jr RH, Peters TJ, Phillips JR (1980) Structure is not organization. Bus Horiz 14–26 Wren DA (1972) The evolution of management thought. New York Zubov VP (1956) Istoriografiya estestvennyh nauk v Rossii. M

Part I

Genesis and Development of World Management Thought from Ancient Times to the End of the XIX Century

Chapter 2

The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth Century

Abstract This chapter describes the main sources and origins of global management thinking over the centuries, from the emergence of the first human civilizations to the early feudalism era. Managerial aspects of the ancient world’s management monuments—treatises of thinkers, statesmen, leaders of economies, and social, religious, and military leaders—are disclosed. The objects of comparative analysis of views on economic management were representatives of ancient states—Egypt, Front Asia, China, India, Greece, and Rome. This chapter also briefly describes management ideas in the Old and New Testaments.

2.1

The Origins and Sources of Management Thought

There are various views on the emergence of the first human and the first human communities on Earth and the characteristic periods (or socio-economic stages) that mankind had gone through since the beginning of life. But in one issue, the opinions of most historians coincide—mankind began its existence with a primitive primordial order of ancestral relationships, a basic level of survival, and helplessness of man before nature. Primitive tools and remedies, on the one hand, and the need for survival and adaptation to the environment, on the other hand, impelled people to combine various forms of their individual efforts and capabilities and to the creation of the first human organizations. In turn, collective work gave rise to public ownership of the means of production, tools of defense, and the products of joint activity. It is assumed that there was no private property in the primitive society, although there was personal ownership of some of the instruments of production and defense, of clothing, etc. This period of the existence of an unprofitable (“embezzling”) primitive economy is referred to as a primitive community, pre-classing society. Knowledge of the history of the pre-class society, which numbers several millennia, is not only of great ideological importance, but also an important specific source value for the formation of history of management thought (HMT), because, while its organization is primitive, the material facts found by researchers, including written documents, confirm the existence, at that time, of organized collective human © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_2

77

78

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

actions aimed at meeting various types of human needs and thus the existence at that era of elements of informed management influence, in particular the functions and methods of managing human groups, communities. The formation of private property, classes in the subsoil of the primitive society, and the class society itself took place in different parts of Earth at different times and in different ways, although the common human goals were still the same: to survive under existing conditions. The struggle for survival led to the conception of a civilized society as a fundamental new stage of world history. Today historians highlight several basic signs of civilization, the presence (or absence) of which in society illustrates the level of development of a given society. Among them are: • The creation of a “producing” establishment, a rationally organized economy that produces a significant surplus product that is made available to society. • The establishment of the institution of private property and ownership of property, the concentration of wealth in the hands of some and its loss by others, and stratification of the primitive community. • Creation of writing in the form of a system of graphic signs and symbols capable of recording and transmitting human speech with the information contained therein to posterity. • The emergence of the institution of the State and law as a special body regulating social and other relations. • The emergence of cities as economic, military, and cultural-religious centers, as locations for the concentration of material and intellectual resources of a given region. • Planning and organizing large-scale construction activities, with the involvement of large labor and other resources, which resulted in the construction of monumental structures—pyramids, temples, palaces, ziggurats, complex irrigation systems, etc. These birth signs of a civilized human community were most vividly and comprehensively manifested for the first time in the states of the ancient world, the Ancient East, Greece and Rome, the Ancient India and China. That is why lots of historical and scientific research begin its “chronology” with the emergence of the first-class societies and State entities in the countries of the ancient world. Following the experience of the older brothers with Peru (history of economic thought, legal and political thought, sociological thought, military thought), the history of managerial thought also begins to study its subject by analyzing management perceptions of the first-class societies in the states of the ancient world, which emerged in the valleys of the Nile, the Tigris, and Euphrates in the second half of the fourth millennium B.C. (see [1–14]). The formation of defining characteristics of classes (attitudes to the means of production and the role of the public organization of labor) has been uneven among different nations. In some cases, the establishment of a dominant class’ ownership for the means of production preceded overtaking of key functions in public division of labor, in others—on the contrary. In other words, at least two ways of emergence of classes in the development of the human community are known. The first way is

2.1 The Origins and Sources of Management Thought

79

based on isolation, priority, and appropriate monopolization of the role of public functions in public organization of labor, and the relation toward the means of production here is a secondary, derivative matter. In the age of the clan community, collective labor reigned supreme amid the low level of development of the productive forces. The ancestral community was a single production community. And collective labor gave rise to common ownership of the means of production. The clan community owned land, water, hunting and fishing facilities, and products of production. Of course, in addition to collective, personal property existed. Individuals had their own hand-made tools (spears, bows, etc.), but the property was not in contradiction with the collective. Even with the emergence of tribal nobility and corresponding socio-economic stratification of the community into classes, the dominant classes’ ownership of the means of production is reinforced and processed later. The formation of classes in the latter case involves the organization and development of private production, the development of ownership by individual families of the means of production and labor. Accordingly, the role of the dominant class in the public organization of labor in such cases is secondary (relative to the means and conditions of production). The countries with the first way of class establishment are referred to as Asian modes of production, while the countries with the second way as societies of the ancient mode of production. The different ways of establishment of dominant classes predetermined the fundamental differences in the development of the nations that opted for these paths. The states of the Ancient East—Mesopotamia, Egypt, Western Asia, India, China—developed in the first way, and the countries of the ancient world in the second way—Ancient Rome, Ancient Greece. It is only natural that the specific features of the socio-economic and political development of these societies could not predetermine the peculiarities of the development of their public thought, including management thought. The history of the ancient world, passing through the ages of Copper, Bronze, and Iron, demonstrates us the stages and, at the same time, the causes for the social division of labor, when cattle herders were separated from farmers, various types of craftsmanship gradually evolved, developed, and separated from agriculture, exchange of surplus production developed, trade emerged and developed, and a management culture was formed. Over centuries of existence of human communities from the clan order to the emergence and formalization of a number of powerful States, obtaining of the means of living changed—from the attribution of finished products of nature to the most complex in terms of composition and structure economies, requiring rational management approaches, including the allocation and implementation of a number of managerial functions, and the development and improvement of effective methods of impact on the individual, groups of people, large communities, and organizations [15–22]. In the textbook, we will be defining and/or formulating various kinds of causes for the manifestation of specifics in the development of views on management. Let us note here that it is the management of the State economy, both in terms of priorities in the formation of dominant classes and in terms of the size of economies,

80

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

that classical managerial functions of planning, organization, coordination, motivation, accounting, and control were already established in the ancient era. These types of management activities were objectively necessary and were implemented, for instance, in the construction of irrigation systems, employing tens of thousands of workers and work managers, where various production resources were used, including human resources, land, and livestock; to ensure and maintain the proportions between the branches of the economy (especially between the branches of agriculture, craftsmanship, and trade); or to rationalize the production of products and services (elements) of the engineering infrastructure in order to survive and reproduce (again in construction of irrigation systems). In turn, the necessities of life in the ancient era led to the idea of creating insurance funds to meet the strategic objectives of management (e.g., the granary system in Ancient China or similar forms in Sumer, Ancient Egypt) In the Preface to the textbook, we hypothesized that management is the oldest type of human activity that crystallized since the advent of primitive human societies on Earth. Consequently, it can be assumed that thought of a rational organization of economies for survival, reproduction of the human being emerged at the same time. It is a different matter to record it orally or in writing. It is obvious that, in an era of lack of writing, it could be transmitted through ancestral memory only orally, by word of mouth, reaching our times in the form of myths of the ancient nations, in stories and legends. But even with the means of writing, management ideas may not have been recorded (at least purposefully and regularly) because of their lesser importance and relevance, than the need to record legal rules, rules of military actions engagement, etc. However, as the importance of cost-effective, efficient management of the economy increased in the context of objective simple cooperation, the need began to emerge to regularly record good housekeeping practices, planning, accounting, and control of expenditure, evaluation of achieved results and accumulated assets, the rules for their equitable distribution, and drafting of rules and guidelines for the management of human beings, groups of people, and organizations. With the work of archaeologists, anthropologists, and researchers of other sciences, it is now known that, during the life of mankind on Earth before the fifth millennium B.C., there really was a great stage when ideas and knowledge on management were transmitted from one generation to the next only verbally, with the goal of replicating successful actions, consolidating good traditions and positive experience in managing the economies of primitive social organizations. This process began in deep antiquity with the emergence of the first communities of people and their joint activities and the emergence of appropriate primitive management. Management ideas and knowledge reflected the gradually enriching experience in the management of the clan’s economy—the economies of several clans or fraternities (or phratries)—and the tribal economy—the economy of the tribal union or community, where for formalization of general decisions, fellow tribesmen meetings were held and council leaders, interchangeable elders, and, over time, other assistant persons were elected. It was so in the Iroquois clan, where the elder was elected as chief for peacetime as well as the chief military leader; the Tribal

2.1 The Origins and Sources of Management Thought Table 2.1 Organizational structure of managing bodies in the ancient states

81

Tribal Council Tribal Elder Tribe (union of phratries) Phratry Council Phratry (fraternity of clans) Generation Council Generation Elder (Military chief of the clan) Clan Source: Compiled by the author of the textbook (based on the materials of Ref. [16]

Council was formed from ancestral sachets and military commanders. It was so in the Greek clan, where the elder—the archon, a warlord—the basilio, and treasurer were elected, the Council of Elders was formed, and people’s assemblies were summoned. It was so in thousands of other clans, tribes, and tribal unions. Thus, in the age of the maternal clan community, the mechanisms for the election of leaders and the organizational structures of the management of these communities had been worked out, reflecting the power relations stemming in the economic life both in peacetime and wartime (see Table 2.1). In all the ease of the forming of the mechanisms and structures of management of the communities of the ancient world, it is worthy noting the clarity and democratic nature of these characteristics of the management system, as was brightly described by F. Engels: “Without soldiers, gendarmes and policemen, without nobility, kings, governors, prefects or judges, without prisons, without trials, everything takes its orderly course. All quarrels and disputes are settled by the entire community involved in them, either the gens or the tribe or the various gentes among themselves.” [23] With the advent of writing, knowledge of management began to be recorded in written sources and, in this form, passed on to future generations. This was originally done in the form of separate comments, observations, reminders, councils, and teachings. Being recorded in such a primitive form, management knowledge merely reflected the first practical steps in the establishment of management, were very scattered, and were not raised to the level of generalizations. They did not yet constitute a clearly structured and independent area of public thought and were interspersed in the still undissociated consciousness. But the very recording of ideas of this kind was a progressive step that was clearly relevant to the development of human activity and human communication. Besides, these ideas emerged before many other directions of comprehension of the developing human relations, having become one of the first links in shaping the humanitarian dimension of human knowledge. Many centuries before the new era, treatises containing individual views, thoughts, and sometimes coherent systems of views on public and private management emerged. There are numerous reasons for this phenomenon. Let us specify two key reasons. It is the objective necessity for centralized management of the state

82

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

economy, as was the case in the ancient civilizations of the Ancient East, Asia, India, and China, caused by the specific nature of public production—the construction and operation of vitally needed major irrigation systems. Second, it is the objective constant need to strengthen the central state authority and the state apparatus, to strengthen economic power and to stabilize the economy after endless wars and during processes of consolidation of disparate possessions, principalities, kingdoms, and states into larger systems—empires—and also to control the intergroup aggravation based on social dimensions and aggravation due to class struggle (between slaves and slaveholders, small and large landowners, democracy and aristocracy, etc.). As already noted, today management thought historians seek and work with written sources of two types—documents characterizing management of the economy itself, as an activity that emerged in the states of the Ancient East, and the works of the authors that attempt not only to comprehend but also to systematize and synthesize management perceptions. The recorded data sources of the first type, of the ancient era, are concerned with the management of public and, at times, private economies, and reflect daily business practices. These are population censuses, land registers, numerous business records, programs for the development of economies, minutes of the operational negotiations of the persons concerned, business correspondence, and various legal documents that formalized property relations (contracts for the sale of land, livestock, means of production, slaves, employment contracts, debt obligations). The second type of documents, directly related to HMT, appeared much later, and this was probably due to the uniqueness and narrow pragmatism of management. This required special training and a sufficient amount of free time, which was absent for business citizens of the ancient kingdoms and therefore made it difficult to make such generalizations (especially with a claim for a scientific result). In addition, the priority of administrative and legal documents, which have a longer history, has, in comparison with organizational and managerial, long affected the attitude toward fixating managerial ideas. The first attempts at interpreting economic and management activities took place within the framework of a common mythological world view and mythologicalpoetry art, which reflected political, legal, economic, economical, ethical, managerial, and many other views of the inhabitants of the Ancient East about the world surrounding them. As for mythology literature, it speckles with various kinds of allegories, symbols, signs, and hieroglyphs, that had a certain meaning [17]. Even the system of views of that area, not just the writings, was highly symbolic, and it was not surprising that every Ancient Eastern literary writing remained in some sense an hieroglyph, preserved the allegoric character of the symbol, a character, and had been given traditional fetish forms. Such are the Egyptian teachings of Achthoês, the kings of the Amenhotep dynasty, Ptahhotep, Ancient Indian Dharmaśāstra. But the main reason for the dogmatic spirit and the form of the myths of the ancient peoples was that they reflected the established and prevailing— at that time—overall vision of the divine origin of the social and political order as well as political, power, management, and other relations in the ancient kingdoms,

2.1 The Origins and Sources of Management Thought

83

and the supreme rulers in the kingdoms (pharaohs, kings, Chinese and other emperors, etc.) were presented in myths and were perceived in the nation either as the stewards of God on Earth, or the expression of God’s will. In the first case, the special supreme ruler concentrated all power; in the second case only the divine source of authority was focused on them, but the gods themselves continued to remain the executors of Earth’s affairs and human fates, often acting and directly (through revelation, miracles, etc.). This is how, for instance, the Babylonian king Hammurabi spoke of himself in his famous code: “I am Hammurabi, the shepherd called (to rule) by Enlil1 the one who makes affluence and plenty abound,. . . the royal seed created by Sîn,2. . . the dragon amongst kings, brother of Zababa3” [17, TI, p. 152]. It should be noted that the gods and goddesses themselves, who are found in written sources of the ancient world, were numerous. Attempts to count them resemble the results of the population census. One of the pharaohs, Amenemhat III, who ruled in Egypt in the era of the Middle Kingdom (the second half of the nineteenth century B.C.), set himself an exigent task—to assemble all the gods under the same roof, build a special structure for them, and allocate separate quarters to each deity in it. It turned out that there should be at least 3000 such premises. The temple was built for the cult of all the pantheon of gods and is known among the archaeologists as “the Labyrinth.” In that era, the gods symbolized everything in the world and gave a tangible shape to every abstract idea. Thus, there were gods that embody every phase and function of life, every significant action and incident, every hour and every month; there were gods of natural forces, idolized animals, anthropomorphic gods, and also gods of the living and gods of the dead. And only a few of them, figuratively speaking, radiated power and grandeur (such as gods of Moon, Sun, and Earth). Many of the gods represented merely different forms of the same god or goddess, symbolizing their many attributes, so that they themselves were a kind of derivative of the main gods. Others took different stages of development in particular regions and received local names. It was the “proximity to the gods” of the supreme rulers that was the reason why a state-normative and regulatory character was a trait of Ancient Eastern literature. This was reflected in the structure of the eastern despots in which a person was lost in a crowd of subjects. The validity of the written sources was mainly reflected to the extent that it was directly related to the supreme ruler. The narrative was carried out, primarily, by the pharaohs, despots, kings, Chinese emperors, major officials, and high-ranking courtiers. Therefore, the validity of the written sources is characterized from the positions of these privileged individuals. Hence the instructive, dogmatic nature and often unsubstantiated content of this literature. This can be judged by the

The Sumerian god of air, the “King of the Gods”, later the god of Earth; called Enlil by the Akkads. The god of Moon, son of god Enlil and grandson of god Anu—god of heaven; called Nanna by the Akkads. 3 The supreme god of the Sumerian city of Kush. 1 2

84

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

name of treatises—the “Teaching for King Merykara” (alt. Instruction Addressed to King Merikare [twenty-second century B.C.]), “The teachings of Achthoês, son of Duauf, for his son Pepi” (twenty-first century B.C.), “Ipuwer Papyrus” (eighteenth century B.C.)—as well as statements from them: “be adept at speeches, and thy strength shall be great,” “do not subtilize the man of hostility; he who is poor is the enemy; be hostile to the poor,” “respect your nobles, guard your people,” “Develop your boundaries and your parishes,” “Good for the future” [17, T.I]. And since the object of interest of the authors of ancient literature was primarily the state economy (both the Tsarist-temple natural economy and the later goods economy), the sources are of a normative nature, and they reflect the harsh discipline of the entire Eastern society—the regulation of economic life, standardization of work, the living of kingdom’s landlords and craftsmen, procedures for the selection and placement of employees, standards of remuneration, forms and norms of punishment and remuneration, etc. Considering the objective need for the organization of vital work, it was possible to predict that in the ancient States, in order to manage large economic facilities in a rational and efficient manner, there was a need to think about the development of official duties and even an order of ranks, and many documents found by archaeologists only confirmed this hypothesis. Among the surviving written testimonies of this kind, a particularly important place belongs to the hieroglyphic autobiographical writings on the walls of the tomb of Metjen—an Egyptian official of the era of the Ancient Kingdom (twenty-eighth century B.C.). In the list of posts that were occupied by Metjen includes ruler of various houses, courts, and villages, administrator of five nomes (small States), ruler of four nomes, manager of people, head of Earth, chief of assignments, head of the food place, head of scribes, chief of messengers, meter, doctor, chief of all royal linen, and others. The same detailed listing of top management positions is contained in the “Una inscription,” carved on a stone slab (twenty-fifth century B.C.). In the description of the life of the nobleman, reference is made here to a vizier (first and supreme official of the state), the caretakers of the garners, a warden for the tenants of the king’s lands, the warders for the priests, the treasurers, the rulers of provinces, the supervisors of the king’s quarters, and so on. The functions of some of these dignitaries were also mentioned. In particular, the province governor had to carry out twice a year the accounting of state property, determine “what tribute should be sent to the treasury,” organize the construction of canals, construction of vessels and rafts, mining of material for pyramids, etc. Similar positions were also listed in the inscription of Harkhuf, ruler of the Elephantine Nome, relating to the same period of the Sixth Dynasty. A little later, the “Order of service duties of the Supreme dignitaries” (fifteenth century B.C.)—a generally accepted example of bureaucratic creativity of Ancient Egypt of the era of the New Kingdom—appeared, which contains a detailed description of the duties of the vizier. The later Ancient Indian treatise of Arthashastra (fourth century B.C.) sets out, perhaps, the world’s first systematized order of ranks, which contains a description of 17 public management positions with a number of required characteristics and the level of remuneration for the work performed [17].

2.1 The Origins and Sources of Management Thought

85

The writing system used by the people who lived in Ancient Mesopotamian states, within the Tigris–Euphrates river system, and consequently widespread beyond Sumer, Akkad, and Babylon, was named cuneiform writing. In the age of hieroglyphic writing, it had been difficult to learn, requiring many years, and most importantly, the teaching of writing had been the lot of the chosen because they had been devoted to understanding the meaning of the hieroglyphs as symbols. Only the children of priests, executives, officials, captains of ships, and other dignitaries were trained. Teaching of ancient writing took place at special schools, the so-called “houses of writing learning”; it was the ultimate dream of the middle class to be accepted there, and learning to write meant make one’s way in life, becoming a government official. An official of antiquity was usually a scientist, a well-brought up and educated person. The schools were located at temples and palaces, as the temple economy and government departments required literate people. At school, in the field of appropriate behavior and good tone, as signs of belonging to the supreme class, schoolchildren devoted a great deal of time to religious and ethical issues. They discussed issues of provision of public services and utilities and security of the State and society, rational management of the economy, the prevention of discontent and social stress, jurisprudence, the ethics of behavior in the society of wise people, in the family, with the subordinates and superiors, etc. The tuition was provided for a fee, apart from various kinds of extra gifts. Inadequate and deficient schoolchildren were punished, for which the school had a special warder—“the bearer of the whip.” With the strengthening of private ownership and ownership of individuals, and the development of monetary relations and slavery, the private economy of nobles occupying high positions in the State apparatus became the subject of management thought. At the initial stage of development, some aspects of management of the private sector can only be judged by the normative documents of the Ancient East, reflecting property relations, such as the famous decree of King Neferkara from the Abydos, the laws of the Babylonian tsar Hammurabi, the Middle Assyrian laws, the Decree of Seti I from Nauri, Hittite laws, and other similar documents. Special essays on the management of States and the state economy then appeared in ancient literature. An interesting material that provides an indication of the principles and systems for the management of the Eastern civilizations is contained in the creations of the Hellenistic and Roman eras. Among them—the biography of the nobleman Una, the immunity letter of Pharaoh Pepi II from Qift, the Iti inscription from Gebelein, the teachings of the Heracleopole King to his son Merikara, and many others. But most of all the aspects of management (in its most modern sense) are reflected in the much later-known treatises of Guanzi, Mentzi, the laws of Manu, Han Fei-tzi, Arthashastra, etc. As primitive and fragmented in substance, the first notions of management were nonetheless broad in scope. These were in the form of different aspects and levels of management in its modern interpretation—management of the state, territories, economies, and people. The development of these perceptions was on the ascending line. As the experience and knowledge of management accumulated and its role in the lives of cities and policies, nomes and larger ancient states, became more

86

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

significant, the content of the recorded ideas was expanded and complexified. Their authors constantly moved forward from primitive statements of simple management realities to detailed coverage of expanding management activities. At the same time, the nature of the texts on management changed. They became more extensive, their themes expanded, and individual comments and teachings were replaced by sections in major works, and then entire treatises, more or less on management activity. Various written sources on management perceptions were created in almost all the states that emerged on our planet. In the opinion of historians, this occurred formerly in the Ancient East, where, because of favorable geographical conditions, the density of the population grew faster than in other territories; the people were on the planet to cultivate farming, breed cattle, trade, build the first cities and large irrigation systems, and create the first public entities. It were the nations of the Ancient East, Ancient Egypt, the people of Mesopotamia (the countries of Sumer, Akkad, Babylon, the cities of Ur, Lagash, Mari, and others) that gave the world the first great civilizations, became examples of rapid development of the economy, and laid the foundations of a high culture. The home of the earliest of these historic transformations was Egypt of the era of the Ancient Kingdom, the territory of which began to be populated in the Paleolithic era [18–22]. What then is the millennium for the rise of culture that brought about the formation of the Egyptian state, if its beginning is referred by all historians to the second half of the fourth millennium B.C. the latest? On the territory of Egypt of the Ancient Kingdom, thousands of objects were discovered by archaeologists relating to the Eolithic and Paleolithic ages—primordial weapons, silicon daggers, knives and arrowheads, clay and stone receptacles, etc. According to historians, the Egyptian state was formed at the end of the Neolithic period. In all cases, even leaving aside the enormous numbers, brought forward by scientists who were involved in the geological history of the Valley of the Nile, it must be acknowledged that many centuries prepared the Egyptians for their great historical future, especially since the advent of their calendar as a result of agricultural observations of the sky should be attributed to the end of the fifth millennium. A single monarchy was preceded by the existence of two separate sovereign kingdoms—the Upper Egyptian and the Delta. The memory of the two halves united by a personal union was preserved until the very end of the Egyptian culture in the title of the Pharaohs, which were called the kings of the South, “Nisut,” and “Biesty” in the North, who wore varied crowns: white in the South and red or two united (the so-called “Pschent”) in the North. Duality left traces in administrative management. It is possible that each of the two kingdoms, in turn, emerged from separate regions, called “Sepat” or “Hesp” in Egyptian and “Nomi” in Greek time, which had their concentration in cities, with local gods and cults, and named mostly by these cities. Egypt did not have a permanent era. Initially, chronology was conducted in a primitive way—the years were marked simply by the most memorable events, then on according censuses, and, finally, on years of reign. For reference, lists of years on reigns and events existed. Of the most famous testimonies are pieces of rocks with such lists—the lists at the Palermo museum cover the entire period from

2.1 The Origins and Sources of Management Thought

87

the separation of two kingdoms to the Fifth Dynasty inclusively. Another important monument of this kind is the papyrus of the Turinese museum, with a list of kings with dates and amounts for periods. It should be noted that Egyptian life depended not only on the Sun and the Moon, as a means of calendar formation, but also on the great Nile. The flooding of the Nile, which completely directed the life of the farmer, enforced the division of the year not by four periods, but three—the time of flood (September–December), planting or winter (January–April), and harvest or summer. As the famous Orientalist B. Turaev wrote: “If the human being is the son of his soil everywhere, the influence of the geographical environment on the population and culture was particularly powerful in Egypt” [19]. Powerful were the effects of the geographical and climate conditions of Ancient Egypt on shaping the consciousness of the inhabiting people. First of all, these conditions were the school of statehood. The fact of the matter is that the rich gifts of the Nile could turn into great calamities if not worked on hardly and systematically. The normal level of water raising for the Nile is about 5 m; 1 m less was sufficient for the onset of hunger; on the other hand, too rapid, exuberant, and abundant flooding of the Nile was fatal to humans and animals. As the “father of history,” Herodotus wrote: “When the Nile comes over the land, the cities alone are seen rising above the water. . . the rest of Egypt becomes a sea and the cities alone rise above the water.” [24, Volume 2, Para 97, page 108] In connection with these natural events, the water flooded by the Nile had to be regulated and maintained at a certain height with special facilities—canals, reservoirs, and locks; dams and mobile vehicles (boats, vessels) had to be built for communication between settlements. All this predetermined the development of the country’s hydrotechnology, shipbuilding, surveying, and sky observation for calendar calculations that determined the time of occurrence and progress of the dissolving of the river. The monthly revision of the boundaries of the fields embathed by the river led to the need to perform accurate measurements and maintain records, with a developed sense of ownership, and respect for the court and the law. All this required cooperation of and mutual understanding among the entire Egyptian nation throughout the Nile, subject to full subjugation to a strong, unconditional authority of central power. It is in this context, and because of this, that Egypt had become the homeland of bureaucratic absolute monarchy. Omnipotence of religion, brilliant arts, architecture, the overarching importance of central power—these are the brightly outstanding traits in the period of Egyptian history, beginning with the Third Dynasty (about thirtieth century B.C.), which in science is referred to as the Ancient Kingdom. The Ancient Kingdom was a strictly centralized bureaucratic state. The idea of two kingdoms, united by a personal union, was, in fact, supported in an external way by the existence of double public sites; the royal palace had two entrances; the king wore a double crown and was called by two titles; but, in reality, both halves of his kingdom were long merged, and he freely transported officials from one to another and granted them land, without being constrained by their origin, in any part of his kingdom. His divine dignity was unquestionable and required appropriate etiquette, which approached the temple

88

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

cult. On the other hand, divine dignity required that his divine prototypes (Ra, Horus, and Osiris) be righteous, strong, and merciful. The best pharaohs understood this and tried to make their reign beneficial by using different methods of public economic management. In the era of reign of Amasis, as Herodotus writes, Egypt achieved the greatest prosperity, particularly due to regulatory techniques. In particular, “Amasis issued this regulation to the Egyptians: each Egyptian was to annually declare his income to the district governor. And who will not and will not be able to indicate any legal income, shall face the death penalty.” [24] The patriarchal nature of the reign of the Egyptians is particularly pronounced when considering the attitude of the kings toward their surrounding dignitaries. Not all of these noblemen were old-line representatives of the nobility; there were many among them who were promoted by their gifts and honesty from ordinary officials and people of not noble origin to nobility. Numerous placards in their tombs report the list of their posts, which sometimes proceeded to autobiographical texts. It is clear from these inscriptions that the former areas, “nomes,” from which the state emerged, became administrative and adroit units managed by the royal governors; in Upper Egypt, they were called the “nobles of the South.” The special six chambers were in charge of the court. The economy was natural, there was no money; trade was barter based, the duties submitted were also natural, and under the direction of the “chief treasurer” was a “white chamber” filled with all sorts of products—raw materials. A huge staff of subordinates and scribes served public places; writing was highly developed and predetermined the emergence of italic letters that originated from hieroglyphs in that distant era. Thus, for the person in service, literacy was required, attaining which, given the complexity of hieroglyphic writing, was not easy, but opened the door to the top ruling class, removed from the hardships of life and the woes of the lower professions, which is eloquently and frankly spoken of, as we shall see, in moral writings, which praised the benefit of book teaching from this utilitarian point of view. Numerous business records found in the archives of the various cities of Sumer and Akkad—Ummah, Lagash, Ur, Larsa, Mari, as well as Egypt of the eras of the Ancient, Middle, and New Kingdoms—are of great importance for the formation of the sources of management thought. Among these documents, the extensive records of “production with labor operations,” accounting, contracts for the sale and lease of land, records of traders (income and expenditure lists, trade transaction reports, price tags), and the like are of particular interest. The administrative correspondence of King Hammurabi to his officials in Larsa gives a perception of the artificial irrigation system and administrative management in Babylon of the first half of the second millennium. It is these documents that served as the starting point for the accounting and control of economic activities and a number of other management functions [19, 20].

2.2 Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia

2.2

89

Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia

In Ancient Egypt, in the Valley of the Nile, by the fourth millennium B.C., some 40 small States (nomes) were formed, on the basis of which in mid-4000 B.C. the Upper and Lower Egyptian kingdoms were formed. About 3000 B.C. under King Menes they were united into a powerful, single Ancient Egyptian kingdom, and the reign of the First Dynasty of Kings began. In the Ancient Egyptian kingdom, the first written sources that survived to our time were created, containing reference to the simplest aspects of management. The texts that made up the content of those sources were brief to the limit. They acknowledged the existence and importance of State management and pointed to the existence of special groups of people engaged in this activity [17–22]. At the same time, the central figure, around which the ideas of management were shaped, was usually the king, whose image in most cases was praised and idealized. A number of texts mentioned the actions of kings, high-ranking dignitaries, and courtiers, relating to the management of the state, provinces, the state economy, managerial posts and the hierarchy of posts, the rights and responsibilities associated with them; also, insights on the emerging fragments of organization, its organizational structure, goals, priorities, and functions of management were expressed. We shall note once again that the most popular issues were those of personnel. The explanation for this can be found in the need to organize large masses of people to carry out the monumental work of building pyramids, and for watering and irrigation systems (similar to the formation of army units for participation in combat). Farming based on artificial irrigation was the main form of economic activity in the age of the oldest kingdoms, as well as the later States of Sumer and Akkad. Therefore, one of the most important functions of the rulers of States was the function of organizing and maintaining the irrigation network, as they had consistently expressed in their inscriptions. This merit is listed alongside military victories, thereby recognizing the enormous importance that irrigation had in the life of the country. Thus, Rim-Sin, king of Larsa (eighteenth century B.C.), informs in a single inscription that he had dug up a canal “that provided drinking water to a large population. . . that gave abundant grain” [17]. The documents of this era refer to a wide variety of irrigation activities, such as the regulation of river spills and canals, the reparation of damage caused by floods, the strengthening of banks, the filling of water basins, the regulation of fields’ irrigation, and the various excavation work associated with the irrigation of fields. In describing management activities, Ancient Egyptians paid constant attention to the relationship that must emerge between supreme rulers and the highest officials in the process. The “Teachings of the Heracleopole King to his son Merikara” (twentysecond century B.C.) are of great interest in this regard. “Great is the great one whose great ones are great,” noted the author of the teachings, Achthoês III. He wrote to his son: “Respect the great. . . Make your magnates great, that they may execute your laws.” The king believed that wisdom was the prime condition for the success of the

90

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

nobles, stressing that “a wise man is a [school] for the magnates, and those who are aware of his knowledge do not attack him.” The king insisted on the need to educate the people who were involved in management, and to continually supplement their knowledge. “Wisdom is created by knowledge,—was taught in his teachings. . . Unfold your scrolls, follow the wisdom, the person who learns will become adept.” Elsewhere it was stressed: “May the people say: there is nothing you do not know.” Attention was drawn to the underlying rationale and exposition of the decisions taken, relating to which advice was given: “Be skillful in speech, that you may be strong; the tongue, and words are braver than all fighting” [17, T.I, pp. 31–36]. Despite the brutality of the orders of slavery, Ancient Egyptian sources often thought of the need for a humanistic orientation in management, a reflection of the interests of ordinary people in the protection of justice. This was very clear in the “Teachings of the Heracleopole King” mentioned earlier, where Achthoês III counseled his son: “Do not be evil, for patience is good. . . Multiply the wealth of your citizens. . . Do justice. . . Calm the weeper, do not oppress the widow. . . Do not distinguish the son of a man of rank from a commoner. . . Care for people. . . Do not be distressed. (Lichtheim: Do not neglect) Increase the rising generation of your retainers.” The idea of care for the submissions in the management process was well documented in other Ancient Egyptian documents. For example, in the “Teachings of King Amenemhat” (twentieth century B.C.), there were such pronouncements with pride of the royal words: “I gave to the beggar, I raised the orphan, I gave success to the poor as to the wealthy.” [17, 25] In the hieroglyphic inscription on the tomb of the nomarch of the Oryx nome Amenemhat (twentieth century B.C.), the nomarch, describing the management of the nome, wrote: “There was no citizen’s daughter whom I shamed, no widow whom I oppressed. . . There was not a pauper around me, there was not a hungry man of my time” [17]. The care for subjects in the king’s management activities was combined in Ancient Egyptian views with many other functions. At the same time, the king’s role was generally praised, his qualities idealized and exaggerated, and traits and functions deriving from God were ascribed to him. This is clearly seen from the inscription of King Senusret III (nineteenth century B.C.), carved in the fortress in Semna, where it was stated: “I have added to what was bequeathed me. I am a king who speaks and acts. What my heart plans is done by my arm. . .the likeness of a son who is the champion of his father, who maintains the boundary of him that begat him!” [17, p. 36] In the overall set of management actions, special attention was given to punitive functions aimed at maintaining order in the country and at suppressing the opposition of the supreme authority. Thus, Achthoês III in “The teachings of Achthoês, son of Duauf, for his son Pepi,” dating twentieth century B.C. wrote: “A talker is a mischief-maker. Suppress him, kill [him], erase his name. . . Do not elevate a hostile person. . . Bend the multitude and drive out hot temper from it.” [17, p. 41] To better organize the management process, the Egyptians in the second millennium B.C. began to create prototypes of future orders of ranks, more precisely to form duty instructions for the most important participants in the process of management of the public economy, listing their functions, order of performance, job

2.2 Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia

91

responsibilities, and the rights of supreme dignitaries. The characteristics that disclose these parameters of management were preserved in the hieroglyphic lists on the walls of the Thebe tombs of viziers Rekhmire, Useramen, and Amenemonet (sixteenth–fifteenth centuries B.C.). These characteristics were rather detailed. They showed that viziers, as the highest dignitaries, dealt with a wide range of issues of central and local governance and did so both in the parts of the state assigned to them and in their subordinate managements. One vizier ruled Upper Egypt and was the king’s deputy in Thebes; when he was absent, another managed the affairs of Lower Egypt. Through viziers, all appeals to the king were made and all the king’s orders concerning the territories assigned to the vizier were implemented. It was established that the vizier appoints key executives in those territories; hears their reports on cases every 4 months; reviews the documents they send; gives instructions to district chiefs, noncommissioned officers of public domains and the houses of troops, and the captains of units (fortresses); hears the princes and rulers of settlements; establishes the boundaries of all districts, possessions, and pastures; calculates tribute and organizes their collection; directs district officials to organize summer agricultural work, for the construction of canal fences and for the cutting of figs; sends warriors and “scribes of mats” to organize the execution of the lord’s orders; reports to the king on the status of the territories assigned to him; and performs other duties. It was the vizier’s duty to make decisions both on the basis of oral reports by officials and applicants, and on the basis of consideration of documents. The use of these documents was strictly regulated. They were to be delivered to the vizier together with the books of the according custodians behind the seals of statementsenders and accompanied by scribes. After usage, the documents were returned to their place behind the seal of the vizier. The responsibilities and activities of viziers were also reported in other sources. In particular, the hieroglyphic inscription on the appointment of the vizier, referring to the times of Thutmose III (fifteenth century B.C.), recommended that greater concern be given to the management of territorial entities. “Pay your attention,— says the document,—to the counties, strengthening them. If you are absent in inquiry, send district Chiefs, village constables and noncommissioned officers.” And here it was recognized that the managerial work of the vizier was a difficult affair, that viziering is “not sweet, but bitter as gall” [17, c.66]. In characterizing the various participants of the management process, Egyptian sources wrote very extensively about the role and activities of the scribes, which not only drafted texts and managed the workflow, but also performed a variety of administrative and financial functions. The first information about scribes was already present in the “Pyramid Texts” drawn up during the Fifth and Sixth dynasties. In particular, the text of the military scribe Kaipera (Early Fifth Dynasty) listed 27 posts that the scribe consistently occupied. These included the posts of the pastures scribe, document scribe, the scribe of the royal army, the scribes’ warden, the chief of the royal works, etc. In the case of scribes and other officials, the Ancient Egyptian sources repeatedly demonstrated not only the honor but also the benefits of management activity, providing direct and additional income from the functions

92

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

performed. In “The teachings of Achthoês. . .,” it was noted, for example, that “when you are at the head of local government, your father and mother praise God. Honor your father and mother who have placed you on the path of the living.” Speaking of scribers, the author acknowledged that a scriber is already an executive, that “he himself is in charge of others,” that “there is no scriber deprived of food from the things of the House of the Tsar,” that the goddess of happiness is “on the shoulders of the scriber since the day of his birth.” The conclusion here was that “if you know the scriptures, it will be good for you” [17, p. 41]. The importance of the role of scribes in management and its advantageous position in society had been emphasized in other Egyptian documents. In particular, in the papyrus scribes of the first and second millenniums B.C., it was said that when becoming a scribe, “you shall manage the population of the entire Earth.” It was emphasized that the scribe “manages the work of all those that there are in the land,” that the position relieves of tribute, protects against hard work, removes from hoe and trouble, and enables not being “under numerous lords commandments.” In the Papyrus “Anastasi II” the following is stated on scribes: “He is in charge of all work in this country”; in “Anastasi III,” “Turn your heart to the activities of the scribe, and you will guide everyone;” in “Anastasi V,” “The scribe—he directs everyone, and no tax is levied on writing.” In developing these assessments of the role of the scribe, the authors of “Anastasi V” noted: “The position of yours is more splendid than any other post, for it glorifies man: one found to be adept at it becomes honorable.” In the Papyrus Lansing, it was emphasized that the scribe “comes close with something greater than himself” and that writing “for one who knows it is better than any position” [17]. Recognizing the benefits of managerial activity, Ancient Egyptian sources drew attention to the appearance within its conduct of bad faith, extortion, and bribery, and stood for the elimination of these abuses. Pharaoh Horemheb, in his decree (fourteenth century B.C.), stated to the officials and judges: “I instructed them on the way of life and directed them towards the truth. My counsel for them is: “Do not cosy up to others, do not take the bribe. . . .”” In the “Teaching of Ani” in order to combat abuse in management it was proposed not to transfer management positions by inheritance, since “there is no son to be chief of the treasury, there is no heir to the chief of the chancellery, nobleman, controller and scribe, skillful in his hand and in his work. . . This is not what children inherit” [22]. Interesting management ideas were left behind by the ancient nations of Western Asia that created, along with the Egyptians, another oldest cradle of human civilization. In the fourth–third millennium B.C. in Mesopotamia, the city states of Ur, Uruk, Lagash, Kish, Shuruppak, Isin, Nippur, and other entities were formed on the basis of which the larger and more stable kingdoms and principalities were later created and operated. Like the Egyptian documents, the sources of Mesopotamia testify of the extensiveness and activeness of management activity in the most ancient of times. In one of the oldest sources for the area, the inscriptions of the Lagash King Urukagina (24 B.C.) mentioned the existence in the state of such management posts such as Pathesi-first elders, and then the local kings, the atrigi—major public and temple government officials, surveyors, warders for the

2.2 Ideas of Management in the Works of the Thinkers of Ancient Egypt and Front Asia

93

shepherds, the flock-masters, the fishermen, the ships, the chiefs of the grass houses, breweries, the supervisors of warehouses, granaries, and so on. In the early sources of the First Babylonian Kingdom, as in Egyptian documents, the idea was advanced of the necessity for the supreme ruler to involve faithful dignitaries in the management of the country and divide management functions among them. Often, such a scheme was attributed to the gods and then designed for terrestrial affairs. In the Atrahasis (eighteenth century B.C.), for example, the gods were attributed the allocation of the Supreme Lord and the appointment of an administrator, counselor, and supervisor. Ancient Babylon was one of the first in the world to put forward and practically implement the idea of dividing the country into administrative districts and appointing rulers sent there by Babylonian kings. The rulers were entrusted with the management of the districts, the collection of tribute, the supervision of law enforcement, and other duties. The breadth of the management system in Western Asia gradually mounted and reached such scale and structural dimensions that in the seventh century B.C. in Assyria, the list of officials of King Esarhaddon contained a reference to 159 posts. In highlighting trends in management development, Western Asian sources testified of the desire of rulers of states in this region to improve and develop management. These sources contained information on the first government management reforms undertaken by the Lagash King Urukagina (twenty-fourth century B. C.), the Sumerian king Ur-Nammu (twenty-second century B.C.), and other rulers. More recent reforms of King Tiglath of Assyria (eighth century B.C.) aimed at organizing stable management of conquered territories were rather informative. Instead of the old territorial entities, the king created new districts, smaller in size, making it easier to manage them. The districts were headed by loyal governors, who were subordinated to the Assyrian military garrisons. Special officials were appointed at the districts to collect tribute and form military units. Everything that reinforced the king’s vertical control increased the discipline of management and strengthened control of the central authority. The drafting in the New Hittite Kingdom of special requirements for dignitaries and public servants, which defined their rights and duties, was useful in improving management. Particularly detailed and clear was the “instruction” for the “Master of the Border Guard,” in which the fortress, troops, and institutions assigned to him were listed and his functions were established to ensure constant defense readiness, supervision of work in the royal economy, and the resolution of judicial and religious problems. Detailed instructions were issued for city governors, senior military officers, and others. More than in many other regions, the focus of management on provision of justice and service of subjects was expressed in Anatolia. Speaking of this desire, the Sumerian King Ur-Nammu (twenty-second century B.C.) was one of the first in history to state in the laws that he had issued, that he had “established justice in the country, truly banished evil, violence and discord. . . suspended the chief of the seamen, the collector of bulls, collector of sheep. . . and thus established freedom.” The king emphasized that now “the orphan was not delivered into the power of the

94

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

wealthy, the widow—to the power of the strong, the poor—to the power of the rich.” The declaration of management’s service of the interests of justice and protection of interests of the subordinates is clearly visible in the famous laws of the Babylonian king Hammurabi (eighteenth century B.C.), where the task was to “manage his country fairly,” “to guide people fairly and to bring happiness to the country,” to ensure “that the strong do not harass the weak.” The same motives were expressed in the Edict of the Babylonian king Ammi-Saduqa (seventeenth century B.C.). “Justice” had also been enshrined in official documents in respect to all and in all cases, on whom “happiness in the country” depended. This is how some Hammurabi laws were formulated: “If a person has rented a field for tillage and has not raised grain in the field, (then) he should be condemned for non-performance of the (required) work on the field, and then he will have to give the master the field grain according to that (harvest) of his neighbors” (p. 42). “If a person has given a man silver for a partnership, (then) the profit and loss that will be, must be equally divided before God” (p. 99). “If the builder built a man’s house and did his work insecurely, and the house that he had built, collapsed and killed the owner, the builder must be executed” (p. 229). And this is the text of one of the Hittite laws (sixteenth century B.C.): “If someone buys a house, or a village, or a garden, or a pasture, and another (person) comes and outruns him (the first person) and proposes a purchase price above the (original) price, (then) he is considered guilty and must give 1 mine of silver. (The first person) buys at the original price” (p. 146 [17, pp. 157–163]). The idealization of the principles of equity in management had lasted for a long time and in different regions of the world. Thus, in Ancient Iran, King Darius I (sixth century B.C.) recorded in Naqsh-e Rustam that his “desire is justice.” He stated: “I am a friend of the right, of wrong I am not a friend. It is not my wish that the weak should have harm done him by the strong, nor is it my wish that the strong should have harm done him by the weak.” [17, p. 232] The perception of the management system of Babylon in the first half of the second millennium B.C. is given by King Hammurabi’s correspondence with his officials in Larsa. In Anatolian practice, the principle of determination and firmness in management had consistently been pursued, offering mandatory and absolute implementation of the adopted guidelines. “Let my decrees,” stressed Hammurabi in the afterword of his laws, “have no offenders” [17, p. 175]. Even more relentlessness was demonstrated by the king of the Hittite Old Kingdom, Ḫattušili I (seventeenth century B.C.), who wrote in his will: “Who contradicts the king’s words must be dead forthwith. He cannot be my messenger, he cannot be my first subject.” And this line had not changed in ages. A millennium after Ḫattušili I, King Esarhaddon of Assyria (seventh century B.C.) exclaimed in the letter to Ashur: “Have you ever heard the word of a strong King said twice?” In doing so, the rulers insisted on consistency of the actions of the persons involved in management, opposed the rivalry of dignitaries, against discord and collusion in deeds. Addressing the dignitaries and elders, Ḫattušili I demanded of them: “One of you must not repel the other, and one should not promote the other.”

2.3 Development of Management Issues in Ancient China

95

A rejection, common in all countries, of abuse of managerial position, of greed, of the use of power for personal enrichment, was clearly observed in all management dispositions of rulers. The laws of Hammurabi provided for the death penalty to commanders and foreman for the appropriation of property of the military and their harassment. King Ḫattušili I stated: “Whatever the King does, by his will or otherwise, malignity will never be.” Hence, one of the tasks of management was seen in fighting against unjust enrichment, with the plundering of national wealth. In the Akkadian poem “The Babylonian Theodicy” (eleventh century B.C.), it was said: “The lush rich, that heaps property in bunches, the king would burn in flames before the bound term.” The focus on combating bribery and illicit enrichment had been observed in Babylonians in subsequent periods. The document on the privileges of Babylonian cities, written in the eighth century B.C., is indicative in this respect. It stated that “if the vizier or an approximate of the king. . . take bribes, these persons will die of weapons, their place will turn into wilderness, and their affairs will be blown away by the wind.” At the same time, it should be noted that, as opposed to this, the document defended just officials, claiming that if the King “does not honor (the vizier), the country will rebel against him.”

2.3

Development of Management Issues in Ancient China

The Origins of Management Thought The development of public thought in China has a long and continuous historical tradition, stemming from deep antiquity. Ancient Chinese thought is deep and original. The most bright and distinctive (from Egyptian and Sumerian thoughts) features are particularly believed to be demythologicness and rationality. Being rather indifferent to religious-metaphysical speculation and not devoting attention to celebration of deities and their heroic deeds, Ancient Chinese thought focused on the issues of society, ethics, the State, and state management. The Ancient Chinese civilization, including urbanization, production of bronze products, a complex socio-political structure (proto-state), and written culture, emerged around the fourteenth century B.C. The emergence of public thought refers to this time. Archaeologists discovered ancient written texts on bamboo bars and wooden plates in China, which displayed various kinds of documents: private texts, for example, letters, diaries, business cards, wills; literary works, for example, poetry, stories in prose; texts of a special nature, for example, calendars, guessing, mathematical, astrological, military, medical, and other texts; or comments on the chronicle of events in Ancient Chinese states.4 Sources of management thought in the fourteenth–sixteenth centuries are epigraphic inscriptions on ceremonial bronze vessels as well as written sources—

4

https://mychinaexpert.ru/knigopechatanie-v-drevnem-kitae/

96

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

Ancient Chinese records of “Chunqiu,” “Zuo zhuan,” “Gwoyeu,” the philosophical essays and treatises of “Mencius” and “Mozi,” and “Rites of Zhou,” “Guanzi,” and others. Many ideas and management perceptions that had an extremely profound impact on the further development of Chinese management thought were formed in sixth– third centuries B.C. In the history of China of subsequent periods, it is hardly possible to find a philosophical, political, economic, or managerial theory or scheme that, to one degree or another, would not use the rich heritage of the Chinese thinkers of this era. Let us consider the socio-historical causes of the rise and development of managerial views and beliefs. The issue of the socio-economic order of the Ancient Chinese society is the most complex and intricate. Some authors refer this period to the period of slavery, others to the age of the birth and development of feudalism. The issue remains the focus of attention of many researchers, whose views differ considerably. At the current level of study of social and political relations in Ancient China, it is very difficult to obtain the necessary and exhaustive characterization of the economic basis of the Ancient Chinese society. But, as we have already mentioned in Chap. 1, management concepts are born of a certain historical era and depend on many situational, specific factors. Economic relations are not the only determinant of people’s spiritual life. For example, knowledge of the ideological foundations of a country in this era can be of great help in resolving the controversial issue of the socio-economic and political nature of the era, the dominant classes in the country, and the determining factors of the country’s development. According to the traditional Chinese periodization, the third century B.C. belongs to the so-called age of Zhan Guo (the “struggling kingdoms”: sixth–third centuries B.C.). The country was divided into many individual holdings and the power of the ruling Zhou Dynasty was nominal. In the struggle for hegemony within the country, the leading position of seven possessions—Chu, Qin, Zhao, Qi, Wei, Yan, and Han—had gradually been determined. The largest of these in terms of space were the first three, and the most populous were Chu and Wei. According to the estimate of historians, a total of about 20 million people populated all seven dominions. The fierce and continuous struggle between the seven strongest dominions ended with Qin’s total victory. In 221 B.C., the country was merged into the Unified Central Qin Empire, a progressive step in the history of Chinese society. The history of the Chinese society is characterized by profound and serious changes in socio-economic relations. The much earlier division of labor and individualization of craftsmanship continued to develop steadily, various forms of ownership began to develop, and class stratification also continued to develop. The role of the community in the life of the Ancient Chinese society continued to be paramount. Many modern Chinese historians believe that, because of the development of private property during the Zhànguó period, the community collapsed, and by the third century B.C. ceased to exist. Other studies have shown that, even in the context of the oppressive states of Qin and Han, the communal self-governing bodies and, consequently, the community remained, although within it, with the

2.3 Development of Management Issues in Ancient China

97

development of land sales and purchase practices, significant income inequality was notable. Farming was the main occupation of the population, which required the formation and development of facilitating industries—artificial irrigation and the production of agricultural tools. Numerous ancient sources provide interesting data on extensive construction of irrigation canals, dams, embankments, and large irrigation systems. One of the characteristics of the Ancient Chinese society was the coexistence of state ownership of irrigation facilities with communal relations. At the time, the craftsmanship industry had developed just as rapidly in China. One of the most important factors contributing to the development of cultivation and craftsmanship was the use of iron for the production of working tools. Significant changes also occurred in metal smelting techniques. Large iron-melting furnaces were constructed, which were served by several hundred people. The ever-increasing demand for iron constantly required the development of new ore deposits. The names of the 34 regions of the country where iron ore was mined at the time are known. The rise in agriculture and craftsmanship facilitated trade and exchange both within and between individual dominions. Economic and trade links between parts of the country became increasingly important. Individual regions began to specialize in the production of some or other products. The increasing role of exchange stimulated the development of monetary circulation. In the period of Zhànguó there were various forms of currency, but by the end of the period round minted coins were widely disseminated. The development of craftsmanship and trade led to the growth of cities and large trade centers. One of the largest cities of that time was Linzi, which was inhabited by 70,000 families. Many of the capitals of the kingdoms were major centers of commerce and craftsmanship. The considered period of the history of Ancient China is characterized by a sharp increase in class struggles. In the works of Chinese thinkers, “noble” people are constantly confronted with the “villainous,” and there are reports on considerable social differentiation and sharp clashes between the interests of different strata. Important advances in China’s socio-economic and political life had been accompanied by major advances in the development of science and culture. The development of agriculture, craftsmanship, trade, monetary circulation, and the strengthening of economic links contributed to the expansion of the scientific knowledge of the Ancient Chinese. They had shown growing interest in the study of natural phenomena. On this basis, the simplest scientific methods were conceived and developed, and the first strong sprouts of rationalistic scientific knowledge of the reality surrounding humanity pierced. In particular, the needs of agriculture led to very early emergence of astronomical knowledge in Ancient China. Already in deep antiquity, Chinese astronomers were able to calculate the time of the winter solstice, and solar and lunar eclipses. Ancient Chinese records preserved chronicles of astronomical observations, many of which are confirmed by modern astronomy. While studying the movement of luminaries,

98

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

Ancient Chinese astronomers attempted to predict the weather based on the change in their location. The need to establish irrigation facilities in Ancient China, as well as in Egypt, Sumer, and Akkad, led to the development of practical mathematical knowledge and, in particular, geometry. The Ancient Chinese were aware of the properties of the rectangular triangle, and they set the equality of the square of the hypotenuse to the sum of the squares of the legs. The sources provide information on the development during the period of Zhànguó of basic knowledge of anatomy and medicine, and a number of discoveries were made in agriculture and building business. The considered period of the history of Ancient China is characterized by sharp aggravation of class struggle. In the works of Chinese thinkers, the opposition of “noble” and “mean” people is constantly met, and significant social differentiation and sharp collisions of interests of various layers is reported. The decomposition of the primitive community system and the emergence of a class society and ancient states in Ancient China occurred in the second millennium B.C. The social stratification of the Ancient Chinese society of the Yin era (fourteenth–eleventh centuries B.C.) is evidenced by numerous burials found on the territory of China, which clearly differ in appearance—size, quantity, and composition of items and inventory. In the era of the rule of Western Zhou (eleventh–eighth centuries B.C.), social differentiation was fixed in the system of social ranks. All of the free population of Zhou were divided into five social groups, correlated with each other on the principle of hierarchy, which in Tianxia (meaning under heaven, as Ancient China was referred to at that time) was more clearly expressed than in other Ancient Eastern societies. The group, which occupied the upper stage in the hierarchy, was represented by Zhou Wangs. Wang was the ruler of China and was considered “the only one among the people.” He was the supreme owner of Tianxia, that is, all lands of Tianxia were considered to belong to the Wangs, who could “appeal” the right of inheritance ownership of part of the lands of the lower stratus of society. The second group was Zhuhou, rulers of hereditary estates, representatives of the highest aristocracy. The third was the Dafu, the heads of the tribal groups (or zun) who collectively constituted the population of the inheritance of the Zhuhou. The fourth group was the shi, heads of large families who were part of a given zu. The group of shi in the following centuries (sixth– second centuries B.C.) began to include people of intellectual work, scientists. And finally, the fifth group was commoners. In addition to these “ranked” groups in the Ancient Chinese society, there was also a large group of “powerless people”— servitude, servants, and slaves. Social rank determined the totality of those material benefits that could be enjoyed by a particular person. Clothing depended on rank, and consumption of wealth depended on the amount of remuneration corresponding to rank. “There are different quantities of drink and food, style of clothing, number of cattle and slaves, there are bans on the use of certain boats, chariots and household utensils. In the life of a person, differences in headgear, clothing, number of fields and size of the dwelling are observed.” All people of Tianxia were considered servants of the

2.3 Development of Management Issues in Ancient China

99

Wang, while “Wang considers zhuhou his servant, zhuhou considers dafu his servant, dafu considers shi his servant,” etc. [22, 378–379]. Zhou’s “Table of ranks” was preserved in the period of “Warring kingdoms.” The main social organization during this period was the patronage designated Zong or Zong Zu. It brought together from several hundred to a thousand and more larger families belonging to the same kindred group. All these families lived compactly, sometimes occupying several villages. There were social and legal differences between the numerous zong of each of the seven “warring kingdoms.” There were zong, the patronym of the ruler of the kingdom. They were considered aristocratic, towering over the rest of the zong, and headed by representatives of the aristocracy, who simultaneously held the highest administrative posts in the state apparatus. The leadership of other “ordinary” zong was based on a different, democratic basis. As noted above, trade and handicrafts flourished at this time, which contributed to the growth of cities. There were new cities and craft centers, and old cities grew. In connection with the development of commodity–monetary relations, there were also changes in the forms of land ownership. If until the eighth–seventh centuries B.C., in most kingdoms, arable land was owned by the community, which through the council of elders endowed communes with equal endowments, already in the sixth–fifth centuries B.C. the situation changed. There have been massive violations of the principle of fair distribution of plots in the community. The heads of communities, who had double arable plots, and the most prosperous part of the community members sought to alienate the best plots; they were no longer satisfied with the custom of regular repartition of fields. The arable fields began to pass into the hereditary possession of individual families. In turn, the emergence of inheritance plots sooner or later had to cause changes in the system of taxation, which, as in other countries of the Ancient East, was the main form of income formation for the royal treasury and at the same time a form of exploitation of the population of the kingdoms. It is the widespread distribution of inheritance plots that led to the introduction of land tax in the kingdoms of Ancient China. According to Sima Qian (145–90 B.C.), the author of Historical Notes (the universal history of the country from ancient times to the first century B.C., the largest historical treatise [26]), for the first time land tax was introduced in the kingdom of Lu in 594 B.C., in the kingdom of Chu in 548 B.C., and in the kingdom of Zheng in 543 B.C.; the most recent of the kingdoms was Qin, where the decree on land tax was issued only in 408 B.C [24, 26–31]. After one or two centuries, the inheritance plots gradually pass into the private property of individual families, and become the subject of purchase and sale. From the owner of the land the community turned to the end of the third century B.C. into a self-governing association of free landowners. In the fifth–third centuries B.C., as in the subsequent centuries, in the community there was an increase in property differentiation—both rich and poor landowners could be found. In the treatises of ancient thinkers, reports of mass destruction of poor community members began to occur; an increasing number of farmers were forced to pledge or sell arable land. By the middle of the fourth century B.C. the situation with poor community members turned into the number one state problem, because the

100

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

reduction in the number of free taxpayer farmers led to a decrease in the income of the royal treasury. During this period, various forms of discontent with the existing order, social and political structure of Ancient Chinese society, began to appear. Moreover, discontent arose not only among commoners—peasants, the powerless, burdened with heavy charges—but also among noble, educated people who thought about the causes of internecine wars, popular performances, and social disturbances. It was in this era in Ancient China that a special kind of monuments of management thought of the era of Ancient Eastern states—social utopia—began to appear. In these treatises, projects of the perfect arrangement of the world, built on the basis of universal justice, great harmony, equality, and universal prosperity, were proposed. The Main Streams of Management Thought Great achievements of the scientific understanding of the world should certainly be seen as one of the most important preconditions for the emergence and development of philosophical thought in Ancient China, which covered public political views, including public management. The teachings of Confucius (551–479 B.C.) had a tremendous impact on China’s entire philosophical and socio-political thought. After Confucius’ death, his disciples, on the basis of the records of the judgments and conversations of their tutor, compiled the book Analects or Conversations and Judgments [32], where his views on the state and management were presented. The Conversations of Confucius with His Disciples and Certain Others is the main book of Confucianism and all Chinese culture. For centuries this treatise was considered obligatory for learning in classical education. It is also the greatest literary monument, the pearl of Ancient Chinese language and philosophy. In 1910, Pavel Stepanovich Popov, one of the greatest Russian–Chinese scholars of his time, translator of many works of Ancient Chinese philosophers, and compiler of the Russian–Chinese Dictionary, served in the diplomatic mission in Beijing [32]. Confucius interprets the state as a large family, where the relations of the ruling and the subordinates are represented as family relations, the younger dependent on the elders, and where the emperor’s Power (the “Son of Heaven”) is compared to the father’s power. And the management of human beings should be performed not through strict laws, but through a system of historically established standards of people’s behavior and rituals. “Li,” and the notion of “Li,” was based on the idea of Confucius about the original and unchanged division of all people into those who govern and those who are governed. He notes that social groups such as “dark people,” “commoners,” “the low,” and “the junior” (“the working low”—xiăo rén) must obligatorily be bound by “noble men,” “the best,” “the higher,” and “the senior” (the superiors—Zhu Xi, or junzi). This was referred to by a follower of Confucius, Meng Ke (or Meng Ko, 372–289 B.C.) in the treatise Mengzi in such words: “Then, is it the government of the kingdom which alone can be carried on along with the practice of husbandry? Great men have their proper business, and little men have their proper business. . . Hence, there is the saying, Some labor with their minds, and some labor with their strength. Those who labor with their minds govern others. Those who labor with their strength are governed by others. Those who are governed by others support

2.3 Development of Management Issues in Ancient China

101

them; those who govern others are supported by them. That is the law of the Tianxia.” [33]. Confucius and his followers argued for virtue and against violence as a method of public management. “Sir, in carrying on your government, why should you use killing at all? Let your evinced desires be for what is good, and the people will be good. The relation between superiors and inferiors is like that between the wind and the grass. The grass must bend, when the wind blows across it.” Confucius calls upon rulers, officials, and subjects to virtue, which must necessarily be the basis of all their relationships. And the decisive role is the satisfaction of the requirements of virtue by the ruling class, as it depends on the dominance of morality in the behavior of the subjects. The subjects, Confucius says, must be loyal to the ruler, and obey and honor the “elders.” That is their virtue. Virtue in the interpretation of Confucius is a set of specific rules and principles of an ethical nature, which includes the rules of Ritual (Li), humaneness (Ren), caring for people (Tu), respect for parents (Xiào), loyalty to the ruler (Zhōng), and many others. Confucius, while making negative statements about laws (Fa) as a result of their association with cruel punishments, does not completely reject the importance of legislative public management, although he only gives it a supportive role. The main thing in management is the social order based on the principles of morality: sustainable stability based on strong social distinctions and, finally, the personal example of the virtuous ruler. Confucius understood that “virtue” at different levels of management should be different, so responding to the question “what is right management?” he gave different answers with regard to the inquirer. Thus, to the dignitary Ji Kang-Tzu, who had usurped power in the native kingdom of Confucius, Lu, he answered: “To govern is to do the right thing.” To the dignitary from the Chu kingdom he said: “If the neighbors are happy, people from far away will be attracted.” To his disciple Tzu-kung, Confucius said that it is important to provide people with food, weapons and gain their trust. You can forgo weapons, you can even give up food (after all, everyone dies, in one way or another), but without trust there is no basis for the state. How do you gain trust? Trust can be gained, first, with untiring concern for people and eternal love for people. Second, with strict following of rituals and rules of the ceremonial. The ritual and the corresponding ceremonial are the most important organizing and integrating principle of management. “When exercising compassionate government with a compassionate heart, ruling All Under Heaven is as easy as rolling it on your palm.” Third, with relentless self-improvement. Only one who works continuously on oneself will have no difficulty in managing people. If, however, the administrator is unable to improve himself, how can he correct the behavior of others? A great deal of space in the treatise of Conversations and Judgments is devoted to specific practical advice in management, in particular in the area of personnel management. “Rely upon assistants, forgiving their minor delinquency; engage the virtuous and capable.” Besides, a good official must be capable of hearing and seeing, dismissing dubious and misleading, and cautiously expressing his opinions; avoiding the risky and dangerous and acting with caution—only then can he count

102

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

on success. You should never throw words if you cannot vouch for them. To another of his pupils, Ji Xia, when he took up an important administrative post, Confucius advised: “Do not be hasty with decisions, do not overload yourself with minor things. If you hurry, you will not be able to grasp the essence of affairs; if you drown in the minor things—you will not be able to solve significant problems.” A true Jun-Tzu is slow in words, energetic in deeds, and the true art of management is to bring together and focus all the main, to put it into practice [32]. Soon after its inception, Confucianism in China became one of the most influential tendencies of philosophical and socio-political thought, and was recognized as the official religion; thus, Confucius made a great contribution to the development of world management thought. Confucianism was criticized by the founder of Taoism, Lao-Tzu, whose views are set forth in the book Tao Te Ching [34]. He characterizes “Tao” as a natural pattern independent of the heavenly Lord, as opposed to traditional theological interpretations of “Tao” as manifestations of the “Heavenly will.” “Tao” defines all the laws of the heavens, nature, and society; with respect to “Tao,” all are equal. He attributed all the shortcomings of his contemporary society to deviation from genuine “Tao,” and in protest against the current state of society—socio-political inequality of people, the plight of the people—looked forward to “Tao,” which could restore justice. Lao-Tzu condemns activity directed against the people, by the rulers and the rich, and the oppression of people, preaching the principle of “non-action” of the sovereign. He calls on people to return to their naturality by abandoning all the extrinsic, which was, in his opinion, artificial human relations in the area of governance and legislation; he called for a return to the patriarchal simplicity of the past, to life in small, divided villages, to the rejection of writing, tools of work, and everything new. More consistently and intensively than Lao-Tzu, the equality of all citizens was defended by Mo-Tzu (479–400 B.C.). There are no reliable data on Mo-Tzu’s life dates. However, all sources agree that he lived and created no later than the fifth century B.C. If we believe the statement of the Ancient Chinese historian Sim Qiang that Mo-Tzu lived after Confucius, the historical framework of the active deed of the thinker is probably limited to the period from the sixties of the fifth century to the turn of fifth–sixth centuries B.C., that is about 60 years [26]. Therefore, it can be argued that the founder of the “mojia” school lived a long life, about 80 years. The main thesis of Mo-Tzu’s doctrine of “universal love and mutual benefit” is an attempt of a kind of ethical justification of the idea of equality of people. The views of the thinker and his disciples are collected in the “Mo-Tzu” treatise [35]. In his teachings, he sets out the principles of natural equality of all human beings and interprets the emergence of the state on the basis of supreme power that belongs to the people. Mo-Tzu emphasizes that the universality of Heaven’s love for all includes recognition of equality of all human beings. It is necessary to follow the heavenly pattern, which is “honoring wisdom as the foundation of management.” Mo-Tzu is an advocate of a combination of violent management methods with moral forms of impact on people.

2.3 Development of Management Issues in Ancient China

103

Mo-Tzu is the originator of the idea of the treaty origin of the State and management, similar to T. Hobbes and J.J. Russo. In so doing, the state in his doctrine does not appear only as a means of management, but also as an instrument of global coercion, not for the sake of the prosperity of others, but for the sake of the Confucian idea of great justice and universal equanimity. He says that in antiquity, when there was disorder and chaos in Tianxia (literally: “under heaven”), the people understood: the reason for this was the lack of command and seniority and chose the “Son of Heaven,” which was to create a “single model of justice in Tianxia.” This provision of unified justice was directed against the autonomous status and arbitrariness of local authorities and dignitaries, establishing their own order in the districts of China and resorting to cruel punishment and torture, which are contrary to the general agreement on supreme authority. He stressed the importance of taking into account the interests of the people in the process of public management. Mo-Tzu was influenced by the school of Confucius (he studied from one of the dignitaries of Confucius) and this was manifested in the main assertion of Mo-Tzu, when he said that the ultimate goal and the most important criterion for good governance of a Kingdom and wise management was the well-being of the people, for which it was necessary in service to promote and use the capable and worthy, which would have the right not only to govern, based on generally accepted principles, but also, if necessary, learn how to correct the ruler. At the same time, Mo-Tzu considered, as the ideal management model, a rigid administrative structure within which the people were split, deprived of traditional family and community links and fully identified with leadership, in an effort to show loyalty and not hesitate to report on the neighbor. Mo-Tzu’s “policeism” is confirmed in his assertion that the administrator should have not only a high prestige (for respect) and a salary (for trust), but also greater authority, in order to be feared. While it is his responsibility to manage, to be fair, to increase incomes, and to oppose all useless, the basis of the police model of government is confirmed in many of the allegations of Mo-Tzu. Legalism was prominent in Ancient Chinese streams of public thought. The main ideas of this direction are set out in treatise of the fourth century B.C. Shang Jun Shu or The Book of Lord Shang [36], the author of which is the bright legalism theorist, one of the founders of the School of “Lawyers,” the ruler of Shang, statesman, and reformer of Ancient China, Shang Yang (390–338 B.C.). Shang Yang criticizes Confucian perceptions of management that suffer from utopianism. He said: “The law is an expression of love for the people; rites are a means for making things run smoothly. . . a wise man creates laws, but a foolish man is controlled by them; a man of talent reforms rites, but a worthless man is enslaved by them. Is it with a person who is binded, do you not discuss affairs with; with a man who is limited by old laws, there is no need to talk about change.” Committed to radical reforms in public management, wise Shang Yang created the concept of a police state as a gigantic, all-encompassing enforcement machine, the management model of which should be designed on a system of strict laws (Fa) and severe penalties. This was due to his understanding of the relationship between the people and the state power as antagonistic (the “who will win” principle). It is only through the use of strict laws that people can be subordinated to order.

104

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

“However, nowadays, the ruler, in his appointments, takes into consideration talent and ability and cleverness and intelligence, and thus clever and intelligent men watch for the likes and dislikes of the ruler, so that officials are caused to transact their business in a way which is adapted to the ruler’s mind. As a result there is no certain system of appointment of officials, lack of order within the country itself and impossibility of focusing effort on the Ensemble” (i.e., agriculture and defense of the country—M.V.). And further “the secret of their management of the country lies in nothing else than in their examination of what is essential. But now, those who run a state for the most part overlook what is essential, and the discussions at court, on government (emphasis added—M.V.), are confused, and efforts are made to displace each other in them; thus the prince is dazed by talk, officials confused by words, and the people become lazy and will not farm. The result is that all the people within the territory change and become fond of sophistry, take pleasure in study, pursue trade, practise arts and crafts, and shun agriculture and war; And so in this manner (the ruin of the country) will not be far off. When the country has trouble, then because studious people hate law, and merchants are clever in bartering and artisans are useless, the state will be easily destroyed. . . Generally speaking, in administrating a country, the trouble is when the people are scattered and when it is impossible to consolidate them.” And further, Shang Yang formulates in our view a genius strategic idea suitable for all times and people: “a sage tries to bring about uniformity and consolidation. A state where uniformity of purpose has been established for 1 year, will be strong for 10 years; where uniformity of purpose has been established for 10 years, it will be strong for a 100 years, where uniformity of purpose has been established for a 100 years, it will be strong for a thousand years; and a state which has been strong for a thousand years will attain supremacy.” [36] Shang Yang attached great importance to the implementation of the principle of collective responsibility in strengthening management, giving priority to penalties rather than awards. This principle was extended not only to the scope of people involved in family–clan relationships but also to the integration of several communities (courts). They were all covered by circular responsibility. This system of total mutual shadowing was a significant factor in the subsequent practice of public management in China (and many other countries), playing a significant role in the consolidation of State authority. And in the process of the reforms of Shang Yang in the Kingdom of Qin, where he obtained the position of Minister and was able to carry out his transformations, the theoretical thesis of the system of total surveillance was embodied in the creation of cells of informers (heels and tens) linked by mutual responsibility, by circular responsibility. The same principle was also extended to the officials: turning in a co-worker freed the official from punishment for action, of which he had a duty to know about. In the same years, in the Han kingdom, the minister was Shen Buhai (400–337), who left behind the treatise of Shen-Tzu [34]. Together with Shang Yang, he can rightly be considered the founder of the tradition of “real politics” in China. Shen Pu-hai is especially known as a theorist of “art” of management (shu), that is, a set of principles and rules that allow the ruler to keep his servants under strict and

2.3 Development of Management Issues in Ancient China

105

comprehensive control. Unlike Shang Yang, the center of his doctrine is the ruler, the head of State: “The wise ruler is the body, the officials—his hands; the ruler— voice, the officials—echo; the ruler is the root, the officials—branches.” Shen Pu-hai’s treatise (or Shen Buhai), if it ever existed, has long been lost, but some of his judgments and episodes of life have been preserved in a number of ancient treatises (in particular, in the “Historical Records” of Syma Qian [26], in the treatise “Han Fei Tzu” [37]), as well as ancient encyclopedias and historical compendiums. Already in the nineteenth century, Chinese scientists Yan Kejun and Ma Guohan reassembled materials about the teaching and life of Shen Buhai. The American sinologist G. Kril devoted a special study to Shen Buhai, which includes an English translation of his surviving statements [34]. The statements of Shen Buhai are, in modern language, a guide of conduct for top managers. In the opinion of the thinker, to become a wise ruler, it is necessary to acquire the technology of power. The first condition here is exposure, impermeability, secrecy. The second and, in some sense, the main is non-doing, that is, external impermeability and even passivity, which obscures information saturation and active readiness, the ability to intervene at any time and to give the necessary guidance: “A clever ruler can put on alias foolishness, show uncertainty, timidity. . . He conceals his motives and demonstrates non-doing to the world. And then those close to him love him, and those far are eager for him.” Non-doing (Wu wei) is the most important principle of a wise management developed by Confucius. But Shen significantly enriched the principle by adding many constructive and specific recommendations for its implementation. If Confucius insisted on wisdom and discernment as the main attributes of the principle of non-doing, Shen believed that it should be management methods and the decision-making processes. One of his main management rules: “Never give inexecutable orders!” Together with his developed personnel management system, the principle of non-doing constituted the notion of the art of management or the technology of power. As for management staff, they were selected for business and work, not the other way around. At the basis of the art of management is a clear division of the functions of officials, strict subordination and hierarchy of structures, and the executive’s right for parallel sources of information. In Shen Buhai’s opinion, three criteria should guide the selection of a candidate and the appointment to a post: the capabilities and competence of the candidate, his achievements in the past, and his seniority. Shen Buhai opposed the idea of Confucius to select officials based on recommendations and patronage and insisted on guidance only by these objective criteria. It is in this context that he developed an integrated personnel management system—Xing-Ming, the essence of which is the procedures and methods of recruitment, examination (attestation), evaluation, placement, and control of officials. In the same years, the general issues of country management were studied and developed in Ancient China. The principles of centralized regulation and control of the economic life of the State, which were initiated by Guan Zhong (seventh century) in the implementation of administrative reforms in the Wèi Kingdom, and continued in the process of Shang Yang’s reforms, were particularly active. The main objective

106

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

of the reforms and the formulation of the country’s management principles was to strengthen central authority in the context of the new socio-economic phenomena that had arisen in the state: processes and relationships—the emergence of the private market and of monetary relations, privatization and the strengthening of the position of private owners (“money grubbers”). Then came the composite work Guanzi [38], compiled by several thinkers during the fourth–second centuries B.C., named after Guan Zhong. This treatise is known for the fact that it sets out a number of original ideas for the central management of the country’s economy. Most consistently disclosed is the idea of qing-zhong (literally, “light-heavy”), meaning stabilization or balancing in the management of the country’s economy on the basis of the knowledge of the patterns of social life and their implementation by the bearer of power, the king. The author of the idea is Lǐ Kuí, the elder contemporary of Shang Yang, reforming minister of the Kingdom of Wèi. He was famous for having created a theory of grain price regulation, addressing the problem of crop failure. Having collected data for a number of years on wheat yields from the same plots, he found a dramatic gap (sometimes up to ten times) in the amount of grain collected from these areas in years of plenty and lean years. At that time, he proposed a method of centralized purchases of surplus grains in years of plenty and the sale of surpluses in lean years, filling the lack of grain in the lean years with stocks from public store houses with sales of stocks at rationed prices. Something similar in his time was offered by the biblical hero Joseph, who became minister of the Egyptian pharaoh. The same method is also used today in many countries, including Russia nowadays, entitled “State intervention in grain.” In its form the treatise is a fictional dialog between Guan Zhong and the ruler of the Kingdom of Wèi, Juan Gun. Guan Zhong says: “Land is the basis of the management system in government. The government is the guiding authority of the rule of law. The market serves as a measure of commodity prices. Gold measures the resources of the State. The land parcels of the Sovereign princes (zhūhóu)—those (lands) that are part of a thousand-chariot state—are a measure to determine the resources of individual possessions. For all of these five (phenomena), it is possible to comprehend the beginning that manages them. This is what means to have a path (tao). Land (as stated) is the basis for the management system. This means that the inherent laws of the land themselves create management (which reckons) with these laws. If the lands are not put in a stable equilibrium via surveying and softening of soil (i.e., agricultural activities), then management itself cannot be organized. If management is not organized, then the labor of management will not have a managerial beginning. . . In relation to Heaven and Earth (nature in general) it is possible to neither diminish nor increase, but what can be regulated by management is land as such, and its reconciliation with the nature of things cannot be avoided. Therefore, if the land is in such a manner, its fruits are in conformity with (nature). . . If the correctness is violated (that is, if the correct becomes incorrect), there is no order in bureaucratic management, and if there is no order in bureaucratic management, business activity is disrupted, and if business activity is not organized, goods are few. So how can you tell if goods are abundant? Response: on the settled state of

2.3 Development of Management Issues in Ancient China

107

the business activity. How is it possible to know that business activity is in a settled state? Response: by the abundance of goods” (all emphases by us—M.V.). The list of measures for implementing central management of the country’s economy is very broadly presented in the treatise. Here is the creation of large grain stock, skillful management of resources (mountains, forests, fisheries), the rationing of lending interest, the regulation of trade with neighboring kingdoms, and the establishment of strictly centralized accounting. And the main purpose of the means used in the special chapter is composed as follows: “Chapter 48. On State Management. The executive beginning in managing the State is the need to enrich the people first. If the people are rich, they are easy to manage. If the people are poor, they are difficult to govern. How do we know that it is so? When the people are rich, the villages are calm, and this reinforces appreciating home, and if the villages enjoy tranquility and families value the home hearth, it means that they respect authority and fear punishments, and they are easy to rule. . . Therefore, most often a well-managed state is rich and the state where disorder reigns is usually poor. Hence, the highest commandment for the Wise king is: first, make the people rich and then govern them. . . Both the wealth of the country and the abundance of grain derive from agriculture. Therefore, the previous Kings treated agriculture with respect. When the state has to resort to special measures, it is necessary to make a ban for producers on secondary labor and the development of luxury goods. If secondary types of labor and the manufacture of luxury goods is prohibited, there will be pests of society (gadabouts) among the people, and if there are no gadabouts among the people, they will turn to farming. . . Bread is the primary affair (main concern) of a true sovereign, the great responsibility of the ruler of people, the path to the enrichment of the people, the way of managing the country.” [38, pp. 256–257]

In conclusion of the story of the development of management thought in Ancient China, let us dwell upon the excerpts from the work of two eminent management theorists, Xun Kuang and his disciple Han Fei-Tzu. Xun Kuang (313–238 B.C.) was the last of the known Zhou Confucianists. His teachings were an attempt to synthesize all Ancient Chinese doctrines under the aegis of Confucianism, a kind of bridge of reconciliation between the uncompromising Confucius and Mencius and the opposing Legalists. It was this synthesis that served as the basis for transforming Confucianism into the official state ideology of Imperial China, which is certainly the merit of Xun Kuang. In the history of Chinese public opinion, Xun Kuang is remembered as the author of the thesis that man is evil in nature, and that humans are characteristic of animal instincts, including anger, envy, ruthlessness, the desire for money, and promiscuity. In that regard, he called for focused efforts in the area of human upbringing and education as the only means of mitigating and eliminating the manifestation of those traits. Although Xun Kuang honored Confucian virtues (humanity and justice, ritual and duty, the wisdom of the ancient), he was at the same time a realist, and raised many important questions in a different manner. He did not, for instance, deny “the good of the people” as one of the areas of efficient management of the country, but was much more concerned about and advocated the interests and needs of the ruler. These thoughts had been expressed in many parts of his teachings, directly and in images: “The ruler is like a boat and the common people are the water. Water

108

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

supports the boat but may also upset it.” In order for that not to happen, it is necessary to govern the people fairly, and to engage the assistance of the wise, the able, the honest, and diligent. For example, the recommendations on personnel management for the Vanir (representatives of high-ranking Zhou rulers) expressed by Xun Kuang: “The Principles of Vanir (are) not to value those who have no virtue, not to give bureaucratic positions to those who do not have the ability, not to reward those who are unwilling, not to punish those who have not committed crimes. In court (of the ruler) there should be no place for luck, and there should be no lucky (lazy) ones among the people. Honor (is due) towards the wise and the usage of the capable, giving to each an appropriate (to one’s talents) position and rank. . . Vanir’s people are the same who direct their actions through a ritual and sense of duty, who in their deeds act according to their origin, who are capable of clearly seeing even the most insignificant (in business) whose activities respond to changes (in person) and do not lead to poverty. Such people can be described as those who have penetrated the basics of management, and they are Vanir’s people.” [39, pp. 194–195]. The chief adviser to the ruler and the practical leader of the country, Xun Kuang, considered the first minister, Xiang, who had been vested by him with unfettered rights in management: appointing the chiefs of all bureaucratic services; monitoring the performance of their duties; liaising with the court, the ministers, and officials; assessing their activities; determining the amounts of remuneration and rewards; and making annual reports to the governor on the state of affairs in the country. Apart from the first minister and the “aides” of the enlightened ruler, Xun Kuang included the court and diplomats close to the ruler eligible with the basic requirement of possessing “talent” in public service, honesty, and selflessness, regardless of their social rank or more specific ranks in the order of ranks disposition. Among the methods of personnel management, primarily the orders of the ruler and the laws issued by him were named, which were mainly distributed to the people, and the relationships within the dominant classes should be governed by rituals and a sense of duty. Another group of methods is a detailed system of rewards and penalties applied to all subjects of the ruler, seeking different goals. “There is a need to attract more (capable) people, learners, train officials and public servants, and with the aid of the encouraging effect of rewards and honors, as well as severe penalties and fines, forewarn the heart of the people (from misdeeds) . . . when rewards play their role, and punishment intimidates (people), capable people will be able to stand out, and the incapable will be rejected, and then the “capable” and “incapable” will receive service according to their qualities.” [39] Let me elaborate on the management ideas of Xun Kuang’s disciple, Han Fei-Tzu. Han Fei-Tzu and his main treatise Han Fei-Tzu (approx. 288–233 B.C.) was of princely birth of the Han dominion. Along with Li Si, who later became the closest adviser to Qín Shǐ Huáng, who by 221 B.C. united under his authority, all the hostile kingdoms, he learned from Xun Kuang, and was profoundly influenced by the “Tao” teachings of Lao-Tzu.

2.3 Development of Management Issues in Ancient China

109

According to Sima Qian, a famous Chinese historian (second–first century B.C.), the author of the Records of the Grand Historian [26], Han Fei-Tzu loved to study ancient laws and sought their roots in the teachings of Taoists. Han Fei-Tzu was a stutterer; he had no gift of speech performance, but he wrote wonderfully. Han Fei-Tzu’s Treatise on public management is composed of 20 chapters, 55 paragraphs, and is about 340 pages long (A.I. Ivanov’s translation to Russian in 1912) [37]. Here is a brief summary of individual chapters of the treatise. • In Chapter 1, Han Fei-Tzu addresses the issues of the unification of China and the establishment of a central authority through the mutual efforts of the Han and Qin domains; the ability and difficulty of performing negotiations; the relationship between the ruler and the dignitaries; the principle of “non-doing” of the sovereign. • In Chapter 2, the scientist develops ideas on the power of the state, which is governed by laws; on penalties and awards, such as the methods of dignitaries’ leadership; on the ruler’s infinite authority as the basis of state management; on the principles of appointment of officials to senior posts in state management. • In Chapters 3 and 4, Han Fei-Tzu refers to the mistakes made by rulers in their actions, confirming his words with true events from the history of China; contrasts the interests of the sovereign and the dignitaries, and to the difficulties of convincing the sovereign. • In Chapters 5, the scientist describes the reasons for the possible demise of the state and the objects of protection of the sovereign; justifies the necessary ability for the ruler to understand the reports of his officials as an important aspect in state management; emphasizes on the strict obedience of law in management. • In Chapters 6 and 7, Han Fei-Tzu explains the teachings of Lao-Tzu. • In Chapter 8, he considers the means of achieving tranquility in the state and the ways in which the situation in the country is precarious; speaks of the need for human beings to be monitored by the ruler; on the management of subjects based on the law and the importance of the ruler’s correct behavior for the well-being of all. • Chapters 9–14 consist of collected advice to the ruler on state management related to his personal actions, related to subjects inclusive. • In Chapters 15–16, Han Fei-Tzu criticizes views on state management of his predecessors, mostly Confucius. • In Chapter 17, he discusses law and the “arts of management”; the opposition of laws and private interests of the people; concludes that there is a need for public management on the basis of laws. • In Chapter 17, Han Fei-Tzu defines the attitude of society toward various social dimensions; on the application of the law on rewards and penalties as a necessary measure of public management. Here, the thinker gives a description of the eight pillars on which state management is built. • In Chapter 19, Han Fei-Tzu expresses his views on the economy of Ancient China, demanding the development of agriculture—the economic foundation of the country—and the encouragement of farmers and soldiers.

110

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

• In Chapter 20, we again find a critical analysis of the views of Confucius, Mo-Tzu, and other thinkers on state management; here, Han Fei-Tzu gives advice to the sovereign on correct supervision of officials; on the combination of awards and penalties in management; and reiterates the importance of the law and the “art of management” in state management. Most researchers consider the treatise to be an authentic monument, although they note that individual materials relate to a later time. The main reason for any doubts about the veracity of certain chapters of the treatise was the testimony of Sima Qian himself. He noted in the records that Han Fei-Tzu “knew the causes of the demise of Kingdoms and therefore wrote “The lonely anguish”, “Five Vermin”, “Collection of advice to the sovereign on foreign and domestic policy”, “On the struggle of opinions”, “The Difficulties of Persuasion”. In general, these books contain more than a hundred thousand words.” These books, judging by their names, are separate chapters of the existing version of the monument. In this regard, it was speculated that they were works of Han Fei-Tzu himself, while the rest of the chapters belonged to other authors. There are hardly any serious grounds for such a conclusion. First, Sima Qian was only able to name some, in his view, most important and interesting chapters. Second, the volume indicated by Sima Qian corresponds to the length of the entire text, not to the chapters listed. Of course, it is impossible to deny completely the existence in the treatise of certain changes and additions made after Han Fei-Tzu. Moreover, such inserts are not essential for the assessment of Han Fei-Tzu’s views. His treatise is a single whole by style and content. The main provisions are set out in a coherent logical sequence, using numerous examples, vividly, emotionally, and with great conviction. Sima Qian gave an interesting indication of the force of effect of Han Fei-Tzu’s compositions. One day the ruler of the kingdom Qín Shǐ Huáng got acquainted with the book and, having read it, said he was willing to sacrifice his life for a meeting with the author, since he was impressed with the originality and depth of the opinion of the originator of the treatise. Shǐ Huáng decided to establish Han Fei near himself. Han Fei-Tzu arrived at Qin, where his arrival was gratified. However, he was soon imprisoned due to a false denunciation, where he died. In this connection, Sima Qian noted with sadness that he mourned Han Fei-Tzu, who rightly “wrote about how difficult it is to convince.” Han Fei was a versatile thinker. As he studied the issues of explaining nature, he was strongly influenced by Xun Kuang and materialistic compositions related to the doctrine of “Tao.” Han Fei considered “Tao” (“the path”) as the source and cause of the real world of things. “Tao” embodies the multitude and diversity of “Li”—the qualities and properties of phenomena and things that interact through the opposite of short and long, large and small, hard and soft, white and black, etc. Han Fei approached the definition of “Tao” as a natural pattern. Everything in the world is done according to “Tao” only due to a natural law—“Tao” can be comprehended and “things can be mastered.”

2.3 Development of Management Issues in Ancient China

111

The logical issue in the Treatises of Han Fei-Tzu is also of great interest. He left a notable imprint on the “names”—notions and judgments in the history of logic in Ancient China. A socio-political concept of the essence of public management based on the law of “Fa,” however, occupies the main part of Han Fei-Tzu’s teachings. Han Fei-Tzu on the essence, purposes, and methods of management Han Fei-Tzu treats public management as a system fully based on the laws and authority of the ruler. “The State achieves power,” he writes, “through the system of government, and the king is honored through power. Therefore, a reasonable sovereign possesses both a system of government and power; an unreasonable ruler also has both power and authority, jointly, though, they differ in what makes the difference. Therefore, a reasonable sovereign shall exercise authority, and the highest shall be respected; he combines a system of government, and order is established within the State; the law is what makes a king.” Han Fei-Tzu proves in his work that the idea of the state and the law emerged as the inevitable result of the development of human society. He says that in deep antiquity, there were not many people and there was enough food and clothing for all. The population grew, difficulties increased, and along with that disputes, disarray, looting, and robbery arose. There is a need for rulers and for management based on strict laws: “Order in the state is the consequence of the application of the law. A state condemned to death shall allow free passage of foreign troops onto its territory and may not surround them and forbid them (to do so)—this is the result of the use of human beings, not the law. . . Those who arrange the state will certainly possess the laws.” Han Fei-Tzu repeatedly focused on the fact that the power and welfare of the state are directly dependent on the use of laws in public management: “If the state is extensive and the ruler is honored, it was possible to make the ruler’s orders relevant to the universe, only because the law had been ranked high.” According to Han Fei-Tzu, law is a necessary tool for establishing order in the State, for strengthening its defense capacity. Thus, for instance, Han Fei-Tzu writes: “At present, for those who are in a position to remove the personal and unlawful and to seek common (good) and the rule of law, the people will be reassured and the State shall settle. For those who can remove personal actions and act according to law, the army will be strong, and the enemy shall be weakened, because if things are worked out and the rule of law, based on law, is established and ranked above the commanders, the sovereign could not be deceived by trickery and falsehood.” Han Fei-Tzu strongly criticized the followers of Confucius for their call for management through ethical principles and ancient examples. He said that ethical norms and perceptions, such as those of humanity, debt, justice, may be compared to a kids’ game of making food from sand. These rules are only applicable to the word game, but not to management. Han Fei-Tzu also drew attention to the fact that, over time, laws change, become obsolete, and therefore many antique dispositions can no longer be applied in later times: “As long as the law changes according to time, order reigns; when order is

112

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

consistent with the age, success is achieved. . . If the management system does not change over time, darkness arises. When it is possible to rule a mass, but prohibitive measures are not changed, (the state) will be reduced. In view of this, in the management of people by the wise, with regards to ability.” In the life of society, Han Fei-Tzu said, fate has no role. “Well-being is brought by work and thrift.” He also rejected faith in the spirits, saying that faith was difficult to reconcile with the law: “Who places hope on spirits, defies the law.” Han Fei-Tzu remained a proponent of centralization of power, demanding scrupulous enforcement of the law, strengthening of the military, and economic power of the country. He called for the management of the country’s economy in such a manner as to achieve full agricultural development—the economic foundation of the country. Farming requires a lot of hard work, but people will do it because they say, “This way we can get rich.” He complains at the situation when “many people talk about farming, very few put their hands to a plow.” Han Fei-Tzu notices that: “Its merchants and artisans spend their time making articles of no practical use and gathering stores of luxury goods, accumulating riches, waiting for the best time to sell, and exploiting the farmers.” First of all, Han Fei-Tzu called for the use of the country’s management methods, which helped encourage farmers and soldiers, as thereupon the rest of the social dimensions depend. And in fact, the scientist notes with regret, all the benefits are enjoyed by idle people. “Barns are full when farming is recognized as a major occupation. Now, however, those become rich who do unneeded business: weavers of jewelry items, embroiderers, cutters and artists. The glory of the kingdom and the expansion of its possessions are the merits of the warriors. However, those orphaned by fighting now beg on the roads, and the artists and participants of palace feasts, dressed in silk garments, ride around in carriages. Rewards and salaries are designed to make the people sell their strength and even their lives. Nowadays warriors who had numerously been victorious in the past and who have achieved a lot of success, are still working without reward, are needed. At the same time, diviners, soothsayers and sycophants receive gifts on a daily basis. . . Enriching the state are farmers, the enemy is warded off with the help of troops, but in fact it is scientists who are appreciated. . . Nowadays traders, officials and art workers, also not working, are being fed. In such a case, land is not processed and it becomes equivalent to stone.” Han Fei-Tzu believed that the goal of the State was to enable people to work peacefully. However, Han Fei-Tzu was not a protector and advocate of the deprived. The only explanation he found to poverty was laziness and squandering. He said that: “under normal conditions, where there is no disease, no crop failure, no other natural disaster, the provident and hardworking is rich and who is lazy and squandering shall be poor. If the state taxes the wealthy, it thus contributes to the lazy and wasteful, which must primarily be punished. . . There are no rebellious slaves in a strict family, but a loving mother may have children who die. From this I conclude that power can suppress cruelty, and abundant virtue is not sufficient in itself to stop riots.”

2.3 Development of Management Issues in Ancient China

113

Han Fei on the Relationship Between Law, Power, and the Art of Ruling Many ancient thinkers paid great attention to the role of law in the life of humans and the community. Strictly speaking, even Confucius, Mencius, and other advocates of management based on ethical principles pointed to the importance of law. Han Fei-Tzu names many of his predecessors, who studied and developed laws to improve management. Lǐ Kuí, the originator of the famous code of laws, Shen Buhai, supreme minister of the Han Kingdom, Shang Yang (Gongsun Yang), who had introduced new laws in 350 B.C., Guanzi, and many others attached the decisive place in management to law. The names of the latter three are most often mentioned by Han Fei-Tzu in his treatise. However, they were mainly concerned with the practical side of improving legislation. Han Fei-Tzu, however, considers legal issues not just in terms of their practical significance. It synthesizes, analyzes, and justifies the legal activities of the State, and sees it as a single, coherent system conducive to the efficient management of the country’s economy. What does it mean, according to Han Fei-Tzu, and how do the notion of law and the “Art of Ruling” relate to one another? “The ruler must focus, if not on the law, then on the art of ruling. The law is what is written in books kept in government institutions and what is declared to the people. The art of ruling is concealed deep within the (ruler’s) heart and is used to divide (into groups) with opposing opinions and to covertly rule the dignitaries. The law must therefore be clear and comprehensible to all, and the art of ruling should not be shown at all. . . Shēn Bùhài preached the art of ruling, and Gongsun Yang (Shang Yang) established the laws. The art of ruling is the ability to appoint officials to perform (defined) duties, demand performance according to name, to dominate life and death (of people), and to determine the capabilities of officials. All this is within the ruler’s hands. . . Laws are orders performed by officials. The people must realize that decisions on penalties imposed (by officials) under the laws are binding. Violators of laws are punished, those who strictly comply with them are rewarded. If the ruler does not possess the art of ruling, it leads to abuses of the highest; if officials do not obey the law, there is confusion among the lower. Both principles must be evident; they are the tools of the ruler.” The mentioned quote is evident of the laws being written instructions from the ruler, on the basis of which officials govern the people. The art of ruling is the ability of the ruler to exercise flexibility in the management of officials and the people, the so-called “ruler’s art of sitting on the throne facing the South.” The main condition for the introduction of law is the benefit of its implementation. “If the law is established but its shortcomings are found, these shortcomings are carefully weighed and if (even if these deficiencies are present) business is successfully implemented, the law shall be established. If harm is found in the conduct of business, the harm is carefully weighed. And if with the presence of that harm there is more use, after all, the business is done. There is no law in Tianxia deprived of drawbacks, no use without harm.” Han Fei-Tzu, in his judgment on the rule of law, predominantly follows Shang Yang, who is referred to in many parts of the treatise. The reform that was carried out

114

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

by Shang Yang consisted of establishing clear laws and practices, imposing penalties and rewards, encouraging farmers and warriors to enrich the country, and making the army strong. Shang Yang, as a politician who advocated the principle of statehood in government, skillfully used the trend of the era modern to him. However, Han Fei-Tzu was not entirely in agreement with Shang Yang. First, he believed that Shang Yang’s teachings of the law were not perfect enough. Second, Han Fei-Tzu did not agree with Shang Yang on speaking only of laws and concealing “The Art of Ruling,” that is, considered the interest of the State but not the interests of the ruler, was a supporter of the responsible cabinet of ministers, not an absolute monarchy. Han Fei-Tzu, as noted above, belonged to the ruling house from birth, which led to his position of defending the interests of the ruler; and that is why he showed particular interest in the “Art of Ruling.” Over half of the text of his book is devoted to detailed composition and defense of the “Art of Ruling” principle. Han Fei-Tzu notes that, in his practical deeds, the head of state needs a system of governance—“The Art of Ruling”: “The State is the ruler’s chariot, position is his horse; if he is in control of the country, without the use of the art of ruling, even though he will work tirelessly, he cannot evade disorder. If he rules with the use of the art of ruling, even though he will live idle, he shall become a wise ruler . . . the wisest, ruling on the basis of law, relies on the art of management, not on people.” “The Art of Ruling” is defined by Han Fei-Tzu as methods incomprehensible to others, hidden in the soul; with their clever maneuvering, they seem to be very difficult to grasp and recognize. “The wise ruler,—he writes,—is like heaven (impenetrable) in his reign, and in the use of humans—like spirits.” Han Fei-Tzu’s “Art of Ruling” is based on the following eight principles of leadership: 1. 2. 3. 4. 5. 6. 7.

Do not cede power to others. Force people to follow each other’s moods. Be secretive, do not expose yourself. Regard all people as bad. Do not reckon with moral values. Promote the policy of stupefying the people. Manifest rigidity and austerity in punishments, in rewarding—moderation and precaution. 8. If necessary, be unintelligible in means. The text contains a rather detailed argument and numerous illustrations of the stated principles. For example, this is an explanation of the principle of secrecy of the ruler: “If the ruler conceals what he loves and hates, he will be able to behold the true nature of subordinates. . . Look, but be invisible yourself; listen, but do not to be heard; know, but let no one be unaware of you.” This is the explanation of the principle of rewards and punishments: “In ruling the Tianxia, rely on people’s feelings. The latter are confined to love and disgust, which enable the application of rewards and punishments. If rewards and punishments are effective, then bans can be set, and good governance will be ensured. . . The people enjoy the benefit and the salary and are disgusted by executions and punishments. The ruler uses what the

2.3 Development of Management Issues in Ancient China

115

people want or do not want to govern the forces of the people. And it should never be lost.” How should rewards and punishments be combined in management? Han Fei-Tzu responds: “When there are more punishments (than awards), the people are calm; If the rewards are abundant, trickery is born. Therefore, the main thing in governance is to apply more penalties (than awards). A plethora of awards is the foundation of confusion.” Han Fei-Tzu’s set of principles is broad enough to be seen as far from the ethical provisions of humane Confucian management. Its main thesis is that “all means are good for achieving the goal.” However, both the law and the “Art of Ruling” cannot be without the support of power. “The tiger and panther conquer man and reign over all the beasts, thanks to their claws and teeth. If the tiger and panther lose claws and teeth, man will surely handle them. The power (of position) is the claws and teeth of the ruler. By losing them, the ruler becomes like a (toothless) tiger and panther.” Thus, according to Han Fei-Tzu, Power (position) is a fundamentally important attribute of management, not only does the tranquility of the state dependent on it, but also it is inextricably linked to the designs of unification of the country and domination over all China. If there is “imperious” power, even a person of average capabilities can control the Tianxia, and if it is absent even the great sage, even the most prominent person will not be able to govern a village. Its skillful use ensures tranquility, wealth, honor, and respect, and the opportunity to have one’s own way in everything. In the unskilled use of it, the ruler would be encumbered by need and care and would find it difficult to avoid robbery and murder. “All wise rulers use their position in the ruling of the country. . . The people unquestionably subordinate to power. . . even the capable, without occupying a position, cannot cope with the ineligible.” Only the strength of power, according to Han Fei-Tzu, makes the man submissive. The tool of authority is the officials. They need to be properly supported or, in the expression of Han Fei-Tzu, “fed” to remain loyal defenders of the power behind them. At the same time, officials should be deprived of any autonomy. And with regard to the interpretation of the “power” category, Han Fei-Tzu sharply confronted the Confucian principle of humane governance, according to which the primary purpose of power was to inculcate in the people a sense of duty, honor, and justice. Han Fei-Tzu, for example, said that while the main thing in public institutions was virtue, the army becomes weak and the land gets covered with grass. Managing the State should be aimed at ensuring that there is no freedom of thought, only blind obedience of the law and the authority behind it. “There are no scientific books in the Kingdom of the wise ruler; the law is taught; there is no talk of past (wise) rulers; officials are considered to be teachers.” The activities of the representatives of science and art are harmful, it is necessary to “stop their actions, destroy their gatherings, disperse their communities.” In the management of the country, Han Fei-Tzu said, only the most extreme and cruel measures are needed. Power is maintained only by force and coercion. No moral considerations should be taken into account because they could cause dangerous consequences. Most important, Han Fei-Tzu repeats, is the ability to govern the state through power, using the law and the “Art of Ruling.”

116

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

Han Fei-Tzu on Personnel Management Han Fei-Tzu, observing the rotten administrative power in his homeland, Han, the particular use of people in public service, criticized the current situation. He said: “In the Han kingdom, people who are maintained are not suitable for public service, but the people who are employed in the service are not, in turn, worthy of maintaining.” The meaning of this expression is the requirement to prevent the use of incapable aristocracy in the public service of Han (“which are maintained”); on the contrary, wise and capable people should be widely recruited, and the wiser should be able to manage. On this basis, Han Fei-Tzu presented the following proposals to the Han ruler (Wang): 1. Get rid of talentless people 2. Implement administrative reform 3. Strengthen penalties But his proposals were rejected by the Han Wang. Han Fei-Tzu speaks of the use of people in the service of State management based on the law: “Within a country to act, regardless of kinship, and beyond the country, to act without fear of enemies; support all those who obey the law and punish all those who violate the laws.” At the same time, no matter how low a dimension the person belongs to—whether he engages in the mountains, forestry, water industry, whether he is a prison warden or a cook, a shepherd, etc.—it is only necessary for him to have business qualities and abilities, and then we must put him in public management positions. In other words, Han Fei-Tzu was a supporter of the appointment of public officials, depending on his or her abilities and business qualities, without regard for their social background and position in society. “The path of a reasonable ruler,—Han Fei-Tzu writes, is to take people according to their abilities, to fulfill their duties, to be considered virtuous, in accordance with the service, and to reward for their deeds.” The treatise gives a great deal of space to the relationship between the ruler and officials. Han Fei-Tzu considered the relationship from two points of view. First, the employee is considered and valued not as an individual, but merely as a tool, as a dissenting executor of the ruler’s command. Second, the relationship between the buyer and seller. The first point of view is the old, traditional point of view of the slavery system. Han Fei-Tzu’s favorite expression: “The wise ruler nurses (like cattle) his officials.” He is most candid in comparing the management of officials with the “rearing” (domestication) of a raven. “The way the wise ruler manages officials is told in the story of rearing a raven. . . For the raven to be obedient, his wings must be trimmed, and he will be content with only the food that man gives him. So shall he not be tamed? A wise ruler is the same with officials; he makes it so that officials forced to receive maintenance from the ruler cannot resist bowing to him. . . So shall they not become obedient?” Completely new and radically different is his point of view in accordance with which he considers the relationship between the ruler and officials as a relationship between a buyer and seller. Han Fei-Tzu writes: “Officials sell their might and life to

2.3 Development of Management Issues in Ancient China

117

the ruler, and the ruler buys titles and salaries for all of this. There is no feeling between the ruler and the officials that bind the father and son; their relationship is based on settlement.” A view of the relationship between rulers and officials as a relationship between a buyer and seller, based on settlement, is in fact a new view, inherent of a different historical era. In Han Fei-Tzu’s time, such relations had already been shaped in society, and much is said of it in his essays. Han Fei-Tzu attaches a great role in the supervision of officials, as well as in the management of an entire nation, to the system of rewards and punishments. “Officials fear punishment,—he writes,—and they consider rewards useful. Therefore, if the ruler himself applies his punishments and rewards, officials fear his authority and subordinate themselves to his interests.” Han Fei-Tzu, speaking of rewards and penalties, as a method of personnel management, also refers to requirements for management personnel: “Officials set out their thoughts, and the ruler assigns business to them and demands fulfillment. Those whose fulfillment is in compliance with the assigned task, and whose deeds comply with their word, are rewarded. Those whose fulfillment does not comply with the assigned task, and whose deeds do not comply with their word, are punished: under the wise ruler officials cannot speak words incompliant with deeds.” Han Fei-Tzu considered it necessary to control the activities of officials, to check the correspondence between words and deeds, and the performance of assigned tasks. He wrote: “. . .those officials who say much but do little, are also punished; in this case, the penalty shall not be imposed for the fact that the deeds are insignificant, but that they do not correspond to their word (name).” The scientist also attached great importance to the ability of officials to draw up an extensive report, a progress report, without losing sight of important aspects in the report. Thus, for example, he writes: “Officials who speak little and do much are also punished; In this case, it is not for how much has been done, but for the fact that the harm caused by the inconsistency of the words is much greater than the deed; The wise ruler, therefore, manages officials so that they cannot have merit as a result of exceeding their duties, and cannot speak words that do not correspond to deeds. Exceeding duty implies execution and deeds inconsistent with words are punishable.” Han Fei considered it unacceptable to impose several duties on employees in public management and to interfere in each other’s affairs: “When they (officials) do not simultaneously have two duties relating to the Sovereign, within (the state), there is no latent grumbling, and the king directs so clearly that they do not interfere in each other’s affairs, and that is why there are no complaints. If employees are not forced to combine positions, their ability increases; if we arrange people in such a way that they do not have the same merit, there will be no dispute.” As can be seen from the summary of Han Fei-Tzu, he touched upon the most important issues in the development of the system of management, and his treatise on Law can be regarded as one of the first attempts at a systemic composition of management issues and the directions of their resolution. These issues continued to be challenged and resolved in the treatises of the Chinese thinkers of subsequent periods. Han Fei-Tzu had set such a high systemic level of issues that subsequent

118

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

generations of scientists tried to follow his example and to touch them in most of their essays. At the same time, in the well-established management categories, such as management staff, management principles, terms from the modern scientific conceptual apparatus—management system, management methods, management functions, and many others—increasingly began to appear in treatises. In confirmation of this, we shall cite a brief excerpt from the famous Chinese treatise on the “Discourses on Salt and Iron” (81 B.C.) between government representatives, led by the Legalist Sang Hongyang, and “scholars,” (Confucianists), who were former opponents of the government’s economic policy. “Our graceful minister has now embraced the management methods of Tian Qi and Guanzi. He established a single regulation over salt and iron, and made use of the incomes from mountains and rivers, so that the production of goods began to increase. “As a result, the government possesses a vast fund for consumption, and the people do not suffer from disasters or needs.” Both primary and secondary industries (i.e., agriculture, industry and trade) are “protected”, and both higher and lower (classes) are quite satisfied. All this has been achieved through accurate accounting and regulation, not only through the processing of fields, and the cultivation of silk trees and rural industry.” [40, T.2, c.252].

2.4

Views on Management of the State Economy in Ancient India

We know much more on the economic life, social relations, ideology, and culture of Ancient India of the second half of the first millennium than of the previous period, since the sources were increasingly dated, although archaeological information was still scarce. This period includes the first attempts to classify customary legal norms, which provide precious material for HMT. One such compendium is MānavaDharmaśāstra, commonly translated as “Laws of Manu” (also Manusmriti) [41]. At the same time, treatises on various issues emerge. The most famous of these is Arthashastra or the “Science of Politics” [42]. By the time of the formation of the Maurya Empire, there had been significant shifts in the development of productive forces in India. The use of iron to produce the tools of labor became an entirely normal phenomenon in India, and iron ultimately superseded other metals. Agriculture had reached a high level, with farming greatly dominating and cattle breeding being secondary. India’s business life had been ever growing. The areas adjacent to the river valleys had become blossoming landowning areas. Artificial irrigation increased the number of arable lands. The meaning of the weather and the amount of precipitation required for a particular culture were carefully considered by agronomists. The most profitable plant was rice. Barley, wheat, peas, sugarcane, and even medicinal plants were also cultivated. The development of gardening and fruit

2.4 Views on Management of the State Economy in Ancient India

119

cultivation was related to the development of agricultural machinery. Literary works refer to vegetables, pepper, flowers, and orchards. The economic treatises refer to the production of seeds and the preparation of fertilizers. Ancient rural communities, whose members are associated with joint responsibility, continue to exist. The construction of roads, dams, and canals and the performance of many duties were a grave responsibility of community members. Special “farm supervisors” were to monitor the crops. In favor of the state, levies and taxes were collected, mainly in a natural manner, in particular grain, which was then stored in large royal barns. The poor in the communities increasingly lost their land and became tenants, giving sometimes half of the crop to the owner of the land. The Kings awarded the lands to the rich from the higher castes. One of the sources (Sutta Nipata), for example, describes the rich Brahman Casi Bharadvadzhe, who owned a large estate. He owned large herds and 500 ploughs, with which his slaves cultivated his land. Land was sold, given, rented. Rents were normally levied in the form of a certain share of the harvest. Cotton, found in India in wild form, was cultivated and served to make textile. Arthashastra refers to cotton, cotton fabrics, and the rolls where they were manufactured. Along with cotton, sericulture is expanded. Silk, silk fabric, and sericulture are mentioned in Banica’s grammar and in the treatise Arthashastra. Sericulture and silk fabric production expands mainly in Eastern India. Along with local silk, Chinese silk is also mentioned. Craftsmanship increasingly separates from agriculture. Individual artisans join into special groups resembling the later guilds or facilities. These guilds (Sreni) were managed by boards and supervisors who regulated the prices and quality of the products. The Jātaka tales mention 18 different crafts guilds. These guilds had contributed to the development of craftsmanship in certain areas and to the transfer of craftsmanship skills. The weaving business, based on the use of wool, linen, cotton, and silk, and on metallurgy and carpentry, had particularly expanded. The Arthashastra refers to various metallic alloys and the processing of various ores. The manufacture of iron from which guns and weapons were made was of great importance. In connection with the development of manufacturing, specialization of individual types of craftsmanship, such as the manufacture of bows and arrows, had emerged. Craftsmen settled in cities and suburbs. Cities turned into major economic trade and crafts centers. The Arthashastra refers to the centers of weaving cotton production—Vanta, Vatsa, Mathura, Aparangi, Kadinga, and Casi. Special streets and districts of craftsmen emerge in cities, such as the street of ivory cutters in Baranasi. Class stratification deepens. The rich and aristocrats also lived in special quarters, in luxurious houses built of stone and brick, while the poor around sheltered in small wooden houses. Among the cities the largest are Baranasi (Banaras), Shravasta (Shravasti), Razzhagrha (Radzhgir), and Pataliputra (Patta). The trade routes, which were on rivers and caravan routes, connected individual cities and states. The development of internal and external trade led to the emergence of a dimension of merchants and

120

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

further deepening of social contradictions. Trade relations had begun to be established with neighboring countries, such as China and Bactria. The first copper coins (Kahapana) appear, which, however, do not have a specific mintage and signatures. They are later succeeded by gold coins. There is growing tension between the rich and the poor. The number of slaves increases. Slave trade is developing, and great wealth is concentrated in the hands of the Rich (setthi), especially money-lenders. Prisoners of war, insolvent debtors, and criminals had been enslaved. The poor often sold their children or themselves to escape starvation, but the class law, protecting the interests of slave owners, stated that for “Aryans there should not be slavery.” The complexity of social relations leads to changes in the caste system. Selected representatives of the higher castes were ruined and found themselves within the labor masses. Literature refers to Brahman who are forced to extract a piece of bread by farming or craftsmanship labor. A characteristic feature of India’s historical development and state structure is slavery, which evolved in the subsoil of a primitive community system that could not develop to ancient forms. The actual brake was the rural community as a form of economic and social organization of the free population. The urgent need for the collective efforts of organized masses to build dams and other irrigation facilities was one of the reasons for the preservation of the community. Another pillar of the community, apart from collective ownership, was the direct linking of cultivation with craftsmanship and the transformation of the community into a whole. State organizations have hardly interfered in the affairs of the community that had its own rural management. Public service obligations for the community as a whole also delayed the disintegration of the community. In turn, the strength of the community hindered the broad development of slave relations, although the community had slaves to carry out heavy dirty work. Some craftsmen were slaves, too. The disintegration of the community and the development of private property had been hindered by the characteristic state ownership of land. This form allowed the slave-owning nobility to be used by the State apparatus not only to exploit, but also to rob the free population via taxation. Geographic factors played a special role in India’s development, such as difficult climate conditions in which droughts, or, on the contrary, floods often occurred. Efforts at the national level were needed to combat those natural disasters. The lack of water, the scarcity of rivers and other natural reservoirs, the long periods of lack of rains had all put the creation of a system of artificial irrigation in the forefront. Such work was unsustainable for individual peasants and even large village communities. Naturally, the Government has had to take this matter into its own hands in order to ensure the normal functioning of the economic life of its state. This led to phenomena such as the lack of private ownership of land by feudal and peasants, which shows the historical characteristic of the economic development of Ancient India. All of this ultimately speaks of the multicultural structure of the Indian society. Thus, India had a feudal structure with the characteristics inherent to a number of states of the East. In particular, the king was the legal owner of the land, but practically it had been run by the community. The state system was characterized

2.4 Views on Management of the State Economy in Ancient India

121

by Oriental despots, the cult of the king, and very often there were palace intrigues. The king had a council, the parishad, formed of the representatives of the nobility of families of the slave-owning aristocracy. The parishad had only consultative functions. The royal officials managed cities, provinces, and villages. Compilations of laws—manuals and the Vedas—had been documented. In governing the king relied on a huge bureaucracy, the institution of warders, the army, which had to be financed by taxes and a date. There was a military and judicial department and a huge standing army to help keep the laws of the system in force. The most important guidelines for the management of the State at that time and in subsequent times were the “Laws of Manu” (or “Manu’s teachings in Dharma”) and Arthashastra (“The Science of gain or advantage”). The first treatise was created within 400 years (second century B.C. to second century A.D.) and existed for almost two millennia as a functioning set of dharmas (laws, religions, rules, regulations, customs, or decrees) for all Indians on a wide range of issues. Along with the most general narrations on the origins of peace and society and the sources of Dharmas—scripture and the study of the dharmas for the various wordings of the Ancient Chinese society—the treatise contains Dharma for Kings (Chap. 7). It sets out the bases of the policy, the management of the State in time of war and peacetime, the objectives of the tsarist authority, the qualities that the ruler had to possess, and the order of his day. Here are also some interesting ideas about human resources (HR). Generally speaking, in the works of the thinkers of Ancient India, the greatest importance is in the sections and chapters dealing with management, public service officials, and managers. These sections deal essentially with all complex staffing issues, more precisely the issues of assessing the need for management staff. Also, requirements for managerial staff are formulated. The principles of staff selection and placement, the goals, objectives, and the methods of their preparation for management, the various reward systems, the diversity of management styles, and the delegation of authority are also described. Here are some excerpts from the “Laws of Manu” treatise: “It is necessary to appoint seven or eight dignitaries, hereditary, connoisseurs of Shastras, brave, experienced in warfare, noblemen, tested. Even a business that is simple to perform, is difficult to handle alone; It is particularly (difficult to manage), especially without assistants, a very prosperous kingdom. With them conventional (business), peace, war, sthana, tax collection, defense (of the country) and provision of the acquired should be kept under constant consideration. Having heard the views of each of them, separately or jointly, it is appropriate to choose the most useful things in performing business for yourself. . . Other employees—honest, intelligent, who collect wealth properly and who are well tested, also have to be appointed. As many people as are needed for the proper performance of business, as capable, forethought and unforgiving, must be appointed. Among them the brave, capable, noble, honest in affairs to the mines and workhouses, and the timid—to inner quarters of the palace.

122

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

An elder should be appointed for (each) village, a steward for ten villages, a steward of twenties and a hundred, and also a steward of a thousand. In every city, one should be appointed, who gives thought to all things, who is high in position, formidable by the look, like a planet among stars.” [41]. The above sated quote considers “shastra” to be a compendium of prescriptions, instructions, and teachings in various fields of knowledge and activity; the term “sthana” is understood as the main four elements that make up states and are at the command of the king—the army, treasure, city, and territory; and workshops are seen as jewelry and weapons manufacturing enterprises, sugar refiners, distilleries, and grain silos. Structure and Brief Content of the Arthashastra The name of the monument Arthashastra is translated as “The Science of Politics,” although in etymological sense Arthashastra means “the Science of Gain,” or “guide to achieve usefulness,” which requires special attention to this treatise of HMT specialists. And the work attributed to Kautilya, is called the Arthashastra, not the Ninishastra—“Science of Politics” (literally). It is known that Kautilya of all the criteria for successful management gave preference to material gain or usefulness (“Artha”), considering it as the main goal of any management, so he gave his treatise the name of Arthashastra. Generally speaking, “Arthashastra” is a generic term that Indians usually cited as essays on various issues of public management—political, legal, administrative, and economic. The life of Kautilya, or Chanakya, as the mentor and Chief Minister of King Chandragupta (317–293 B.C.) is known in some sources, which spawned numerous legends. Already in the early Middle Ages a whole cycle of legendary status prevailed on him, not only in Hindu texts, but also in Buddhist. There is no direct mention of Chanakya in the works of ancient authors, who have preserved a lot of information about Chandragupta. It is noteworthy, however, that some of the episodes from his “biography” are reflected in their essays, but the main character is Chandragupta (apparently, two images in later works merged into one). Kauṭilya (Chanakya) was not only a major scientist, but also a person who played a certain role in the creation, development, and preservation of the empire. Chanakya is called the Indian Machiavelli, and this comparison is justified to some extent. However, he was, in all respects, a much larger figure, with supremacy over Machiavelli, above all, in practical deeds and in the breadth of scientific interests. He was not just the king’s adherent, a humble counsel to the almighty ruler. His image is given to us by the old Indian play of the Ancient Indian playwright Vishakhadatta “Rákshasa’s Ring” (Mudrārākṣasa). In all these narrations, Chanakya is a clever and cunning politician with the traits of a brilliant statesman. He is portrayed as a courageous intriguer, proud and vengeful, never forgiving of grudges, and mindful of his goals. According to Chanakya, he was born at the end of the fourth century in Taxila (Takshashila), the capital of the province of the Maurya power, in the family of a well-known Brahman. His appearance was preceded by a sign, a prophet of unusual fate—to become king or the closest adviser to the ruler. When the baby became a

2.4 Views on Management of the State Economy in Ancient India

123

young man, he easily embraced the secrets of all sciences and went to the capital of the Empire, Pātaliputra, to the court of the mighty, but hated by the people for greed, King Nanda. The scholar Brahman so clearly exceed the ruler in the knowledge of shastras and “sacred Laws,” that he incurred displeasure. The king whose ego had been hurt, even drove him out of the assembly. Kautilya vowed to avenge Nanda and overthrow him from the throne. He roamed around the country for a long time, bearing plans to fight the foe. He dreamed of assembling a strong army and therefore engaged in alchemy to learn the secret of obtaining gold and to become rich, to hire and equip squadrons of soldiers. It was then, by tradition, that he met the young Chandragupta from the influential kshatriya clan Maurya, where he was able to discern a worthy candidate for the throne. Chanakya and Chandragupta spent a few years together in Taxila. Here, under the direction of his mentor, the future ruler was taught in various sciences, including the military and the art of government. According to the legends, Kautilya’s first attempt to overthrow Nanda failed: he sent an army inside the country, left the flanks unprotected, and thus allowed the enemy to surround the army. However, the aspiring Brahman did not fall in spirit and began to prepare for a new crusade with a clever strategic plan: to gradually encircle the capital, consistently oppressing the enemy, to weaken its strength and to completely break the enemy in the final battle. Kauṭilya enlisted the help of another influential ruler, Parvati, who in the case of victory was promised half the kingdom. In the course of his vision, the future minister had shown himself as not only adept but also a treacherous politician: when Nanda’s joint army held a decisive defeat over the troops, Parvati was poisoned by Kautilya. Chandragupta became the sole ruler of the great Empire. Given the great “fame” of Kautilya in Indian tradition and popularity among the people, it should not be surprising that a great treatise of antiquity had been attributed to him. Arthashastra is a large piece of work consisting of 15 divisions or books. Each division, in turn, has sections and chapters. There are 150 chapters, 180 sections, or 6000 verses (the latter includes the total number of phrases in the treatise). The first division of the monument begins with the opening (first) chapter, which enumerates divisions and sections of the entire treatise, and sets out the rules of the king’s conduct. This division contains sections and chapters on the classification of science, communicating with scientists, appointing ministers and advisers, testing their honesty, appointing and directing undercover agents, sending ambassadors, observing the king’s sons, the King’s house, and preservation of the tsar. The second division, the most extensive in the monument, refers to the responsibilities of numerous supervisors in industry, agriculture, shipping, and military affairs, as well as supervisors for weight measures, duties, tribute, and others. It refers to the duties of the custodian of the treasury, the income collector, the warlord, the mayor, and others. It also contains provisions on the settlement of the country, the distribution of land, maintenance of accounts, drafting of decrees, testing of officials, and the actions of various state agents. The third and fifth divisions reflect issues of public policy and the court. They deal with marriage-related affairs, the inheritance section, the performance of treaties

124

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

and the recovery of debts, cases involving slavery, property rights, violence, various forms of abuse, the actions of covert agents and detailed means of public policy, the principles of secret punishment, the replenishment of the treasury, the conduct of courtiers, strengthening of the State, personal power, and others. The fourth and eighth divisions are declarative of removing obstacles to public order, monitoring craftsmen and merchants, monitoring natural disasters and combating them, protecting vices, monitoring various interrogations and torture, monitoring all departments, methods of punishment, penalties for various offenses, detention on suspicion and investigation of sudden deaths, various kinds of calamities (natural and internal), and disorders that undermine the foundation of the state and the power of the king and disturb the tranquility of his power. The sixth division focuses on the fundamentals of statehood—the improvement in the foundations of the State, peace and labor. The 7th, 9th, 10th, 12th, 13th, and 14th divisions are devoted to the issues of war and foreign policy. The 11th division outlines the course of action toward alliances and associations, namely actions that cause divisiveness in associations and the use of clandestine punitive measures. The 15th division is devoted to the methodology of the treatise and to various scientific methods. Arthashastra on the Scientific Nature of Managing the State In Kautilya’s view, the king and those dignitaries for whom the supervision of the management of the country was drafted were to serve equally the three main purposes or installations in the life of the human person—the rule of law (or religion), profit (or wealth), and love (or pleasure). The preference given to one or the other goal inevitably violates their unity, harmony. In the “Triumph over Feelings” section, Kautilya says: “Let him (the King) give in to love, without breaking law and advantage; let him not be deprived of pleasure or equally give into three goals, parts of which are related to one another. For one of the three is disproportionately honorable, harmful to itself and the two others.” However, Kauṭilya still favors one of the goals, namely, profit, considering it the principal, leading, although in some sense it stands in contradiction with itself, thus violating the unity of the three. But Kautilya explains his choice very simply: “Kautilya believes that the most important thing is profit, for piety and love are based on profit.” Again, it is in this preference that the author of the treatise has given it the name of Arthashastra. In particular, Kautilya reveals the concept of profit in the example of a household: “The study of farming, of cattle-breeding, of trade constitutes the study of the economy. It benefits from the delivery of grain, livestock, gold, forest products and compulsory labor. With it the king subordinates his followers and enemies through the treasury and army.” According to Kautilya, only philosophy, the doctrine of the Three Vedas (scriptures), the teaching of the economy, and the teaching of public management are sciences. And “the first three sciences are rooted in public management, which is the

2.4 Views on Management of the State Economy in Ancient India

125

means to possess what we do not possess, to save the acquired, to increase the preserved, and it distributes among worthy the accrued good.” This means that the science of public management expressed the king’s strong desire to increase the wealth acquired. However, this science provided for the distribution of the accrued good among “the worthy.” Science applied with its true understanding “gives people a sense of legitimacy, benefit, and delight,” and a king, raised in the spirit of these sciences, “cares for the upbringing of his subjects, owns the land indivisibly, rejoicing in the fortune of all creatures.” As we see, already in those distant times in Ancient India, the issue of science in public management and the usefulness of science in practical life had been seriously discussed and resolved. “All temporal affairs are related to the Science of public management, so whoever wants (success) in temporal affairs, let he always have the staff (punishment) raised. . .” The use of the staff based on true conduct brings living beings to well-being. True conduct is obtained through improvement over oneself and nature.” Next, Kautilya expresses his thoughts on the benefits of science. “Science teaches one whose mind is directed at the essence of things through the desire to listen, perceive, and learn. It is necessary for the ruler to have constant communication with scientists to increase real upbringing, for in this communication is the root of true upbringing. . . proper distribution in the communication and assimilation of the material is required. . . what is not sufficiently understood is to be re-attended. It is from hearing that understanding comes, from understanding comes application into practice, from application to practice comes full self-consciousness. This is the power of science. The king, brought up by sciences and caring for the upbringing of subordinates, contributes to the wellbeing of his country.” Comments on the beginning of the development of critical decisions are interesting: “Any commencement of business is preceded by a meeting. The meeting deals with what is not yet known. It is necessary to consult with elders who are successful in knowledge.” Analysis of the text shows that in Ancient India, the principle of planning and the process of scheduling, as a function of public management, were known, since Arthashastra introduces the reader to a management system in which many issues of economic, financial, and business life are resolved on the basis of this principle and through the use of planning instruments. A great deal had been planned—the distribution of branches of production by region and province, the relocation of new areas, the number and composition of top and lower-ranking officials in the state apparatus, the generation of general revenues and expenses, and the cost of maintaining the state apparatus. And, finally, a planning tool for human resources management had been developed, more precisely the world’s first table of ranks model, the main provisions of which are shown in the next section. Here, the requirements for some government employees confirming a planned approach in the management of the public sector are given: “A trade warden must know exactly when the goods should be disposed of, stockpiled, bought and sold.” Or: “A farming warden wise in agriculture and in the care of bushes and trees, should, in due course, perform collection of seeds of all kinds of grains, flower and

126

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

fruit plants, vegetables, tubers, root crops, linen, cotton. . . On appropriate land, tilled several times, he shall produce crops. Crops should be harvested in a timely manner.” The planned tasks were accompanied by strict control over their implementation: For instance, “during the rainy season, autumn and winter, a cow should be milked twice a day, and during the melting of snows, in spring and summer, milking should be performed only once. He who at that time milks twice is punished by striking off a thumb. He who skips the milking time is punished by being deprived of a day’s pay for work as a fine.” Arthashastra on Personnel Management Arthashastra provides detailed characteristics of the work of staff of all levels of management—the King, ministers and counselors, ambassadors, governors, the chief military commander, the senior aumildar of rural areas. Then go the demands to an entire army of warders, who were divided according to the functions of management by industry and type of production. Arthashastra demonstrates almost all the elements of personnel work. Often the text is presented in the form of a discussion with representatives of different scientific schools in order to obtain a final, informed decision, the author of which is always Kautilya. For instance, this is how Kautilya refers to the selection and placement of staff, in particular the appointment of ministers and advisers: May the King make his disciples ministers, as he has learned of their honesty and suitability, so says Bharadvāja. May he make ministers of those who, in the perils that threaten his life, help him, because their loyalty is so discovered, says Parashara. No—says Pishuna—it is loyalty, but not manifestation of mind. He must appoint as ministers those to whom he assigns the affairs of the accounting part and incomes, and those who fulfilled them as assigned or with excess, as that is where their commitment had been determined. Bahudantipura advises to appoint people who are experienced in politics, who know history and practice, saying that the King appoints as ministers people of noble origin who are wise, honest, courageous, loyal, since these virtues are foremost. This is all right—says Kauṭilya—since a person’s feasibility is created from suitability for business in general and from his special suitability. Once the ministerial powers, the place, the time and business had been distributed, all persons with these properties must be made ministers but not advisers.

A similar discussion is given on the adoption of Kautilya’s clever decision on the size of the King’s Council: May the king make twelve ministers, says the Manav school. Sixteen, says the Brihaspati school. Twelve, says the Ushanas school. As required, says Kauṭilya. [42].

The treatise contains a set of requirements for the personal and business qualities of the top executives—ministers, chief counselors, ambassadors, the house priest. For instance, “a local citizen, developed, easily led, skilled in crafts, insightful, intelligent, with good memory, artful, eloquent, self-confident, skillful in response, gifted with entrepreneurial spirit and courage, enduring, honest, loyal, friendly,

2.4 Views on Management of the State Economy in Ancient India

127

strong, healthy, resilient, but not stubborn or frivolous, with pleasant appeal, not quarreling—is a perfect minister. Those deprived of a quarter or half these virtues are the middle and bad ministers.” Kautilya says the following on the requirements for ambassadors: “Who has the entirety of qualities of a minister, is the ambassador responsible for the conduct of business. Who is deprived of a quarter of those qualities has limited powers, who is deprived of them by half, is merely the transmitter of the royal message.” Special emphasis is placed on the most responsible staff member of the King— the home priest: “As priest, may the King appoint a man of high morality, of educated origin, who has fundamentally studied the Vedas and six auxiliary sciences, God’s omens, token, the science of public management, who is capable of withstanding the calamities of the gods and the people, through spells and appropriate means. May his disciple follow him as his tutor, as a son obeys his father, as a servant obeys his master.” The treatise presents interesting procedures for the evaluation of candidates for ministerial positions, with the help of trusted individuals and undercover agents (“recruiters”): “Their homeland and their ability to govern may the King find through entrusted people, their art in the craft and the intensity of their scientific knowledge—from people of the same specialty, may he find eloquence, selfconfidence, art in answers, in conversation, in communication—honesty, kindness, resilience, from cohabitors may he find virtue, strength, health, resilience, lack of stubbornness and levity, personally—friendliness and inability to cause quarrels, let him find the mind, memory, dexterity, when they get to work; In distress, may he find the entrepreneurial spirit, courage, endurance.” The treatise also sets out the methods of selection and placement of Ministers: “Together with the Chief Counselor and the House priest, the king, having appointed ministers to the posts, may experience their tricks. May he, after testing the ministers, place those pure in law craft in judicial and criminal affairs, those pure in fortune craft in the affairs of collection of revenue, in the collection of tribute and accounting positions, those pure in love craft, may he place in the protection of the amusement within and beyond the palace; those pure in craft of fear, may he place in immediate vicinity of the king. Those pure in all craft, may he make advisers; those unpure in all, may he send to the mines, to combat forests, to the forest preserves of the elephants and to the workshops. Ministers purified relating to three sections (law, profit, love) and fear, may he place at the head of affairs related to their specialty, in accordance with the results of the verification of their integrity.” Kautilya does not advise the king to engage in all procedures for the selection of higher dignitaries, but to possess two types of specially selected agents for this purpose: resident and non-resident secret agents with special instructions and authority to gather all necessary information and autonomy in the selection of procedures for verifying the integrity of candidates and subordinates of the sovereign. All of these measures served to ensure that the candidate is in the best fit for the given place in the state apparatus. For this, as has been shown, the past activities of

128

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

the candidate for the position had been studied thoroughly, the requirements for the worker formulated, and the possession and degree of development of the necessary qualities by the candidate were identified through special methods. Besides, the level of education, knowledge, and source of knowledge (acquired independently or in communication with scientists) were also taken into account. Kautilya’s Order of Ranks As we have already noted, one of Kautilya’s most important achievements in the development of world management thought is the civil service order of ranks presented in Arthashastra. Prior to the description of this treatise, we have referred to the topic of human resources reflected in textbook materials on the history of the Ancient East. In particular, documents were encountered that included a list of senior management posts, employee requirements, and specific staff selection and placement procedures. But all these have been quoted without a single core idea and most often only to underline the importance of the status of the first person in the country. A systematic and detailed description of virtually all personnel control elements collected in a single treatise, such as Arthashastra, did not exist before in world literature on public opinion. We have already introduced the reader with some of them. Let us go on to describe the performance and duties of the state apparatus, starting with the first person in the country—the king. According to Kautilya, the king must be an active man, for “when a king is deedful, all servants shall follow in being deedful. If the king is an amateur, his servants will also follow in being amateur. Therefore, may the King manifest his deeds.” As strange as it may sound, the “Tsar’s position” in those ancient times required exceptional qualities of people. All of the ruler’s time to the last minute, day and night, was distributed between performing various administrative duties, admitting official and secret reports, meetings with ministers, the treasurers and military commanders. Breaks for rest, sleep, meals, amusement, and entertainment in the harem were also severely constrained by a strict schedule. Far from “being engulfed in typical eastern luxury,” the young monarch of Arthashastra was the largest worker in his kingdom. Not every king could withstand such a workload, especially when at every step one had to take the most thorough precautions and personal protection, fearing poison or the dagger of a murderer. “The king, always tense in work, may he order to do what has to be done. The root of what is needed is tension in work, the opposite is the root of harm. In the absence of tension in work, the destruction of both what has been achieved and what remains to be done, is doubtless. By tension in work its fruit and the completeness of material goods is achieved.” One of the duties of the king is to continuously monitor and verify the results of the work of his immediate dignitaries: “All warders capable of and possessing the qualities of ministers shall be required to work. And he, the king, must constantly test them in work. Official people, like horses, change in their work. So he should know about them: those who act, and the tool of action, the place and time of action, the action, the costs, and the benefit. If they act according to the instruction, do not collude or quarrel—that means they can do business; and may they even not venture

2.4 Views on Management of the State Economy in Ancient India

129

without the master’s knowledge, apart from measures of revulsion of misery. And he must establish a penalty for negligence of a double-day salary and expenses. The same person who performs business as indicated, or with excess, shall be given a position or a reward.” One of the responsible positions in the country’s leadership was the head of so-called associations (departments of the Royal Management). “The heads of associations of 100 or 1000 persons shall produce (among such associations) the distribution of food and payment for work as well as appointment and transfer. When it comes to positions supervising the King’s property and the protection of towns and localities, there is no motion. The dominant people must be permanent. There must be several of them.” As already noted, there was a strong institution of warders in the country—by territory (governors, aumildars) and by branches of the State economy: wardens for farming, cattle, hetaera; wardens of shipping, chariots, and collection of duties; for industry and craftsmanship (of workshops, mines, textile business, and others). Let us highlight some of them. First of all, “the King’s wardens have to do business with the help of enumerators, scribes, coin connoisseurs, net income holders and second wardens. Second wardens are riders of elephants, horses and chariots. Those of them who are students and have proven to be skillful and honest should watch (as spies) over enumerators, etc. And he, the king, must establish non-permanent (replaceable) positions of multiple authority (heterogeneous). Those who do not disunite the property but who wisely multiply it, striving for pleasing the king, may they remain permanently in their position.” The treatise provides official instructions, guidance, and advice to various warders. For instance, a beverage business warden should organize trade, but “it may be produced in different places or be centralized according to purchase and sale benefits.” “The textile warden shall ensure that the armor, clothing and ropes manufactured from threads were made by specialists of this business.” All work should be divided into sections, main and secondary; production participants should be properly distributed, given particular work, and their performance should be coordinated. The warder should reckon with the material and tool available, correctly adapt the working place, and select assistants. “The textile business warden shall take steps to ensure that the strands of wool, bast, cotton and linen threads were weaved by widows, cripples, hetaera keepers, nuns, girls, temple keepers, and those who terminated service at temples. He can do the weaving work with the help of special masters, taking into account the size of the work, time, payment for work and benefits. He shall have close contact with workers to keep an eye on them.” “A textile business warden shall determine the payment for work after checking whether the thread is thin, coarse or medium, and also more or less quantity.” “After learning the number of weaved threads, he may reward (the spinstress) with oil and myrobalan ointments. In the days of the lunar phases, the spinstress should be encouraged via gifts and honoring. When the amount of yarn is reduced,

130

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

the payment is reduced to match the quality of the material. The warder, in directing work on the manufacture of canvas, silk, wool and cotton fabrics, should encourage (employees) with gifts in the form of wreaths and fragrance or other kinds of attention. He shall also take care of the manufacture of armor of the textile, the work which is to be done by the workers and master specialists.” Kauṭilya believed that there should be a clear system of remuneration at each enterprise in the form of various types of rewards and punishments. “The warden had to take care that, at dawn in the premises of the spinning house, a payment for work in exchange for the manufactured product was paid.” Penalties in the form of fines are described here, with the penalties being levied on the warden: “If he looks a spinstress in the face or talks about an extraneous matter, he shall be fined a lower-level fine (up to the 96th pan). If he issues a payment for work later than the appropriate time, the average type of the indicated fine is levied. The same shall be the case if he pays for unperformed work.” But more severe (even harsh) punishments existed. “If (a woman), having received payment for labor, does not perform the work, she is to have the top of her thumb and forefinger sliced off. The same penalty shall be imposed when (material) is misused, stolen or spoiled.” This confirms the example of savings, calculation of material, and examples of moral, power, and material motivation (penalties and rewards). Other industries provide examples of the organization of the workplace. For example, “the duty warden must build customs at the main gate (of the city), with a frontspace to the east or north, and mark them with an appropriate sign.” “A warden of mines, who, knowing himself the science of metal and ore, melting of metals, color of gems, or with the help of people who are knowledgeable, being provided by corresponding workers and equipped with tools, must investigate the mines, which were in development, have signs of slag, сrucibles, coal and ash, and ores in land, mountains and liquids, which had not been in development, (their) special color and gravity, acute smell and taste.” “The Treasurer must make room for the Treasury, trade premises, warehouses, premises for raw materials, arsenals and prisons.” The elements of the management system are finalized in Arthashastra with a full list of posts and the “determination of salaries of public servants in accordance with their official duties.” According to the basic principle of ranking of public servants, their activities should be defined “in accordance with the requirements of assigned cities and villages, and their payment should be equal to 1/4 of incomes. Or should employees be recruited for remuneration in which they would be able to perform their duties. (The Sovereign) shall take care of the material good and, at the same time, shall not permit violation of the law in his care of the state organism.” The total number of posts in the order of ranks was 17, each of which in turn contained several posts of equal value to the state, judging by the equal remuneration of their activities. In conclusion of this chapter, we will bring Kautilya’s ranks in a summary table, retaining the original order of positions in each rank (see Table 2.2).

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

131

Table 2.2 Public service order of ranks (according to Arthashastra [42]) Ranks 1. 2. 3.

4.

5.

6.

7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

List of posts A tutor priest of the king; house priest; military chief; co-regent heir; mother of the king; main spouse Main gatekeepers; chamber warden; caretaker of troops; aumildar; chief treasurer Tzarevitches; their nurses; chief captains; warders for business life in cities; chiefs of workshops; members of the counselors; heads of security of individual places and borders Head of associations; head of individual troop units: horsemen, elephants, chariots; representatives of executive power Chiefs of foot troops, cavalry and troops, on elephants and chariots; custodians of valuable forests and those where elephants are kept Chariot riding coaches; elephant-riding coaches; military doctors; horse handlers; builders; animal breeding attendants Prophets; omen interpreters; astrologers; Puran readers; coachmen; singers; house priest attendants; all warders Skillfully trained troops; the state of accountants; the state of scribes; masters, manufacturers of musical instruments Musicians Craftsmen, skillful masters Attendants to the two- and four-legged; their assistants; animal caregivers; those guarding them; animal handlers Those in the service of Aryans; riders; youngsters; diggers; teachers; scientists Medium quality messenger: at a distance greater than 10 yojana to 100 The King’s coachmen Agents (Spies) under the guise of traveling disciples, ascetics, householders, merchants, monks Rural workers (minions); instigator spies; poisoner—nuns Spy agents

Salary (in panas) 48,000 24,000 12,000

8000

4000

2000

1000 500 250 120 60 500–1000 (depending on dignity) 10 20 1000 1000 500 250 (or in accordance with the work expended)

Source: Compiled by the author of the textbook

2.5

The Development of Management Issues in Ancient Greece and Ancient Rome

A fairly significant improvement in management thought had been achieved in the Hellenistic and Roman periods. It is acknowledged that it was in these ancient civilizations that the foundations of economic, legal, political, and managerial views of scientists of the medieval East were laid, and that the key points of public

132

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

thought they formulated were constantly commented upon, developed by successive generations, and became kind of classics of public thought. The emergence of early slave states on the Greek islands of the Aegean archipelago (Lemnos, Melos, Syros) dates back to the twentieth–seventeenth centuries B.C. A little later process of formation of similar states of Achaeans began on the mainland of Greece (in the settlements of Mycenae, Tyrinthos, Athens, Pilos, etc.), where, in the sixteenth–thirteenth centuries B.C., significant progress was achieved in agriculture and handicrafts. The Achaeans learned to make tools and utensils from bronze, began to breed cattle and horses, passed from hoe farming to plough. The Achaeans conducted extensive overseas trade, at the same time using their ships for piracy and robberies. In connection with the development, productive forces began to strengthen private property, property inequality emerged, and the top of society turned to a rich militant aristocracy. Achaean kings became major slave owners. However, endless internecine wars soon led the economy and culture of the Achaeans to decline. The so-called “Mycenaean era of Ancient Greece” ended around 1100 B.C., when other major Greek tribes of the Dorians invaded mainland Greece from the north. The Mycenae were destroyed and ceased to exist as a major cultural and political center. Another part of the Dorian seized the lands of Messenia and Laconia, where after a long and brutal struggle only in the ninth century B.C. in the valley of the River Evrotas on the basis of the enslavement of the indigenous population the Spartan primitive State emerged. The appearance in Central Greece of the highland Dorians and their relocation led to the disappearance of the power of Mycenaean dynasts, but at the same time due to tribal relations inherent in public organization the Dorian communities still remained. Independent communities began to gradually spread in Greece uniting around settlements founded in the Mycenaean era. Their elders acquired the status of kings (Basileus), and from among communities nobility and Demos began to stand out. The nobility included the “best” citizens, who constituted the elite of the civil communities of Greece. The dominant position of this social layer was not determined by the vestiges of tribal relations, but was due to a number of economic and political advantages, more extensive than that of other community members, such as land holdings (clerks) in their possession or the support of the military of the Greek clubs. Large associations of small landowners and artisans were demos, which were quite independent. Free communities united not around major landowners (from among the nobility), but in relatively small companionate filaments and fratria, which played an important role in the defense of the small civilian communities. There was another component of the social structure of the Greek archaic society of that period—the dependent population, which included slaves and dependent farmers attached to the clerks. The situation of this layer of society was different in different policies of eighth–sixth centuries B.C. The development of productive forces in the Greek states in the eighth–sixth centuries B.C., which led to the separation of craftsmanship from agriculture, contributed to the expansion and growth of cities and the development of forms of socio-political organization of Ancient Greek society. The power of the Basil kings, who, in fact, had always been “first among equals,” is gradually eliminated almost

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

133

everywhere, and the leadership of public and political life in the cities of Greece passes to the nobility. Population growth in Greece of the eighth century B.C. sharply marked the problem of land ownership. It was at this time that the original systems of allotments (clerks) began to develop. The cities became focus points for land-deprived peasants. The need for slaves increased. Colonization had become a means of easing class controversy. At this time in Ancient Greece, polises are being developed. If the first Ancient Greek polises (twelfth century B.C.) arose from the fortresses of the dynasties, geographically located in the most convenient places in strategic and economic terms, the current polises began to emerge as a special form of socio-economic and political organization of society. The antique polis in eighth–sixth centuries B.C. emerged in the course of the struggle of small, free producers with generic nobility. As a result of this struggle, debt bondage had been abolished for members of this community, which now became the lot of foreigners. The polis was an association of private owners directed against slaves and other categories of dependent population—residents who did not possess full rights, and foreigners—(Metics in Athens, Perioeci in Sparta, Freedmen in Rome, etc.). Belonging to the city granted the right for land and slaves. Family lines (genos), although preserved in the archaic Attica, were independent religious associations; the primary cells of the ancestral community were Philas and Fratria. These “small societies” had no relation to the ancestral organization, formed on the basis of the territorial principle and were the most important factor of socialization, structural-forming elements of the archaic policy. In general, the existence of many small city-states was predetermined by the way of life and public organization within the polis itself. With the abolition of tsarist power, a system of magistrates began to develop in polises. Public offices were at the disposal of the nobility. The authority of officials was rather limited (primarily in representative and religious functions). An important element in the management of polises was the People’s Assembly, which was designed to ensure the political rights of all free citizens. In order to stabilize the development of forms of the political system and to guarantee control over it by the nobility, codes of laws are being created that are equally binding on all segments of the population. These laws were the basis of the police model of governance mentioned in Chap. 1 of the textbook. Ancient Greece consisted of numerous polis-cities united by trade and economic relations, and broad cultural bonds. However, despite the universality of laws, as well as universal political, cultural, and religious bonds, a single—“ideal” in the type and form of governance—stable Greek policy had not become a historical reality. The life of polises was formed depending on the interaction of many external and internal factors, primarily political. At the same time, with all the diversity of similarities and differences of Ancient Greek poliscities, polar “classical” models of social order, state system, political and legal culture, and governance form were Sparta and Athens. At that time, all foreign policy in Greece was determined by the rivalry of Sparta and Athens, seeking to go beyond the original political organization. Military democracy had been established

134

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

in Sparta, and civil democracy in Athens. The differences between them were so significant that the rivalry resulted in the internecine Peloponnesian War (431— 404 B.C.), which first ended in a complete defeat of Athens, after which the period of hegemony of Sparta in Greece began. However, the subsequent involvement of Sparta in endless wars (successful and unsuccessful), together with social stagnation (including a sharp drop in the birth rate in Sparta), rendered the Spartan army lifeless and led to the fall of Sparta, making it an easy prey for the alliance of democratically organized Greek polises. Thus, having begun as internecine, the Peloponnesian War ended with the self-destruction of the Hellenic people. The dispute over hegemony between Sparta and Athens ended in irreparable losses for all its participants and eventually led to the domination of the Macedonian monarchy of Philip and his son Alexander. The antique polis, in turn, was the main prerequisite for the development of antique culture. It is the essence of the Ancient polis that explains many of the characteristics of the ancient culture, which had long predetermined the distinctness of the development of public thought. In contrast to Ancient Eastern, antique culture is more rational and democratic. This culture was created by free citizens of the polis. The Greeks mastered and developed the phonetic writing invented by Phoenicians, which greatly facilitated the widespread dissemination of literacy among citizens. Free public discussion of ideas and projects predetermined the secular, rational, evidentiary character of political, legal, social, and economic literature. In this society, the comprehensive development of the personality of citizens becomes one of the most important objectives of public production, and the individual is the main form of wealth. The sources of ancient social thought are the laws of the city-state—the laws of Lycurgus Draco (or Drakon), Solon, Cleisthenes, Pericles, as well as public speeches and treatises of philosophers, historians, and famous citizens. Only later do special, primarily political and legal works appear, in which managerial issues—Xenophon’s Oeconomicus and Ways and Means, The State and Laws by Plato, Politics, Constitution of the Athenians, and Nicomachean Ethics by Aristotle, and others, are prominent. The foundations of the state system and management of Sparta were laid in the seventh century B.C. by Lycurgus, who developed the relevant Laws of Governance. Originally, the structure of Sparta was the same as in other polises of archaic Greece, but due to the need to keep the superior mass of Ilots in obedience, the city was turned into a military camp, which was in constant combat readiness, with a special way of life and management of the economy. Only military service, preparation for military action, and participation in public administration were considered worthy occupations for the Spartan. Under the laws of Lycurgus, in order to maintain the general combat capability of the people, a special state of “equality” of economically wealthy citizens who were obliged to serve in the Spartan army was established, a uniform order of military organization with obligatory belonging of each Spartan to some fiditia—military unit of 15 people, united in a kind of partnership and living in the same camp tent, was established. The equality of the so-called Spartans—Homeys (“equals”)—was supported by joint luncheons, for the

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

135

expenses of which each Spartan had to make a monthly contribution in metayage and money. Lycurgus is also attributed to the promulgation of laws against luxury. In Sparta, it was forbidden to accumulate silver and gold. The currency was made of iron and was so heavy that it had to be carried on a wagon. The roofs of the houses of the Spartans were to be made only with an axe, and doors—with a saw, that is, without the use of any finishing tool. Sparta’s links with other polises were severely limited. So, strangers were forbidden to stay in the city, and Spartans—to travel beyond the polis. Under the pretense of fighting penetration of luxury trade links were terminated, which hindered the economic development of Sparta. Lycurgus’ laws allowed the Spartan authorities to intervene not only in public life, but also in private and family life without any restrictions. The authorities “cared for” marriage and the upbringing of young people and demanded that in this regard citizens submit their will to the interests of the entire class unconditionally. Marriage, which was allowed to men who had reached the age of 30, was intended to deliver strong, healthy children to the state, who could become a reliable support for Sparta. In line with this, special penalties had been devised for both negligence and late or unequal marriages. At the birth of a boy, special elders examined the newborn and decided whether a good warrior would come of him, brutally disposing of weak children. At the age of seven, the State took children from their parents and transferred them to special children’s camps (agella) under the supervision of State tutors. All emphasis in education and upbringing in the camps was made on the physical development of children. Learning to read and write was kept to a minimum. It was believed that mental education could be obtained without special teaching, because it was acquired practically, in real life. To this end, the boys attended public lunches and meetings, where they listened to adult reasoning about public affairs and stories of glorious feats. At the same time, the elderly, monitoring the training and games of children, provoked fights and studied what makings of courage, manhood, and cunningness were present in each individual ward. Having reached the age of 20, Spartans began regular military service, which lasted until the age of 60. The same interests of the state were served by the setting of education of girls, aimed at harmonious development of their physical powers, so that they could become mothers of healthy offspring. At the head of Sparta were two hereditary kings, who enjoyed great respect and were called “lords” (archagets). Real power in Sparta was concentrated in the hands of the Ephors, representatives of the extreme oligarchy, Spartans elected for a year for the special supreme governing body of Sparta—the Ephorate. Initially they replaced the kings in civil court, but gradually their power expanded and surpassed that of tsarist. They performed internal administration of the country and foreign policy, controlled the activities of all officials, had the right to suspend them and bring gerusia (the council of elders of Sparta) or apelle (the people’s assembly) to justice. Lycurgus’ concept of governance did not develop toward democracy in Sparta. Thus, the proposed equalization turned into a sharp political differentiation of

136

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

society into the uncontrolled ruling top and passive mass. Seeking to educate the citizens of good soldiers, the state gradually constrained personal freedom and subjected the entire life of ordinary citizens to strict control and petty guardianship. Sharp property inequality and clear social differentiation also derived from the Spartan equalization. The oligarchic system of government in the face of elder Ephors had only an appearance of democracy and was a soldier democracy, advantageous and pleasing for the commanding elite. So, despite all its former military victories, Sparta gradually came to nothing, leaving behind no historical legacy. It had not provided the world human culture with any prominent creator, neither in art, nor in science, nor in philosophy. And in a sense the fault was the laws of state building and governance created for Sparta by the mythical Lycurgus. Almost simultaneously, other polises of Ancient Greece developed different laws of polis governance and applied them. Thus, in Attica (the peninsula in the territory of the Athenian city-state) during the period of unrest of the representatives of the urban demos (the late seventh century B.C.) aristocrats were forced to entrust the archon Drakon to develop a code of generally binding laws to replace arbitrarily interpreted and verbally transmitted ancestral customs. Such a code of laws was “created” by the archon Drakon in 621 B.C. “Drakon’s laws” later became renowned for their cruelty, as at a fundamental level they only represented a summary of primitive ancestral customs in writing. Even petty theft—stealing vegetables or fruits—was subject to the death penalty. Demades (an Athenian speaker of the fourth century B.C.) later wrote: “The Drakon wrote his laws not in ink, but in blood.” However, the laws of Drakon were still a known step forward, as the fact of written registration of the legal norms developed by him limited the judicial arbitrariness of the patrimonial nobility of Attica. Recorded on stone boards, they were exhibited in the central square of Attica for general information and viewing, and thus the trial came under known public control. A while later a similar reason for constraining popular unrest forced the aristocracy of Attica to “commission” the development of laws and the program of reforms of Athenian society from the famous, in the sixth century B.C., poet Solon, belonging to an impoverished aristocratic family. His candidacy as an archon with the broadest powers of legislator was proposed by the representatives of the urban demos, not the aristocracy. In 594 B.C. he was elected the first archon and began to implement the reforms he had developed. Prior to that, Solon was engaged in trade, which brought him closer to the urban demos, and numerous trips to Greece, Egypt, Asia Minor, and other places broadened his horizons and enriched his experience. He started his activities with “seysachteia” or “agitation of a burden,” that is, the removal of debt stone from the land of the poor. Solon declared all the debts and the interest accumulated on them invalid and repealed debt bondage. Athenians sold into slavery for debts were repurchased and returned to their home country. In one of his poems, Solon, describing his reform, says he will not be condemned for it. . . . from the Olympians the highest goddess, the dark earth, the most excellent mother of the Olympian gods, which was enslaved [before my reforms],

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

137

but is now free, would give witness [to the success of my work]. in the dike of Time.

Solon also implemented a number of reforms in the field of trade organization and industry. In particular, he prohibited the export from Attica of all agricultural products except wine and olive oil; replaced the currency in connection with the expansion of trade relations; encouraged the development of craftsmanship and handicrafts by inviting foreign craftsmen to Attica; issued a law stipulating that a son may refuse to provide for a father who had not taught him any craft; issued a law prescribing the careful handling of property, forbidding excessive luxury and unproductive expenses of ancestral nobility during weddings, burials, etc. The next extremely important action of Solon was his political reform, which eliminated the political monopoly of the patrimonial nobility and set property qualification, or, according to Plato, “timocracy”: the participation of citizens in public life was not dependent on nobility and origin but on the size of their property, their income, and belonging to a particular property group. Solon revived the National Assembly of Attica, in which all citizens of Attica began to participate. The People’s Assembly was convened four times a year; it elected all the officials and members of a completely new body of state administration of Attica—the “Council of Four Hundred.” Finally, in order to strengthen democratic beginnings, Solon established a people’s court, Heliaia (Heliaea), the highest judicial authority in the State, with the power to correct and reverse decisions of senior officials, to hear their reports at the end of their service. Over time, this body acquired a decisive role in the implementation of legislation and the monitoring of the activities of officials. The state system established by Solon remained unchanged for 30 years. Solon’s reforms attest to his understanding of the acute problems of the development of slavery and the risk of enslavement of the main mass of the agricultural population, which would narrow the social base of the slave-owning system. The reforms had contributed to the elimination of the vestiges of the ancestral system and the dominance of ancestral aristocracy and the development of the monetary relationship in Attica. An essential prerequisite for the existence of an antique polis was the maintenance of equality between its citizens as independent private landowners. However, in situations of inequality and slavery, such a precondition is often violated. There was constant controversy between the poor and the rich, of which the ancient polis could never be relieved. Occasionally, land redistribution projects were introduced by restricting large land ownership and expansion of small ownership (projects of the Spartan Kings Agis IV, Cleomenes III and Nabis; reforms of the Gracchi brothers in Ancient Rome, etc.). An important achievement in antique social thought was the development of the basic elements of the subsistence economy and in management thought—the development of issues of managing these forms of housekeeping. Among the issues— management of the state subsistence economy and state regulation of the emerging commodity economy. Subsistence management involved its planning and

138

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

organization, respect for the proportions of agriculture, craftsmanship, trade, construction, coordination of efforts to manage different branches of the subsistence economy, and consideration of the conditions and results of production activities. The state regulation of the goods economy was carried out both directly (through price fixing, quality standards, monopolization of industries) and through indirect measures (level of taxation, partial sale of government stocks, etc.). Issues of orientation of economic development, the advantages of subsistence and goods economy, private and collective slavery, industry and agriculture, and the management of these forms of doing business had become relevant. These problems become subject to special studies in the works of Xenophon, Plato, and Aristotle. The Greek public Thought in the fifth–fourth centuries B.C. reached an unprecedented bloom. A compelling insight into this is provided by the drafts of the polis-states (from Miletus), Xenophon’s works (approx. 430–355 or 354 B.C.), and the treatises of Plato and Aristotle. The architect, and urban planner, Hippodamus (mid-fifth century B.C.) was known not just for having invented the division of polises and the planning of Piraeus, for a long time he had also been building a model of the Best State. Aristotle believes that he was “the first of the non-state-engaged people to try to describe something about the best state structure. He planned a city with a population of 10,000 divided into three parts, one of the skilled workers, one of husbandmen, and a third of armed defenders of the state. The land was also divided into three parts: one sacred, one public, the third private. The first was set apart to maintain the customary worship of the Gods, the second was to support the warriors, the third was the property of the husbandmen. . . . As to the magistrates, he would have them ’ll elected by the people, that is, by the three classes already mentioned, and those who were elected were to watch over the interests of the public, of strangers, and of orphans” [43; 423–424]. In other words, Hippodamus assumed participation in the management of the state of all its citizens. In his model of the Best State, Hippodamus proposes an original law: “those who discovered anything for the good of the state should be honored” [43; p. 424]. Xenophon was from aristocratic circles of the Athens polis. Having lived a long life, he actively participated in turbulent political events. After receiving a plot of land in Skillous (in Elis, near Olympia) from the Spartans, Xenophon became engaged in agriculture and literary work. He stated his social and economic views in many works, but mostly in the essay Oeconomicus in the form of a dialog between Socrates and Critoboulus. The legality of the existence of slavery had not been questioned by Xenophon. Moreover, he gave specific advice on the organization of production and the best methods of exploiting slaves. As merit of Kir, the state he described, he referred to “slaves always willing to remain slaves.” In Oeconomicus, the lords were advised to exhort them, to make promises to feed better. Xenophon wrote that commendation by the master was useful. In the face of growing tensions of the slave-owning order, this advice was rather common. Xenophon sought the solution in a more flexible and precautionary treatment of slaves, the use of certain elements of social demagogy, and material incentives.

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

139

Xenophon advocated for subsistence farming as more stable and reliable. The Peloponnesian War revealed the instability of the polis, commercial and industrial economy of Athens. Praising the subsistence economy of Lycurgus Sparta, Xenophon actually recommended natural economic development for all of Greece. This involved the idealization of agriculture. In Oeconomicus, he praised agriculture as yielding fruits, suitable even for sacrifices, training peasants physically, making them excellent warriors, guiding people to the path of mutual assistance, which provided them with all the necessities. Land teaches justice, for it gives more to people who work harder. According to Xenophon, “agriculture is the nursing mother of the arts.” He recommended that farming, horticulture, and wine-growing should be taught, but held in contempt to the work of craftsmen doomed to sedentary lifestyles. It was evident that the impact of the crisis of the Greek polis economy and the contradictions of its system of slave-owning system were also reflected in these judgments. Xenophon sought a more solid foundation for the economy, expressed hatred for the city’s demos, and focused on the use of peasants to stabilize the slave-owning regime. Oeconomicus provides numerous household management advice, and calls for thrift and the importance of building “useful buildings.” Xenophon, referring to the organization of commercial production, underlines the usefulness of division of labor that has a great effect in all types of productive work (even in the canteen business). The assessments of the potential of large cities as compared to small ones, or assessments of the impact of the scale of production and specialization described by Xenophon in another of his works, Cyropaedia (or “The education of Persian king Cyrus”), are of interest. He writes: “For in the small towns the same man makes bedsteads, doors, ploughs, and tables: often, too, he builds houses into the bargain, and is quite content if he finds custom sufficient for his sustenance. It is altogether impossible for a man who does so many things to do them all well. But in the great towns, where each can find many buyers, one trade is sufficient to maintain the man who carries it on. Nay, there is often not even need of one complete trade, but one man makes shoes for men, another for women. Here and there one man gets a living by sewing, another by cutting out shoes; one does nothing but cut out clothes, another nothing but sew the pieces together. It follows necessarily then, that he who does the simplest kind of work, undoubtedly does it better than anyone else.” [44]. A prominent place in the history of public thought in Ancient Greece belongs to Plato (427–347 B.C.). He wrote many essays of philosophical, socio-political, economic, and managerial content, with high literary merits and interesting ideas. Management issues were addressed by him in the essays Republic and Laws. Plato believed that inequality was rooted in human nature and was therefore irreparable, but that every human being should receive his share according to natural abilities. That will be fair. Everyone is naturally adapted to the performance of a single business and should deal only with it. Then more products could be created and more easily. This means that Plato’s division of labor is analyzed from the point of view of consumer value. The main position of Plato “is that the employee must adapt

140

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

to the business, not the business to employee.” In the division of labor, Plato saw not only the “basis for the disintegration of society into categories,” but also the “basic principle of the foundation of the state.” The first draft of Plato’s state consisted of dividing villages into three category terms: philosophy kings, guardians, and craftsmen farmers. The basis for this division was the division of public labor and the necessity was based on society’s analogy with the human being. In other words, the three categories of the best state correspond to three parts of an individual’s soul: reasonable, desirable, and sensual. The sharp division of society into social categories was the “Athens idealization of the Egyptian caste system.” In the view of Plato, the division of labor binds people into society and enables resolving the conflict between the diversity of needs and the limited abilities of the individual. But it is possible in Plato’s state. So C. Marx called ingenious “for his time image of Plato’s division of labor, as the Natural foundation of the city (which for the Greeks was identical to the state).” One of the models of the best police state is represented by Plato in his utopian project The Republic, the main task of which Plato saw in the answer to the question of how to ensure the benefits and life of society as a whole. His attention had been drawn to the state and to society as a whole, which is objectively created by people because of their incapability to deal with numerous tasks separately: “every person attracts one or another to meet some or other need. Experiencing the need for a lot, many people are gathered together to live jointly and assist each other: such a joint settlement shall receive the name of the state” [45; 130]. The citizens of Plato’s ideal state are divided into three rites—philosopher kings, military/guardians, and craftsmen. The state, ideal in its structure (and therefore the “good state”), has, according to Plato, four main virtues: “wisdom, courage, moderation and justice.” Plato considers wisdom as the higher knowledge that “advises, not about any particular thing in the State, but about the whole, and considers how a State can best deal with itself and with other States” [45; 199]. A harmonious whole of a state is guaranteed, according to Plato, through the management of the state by the most reasonable category—the rulers: “by reason of the smallest part or class, and of the knowledge which resides in this presiding and ruling part of itself, the whole State, being thus constituted according to nature, will be wise” [45; 199]. The known concept of the hierarchy of needs of A. Maslow also had a pre-history in Plato’s treatise in the “design” of the state, when the protagonist of the treatise, Socrates, said: “Then, I said, let us begin and create in idea a State; And yet the true creator is necessity, who is the mother of our invention. . .Now the first and greatest of necessities is food, which is the condition of life and existence. . . The second is a dwelling, and the third clothing and the like. . .” [45; 130]. The enumeration of needs proves that there need be many branches of public division of labor in the city-state. Therefore, it is in Plato’s treatise that the concept of the division of public labor may be presented and justified for the first time: “we are not all alike; there are diversities of natures among us which are adapted to different occupations. . . we must infer that all things are produced more plentifully and easily and of a better quality when one

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

141

man does one thing which is natural to him and does it at the right time, and leaves other things.” [45; 131] And since “wisdom” is the destiny of few, the main conclusion is the following: “Until philosophers rule as kings or those who are now called kings and leading men genuinely and adequately philosophize, that is, until political power and philosophy entirely coincide, while the many natures who at present pursue either one exclusively are forcibly prevented from doing so, cities will have no rest from evils, Glaucon, nor, I think, will the human race. And, until this happens, the constitution we’ve been describing in theory will never be born to the fullest extent possible or see the light of the sun” [45; 252–253]. Aristotle (384–322 B.C.) in Politics not only continues to discuss issues similar to those raised by Plato, at the same time polemizing with his teacher Plato, but also discusses new issues related to HMT. Thus, for instance, he deals with the following issue in some detail: “The first question is whether the art of getting wealth is the same with the art of managing a household or a part of it, or instrumental to it; and if the last, whether in the way that the art of making shuttles is instrumental to the art of weaving, or in the way that the casting of bronze is instrumental to the art of the statuary. . .?” And here is his answer: “Now it is easy to see that the art of household management is not identical with the art of getting wealth, for the one uses the material which the other provides” [43; p. 387]. At the same time, the so-called “necessary art of getting wealth” refers to the area of the household as one of the many sources of well-being of the private economy, and “at this stage begins the duty of the manager of a household, who has to order the things that nature supplies; he may be compared to the weaver who has not to make but to use wool, and to know, too, what sort of wool is good and serviceable or bad and unserviceable” [43; p. 394]. In connection with the need to acquire various types of means for the household, Aristotle raises specific practical questions: “which (means—M.V.) are most profitable, and where, and how—as, for example, what sort of horses or sheep or oxen or any other animals are most likely to give a return. A man ought to know which of these pay better than others, and which pay best in particular places, for some do better in one place and some in another. Second, husbandry, which may be either tillage or planting, and the keeping of bees and of fish, or fowl, or of any animals which may be useful to man” [43; p. 395]. Today all these classic questions refer to “Marketing Research.” From the perspective of HMT, Aristotle’s stories about some of the people who had achieved financial successes using quite modern techniques are curious. Thus, the wise philosopher Thales of Miletus, “anticipating, on the basis of astronomical data, the abundant olive harvest, handed out before the end of the winter the deposit of the small amount of money available to all the owners of mills in Miletus and on Chios, having contracted them cheap since no one competed with him. When the olive harvest time came, and a lot of oil mills were in demand at the same time, he, leasing the oil mills on conditions favorable to him and gathering lots of money, proved that philosophers could easily get rich if they wanted to.” Another entrepreneurial resident of Sicily “bought all the iron from the ironworks had workshops and

142

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

then, when the merchants from the harbors arrived, sold the iron as a monopolist, with a small allowance for his normal price” [26; 395]. Well, are not these good examples for the modern bestseller “Rich Dad, Poor Dad” of Robert Kiyosaki? While there is a difference in the structure of social relations in the countries of China, India, Rome, and Greece (during the periods of sixth–first B.C.), as well as other differences between researchers, striking similarities have been found in the direction of the development of public thought. It was natural to expect similarities in the development of management thought in these countries. For example, the struggle of the two currents in Ancient China—the patriarchal-paternalistic concept of the state of Confucius (hence the principles and methods of governing that state) and the concept of Guan Zhong and other Legalists—was reflected in the creations of one Ancient Greek thinker—Plato. If in The Republic dialog he followed the patriarchal order, in an attempt to create a model of utopian society with ideal subjects other than ordinary people, in Laws, approaching the needs of life, he comes to the need to manage ordinary people through appropriate laws of compulsion. Plato’s ideal state is the fair reign of philosophers. “Until philosophers rule as kings or those who are now called kings and leading men genuinely and adequately philosophize, that is, until political power and philosophy entirely coincide, while the many natures who at present pursue either one exclusively are forcibly prevented from doing so, cities will have no rest from evils, Glaucon, nor, I think, will the human race. And, until this happens, the constitution we’ve been describing in theory will never be born to the fullest extent possible or see the light of the sun.” [45] At the heart of Roman management thought were issues of formation and management of a private slave-owning economy. In the early fourth century B.C., a form of industrial relations between the major landowner and the direct producer— the colonus, and the corresponding legal institution of “dependent peasants” (or colon), called the colonate—became widespread in the Roman Empire [27, 28]. The Romans had a practical cast of mind, and their practicality manifested itself first and foremost in the meticulous elaboration of a variety of recommendations for the organization and management of a slave-owning villa, a typical household of average size for wealthy citizens. These issues had been most fully developed in the works of the Roman agronomists Cato (On Agriculture), Varro (On Agriculture), and Columella (Agriculture), and the encyclopedic essay by Pliny the Elder (“Natural History”). These treatises contain numerous ideas for the sound management of the latifundia economy—the main form of slavery production organization. All the projects were aimed at the search for methods of organizing production that enabled the existence of latifundios in the context of the technological backwardness of that era. Marcus Porcius Cato (234–149 B.C.) wrote a treatise On Agriculture as a practical guide for the owner of a medium estate. Cato considered farming to be the most worthwhile business for a free citizen. “The most loyal people and most persistent soldiers” came from farmers. After instructions on the selection and purchase of estates, Cato gives detailed advice to the owner of the estates on

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

143

planning, distribution, accounting, and control of the works performed at estates. “When the master arrives at the farmstead, after paying his respects to the god of the household, let him go over the whole farm, if possible, on the same day. . . When he has learned the condition of the farm, what work has been accomplished and what remains to be done, let him call in his overseer the next day and inquire of him what part of the work has been completed, what has been left undone; whether what has been finished was done betimes, and whether it is possible to complete the rest; and what was the yield of wine, grain, and all other products. Having gone into this, he should make a calculation of the laborers and the time consumed. . . After this has been gone into calmly, give orders for the completion of what work remains. . . Give directions as to what work you want done. . . and leave the directions in writing” [29]. A considerable amount of attention to the set of means of production and even to household items is due to the author’s desire to raise the revenues of the estate. In a suburban estate, in his view, the owner “must arrange and plant so that it would be as profitable as possible. Cato was the first in the socio-economic thought of Ancient Rome to raise the issue of the efficiency of the slave-owning economy by linking it to the organization of production and exchange. Already in the early days of the treatise, Cato cautions the landlords against “large equipment.” Cato sought to achieve an appropriate effect by regulating not only the means of work but also the process of production, and its efficient organization and management. This is why a huge role had been devoted to the landlord, who must be well informed about the farming calendar and all the necessary agricultural techniques. The treatise describes in detail the duties of the estate manager, the details of the composition, the structure and organization of the various branches of agriculture, and the state of the agricultural science of that era. Thus, production efficiency was dependent on a multitude of factors. The treatise considers the idea of viewing the slave estate not merely as a form of subsistence farming but as an organization of production with a certain market orientation. A renowned agriculture economist was Marcus Terentius Varro (116–27 B.C.), who belonged to the social category of horse riders. Three books of his Treatise On Agriculture, written about 37 B.C., a century after Cato’s essay, containing more information on cattle breeding, developed at the time, survived to our times. Unlike Cato, Varro was never involved in agriculture and his main sources were book materials. On a compositional level, the three books represent agriculture, livestock, and subsistence farming (poultry, fishing, and beekeeping). According to Varro, “farmers ought to aim at two goals: utility and pleasure.” But “utility pursues what is profitable, pleasure—that which is agreeable. . . .” However, before casting seeds into the ground, Varro advises to study the basic elements of the Universe: water, land, air, and the Sun. In his opinion, not only should the properties of the local soil be well known, but also the “equipment needed for the operation of the farm in question” should be ascertained [30]. Varro’s first book is devoted to the organization of the slave-owning economy and mainly to field husbandry. He was skeptical about Cato’s principles in selecting the optimum slave-owning estate by the scale of land and product specialization. The

144

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

layout of the estate, in his view, defines the agriculture and ultimately soil property. Therefore, the value of the estate may be defined not by the vineyards, as Cato believed, but by good meadows. And Varro agreed with those who believed that “the vineyard devours its own profits.” Varro doubted the effectiveness of a slave-owning economy, practicing an intensive culture of grapes. For Varro, the main value of the estate is land. The key is to know, “what the land is like and why it’s good or not good.” In his work, Varro responded to the inquiry of a large slave-owning economy, demanding guidelines for the maintenance of ancillary enterprises. In view of the need to manage a much larger mass of slaves than in the Cato era, in Varro’s treatise new administrative posts, other than the Villicus, who were at the helm of the slaves, appear and the qualities they should possess are described. They must be literate, honest, courteous, and knowledgeable in agriculture. Here, Varro refutes Cato’s calculations in the labor requirements for the estate, citing specific experience of slave owners and other workload standards, working conditions, and new agrotechnical techniques in different localities. The issue of the placement of the villa is closely linked by Varro with its internal organization. “Farms—he reasons—which have nearby suitable means of transporting their products to market and convenient means of transporting thence those things needed on the farm, are for that reason profitable.” Since the first century A.D., the organization of slave-owning production had undergone significant changes. The decline in the average slave-owning estates of the intensive type was accompanied by a certain rise of latifundios, transferring to colonizing farming. The colonus’ labor was more productive than slavery. The shift in agriculture was directly reflected in the management thought of the period. An important part of history of Roman management thought belongs to Mark Cato’s nephew—Junius Moderatus Columella (4–70 A.D.), who had written 12 books on agriculture [31]. Columella’s work cannot be accurately dated, but the third book refers to 62–65 A.D. Columella was a deep expert in agricultural literature and a good practitioner. He witnessed the crisis events of the slave economy: there had been a decline in the productivity of slave labor, and many cultural lands in Italy had not been cultivated and became pastures. Already in the foreword to the first book, Columella entered into polemics with those representatives of Roman science who saw the causes of a certain decline of the economy in the infertility of the land and poor climate. The main point, in his view, is that agriculture is given “as to the executioner of the worthless of slaves and, at the times of our ancestors, the best people took care of it and in the best way.” Columella begins his treatise On Agriculture, calling for the urgent need for training and selection of qualified experts in the field of agricultural management. “Everyone picks an experienced leader in the business they want to do, and finally, from among the wise men, they invite a mentor who forms the soul in the rules of virtue—only agriculture, which is undoubtedly the closest to wisdom and is in kinship with it, no one teaches and no one learns” [31]. In his treatise, Columella promotes the introduction of agricultural science into practice and, in this regard, his work is more progressive than preceding projects. Here, as in other treatises, the

2.5 The Development of Management Issues in Ancient Greece and Ancient Rome

145

foundations of agricultural science and more detailed responsibilities of the Villicus in the organization and management of the economy are laid down. To reorganize the slave economy, Columella offered a whole system of activities. As a slaveholder practitioner, he strongly opposed the extensive path of development of the slave-owning estate. Columella believed that the main purpose of purchasing an estate was to earn income, but “a reasonable person would not buy land in any place, succumbing to the temptation of fertility or a beautiful location.” In his opinion, a good host would be able to make any plot profitable. And his diligence can defeat the infertility of the land. A real master of the land will achieve “growing on it exactly what would do better there.” Columella led an open dispute with agrarian theorists, who lined too much importance to natural soil fertility. In essence, Columella was first in ancient thought to raise the issue of intensive development of the slave economy. He developed an entire system of artificial soil fertilizing, courageously advocated the conduct of agronomic experiments, calling on the masters not to cheap out on experiments. In this way of running an economy, any land will bring income to the landowner. Columella recognized the correctness of all methods of compulsion to convert unfit slaves into diligent workers: from a local prison in a basement to “exchange” of jokes with slaves. This, in Columella’s view, together with a joint discussion of new works, “caring” for the lives of slaves, and allowing them to complain of abuse, contributes to increased productivity. However, Columella understood that the organization of the slaves’ work, even in the presence of a steward and guards, could be poor. A slave, “to gather the amount ordered by the steward, works inconsiderately and in bad faith.” Columella saw the limited capacity of slavery, but still hoped to compensate with improvement in agriculture with the help of a specialist among slaves, an experienced Villicus, and, finally, a strict and qualified master of the estate. It is no coincidence that the “eye of the master” is the most important factor in the organization of work at the estate. Gaius Plinius the Elder (23–79 A.D.) was Columella’s contemporary. He had not written any special agronomic treatise. But this encyclopedically educated man created a vast work, “Natural History,” in 37 books [46]. His paper covered all the branches of knowledge contemporary to him. If Columella had any illusions about slavery, Plinius explicitly denounced the slave relationship. Plinius again raises the question of the efficacy of farming. He believed that the best treatment of land was unprofitable, as it caused high expenditure. But “it is still necessary to cultivate land well.” So Plinius advised to cultivate the land “both bad and good,” considering “bad” as merely “the most cost savings.” So Plinius was the antithesis of Columella, who advised to conduct agricultural experiments, not reckoning with the costs of production. Plinius called on landowners for moderation. In his opinion, bad is the master who buys what is available in his estate. He reiterated the suggestion for farmers to make use of the natural and economic opportunities in the organization of production. Plinius did not approve of excessive intensification of the economy, which is impossible and even unprofitable under slavery. But he pointed out that “farming is based on labor rather than expense. Our fathers used to say that the master’s eye was

146

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

the best fertilizer.” Therefore “well cared-for slaves, iron instruments of excellent work and fed oxen” are necessary. Plinius represented a different direction than Columella, which sought to adjust to the economic situation and to maintain the achieved level of intensity of production. He advocated the naturalization of the economy and promoted “diligent” slave labor with new but cheapest tools. However, in the new environment, this would lead to a decline in the efficiency of slave labor, as increased production costs would be inevitable. Therefore, the Roman scientist eventually gave preference to the colonate, a form of production that was transitional from slavery to feudalism.

2.6

Management Thought in the Old Testament and the New Testament

A wide range of critical issues of managing the State and its constituent territories was addressed in the Bible.5 This aspect of the coverage of the life of the ancient society was presented in many ways already in the first five earlier sections, known as the “Pentateuch.” The church considers the Prophet Moses as the author of the “Pentateuch” and dates the creation of all five of its books about the fourteenth century B.C. Following the “Pentateuch,” other sections that made up the Old Testament were written for more than a millennium. In first–second centuries of the New era the work was continued, and the second part of the Bible, the New Testament, appeared. The particular significance of the Bible in the light of management ideas is not confined to a detailed composition of management thought found in the relatively small Israeli-Jewish territories, but goes far beyond that, acquiring a universal sounding, since the Bible is canonized as a Holy Scripture by the Christian and Jewish religions and recognized as a holy book by Islam. Therefore, the ideas it contains are not merely a description of the practical experience of an Asia Minor state, it is a truth consecrated by religion and requiring repetition, an ideal to imitate, binding the authority of believers, a religious normative document that hundreds and hundreds of millions of believers must follow in their activity. The Bible was in favor of a clear organization and hierarchy of governing the country. The first and most common scheme of such an organization was outlined in the “Exodus” of the second section of the “Pentateuch.” The highest level in this scheme was to be the supreme authority, which was to tell the nations “the way they should go and what they should do,” that is, to define strategic objectives. The Bible made a religious interpretation of the ways in which the supreme power was exercised and how it was administered by the Jewish people. At the beginning, this supreme authority was attributed to God himself, and its implementation was ensured through the Deity system. This system of management implied that all basic

5 This section provides quotes from the Old and New Testaments on the treatise of F.M. Volkov [47].

2.6 Management Thought in the Old Testament and the New Testament

147

laws had to come from God and be unquestionably obeyed in the country. The Bible demanded: “Love the Lord, your God and keep his requirements, his decrees, his laws and his commands always.” However, Deity in the interpretation of the Bible was not a special form of government, in which God became the Earth’s leader and should be directly responsible for performing specific managerial functions while replacing real people. This was only about God’s general supervision, in which the state’s life evolved freely and took forms that corresponded to the present circumstances. God’s will had to be realized not through specific managerial decisions of the Lord himself, but through specific managerial actions by Earth leaders, who are obliged to take over management affairs within God’s commandments and laws. In the biblical interpretation the Lord implemented his high supremacy through the actions of prophets, chiefs, patriarchs, judges, elders, and other persons participating in management, who, according to the Bible, were only the tools and executors of divine will and the laws established by God. The Bible noted that there were many contradictions and failures in its considered religious Deity model and therefore had to recognize the need for a transition to the real Earth system of supreme power, implemented in Israel in the establishment of the power of the king and the system of governance under him. This model of Supreme rule was considered in connection with the description of the actions of Kings Saul, David, and Solomon, and other historical figures. In the “Book of Deuteronomy,” the basic requirements for the king in high charge of the country were defined, first the king was to represent the indigenous population of the country. It was stressed that “one from among your brothers you shall set as king over you,” and that “you may not put a foreigner over you, who is not your brother.” In this way, emphasis was placed on the relationship of the supreme subject of governance with the people, on his involvement in the interests, needs, and aspirations of the country. Second, there was the inadmissibility of self-interest of the king, his use of power for personal enrichment. The king was required, inter alia, “he shall not multiply horses for himself,” “nor shall he greatly increase silver and gold for himself.” Third, the king was subjected to high moral demands. It was envisaged that he “shall not multiply wives for himself, or else his heart will turn away.” The “Book of (Solomon’s) Proverbs” underlined that “it is an abomination to kings to commit wickedness: for the throne is established by righteousness.” Highly appreciating the king’s rule, the Bible considered it particularly fruitful when the interests of the State were placed at the center. “The greatest advantage to the country” as was emphasized in the Book of Ecclesiastes, “is when the king makes himself a servant to the land.” With great approval the Holy Scripture narrated of another form of supreme governance—of the connection at the highest level of secular and religious management after Melchizedek, who was at the same time King of Salem and a priest of God Almighty. Melchizedek’s ancestors were Semitic local princes of the Urian kings in the land of Canaan, and later became independent kings. Melchizedek himself, who embodied the supreme secular and ecclesiastical power, was very respectfully spoken of both in the Old and the New Testament.

148

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

In the management hierarchy in the Old Testament, following the supreme authority, a distinctive middle-ranking link, consisting of the closest entourage of the supreme ruler, was considered from the circle of councilors and attendants he formed. Referring to the emergence of this link, the Bible reported that Moses had established a permanent Council of elders to facilitate his management activity, consisting of 70 representatives tribes and generations, worldly wise from life and experience. The Council was to share with the supreme leader the burden of responsibility for the adoption and implementation of decisions of public importance, or as stated in the fourth Book of the Old Testament, the “Book of Numbers,” “and they shall bear the burden of the people with thee, that thou bear it not thyself alone.” The Bible also provided information about the lowest level of the management hierarchy. The decisions of the current and ordinary cases covered by this link were entrusted to lower officials, who were appointed by the highest authority. These people, as stated in the “Exodus,” were made “leaders of the people, officials over thousands, hundreds, fifties and tens.” All the listed parts of the management system did not remain once and for all given, fossilized, permanent. The Old Testament recorded and approved the changes implemented to this initial management scheme as needed, its gradual detailing and complexity. In particular, in the “First Book of Chronicles,” related to the historical part of the Bible, the transformation of state management during King David’s reign (eleventh–tenth centuries B.C.) was described. These transformations included the consolidation of territorial offices and the appointment, at the head of each of them, of a special chief; the appointment of chiefs of families, generations, and semigenerations of Israel; an increase in the number of dignitaries participating in management; and a clear division of management functions among them. Among these dignitaries were the advisers to the king; the custodians of the royal treasures and the king’s reserves in various parts of the country; superiors over the king’s estate, including the chiefs who supervised field works, agriculture, vine culture and winemaking, herds of large and small cattle, camels, asses, and other areas of the king’s economy; etc. The Bible linked the creation of a State Council and further detailing of the distribution of management functions between the dignitaries with the establishment of King Solomon’s Power (tenth century B.C.). Dignitaries who were part of the King’s entourage began to supervise the links, parts of the management (the chief of the army, chief of tribute, chief over the King’s house, chief over delegates, etc.). Under Solomon, new principles of territorial management were developed and implemented. The entire state was divided administratively into 12 districts. Each district was managed by a special supervisor, “a delegate.” The district was to provide the royal court with food for one month. Measures had been taken to strengthen grass-roots management and supervision (in particular, in the construction of the Jerusalem Temple, the king appointed 3300 supervisors to supervise the people who worked). In management, the Bible was particularly appreciative of wisdom, thoughtfulness, and validity. In this connection, the “Second Book of Chronicles” emphasized that the king needed wisdom and knowledge to manage the people. This was

2.6 Management Thought in the Old Testament and the New Testament

149

followed by the allegations in the “Book of Proverbs”: “I, wisdom, dwell together with prudence; I possess knowledge and discretion. . . I have power. By me kings reign and rulers issue decrees that are just. By me princes govern, and nobles—all who rule on earth. . .With me are riches and honor, enduring wealth and prosperity. My fruit is better than fine gold. . . .” Expanding on these thoughts, the Bible provided advice in the (Book of) “Wisdom of Solomon”: “who take charge over peoples, want to keep enjoying the thrones and symbols of power that you presently possess, honor wisdom so that you may rule forever,” and then concludes: “a wise king is the upholding of the people.” As antithesis to such a ruler an unreasonable king is brought forward in the “Book of Wisdom of Jesus, son of Sirach,” which warned that “an undisciplined king will be the ruin of his people.” Based on these requirements to management, the “Bible” addressed the question of criteria for selection of management position candidates. In the “Exodus” it was determined that they should include “men who fear God, trustworthy men who hate dishonest gain.” In the “Book of Deuteronomy,” this thought was repeated. “Wise, understanding and respected men” were proposed to be chosen as candidates for chief positions. The Bible articulated a number of interesting principles for the organization, and implementation of management. It was suggested that the law should be the basis of the decisions taken. It had already been emphasized in the “Book of Deuteronomy” that the king must rule strictly by law, that he is to “write for himself on a scroll a copy of this law,” read “it all the days of his life,” observing “all the words of this law,” and not turn “from the law to the right or the left.” In the formulation of management decisions, it was suggested that they should be carefully thought out and discussed, with the use of sensible advice. “Reason”—as noted in the “Book of Wisdom of Jesus, son of Sirach”—“should be the basis for every activity, reflection must come before any undertaking.” In the “Book of Ecclesiastes,” a king “who no longer knows how to heed a warning” is called foolish. In the “Book of Proverbs” it was emphasized that “Kings take pleasure in honest lips; they value the one who speaks what is right.” While stressing the need for the use of advisers in management, the Bible was also in favor of a careful attitude toward their recommendations. In the “Book of Wisdom of Jesus, son of Sirach” it was said: “Beware of someone who offers advice; first find out what he wants himself- since his advice coincides with his own interest.” In the same book, an important message was conveyed about the inadmissibility of interference in the management of family members and friends of leaders. In the teachings to princes and chiefs, it was demanded: “Neither to son nor wife, brother nor friend, give power over yourself during your own lifetime.” A similar requirement concerned dishonest people. “Remove wicked officials from the king’s presence”—was said in the “Book of Proverbs”—“and his throne will be established through righteousness,” for “if a ruler listens to lies, all his officials become wicked.” It was said here that “if imposing a fine on the innocent is not good, surely to flog honest officials is not right.” The focus on equity and the protection of subjects, traditional for ancient management systems, is also evident in the Bible. “Do not take advantage of the widow

150

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

or the fatherless,” was said in the “Exodus.” “Woe unto them”—was recalled in the “Book of Isaiah”—“that decree unrighteous decrees, and that write grievousness which they have prescribed. . . to take away the right from the poor of my people. . ., that widows may be their prey, and that they may rob the fatherless,” In the Psalms by the words of King David was the ideal order glorified, in which the ultimate power “raises the poor. . . lifts the needy from the ash heap; he seats them with princes, with the princes of his people.” Here, in Psalm 41, it was said: “Blessed is the one who considers the poor.” This idea was again repeated in the “Proverbs of Solomon,” where the words were: “blessed is the one who is kind to the needy.” The “Book of Daniel” contained the following outline: “Therefore, Your Majesty, be pleased to accept my advice: Renounce your sins by doing what is right, and your wickedness by being kind to the oppressed. It may be that then your prosperity will continue.” In protecting the people’s interests, the Bible strongly condemned abuses of power and fought against the use of managerial rights for personal enrichment, and promoted the idea of incompatibility between management and the receipt of bribes, illegal gifts, corruption, embezzlement. In the “Exodus” it demanded: “Do not accept a bribe, for a bribe blinds those who see and twists the words of the innocent.” In the “Book of Deuteronomy” it was repeated: “Do not pervert justice or show partiality. Do not accept a bribe, for a bribe blinds the eyes of the wise and twists the words of the innocent.” In the “Book of Wisdom of Jesus, son of Sirach,” it was recognized that “Favors and gifts blind the eyes of the wise; like a muzzle on the mouth they stop reproofs.” By placing the omnipresent God in the center, and considering that all power is from God, the Bible more definitely than many other ancient sources demanded unquestionable obedience of subjects to managers, sought authority, management discipline, strict obedience to subordination, instructions, prescriptions of those who wield power, who rule, who makes decisions, and directs the actions of people. The Sacred books advocated obedience and humility, strict adherence to everything prescribed above, and respect for all who possess power and perform supervision. “Do not”—it was stressed in the Exodus—“curse the ruler of your people.” Almost to the word the same idea was repeated in the “Book of Ecclesiastes”: “Do not revile the king even in your thoughts.” And the subject was particularly detailed in the New Testament. Here, in the “First Epistle of Peter” the idea of strict obedience to managers exercising managerial responsibilities had consistently been developed, and a famous requirement had been formulated: “Be ye subject therefore to every human creature. . .: whether it be to the king as excelling, or to governors as sent by him. . . .” The same emphasis on strict subordination and obedience was found in the message of the Apostle Paul, “to Romans,” where the call was made: “Let everyone be subject to the governing authorities,” and his message to Titus stated the need to “be subject to rulers and authorities, to be obedient, to be ready to do whatever is good.” In doing so, the Apostle Paul, explaining the reasons for the need for such behavior, stated that “For rulers hold no terror for those who do right, but for those who do wrong,” that “is

References

151

necessary to submit to the authorities, not only because of possible punishment but also as a matter of conscience” [47]. Test Questions 1. Describe the origins of the scientific understanding of management by sources of writing of the ancient States (fourth millennium B.C. and later). 2. Describe the ideas on the management of public works in the Ancient Egyptian kingdoms and the reasons for their occurrence. 3. What is the main mission and idea of managing ancient polises? 4. What is the reason for the development and content of the first orders of ranks in personnel management? 5. Describe the main management ideas in the treatises of thinkers and activists of Ancient Greece: similarities and differences. 6. Disclose the content of the main management ideas in the treatises of thinkers and activists of Ancient Rome: their similarities and differences. 7. Describe the main management ideas in the treatises of thinkers and activists of Ancient India: similarities and differences. 8. Describe the main management ideas in the treatises of thinkers and activists of Ancient China: similarities and differences. 9. What had the “cosmopolitanism” of management thought manifest itself in during the era of ancient civilizations?

References 1. Istoriya politicheskih i pravovyh uchenij. /V 3-h kn. M., Nauka, 1985, 1986, 1989 gg 2. Vsemirnaya istoriya ekonomicheskoy mysli (nauchnyi redactor Victor Cherkovetz)/v 6 tomah. M., Mysl’, 1987–1997 gg 3. George CS Jr (1968) History of management thought (1st ed), 1972 (2nd ed). Englewood Cliffs, Prentice-Hall 4. Wren DA (1972) The evolution of management thought. Wiley, New York 5. Witzel M (2012) A history of management thought. Routledge, London 6. Bobryshev DN, Semencov SP (1985) Istoriya upravlencheskoj mysli. M., ANH 7. Marshev VI (1987) Istoriya upravlencheskoj mysli. M., MGIAI 8. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU ((pod nauchnoj red. V.I.Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www.econ.msu.ru/science/conferences/mciumb/ 9. Wren DA, Bedeian AG (2018) The evolution of management thought. Wiley, Incorporated 10. Andreevskij IE. Policejskoe pravo. V 2-h tt. Spb., 1871–1874 gg 11. Platonov I. Vstupitel’nye ponyatiya v uchenii o blagoustrojstve i blagochinii gosudarstvennom. Har’kov, 1866 12. Babst I.K. Kurs politekonomii 1859 goda. B.M. i G. (litograf.) 13. Belinskij VE. Organy upravleniya akcionernyh kompanij. Varshava, 1891 14. Berendts EN. Opyt sistemy administrativnogo prava. YAroslavl’, 1898 15. Istoriya menedzhmenta (pod red. D. V. Valovogo). M., Infra-M, 1997 16. Avdiev V.I. Istoriya Drevnego Vostoka. M., 1953 17. Hrestomatiya po istorii Drevnego Vostoka. V 2-h tt. M., 1980. 18. Po sledam drevnih kul'tur. Ot Volgi do Tihogo okeana. M., 1954

152

2 The Origins of Management Thought: From Fifth Millennium B.C. to the Fifth. . .

19. Turaev BA (2001) Drevnij Egipet. SPb, ZHurnal Neva 20. Turaev BA (2002) Istoriya Drevnego Vostoka. Minsk, Harvest 21. Korostovcev MA (2001) Piscy Drevnego Egipta. SPb, ZHurnal Neva 22. Istoriya Drevnego Vostoka (pod red. V.I.Kuzishchina). M., Vysshaya shkola, 2002 23. Engel’s F (1950) Proiskhozhdenie sem'i, chastnoj sobstvennosti i gosudarstva, M., Nauka, s. 99 24. Gerodot. Istoriya v devyati knigah. Leningrad, Nauka (1972) 25. Poucheniya carya Amenemhata (XX v. do n.e.). Perevod MA. Korostovceva. Pechataetsya po: Povest’ Peteise III. M., 1978, str. 222–225 26. Syma Cyan’ (1972) Istoricheskie zapiski. M.: Vostochnaya literatura 27. Fyustel’ de-Kulanzh N. D. Rimskij kolonat. SPb (1908). 28. Drozdov VV (2019) Kolonat: istoriya i ekonomicheskaya priroda instituta. M.: Ekonomika. 29. Katon Mark Porcij. Zemledelie. M.-L.: Izd-vo AN SSSR (1950) 30. Varron Mark Terencij. Sel’skoe hozyajstvo. /Per. M. E. Sergeenko. M.-L.: Izd-vo AN SSSR (1963) 31. Kolumella Lucij YUnij Moderat. O sel’skom hozyajstve/Katon, Varron, Kolumella, Plinij. [Vved. M. I. Burskogo, s. 7-98]. M.: Sel’hozgiz (1957) 32. Popov PS (1910) Izrecheniya Konfuciya, uchenikov ego i drugih lic. SPb 33. Men Czy. SPb.: Peterburgskoe Vostokovedenie (1999) 34. Creel NG (1974) Shen Pu-hai. A Chinese political philosopher of the fourth century A.D. University of Chicago Press, Chicago, p 66 35. Mo-czy syan’gu. Dostupnoe ob”yasnenie «Mo-czy». Perevod M. L. Titarenko. Pekin (1956) 36. SHan. Kniga pravitelya oblasti SHan. Perevod L.S. Perelomova. M.: Ripol-Klassik (2018) 37. Ivanov AI (1912) Materialy po kitajskoj filosofii. Perevod Han Feya. SPb 38. SHtejn VM. Guan’-czy. M., 1959 39. Feoktistov VF. Filosofskie i obshchestvenno-politicheskie vzglyady Syun’-czy. M (1976) 40. Huan’ Kuan’. Spor o soli i zheleze (YAn’ Te Lun’). V 2-h tt./Perevod s kitajskogo, vvedenie i kommentarij YU.L. Krolya. – Sankt-Peterburg 1997 41. Zakony Manu. M.: Izd-vo vostochnoj literatury (1960) 42. Arthashastra ili Nauka politiki. M.-L., Nauka (1959) 43. Aristotel’. Politika. Soch. v 4-h tt. Tom 4. M., Mysl’ (1983) 44. Ksenofont. Kiropediya/Perevod V.G. Boruhovicha, E.D. Frolova. M.: Nauka (1976) 45. Platon. Gosudarstvo. Soch. v 4-h tt., Tom 3. M., Mysl’ (1994) 46. Plinij Starshij. Estestvennaya istoriya. /Katon, Varron, Kolumella, Plinij. [Vved. M. I. Burskogo, s. 7-98]. M.: Sel’hozgiz (1957) 47. Volkov FM. U istokov nauchnyh predstavlenij ob upravlenii. M., (2001)

Additional Literature Bykov FS. Zarozhdenie obshchestvenno-politicheskoj i filosofskoj mysli v Kitae. M., Nauka (1966) Iskusstvo upravleniya/Sostavlenie, perevod s kitajskogo, vstupitel’naya stat’ya i kommentarii V.V. Malyavina. – M., Astrel’, AST (2003) YAn YUn-Go. Istoriya drevnekitajskoj ideologii. M., Inlitizdat, 1957 YAn Hin-shun (1950) Drevnekitajskij filosof Lao-Czy i ego uchenie. Moskva. Zenger, Harro fon. Stratagemy. O kitajskom iskusstve zhit’ i vyzhivat’. V 2-h tt. M: Izd-vo Eksmo (2004)

Chapter 3

World Management Thought in the Fifth to Nineteenth Centuries

Abstract This chapter further describes the main directions and works that reflect the development of management ideas, attitudes, and concepts in Western countries in fifth to nineteenth centuries. This chapter is perhaps one of the first special treatises on management, the authors of which were organizers of industries, statesmen, academics, high school teachers, including the first business schools. The objects of comparative analysis of views on economic management were representatives of a number of European countries, as well as well-known creators of management ideas—classics of political economy, philosophy, law. The chapter ends with characteristics of the famous treatise “The Doctrine of Management” by Lorenz von Stein.

3.1

Origins and Sources of Management Thought in the Fifth to Eighteenth Centuries

Management thought developed fairly actively in the era of feudalism in Byzantium, Western and Eastern Europe, China, and other regions of the world. Most illustrative in this sense are the countries of Western Europe, where feudal formations existed for almost a 1000 years (fifth to sixteenth centuries), and when new nations emerged, centralized states developed, material culture grew and spiritual culture became more complicated. Given that all this time, in European society, the vision of the Roman Catholic Church was decisive, public thought, and with it management thought did not remain unchanged because of natural changes in the evolution of socio-economic and political systems. This evolution includes three major historical stages in the Middle Ages. The first—the early feudal—refers to the late fifth to mid-eleventh centuries. At this stage, feudalism is still being consolidated and strengthens as a new socio-economic formation. Statehood is first organized into a large but very weakly integrated monarchy and then divided into conglomerates of fragmented political entities. The second stage—the time for the full development of the feudal system, its flourishing—refers to the mid-eleventh to early-fifteenth centuries. For this period, centralized group representative monarchies, the strengthening of the role of cities as centers of world trade, and the corresponding formation © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_3

153

154

3 World Management Thought in the Fifth to Nineteenth Centuries

of “urban” law are typical. The third phase, the later Middle Ages, refers to the fifteenth to sixteenth centuries, when the crisis and decomposition of feudalism and the genesis of capitalist social relations began to emerge. Statehood, and, along with it, public management, is built at this stage, mostly as an absolute monarchy. As different countries developed with their own peculiarities, unevenness in the development of public thought in individual countries had gradually strengthened. This affected not only the influence of the ancient heritage but also the characteristics of the prevailing socio-economic order. The main points of the genesis of the feudal mode of production were the transformation of free producers of goods and slaves into feudal dependent peasants and the formation of large feudal land ownership. The entire period is characterized by a struggle between the peasant community and the feudal estate. Feudalism had spawned different forms of large production and, above all, secondary manufacturing enterprises. These processes had been prepared by feudal tendencies that emerged in the process of decomposition of the primitive system and ancient society. After the fall of the Western Roman Empire (fifth century A.D.) in the barbarian kingdoms that had emerged on its territory, synthesis of feudal elements, which existed in the ages of the ancient society and the primitive community order of the Teutons and the Celts occurred. Previously, free community members fall into legal and administrative dependence on feudal—the owners of feuds—with conventional hereditary land ownership. Feudal hierarchies and a vassalage system are formed. Feudalism emerged most rapidly where these elements harmoniously complemented one another (in Northern France). In places, where antique population dominated (in the Byzantine Empire and countries of Southern Europe), the pace of feudalization decelerated. A strong state, developed private ownership and commodity monetary relations, prolonged preservation of the slavery form of exploitation, etc. became factors that prevented the genesis of classical feudalism. The pace of feudalization was also slower where feudalization had primarily been formed on the basis of the decomposing primitive system, for instance, in Britain, Scandinavia, among western and eastern Slavs, and the influence of antiquity was weaker and more inconsistent. This had been manifested in the remnants of the pre-state forms of management. Gradually, in the European feudal society the four following classes were formalized: peasants, secular feudal knights, church feudal priests and burger citizens. Each of these classes had developed its own culture, its ideology, and its economic and organizational managerial perceptions. However, before analyzing these features, we would note commonalities typical of feudal worldview as a whole. The feudal economy is of an agrarian nature, subsistence farming, “the main objective condition of work is not the product of labor but the nature found by labor.” Man was suppressed in the struggle against nature, his productivity was the result not only of his personal efforts but also of natural productive forces, and his activities depended on the biological cycles of nature. Not being able to explain natural processes, man of medieval society was constantly in fear of devastating natural disasters: crop failure, floods, droughts, etc., naïvely believing in the supernatural and attempted to fence oneself off from it by strict observance of rites,

3.1 Origins and Sources of Management Thought in the Fifth to Eighteenth Centuries

155

various types of rituals, spells, and prayers. He feared innovation and was receptive to old custom, appealed to the traditional norms of morality and law. And at the same time, he was relatively young (the average life expectancy in the medieval age was relatively low). A guarantee against the effects of natural disasters and unforeseen circumstances on any community, a collective with whose interests a medieval man strongly associated his activities, actions, and thoughts. This was manifested by a universal personal dependence that extended to relations not only between antagonistic classes but also within them. “Here, instead of the independent man—wrote C. Marx, describing the “European Middle Ages, shrouded in darkness,”—we find everyone dependent, serfs and lords, vassals and suzerains, laymen and clergy. Personal dependence here characterizes the social relations of production just as much as it does the other spheres of life organized on the basis of that production.” Vertical links of a hierarchical type in this society had been supplemented by horizontal links, represented by various kinds of corporations, such as neighboring communities, urban communes, craftsmanship and merchant guilds, monastic fraternities, knights of chivalry, etc. The thinking of medieval man was teleological, since the leading role in Europe was played by the Christian religion and the Roman Catholic Church, which determined the entire intellectual life of Western Europe. This predetermined the peculiar duality of feudal culture. Latin became the universal language of the educated part of Western European society, preserving, albeit transformed and redesigned, the legacy of the ancient world. However, along with Latin, the knowledge of which was limited to a mere few, national languages develop, opening the way among a plethora of dialects and speeches. Early medieval culture was mostly oral. Records documented current events, and were made “for memory.” The syncretism of medieval spiritual culture, the sector of public thought from which economic, managerial, and sociological thought had not yet distinguished into autonomous fields of knowledge, should not be forgotten. What could be attributed to management thought, as in previous periods of human history, is imbued with the spirit of “practicalism.” Medieval treatises are overfilled with specific economic advice, various practical recommendations on economic management, which is very valuable for history of management thought (HMT), although there is little room for theoretical generalizations or attempts to understand management processes. Engaged in wars, hunting, amorous adventures, and personal assertions, the medieval knight, like the class of secular feudal in general, had little interest in economic issues, the management of his own domain or estate. He was a representative of those who consumed wealth. The agrarian nature of the feudal economy, the dominance of subsistence farming, lack of development of craftsmanship, and trade in the early medieval era (fifth to eleventh centuries) severely confronted the secular feudal with only one economic issue—the problem of obtaining money for the purchase of exotic luxury items from the East, for the maintenance of a well-off and carefree way of life. Monetary famine was felt not only by individual members of the dominant class, but also by the feudal state itself, which periodically degraded the coin. Attempts to justify this practice are

156

3 World Management Thought in the Fifth to Nineteenth Centuries

found in the essays of medieval scientists who sought to substantiate the nominalistic monetary theory. However, their explanations were as far from science as the “theories” of medieval European alchemists engaged in search for the philosopher’s stone that could transform any metal into gold. The wealth looted during wars and raids was valued in the feudal environment above accumulated savings, good economic management, or methodical exploitation of peasants. Wealth that had been given away to subordinates or squandered for prestige consumption purposes raised social status higher than wealth used for productive purposes. It is not surprising, therefore, that not only the early, but even the developed Western European Middle Ages (eleventh to fifteenth centuries) did not leave us with any serious theoretical essays on economics and management written by the representatives of the secular feudal. The development of public, including managerial, issues from the perspective of the dominant class became the domain of the clergy—Church feudal. The most organized class of the feudal society was the clergy. With a strict hierarchy, it belonged to the secular system of vassalage. It was an open category of a feudal society, which included not only feudal, but also the most gifted representatives of other classes. Social sciences were, during this period, simple branches of theology and were addressed from the Scriptures perspective. Therefore, Bible quotes were the main arguments in dispute, and the compilations from ancient texts were a way of expressing their own views. The authors were not at all confused with the fact that the past was described in modern categories, and ancient thinkers were attributed to medieval economic perceptions, a feudal system of values. Biblical texts had been used extensively, for example, to denounce usury as an unnatural means of enrichment, as a phenomenon ruining the human soul. The Christian dogma had become an important “theoretical tool” also to overcome the insolent attitude towards labor, which was distinctive to antiquity. Labor in medieval times is increasingly seen not only as a punishment for sin, but also as a way to save humanity. Management issues had been developed in the works of monks. Monasteries were the organizers of a large, often well-established secondary economy, and agricultural and craftsmanship production, as reflected, for instance, in the Saint-Germain urbarium (France, early-ninth century), in the urbarium of the Italian Abbey of Santa Giulia di Brescia (mid-ninth century), Fulda urbarium (Germany, early-tenth century), or other works of this era. The main object in polyptics was usually a manor, within which both a manor land (arable land, gardens, vineyards, mills, buildings, workshops, etc.) and slaves and peasant holdings serving were described. Due to the large amount of information (in the largest, Saint-Germain polyptic, about 10 thousand people are mentioned), the systematic description and diversity of information polyptics are one of the most important sources of study of management of church farms in Western Europe in the eighth to tenth centuries. Note that in Russia the nearest analogue of polyptics is scribe books known from the fifteenth century, which will be discussed in Chap. 4. The growth of productive forces and the deepening of the public division of labor facilitated the separation of craftsmanship from farming, of towns from villages. In

3.1 Origins and Sources of Management Thought in the Fifth to Eighteenth Centuries

157

the tenth to thirteenth centuries a special social category among the feudal society is formed—townspeople. As a legitimate result of the feudal order, the burger culture differed notably from the culture of other feudal society categories. In comparison to church and chivalry cultures, it was more modest, owing to both economic and social causes. The wealth of this category no longer depended on land ownership, but above all on its labor efforts. This predetermined a practical mindset, an entrepreneurial impulse, and rational reasoning of the townsfolk. In comparison with the culture of peasantry, urban culture differed by a higher level. The civility of the townsfolk also manifests itself in the wider use of goods and monetary relations for the management of the economy and in greater dynamism of its development, in its more secular nature, and in the promotion of the role of literacy and written culture in general, and the awakening of cognitive interest in the surrounding world. Townsfolks are more critical of themselves and other categories of the feudal society, and enjoy laughing at the weaknesses and shortcomings of other classes and social groups. Managerial, economic and legal perceptions of medieval burgers were reflected in craft charters and city law. The craft structure was a feudal organization of the city’s craftsmanship. The crafts master not only works himself, but also exploits the labor of disciples and apprentices, but the purpose of his exploitation is feudal, rather than capitalist. “Existence relevant to his dimensional position, not exchange value as such, not enrichment as such, is the goal here and the result of the exploitation of the work of others.” The means of achieving that goal were also feudal. The craft charters perform petty regulation of the production efforts of each member of the corporation. They regulate the quality and quantity of products produced, the number of disciples and apprentices, the technology of production, etc. All these measures are aimed at competing both within the workshop and with village and other non-functional trades. This contributes to the unification of craftsmanship, widespread professional skills and the stabilization of the market, but at the same time limits the capitalist potency of the functional system. Thus, in the future, functional charters had become an obstacle to economic development. Workshops sought to establish monopolistic conditions for the production and sale of their products in the local market. Merchant guilds also sought to create monopolistic terms of trade. The strengthening of the urban system, on the one hand, and the gradual transition of peasants from serfdom to natural and later money serfdom, had exacerbated the contradiction between the town and the country. “If the country-side exploits the town politically in the Middle Ages, wherever feudalism has not been broken down by exceptional urban development—as in Italy, the town, on the other hand, exploits the land economically everywhere and without exception, through its monopoly prices, its system of taxation, its guild organization, its direct commercial fraudulence and its usury,”—wrote C. Marx about the relationship between the town and country-side of the Middle Ages. The development of management thought of this era is characterized by its strong state nature, and by its continued existence as a model of the police management. This is especially evident in the treatises of scientists and statesmen of the Byzantine Empire and Eastern European countries, such as Georgius Gemistus, Basilios

158

3 World Management Thought in the Fifth to Nineteenth Centuries

Bessarion in the Byzantine Empire, A.L. Ordin-Nashchokin, J. Križanić, G. Kotoshikhin in Russia, whose essays are written from the position of the state or for the first person of the state, or appeal to the state. This had been facilitated by ancient tradition and a weaker one than in Western Europe, class diversity of society, a high degree of centralization of all spheres of spiritual activity, particularly orthodoxy, which is characterized by hierocracy subordinate to secular authorities, and an awareness of national interests in the fight against foreign invaders. Along with these common points, there were profound differences. The finest monuments of Byzantine management thought were the greenhouse creatures of a highly educated elite, which did not reflect, as in Russia, the interests of sufficiently broad categories of society. Moreover, most of the monuments of Russian management thought refer to a later era, reflecting the more complex socio-economic conditions, and are more acutely alert of the issues faced by the Russian centralized state. Despite the fact that the production itself in medieval economies remained manual and primitive, many of the problems and principles of good management of the local economy occupied the minds of religious leaders, rulers, owners of estates and individual scientists. In the early Middle Ages, the so-called barbaric laws—Salic, Ripuarian, Burgundian, Bavarian, Russian, and others—were emerging, containing a list of penalties and fines for all kinds of crimes in the rural, craftsmanship and other types of economies. The text of these prescriptions makes it possible to judge the relatively low level of development of the ideas on the organization of small local economies and the principles of local self-governance. More informative in terms of managerial thought are the so-called regulations, instructions for those managing feudal estates, issued three centuries later. If, for instance, the Salic Law did not inquire about the organization of production, leaving it to the discretion of individual peasants, who performed business within the community (the matter was to regulate the relationship of peasants with the community and among themselves, of the protection of their interests, etc.), the famous Capitulare de villis (Estate Act), issued in the early ninth century, attempts to resolve the issue of the organization of major feudal production on a serfdom basis by increasing the exploitation of house serfs and peasants. However, in the Capitulare, as in barbaric laws, agriculture organization issues were still upfront. During the classical Middle Ages (eleventh to fifteenth centuries) feudal production management issues become more complicated. By adopting a policy of fixing certain obligations (serfdom and levy payments), the organization of such production became sustainable, which in turn enabled the recording of material production capacity, the introduction of elements of planning and accounting for production. On the other hand, diligent fixation of duties and charges made feudal production too cumbersome, inadequately elastic and seasonally adjusted. Another policy, the policy of feudal arbitrariness, guaranteeing feudal unlimited rights to administer the work of a serf peasant, was conducted to maneuver the management of production. The main feature of the development of management thought of the medieval East is that it had continued to develop the same issues as in antiquity. The continuity

3.2 Byzantine Management Thought

159

of economic thought is primarily due to the continuity of the socio-economic system known as the Asian mode of production. It is characterized by: preservation of the rural farming community as the backbone of the socio-economic structure, the leading role of state ownership of land, lack of demesnial economy, corvee and serfdom, and cities as centers of craftsmanship and domestic trade. Cities arise here as military settings, religious pilgrimage sites and foreign trade points. Higher crafts that serve the sophisticated interests of the dominant class focus here. Therefore, central to management thought of the medieval East, as well as in the countries of the Ancient East, are issues of governing the country, public taxation and the enrichment of the state. In doing so, the authors of treatises seek to propose a system of measures that, while satisfying the interests of the dominant class, would ensure the normal course of reproduction, well-being and security within the country. A particular feature of China’s management thought was the fact that its main author was a person, either in public service or seeking a post. The government official acts here as the main creator of the spiritual culture. It is not surprising, therefore, that the focus of his essays also remains on public management, public support and promotion of agriculture as the main area of production, and the promotion of craftsmanship and trade as complementary to agriculture. Islam has had a great impact on the development of economic thought in the Middle East. In a number of areas of knowledge, Arabs are direct heirs of antiquity. But from its spiritual world, they have learned a rational rather than humanistic beginning. Therefore, the Muslim culture is closer to the ancient culture than to the antiquity. With the ancient eastern literature of the Muslim authors unite the focus on traditional subjects, imitation of predecessors, the didactic attitude of literature, the love of “fundamental” works—particular Encyclopedias of Medieval Knowledge. The essays of Al-Ghazali and Ibn Khaldun, for example, contain ingenious judgments about managing people, leadership, human behavior within an organization, and the upbringing and training of future executives. Here we will examine the works that characterize management thought in Byzantium, the barbaric kingdoms of feudal Europe, and the countries of the medieval East.

3.2

Byzantine Management Thought

The Byzantine Empire, the history of which spans over a millennium (from the end of fourth century before the capture of Constantinople by Turks in 1453), has known during its development periods of both highest bloom—when it became a giant power, encompassing the entire Mediterranean basin in a broad ring—of deep decline. In the last centuries of its existence, it was a politically fragmented, “residual” state, which owned in the Balkans only a few insignificant, scattered territories. As a state, Byzantium preserved and continued the Roman system of elected, non-inheritable (at least at first) and centralized monarchy, which strongly

160

3 World Management Thought in the Fifth to Nineteenth Centuries

distributed it throughout the Middle Ages. From Rome, it also borrowed developed written law, resting on the principle of private ownership. The economy of Byzantium was dominated by subsistence farming, but there was also a commercial economy [1, T.I, Ch. 9, 2–4]. The combination of monetary and goods relations with pure medieval, feudal forms of conducting business and exploitation was perhaps the most characteristic of its traits. In the area of finance, the monometallic system based on gold dominated and the Byzantine gold nomisma was a universally accepted international transaction unit which played the role of the international currency. Accordingly, a relatively high level of banking was observed in Byzantine (especially in the early period). In an effort to promote the development of banks, the Byzantine government, for instance, under Emperor Nikephoros Phokas (963–969), struggled with tendencies to withdraw money from circulation, to their hoarding. The books of artisan corporations of the tenth century contains a ban on saving money “for the time of need” without depositing them to trapezites for safekeeping. The stability of monetary circulation and sustainability of currency was particularly emphasized by Leo VI the wise (886–912), in whose 52nd novella “money, suitable for circulation” is called “the nerve of all things.” The notion of “fair price,” which was present in Byzantine and the medieval West, in the context of a developed market exchange was not a purely theoretical issue or a moral influence principle. It reflected market conditions and was applied to pricing in the urban market. As a legalized rule of applicable law, the notion of “fair price” had also been used in practice, and was in particular reflected in the sales acts. In general, management views on the management of the Byzantine economy have been influenced by the classical tradition, judgments of antique chrematistics, as well as by Christian norms reflected and established in both canon and civil laws. Therefore, up to the last centuries of the Empire’s existence, there had not been any original concept in this regard. Even in the fourteenth century in the work of the distinguished Byzantine statesman, scientist, and writer Theodore Metochites (1260–1332), management ideas take the form of abstract speculation on improving financial management, their economical and moderate spending, and the multiplying of social wealth that is associated by Metochites with monetary wealth. Another Byzantine scientist of this time, Thomas Magistros (approx. 1270—1325), follows the general provisions of the classical tradition in his criticism of financial and fiscal policy of the government, in an attempt to justify the need for broader reforms. And the prominent church figure of the era Gregory Palamás (1296–1359), apparently under the influence of Aristotle, expresses his interest in the idea of assigning money as a universal equivalent and as an intermediary in the area of merchandise. “For one and the same person,” says Palamás, “cannot at the same time be a wise man and farmer, tailor, weaver, builder, shoemaker, doctor, and competent in all other trades besides. And as each cannot by oneself satisfy all one’s needs, and since in the same domain all have, without fail, the same needs, an intermediary—money—was invented as a means to be used by society. By this means the excess of one person is limited and the need of another is met. Thus, the farmer gives his excess to one who does not work the soil, and having received money for this, buys, for example, a house or a piece of cloth. It is thereby that in the community the lives of all of us are

3.2 Byzantine Management Thought

161

bound to one another, and as a result, towns and cities are born where man is a social being” [1, T.I, Ch. 9, 2–4]. As in feudal Europe, Byzantine ecclesiastical theorists, in accordance with the provisions of canon law, actively fought against usury (canon law condemned loaning money for interest as a serious sin based on the principle “money cannot generate money”). These submissions penetrated secular legislation. The Ecloga (the Byzantine Book of Laws, eighth century) does not mention loan for growth at all, which was interpreted as a prohibition. The famous 67 chapter of the legal compilation “Agricultural Law” does not prohibit lending for growth, but prescribes that after 7 years income from land held as collateral should be credited to the debtor. And it was legitimately understood as a desire to limit broad lending for growth. The legislative compilation of the ninth century. “Isagoge,” which was written by Patriarch Photios, demanded that all interest be abolished and prohibited peasants to give their fields as collateral, “because in reality this is not a guarantee of his field, but the destruction of his life.” A hostile attitude towards usury was demonstrated in the fourteenth century by the Constantinople Patriarchate in a number of his judicial decisions, and the pupil and successor of Gregory Palamas, the prominent Byzantine theologian, Nicolas Cabasilas (approx. 1320–1363/91), in his two treatises—“On usury” and “Against moneylenders”—develops these ideas in relation to the critical situation in which Byzantium was at this time [1, T.I, Ch. 9, 2–4]. Inspired by biblical texts, Cabasilas raises the thesis of compulsory labor for all because “no income should be paid to those who do not work.” That is why usury cannot be considered moral, since “no one gains interest by labor.” Labor, in Cabasilas’ interpretation is a moral rather than an economic category. And all the calls in the name of abstract justice and Christian love for the sibling to ban the activities of the rich moneylenders were in the period of the emergence of the elements of the exchange and commercial credit (as the book of accounts of the Venetian merchant, Giacomo Badoer so eloquently attests), not only useless business, but also reactionary, as evidenced by the Trade book or the Book of accounts of the Venetian merchant Giacomo Badoer, published by Italian scientists Dorizi and Vertele in 1956 [5]. Giacomo Badoer was a merchant, an operator on the Constantinople market and a commission agent of several prominent Venetian merchants [6]. Most distinctively, fully and originally economic vision and ideas were manifested in the humanistic stream that developed in Byzantium in the fourteenth to fifteenth centuries and it was primarily related to the name of the eminent Venetian culture figure, the Neoplatonist philosopher Georgius Pletho (approx. 1360–1452). Greek historiography of our day regards Pletho, also called Plethon, as the “deliverer and initiator of economic science,” “a great sociologist and financier,” arguing that the lot of other national schools throughout the ages has been “to develop and analytically express their views, thus developing a theory” [1, T.I, Ch. 9, 2–4, 7]. What is from the perspective of HMT the essence of Pletho’s ideas? Unfortunately, those chapters of his famous treatise, “Book of Laws,” which set out the views on the management of the economy (from the table of contents these were partially the second and mainly third book), have not survived. But there is a possibility to make a pretty clear impression of them, since Pletho’s speeches with

162

3 World Management Thought in the Fifth to Nineteenth Centuries

reform proposals remain. One of them is addressed to the Byzantine Emperor Manuel II Palaiologos, the second is to the ruler of the Peloponnese Theodore Palaiologos. The starting point of Pletho’s management ideas was his provision on public wealth as the sum of the fruits of the earth, and more specifically as a result of agricultural activity. This purely “real” wealth arises, in Pletho’s mind, by a combination of three composite elements—labor, means of production and management. The idea of labor as a source of wealth is constantly emphasized by Pletho. He distinguishes it from other factors of production and thus gives rise to some bourgeois authors to talk about the birth of a labor theory of value. The fact also draws attention, that, although land occupies special place in Pletho’s view, as an area of application of labor, it is not included in the notion of means of production, as an active factor in the creation of social wealth. As a result, he avoided mistakes so typical of physiocrats. Plethon’s main thesis, which runs through all of his reform projects—the need to protect the working person, especially a farmer, shepherd, or winegrower, whose work was regarded by him as the basis for the economic well-being of the state, was very progressive. Plethon called probably for a better approach to the direct producers, “these universal breadwinners,” not only to protect them from external danger, but also to be able to impose only a single, equitable natural tax. In the hierarchy of the categories that society is supposed to be divided into, it is the farming taxpayers that are to be placed first. Second were warriors, freed from taxes and obliged to protect the state, and the third—rulers, officials headed by the Emperor himself. No less progressive was Plethon’s thesis in the context of the reign of feudal relations: “by nature all the land is equal and common to those dwelling on it; no one should lay claim to any part of the land as private. . .” Everyone must be considered the owner of the ground he cultivates, until he abandons work on it: “he shall not pay anything, and no one may harm or hinder him, except only one who has previously received (this) section for processing—as determined by law in respect of common and not private property” [1, T.I, Ch. 9, 2–4]. Of course, this cannot be seen as a requirement for “socialization of land,” and the author—as a predecessor of not only utopian, but also scientific socialism, as most bourgeois researchers do. It is also difficult to accept the opinion that explains Plethon’s denial of private ownership of land by his “capitalist” thinking and ascribes antifeudal thrust of ideas to him. After all, advocating for the land to be “common,” i.e. public (which for Plethon is the same as the term “koine,” which he uses, may bear both of these meanings), Plethon acts as a servile small landowner, as a pronoier, with no major ancestral land ownership and with hatred (and possibly with lust) looking on the estate of the ancestral Byzantine nobility. Hence the merciless criticism of all sorts of “dynatoi” and “archons,” the largest landowners—owners of ancestral estates, the bearers of separatist tendencies, which the pronoier community, associated with the imperial court, considered its enemy. Also, characteristic is Plethon’s reasoning on the distribution of the annual aggregate product of production among various social groups of the population for the purpose of conducting social justice. When the fruits of labor are counted and

3.2 Byzantine Management Thought

163

seed costs are returned to the farmers, he wrote, stressing the need for production consumption, then the entire income should be divided into three parts and the first part should be given to those who perform the work (i.e., farmers), the second to those who invest their property into production (i.e., the owners of the means of production), and the third—for maintaining the state apparatus. However, Plethon categorically denied the right to participate in the distribution of social income to the parasitic domains of society, especially monasticism. Only by taking into account the specific relationship between proprietary and monastery landowning in Byzantine of the fourteenth to fifteenth centuries and the frequent redistribution of the land fund between these two categories of Byzantine feudal can the passion with which Plethon called for the deprivation of this, in his opinion, “swarm of drones” of their share in public wealth, as a segment of the population with no obligations to society, be understood. Opposing the greed of monasteries, Plethon stressed that such phenomena “are inconsistent with the teachings of those who originally established this (i.e. monastic) way of life.” The state suffers from the fact that the demands for endless gifts from state reserves by “people with no responsibilities” are being satisfied. Many of the plans for Plethon’s reforms were imbued by external peril, which threatened Byzantine in the fifteenth century. Hence his thesis of the need to replace the employed army with a local regular army, to focus on protectionist policies to protect craftsmanship and trade of Peloponnese (it is to him that Plethon assigned the role of the “experimental division” for his reforms) from the competition of foreign, primarily Italian, merchants. This protectionism, which derives from Plethon’s perception of the Autarky state, of the creation of a confined economy, separate from that of other countries, was also dictated by the urgent need to save local production and objectively addresses the interests of the country’s trading and crafts population. Plethon’s views had a great influence on his followers and disciples. Some of them, most prominently, were not confined to the theoretical assimilation of their economic beliefs but sought to implement them. In this regard, the letter of the outstanding figure of Byzantine and Italian Renaissance, Cardinal Basilios Bessarion (1403–1472), to Constantine Palaiologos [1, T.I, Ch. 9, 2–4, 8] is particularly indicative. In fact, the entire political, economic and military program outlined in Bessarion’s letter was based on the ideas of his mentor, Plethon. This is clear from Bessarion’s terminology: when he proposes dividing the population into an agricultural production class and a military category, it is merely a simple repetition of the relevant provisions of Plethon. Understanding the laws of the economy and the role of the state in this process is also based on the ideas of Plethon. In particular, the author of the letter believed that the normal functioning of the economic body required the protection of public wealth, the export and disposal of surplus production of public goods, the preservation of what was not in abundance in the country, and finally, the import of goods that the country needs. However, in his proposals to improve the economy of Byzantium, Bessarion is much more practical than Plethon. Being well acquainted with the industrial development of the West, and especially Italy, Bessarion acutely felt the country’s

164

3 World Management Thought in the Fifth to Nineteenth Centuries

economic immaturity. Therefore, he sought to reinforce his theoretical provisions and practical proposals with examples of Italian cities. It was under the influence of Italian practice that Bessarion largely departed from the views of his mentor on agriculture as the basis for social production and for agricultural work as the only productive one. Pointing out to Constantine the presence in the Peloponnese of ore deposits and urging that they be systematically developed in order to avoid import of iron from abroad, the author thus recognized the role of industry as a significant component of public production. This involved not only extractive industries but also the processing industry. In Bessarion’s view, iron production “is so useful and so necessary for people that without it is impossible to succeed in neither military nor in peace or in public affairs.” As a practical measure, he advised Constantine to send young people to Italy for learning the necessary crafts, adding that such direct learning of crafts at Italian workhouses would make it easy to study them in a short period of time. In Chap. 5 on the establishment of HMT in Russia, we will encounter exactly the same proposals, but which had already been made by Russian thinkers and Russian kings in the fourteenth to seventeenth centuries. This once again confirms our hypothesis about the non-Markoviness of social processes, caused by the fact that it is Vissarion Niceisky who played an important role in the fate of Russia, when, taking care of the fate of the members of the Byzantine imperial house of Paleologists, he was first to start negotiations concerning the marriage of Russian tsar Ivan III Vasilyevich with Sophia Paleolog and more than others promoted the arrangement of this marriage [9]. Thus, Byzantine management thought reflected the peculiarities of the emergence of individual feudal institutions, a shift away from a focus on philosophical tradition and antiquity, a distinctness in the development of Byzantine feudalism as a whole. It was the ideology of a society whose economy, due to some particular historical circumstances, combined the natural-economic basis with elements of a developed commodity and monetary economy. The social tendency of Byzantine thinkers was to promote the consolidation of feudalism, to consolidate the class foundations of the Byzantine state.

3.3

Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

In the fifth century A.D. slaveholding the Western Roman Empire collapsed under the pressure by German tribes and barbaric kingdoms formed on its territory. These states had an incomparably simpler economic and political organization than that of an empire, and the remnants of the clan system were clearly manifested. The Romano-Germanic fusion, which took place in a large part of Western Europe, eventually led to the emergence of large feudal land ownership and the main classes of medieval society—feudal and dependent peasants.

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

165

It should be noted that there is no work specifically devoted to management and economic issues and written in the early medieval period. This is due to several circumstances. First, the level of economic development of the German states had been low. Also, subsistence farming was widespread, agriculture was the mainstay of the economy, and monetary circulation was not significant. Secondly, the dominant form of ideology in the barbaric kingdoms was the Christian religion. The influence of the church on the spiritual life of medieval society was so strong that all the arguments on the subjects of interest of HMT were generally invested in a religious and ethical form. Third, there has been a known regression in the field of scientific thought, as well as the fact that management issues had not yet been identified as an independent research object at that time. However, this does not mean that management thought in the early Middle Ages had not evolved. During this period, issues emerged that were not known to the ancient world and that required their interpretation. Thus, the breakdown of slavery had enforced a change of attitude towards physical work, and a different raising of the issue of the situation of various groups of people in society. The decomposition of the community and the genesis of feudal relations also raised important issues (see Anthologies on the topic [2–4]). Interpreting management issues, the authors of the sixth to eleventh centuries cited the provisions contained in the Bible and in the essays of the Fathers of the Christian Church (patristics) as key arguments. This approach was manifested in particular in dealing with the issue of wealth. As is well known, in Ancient Rome, the principles of hedonism were preached in aristocratic circles. In the Middle Ages, another view was that the desire to possess wealth was flawed, because it prevented the search for the Kingdom of God and was proof of the absence of true faith. Unlike the ancient authors, who considered inequality of human beings to be natural and eternal, medieval thinkers on this issue proceeded from the position of Christianity that all people were equal before “divine grace.” In the ancient world contempt dominated for physical work, which was considered primarily the fate of slaves. On the contrary, in the Middle Ages, and in particular in the early medieval period, the point of view was that work should be the sole source of livelihood in accordance with the biblical principle: “In the sweat of thy face shalt thou eat bread.” At the same time, the church, demagogically proclaiming itself to be a mediator between the haves and the have-nots, obliged Christians to share the fruits of their work with the poor by giving alms. Historical early medieval documents reflected the issues associated with the decomposition of the community and the genesis of feudalism (attitudes towards the community and emancipation of peasantry, economic organization of early feudal patrimony, the productive capacities of natural production, etc.). The most comprehensive interpretation of these issues is found in the sources relating to the Frank Kingdom. For example, the issue of community attitude was reflected in the famous “Salic Law,” a code of customary law on Salic Francs, drafted under Clovis (481–511) and subsequently added up by capitularies of other kings [2–4]. In the Russian Empire the Latin text of the Salic Law was published by R. M. Gube (1867) and D. N. Egorov (1906); and D. N. Egorov’s edition served as the

166

3 World Management Thought in the Fifth to Nineteenth Centuries

source for the only complete translation of the monument into Russian (1913; 2nd ed. 1950), performed by the staff of the Department of World History of Kazan University, N.P. Graziansky, and A. G. Muravyov [10]. The authors of the “Salic Law” recognize the community’s supreme right for arable land to protect the sovereignty of the community from assassinations of new coming elements. Thus, title 59 of the “Law” indicates that land allotments (allodium) had not yet become private property of individual families. Paragraph 5 of this title prohibits the transfer of land by inheritance to female persons: “In no case shall land inheritance fall into the possession of a woman, but may the entire land be submitted to the male gender, i.e. brothers.” If there were no male heirs, the land went to the community [2–4]. The “Salic Law” protects the community’s supreme right for meadows, wastelands, forests, swamps and other lands. Thus, according to paragraph 19 of title 27, the logging of the forest was permitted to all community members unless the trees had marks made less than a year ago: “If there is a tree that has been marked over a year ago, there is no fault in this.” While protecting the community’s rights for land, the “Law” imposed severe restrictions on the settlement in the villages of new coming elements. Thus, in title 45, “On immigrants,” it was said that “if one wishes to move to one else’s villa and if one or more of the occupants of the villa are willing to accept him, but there would be one who opposes the relocation, he would not have the right to settle there” [2–4]. At the same time, the writers of the Salic Law were obliged to consider the fact of decomposition of the community and the development of the private economy on its lands. Therefore, this legal monument contains laws protecting the individual economy of the francs (the titles “On theft of a fence,” “On various thefts,” “On arson,” “On harm caused to a field or any fenced site,” and others). Recognizing the presence of remnants of ancestral relationships (as evidenced in particular by the title “On Raypus”), the “Salic Law” at the same time reflected the process of their gradual elimination. For example, the drafters included in the compilation of laws the title “Of a handful of land,” under which wealthy relatives could refuse to pay fines for their poor kindred. The title “On the willing to renounce kinship” allowed the possibility of leaving a large family. The most important source of management thought of Western Europe of the early Middle Ages is the “Capitulary of Estates (Estates Act)” issued in the end of the ninth century by Charles the Great (approx.742–814) for all the estates of his monarchy as an instruction for running the household in the King’s own possessions [11]. By this monument the economic views and economic policy of the feudallandowners can be judged. The author of the “Capitulary” proceeds from the fact that the owner of the estate is the monopolistic owner of land and the local economy must serve its “own needs.” The economic ideal for the author of the “Capitulary” is subsistence farming. In formulating the principles of exemplary economic management, it prescribed natural levy, creating stocks, “so that there would be no need to beseech anywhere. . .or to loan,” to develop various types of production. The Capitulary lays down specific regulations on the organization of field work, the expansion of cattle breeding,

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

167

horticulture, wine-growing and gardening. At the same time, issues of organizing allodial craftsmanship for the implementation of primarily agricultural work are addressed. Thus, for example, the Capitulary prescribed that each estate manager should have “in under his supervision good masters: blacksmiths, silversmiths and goldsmiths, shoemakers, lathes, carpenters, armourers, fishermen, breeders, soap makers, brewers, bakers,” so that the masters can prepare their own assistants by inviting students to the establishment. It provided for the creation of special workshops to make the drawing canvas and cloth. The Capitulary outlines the principles of rational trade and stockpile management, suggests selling surplus and buying products that are not produced in patrimony. Thus, for instance, managers were required to buy high-quality seeds, simple wine and sell unsent eggs and chickens unsent to the palace, as well as fish from tanks if it was destined for the king and his entourage, were the king not to arrive at the patrimony. In article 33, the principle was formulated more generally: “After all these parts of our revenue have been set aside or sown or otherwise dealt with, anything that is left over is to be kept to await our (royal) instructions, so that it can be sold or held in reserve as we shall decide” [2–4]. The economic policy of the Frankish kings, as a public management strategy, was affected by the strong influence of the Church and the economic views of the Roman Curia and episcopate. Thus, in justifying the need to help the poor while at the same time pursuing their material interests, the Church demanded tithing from members. This requirement is reflected in the legislation of Charles the Great. In the “Saxon Capitulary” (last quarter of the eighth century), for instance, he prescribed “all, according to the commandment of God, to give the churches and the clergy a tenth of their property and earnings”. The duty of everyone to pay the church tithing was justified by the fact that “all Christians, without exception, should return to the Lord part of what He gave to everyone”. Throughout the Middle Ages, the church had been in a hypocritical struggling against charging interest for loans. Already in the early medieval period, it had succeeded in spreading negative attitudes towards interest in society and in issuing laws prohibiting usury. The royal authorities’ negative attitude towards the charging of interest was manifested, inter alia, in the laws of Charles the Great. Thus, one of them referred to the prohibition “to give anything for the purpose of growth. Not only spiritual but also secular Christians should not request interest on loans.” In the opinion of the legislator, usury is unacceptable because the charging of interest “is a requirement of what has not been given,” so “the most legitimate thing would be to take only the size of the loan from the debtor.” Charles the Great stated that he “who, during harvest or gathering of grapes, buys grain or wine not for the sake of need, but out of greed, buys, for example, for two denier a measure and waits for the time when he can sell it for four denier or more,” obtains a “criminal profit.” As we shall see later (in Chap. 4), the same position was followed by the authors of the truth of the “Pravda Russkaya.” The issues that were reflected in the sources of HMT of the Frankish kingdom are, to a greater or lesser extent, dealt with in documents describing socio-economic relations in other Western European romance countries (in the Ostrogothic Kingdom

168

3 World Management Thought in the Fifth to Nineteenth Centuries

and Visigothic Kingdoms, in the Kingdom of the Lombards). However, the Romanization of these states was stronger than in the Kingdom of the Franks. Therefore, one of the most important issues encountered by Management Thought of Italy and Spain during the early medieval period was the issue of how to deal with the forms of exploitation inherited from the Roman Empire, in particular the Colonate we mentioned in Chap. 1. State and church figures of these kingdoms viewed the Colonate as an important form of serfdom, responsible for the interests of land owners. Thus, the Archbishop of Seville Isidore (approx. 560–636), in his “Etymologiae” (in 20 books (!) [12]), stressed that the colonies were under the authority of landowners, who were the holders of the lord’s lands that carried out various duties in favor of the landowners. The second church council in Hispalis, held in 619, confirmed the colonus serfdom to the land. However, attitudes towards the colonate in the early medieval period had changed in comparison with antiquity. Roman jurists viewed this form of exploitation as an institution closely linked to the state burden, and in colonate they gave prominence to attachment to the same piece of land. Wherefore, they allowed to sell the colonus only along with parcella. On the contrary, according to § 142 of the “Edict” of Theodoric the Great (493–526), estate owners were allowed to “alienate, cede, sell, give” colonus “without land.” Colonate was no longer viewed as an institution closely linked to the state’s taxation system. From the perspective of the dominant class, it was not fundamentally different from other forms of feudal dependence [2–4, 13]. The development of feudal relations in England took place more slowly than in France, Italy and Spain. The Anglo-Saxon kingdoms had not inherited Roman forms of exploitation and the community had thus become more stable. The management ideas in the Anglo-Saxon period can be judged, first of all, by legal sources. The most important of these are the Law of the Kent King Æthelberht (early seventh century), The Code of Laws of Ine of Wessex (approx. 690), the Legal Code of Alfred the Great (second half of the ninth century), as well as the writings of the monk and chronicler of Bede the Venerable (672—approx. 735). Anglo-Saxon sources reflected the process of social differentiation of peasants and the strengthening of the royal authority. Trying to disguise the fact that the royal power stood for the interests of feudal, Bede the Venerable brought forward the idea that kings cared for the welfare of all the people. However, he had to recognize the division of society into the poor and the rich. The fact of social and property differentiation of peasants and the disintegration of ancestral relationships is also recognized in legal sources. Thus, the laws of Ine suggested that a free man and his unfree relative were not bound by any obligation to help each other. Based on the differences in the social status of the people, the Anglo-Saxon “Codes of Law” set up various wergilds. The royal authority protected new forms of dependence and facilitated their distribution. Thus, the Law of Æthelberht prescribed that relatives of hlafordless people “made them settlers” and found them hlafords. At the same time, kings attempted to regulate the feudal exploitation of the dependent population. The sources of the Anglo-Saxon period give an idea of the Royal Government’s attitude to trade. On the one hand, the kings, considering trade as one of the main

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

169

sources of revenue for the treasury, patronized trade transactions and, on the other, attempted to regulate them. As the “establishment of merchants” of King Alfred indicates, merchants were respected by law, although they were under the supervision of the authorities. Kings had repeatedly issued laws that allowed for trade only in certain places. At the same time, they exercised strict control over the minting of coins [2–4]. During the classical medieval period, the Catholic Church, as the creator and distributor of the “ideology of medieval feudalism” (F. Engels), continued to have a great influence on the development of public thought. In particular, the medieval management thought was greatly influenced by the canonical doctrine developed by church jurists, interpreters of church law. Canonists also interpreted economic issues, often from the standpoint of the ancient tradition, Aristotle’s beliefs. But the class interests of the feudal, specific motivations of the church itself, who claimed social privileges, were decisive. The most important source for judging the managerial views of canons is the “Concordia discordantium canonum” (or “Decretum Gratiani”) [14] drawn up in mid-twelfth century by the Bologna monk Gratian. According to Canonists, the ideal for all who wish to comply with the rules of Church law must be common property. At the same time, they claimed that private property was necessary as a punishment for “human heartlessness.” In the mind of canonists, man must look upon his property as a good for which he will answer to God. The need to give alms to the poor to whom, according to church lawyers, God has special patronage, was proclaimed. They considered only land and labor to be the true factors of production. Based on this, canonists declared agriculture and craftsmanship as worthy of a Christian, disapproved of trade, the purpose of which was to receive gain, and condemned usury. The classical interpretation of the canon doctrine was given by Thomas Aquinas (or Thomas Aquinant: (1225 or 1226–1274), an Italian monk, aristocrat of origin, declared a saint by the Church (1323), and still very popular among bourgeois philosophers. The famous treatise “Summa Theologiae” [15], created by Thomas Aquinas, became kind of an encyclopedia of Catholicism and became widely known. In his political, economic and managerial views, the author relied mainly on Aristotle, but also developed a number of his own provisions. He advocated centralization of power, pointing out that God stands above the Universe, the heart dominates the body, and even bees have a queen. At the same time, he stressed that kings should obey the Pope [2–4, 15]. Thomas Aquinas stated his views in the form of a series of questions that sometimes proved far-fetched. Thus, it was discussed: “whether it is natural for man to possess external things,” “Whether it is lawful for a man to possess a thing as his own.” The response method was casuistic and academic in nature. Arguments were invoked to justify some or other phenomena and were then opposed to the texts of the Scriptures, the opinions of the fathers of the Church and Aristotle. This was followed by a compromise conclusion. It is clear that a scientific solution to the question raised was not possible.

170

3 World Management Thought in the Fifth to Nineteenth Centuries

Aquinant strongly condemned the desire for social equality, society was envisioned by him as hierarchical and dimensional. He claimed that “rising above one’s dimension is sinful,” because dimensional division is “established by God.” The supreme good for man was proclaimed to be “contemplation of God” rather than the accumulation of wealth. Following Aristotle and in accordance with the dogmas of “evangelical Christianity,” Thomas Aquinas justified slavery, seeing its roots in the natural distinction of people and their sinfulness. Slaves were consigned to the role of bees who collect honey for the Lord. In doing so, Aquinant referred to the usefulness of slavery, although he recognized (following Roman jurists) that it did not have a “natural basis.” Serfdom was perceived as an undeniable phenomenon. In accordance with the long tradition of Christianity, the work of Thomas Aquinas had been positively evaluated as necessary for life, deliverance from idleness, the promotion of morality and the distribution of charity. However, physical labor was treated by him as “a slavery affair.” Aquinant justified social parasitism, defending feudal rent, which according to his words enables the chosen ones to engage in spiritual work “in the name of the salvation of others.” The apologia of feudal exploitation would not do without the protection of private property. Thomas Aquinas paid tribute to phraseology that all things are by nature common and belong to God himself and that man could only use them. At the same time, he claimed that private property was necessary for the common good, business itself and personal interest. Reiterating Aristotle’s argumentation in defense of private property, Thomas Aquinas wrote that “plants are created for the sake of animals and animals for the sake of men” and stressed that, within the necessary needs, property is natural, because it obliges them to give alms, to take better care of their affairs, and to establish relations with people on a peaceful basis. Therefore, “one must protect what is his.” Only “voluntary poverty” (for the sake of contemplative life) allowed for common property. It is quite characteristic that, by protecting dimensional privileges of the nobility, Thomas Aquinas opposed excessively generous handouts of charity because, according to him, the owner must “lead life in a manner appropriate to his dimension.” Proprietary lust and dimensional claims of landlords found a pious expression in these discourses with a significant dose of pharisaism. Private assignment was justified even by the usefulness of charity. Thomas Aquinas ignored the fact that private property was used to exploit people. In general, the Dominican monk adhered to a subsistence philosophy, believing that the state should be secure and receive everything necessary from its territory so as not to be dependent on merchants. The division of wealth into natural and artificial (gold, silver) is also distinctive. The latter, in Aquinas mind, does not make one happy, and the acquisition of such wealth cannot be a goal, as it must be a moral improvement. These maxims were affected by the repercussions of Aristotle’s judgment and the influence of the subsistence economy of the thirteenth century. But it is important to note that Thomas Aquinas severed in part with naturaleconomic views. He justified the exchange, and even considered the city, with its class division of the population, as a perfect form of society.

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

171

Merchandise production was a secondary issue in the judgment of Thomas Aquinas. But he spoke of fair price (justum pretium), as the teachings of canonists about it were in contradiction with the economic life of cities, and the practices of monasteries and churchmen. There was an ideological struggle around the interpretation of such a price: townspeople regarded it as the equivalence of exchange, and canonists with it justified the claims of nobility for privileges, arguing that the price should guarantee the people a well-being according to their dimension. Commenting on the “ethics” of Aristotle, Thomas Aquinas acknowledged that the exchange of footwear should take place in the proportion where the builder “surpasses the shoemaker in labor and expenses.” In “Summa Theologiae” he, it seemed, tended to an understanding of “price equity” in the sense that it was interpreted by the townspeople. But an inflated price was justified if it was not linked to deception, and the buyer benefited. Aquinas stressed that the fair price itself “is not determined to be accurate, but is more of some measure.” He distinguished two kinds of justice in exchange. One of them defined the relations of the parties involved, guaranteeing a price “reasonable for the item,” the second—the “part-to-the whole” relationship and providing more benefits to those who “mean more in the public area.” He made the pricing process conditional on the social status of the participants of the exchange. However, the social status did not oblige the sellers and buyers. It was indifferent to each of them who buys or sells an item. The class meaning of Thomas Aquinas’ reasoning of pricing was to protect the privileges of the feudal nobility. Aquinas recognized the need for money as a measure of value and means of circulation. In this context, he wrote that “a coin is the most true measure of material life in trade and circulation, just as charity is the best measure of spiritual life.” At the same time, referring to Aristotle, he stressed that “money cannot generate money,” that is, cannot be used to obtain profit. Interpreting the issue of the value of money, Thomas Aquinas adhered to the point of view that the value of money (coins) can be set by the sovereign, although the difference between the “nominal value” and “intrinsic value” should not be significant. He therefore opposed the deterioration of the coins and compared it with changes in measures of length and weight. Thomas Aquinas believed that trading for gain “is creditable, not shameful, to a man, since it enables him to earn an honorable livelihood.” Trade gain was justified by the fact that it “does not do anything virtueless itself” to economic life, as it can be used for a “honorable purpose” (family support, helping the poor, public affairs). In addition, the merchant, thought Aquinas, can seek gain “not as an end itself but rather as a worker’s just pay,” and gain becomes that when selling things “changed for the better.” Taking the impact of transport constraints into account was also suggested. Thomas wrote that “not everyone who sells something for more than he buys it is engaged in trade, but rather only those who buy something for the purpose of selling it at a higher price.” Thus, the renowned theologian approved of trade and justified trade profit. In doing so, he mixed the trade of merchants with the sales of products by craftsmen and peasants. According to the traditions of the Catholic Church, Thomas Aquinas denounced usury, calling it “depravity” (in his letter to the Duchess of Brabant). He considered sinful even the taxation of moneylenders as complicity in their incomes. Interpreting

172

3 World Management Thought in the Fifth to Nineteenth Centuries

the 78th question of his essay, Thomas Aquinas called the levying of interest on the sale of something that does not exist, for it is not possible to sell something and then use it. Money was invented for exchange, so you can’t take a fee for “the usage of money.” At the same time, however, he attempted to find loopholes to justify interest as an “unselfish gift” in the form of reciprocity, amity, love, as well as forms of damages (by benefit of the debtor), or shared profits from the financing of trade transactions. If the debtor was given a gainful house or a piece of land, Thomas Aquinas thought, the incomes should be received by the lender. In so doing, he brought forward both traditional arguments in favor of charging interest as damages for direct loss (damnum emergens) as a result of the retention of money at the debtor, and the damage arising from the creditor’s unavailability of the possible income from it (lucrum cessans). By adjusting the condemnation of interest by the “fathers of the Church” (Basil, Gregory of Nyssa, John Chrysostom, Ambrose, Jerome), Thomas Aquinas clearly boggled and sought an excuse to justify interest. Subsequently, in the fifteenth century, when canonical asperity lost importance, the charging of interest was considered legitimate as a refund of the creditor’s lost income. As an advocate for the interests of the dominant class, Thomas Aquinas recognized the legality of land rent. He claimed that in the form of an annuity, the landlord received a portion of the production made by the forces of nature. This concealed the exploitative nature of rent and gave justification of the duties to church feudal, which peasants were obliged to pay [2–4, 15]. One of the important issues that attracted the attention of secular writers was the issue of the origin of serfdom. This issue is addressed in particular in “Coutumes de Beauvaisis,” drafted by Philippe de Beaumanoir (1247–1296), which is the most important source of history of medieval France [16, 17]. Beaumanoir acknowledges that “all are free under natural law,” although in fact many peasants are dependent on the lords. In Beaumanoir’s view, personal servitude arose in many manners. Thus, formerly, when a person summoned his subjects for army service or for the defense of the crown, “those who did not come, unless they had a good reason, were to remain forever serfs, they and their heirs.” Some farmers became serfs of the Church, “in great piety,” and also entered servitude trying to “to be protected from other lords or from people who hated them” and solve material problems. This explanation of origin of the serfdom is quite realistic. It is also very indicative that Beaumanoir recognizes the inappropriateness of some methods of emancipation of peasants. For example, with regard to the entry of farmers under the patronage of the church, he emphasizes that financial officers of the churches “wrote down what they could force them to admit, and thus they took profit from them and have always subsequently taken profit from them, more and more,” so that “what was originally done in good faith and piety has turned into the loss and ruin of the heirs.” The issue of the origin of serfdom is also considered in the famous “Saxon Mirror” (the first half of the thirteenth century), the author of which was Eike of Repgow, one of the top people in medieval Germany [18]. He argues that “God created man in his own likeness and saved man, each and every one, with his martyrdom.” E. von Repgow writes that he “cannot comprehend that one person

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

173

could belong to another.” The provision that serfdom existed at all times is not convincing to him, as all people were free during the settlement of the Germani in Europe. Therefore, in the opinion of the author of the “Saxon Mirror (The Sachsenspiegel),” “the genuine truth, however, is that bondage resulted from coercion, imprisonment, and unlawful exercise of force, which has become unjust custom since ancient times, and now people take it to be right and good custom.” This statement by E. von Repgow shows that he has denounced serfdom, considering the institution to be unjust and established in a violent manner. For the medieval author, this kind of thought was rather radical [2–4]. During the classical medieval period, attempts were made to theoretically interpret the monopoly of feudal on land. In the eleventh to thirteenth centuries, a record was made of feudal customs where feudal claims are clearly formulated. Commenting on such recordings, the already mentioned Beaumanoir advanced the principle that there is “No land without a lord.” That meant that any piece of it had to belong to a feudal and could belong only to him. Independent peasant land ownership was out of the question. The serf (peasant) had been left with only Muntz (a burden allotment). At the same time, a very clear understanding of the content of serfdom was established. In France, a serf was considered to be a peasant, possessing a burden allotment, paying merchet (wedding duty), an arbitrary taille (a local fee), obeying “mortmain,”1 local banality (prohibitions of certain economic activities), and seigneurial jurisdiction. This definition included rather significant points that characterize the serfdom. It was envisaged that the serf could only use land, which was compulsory to be burden, and his property had no legal safeguards, he was unable to deliver it without an inheritance ransom, “and when a serf dies, he has no heir but his lord, and the children of a serf take nothing unless they pay the lord for it as an outsider would,” wrote Beaumanoir. Serf was obliged to grind grain at his lord’s windmills, bake the bread in the furnaces belonging to the feudal, and press grapes at his lord’s press. In all three cases, he had to lose some of his products. This interpretation of serfdom by Beaumanoir disclosed all the rightlessness of serfs [12, 14]. A similar understanding of serfdom is also common to “Seven-Part Code (Siete Partidas),” a code of feudal law of León and Castile (Spain), which was drafted in 1256–1265. One of its laws states that “a master has complete authority over his slave to dispose of him as he pleases. Nevertheless, he should not kill or wound him, although he may give him cause for it, except by order of the judge of the district” [2–4]. In the eleventh to thirteenth centuries the local policy of feudal becomes more diversified. Monasteries, which had turned into large centers of feudal exploitation, were of particular zeal. For example, in “Contes des vilains de Verson” (mid-thirteenth century), Estout de Goz, an attendant of St. Michael’s Abbey in

1 The law prohibiting the seizure by the churches of lands belonging to secular owners, which, due to this, were exempted from all services lying to them to the detriment of the state [14; T. I, p.536].

174

3 World Management Thought in the Fifth to Nineteenth Centuries

Normandy, stressed that “villeins are constantly in duty of service” and “obliged by corvee,” which “is not to be forgotten.” They are to carry out their obligations “without dispute or resistance.” The estates made inventories of burden allotments and conscriptions of serfs. In monastery estates (manors) of England of the thirteenth century such inventories (extents) became a mass phenomenon, playing the role of the legal instrument of serfdom, villeinage. For new generations of serfs these regulations were “hoary antiquity,” with binding authority. They sanctioned their rightlessness as a factor of exploitation, of the organization of production. However, many of the charges were passed on to the lord’s discretion. Local management thought was inherent in natural-economic traits. Although English lords were selling bread, oats, barley, sheep wool, they were oriented towards subsistence farming in the organization of production. A variety of natural tribute was levied. And the types of serfdom quite numerous. Thus, the manor’s selfsufficiency by a variety of products, including iron items, had been achieved. In the fourteenth to fifteenth centuries throughout Western Europe, there had been a massive transition from a corvee to a tribute system. Some elements of personal serfdom had disappeared. The problem of fuller use of land dependence and the advantages of the feudal estate emerged. The distinctness of the Western medieval management thought also affected the socio-economic policies of kings. It relied on the liege system and served it. The economic role of the state had increased. The economic legislation of kings, dukes, and princes began to play an important role in the development of the feudal economy. Economic reforms were undertaken, which were caused by contradictions of the feudal regime. At first glance, the royal policy appears to be unsystematic, as it was limited to episodic intervention in economic life, often harmful to it. Thus, the French kings at the time of the Capetian dynasty (987–1328) published dozens of ordinances, regulating the development of trade and industry, the import and export of goods, the activities of moneylenders and foreign merchants, the levy of duties and taxes, the consumption of luxury goods and even the number of meals in regular days and days of “lent.” The robbery and expulsion of Jews was also a subject of royal law [2–4]. However, there is a particular pattern in this chaos of measures and orders. Fiscal obligations were an economic necessity because the existence of a financial base was an indispensable condition of the very existence of a centralized state. Prohibitions on citizens’ owning crews or wearing clothing trimmed with ermine represented an attempt to defend the monopoly of feudal on luxury goods and social privileges. Starting from the late-eleventh century the economic recovery of Western European cities began [19]. They made numerous new points in the development of management thought. Within it, we may say, a kind of revolution occurred. For the first time, it is freed to a large extent from the subsistence orientation and recognizes the priority of product production. Cities in their new quality led to the development of a special branch of law—“City law,” where most of the articles were concerned with world trade in Western European cities. In the twelfth to thirteenth centuries “communal revolutions” unfolded under the banner of freedom.

3.3 Management Thought in Western Europe and England (Fifth-Seventeenth Centuries)

175

Communes formed in Italy, France, the Netherlands, as well as free and imperial cities in Germany. In Germany, the principle that “urban air gives freedom” to one who had lived a year and one day in urban areas, had been recognized. In the course of the “communal revolutions,” craft guilds were formed, which also introduced new aspects in the management thought of medieval times. They present community traditions, and the central point of the functional system was “equal participation of each member in the usage of all the privileges and incomes of the workshop.” But these traditions only proved to be valid among masters. The disciples and apprentices were under the supervision of the masters of the workshops. Workshop egalitarianism created a complex regulation of production and sales, apprenticeship, and hiring of apprentices. The principle of compulsory membership had been strictly applied. Initially the guilds fought serfdom, but in the fourteenth to fifteenth centuries they did not take peasants into their membership. However, egalitarianism was inconsistent. From the mid-fourteenth century pro-capitalist tendencies manifest themselves (in fair trade, exploitation of “eternal apprentices,” etc.). The so-called Magdeburg rights in the German city of the thirteenth century became legal consolidation of the success of townspeople in combating the feudal for their own independence. It particularly focused on the rules governing trade and craftsmanship, the activities of the workshops and merchant guilds, and the order of taxation. Magdeburg rights provided the city with self-government and its own court of law, land ownership and exemption from most feudal obligations. It was then (from the fourteenth century) received by many cities in Eastern Germany, East Prussia, Silesia, Czechia, Hungary, Poland, and Lietuva, and later (from the sixteenth century) spread to Galicia and Belarus. Specific issues in the organization of merchandise production were not covered by HMT of Western medieval sources. True, though, that search for a “fair price” had been conducted, but that did not mean a scientific analysis of goods production. The pressure of subsistence farming manifested itself. An exception was “A Treatise on the Origin, Nature, Law, and Alterations of Money,” written (perhaps after 1360) in France by Nicholas Oresme (approx. 1323–1382) (see [1, T.I, Гл.8, 2–4, 17]). This work analyzed the origins of money and alleged that it emerged as a result of the people’s agreement when the inconvenience of direct exchange was discovered; Gold and silver began to function as money, since even in small amounts they have high value, and are also transportable. Thus, in Oresme’s view, an “artificial instrument invented by the community to facilitate the exchange of its natural wealth” emerged, with the author regarding money as artificial wealth. N. Oresme was one of the first representatives of bullionism. The disclosure of the public nature of money and the analysis of the value forms remained inaccessible to him. It was important, however, that gold and silver were interpreted by him at the pre-metal stage as ordinary goods that had only gradually acquired the privileges of the monetary metal. In interpreting the functioning of money, the author expressed new and progressive ideas, courageously opposed the spoiling of coins by kings, qualifying it as the worst kind of usury, worthy of “tyrant and not of a king.” He stressed that money did

176

3 World Management Thought in the Fifth to Nineteenth Centuries

not belong to the king, although it is minted with his portraits. Money “actually belongs to those who own natural wealth.” However, by lowering the metal content in the coin, and on the pretext that it is “necessary for the general welfare,” the King embezzled the property of his subjects. N. Oresme wrote that the spoilage of the coin undermined trade and credit, and degraded the income of the king and nobility, annual pensions, deposits and debts [1, T.I, Гл.8, 2–4, 17]. As we see, N. Oresme expressed realistic ideas when he argued that kings were helpless before the market force. He noted that there were objective patterns of monetary circulation, although he could not disclose them. Fearing devaluation of tribute, pensions, and salaries, Oresme discovered his class position as protector of the interests of feudal. There was also evidence of management ideas contained in various kinds of heresy sponsored by the people’s masses. The spread of heresy was inevitable, as the Catholic Church stood in custody of the feudal regime, justifying feudal exploitation. In the form of mysticism, heresy and rebellion, the revolutionary opposition to the feudal order passes through the Middle Ages, although in cities often only as opposition to “church feudalism.” This is evidenced by the statements of Arnold of Brescia (Italy), the Albigeois (southern France), Wycliffe (England), and Hus and Utraquists (Czechia). But when the city’s lower class and peasants participated in the movement and it came to riots, requests for the restoration of the early system were put forward. Thereat, the “equality of the Sons of God” resulted in “civil equality and by then, in part, equality of property. The equation of nobility with peasants, patricians and privileged citizens with plebeians, the abolition of serfdom, tribute, taxes, privileges and the destruction of at least the most shocking property differences—these are the requirements that had been advanced with greater or less certainty” [1–4]. Of course, heresy was rather heterogeneous, but it always contained an antifeudal element. Thus, in Byzantium of the eighth century the Iconoclastic movement unfolded, which was not limited to the quarrel between the emperor and churchmen. It also reflected the antifeudal sentiments of the masses. In the mid-eleventh-century, monk Arnold smashed in his sermons (in Milan) the enrichment and luxury of churchmen, finding resonance in the hearts of citizens. In the early thirteenth century, the heresy of Catharism (the pure), demanding a return to the principles of “Gospel poverty,” became popular in Italy. This heresy also penetrated the cities of southern France, where the Cathars (or Albigeois) following the Manichaeans, Paulicians, and the Bogomils, denied the visible world with all its wealth, luxury, misery, and suffering. It was stigmatized as the spawn of the devil. The movement had become so dangerous to the church that in 1208–1216 Pope Innocentius III declared a crusade against the Albigeois, accompanied by violent massacre. More clearly, the socio-economic aspirations of the masses had been reflected in the demands of peasant revolts. Thus, on the territory of Saxony in 841–842, the “Children of Ancient Law” (Stellinga) revolted under the slogan of a return to a free community, its ancient customs. The revolt was a protest by peasants against feudalism, which had been perpetrated by Frankish kings. During the classical medieval period in Western Europe, there was a wide wave of peasant revolts of

3.4 Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries

177

great historical significance. These, primarily include the revolt of 1304–1307 in north-western Italy under the command of Dolcino (an escaped novice of the Franciscan Monastery). He preached the commonality of property, the abandonment of private property, since it together with the enrichment of individuals were the root causes of all disasters. However, Dolcino was executed, and the rebellion was suppressed as a result of a crusade organized by Pope Clement V. The famous Jacquerie swept through the territory of France in 1358 like a hurricane. This rebellion of peasants was led by Guillaume Cale. It had an antifeudal character, accompanied by the massacre of the nobles, the destruction of their castles, and the burning of seignorial documents, which recorded charges for serfs and villeins. The revolt of English peasants under the leadership of the roof tiler Wat Tyler (1381) is particularly noteworthy in the fact that two antifeudal programs had been put forward. The Mile End program, presented to King Richard II, provided for the cancellation of serfdom, villein socage and the establishment of a four-pence land rent per acre. This was supplemented with the proclamation of freedom of trade and the amnesty of the rebels. The Smithfield program was nominated by the peasants of Kent and did not have the task of eliminating serfdom (because they were personally free). However, it demanded the division of church lands, the return of communal lands (captured by lords) to villages, the equation of social categories in their rights, and the abolition of “working legislation.” During the revolt, manors and monasteries were raided and manorial documents were burnt. All this testifies of the antifeudal and community aspirations of the fourteenth century English peasantry. An ideologist of the movement was the social equality preacher John Ball, who denounced serfdom and the privileges of lords, and even stood for common property. Proving the futility of nobility, Ball asked listeners the famous question: “When Adam delved and Eve span, who was then the gentleman?” [1–4]. The year 1549 is the year of the rebellion of English peasants under the leadership of Robert Kett. Their 29-point program requested the liquidation of the residues of serfdom and manor courts, reduction of taxes, prohibition of transfer of freeholds (free holdings) to copyholds (peasant on quitrent), the abolition of enclosure, and the prohibition on lords from using communal land. On the background of the ideological struggle of various classes, Western Europe continued to produce treatises in the style of police management, but at the same time civilized freedom-loving entrepreneurship emerged, the characteristics of which shall be described in the next section.

3.4

Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries

The model of managing a police state continued to be promoted in the treatises of foreign scholars of the eighteenth century. Of the Policeists, the best-known were the French De la Mare [20] and the Germans J.H. Justi [21] and J. Sonnenfels [22]. In

178

3 World Management Thought in the Fifth to Nineteenth Centuries

their work, the authors continued to uphold the primacy of the state in the management of all branches of the national economy and, in this regard, they had identified the causes and nature of the welfare and security of the state, as well as the functions of public management and activities to enhance the welfare and security of the state. The author of the most famous and extensive (over 2500 pages in the Russian translation of 1772) of Justi’s treatise was of the opinion, for instance, that the causes or factors of well-being lay in the natural and economic conditions of the state and the spiritual development of its citizens. Consequently, this should be the focus of the state’s activities (more specifically, the Government’s attention). On this basis, Justi proposes, in the first three parts of his treatise, measures to adapt this surface to channeling, dam construction, forestry development, agriculture, cattle breeding, etc., to increase the population of the state, to build roads and to develop vehicles (Part I); measures on the foundation of various industries, “handicraft and factory works,” on the management of agriculture, craftsmanship, and trade; makes reasoning on money, pricing, and the financial “care of folk handicrafts” (Part II); assesses the relationship of science to the welfare of the state; characterizes the “institutions facilitating the increment of sciences”; proposes measures for the upbringing and education of children, etc. (Part III). These issues compose, in Justi’s expression, “speculative knowledge” of the science of deanery. And for their practical use, a further Part IV—“active” part is needed, in which Justi includes execution and management of public welfare and well-being management. This part sets out the requirements for the relevant legislation, issues of organization of monitoring the implementation of the laws of deanery, the organization of “management of decent affairs,” and issues of organization of administrative bodies and their functions [21]. As for the general characteristics of the world situation, in the last quarter of the eighteenth century, in the majority of Europe’s most economically advanced countries active breakup of feudalism began. There were numerous reasons—the division of public labor and rapid growth of labor productivity were underway, major cities had been strengthened and new ones had emerged, such as craftsmanship and trade centers, natural and social sciences (philosophy, political economy, law, and sociology) had achieved success in their development, and the literacy and education of the population in the countries had increased. Among the numerous factors, particularly outstanding was one that the gradually, but securely shifted in the mindset of citizens employed in public production from an “efficient trade” paradigm to an “efficient production” paradigm. This includes the development of cities where technical discoveries had been introduced and various forms of entrepreneurship were born, illiteracy had been liquidated, the center of gravity of craftsmanship had moved from villages, special commercial and technical schools appeared, selfgovernance had developed and Roman law had been utilized. In the cities of England, Germany, France, Italy, the Scandinavian countries, and Russia, during the Middle Ages, alliances of trade people—merchant associations, guild societies, which became increasingly aware of the benefit of investment in production emerged and became a strong political, economic, and cultural force. Their strength and potential begun to manifest themselves in the territories of other countries, that is, the first wave of globalization of public production had begun.

3.4 Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries

179

Here is an example from the history of Italian traders, citing the studies of the eminent Russian scientist Alexey Karpovich Dzhivelegov (1875–1952). In “Medieval cities in Western Europe,” he wrote that the associations of Italian traders in the form of trading societies “were available in all major Italian cities—in Venice, Genoa, Pisa, Florence, Milan, Rome, Lucca, Siena and others. Italian trade societies had gained enormous influence throughout all of Europe; thanks to their organization and their large capitals, their operations had reached enormous scale quickly; they had gained offices in the main European trade centers; thanks to them, they had, for the first time, destroyed the dogmas of Canon Law, which prohibited so-called pay-off (usura, interest), since they were not limited to trade in a literal sense and used many credit transactions to increase their incomes; thanks to them, for the first time Europe recognized broad credit” [19]. At the same time, in cities where rural craftsmen gathered, craftsmanship companies had been established and had strengthened their positions, which by the late eighteenth century already had a 1000 years of history, starting with the first fisheries corporation in Ravenna (Italy), which is referred to in documents of the eighth century and had maintained many traditions of the first corporations of the Roman Empire. Among other most “ancient” large craftsmanship corporations the Parisian Candle Workshop, established in 1061, Worms Fisheries Workshop (Germany, 1106), the shoemaker’s shop of Würzburg (1128), the weavers of bedding ticks corporation of Cologne (1149), the butchers and bakeries guild of Gaggenau (1164) and the Turner Corporation of Cologne (1178) are most often mentioned in documents on city history. Medieval craftsmanship corporations and guilds historically sought full autonomy from the influence of urban authorities on their activities, and even from influence, much less the merger with large capital, while remaining independent and even “against the spirit of large production.” In the medieval workshop organization, the very possibility of the emergence of large capital was excluded. The police spirit of workshop stewardship remained in that most of the regulations of workshop statutes were designed to prevent the more enterprising master from expanding his production. A master was supposed to have only one workshop, often, even the number of items that may have been produced in a known period of time was prohibited from commencing a business that the master did not understand and to conduct it solely with the help of apprentices, and to sell goods in the production of which he had not participated. Advertising was pursued, the number of showcases (only one window per shop) was limited, and the number of disciples and apprentices was limited. If, in any workshop the production of some product had grown so much that competitors were destroyed, and then, because of the monopoly, led to higher prices for this product, such a master would immediately be “brought back to normal,” determining the quantity of goods he could produce annually. This was very much reminiscent of the “fair price” principle which applied to the trading world and traders’ associations. Craftsmanship corporations or workshops sought to equalize the conditions of production for their members. No master was to be able to produce more than his colleagues. The situation began to change dramatically during the eighteenth century. While сraft corporations were content with limited capital in the Middle Ages, they were

180

3 World Management Thought in the Fifth to Nineteenth Centuries

now forced to either merge with large trading capital seeking a place of application or leave the world arena as a social institution without being able to compete with the nascent large industry. In the opinion of historians of management thought, it was in this period (the late-eighteenth to early- nineteenth centuries) that the roots of modern management began to emerge, and they should be sought where the industrial revolution began -in England and Scotland, and where some of the first treatises on management emerged. The originality of the work of the scientists and the practitioners was not that they included a synthesis of past experience in management, but rather of original management thought and ideas, the results of original management experiments and recommendations for the implementation of new opportunities and the elimination of past shortcomings that impede the emerging transition into a new business environment. The world History of management thought included many participants in the eighteenth to nineteenth centuries, “overflowing in original minds.” Among them are R. Cantillon, A. Smith, J.B. Say, M. Speransky, R. Owen, A. Ure, C. Babbage, I. Platonov, L. von Stein, V. Goltsev, I. Vyshnegradsky, J. Wharton, S. Witte and many other scholars, professors and management practitioners from different countries, different sciences, different professions, who contributed to management as a science [1–4, 23–25]. The fact that Great Britain is regarded as a pioneer in management is not surprising, because it was there that the industrial revolution started, beginning in the middle of the eighteenth century. The process lasted for nearly a 100 years, and the authors of treatises (including non-English) did have things to tell their readers, having studied the British experience. Each of them wrote, first of all, on national issues in politics, economy, finance, social life and public management. After a short time, the wave of revolutionary ideas and thoughts of the classics of political economy spread to the continent, where the saviors of their fatherland began to emerge very soon, who offered appropriate managerial, economic, social and technological innovations. What is worth, for example, the name alone of the treatise of the forefather of the bourgeois political economy, the Frenchman Pierre Boisguillebert “A detailed description of the position of France, the reasons for the collapse of her well-being and the simple means of rebuilding, or How in one month to deliver to the king all the money he needs and to enrich the entire population” (1696), which was an example for the title of treatises of subsequent generations. But none of the authors of the era of the industrial revolution and beyond could have taken into account the results and consequences of an objective process, which began in the United Kingdom and which, together with the advent of new scientific and practical management literature, adopted in all countries the sustainable positions of the new social category—entrepreneurs, whose interests were first and foremost reflected in the literature [18]. It was at this time that the representatives of social sciences formulated a method of classical political economy (W. Petty, A. Smith and D. Ricardo); the doctrine of the state as a union of people under legal rules (I. Kant); the principles for the analysis of private property (J. Locke) were formulated; the theory of separation of powers (J. Locke and C. Montesquieu); the freedom of external and internal trade (D. North) was validated; the doctrine of a Social Contract (J.J. Russo).

3.4 Origins and Sources of HMT in the Eighteenth to Nineteenth Centuries

181

The main achievement of public thought was the recognition of the role of labor in the development of society and, on the basis of this, shifting the focus from the area of circulation to the area of production. A significant contribution to the genesis of scientific management was the thesis formulated by the creators of classical political economy that “the welfare and security of the citizens of the State,” which, as we have written earlier, remained the mission of state management until the end of the eighteenth century, had its source not in trade, but in production, and it was the study of issues of organization of production that the efforts of social sciences should focus on. In the midst of these achievements, and as a result of these factors, the necessary conditions for the evolution of management thought were laid down in the early nineteenth century. It cannot be said that the theoretical concepts of management, in the proper sense of the word, were among the works of the mentioned and authors of the immediate later periods, but still the “process went on” through the development of scientific foundations of management science and the development of applied sciences. With the expansion of production, domestic and foreign trade, the construction of large enterprises and railways, etc., the need for organization of efficient production, the need to coordinate human and other resources to meet new challenges had also increased. And that means that the need for new quality management had increased. That’s when management went up to the stage. So far, we’ve only used the term “management,” and in describing the development of management thought in the work of the late-eighteenth century and later periods, we will add the term “management,” which provides a context for the control in the form of a private economy, and often as synonymous with the term “management.” Economists and jurists were among the “leaders” in the development of HMT during the period under study. Representatives of classical political economy studied and described production management, formulated some of management’s conceptual ideas, including management functions and the results of economic theory applications. A. Smith and A. Turgot underlined a kind of separation of powers within an organization, highlighting the notions of “ownership” and “management,” examined the differences in the roles of owners and managers, not to mention the fact that they had revealed a noticeable increase in the number of managers and the rudiments of the formation of a class of executives (managers). In anticipation of this growth, economists began to be the first to write about this new managerial category, discussing the goals and purpose of managers, their roles and responsibilities, and the social responsibility of managers. Researchers in the activity of business organizations, guided by the aim of improving production efficiency and the primacy of production activities, had very soon (much earlier than F. Taylor’ experiments) thought of organizing scientifically based experiments in the study of the issues of rational labor management, managing a human being and an organization as a whole. In particular, as early as the eighteenth century, special surveillance of people in various types of work was carried out, and experiments were put in place to deal with the problem of “time and work motion.” Among the researchers, we should particularly highlight Charles

182

3 World Management Thought in the Fifth to Nineteenth Centuries

Babbage, better known in the world as the creator of the world’s first digital computer. Representatives of legal sciences have also made a great contribution to HMT, of which Lorenz von Stein is widely recognized as the main protagonist, and to whom a special section within this chapter is devoted. A description of the work of economists and representatives of other activities, as set out below, shows the managerial issues that were of the mind of the ideologues of the emerging class, which were reflected in the work of Western scientists.

3.5

Ideas of Entrepreneurship in Western Europe

In the late Middle Ages, the “Essay on the Nature of Trade in General” appeared, which was written by the now world-renowned scientist, the pioneer of the concepts of entrepreneurship Richard Cantillon (1680–1734). He was born in Ireland, lived in France for a long time, spoke many languages, and his only work was written in English. The merchant and the banker R. Cantillon apparently studied the nature and organization of trade well, of which he wrote in the treatise. How else could we explain that his “Essay,” composed in the 1930s of the eighteenth century, was for the first time 21 years after the death of the author, only in 1755. R. Cantillon’s treatise was translated into English by Henry Higgs in 1932 [26]. Having analyzed the reasons for the “price revolution” in Europe, R. Cantillon brilliantly solved the theoretical challenge of his time, showing how and in what proportion the growth of the money supply led to price increases. It is only for this reason that the work of Cantillon and its author earned the right to be included in world economic thought [1, 27]. But something else is amazing. In the “Essay on the nature of trade,” R. Cantillon, in addition to the main theme of his essay, touched a number of related issues, including the nature of entrepreneurial functions, thus giving rise to (it turned out much later) the history of entrepreneurial concepts. What is this type of economic behavior, what are its characteristics, and thus functions, how does entrepreneurship differ from routine business practices, etc. At the same time, as if in coincidence, along the way the Irish economist explicitly formulated the idea that within the entrepreneur’s activities two relatively separate functions are visible: the capitalist function and the function of the executive, that is, the person taking the final decisions. Or, in modern terms, the functions of the owner of the means of production (capital) and the manager [26, p. 269]. This was written at a historical era when there was no division of business functions, when a family firm with ownership and management of capital remained the most prevalent form of capitalist enterprises in Britain itself for more than two centuries. An amazingly providential idea, much ahead of its time! May that have been why it was perceived by R. Cantillon’s contemporaries as a language passage, as a utopia unrelated to the world’s realities, or as poorly thought over.

3.5 Ideas of Entrepreneurship in Western Europe

183

In science irregularities and alogism are a common phenomenon. Thus, the most ingenious economist Adam Smith, whose book, “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776) saw the light of day half a century later, and who knew the work of Cantillon well, did not cling the ingenious speculation of his predecessor to his mind. Maybe because Cantillon considered as entrepreneurship only one of its types—commercial, entrepreneurship which was carried out at that time in the generally accepted policy of mercantilism and became the subject of severe criticism of A. Smith [28]. Anyway, A. Smith, widely using the notion of an “undertaker” in the same sense as the French “entrepreneur,” that is, “entrepreneur” in the meaning of “owner of the business,” without singling out his managerial function. I haven’t the heart to write that A. Smith and his closest followers did not understand the meaning of the entrepreneur’s managerial function. Rather, they probably understood, but didn’t admit it. All of this gave M. Blaug an excuse to criticize the economists of the classical school of political economy for “inability. . . to emphasize the special nature of the entrepreneurial function.” This criticism is hardly 100% just, but it is important for us to stress the following: R. Cantillon was keenly aware of the special role of the entrepreneurial function of managing one’s own business, which, along with willingness to take risk (highlighted by Cantillon as an important attribute of entrepreneurship), was a necessary prerequisite to achieve success in private business. And even though back in the early-nineteenth century, following R. Cantillon, the French thinker J.B. Say, the outstanding interpreter of A. Smith, clearly divided the functions of the entrepreneur (especially in the part of his “Treatise on Political Economy” [29], where he substantiates the profit theory), classical political economy (including Marx) did not notice the various functions of the entrepreneur (“joining together” these functions, as observed by M. Blaug). In the meantime, the industrial revolution that began in England in the 1770s (and ended in the 1830s) brought large capitalist enterprises to life and, at the same time, created a completely new social institution-business executives (managers). An entirely new type of entrepreneurship emerged—intrapreneurship, that is, entrepreneurial activity within a large firm— with a thousand varieties [28–30]. From R. Cantillon’s deep conjecture a conclusion could almost follow (Cantillon himself did not write about it) about the possibility of two types of entrepreneurship and entrepreneurs: (a) with “merged” functions; (b) with separate functions. From the latter circumstance, Say deduced his famous theory of two kinds of capitalist profit: (1) loan interest (which is received by the owner of the capital) and (2) entrepreneurial income (received by him, but this time as a manager of the enterprise). According to Say, the entrepreneur is the bearer of a new type of economic behavior, because an entrepreneur is forever charged with reform, innovation (this idea, later, in the twentieth century, will be developed by J. Schumpeter); it is he who plays a leading role in the distribution of national wealth. Having discovered the phenomenon of entrepreneurship, Say not only proved the optimality of this form of business, which provides the market equilibrium (i.e., when aggregate demand is always in market conditions equal to aggregate supply), but also the productivity of both types of entrepreneurship, that is, capitalism.

184

3 World Management Thought in the Fifth to Nineteenth Centuries

Logically continuing J.B. Say’s thought (which was subsequently done), it was not possible to conclude that the market, that is, capitalism, is far from being constrained by a patterns, unbounded system, obligatory for the entire universe, as was perceived by theorists of the classical school of political economy, from Adam Smith and David Ricardo, including Marx (and not finishing with him). The truth is that capitalism is different. It may have its own characteristics, distinctive features, characteristics that are caused by a country’s national characteristics, and the mentality of particular nations. This, as it turned out, explains the extraordinary “viability” of the market, the inexhaustible source of its movement, the resource of its self-sufficiency. There is capitalism of an Anglo-Saxon type based on the ideology of individual success. There is capitalism of an Asian-Slavic type that is based on family-type enterprises. This was the case in Russia until 1917, and this is what entrepreneurship is like to the day in Japan, South Korea and some other countries, where corporations, often giant in size and number of workers, build their activity as the collective work of a single, undivided, coordinated family. Hence, the treating of uniformed workers of each other as members of the same family, fanatic loyalty to the firm, and wearing (with pride!) of a uniform, unified for the firm, corporate marks of distinction, joint rest, etc. And it is not a tribute to an empty formality, it is the moral and ethnic norm of “industrial relations,” which is the ultimate value of many organizations, a part of corporate culture.

3.6

The Classics of the Political Economy on Management (Eighteenth to Nineteenth Centuries)

Let’s focus on some of the issues, aspects and elements of management systems that were the subject of reasoning of the classics of political economy in the eighteenth to nineteenth centuries. Many of them, by examining the political economy aspects of the nascent managerial class in society, had attempted to identify the characteristics and qualities of people that are consistent with, in their view, the notion of a “good manager” or “good entrepreneur,” before expressing any conceptual allegations of management as a whole [1–4, 24]. Among all the authors involved in the research functions of management as isolated types of managerial activities, Samuel Newman was outstanding, who stressed the importance of the complexity of functions, arguing that the most important functions of the manager are planning, organizing and coordination of various production processes. In 1835, S.Newman wrote in “Elements of Political Economy”: “To be a good businessman, it is necessary to possess a number of qualities, rarely combined in a single person: he must possess an unusually strong gift of foresight and, at the same time, a practical thrift to make his good plans happen. He must manifest insistence and continuity of intentions in the process of implementing plans. He is often required to dominate others and guide the efforts of

3.6 The Classics of the Political Economy on Management (Eighteenth to Nineteenth. . .

185

others. And for all of this to work together, he must be both cautious and resolute. The ability to successfully manage different branches of production, possession of in-depth knowledge of both the overall state of affairs in the world and the details of employment of workers and earning profit, are also required of him” [31]. The above cited list of qualification requirements for a manager greatly expands on the modest list of Adam Smith, who, in his time in the treatise “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776), formulated three essential qualities of a manager: “order, economy and attention.” In his work “Elements of Political Economy” in 1826, James Mill added another two important qualities to the list—honesty and diligence [32], much later, Alfred Marshall, in his work “Elements of Economics of Industry” (1890), added “self-confidence and a willingness to react quickly to environmental change” as characteristics of a highly skilled manager. Turning to the characteristics of the conceptual framework of management, we begin with the fact that many classical economists of the time had already distinguished the functions of a manager and the functions of an organization. At the same time, each of them often highlighted some single function as crucial. For example, as early as 1766, Anne Robert Jacques Turgot, in the treatise on “Reflections on the Formation and Distribution of Wealth,” that included a hundred theorems and postulates that reflected Turgot’s views on major economic problems, discussed in depth the issue of managerial functions, emphasizing the coordination and control functions of agricultural enterprise [33]. Then Jean-Baptiste Say, in “A Treatise on Political Economy” (1855), stressed the importance of the planning function in a manager’s activities [29]. Finally, already in the late nineteenth century. Richard Bowker, in “Economics for the people” (1886), outlined the functions of organization and coordination as the most important in a manager’s activities [34]. Lawrence Laughlin, in the treatise “Elements of Political Economy” published in 1887, wrote of the functions of management and the functional organization in terms of the manager’s specific responsibilities and roles of the manager: “the Manager is the one who selects the location for the factory, who selects the site of the factory, who controls the finances, buys materials, and sells the goods; who decides upon what machinery to use; who deals with the workmen, allotting the tasks, and classifying their labor; who watches the market, knowing when to sell and when to withhold his goods; who can find out satisfactorily what purchasers really want, and adapts the character of his goods to these wants —such a manager, who makes the most of everything, is in general. . . a rare man” [35, Ch. V, p. 52]. The mentioned works are essentially the first attempts to emphasize production management functions as the subject of the emerging management theory. The authors of the works actually laid the groundwork for the research of Fayol and other scientists who worked half a century later. It should be noted that the actualization of the functions of management was carried out by the authors solely from a political economics or business point of view. But we know that the parallel course of jurist scientists was to examine the functions of management within the concept of separation of powers, the results of which had a different scientific basis. There was another issue of management that drew the attention of the classics of political economy. This is the issue of “motion (working operations) and time.”

186

3 World Management Thought in the Fifth to Nineteenth Centuries

When mentioning research results in this area, it is often said that this is a product of the F.Taylor and Gilbreths era (early-twentieth century). Sometimes the discoveries of Charles Babbage (1832) are remembered and added to them. But it’s easy to see that A. Smith devoted almost the entire first chapter of his treatise to a description of the results of special observations similar to the observations and experiments of Babbage. Moreover, 6 years before Babbage James Stewart Mill highlighted the problem of motion and time as a special type of research and scientific observation, as he wrote the following: “It is found that the agency of man can be traced to very simple elements. He does nothing but produce motion. An operation, which we perform slowly at first, is performed with greater and greater rapidity by repetition. The repetition, upon which the greatest celerity depends, must be frequent. It is not therefore compatible with a great number of different operations. The man, who would perform one, or a few, operations, with the greatest possible rapidity, must confine himself to one or a few. Of the operations, therefore, conducive to the production of the commodities desired by man, if any one confines himself to a small number, he will perform them with much more rapidity, than if he employed himself in a greater; and not only with more rapidity, but, what is often of the highest consequence, with greater correctness and precision” [32]. As can be seen, the first evidence exists of a conceptual attitude to the analysis and synthesis of human labor in HMT sources, which had subsequently been transformed into a study of the issues of performance of managerial functions. The very fact of what was written in the late-eighteenth and early-nineteenth centuries is an indication of the growing importance of production management for the economy of the time and, at the same time, an understanding of the specificity and complexity of management. Classical economists were divergent on the question of need for and possibility of a successful separation of the functions of the owner and manager (master, director, manager). For instance, A. Smith tried to convince readers that in his days such a division of functions had already been a common practice. He was echoed by A. Turgot. At the same time, David Ricardo was absolutely certain that the main factor in efficient production was capital, not the manager’s skills, even if he was the owner, and therefore the hired manager was unnecessary and useless. Of the Functions and Principles of Management Of the five generally recognized functions of management (planning, organization, personnel management, coordination and control), a number of classical economists, for example, A. Marshall, L. Laughlin, recognized planning as the most important function. L. Laughlin even tried to argue this in such words: “he who controls a large capital actively engaged in production can never remain at a standstill; he must be full of new ideas; he must have power to initiate new schemes for the extension of his market; he must have judgment to adopt new inventions, and yet not be deceived as to their value and efficiency” [35]. Among the many functions of personnel management, the classical economists were unanimous in their views, considering it most important. This is about special training for managers. It cannot be said that economists had shown undue

3.6 The Classics of the Political Economy on Management (Eighteenth to Nineteenth. . .

187

enthusiasm for the effectiveness of training, but they had tried to highlight this part of work with staff. Thus Emile de Laveleye, in the “Elements of Political Economy,” wrote that it was the employer’s most important duty to assist unskilled workers, to instruct them [36]. On the same subject, de Laveleye supported other economists of the nineteenth century, arguing that there was a need for good business training, noting that the first concern of the Government should be the establishment of institutions that would be the school for preparation of good industrial managers. Alfred Marshall commented on the efficiency (profitability) of this as follows: “If someone takes on the job of investing capital into the development of the worker’s skill, the abilities and skills become the property of the worker, and thus the efforts (costs) of those who had helped the worker are transformed largely into the investor’s value” [37]. An organization, as a function, was understood by economists very broadly. One of the interpretations belonged to Van Buren Denslow: “The subordination of the employer to society and, in turn, the subordination of workers to the employer, is the power that subordinates workers to ideas of meeting the needs of society. This is organization in industry” [38]. In the works of classical economists, it is possible to find speculation and other management issues, for instance, issues of the management horizon are referred to in V.B.Denslow’s works, sufficient space had been devoted to the principle of unity of command, more attention had been devoted in the works of F. Bowen and R. Bowker. At the same time, Francis Bowen violently criticized management committees when in his work “American Political Economy” he wrote: “Committees of management are proverbially negligent or meddlesome, inharmonious and unsuccessful: One executive head, and a very able one, is an essential prerequisite of success in any large undertaking” [39]. In support of unity of command A. Marshall noticed that even at the lowest level of organization, the division of responsibility was unreasonable, arguing that “two persons sharing responsibility for the care for equipment (machinery) ultimately cared for it worse than when one person was in control of a machine” [37]. In the beginning of their reasoning on the functions of management, classical economists focused on strict control as a means of preventing theft [1]. However, they soon switched to the notion of control as a means of avoiding unnecessary expenditure, with economists beginning to write about it much earlier than managers or theoreticians of management had done. It doesn’t mean they had forever forgotten about theft and stealing. For instance, John Mill (son of James Mill) wrote in 1848: “All labor spent on observing how they (the English workers) carry out their assignments, or to inspect what they had done in the end, will be completely withdrawn from real production only to perform an auxiliary function not necessitated by things, but by unscrupulous behavior of people” [40]. The economists were quite unanimous that the best kind of control is the eye of the master. While in addition, for instance, Mill highlighted the peculiarity and systematicness of control in cases of a corporate form of organization. It appears that the following words of Mill are the first comment in HMT on control as a system: “In managing large capital and large transactions, especially when the

188

3 World Management Thought in the Fifth to Nineteenth Centuries

interest of managers themselves is not too great, small financial values are likely to be accounted for. They will never outweigh the costs required to control them. The credit of liberality could be cheaply compensated by the rejection of such trivial concerns. However, small incomes and low costs often result in overall large profits and large losses, which the capitalist most often regards very carefully and sparingly; and to do so, it’s quite enough to organize your business as a system that, being tightly controlled, eliminates any possibility of performing the usual unnecessary expenditure, which is usually common for a large enterprise. Unfortunately, managers of stock companies rarely devote themselves to work sufficiently enough to enforce a system of control over all the details of business in the current economy.” If there is a topic on which all economists converge, it is the principle of specialization and division of labor [1]. Almost all of them practiced reasoning on this subject with such diligence, from Smith to Marshall, that there is no point in making any specific quotations. Nevertheless, it is important to note that they had objectively considered the problem at three different levels. International trade was generally considered a consequence of the development of territorial division of labor. The company’s industry specialization was called organizational division of labor, and the specialization of individuals in their work was defined as craftsmanship division of labor (or division of labor itself). It is the latter perception that had naturally passed as the basic content of the above cited concept of motion and time. Study of Labor Remuneration Issues The minds of the classics of political economy were focused on renumeration systems, fair job evaluation, but the conclusions were different [1]. Thus, Thomas Malthus (1766–1834), referring to motivation and encouragement, thought that “what was done within a day was done within the day,” and that any worker could be replaced by another. De Laveleye disagreed with him by proposing the following hierarchical scale of distribution and recipients of the results of an organization’s activity: 1. 2. 3. 4. 5.

Those who keep for themselves all they produce Those who have a share in the profits Those paid according to the work done Those paid according to the time they are supposed to be working. Slaves, the produce of whose labors belong to their masters [36].

Many nineteenth-century economists agreed with Laveleye that piecework payment can solve the problem of low productivity, although Smith, for instance, was concerned that for those paid by the piece “mutual emulation and the desire of greater gain frequently prompted them to overwork themselves, and to hurt their health by excessive labor.” Commenting on this concern, Mill states that piecework payment is not the only incentive system that meets the demands of both managers and workers. “He wrote: It must be further remarked, that it is not a necessary consequence of joint stock management, that the persons employed, whether in superior or in subordinate offices, should be paid wholly by fixed salaries. There are modes of connecting more or less intimately the interest of the employees with the pecuniary success of the concern. There is a long series of intermediate positions,

3.6 The Classics of the Political Economy on Management (Eighteenth to Nineteenth. . .

189

between working wholly on one’s own account, and working by the day, week, or year for an invariable payment” [40]. Like many other management topics, the subject of labor automation had long been known, drawing the attention of researchers to the problem of the impact of the introduction of machines to replace manual work. The prediction of the possibility of negative social consequences was expressed 300 years B.C., when Aristotle observed that “if every tool could perform its own work when ordered. . ., mastercraftsmen would have no need of assistants and masters no need of slaves.” And in the 1830s there was still a danger and fear in society that man would be completely replaced by machines. But at that time, doubts had been expressed. Thus, S. Newman expressed these doubts in the following words: “But now suppose, that a like increase of productive power should take place in manufactures and commerce, and that thus the amount of labor, required to supply the great family of man, should in a corresponding degree be diminished. It does not follow, that men need be idle, or that their condition would not be improved. Should men be relieved from the necessity of toil to supply the wants of the body, there are other and higher occupations in which they might engage; for there is to man the labor of the mind, and the accumulation of stores of knowledge, more valuable than those of material things” [31]. In conclusion, we shall cite the general assessment of the heritage of classical economists. In our view, it is tripartite. First, they established a substantive concept of management by highlighting management as a distinct entity that deserves attention and research. Secondly, the very fact that they wrote about management points to the growing importance of management for companies and the economy, and the growth is sufficient to develop concepts of management itself and to conduct relevant research. Third, their pronouncements on management provoked further reflection and publications on the subject by scientists and managers, and in both forms of presenting research results there was a great potential was still being felt. This does not mean, of course, that the economists of the eighteenth to nineteenth centuries fully occupied managerial problematics. The subject had been described by doctors, industrialists, teachers, and military figures. Thus, the following examples demonstrate different views on the emerging conceptual framework of management. Among other professions, I would like to mention the well-known theorist of the art of war, Carl von Clausewitz (1780–1831), who was a Prussian general, wrote many works on war and the management of large military units and military battalions. In short, we already wrote about him in Chap. 1. Having joined the military at the age of 18, he was confronted with the strict discipline of the Prussian army, after which he considered for the rest of his life such discipline to be a necessity at any organization. Although Clausewitz himself had never commanded a large-scale military operation, all his work is the result of his observations and research of human behavior in such operations. Besides, even though the subject of his research was military management in wartime, Clausewitz believed that his ideas and recommendations were applicable to the management of any large organization in peacetime, arguing that business was simply a form of human competition that was very much reminiscent of a military confrontation.

190

3 World Management Thought in the Fifth to Nineteenth Centuries

Clausewitz is known for his profound remarks on strategic management. He recommended careful planning as a necessary tool for the management of a large organization, with purpose being a priority. He also stressed that all decisions should be based on the probability of events rather than on a logical necessity, as was normally considered at his time. Of all of Clausewitz’ ideas, perhaps the most important contribution to the theory and practice of management was, and remains, his idea that managers must accept the fact of risk and uncertainty in decisionmaking and, therefore, must act on the basis of careful analysis and planning to minimize this risk and uncertainty. Prejudging F.Taylor, Clausewitz defended the view that solutions needed to be taken on the basis of science rather than feeling, and that control should be based on analysis, not intuition [41]. We shall also highlight Charles Dupin, a French engineer of the nineteenth century, who published many works on industry, work, labor, and the wealth of workers. He often spoke on these topics at the Academy of Sciences of the Royal Institute of France, as well as on other purely scientific issues in engineering and mathematics. At 1816–1820, he conducted studies of the English fleet to determine the basis for its effectiveness and to transfer England’s experience to France for the construction of a strong French fleet. The principles of management that the Dupin recognized and wanted to copy from the British basically concerned the management of human beings and human relations [42]. In the future, Dupin preached honesty and responsibility in management. This particularly included the timely repayment of credits, the promotion of fair circulation and the faithful implementation of agreements and arrangements. Although these ideas do not appear new today, Dupin’s consideration of honesty and honor in the 1820s is one of the first references to this concept as a factor of effective leadership and management. As an engineer, Dupin had done a lot to develop the scientific basis of mechanized production. Nevertheless, his work in the area of management points to his scientific passion for human relations, human development, workers’ remuneration, and other staff management issues, more than the technical aspects of production. And one more scientist who should be mentioned is William Stanley Jevons, who was born in Liverpool in 1835. At the age of 15, he went to Liverpool University College, after which he worked for a short time in meteorology, but then decided to acquire a wider education. He began studying mathematics, philosophy, and political economy at the University, receiving a gold medal on the first two subjects. In 1865, he became a lecturer at the College. Jevons introduced into the development of English economic thought, perhaps more the spirit and discipline, inherent in pure science, than any of his predecessors. He was neither a moralist philosopher nor an entrepreneur who had given up business, nor a social reformer. He was an ordinary scientist who tried to identify common patterns of behavior of economic systems to regulate these systems. His major work, the “Theory of Political Economy,” was published in 1871 and contains a number of interesting thoughts about the intensity of human work and fatigue. It includes, in particular, Jevons’ reasoning of complex

3.7 Robert Owen and Social Responsibility of Business

191

and simple work, the dependence of work performed on tools and fatigue of the worker [43]. Interestingly, Jevons’ theoretical ideas and conclusions were published shortly before the beginning of Taylor’s experiments. Jevons surpassed Taylor in another inference, when he called for cooperative work and management. Moreover, he managed before Taylor to go further than Taylor on this issue by promoting production cooperation and partnership, as well as the participation of ordinary workers in splitting profits and shareholding, considering it a means of reducing class disparities and easing the pressure of labor union organizations [1].

3.7

Robert Owen and Social Responsibility of Business

Robert Owen (1771–1856) could be recognized as one of the first authors of scientific management. He was born in Wales, was the son of poor parents, left school at the age of nine and became a student at a fabric store. In his childhood, there were no universities, nor travel, and there was very little child happiness. This kind of reality forced him to look at more and more machines being introduced and factories as the cause of the suffering of the working class. His sympathy for workers had gone so far as to make a real difference to workers. With the aim of creating a “rural cooperative,” Owen bought the bankrupt factory in New Lanark (Scotland) and immediately began to create more favorable conditions in the workplaces of his factory. In the early XIX century, his factory was a very large business, requiring management-level and production control techniques beyond that of the owners of smaller enterprises. After bankruptcy, the situation at the factory was deplorable, and Owen first tried to recruit new employees to quickly improve the quality of the workforce. However, at the onset of the Industrial Revolution, candidates for hired workers had little or no experience in working with machines. Owen found that “the overwhelming majority of workers lacked initiative, were unrestrained, dishonest, and fled from the truth.” He also had to “deal with careless immoral managers, who abused of theft, embezzlement and drunkenness.” R. Owen introduced a new management practice at his factory. It included a daily or weekly inventory of raw materials, unfinished production and finished products. In addition, the manufacturer instituted a labor control system for contracted workers. As a result of the day in the workplace, signs were placed in plain view, which corresponded to the assessment of the workers’ labor -wooden plaques of different colors. Black meant bad work. Recording the “assessments” received was imputed to the masters and supervisors. Owen was a fanatic of discipline and sought to counter the nascent lawlessness by all forces, although his workers were not enthusiastic about innovation. However, thanks to Owen’s efforts New Lanark became an attractive place, later called the “industrial oasis” in the gaunt landscape of Scotland. In New Lanark, child abuse was prohibited and child labor laws were respected, at the factory

192

3 World Management Thought in the Fifth to Nineteenth Centuries

kindergartens for the children of the workers were organized, allowing both parents to work, the factory-built roads in the city, opened people’s schools, where the children of factory workers and the whole city received schooling rather than flogging. Owen advocated that more time and attention be paid to people, or, as he expressed, “living machines.” At his factory, he attempted to bring to life many of the ideas for future social justice: community ownership and management, the upbringing of children outside the family and the inculcation of “true values”, the individual must be clean and well-groomed, provided with everything necessary for a dignified existence. Adjustable working hours for all, child labor laws, folk education, meals at the enterprise at the expense of the company and the involvement of the company in community welfare planning—all of these are parts of Owen’s plan. Owen also actively managed the links between the business and the rest of the world. He joined the Glasgow business elite, took part in the local Chamber of Commerce, and played an important role in the social and political life of the city. The manufacturer used his connections to prepare documents on educational reforms and changes in the economic system. He critically assessed the impact of industrialization on the working class, while believing that the acquisition of useful skills would help descendants from working families to eradicate poverty. His fanatical belief that all would agree with him, if only they had known the truth about the injustices occurring at factories against workers and their families, was wrong. In the end, Owen wasn’t just naïve. He did not understand the nature of human behavior, although he sought to improve it. New Lanark became a peculiar monument to a man who had since been called the donor capitalist and utopian socialist. The purpose of R. Owen’s theoretical and practical experiments was to find new ways of organizing an economic system that would increase the wages of workers and provide them with job security, even during reproductive crises. For instance, he persuaded his allies in Parliament to propose a Child Labor Act in 1815, which prohibited work at factories for children under 10 years of age. He also suggested that the working day should be limited to 10 hours. However, all his proposals were met with resistance behalf the majority of manufacturers, and, to Owen’s disappointment, in 1819 Parliament adopted a much less radical law. In 1825, Owen published his work “New View of Society” [44], where the results of his social experiments at his own factory and in the city were collected, from which it is evident that he, for the first time in the history of management, had defined management not as an institution of police management, but rather as a collection of individuals responsible for the use of human and other resources in the process of achieving organizational or corporate goals. His enthusiasm, generated by successful activity in New Lanark convinced the need to continue the reforms by changing labor legislation. He decided to go to America, where people sought freedom and cared for their fellow men and women. In town of New Harmony, Indiana, he attempted to replicate and refine the New Lanark experiment. But, unfortunately, once again, he had been wrong to judge the

3.8 Charles Babbage on Specialization and the Division of Physical and Mental Labor

193

nature (or lack of character) of his fellow citizens. The experiment in the New Harmony failed, and Owen returned to England, where he joined the creation of a national workers’ union, which turned out as unacceptable as his rural cooperative. A rather strange combination of qualities was represented by Robert Owen, a capitalist and socialist, manufacturer and trade union organizer, a profit-maker and reformer! In the history of management, Owen is mentioned not due to his successful deeds. They were few. He is remembered as a courageous man, committed to the deed of defense of the interests of the working class. He is known as a scientist and practitioner of management, who was first to draw attention to the primary responsibility of management—its social responsibility. The tradition that he had begun, and the issue he had attempted to solve, is formulated somewhat different in our time, but the essence had not changed: what is the responsibility of modern management and each manager individually [25].

3.8

Charles Babbage on Specialization and the Division of Physical and Mental Labor

Somewhat after R. Owen’s essay, a treatise of two giants of managerial thought— Charles Babbage and Andrew Ure—emerged. These authors expressed two important ideas that, along with the markets for mass goods, had rendered factory production inevitable and, as a consequence, the inevitable emergence of management as a scientific discipline [25]. Charles Babbage was born in 1792 in the family of a wealthy English banker. If his father hadn’t been rich, the son would probably have died as a child, as he was often ill. The weakness of his physical health had been offset by his strength of intelligence. He was curious, inventive, and much smarter than most of his peers. Maybe it was the disease that made him capricious and intolerant. It was common for him to blow the horn at his house to chase away the organ grinders that interfered in his work. M. Moseley said of Babbage that “he spoke as if he hated the whole of humanity, the English in particular, and the English government together with organ grinders most of all” [45]. Babbage always wondered how things were arranged, and that interest led him to mathematics in Cambridge. His mathematical talent helped him invent the famous “analytical machine”—the predecessor of a digital computer. A broad range of interests in science prompted him to travel across Europe for over 10 years, where he observed and studied industrial enterprises before returning to Cambridge and becoming a professor of mathematics in 1828 [25]. The most outstanding contribution was the publication in London of his work “On the Economy of Machinery and Manufactures” (1832) [27]. All 3000 copies were sold in less than 2 months. The 2nd edition of the book appeared in 5 months, and by 1835, the 4th edition was released in London. For Great Britain of the time, it was a sensation in the book world. In the United States, an 1832 edition was printed

194

3 World Management Thought in the Fifth to Nineteenth Centuries

and the magazine “Mechanics” began publishing all of his work in a series of articles starting in1833. In the foreword to his work, he writes: “Having been induced during the last ten years to visit a considerable number of workshops and factories, both in England and on the Continent, for the propose of endeavouring to make myself acquainted with the various resources of mechanical art, I was insensibly led to apply to them those principles of generalization to which my other pursuits had naturally given rise.” It is interesting to compare this idea with a similar thought in Taylor’s book “Principles of Scientific Management” published in 1913: “When men, whose education has given them the habit of generalizing and everywhere looking for laws, find themselves confronted with a multitude of problems, such as exist in every trade and which have a general similarity one to another, It is inevitable that they should try to gather these problems into certain logical groups, and then search for some general laws or rules to guide them in their solution.” The study of factories within 10 years has undoubtedly had an impact on the content of Babbage’s book and has also broadened the range of issues it discusses here. It contains a lot of speculation about the meaning of tools, equipment, location of enterprises, trade unions, and the use of counting machines working on perforated cards. Yet it is the provisions of Babbage on specialization, or division of labor, that help us understand the nature and significance of factory production. Babbage argued that the patterns derived from research should be applied in the management of an enterprise. He also said that the manager should know how many times each transaction was repeated every hour; that the work should be divided into mental and physical activities in order to determine the exact price of each component; that the worker must be paid in accordance with his personal efficiency and the overall success of the enterprise. Babbage stressed the importance of a division of labor, pointing out that specialization leads to increased profits, that the time spent on learning a process should be significantly reduced, that the skills acquired in performing this process should increase under the division of labor. Babbage described this as follows: “The master manufacturer, by dividing the work to be executed into different processes, each requiring different degrees of skill or of force, can purchase exactly that precise quantity of both which is necessary for each process; Whereas, if the whole work were executed by one workman, that person must possess sufficient skill to perform the most difficult, and sufficient strength to execute the most laborious, of the operations into which the art is divided” [27]. Babbage was not the first to discuss the merits of a division of labor, as we have already mentioned, reminding readers of Adam Smith, who devoted a lot of space to the issues of division of labor, illustrating the use of this principle in the manufacture of pins. Babbage’s borrowing from Smith is obvious, although, of course, he had substantially developed and refined this original idea. One of the important distinctive features of Babbage’s concept is the division of physical and mental labor. If specialization is good for factory workers, then, asked Babbage, why is it not as useful for mathematicians? In our societies, specialization is easily assessed and understood. We are accustomed to doctors dealing only with ears or the skeleton, to lawyers who specialize exclusively in real estate, and to

3.8 Charles Babbage on Specialization and the Division of Physical and Mental Labor

195

accountants who only deal with taxes. That was not the case in England of the seventeenth century. Specialization did not seem so obvious for a farmer or an employee of the cottage industry. Before factories and assembly lines appeared, people were universal, they simultaneously turned up soil, planted, fertilized, and then collected the fruits of their labor. Babbage recognized the potential of specialization. In fact, he argued that the division of labor was the most important principle for all those who performed a job. Similarly to A. Smith, he drew up a list of positive characteristics of specialization, of which the most important are the following: 1. It reduces the time it takes to master a profession. The time it takes to learn a profession depends on its complexity and the number of individual operations required to complete it. The more complex a job and the more operations it contains, the greater the potential benefits of specialization. 2. It reduces material waste during the course of training. When a person learns a new business, he inevitably makes mistakes in the manufacture of goods. This leads to losses. These losses can be reduced if a person restricts his or her attention to only one task, which he learns more quickly. 3. It eliminates the time that is spent moving from one kind of job or work to another. A person who specializes in carpenter’s work does not lose time to take a break to perform water or electrical work. 4. It provides an opportunity to achieve a high level of expertise. In theory, quality is enhanced by the division of labor because of the fact that repeatability of operations leads to higher speed and quality of work. 5. It stimulates labor-saving innovation. Like Smith, Babbage believed that a specialist who becomes an expert in the accomplishment of a single task is more likely to invent, introduce a tool or method, which enables improving his work. 6. It provides for greater interoperability of man and the task. If a person is recruited to do all kinds of work, he must be able to perform the hardest or most complex kind of assignment across the entire range of work. As you specialize, skills and physical abilities are more easily tailored to a specific job [25, 35]. Babbage considered that, as a general rule, the higher the skill required for a particular job, and the less the time during which this qualification is involved, the higher the benefits of specialization. A worker who performs a simple task can focus exclusively on it and perform it more quickly. A worker who must perform many jobs at once does not acquire the skills required to perform a specific job so quickly. Without division of labor, training requires a lot of time, losses increase and productivity decreases. However, Babbage was not satisfied simply with the specialization of physical labor or by occupations. He wondered, for example, whether mathematicians should perform the simplest arithmetic operations. That’s why he developed an analytical machine that enables a talented man to be freed from many routine calculations. To get an answer to the question: “How do you develop an efficient analytical machine?,” he spent 10 years studying the organizational processes in construction,

196

3 World Management Thought in the Fifth to Nineteenth Centuries

iron smelting, the assembly of clocks, coal mining, production of newspapers, lithographs, mail, the manufacture of nails, and transport—this an incomplete list of the objects he has studied. All experiments ended with evaluations of the organization of production, recommendations for its improvement through the division of labor, specialization, the upgrading of masters and workers, and the results are set out in his treatise. Besides specialization, Babbage studied the problem of “motion and time,” in which he was also ahead of Taylor, stating: “if the observer stands with the watch in his hand before a person heading a pin, the workman will almost certainly increase his speed, and the estimate will be too large. A much better average will result by inquiring what quantity is considered a fair day’s work. When this cannot be ascertained, the number of operations performed in a given time may frequently be ascertained when the workman is quite unconscious that any person is observing him. Thus the sound made by the motion of a loom may enable the observer to count the number of strokes per minute, even though he is outside the building in which it is contained.” Babbage also stressed the importance of balancing production processes with the optimum production unit size for each product class. Having seen the following geniuses, we believe, for the time, with Babbage’s recommendations, it is clear that there are not many areas where the talented hand of Charles Babbage had not been successful: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

11.

Analyze production processes and their cost Use time consumption measurement techniques Use standard print forms for observations Use a comparative method to study business practices Study the effects of various shades of paper and ink to determine the least eye-tiring style Define the best form of questions Define demand based on income data Follow the principle of production processes centralization to economize Allocate research and development processes Study the location of the factory relative to the source of raw materials, given the increase or decrease in the weight of the final product, depending on whether the final product of the raw material is heavier or lighter Use the bonus system because: “Every person involved must benefit greatly from the introduction of any improvements he proposes” [27].

It is obvious that Babbage was an astute observer who accurately expressed the processes he observed on paper, a generator of ideas and the harbinger of scientific management that followed him in Taylor’s research. In the area of dissemination of the ideas of “universal specialization” C. Babbage was a dreamer, but his dreams were not far from reality. He knew that there should be mass markets for the “products” of specialists’ labor and that much larger investment would be required if specialization were to be practiced on a large

3.9 Andrew Ure on Replacement of Labor with Capital

197

scale. This need for capital was justified by another great scientist of the studied period—A. Ure.

3.9

Andrew Ure on Replacement of Labor with Capital

Andrew Ure was born in Glasgow, Scotland, in 1778, 2 years after A. Smith published his “Wealth of nations.” Ure received a degree in medicine and intended to make a career of a scientific educator and chemist. Why he became interested in factories, nobody knows. This may have been due to the scientific popular lectures he was the first to prepare and read to Glasgow workers. Factories are precisely what the audience was best at, and it is possible that his search for meaningful illustrations contributed to educating the teacher as much as his disciples. However, it is not as significant why he was interested in factories, it is only significant that he was interested in them. Ure was particularly interested in the British textile industry. He examined the factory regions in detail and actually tried to “eat, sleep, think and feel” just like factory workers. He interviewed the workers, watched them, and finally wrote about them in a book called “The Philosophy of the Manufacturers” (1835). Ure’s book received a variety of definitions, such as “the lashing of a desperate workman” and “an apologia of a factory and factory production”. However, according to modern management theorists, this is one of the major books ever written about the factory system of England [46]. Ure’s book begins by presenting a broad variety of data on demography and public health, which is undoubtedly due to his research interests, as well as his profession—he was a doctor. He established the average age of the British industrial worker, divided employment data by worker category, by gender, described their state of health, summed up the complaints and described their way of life outside the workplace. The important aspects of Ure’s philosophy were formulated in the course of his attempts to refute the report of some Mr. Sadler, who accused British industrialists of treating workers too harshly, abusing child labor, and generally being indifferent to poor working conditions. However, Ure argued that this was not the case and that the real cause of many problems was the lack of mechanization. Data show that work is best done by machines that exempt a person from hard work. Workers in mechanized factories with steam machines are more satisfied with their work because, according to Jure, they are not engaged in hard physical work and can secure more than a minimum standard of living [25]. Sadler’s report accused machines of poverty and abuse of child labor. Ure, however, chastened the conditions of work organization at factories. Children at textile factories worked under the supervision of the spinners and the people who served the basin machines. Basin makers observed the children and received their wages depending on how much the children had done. Any mistake or refusal of hard work caused a beating. Most of the complaints of mistreatment at factories

198

3 World Management Thought in the Fifth to Nineteenth Centuries

concerned relations between textile workers and their young job workers. It had nothing to do with machines. The fundamental principle, as Ure saw it, was to “replace manual skill with mechanical science.” In other words, to replace manual work with machinery. Machines help to reduce tedious work, eliminate the monotonousness of work and ensure a better standard of living. Thus, the book “Philosophy of Manufacturers” outlined general principles on the basis of which material production should be organized through self-sustaining machines. The course of Ure’s reasoning is easy to trace through his work. Whereas Babbage called for specialization, Ure echoed him and went further, calling for the active use of machines [25]. But perhaps the most comprehensive concept of the management of the legal state as a system and of its individual elements—enterprises, economic agents, was developed by the German scientist, Lorenz von Stein, who issued in the 1860s the seven-volume work the “Doctrine of Management.” In it, L. von Stein was one of the first to introduce the term “administrative doctrine” instead of “police science,” uncovering the content of the individual categories and provisions of the doctrine. His work had many followers in Europe and in Russia. Let’s elaborate on the analysis of the main work of Stein, given that it is the first attempt in the world history of management thought to methodologically justify the need for and the possibility of managing all sectors of the state’s economic life with a systematic approach.

3.10

Lorenz Von Stein’s “The Doctrine of Management”

The Methodological Basis of Stein’s Doctrine of Management L. von Stein (1815–1890) was a famous German jurist, political scientist, and economist from Schleswig. He studied philosophy and jurisprudence at the University of Jena. In 1846 he became a professor at the university, but was to leave the chair for a number of reasons. In 1855, he was invited to the University of Vienna. His lectures covered the entire range of state sciences, first given in a well-developed system. Stein remained professor at the University of Vienna for a further 30 years, and in 1885, when he turned 70 (the professor’s age limit in Austria), he resigned. Stein’s most significant work, which opens up a new stage in the development of management science, is its doctrine of state management. He wrote numerous works on the issue. And despite the philosophical direction of Stein’s mind and his addiction to systematics and methodology, there is a large number of specific historical and economic outlines in his works. These outlines, based on a comparative historical analysis of special and legal institutions of the major Western European states, especially England, France and Germany, constitute one of the most fundamental virtues of Stein’s main work, entitled “A doctrine on management and management law with a comparison of literature and laws of France, England and Germany” [47, 48]. In Germany, many social sciences in the late eighteenth century were at a rather low level of development. However, new scientific developments also penetrated

3.10

Lorenz Von Stein’s “The Doctrine of Management”

199

German science, affecting more or less prominently all social disciplines. But in general, the tone, direction, and setting of objectives of all these sciences were narrow, cabinet dogmatism. The brilliant development metaphysics alone had preserved the prestige of German science in Europe, showing the rich forces that lie in the “nation of thinkers.” But it is this philosophy, which, while trying to “grasp the foundations of all essence and resolve the problem of the due,” distracted the most profound minds from systematic observation of the real phenomena of the political, social and economic life of the country. A very different picture was observed in France, where Stein went. In the midst of rationalism, a scientific school of political economy was developed, a very pragmatic science of police emerged, starting with the works of De la Mare. The political revolution had created revolutionary trends in political and social sciences. The whole system of jurisprudence is radically reprocessed and reformulated. Socialist literature emerges and flourishes. Historical research is being given a broader and deeper statement. Sociology emerges, committing to reveal the laws of statics and dynamics of public phenomena. These were the mental tendencies that, by the time of Stein’s arrival to Paris, had achieved quite significant development and brilliance. But this influence had not manifested itself in passive acceptance of any theories. Stein was a too talented and independent thinker to subordinate his mind to the external leadership. Under the influence of French literature, Stein developed a strong and conscious desire for a historical comparative method. In his last work Stein enjoys both a historical and a comparative method and philosophical deduction. Stain advocated the combination of these methods in his first works. Thus, in the “System of state sciences,” he writes: “Different are the ways in which scientific knowledge of life is sought. Some attempt to comprehend the essence and relationship of the factors of life based on data on life relations, others tend to understand and explain certain forms of real life based on its concept. A large chasm lies in between both starting points. There is seldom a lack in any country of people who began their journey from one or another starting point. The challenge of our time seems to be to fill the chasm that lies between these points” [48]. Stein often dwelt on the need for an organic combination of philosophy with a comparative history of law. The first is to identify the “organic entity” of management and establish its categories. Only by establishing a solid system “can the idea of a comparative exercise of management be implemented.” Without “strong categories,” only a mechanical comparison of the different states of Europe is conceivable, rather than a fruitful comparison. “How can a comparison perform its purpose -exclaims Stein -when its foundation—a system, is arbitrarily fabricated?” According to this Stein, in the study of each individual issue of management attempted, first of all, to give a philosophical analysis of the issue and to indicate the place it occupies in the general system of science, and only then embarked on a historical study of the main causal factors, the characteristics of the current state of governance in Western European states and, finally, the analysis of the legal aspects of public management.

200

3 World Management Thought in the Fifth to Nineteenth Centuries

The influence of French science on the German scientist has had an impact in bringing him to a realistic worldview, in broadening his scientific interests and horizons. Thanks to his vast mind, L. Stein could not fail to recognize the legitimate demands of positivism in political and social science, but, having been raised in an atmosphere of Hegelian philosophy, he could not overcome metaphysics at the same time. The desire to reconcile both could not have been crowned with success—the metaphysical beginnings, expressed by him, on the state, as a superior personality, on law, as the will of state, on the head of state, as a state “me,” etc., all of this—a tribute to metaphysics, and not only does he not accept reality, but even the views of the Stein himself, when he develops them in detail and when he is more and more gives into positivism techniques. Another influence should be noted, that resulted in from Stein’s acquaintance with French science and the social life of France and its distinguished representatives. Finding himself at the center of the socialist movement, Stein could not help but be interested in this new social phenomenon and took a zealous interest in its research. But in the study of this issue, Stein did not confine himself to the history and criticism of the phenomenon being investigated, but also tried to answer the questions: “What in fact is this social movement? What is a social revolution? What are the goals it pursues and where will it lead? How does such a society differ and how does it relate to the state?” In examining these questions, Stein created a sociological theory, and more precisely elaborated a special sociological worldview, which was the basis for all of his subsequent works. In the works “Socialism and communism in modern France” (1842), “The History of the Social Movement in France,” “Doctrine of Society,” “Doctrine of Management” (1863–1868), etc. Stein was one of the first among Western scientists to turn to a thorough study of the proletarian movement, ideas of socialism and communism, to raise the question of the relationship of political power and the state with the development of society, property and class struggle, and on that basis he put forward a liberal program for the reconciliation of class contradictions and the stabilization of society through an “above-class” constitutional monarchy. Many modern researchers believe that he had studied all these problems much earlier than C. Marx. Under the influence of Hegel, and Hegel distinguished civil society and a political state, Stein considered civil society essentially as a bourgeois society. Hegel portrayed civil society as an antagonistic society torn by conflicting interests. Hegel’s analysis has shown that civil society is unable, based on its internal capacity alone, to address the problem of poverty. The state is, according to Hegel, the idea of reason, liberty, and right. The state is divided into three different authorities: legislative, executive, and the authority of the crown. Hegel advocated the organic unity of the various authorities. Hegel saw the essence of the internal sovereignty of the state the domination of the whole, depending and subordination of the various authorities to state unity. Stein distinguished the state and civil society. He considers the state as a legitimate product of the development of civil society, which in turn is linked to the development of human needs, labor, and property. In order to meet his material

3.10

Lorenz Von Stein’s “The Doctrine of Management”

201

and spiritual needs, man, Stein notices, is forced to work, to produce various goods and to conquer nature. In this process, man, because of his limited power and capabilities, comes into contact with other people and develops the prize of life based on the division of labor. The distribution of the goods created is based on the principle that the good created by each person belongs solely to him and constitutes exclusively to him the assigned area (private property) and is his right in relation to other persons. The development of society, underlined by Stein, necessarily leads to the formation of two opposing classes—owners and non-owners (workers). Reconciliation is possible only through the subjugation of society to the highest union—the state. “The state is a union of people as a single, free, self-determining entity and an individual personality.” The idea and the essence of the state, argues Stein, is a representative of common interests, a “defender of the oppressed,” which has in mind not the benefit of any particular class, but the benefit of all, protecting peace, property, law and social order. However, historically the idea of a state, according to Stein, does not immediately gain full implementation. In practice, the state is subordinate to “private interests” at the expense of the “general benefit.” This is because the struggle of opposite classes extends to the political area. The owners, on the basis of their economic superiority, seize political power and, through it, exercise their selfish aims by ensuring dominance over workers. This opens the way to coups and the revolution. The French Revolution, says Stein, destroyed the class order and paved the way for a bourgeois order in which society was divided into two opposing classes— entrepreneurs (capitalists) and the proletarians. The proletarians gradually realize themselves as a “unified whole,” as a class and oppose owners and the state, which had turned into a tool for exploitation. The proletariat finds its expression of the desire for emancipation and social equality in socialist and communist ideas. Hence, the prominence of these ideas, the understanding of these ideas, and much less the fight against them, stresses Stein, could not be dissociated from the “working question.” The established situation, in Stein’s opinion, is fraught with a revolutionary destruction of the entire socio-political system, based on “industrial” private property. Stein believes preventing this fate of capitalism is possible only if the state turns, in accordance with its idea, from a tool of “private interests” of individual classes into an instrument of “common benefit,” in which all classes and forces of society cooperate in harmony. In Stein’s view, the form of state plays a crucial role in achieving this goal. Political power must be sufficiently self-contained to stand over classes and not become a tool for the selfish interests of any particular part of society. At the same time, it is important for the state not to be torn away from society and degenerate to despotism. These requirements are met, says Stein, by constitutional monarchy (but neither by absolute monarchy nor by a democratic republic). In it, the beginning of power is organically combined with the beginning of freedom. This is achieved through the separation of powers: monarchy, legislative and governmental. This structure purports to stem from the very idea of the state: the identity of the state

202

3 World Management Thought in the Fifth to Nineteenth Centuries

is expressed in its head, the will of state—in law, state activity in management. A constitutional monarchy, states Stein, does not act in the interests of any particular class, but for the sake of “common good,” that is, is a “state above class.” An independent and firm state authority guides the people on the path of freedom and class harmony to the “common goal,” to solve the “social,” “working” issue within the capitalist system, while retaining private property. The opposite is reconciled. Revolution becomes a thing of the past. Only in this case, states Stein, will the destructive ideas of socialism, communism and materialism be overcome, and instead in the consciousness of the proletary, and all members of the bourgeois society likewise, a “moral beginning of love, which binds various classes and dimensions” is brought to the mind. Stein’s influence on the political ideology of his contemporaries was significant. A constitutional monarchy, which is able to balance between the bourgeoisie and the nobility on the one hand, and between the proletariat and the propertied classes on the other, has long remained a sign of a moderate liberal bourgeoisie. The ideas of an “above class” and “social” monarchy, capable of reconciling the differences between workers and capitalists, were addressed by the political leaders of Kaiser Germany (O. Bismarck and others). The Bourgeois social party is attracted by Stein’s strategic intent: through artificial social and political maneuvering, to distract the proletariat from the ideals of socialism and communism and to turn it to voluntary support as a system. Stein’s theoretical provisions on the relationship of political power and the state with society and classes were at the time, along with relevant concepts of English economists and French historians of the period of Restoration, a significant step in the knowledge of social and political life and laid the path to sociological theory of politics and the state. Main Concepts and Terms of the Teachings of L. Stein In the “Doctrine of Management” treatise L. Stein wrote: “The more advanced the enlightenment of our time, the more clear the position that the center of gravity of further development lies in governance (emphasis added—M.V.).” One of the greatest challenges of the immediate future is not only to develop this governance, but also to make it a vibrant, lifelong part of social life. It is essential for everyone to have a clear understanding of governance, its reasons, its mission and its rights. “Stein considered the concept and content of executive power to be the connecting link between the idea of the state and governance in general, and in management in particular.” “It is a great independent body through which the basic positions of the structure of the state are transferred to management. The state appears to us in form of government, in execution and management” [48]. Let’s consider the categorical-conceptual apparatus used by Stein to reveal the essence of his doctrine on management (or administration). In the very beginning, Stein gives a definition of the state. “The state is a society rising to the selfdetermination of the individual and, at the same time, also to the highest internal identity.” Stein called state life a combination of actions, functions. Correct state life is the one in which each body performs only its function. “The body of state is land, the soul of the state is the people. In the land and the people, the state has its own

3.10

Lorenz Von Stein’s “The Doctrine of Management”

203

identity.” Stein called the interplay of these factors the natural life of the state (and opposed it to personal life of the citizens of the state). Stein considered supreme state power as its first body, without which there could be no state, and which is expressed in legislation (the second body). And the third body of state activity is State Management: “Management is the state at work.” In management Stein distinguished execution and management in its own sense. He referred to executive power as autonomous, state-owned, provided with an autonomous body and its own right for executing the will of state. Executive power is autonomously manifested activity of the state, the content of which is exactly management. The content of executive power was presented by him as a commandment, organization and coercion in their entirety. Stein considers management in its own sense as the activities of the state, all actual life relations. He also understood the actual right of management, the guiding principle of which was, in his view, the appropriateness derived from the study and the understanding of the life relations which are subject to management. Actual management law falls into three broad categories “according to the main starting points of the state body”: public economics, justice and internal management. The second area relates to the notion of right, the third—to the notion of an agreement between a citizen and a state. The author called right the inviolability of one life area by the movement of another and law—the expression of the will of state. However, Stein also refers to orders the content of which is law enforcement. Stein defines state power as the sum total of the active force of all the bodies of the state, that constitute a single whole. State right, however, is the border for the start of all individual bodies of the state. State right, according to Stein, arises only where the state, as an individual, enters into relationships with other individuals, in which case state right determines the relationship. The supreme head of state, legislation and management are special bodies, each with a special right which establishes the border of their special will. Stein believed that state right could be different not only in individual parts, but the distinction could derive from those elements that are part of the state and nevertheless retain their autonomy. The first such element is a single personality with its individual development, and the other element is society with its own public order. Public order is not something permanent, it is capable of changing according to the various aspects of public class movement. Therefore, the state, being the personal unity of all citizens and drawing its power from this, should never promote the domination of one class over the other, on the contrary—it must combat the order in which state power is made available to individuals or to known classes, so long as it should be the sum of power of all. The state should itself promote the lower, suppressed classes to achieve legal equality. Adding to the above-mentioned properties of the state individuality, which is expressed in the dominant public order, Stein defined the state as a living, individual “me” with personal and social elements within itself, with the will and the strength of activity.

204

3 World Management Thought in the Fifth to Nineteenth Centuries

Furthermore, in defining the main forms of the management (or administration) body (the supreme Head of State, government, self-government and personal unions), Stein says that the supreme Head of State is the personal head of government and law, with his autonomous right, from which the notion of royal authority derives. The government is an autonomous body with its own right. It consists of management bodies (ministries, departments) and positions, each of which focuses within itself, to a certain degree, administrative, organizational, and individual power. The government’s function is to exercise the will of state. Stein introduces the concept of the people’s electoral management—a state body whose purpose is as full development of all individuals as possible and it’s means are the performance of the objectives of management. Any commonality of people to that pursue this goal should be viewed as a transitional stage to the people’s electoral management. This transitional stage manifests itself in two forms: societies and private unions. As far as self-governance itself is concerned, it arises where there is a common task to be performed within local borders. Self-governance, according to Stein, is the first form in which the idea of free management is attained, as institutional and plenipotentiary participation of citizens in the functions of execution in general, and of management in particular. Stein conceived internal management as the sum of the parties of state activity that delivers to an individual the conditions for his own individual development, unattainable with his own energy and efforts. “The idea of internal management is based on the fact that the ideal of human development is the perfect man—wrote Stein. -Perfection of an individual cannot be achieved through the efforts of one person. An individual who wishes to carry out this idea of internal management and fulfills it is the state.” In other words, Stein understood the activities of the state “to create conditions of personal freedom” as internal management. Stein’s Views of the Management System Stein believed that management concentrates within itself all the objectives of the state, and the totality of these tasks constitutes the management system. Every part of human life has its own management. From here, Stein, the richness and diversity of mankind’s activities arises. Stein referred the following to the internal control system: 1. The main relationships of personal life taken in itself; 2. Relations arising from the economic life of the individual; 3. The relationships of the individual’s public life. Stein saw the “True task” of the management system in the fact that the Doctrine of Management represents in one image the basic life relations of mankind in general. But Stein did not consider everything that refers to human life to management: its area, wrote Stein, embraces only what the life of the individual and the life of the common mutually define and determine one another. Where the individual is fully left to himself, there is no management at all, according to Stein. A common part of the management system is the doctrine of the executive power, which in turn is divided into a common and special part. The first sets out the main “organic” notions of executive power, its functions and rights. A special part is devoted to the

3.10

Lorenz Von Stein’s “The Doctrine of Management”

205

inheritance of the main forms of executive power, which are the head of state, government, self-governing bodies, and all kinds of alliances of private persons. A special part of the doctrine of management should be devoted to the study of its three main areas. But Stein, being most of all interested in internal management, started directly from developing this area. L. Stein placed the basic relationships to which the special life of the individual in the state itself is divided at the base of internal management. As such, the person needs to register certain moments of its life, which are births, obtaining a name, marriage. In addition, the individual needs to regulate his place of residence, to protect his health and to represent his interests in cases when the individual, because of his physical and mental disadvantages, is not able to take care of them by himself. Finally, the individual, as such, needs to develop his spiritual abilities. With such needs, the individual cannot, obviously, achieve satisfaction by one’s own forces. From here, the first subject of internal management is the personal, both physical and spiritual, life of the individual. Accordingly, the first part of the doctrine of internal management is divided into two divisions: the first deals with population issues, the security police, public health and the issue of custody; in the second division, dedicated to the spiritual life of the individual, Stein considers the issue of popular education. But the individual also needs a wide range of material benefits that can only be achieved under certain conditions. He is not capable of ensuring these conditions without the cooperation of the state. Hence the second area of internal management, which is the subject of the individual’s business life. In view of the fact that certain conditions are equally necessary for all branches of economic activity, while others are needed only for some of its industries, Stein subdivides the considered area into a general and special part; the first includes all the activities of management, which are caused by the natural forces of nature (firefighting, preventing floods, insurance, etc.); the issue of means of relations; the issue of money circulation and the credit issue. In the special part, Stein examines the attitude of the state towards the extractive, agricultural, commercial and manufacturing industries, as well as the issue of literary activities. The third element of human life is, in L. Stein’s view, public life, the content of which is the struggle of public classes caused by their interests. The state, as the representative of the supreme harmony of all interests, should not take sides in any of these public classes; it should, on the contrary, create conditions that an individual is not capable of generating to rise from the lower class to the highest. These conditions are as follows: • to eliminate various legal obstacles to the free public movement of classes; • custody of public needs; • promotion of labor that does not possess sufficient capital to achieve economic self-sufficiency. In this part, Stein considers various auxiliary classes, “social insurance” and all forms of self-aid.

206

3 World Management Thought in the Fifth to Nineteenth Centuries

So, internal management includes personal, public and economic life. A person’s personal life is of interest for internal management, “as this person is a member of society. Whereby, the extent to which a person defines communication with purely personal existence, that much he gains from communication.” Furthermore, Stein says that “personal life always has two areas: physical and spiritual. Man goes forward in both, and with them communication develops. But the progress of an individual requires a number of conditions that an individual cannot provide on his own.” Delivering these conditions to him—says Stein—is the first task of internal management. Stein divides personal life into the following areas of management: 1. Human population 2. The health structure and health condition generated and managed by the relationships of the individual’s overall life, called public health, and this is subject to internal management. And management cares about the conditions of this public health through legal definitions, special institutions and their activities. 3. Police structure. Until the end of the nineteenth century, the police and police structure actually signified weight of the form in which the government’s interference into management had occurred. And it’s only in Stein time that the term acquires another distinct meaning: it began to point to a certain relationship between law and management, so Stein believed that it was part of the doctrine of management. The police structure served the entire internal management as a body of coercive power. Police authorities were applied to the management of finance, law and internal affairs. A real police structure, in Stein’s view, begins only where the task of internal management—“to prevent society from danger”— is an autonomous function. And the police were supposed to avert threatening dangers. Stein defined managerial police (administrative) as police directed against individual and certain dangerous acts. Its objective is to protect a certain area of public life. And meanwhile, as the security police must deal with the possibility of deed, the police must always accept a certain act as dangerous and should thus always prohibit deed. 4. The formation of education, that is, the management of the spiritual world. This has been given more attention by the author because education was considered not only as a basis for individual development but also as a basis for progress in state structure and management. The second vast area of vitality, according to Stein, is the business world as “filling existence with labor.” The concepts and laws that had been identified in this area of activity constituted the doctrine of the national economy. The doctrine asserted that an individual, having been represented by his own expressions of force, could not fulfill his appointment. According to Stein, in order to achieve improvement, he was obliged to deliver the state household means in the form of taxes. As a result, the state in turn became an economic “body,” and thus the notion of state economy emerged, in which the state, like an individual, is an economic identity with income, expenditure and reproductive activities. Stein further observed that “when the funds made available to the state are actually spent on improving the conditions of economic development of each individual, custody of the national

3.10

Lorenz Von Stein’s “The Doctrine of Management”

207

economy emerges, which constitutes an extensive area of internal management, the objective of which is to develop and replenish the nation’s economy through organized, social activities that are capable of achieving all the necessary material conditions, without which the individual cannot achieve his economic purpose.” Stein’s called this custody economic management. He wrote that when the government cares for everyone individually, it was, at the same time, caring for everyone, and that this way economic management becomes an organic fulfillment of the harmony of interests, and therefore also “the embodiment of the great dominant truth,” that the interest and fulfillment of any success and any freedom is in harmony. Stein represents the economic management system as an organic unity of all life relations in which the conditions of economic development are achieved not through the forces and activities of a single individual, but must be provided and ensured by law and the executive activities of the state. This area is so rich in scope and content, says Stein, that the body that brings care for the nation’s economy into motion does not only embrace the government alone; all three bodies operate evenly here: government, self-governance and society. “In the meantime, so long as in the past century, all care for the nation’s economy was entrusted to the government alone, now,” wrote Stein, “it opens up an evergreater scope to free management. And society expands every year because not so much because it is taking on the Government’s activities, but rather because it is making a completely new effort to take care of the nation’s economy and thereby revealing the objectives of social activity to the benefit of economic development, a task which had no understanding at all in the past time.” The elements of the economic management system comprise: 1. A general part, which includes conditions “equally necessary for all sectors of business life. In its elements it has existed for a long time, because there is no state without structure, without any general economic management.” Stein wrote also, that its development begins with royal authority and completion may be given through free development of the union system. The system is based on the “great elements of all life”: personal, natural and economic. The first refers to expropriation, the second—to the management of elements, the third—to the management of communications between individuals; 2. A special part which relates to individual types of enterprise On the first area, expropriation, Stein wrote that it arises where the destruction of a particular right was an indispensable condition for the development of the whole society and was recognized as such by the state. Every expropriation is a requirement of public progress to be demanded of a private individual. Every expropriation is essentially a social process. The state does so and a legal system of expropriation arises. Stein called the second area element management. Here, he says that all the physical and business life of man is an unceasing fight against elementary forces. At times man cannot completely subdue them. That is why nature’s power must be opposed to the power of human communication. Stein called the combination of

208

3 World Management Thought in the Fifth to Nineteenth Centuries

types of government activity against nature’s elements elementary management, which is nothing other than management in the fight against external nature, its forces and its movement. By the very nature of the things, the body of this management, in Stein’s opinion, is initially always local and consequently selfgovernance declines. Stein called the third area the structure of messages. No private economy can thrive on its own. The source of any development is based on the fact that what one private economy possesses has a higher price for another than for the first. Stein called the ability to create such property productivity, “which is the living soul of all production.” He defined as intercourse such phenomena in which property is actually created and the process through which they are delivered to one another begins immediately. Stein considered intercourse a condition for any real productivity, any development of the nation’s economy in general. The conditions of achieving property, according to Stein, comprise the first part of this system, and price movements—the second part. A system for developing relations is gradually formed. Stein called the aggregate of these institutions in the main forms—postal services, railroads, steam shipping and telegraph—the institutions that provide the interrelations and noted that each of those forms fulfills its function. By connecting countries and nations, they give rise to a worldwide life. All the institutions of relations are the affair of the state. Stein understood circulation as a legal act, as a contract. Circulation, as Stein considered, has one condition that an individual person could not reproduce on his own—that is ensuring the correct measure of property and value in the services. The measure is established, as Stein considered, objectively and contrary to subjective arbitrariness. Stein also developed a monetary structure. He referred money to notions of political economy: “money is a common measure of the value of any property, and also the primary condition of any economic reciprocity.” Stein believed that at all times, the monetary system emerged together with the state system. Management of the cash system was defined by the author as management of the monetary system, the system of price of money, the system of paper money, and the monetary system was a system of measurement of value, making the reconstruction of this system is an objective of management. Stein deduced the concept and essence of credit. He interpreted this category as economic and defined credit as the capability of money to deliver to one economy the use and acquisition of another economy. Stein’s considered the organization of the credit business as an extremely important management affair. “Every valid credit is a purely business act of communication (first, a transfer of capital for use, and then—interest back). The State should take care of the management of the credit system through public management and should, by its legislation, establish its organization.” This is the system of the doctrine of management in general terms. In formulating the objective of the teachings on management, Stein wrote: “The purpose of the doctrine of management is to trace the causal link observed in a real life, between the functions of State authority which constitute the content of management, manifest

References

209

themselves in all its activities and in any field, on the one hand, and the highest appointment of all members of State, on the other.” While appreciating the practical significance of this multidisciplinary science and, at the same time, the complexity of its formation, he again and again called for: “One who performs Management will soon realize that there is no science that would be equal in wealth and importance,” wrote Stein [47]. Test Questions 1. Briefly describe the main ideas of management of the economy by the works of thinkers and figures of the feudalism era in the countries of Western Europe (fifth to eighteenth centuries). 2. Give a brief description of the main ideas of the management of an economy of thinkers and reformers in the countries of the feudal East. 3. Give a brief description of the management systems in the utopian states of T. Campanella and F. Bacon 4. What are the main ideas in the management of the police states in the treatises of De la Mare, G. Justi and J. Sonnenfels? 5. Where and how were management ideas reflected in the curricula of the first commercial schools and cameral levels of the universities of Europe? 6. What was the merit of A. Smith in the development of management thought? 7. What are R. Owen’s main management ideas? 8. Disclose the meaning of Babbage’s experiments in the establishment of scientific management. 9. What is the merit of A. Jure in HMT? 10. Disclose a brief summary of the L. von Stein’s “Doctrine of Management”. 11. Describe the most important management ideas with the works of C. Marx and F. Engels. 12. What causes and factors contributed to the opening of the first business management schools and the managerial training programs in the late-nineteenth century?

References 1. Vsemirnaya istoriya ekonomicheskoy mysli (nauchnyi redactor Victor Cherkovetz). v 6 tomah. M., Mysl’, 1987–1997 gg 2. Hrestomatiya po vseobshchej istorii gosudarstva i prava (pod red. prof. 3. M. Chernilovskogo). M., 1994. isbn:5-8493-0045-7b 3. Hrestomatiya po istorii gosudarstva i prava zarubezhnyh stran: V 2 t. T. 1: Drevnij mir i srednie veka. M.: Norma, 2003 4. Hrestomatiya pamyatnikov feodal’nogo gosudarstva i prava stran Evropy. Gosudarstvo drevnih frankov, anglo-saksonskoe gosudarstvo, Angliya, Germaniya, Ispaniya, Italiya, Franciya, Albaniya, Bolgariya, Vengriya, Pol’sha, Rumyniya, Chekhiya, Yugoslaviya. Pod red. akad. V. M. Koreckogo. M., Gosyurizdat, 1961, 960 str

210

3 World Management Thought in the Fifth to Nineteenth Centuries

5. II libro dei conti di Giacomo Badoer (Costantinopoli 1436—1440). Testoa cura di U. Dorini e T. Bertele, Roma, 1956. II nuovo Ramusio. Raccoltadei viaggi, testi e documenti relativi ai rapporti fra ГEuropa e l’Oriente, vol III 6. Uspenskij FI (1891) Ocherki iz istorii Vizantijskoj obrazovannosti. SPb 7. Spentzas SP (1964) Ai oikonomikai kai demosionomikai apopseis tou Plethonos. Athenai, pp 11, 47, 59 8. Lambros SP (1926) Palaiologeia kai Peloponnesiaka. T. 3. Athenai, p 260 9. Uspenskaya ZV (1976) Zhizn’ i deyatel’nost’ Vissariona Nikejskogo. «Vizantijskij vremennik» №37. M., ss.74–97 10. Salicheskaya Pravda (1913) Russkij perevod Lex Salica N. P. Gracianskogo i A. G. Murav’eva. Kazan’: Izdanie knizhnogo magazina Markelova i Sharonova. S. III–XXXVIII 11. Kapitulyarij o pomest’yah. V «Hrestomatiya po istorii Srednih vekov». Pod red. N. P. Gracianskogo i S. D. Skazkina. V 3 t. M., 1949. T. I. S. 147–155 12. de Sevilla SI (1472) Etymologiae sive Origines, PL. 82. col. 73–729 13. Drozdov VV (2019) Kolonat: istoriya i ekonomicheskaya priroda instituta. M.: Ekonomika 14. Gratiani (1879–1881) Concordia discordantium canonum. Emil Albert Friedberg (ed). Leipzig 15. Aquinas T (1947) Summa Theologica. Translated by The Fathers of the English Dominican Province 16. de Beaumanoir PH (1899—1890) Coutumes De Beauvaisis. Texte critique publié avec une introduction, un glossaire et une table analytique par Am. Salmon. 3-ème ed. A. Picard et fils, Paris 17. Lisohina EI (1961) Kutyumy Bovezi. Hrestomatiya pamyatnikov feodal’nogo gosudarstva i prava stran Evropy. M.- Gosyurizdat, ss 580–599 18. fon Repkov E (1985) Saksonskoe zercalo: Pamyatnik, kommentarii, issledovaniya. Otv. red. V. M. Koreckij. M.: Nauka. 272 s 19. Dzhivelegov AK (1902) Srednevekovye goroda v Zapadnoj Evrope, S-Peterburg, Obshchestvo «Brokgauz i Efron», 301p 20. De la Mare (1722–1738) Traite de la Police. I-IV. Paris 21. YUsti GG (1772) Osnovaniya sily i blagosostoyaniya tsarstv, ili Podrobnoe nachertanie vsekh znanij, kasayushchihsya do gosudarstvennogo blagochiniya. CH. I-IV, SPb 22. Zonnenfel’s I (1787) Nachal’nye osnovaniya politsii ili blagochiniya. M. 23. Istoriya politicheskih i pravovyh uchenij. V 3-h kn. M., Nauka, 1985, 1986, 1989 gg 24. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU ((pod nauchnoj red. V.I.Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www.econ.msu.ru/science/conferences/mciumb/ 25. Dunkan DU (1996) Osnovopolagayuschie idei v menedzhmente. M., Delo 26. Cantillon R (1932) Essay on the nature of trade in general. Liberty Fund, London 27. Babbage C (1832) On the economy of machinery and manufactures. Charles Knight, London 28. Galagan AA (2001) Russkij predprinimatel’: i sobstvennik, i upravlenec. Sb. dokladov IV mezhdunarodnoj konferencii po IUM. M.: TEIS. S. 27–37 29. Say J-BA (1855) Treatise on Political Economy. Distribution, and Consumption of Wealth, ed. Clement C. Biddle, trans. C. R. Prinsep from the 4th ed. of the French. Lippincott, Grambo & Co, Philadelphia 30. Adam S (1866) Issledovaniya o prirode i prichinah bogatstva narodov v 3-h tt. T.1. s primechaniyami Bentama, Blanki, Buhanana, Garn’e, Mak-Kuloha, Mal’tusa, Millya, Rikardo, Seya, Sismondi i Tyurgo. Perevel P. A. Bibikov. SPb. tip-fiya I. I. Glazunova 1866 g. 496 s 31. Newman SP (1835) Elements of political economy. Gould and Newman Publishers, Andover 32. Mill JS (1826) Elements of political economy, 2nd edn. Henry G. Bohn, London. 33. Turgot ARJ (1766) Réflexions sur la formation et la distribution des richesses. J Ephémérides du Citoyen:1769–1770 34. Bowker RR (1886) Economics for the people: being plain talks on economics, especially for use in business. In: Schools, and in women’s reading classes. Harper & Brothers, New York

References

211

35. Laughlin JL (1887) The elements of political economy. D. Appleton and Company, New York, 363 p. URL: https://ia800301.us.archive.org/34/items/elementsofpoliti03laug/ elementsofpoliti03laug.pdf (date of the application: 28.08.2019) 36. de Laveleye ÉLV (1884) Eléments d’économie politique, Paris 37. Marshal A (1890) Principles of economics, London 38. Denslow VB (1888) Principles of the economic philosophy of society, government and industry. Cassell, New York 39. Bowen F (1877) American political economy. Scribner, Armstrong and Co, New York 40. Mill JS (1848) Fundamentals of political economy. London 41. Klauzevits K (1932) O voyne. M.-L. 42. Dupin PCF (1820–1824) Voyages en Grande Bretagne de 1816 a 1819, 6 vols, Bachelier, Paris 43. Jevons WS (1871) The theory of political economy. Macmillan & Co, London 44. Owen RA (1825) New view of society. E. Bliss and White, New York 45. Moseley M (1964) Irascible genius: a life of Charles Babbadge, inventor. Hutchinson, London 46. Ure A (1835) The philosophy of manufactures: the philosophy of manufactures: or, an exposition of the scientific, moral, and commercial economy of the factory system of Great Britain. Charles Knight, London 47. Stein L (1863–1868) Die Verwaltungslehre Bd. I-VII. Stuttgart 48. fon Shteyn L (1874) Uchenie ob upravlenii i pravo upravleniya s sravneniem literatury i zakonodatel’stv Frantsii, Anglii i Germanii (Per. s nemetskogo I. Andreevskogo). Spb

Additional Literature Buagil’ber P (2004) Rassuzhdenie o prirode bogatstva, deneg i nalogov. Mirovaya ekonomicheskaya mysl’. Skvoz’ prizmu vekov: v 5 t. T. 1. Gl.6. M.: Mysl’ Marks K (1955–1981) Engel’s F. Sochineniya. 2-e izdanie, v 50 t.t. M.:Politizdat Marshev VI (1987) Istoriya upravlencheskoj mysli. M., MGIAI Polyakovskaya MA (1976) Vzglyady Nikolaya Kavasily na rostovshchichestvo. «Antichnaya drevnost’ i Srednie veka» (ADSV). Vyp. 13. Sverlovsk Sludkovskaya MA, Rozinskaya NA (2005) Razvitie zapadnoj ekonomicheskoj mysli v social’nopoliticheskom kontekste. M.: INFRA-M Uornera M (2001) Klassiki menedzhmenta: Enciklopediya. SPb.:PITER

Chapter 4

The Emergence and Formation of Management Thought in Russia (Ninth to Eighteenth Centuries)

Abstract This chapter examines genesis, formation, and the development of management thinking in Russia of the ninth to eighteenth centuries. The authors of ideas here are state and religious figures, academics, representatives of various Russian categories, and classes, including representatives of the nascent third word. The sources were ancient records and tales, legislation, monographs of scientists and thinkers, archival documents, and memoirs. Of particular interest is the Sylvester’ treatise “The Domostroy,” containing many original ideas of household management. Among the heroes and creators of Russia’s management thought of this period are princes, emperors and representatives of imperial families, statesmen, advisers to emperors, and scientists such as Yurij Krizhanich, Ivan Pososhkov, and Michail Lomonosov.

4.1

The Sources and Origins of the Emergence of Management Thought in Russia

Studying the management views in Russia in the ninth to eighteenth centuries, it is difficult to find examples of real management, as the activities we have today. Again, as in the case of Ancient Eastern countries, much of the proposed material characterizes the ideas and the affairs of public management. Nevertheless, in recognition of management as a profession, we will try to discover the reasoning and thought on management of this period in Russia, which had been effective not only in the past but also in modern management. Ancient Records The public thought of Russia roots in the history of ancient Russia. For a long time before the first Russian recordings came into being, the only source of information on the ideas for managing economic facilities and other organizations in Russia was the recordings of foreigners—“the foreign News of Patriarch Photios (IX century), Emperor Constantine Porphyrogennetos and Leo the Deacon (X century), the tales of the Scandinavian Sagas, a whole series of Arab writers of the same period, who knew the Khazars, Rus’ and other nations that lived on our plains, Ibn Khordadbeh, Ibn Fadlan, Ibn Dasta, Masudi.” Thus, in the treatise © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_4

213

214

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

of Constantine VII Porphyrogennetos, “De administrando imperio,” there is a chapter “Of the coming of Russians in ‘monoxyla’ (dugout canoe) from Russia to Constantinople,” which narrates the transit of the Slavs of the trade route “from the Varangians to the Greeks” in details [1]. The treatises of foreign authors reported various characteristics of Eastern Slavs, national and other characteristics of the Slavic people, the trade routes of Kievan Rus’, and the religious rites of Slavs. And yet, in the view of the Russian historian V.O. Klyuchevsky, “these were all individual details, not adding up into anything whole.” [2]. With the advent of the Beginning and subsequent records and chronicles (twelfth to fourteenth centuries), the information increasingly began taking the form of a consistent, coherent, structured narration of this, and a number of subsequent periods of Russian history. Today, it is precisely the records that serve as one of the most abundant sources of study of the ancient History of Russia [3]. As in the States of the Ancient East, history in Russia was the fate of a narrow circle of specially trained persons. And it began with imitating the external techniques of Byzantine chronography, but then acquired a more and more of a distinctive character, a special style. At first, chronicle writing was considered a “pious, edifying deed,” and these “weather recordings of memorable events” were maintained by the most literate part of the population of Russia—spiritual persons (bishops, monks, priests). But over time, chronicles were written not only at churches and monasteries, but also at sovereign courts, as official documents. With the formation of Moscow State, the official chronicle at the royal court was particularly extensive, and the recordings themselves were conducted by specially trained people—official scribes. The chroniclers recorded not only the facts that were relevant to all of Russia, but also the events of local nature. It is natural that a number of private and official local records had been recorded in the initial recordings over the centuries. For instance, in the oldest Laurentian Chronicle, the Initial record of Russian events of 1110 is immediately followed by information on the events in Suzdal Russia, that is, a local chronicle begins. In the Hypatian list, the original record is followed by detailed records of affairs in Kiev and then in Galich and the Volhynia land. Each of the chroniclers attempted to systematize the facts known to him in his own way, interpreting them and adding his vision of historical events. Thus, the secondary Russian records or All-Russian Chronicles began to be composed. It is believed that all the primary records made in different places in Russia were almost all lost, but it was the chronicles that survived. In the process of overwriting the original texts, the chronicles were shortened or expanded, replenished with new information and insertion of entire stories about individual events, the Lives of Saints and other articles, and the record then gained the form of a systematic record book (list) of a variety of material. Such compilations usually began with a description of the events of the ninth century, followed by a description of events contemporary to the originator of the summary. Numerous attempts had been made in Russia to collect and publish a single, complete record. Thus, in 1834, the Archaeological commission was set up in order to publish the written monuments of ancient Russian history and, starting from 1841, it published a full collection of Russian

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

215

records [4]. Most famous of the earliest lists of the Original records are the Laurentian Chronicle (1377), the Hypatian Chronicle (late fourteenth to early fifteenth centuries), The Chronicle of Moscow (sixteenth century) and the Nikon Chronicle (sixteenth to seventeenth centuries) [3]. For the characterization of management thought, the local records describing the period of development of the principality order in Russia in the thirteenth to fourteenth centuries are an important source. During the age of principalities, princes, tired of the endless quarrels for the thrones of Kievan Rus’, had completely forgotten the sense of national dignity that had united them to the time and had taken up only the affairs of their own principalities. At that time the best Prince was considered to be the best to run the principality, better suited it, who “assembled it.” And they were called assemblers not because they sought autocracy, but because and only those who were better at managing the affairs of their principality and the principality altogether. Both economic and management skills and inclinations of the princes depended on the skills and inclinations of the entire population that inhabited the principality, primarily “craft people,” “working,” and “industrial.” Among the local records is the Galician-Volynian Chronicle describing the events of the principality period (from the early thirteenth century to 1292). It describes the economic policy of the princes of the south-eastern principals of the Russian State, who encouraged the development of crafts, trade, and trade routes. Cities (for instance, the city of Lviv) had been built to help citizens in their fight against the boyars. The townspeople praised the activities of Daniel of Galicia as a patron of industry. According to the chronicle, he had invited skilled craftsmen and merchants to his principality, which in turn had helped to develop views on the management of craftsmanship in the principality [3, 5]. Other purely “local” records are also known—The Chronicle of Novgorod, Pskov, and the Lithuanian Chronicle [3]. Apart from records, the sources that reflect the processes of the beginning of management of the Russian economy should include a set of legal acts (“Russkaya Pravda,” sovereign statutes and charters, acts of court, acts of county councils, etc.), trade treaties, the “Teachings of Vladimir Monomah,” the acts of local government, as well as various ceremonies, spells, tales, epic ballades and songs, ancient Russian games (“sowing millet,” “stacking,” and “weaving”). As the state’s bonds with the church tightened, the church’s position at a state and local scale in the area of governance, finance, and justice increased, and new documents appeared, which had become more valuable as sources of history of management thought (HMT). These include the Russian Princely statutes and charters, which define the place of church organization within the system of state. The documents on tithing (the share of church income in the state), the courts, and church people were essentially a treaty defining the relationship between secular and ecclesiastical authorities in Russia, the distribution of their functions in public management and the сourt, their place in the feudal exploitation system, participation in the collection and distribution of tribute, which establishes a distinction of land ownership, that is, the relationship between the land, financial, and other interests of the state and the church.

216

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

The remaining sovereign rights are divided into two groups depending on the period of the history of the feudal state, the territory of which State entity the separation of powers under the Charter comprises and at which level of the feudal ladder the parties stand. The first group includes the Charter of Vladimir Svyatoslavich on tithing and church people and the Statute of Prince Yaroslav Vladimirovich on ecclesiastical courts. They specify the forms and amounts of church material support and the limits of church jurisdiction for the Kiev archdiocese. In particular, they reflect changes in the relations of secular and ecclesiastical power in certain principalities of ancient Russia in the process of the development of feudal relations and the evolution of the state system and the church organization itself [6, 7]. The second group is the statutes and charters that emerged from the feudal fragmentation of the twelfth to fourteenth centuries. Thus, the relationship of the principal and ecclesiastical authorities in the Smolensk land of the twelfth century is reflected in the literacy of Rostislav Mstyslavovych and Bishop Manuel 1136–1150. The situation in Novgorod is shown in the literacy of Prince Svyatoslav Olgovich 1137, and the changes in the church’s position related to the development of the republican order in Novgorod were expressed in the Charter of Vsevolod on ecclesiastical courts and in the Charter of the Church of Ivan at Opoki in Novgorod, known as “Rukopisanie of Prince Vsevolod Mstyslavovych.” The latter document mentions perhaps the first business organization in Rus’, the Ivan merchant corporation in Novgorod, the members of which were the most wealthy merchants, known as custom (i.e., original) merchants. Having a predominantly merchant character, the corporation at the same time went beyond the purely class and merchantry framework and was a trade and economic center acting on the rights of self-governance and was responsible for regulating the commercial life of the city, as well as the commercial court. The activity of this trade and economic center was led by two chiefs elected by the merchantry and one elected by the living and black peasantry (art. 5 of the Rukopisanie). To become a member of this “guild,” it was necessary to make a “statutory contribution” of 50 hryvnia of silver (about 10 kg of silver), in addition to natural contribution (cloth). The finances of the Ivan merchantry were a powerful material source of the Church of Ivan at Opoki budget, as merchants were obliged to “place in Ivan’s funds” half the contribution—25 hryvnia of silver (see art. 7 of the Rukopisanie). Neither the Novgorod tradespeople, nor the Novgorod boyars had the right to interfere in the activities of this center (art. 6 of the Rukopisanie). The Trade and Economic Center had the exclusive right to hold the standard of scales for weighing measures in trade operations (arts. 8 and 9 of the Rukopisanie), and also collected a cereous duty from wax trade in its income (art. 10 of the Rukopisanie) [7, Section three, pp. 158–165]. Sovereign statutes and the instruments of nonecclesiastical law are of special significance. These are the statutes of Volyn Prince Mstislav Danilovich (approximately 1289), establishing feudal obligations in favor of the princely management, and the Statute of Prince Yaroslav on Mosteh, organizing the paving of the main trade routes of the city of Novgorod and the roads leading to the inlets and the

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

217

Novgorod urban bid, on the organization of the alloy of building materials for paving and commercial travel and the repair of bridges. These documents are also the most important sources of the period of the formation of Russian management thought of the thirteenth century [7, Section three, pp. 149–152]. In the era of feudal fragmentation, the objective political and economic situation in Russia and the external environment have become major factors in the emergence of new ideas in public management that would facilitate the establishment of new sustainable economic relations between the principalities and greater centralization in governance. The centralization of the Russian state, which began under Ivan Kalita (1325–1340), ended under Ivan the Terrible (1530–1584). In particular, the active process of unification of Russian lands occurs during the reign of Ivan III (1462–1505), with the emergence of a centralized administrative apparatus, the development of local land tenure, craftsmanship, mining and processing industries, increase of the political importance of the local nobility, which had long-term rent of land, and continuous growth in foreign trade. The most important sources of HMT for this period are The Sudebnik (Code of Law) of 1497 and 1550, various local government acts (charters of vicegeral governance, labial, and county council charters), as well the “Stoglav” (Book of One Hundred Chapters)—a collection of decrees (decisions) of the famous church-provincial Stoglavy Sobor (Hundred Chapter Synod or Council of a Hundred Chapters), held in Moscow in 1551 [8, 9]. Later, the stages of further development of management thought in Russia were increasingly reflected in specialized scientific, educational and methodical literature and juridical acts (see, in particular, [2, 10–16]). The Formation of the Russian State As in other States, Russian management thought had emerged and evolved, primarily as a means of rationalizing the management of different types of holdings (public, church, private) which, in turn, served to meet the natural needs of individuals and human settlements. Ancestral unions and tribes that had formed on the basis of homogeneous economic activities (agriculture, beekeeping, fishing, hunting, individual crafts) had gradually evolved into more complex multisectoral economies. This led to the breakdown of ancestral settlements and the creation of more rational entities. The main occupation of Oriental Slavs was farming. The leading role was that of ploughing agriculture, especially in the southern and middle regions of the country, where wheat, rye, millet, barley, oats, cannabis and flax were cultivated. The population was also engaged in cattle breeding, hunting, forest bee-keeping, and fishing. In Kievan Rus’, which is considered as Russia in the period from the arrival of the Varangians to the Mongol invasion, small-scale production of industrial products and craftsmanship had already been extensively developed. Ore was mined from swamps, “iron smelting” was produced by craftsmen in special melting furnaces—“bloomeries,” with hand-fur air blasting (bloomery iron), and domestic production of iron—in ordinary smelting furnaces. Blacksmiths produced agricultural tools, tools for craftsmen, household objects, and weapons. Excellence in Kievan Russia had been achieved in jewelry; pottery, leather, weaving, wood and stone processing, glass, and glass items production were widely developed.

218

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Whereas in ancient kingdoms the main settlements of citizens were norms and policies as centers for formation of future States, the structuring of the territory of Russia changed from ancestral settlements, courts and ancient settlements to major trading towns and districts. It is major district city states—Kiev, Chernihiv, Pereslavl, Smolensk, Vladimir—served as the political center and the most important factor in the political and economic development of Russia in the ninth to twelfth centuries. Another factor in the structural changes in the political and economic development of Kievan Rus’ is domestic and foreign trade. On their basis and in connection with trade in Kievan Rus’, there was trade and usurious capital. Domestic trade existed mainly in the form of small and fragmented markets. Foreign trade, which was performed, again, on behalf of the individual and in the interests of district towns, was more organized. From the eighth to the tenth century, Oriental Slavs conducted large trade with Arabs, mainly via the Volga and its tributaries, and from the ninth century the new trade route—“from the Varangians to the Greeks”—from the Baltic Sea to the Black Sea, became of great importance. As foreign trade increased, so did the external danger, causing invasion of foreign enemies and capture of Russian cities. These circumstances had led to the consolidation of small towns into larger ones, to their strengthening and arming, and to the transformation of trade centers into Russian political centers. Kiev was the first such major political, trade, and industrial center. Prince Oleg and his vassals Askold and Dir, who ran the city, were not confined to fencing it from external enemies, but also expanded its possession, attaching the eastern Slavic tribes to it. In this regard, “the Kiev princes established state order in the dependent jurisdictions” [2; Vol. 1, p. 164], first of all, of course, tax management. The old urban areas (counties) served as a ready-made basis for the administrative division of the Kiev principality, while at the head of the districts the princes placed their stewards, posadniks, who were either hired vigilantes or their own sons and relatives. In the opinion of Russian historians, it is the trade treaties that facilitated the penetration and acceptance of Christianity in Russia from Byzantium. At the same time, new political concepts and relationships had spread to Russia together with Christianity from Byzantium. At the Kiev prince, the newcoming clergy retreated the notion of the King, anointed by God, not only for the external protection of the country, but also for the establishment and maintenance of internal public order. But we already know that in Byzantium there was a popular model for the management of the police state, according to which the welfare and security of the citizens of the State were the main goals of management. Naturally, active communication with the Greeks could not have left the formation among Russians of the police spirit of governance of their own state unaffected. This is the case of the Kievan principality in Russia by the early ninth century, when all the other Varangian principalities and urban areas of Russia were brought under the authority of the Kievan prince, and a feudal Kiev state was formed. Even before the establishment of the Kievan state, there were political entities of individual East Slavic tribes, resulting from the decomposition of the primitive order and division of the population into classes. These are Kujawy, Slawiya, and

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

219

Arthania, situated in the Kiev land, along Lake Ilmen and the Taman Peninsula, known since the eighth century. Also known were the earlier political entities that existed in the territory of Oriental Slavs in sixth and even fourth centuries. But historians believe that only the Kiev Principality of the early ninth century can by all odds be regarded as the first state entity in Russia, and of a feudal type, that is, Russia transformed from a primitive system to feudal, bypassing the slavery stage of development. The geographical location of Kiev only amplified its centripetal effect. And thanks to the trade and industrial activities of the Greek colonies of the north coast of the Black Sea, the Dnieper, long before the new era, became a large trade route, known by the “father of history,” Herodotus. “The Dnieper’s downstream and lefthand tributaries stretched the Slavic settlers to the Black and Сaspian markets. This trade movement led to the development of natural wealth of the country occupied by the settlers. The Eastern Slavs occupied mainly the forest strip of the plains. It is this forest strip with its magnificent wealth and forest beekeeping that delivered abundant material to the Slavs for foreign trade. Since then furs, honey, wax had become the main items of Russian export; since then, with farming for themselves or with little export, intense exploitation of forests began, which lasted for centuries and left a deep imprint on household and social life and even the national character of the Russian people. Forest menacing and bee-keeping is the earliest type, which is clearly distinguished in the history of the Russian national economy” [2; Vol. 1, pp. 137–138]. The principal means of effectively administering of the Kievan Principality, and then the state, were taxes from dependent tribes. As Emperor Constantine Porphyrogenitus wrote in his essay “On the Peoples,” taxes were either collected by their submission to Kiev (loads), or the princes traveled for tribute to the tribes (poliudie) themselves. The collected taxes levied most often in natural form (fur, honey, wax, etc.) had become products of foreign trade for the princes. At the same time, the Slavic taxpayers, in anticipation of their requisition during the winter months, chopped trees, built one-tree boats, and in the spring rafted them on the Dnieper and its tributaries to Kiev, where they sold the boats to the prince’s representatives. Having fitted and loaded the purchased boats, the prince descended to Vitichev (just below Kiev) with his druzhina, from where, after waiting for the merchant boats from Novgorod, Smolensk, Chernihiv and other Russian towns, they set sail together down the Dnieper to Constantinople. Whereas in the countries of the Ancient East they built powerful irrigation systems, which were both a source of emergence and an application of management ideas, in the case of Russia these common deeds were strengthening and protection of trade routes, the defense of the steppe borders of Russia and the construction of cities. The towns began to emerge among Eastern Slavs before the formation of the Kievan State, mainly on the waterway from the Baltic to the Black Sea. These include Novgorod, Belozersk, Smolensk, Kiev, Lyubech, Pereslavl, Chernihiv. In order to defend the three senior cities of Rus’—Kiev, Chernihiv, Pereslavl— the Kievan princes began to build small towns around them. Prince Oleg, according to the Primary Chronicle, having taken hold of Kiev, began to “place the cities

220

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

around it.” Prince Vladimir, having become a Christian, said: “It is unfortunate that there are few cities around Kiev,”—and began to build cities on the Desna, Trubizh, Stuhna, Sula, and other rivers. Thus, new city-fortresses—Ladoga, Iziaslav, Belgorod, Suzdal, Murom, Yaroslavl—were built. The fortified points were inhabited by craftsmen, merchants and, of course, combat men, “the best of men,” who, in the terms of the chronicle, were recruited from various tribes, Slavic and Finnish, inhabiting the Russian plain. Over time, these fortified sites merged by land shafts and forest glades. As a result, along the southern and south-eastern boundaries of Rus’ on the right and left side of the Dnieper in the ninth and eleventh centuries, a series of land trenches and outposts and small towns were established to deter the nomadic attacks. The major cities themselves were also had new churches, markets and other public and private buildings built within them. Foreign writers of the eleventh century tended to exaggerate the wealth and population of the Russian cities mentioned in the trade treaties and, above all, Kiev. In the early eleventh century, Thietmar of Merseburg spoke of Kiev as an extremely large and sturdy city in which there were about 400 churches and eight markets. Another author of the same era, Adam von Bremen calls Kiev rival of Constantinople, “the Shining Jewel of Greece,” that is the Orthodox east. And in the Russian records, it is possible to find the fact that in the great fire of 1017, up to 700 churches burnt in Kiev. It is clear that urban planning and construction work required management of this activity and may be a reason for asserting that progressive management ideas had been used since the very birth of Kievan Rus’. Foreign Trade and Trade Treaties The main items of foreign trade of Rus’ were the products of forest bee-keeping and hunting. Trade with the main Byzantium partner was quite civilized, according to the treaties signed by the parties. The texts of the Greek treaties (two treaties of Prince Oleg, one of Princes Igor and Sviatoslav) are another source of management thought. The Treaties describe in detail the order of Russian annual trade relations with Byzantium, as well as the order of the Russians’ private relations with the Greeks. According to the treaty, Russian merchants attended Tsargrad for a six-month trade convention every year. Under the Treaty of Igor, none of them had the right to stay for the winter. Greek officials collected from the arriving merchants a princely certificate with the number of ships sent from Kiev and, for the sake of precaution, wrote the names of the arriving princely ambassadors and ordinary merchants and guests—“that we, too shalt know that with peace they come”—is recorded by the Greeks in the treaty. Russian ambassadors and guests stayed at a specially prepared place (at the monastery of St. Mammes), were provided by local government with gratuitous food and bath. This was a sign that trade visits were considered by the Greeks, not as private business enterprises, but as trade embassies of the union’s Kievan court. At the same time, Rus’ was paid ally of Byzantium, that is, under the agreement, for an appointment payment (tribute, dan’), Rus’ was obliged to provide some defensive services to the Greeks at the borders of the Greek Empire. It is known that the northern shores of the Black Sea and eastern Azov were strewn with the Greek colonies—Olvia

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

221

(vs. Nikolayev), Tauric Chersonesus (on the southwest shore of Crimea), Theodosius and others, long before Christ. Now, Igor’s treaty obliged the Russian prince to “prevent the Black Bulgarians from entering Crimea and messing in the land of Korsun.” The trade ambassadors of Rus’ received their embassy salaries at Tsargrad, and ordinary merchants received Mesyachina (a monthly payment), a month’s supply of food, which was given to them according to the seniority of Russian towns—first to Kievan merchants, then Chernihiv, Pereslavl, Smolensk, and so on. Trade with Byzantium was predominantly by barter and, under the treaty of Oleg, Russian merchants did not pay any fees. Russian merchants exchanged furs, honey, wax and valetry (slaves) for pavoloka (silk tissue), gold, wine, vegetables. After the expiry of the trade period, when leaving for home, the trade ambassadors of Rus’ received food, takelage and anchors, ropes, and sails from the Greek treasury for the road. Long before the adoption of Christianity, trade treaties had already reflected not only trade but also legal relations between Greeks and Russians. Mixed “Graeco-Russian” norms based on two legal systems emerged, and behalf the Russians, they were double themselves—Slavic and Varangian. It is obvious trade relations could not fail to be reflected in the Russian legal norms, and they often contain terminology of Graeco-Roman law. Under one article of Oleg’s Treaty, if any of the Russian trade ambassadors serving in Constantinople dies without leaving a will, “and there are no relatives,” his estate is transferred to “distant folks in Rus.” In this article, the term “relatives” was a translation of the Roman sui, descendants, and distant relatives, or just relatives, is the old-Russian “laterals.” After the adoption of Christianity in the Kievan Rus’, a large church and monastery land began to form through princely wards of land to the church and monasteries and other ways. The agricultural products of the church and monasteries had also become the subject of domestic and foreign trade in the Kievan Rus’. The church became increasingly involved in public management. The Structure of Power Relations in Russia Management ideas and thoughts are visible throughout the system of inheritance of the first Russian princes. Considering the notions of “authority,” “power,” and “influence” by the categories of management science, let’s follow the procedures for delegating authority in the management of the Kievan Principality, consider the procedure for the transition of power and inheritance in Russia. The Russian society of the first princes was very reminiscent in structure of the army structure. Originally, the Kiev state had a so-called decimal system of management, which originated from military organization. The highest class of Russian society, with which the Prince “shared work of governance and protection of the land,” was the princely army (the druzhina). It was divided into the higher and lower druzhina: the first consisted of the prince’s men or boyars, the second of children or lads. This druzhina, along with its prince, emerged from the armed merchants of large cities. The Principality druzhina was in fact a military class; but large trading cities were also organized in a military fashion, formed each of the whole organized

222

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

regiments, which were called a thousand, divided into hundreds and tens (battalions and squadrons). The thousands were commanded the tysiatskii elected by the city and then appointed by Prince, and the hundreds and dozens were commanded by elected sotskies and desyatskie. These elected commanders were the military department of the city and its belonging area, the senior military government representative, which is in the record called “the city elders,” the city regiments, more precisely, the armed cities took a constant part in the Prince’s crusades on an equal footing with his druzhina. On the other hand, the druzhina served the prince as an instrument of command: the members of the senior militia, boyars, were the prince’s duma, his council of State. “For Volodymyr, says the Laurentian Chronicle, loving the druzhina and with them thinking about the order of land, the rateh, and the Charter of Land.” But in this druzhina, or boyar duma were also the “city elders,” that is, the elected military authorities of the city of Kiev and other cities. Together with boyars, the “city elders” formed the Russian aristocracy and took part in all the affairs of the management of the Kievan principality. In particular, the issue of the adoption of Christianity was resolved by the prince with the council of boyars and the “city elders.” On the other hand, the princely druzhina, making up the military government class, remained at the head of the Russian merchantry, from which it outstood, and took an active part in foreign trade. In addition to the posts and functions of military origin in the Kievan state, there were also “peaceful” government officials, “service-class” people, representatives of all the branches of the central and local administrative apparatus, the prince’s servants, who were engaged in housekeeping, collection of taxes and duties, litigation, management of towns and municipalities, management of agricultural works. The first person in financial management in the Principality was the dvorsky (the butler), the steward of the Prince’s Court (or the princely land economy). The treasurer, key keepers, tiuni, and rural people were subordinated to the dvorsky. All of these persons participated in the management of the palatials, that is, the private princely economy. The government management was headed by the boyars. They ran cities and counties. The city vicars were known as governors, those managing the townships—volostels. The boyars profited from cities and counties not only for the prince but also for their own living, or “fed” from the population; hence the other name of their posts—feeding. In other words, local (territorial) governance was intended to support the living of princely servants rather than to meet the needs of the state. As V. Klyuchevsky notes, “in the X century, the decimal system of governing the Kievan state was replaced by the palatial patrimony system, most characteristic of the early feudal monarchy. Under such a system, the state is governed like a feudal patrimony, i.e. the management of the state is essentially a continuation of the management of the domain of the grand prince. Those serving the needs of the grand prince were also state officials. If the decimal system had not yet been divided even into central and local authorities, the palatial patrimony system allocated local governance bodies and their executives in the form of local princes, governors and volostels, i.e. officials appointed by the grand prince” [2; Vol. 1, p. 230].

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

223

The Kiev state was originally a complex of primitive Russian states and tribal reigning. However, it was an integrated whole. The degree of this unity, for a number of reasons (the mobility of dominion, the breakdown of power transfer) had constantly fluctuated, with a tendency to weaken, until unity had been replaced by fragmentation, the disintegration of the state into many rather small independent states. Prior to the rise to power of Yaroslav (1019) in Rus’, there was not a certain single order of the princely property. Most often, power was passed from one prince to the next in order of precedency. For example, Rurik’s successor was not his minor son, Igor, but his relative, Oleg (according to legend, his nephew). Sometimes when there were no Russian adult princes, the whole land would be ruled by one prince. When several of the prince’s sons would grow up, every one of them, despite their age, was usually given a known area of control. For example, Svyatoslav, remaining a minor child after the death of Yaroslav, had reigned in Novgorod even in the lifetime of his father. Again, Svyatoslav, somewhat later, preparing for the second expedition to the Danube against the Bulgarians, distributed the counties of Russia between his three sons. The same had been done by Vladimir with his sons. We have already noted that the sons ruled the provinces as his posadniks (stewards) and paid, as posadniks, a tribute from their areas to the grand prince—their father. For example, the Laurentian Chronicle observes that Yaroslav, ruling Novgorod in the name of his father, gave Vladimir an annual appointed tribute to two thousand hryvnia: “. . .so, adds the chronicler, all the posadniks of Novgorod paid, and Yaroslav ceased to pay.” But when his father was dying, apparently, all the political links between the sons had been disrupted. At least it is difficult to restore the political dependence of the younger regional princes from the elder brother, succeeding after his father in Kiev. If family law was in force between the father and the children, there was no established recognized law between brothers, which could be explained by the endless dissension between the sons of Svyatoslav and Vladimir. On the other hand, after the death of Yaroslav (1054) autocracy ceased to work in Rus’, which sometimes happened before him. None of the descendants of Yaroslav accepts, according to the record, “power in Rus’ in its entirety,” becomes “the absolute sovereign of the land of Russtey.” This was because the genus of Yaroslav significantly reproduced with each generation, and the largest cities of Russia had repeatedly been redistributed between the upbrought princes. While there were some rules and procedures for the transfer of power from one “senior” prince to another, in real life these norms were violated, adapted to specific circumstances. In his will, Yaroslav appointed as heirs and successors not all five of his sons, but only the three elder ones. It was then an innovation in the management of the principality, but then became a known norm of ancestral relations and one of the foundations of localism in Russia. Under this norm, in a complex family composed of brothers and their families, the first “generation of power” consists of only three elder brothers, while the other younger brothers are being relegated to the second, “subpower generation,” and are equated with nephews. The eldest nephew was equated to the fourth uncle, with the nephew’s father counting among uncles.

224

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

But because of the increase in the number of direct heirs (sons, grandchildren) and indirect ones (nephews and their sons), shortly after the death of Yaroslav, the “Order of the Kiev line of succession in the turn of precedence” he bequeathed was frequently violated. The general scheme of dominion in Russia for two centuries after Yaroslav was such that “there was neither a single supreme authority nor its personal succession under will.” The Yaroslavyches did not share the fortunes of their fathers and grandfathers in permanent shares, nor did they pass on their shares to their sons under will. They were mobile owners who moved from county to county in order of a known line. Hence the title of this transfer of power is a rolling sequence. The line was determined by the seniority of the persons and established a constantly fluctuating, volatile ratio of the number of princes to the number of princely townships or possessions. All princes in good health composed one genealogy ladder by degree of precedence. Similarly, all Russian land was a ladder of areas, hierarchical in the degree of their meaning and profitability. The order of princely property was based on the exact conformity of the steps of the two ladders, genealogical and territorial, the ladder of persons and ladder of areas. At the top of the ladder of people, there was the senior of the available princes, the grand prince of Kiev. This seniority gave him, in addition to possessing the best county, the known rights and advantages over the younger relatives who “followed in his obedience.” He bore the title of the grand prince, “the appointed father of his fraternity.” The grand prince distributed the domains among the younger princes, dealt with their disputes and judged them, cared for their orphaned families, and was the highest custodian of the Russian land, “thought, read fortune of the Russian land,” of his honor and of his relatives. In the most important cases, the grand duke did not act alone, but gathered the princes on a general council, took care of the council’s rulings, and generally “acted as the representative and the executor of the will of all the powers of the sovereign genus.” The alternating order of sovereign possession in Russia had two sources or bases, the permanent supreme authority, belonging to the whole of the princely lineage (or the right of ownership) and the temporal power of individual princes in various counties of Rus’ (or the order of possession, in a known line, as a means of exercising that right). The first was the consequence of the ancestral relationships and concepts that existed in Rus’ before the arrival of Varyags. This phenomenon of the presence of the rules of private family law in state management is found in the law of the state and the public authority of many states. This is the case, for example, of all monarchies, and what was natural for the feudal Kievan state. The second reason (the mobility of the order) was original in public management and was the result of the recording and operation of specific circumstances (e.g., in view of the change in the economic or political significance of the county or county town), and mainly—a consequence of the attitude of the Varangian princes to the Russian land and their position in the land. The sons, grandchildren, and even great grandchildren of Yaroslav (eleventh to twelfth centuries) remained largely the same river Vikings as their ancestors of the IX century. They did not see themselves so much as possessors and rulers of Russian territory, rather as contracted favorites, heads of trade and military watchmen of commercial routes and Russian borders. For

4.1 The Sources and Origins of the Emergence of Management Thought in Russia

225

these services they received remuneration from the land, as well as feed in the form taxes and duties. In other words, the defense of the land was their political responsibility, and feed was their political right, and these two ideas exhausted all the political consciousness of the then Prince. And the feuds of the princes and the interference of the county towns in their affairs only underlined the fragility of their political and economic status. According to the record, the grand prince Izyaslav, the eldest of the sons of Yaroslav, was twice exiled from Kiev, the first time by Kyivans themselves, then by his own brothers, Svyatoslav and Vsevolod. What was he to do? Without finding anything better, he returned to Kiev with the help of the Polish military. And in connection with the subject under discussion, rather expressive is his conversation following another return to Kiev with brother Vsevolod, when he, in turn, had been driven by his nephews from Chernihiv, rushed in sorrow to Izyaslav to Kiev and complained about his nephews. Izyaslav, being a simple and kind man, comforted him by saying: “Do not despair, brother! Remember, what I’ve been through: I have been exiled by Kyivans, who devastated my domain; then you exiled me, my brothers; have I not wandered, deprived of all, in foreign lands, without having done any evil? And we shall not despair now, brother! If we are to have a part in Russian soil—then both; shall we lose her—then both, and I shall lay down my head for you.” The Lord of the Russian land could not say so, only a hired employee, a favorite, awaits his resignation any day now. Sometimes the princes reconsidered, gathered together and attempted to settle with each other. In this sense, the princely congress at Liubech in 1097 is indicative. The congress has a historic “uniting” importance, having been convened on the initiative of Grand Prince Sviatopolk II and his relatives after a series of feuds and attacks on Russian lands behalf the Polovtzy (often headed by the Russian princes themselves). The decisions of the Congress are recorded in the “Tale of Past Years (Primary Chronicle)” in the following form. The princes said to each other: Why do we ruin the Russian Land, constantly quarreling with each other? The Polovtzy exhaust our country by raiding and rejoicing that we are fighting among ourselves. We will live together and guard the Russian land from now on, and let everyone govern his domain: Sviatopolk—Kiev—the inheritance of Izyaslav; Vladimir—the inheritance of Vsevolod -Pereslavl; Davyd, Oleg and between them, Yaroslav are the heirs of Svyatoslav—Chernihiv. Let them keep fiefdoms appointed by the Vsevolod; Vladimir remains in the hands of Davyd (Igor’s son), Peremyshl belongs to Volodar, and Vasylko may be prince in Terebovlia (Laurentian Chronicle, p. 279).

But after the Council of Liubech, similar to their ancestors, the Varangians, the descendants of Yaroslav continued to compete with one another for the rich Russian cities, and in this rivalry, they went from city to city. Generally speaking, in the normal position of a country such an order of movement, inherited from ancestors, would not prevent the princes from soon becoming sedentary territorial owners of its provinces from wandering watchmen of Russian land. If the well-being of each area depended solely on its domestic economic potential and means, the descendants of Yaroslav, once divided, would each become engaged in the exploitation of this potential and means in their own province, establishing the most effective system of

226

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

governance and defense system of their territories, working separately in their territories, would have become accustomed to considering them as their permanent private possessions and handing them over to their children. But in the Dnieper Rus’ of the eleventh to twelfth century the notions and habits of the princes described above were met with special conditions of the national economy which prevented such a transformation. The economic life of Russia was too dependent on foreign trade. All areas were rich in fur beast, honey and wax, but the price of these riches depended on demand and supply in overseas markets, and sales were possible when the steppe trade routes to these markets from Kiev, Chernihiv and Pereslavl were clear and safe. The slightest “obstruction” of these pathways would painfully affect the most remote parts of the Russian industrial world. In this respect, the Dnieper Rus’ was like a nervous body, the face of which— Kiev, was turned to the steppe, facing enemy blows, and was chained to a network of arteries and nerves that came from this face in the form of Dnieper with its tributaries. Under such accommodation and the condition of the national economy, it made virtually impossible for the princes to operate independently in their fields. They were supposed to protect the Russian land by sending them to more threatened destinations on the southern borders. The prince who sat in Novgorod or Smolensk constantly looked at the same far away steppe, on which his southern relative, the Pereslavian or Kursk Prince, kept an eye, because the welfare of the northern regions too depended to a large extent on the security of the southern borders of trade routes along the steppe. In Rus’, it happened that the most threatened areas were also the richest, profitable for the princes. The economic well-being of each area was determined by its geographical location, its proximity to the Kiev, the main river routes of the country, and the maritime markets, that is to say, proximity to the steppe, which was the most dangerous in Rus’. It was this sort of combination of strategic and economic importance of the areas that suggested the order of common nonsegregated ownership to the princes. If the most affluent areas were the least dangerous, then the eldest sons of Yaroslav would have captured them, leaving the younger brothers the least wealthy and most threatened areas. In this case, it is more likely that the order of succession by seniority would be different, more sustainable in the form of implementation, without permanent movements from “throne to throne.” It is likely that the princely genus would have broken down into a number of genealogical lines, and in each generation the in “order of precedency” would have entrenched the concept of the “elder prince” to the senior representative of the eldest son of Yaroslav– Izyaslav. And that would be a fixed seniority with a single line of the whole genus of Yaroslav. But due to the complex interplay of the specific circumstances described above, which had determined the economic and strategic position of the major areas of Russia, a different order had emerged. The common interest of the princes demanded that the defense and possession of the most threatened area was assigned to the one of them who had the greatest rights to its wealth and at the same time the best means for its defense. It was these rights and means that were associated with personal seniority. The older the prince was, the larger druzhina he possessed; the state and military authority of the prince was associated with personal seniority; the

4.2 “Russkaya Pravda”

227

elder prince was more obeyed and feared. But personal precedence is not eternal— with the death of each elder, it should have shifted from the prince of one line to the prince of another. And the transition of personal seniority had spawned the transition from a less threatened and rich area to a more dangerous and richer one [2; vol. 1, pp. 402–404]. Novgorod and Pskov stood apart, which were freed from the Kiev dependency and in which there was no major boyar land ownership and, consequently, political dominance of a major boyars. Here feudal republics emerged in their aristocratic option. But both in Novgorod and in Pskov there were princes, but the functions they performed were not at all alike to those of Kiev. In feudal republics, the princes were no longer monarchs, not heads of state. The role of the republican authorities—the veche (People’s Assembly) and ospody (the Council of Lords, the Assembly of the Top Boyars) is more visible here. These bodies had been actively involved in the management of all the affairs of the State. The influence on public management of the head of the Church, the lord, is also distinctive to Novgorod, as is sufficiently clear and in detail stated in the above-mentioned sovereign charters and statutes. From the second half of the eleventh century the political decline of Kiev begins, and in the second half of the twelfth century it ceased to be a capital city and lost the former importance of the political, economic and cultural center of Rus’. The growth of large feudal land ownership—princely, boyar, ecclesiastical—led to the expansion of the subjugation of smerds, to the capture of their communal lands. The economic interests of large landowners required the strengthening of their power over enslaved peasants. This led to the desire for feudal to be self-reliant, to obtain full political and administrative authority over their subordinate lands. The struggle for power and territory, the multiplicity of strife and the growth of large cities, the strengthening of their economic and political influence have led to the fragmentation of the Kievan Rus’. On the site of the single Kievan Rus’ in the mid-twelfth century a number of autonomous feudal principalities emerged- Rostov-Suzdal, MuromRyazan, Smolensk, Kiev, Chernihiv, Pereslavl, Halych, Volyn, and others, which in turn consisted of smaller specific principalities.

4.2

“Russkaya Pravda”

We’ll elaborate on one of the domestic sources of HMT—Russkaya Pravda, which is accepted by all researchers as an outstanding monument of Russian social thought of Kievan Rus’. In terms of management science, “Russkaya Pravda” is a set of legal foundations for the public management of Kievan Rus’, and a source of information on the administrative and managerial personnel of the Grand Prince (of the higher, middle, and lower echelon), on local officials, on measures to protect their rights and on the payment of their services [17]. The Russian Pravda is similar to earlier European legal collections, including the so-called German (barbaric) laws mentioned in Chap. 3, such as Salic Pravda, as well as the Ripuar and Burgundy law. The name of these compendiums of laws

228

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

“pravdas (truths)”—is conditional and adopted in Russian literature (by analogy with the Russian Pravda).1 The various lists of the text of the “Russkaya Pravda” are known and divided into two groups depending on the authors, volume, and content. The first group is called a “The Short Edition” (“The Kratkaya Pravda” or “The Roskaya Pravda”), and the second is the “Extensive Edition” (“The Prostrannaya Pravda” or the “Pravda Rus’skaya”). The estimated years of their occurrence are the 30–70s of the eleventh century [17]. The Short Edition is the result of the activities of the Russian princes in the systematization of law. It consists of 43 articles, which are divided into four parts— the Drevneyshaya Pravda (the Oldest Justice) or Pravda Yaroslava (Yaroslav’s Law), and Pravda Yaroslavichey (The Law by Yaroslav’s sons), the Virny Pokon, and the Lessons to Mostniks. The rules of the Drevneyshaya Pravda (arts. 1–18) reflect the early days of the history of Russia, even before the establishment of state authority and the adoption of Christianity. Yaroslav’s credit is that he chose to select old legal norms and to establish in the Pravda those of them which corresponded to the interests of the feudal class and became new rules of the Russian state. For HMT, this part is interesting in that it begins with the list of employees of the prince (vigilantes) as well as representatives of the social layers of ancient Rus’. Among them are the informer or tiun (princely clerk, household manager, manager of the economic affairs of the Prince), the swordsman (princely vigilante, judicial servant), bodyguard (junior vigilante), bondman (a peasant who is dependent on the Prince), smerd (independent commoner, community member). In general, this part deals with the protection of rights (including property rights) of sovereign officials, as well as of merchants, outcasts, foreigners (varyags, kolbiags), of procedures for the identification of perpetrators and measures of their penalty. The Pravda Yaroslavichey (arts. 19–41) is an autonomous legislative act adopted by the Princes Iziaslav, Svyatoslav, and Vsevolod, together with the boyars. The normative activities of princes that changed the rules of criminal and procedural law for the benefit of feudal landowners, appears much stronger in this law than in the Drevneyshaya Pravda. More precisely, this part deals with the regulation of the life of princely fiefdoms, the protection of feudal property and the lives of persons serving the prince in some form of dependence on him and also the property and identity of other feudal. The list of posts in the Prince’s management continues here. In particular, mention is made of the most noble princely noblemen and servants— the ognischanin (senior druzhinnik, boyar), the attending prince (collector of various income in favor of the prince), the elder horseman (senior horseman), as well as middle- and lower-level officials—the village elder and retail (arable) elder (agricultural works manager), the ryadovich or stallkeeper (the prince’s business agent), and the yemets (judicial officer). The last article of this part (art. 41) determines the remuneration of the yemets for the performance of judicial functions.

1

In the original, for example, the Salic law is known as Lex Salica (Lat.)—“Salic law.”

4.2 “Russkaya Pravda”

229

The Virnyj Pokon (Charter) (art. 42) defines a typical for the early feudal state order for feeding (subsistence) by the community of one of the most important government officials, the Virnik, whose main function was the collection of Vira (a tax or fine equal to 40 hryvnia). The lesson (rule) to mostniks (art. 43) concludes the articles of the Kratkaya Pravda about the order of payment for the servants of the Prince. This is the case of a mostnik (leader of bridge construction and/or streetways). In the article, the word “bridge” has a twofold meaning: bridge as a passage across a river (or gully) and bridge as a streetway. The Prostrannaya Pravda is a summary of developed feudal law. It is based on the text of The Kratkaya Pravda, the Charter of Vladimir Monomakh and other Kievan princes of the late eleventh to twelfth centuries and reflects the strengthening of feudal relations in Kievan Rus’. The text of the Pravda consists of 121 articles, most of which are devoted to the principles of the Prince’s economic policy, the property of the prince and the feudal nobility, the protection of that property and the order of its inheritance. There are articles on loans and loan interest, on the protection and enforcement of the creditor’s property interests, on the order of debts collection, on craftsmanship and craftsmen, and on the salaries of officials of the prince’s court. The Prostrannaya Pravda is divided into six parts by author, volume, and content. The first part (arts. 1–46) is a collective work and was adopted at the mentioned Prince’s Congress in Liubech, in 1097. Many articles in the first part repeat the essence of The Kratkaya Pravda, but there are original articles, as well as articles clarifying and providing administrative and legal concepts. For example, the historic article (art. 2) on the abolition of blood feuds; a number of articles (arts. 3–7, 11–17) on the responsibility for the murder of representatives of the princely management and various social groups associated with the princely and the boyar economy, from the high-ranking “tiuni” to craftsmen, stallkeepers, smerds, and serfs; the original article (art. 8) on the responsibility of the community for the crime of its member (elements of a circular hand). In this part, there is article 9, similar to the Virny Pokon, but which provides a specified level of subsistence for tax collectors and fines—virniks (the princely officials) and their local assistants—metelniks (representatives of the local community). The second part (arts. 47–52) is a product of the creativity of Sviatopolk Izyaslavovich, who patronized lenders. The articles of this part describe civil relations, loan issues, usurious capital (“istoe”), loan Interest (“rez”), the relationship of merchants and trade items (“goods”). The third part (arts. 53–66) is based on the statute of Vladimir Monomakh and describes debt obligations, the forms of liability for breach of contractual obligations between the master and the zakup (a feudal dependent peasant). The fourth part (arts. 67–73, 75–85) is the statute of Vsevolod Olgovich (1138–1146), which regulates social relations in feudal fiefdoms. The fifth part (arts. 90–95, 98–106), which discloses the issues of inheritance, belong to the same era and author. The sixth part refers to the activities of the grand prince of Vladimir, Vsevolod (1174–1175). This is a collection of articles on the provision of the activity of the judiciary and administrative apparatus of the grand prince, on duties and fines, the amounts and forms of remuneration of person, construction

230

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

workers and tax collectors in charge of public affairs (arts. 74, 86–89, 96–97, 107–109). And, for the first time in Rus’, additional duties were introduced for the winners of trial cases, that is, from those “who shall receive help” (art. 107). This part also contains a special section on villeinage (arts. 110–121). In the Prostrannaya Pravda, the status and functions of a number of the aforementioned public service officials are clarified and new categories of persons in the administrative apparatus of the grand prince are listed. The composition and functions of officials once again demonstrate the complexity of the state apparatus of governance during the area of the Kievan Rus’ of the tenth to twelfth centuries. These are—the tiun knyazh (the steward of the sovereign feudal economy), the ognischny tiun (the steward of the business of the higher circles of the princely druzhina), the equerry tiun (the steward of the princely stables), the adolescent (the junior member of the princely administrative apparatus), the gorodnik (architect, construction manager), and the “det’sky” (judicial executor). At the same time, there are completely new categories of ordinary employees, such as the boyarsky stallkeeper (as opposed to the princely stallkeeper of the Kratkaya Pravda) or the boyarsky tiun (as opposed to the princely tiun), which is indicative of the development of feudal land tenure during the eleventh to twelfth centuries, which had already spread beyond princely to boyar lands, with a significant proliferation of this phenomenon sufficient to be reflected in the codification of posts of the twelfth century. This is also reflected in the new tiuni posts (rulers of various economies). In some cases, they emphasize the reinforcement of the positions of vigilantes and boyars (ognischny tiun), in others—the increasing importance and scope of work (the equerry tiun, gorodnik). The plethora of public posts mentioned in one of the most important sources of Russian management thought testifies of the complexity and diversity of the economic and other activities carried out by the grand prince and his entourage with a view to the effective management of the Kievan state, an understanding by the Prince of the relevance of the managerial staff required for it. From the text of the Russkaya Pravda it could be understood who, if not the author, then the customer of the document was. It was, of course, created in the interest of the grand prince and was aimed at strengthening his power in Ancient Rus’. Many articles emphasize the sustainability of the police state’s management model, which the Kievan state was at the time. What, for instance, are the detailed order and forms of feeding in monetary and natural form of the princely servants (and their horses) worth—the collector of wergeld (tax collector), the townman (head of construction of city fortifications and towers) and the bridgeman (leader of construction and repair of bridges and causeways), as well as foraging for their horses, as reflected in articles 9, 96, and 97, respectively, of the Prostrannaya proversion.

4.3 Ideas for Organizing of Local Management in Moscow Centralized State

4.3

231

Ideas for Organizing of Local Management in Moscow Centralized State

During the initial period of the formation of the Russian centralized State with the center in Moscow (late fourteenth to fifteenth centuries), the problems of local government became relevant, as the accession of lands and principalities to the Moscow principality was constantly under way and the area of governance was greatly expanded and new principles and methods of good local governance were needed. It was during this period that evolutionary reorganization of the existing system of local governance occurred—the gradual replacement of the feeding system provided in the “Russkaya Pravda” by special bodies of the labial (county) and the provincial governance. This process was governed by the acts of local government—charters of local governance, labial, and county charters. In the early years, the great princes of Moscow, as in the Kievan state, appointed special officials, governors and volostels (district executives), to administer the affiliated territories, to which they granted the charter, as the basic document defining their powers, as well as rights for reception and the size of the feed. The grand princes foresaw the possibility of abuse behalf the feeders they appointed. In an effort to prevent this, and to gain popularity in the local feudal and the ordinary population, Moscow’s princes gradually reduced the power of the governors and district executives, very cautiously imposed restrictions on the rights of feeders, eroding their power by the presence of local population in administrative and judicial bodies, which eventually led to the cancellation of feeding. The statutes of ratification, while confirming the sovereignty of the Prince of Moscow in the territory of the State, not only strictly regulated and reduced the authority of the feeders, but allowing the central Moscow authorities to control their activities in the territory. According to the statutes, only the Moscowan grand prince was declared the highest authority for affairs where abuse behalf governors took place. And the presence of good or the best people from the local population, from the nobility, the townsmen and the wealthy layers of chernososhny peasants, was locally imposed at the bodies administrating “all-affairs.” All of this was subordinated to the main objective of the nascent Russian centralized state—to find and maintain a permanent compromise of the three most influential social forces of the time—boyars, the nobility and townsmen, through mutual concessions and the preservation of the entire government interest. The involvement of local representatives in the management and management of justice was a harbinger of the emergence of a new political form of the Russian feudal state—a group representative monarchy, legislatively formalized by the reforms of Ivan IV in the sixteenth century and assuming participation of classes in the implementation of public management, both in the center and locally. Among the acts of vicegerent management most famous are the Dvinskaya Statutory Charter (1397), the Belozersk Statutory Charter (1488), the Belozersk Customs Charter (1497). The Dvinskaya Charter is the oldest of the remaining statutes of the Moscow State [6]. The history of writing the charter is linked to rebellion in Dvina in 1397, which resulted in the Dvinskaya land (with the cities of

232

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Ustyug, Vologda, Kostroma) “seceding” for some time from Novgorod, joining the Moscow State. Three years after the war with the state of Moscow, Novgorod was able to regain its rebel territory. It was in this short historical period that this charter was drafted and approved by the “Grand Prince Basil Dmitrievich of all Russia.” The Dvinsk charter, consisting of 16 articles, continues the line of the Russkaya Pravda in protecting the interests of the dominant class—the boyars, their bodily integrity, honor, and dignity. At the same time, the Grand Prince of Moscow emphasizes that not only boyars from Moscow, but also from Dvin may be appointed governors of the Dvina land, as if opposing the latter to Novgorod boyars. There are articles in the charter that give the local population the right to appeal to the grand prince in case of abuse behalf governors (art. 13), imposing the size of duties on trade in the territory of Dvina land (art. 14), exempting dvinsk merchants from all duties in trade in the Moscow Principality (art. 16). The Belozersky charter was drafted under Ivan III after the final accession of the Belozersky principality to the Moscow State in 1488. The 23-Article charter continued to strengthen the privileges, rights and benefits of grand principal representatives and officials performing administrative and financial assignments over local governing bodies. The charter even introduces an entirely new entry feed, which is received by the steward when he takes office, but without specifying its size: “townspeople and basic people, to our stewards of entry, what they shall bring, that they shalt take” (art. 1). The charter establishes the exact number of officials who were members of the governor’s apparatus -“two tiuni and ten closers” (art. 3), and their term of office—“tiuni and closers not to be replaced under a year” (art. 5); the size of the food portion, the time of its collection and the right to replace natural feed with a monetary reward (art. 2). The measures restricting the rights of the governors and their assistants should include the rules for their travel in the territory of the land, when the door assistant was not entitled to levy duties and feed (this was the responsibility of the sotsky elected by the people), to dine in places of sleeping accommodation and to sleep at places of dining, bypass the territory of other closers (art. 4). In order to promote trade, the Charter created favorable conditions for merchants who came to the Belozersk land not only from the Belozersk districts, but “from the Moscow Land, from Tver, from the Novgorod Land, from Ustyug, from Vologda” and other places. Guests were allowed to trade “dwelling and all goods at Beleozer in the city, but beyond the lake they are did not go to trade.” Violators of the rules and the place of trade were subjected to harsh penalties. First, they were fined, second, the goods were confiscated and the merchant and seller or customs official were forwarded to the Grand Prince (arts. 7–8). It is in this Charter that there is an article on the prohibition for “our stewards and their tiuni” to pursue judicial proceedings “without the sotsky and without good people” (art. 19). The Grand Prince gradually restricted the rights of his officials even by measures such as “the feasts and patches of tiuni and vicegerent people not to attend uninvited” (art. 20), or “my princes, and boyars, and the children of boyar and all riders shall not demand of the townspeople, of the camp people, and of the county council people, neither fodder nor input, nor

4.3 Ideas for Organizing of Local Management in Moscow Centralized State

233

conductors, nor watchmen.” This also applied to grand principal messengers who did not have special literacy for it (art. 21). In the first half of the sixteenth century the power of the bodies of local governance is further reinforced by the widespread introduction of elected bodies—labial and local huts. In the first time, labial huts operated in parallel with feeding and, as a rule, on the territory of the county, and according to the Belozerskaya labial charter of 1571, in the territory of the district. The activities of these local government bodies were regulated by labial and county charters. The best known of them are the Labial Charter of Belozersk (1539), the Medinsky Labial Order (1555), the Belozerskaya Labial Charter (1571) [6]. According to these instruments, the top level of local government was as follows. Labial huts were headed by the labial elders, elected (by the Charter of 1539) or appointed (by the Charter of 1555) from among the children of boyars and the nobility. The labial elders must be subsistent, that is to some extent wealthy. Some labial charters require “electing. . . the labial elder, who would be skilled in literacy.” In the event of the election of the labial elder, the early charters required to report to Moscow about the results of the election and, by later charters, to “send for the kissing of the cross to Moscow, to the Razboyny order.” A Razboyny order (or hut) had some control over the labial authorities, prosecuted the labial elders themselves and the sworn-men for bribery and other abuses (art. 14 of the Medynsky Labial Order). The labial elders possessed an apparatus (six to seven persons) from the elders, tenth and best people, as well as the scribe, overseeing the workflow of the labial hut. Over time, in the apparatus of the labial chief the “best men” were replaced by sworn-men elected from the local townsmen and black peasantry (the peasants of black villages). The sworn-men were initially elected indefinitely, later—annually. In the mid-sixteenth century, a county council reform was also carried out, which resulted in the establishment of provincial self-governing bodies, whose officials were chosen from among the nobles, the townsmen and the wealthy strata of black peasantry—the best people. The competence of county representatives extended only to townsmen and peasants, boyars and the nobles were excluded from their competence. The territory of the zemstvo hut’s authority was usually a city with the countryside, but in some cases—the district. The order of organization of the county bodies and their competences was determined by the zemstvo charters. They were also issued on behalf of the “Great Prince of All of Rus” and then the tsar, and regulated the functions and methods of the local government bodies in the financial, judicial and police areas. Of the best-known charters are the Statutory Zemstvo Charter of the Malaya Penezhka, Vyskoy and the Dvinsk County (1552). From the day of the release of this instrument, composed on behalf of Tsar Ivan IV, the authority of districts and their local representatives appointed by the prince and the corresponding feeding system was abolished—“their volostelya are at the Penezhki, and on the Viya, and at the Sure and his tiun has been left” (art. 3). Instead, county council bodies were created, consisting of preferred persons (later county council elders), and sworn-men -the elected best people. The names of both were stated in the tsar’s literacy (art. 4). The zemstvo institutions had been authorized to solve all

234

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

issues of local governance—in all county affairs to perform governance, and the All-Russian Sudebnik of 1550 (art. 4) was since then enacted as a guide for operation and the resolution of all affairs. They were, for instance, responsible for the distribution of taxes and collection of tribute, control over the areas of production, trade and drinking establishments (art. 23). The articles of the Charter refer to the organization of county governance bodies and the order of their activities. First, it defines the personnel of the Zemstvo hut of 10 persons and a scribe, which consists of the three favorite persons, Elizary Yakovlev, and Semyon Ivanov and Timothy Ancyforov, with comrades, 10 persons, also elected by the counties, and those among them perform governance in all affairs under our Sudebnik (art. 10). In the event of insolvability of an issue by the first three favorite persons, they were to be, together with all the elders, 10 persons gathering at the Viya, but judge all our zemstvo affairs and perform governance to all things at one (art. 11). All county documents were to be kept in writing by the specially elected county scribe who had sworn allegiance (brought to the kissing of the cross) (art. 12). All the issues of tax deduction of the local population, as the main financial source of the grand principal treasury, are described in the Charter in detail. Instead of vicegera servage, monetary tribute was set—a payoff. Usually the servage was paid to special officials—the treasurer and scribe, and the population was required pay it to the sovereign treasury once a year at the Butter Zagoveyno, that is, on Sunday on Butter Week, without awaiting a bailiff. In the event of a violation of this claim, the central government sent bailiffs from Moscow, who were charged double servage and received additional ride. In addition to tribute, direct taxes continued to exist in favor of the sovereign treasury, such as on squirrel and ermine hunting, yam money, duties in connection with military service (arquebusean, urban, polonyanichean). There were separate so-called guest submissions, that is, duties on guests—visiting merchants (arts. 5, 6, 8, and 9). According to the Charter, the manufacture and sale of intoxicating beverages was strictly punishable (art. 23). The monetary penalty was not only paid by those holding the inn (a bar place where the beverages were sold) but also by the buyers (pitukhi). The manufacture of intoxicating beverages was permitted by special resolution of the county council authorities only in connection with special events—by the eve of a festivity make it, or the memorial of parents, or christening, or birth (art. 24). There is an article in the Charter that establishes the manner in which the county authorities address the central government in Moscow in cases that exceed their competence (art. 25). There is an instructive article in the Charter with the requirement that the favorite persons should monitor one another (among themselves preserve tightly), and the county people watch them and each other, so that there is no abuse and bribery (art. 26). We cannot fail to mention an article specifically devoted to the organization of workflow at the county council hut. As we have said, all workflow was entrusted to the scribe elected by three counties. He had to manage and record all affairs only in the presence of the three favorite persons and their 10 comrades, all the recordings (minutes) had to be certified by the seal of the county council elders and kept by them. In cases when the scribe makes a record of

4.3 Ideas for Organizing of Local Management in Moscow Centralized State

235

provincial affairs in the absence of the elders, or shall keep a case in his possession, and these facts are revealed, “the county council scribe shall from me, the King and the Great Prince, be executed by death penalty,” and the scribe’s selected property shall be transferred to the person who reported his violations (art. 29). And finally, the Charter ends with an article which establishes a privilege for the county council elders, the sworn men and their people—they were exempted from paying all kinds of duties, “as they go to us to Moscow. . . with the money, with our tribute,” and “they shall be allowed to pass everywhere without hold, without delay” (art. 32) [6]. Thus, the acts of county council management have demonstrated the systematicity in covering management issues, their rather detailed elaboration, ranging from the setting of tasks and the formation of bodies of local government, the list of officials and their functions to the characteristics of decision-making processes, communication and even individual procedures. One of the valuable sources of management thought in Russia are the so-called cadasters, as summary depictions of the economy in Russia of the fifteenth to seventeenth centuries—descriptions of urban and rural areas, as well as descriptions of the population. These books began to be compiled on a regular basis staring from the fifteenth century when the term itself appeared. The earliest surviving cadasters are Novgorod books of the end of the fifteenth century [18]. The practice of mass bookwriting developed during the reign of Grand Duke of Moscow Ivan III. In 1484, the government of Moscow evicted over 7000 landowners from the lands of Novgorod, in 1489—a further 1000. Moscow servicemen were appointed in their place. This mass event objectively required writing cadasters, which recorded the size of possessions, the quality of land, the number of peasant yards and other information. Since the 30s of the sixteenth century the compilation of general descriptions of the entire Russian state begins. This work was carried out mainly between 1538 and 1547. Since the middle of the fifteenth century, a uniform system of distribution of public duties was introduced throughout the country. Now the unit of taxation was a certain size of the plowed land (“living quarter”), and the quality of land was taken into account. This caused the need for new solid descriptions, and more complex in terms of organization. As a result, the work took place almost the entire period of the reign of Ivan IV the Terrible in 1550–1570. The agricultural crisis of the late sixteenth century and, especially, the events of the Time of Troubles in Russia (Smutnoe vremya, the late sixteenth to early seventeenth century) became a shock that impacted the very foundations of the state system, caused changes in land ownership of the Russian state, which forced the government of Tsar Mikhail Fedorovich to carry out a number of extraordinary descriptions (“the watchings”) in 1612–1614 and 1619–1620. First of all, attention was paid to the most bankrupt territories of the state. After the Time of Troubles came to an end, a general description of the land (the so-called “gross description”) was undertaken, which took about eight years (1622–1630). Some of the suburban areas had to be described twice, as part of the writings burned down during the Moscow fire of 1626.

236

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

The cadasters served as the basis for yielding land taxation—soshnoe pismo, or description of land property. Gradually they became a means of strengthening feudal land ownership and enslavement of peasants and eventually received the value of the main document, determining the belonging of peasants to its owner. The books were compiled by special commissions consisting of scribes and government officials, whom the government sent from Moscow to the places. Cadasters were conducted on settlements and administrative-territorial units, cities were described separately (their fortifications, churches, shops, yards, population), county, camp, parish, rural areas, and villages. Each cadaster consisted of summary results. The last description of households was undertaken in 1684–1685, but remained incomplete [18].

4.4

On the Management of the Private Sector in Silvester’s “The Domostroy”

In the mid sixteenth century in the Russian centralized state, with its extensive experience of public management, apparently the first domestic essay devoted entirely to managing a private economy appears. Prior to this, from the eleventh century, in Russia, of course, translations and domestic works were published in the spirit of “father-to-son teachings” in various options, but they were frankly socially oriented. Their authors were not just philoprogenitive fathers, but some spiritual father (like Patriarch Gennadius and his “Stoslov”) or a reigning person (like Vladimir Monomakh and his “Teachings”), or some warlord (“Mandate from father to son” issued in the fourteenth century) or a wise man (Egidio Colonna and his “???”)) who had the right to teach at the state or public level, although in fact the author had instructed the son in the rules of hereditary craftsmanship. One of these last (before the “Domostroy”) translational teachings addressed to the ruler was the treatise of “Vasily of the Greek fidelity” (late fifteenth century). However, the accumulated experience of entrepreneurial activity, sufficiently developed market relations (especially in the Novgorod and Pskov principalities) and the development of new social and economic relations in Russia in the mid sixteenth century had led to the need to create similar “penalties” for the laity of unnoble origin. It was then that the “Domostroy” appeared, devoted to the townspeople of average income, to the merchants and nobles (“as constructing the court”), to the new service class people who appeared in Rus’ [see the text in work [19]. In its language and style, the Domostroy is much more practical than any previous instructions and teachings. Although the medieval traditional genre is preserved in Domostroy, as well as the didacticism and at places even aphoristic laconism of exposition, the spiritually high moral goal had disappeared, as the treatise is oriented toward a completely different social environment. The Domostroy focuses on the entrepreneurial audience, and at the same time it was devoted to everyday life, daily household affairs, management of a particular household. Pragmatism, brought at times to pure practicality, emphasizes the primary purpose of the Domostroy—not

4.4 On the Management of the Private Sector in Silvester’s “The Domostroy”

237

“knowledge,” but order and ability to manage specific affairs are of interest to the author, and therefore the Domostroy resembles a “Business manager’s handbook” rather than a moral “father-to-son teaching.” The authorship of one of the two known editions of the Domostroy is attributed to Sylvester (early sixteenth century—1568 or 1578), a national of the Novgorod prosperous trade and industrial environment. He was close to the Novgorod Archbishop of Macarius, who, after being elected as Metropolitan (1542) moved to Moscow and from 1545 became protopope of the court of the Cathedral of the Annunciation in the Kremlin. Sylvester was one of the youngest employees of Ivan IV the Terrible. In his views, Sylvester was a “Nonpossessor,” an opponent of church possessions, and defended strong state power—autocracy and a proponent of the strengthening the positions of the nobility, dominating in Russia. The author of the Domostroy illustrates a picture of the household of a wealthy person, as can be assumed—a boyar, living in a city, a major merchant. His home has a butler, keepers of keys, a lot of bondsmen; expensive luxury items and overseas goods are purchased. The master of the house is a man living at the expense of someone else’s work. It is closely linked to the market; the master is encouraged to purchase a wide range of goods, agricultural products, and various household items. Even a simple listing of the items recommended for purchase takes up a lot of space in separate chapters and in the book altogether. The Domostroy consists of three interrelated parts—“structures”: “The Spiritual structure” (religious teachings, [19; Chap. 1–15]); “The Common structure” (on family relations, Chaps. 16–29) and “The Household structure” (management recommendations, Chaps. 30–63). The Sylvester’s version also contains an additional Chap. 64, “A message and instruction from father to son,” which is an authorial abstract of the entire Domostroy and at the same time natural rationale for the Domostroy, based on the author’s personal experience. According to V.O. Klyuchevsky, who believed that the ancient Russian word “order” had the sense and meaning of the word “science,” modern to him, Domostroy consisted “of three sciences.” In this case, the Domostroy may be considered the first attempt in Russia to create a science of household management. Here are the titles and texts of some of the Domostroy’s articles describing the level of development of managerial thought in Russia of the sixteenth century [19]. For example, “to rule any affair without delay, and especially not to underpay the worker” (art. 21), or “what people to hold and how to care for them in any teaching and in divine commandments, and in domestic work” (title of art. 22), “to have good people so that they know the craft, whom is worthy of which and what kind of craft they are taught” (text from art. 22). And here is the full text of the short but essential article 26, “How a person should live, having his life figured out”: “In all of his possessions: in the store, and in any good, in the treasury, and in houses, or any court stock, villatic or handicraft—both in expenditure, and in loan, and in debts, always take note, then you will both live, and preserve property, by receipt and expense.” And here’s what happens “If one lives without having anything figured out” (art. 27): “For every person: rich and poor, large and small—all is to be figured out and marked upon the basis of

238

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

craftsmanship and income, as well as property; It is up to the official to figure everything out, taking into account the monarchic wages by both income, and by estate. . . If one, without having figured out what is his and marked his living and handicraft, and profit, shall begin, looking upon people, to live beyond means or taking by an illegal way, such an honor will turn out with great dishonor with shame and disgrace. . . .” There are articles that are relevant to the subject of inventory and marketing management. For instance, article 40: “To the steward, the butler or keeper of keys, or the merchant, who is trusted, or to the lord himself on the market, to always seek any supplies, . . . any good that comes from all directions; when all is brought or when there is abundance in the hands of entrants, in those ages to buy in stock, everything from the ruble from a quarter shalt give short, and from ten rubles also, from the merchant shalt buy at a higher price, shalt pay double for it and not buy anything, if something is scarce, but needed. And what kind of merchandise or supplies dost not spoil with time, if it is also cheap, then you can buy it in abundance to meet all the needs in one’s own estate; the excess shalt be sold when it rises in price, and then your stocks will be profitable, and that is around a good master, housekeeper and sophisticated person in his forethought and skill.” There are articles on accounting and control and measures of remuneration for work: “And in the cellars and on the glaciers, and in the granaries, and in the ovens, and in the cages and in the barns, and in the stables every day in the evenings, in any weather, for the master himself to check all the drinking and food, and order, and all the supplies, and the goods, and the belongings, . . . and in any possession; and for the keeper of keys and the chef, the baker, and the horseman—to inspect all himself, whether it’s well designed, whether it’s as it is written in this book, and to ask how much of what there is and if everything has a measure and account, and a record. And all that to observe, and think of oneself: How much has been done, how much has been dispersed, what had been given out to whom” (art. 58). There are articles in the Domostroy that outline the principles of working with staff: “In all affairs, who serves well, lean, and plain hearted, performs all by mandate, that one shalt be bestowed and welcomed by good word, be gifted of food and drink, and any of his request shalt be done. And what he had unintentionally or unreasonably or foolishly done or spoilt—and in that only by word be taught before everyone: and all shalt be on guard about it, his fault shalt be forgiven. But if he again and for the third time does wrong or becomes lazy, the, by fault and the deed judging, by reflecting, to teach and beat: if there was honor for the good one, there is punishment for the bad, and lesson to all” (art. 59). “And who are foolish and rude, and selfish, and lazy, and no good, respond to neither teachings, nor blows—those, on the contrary, exile from court: then the others, watching such a fool, shall not be spoiled!” (art. 60). In general, Domostroy is a specific-enumerative set of guidance for the rational organization “arrangement of home and yourself in all,” against the backdrop of moral characteristics in the relationship between household managers and household members. Moreover, the principles of good management of the economy set out in the “Domostroy” are such that some of their universality may be spoken

4.5 Major Factors in the Development of Management Thought in Russia of the. . .

239

of. Although the starting object of the discourse is a subsistence household of a consumer type rather than a production or industrial type, more complex economic models further emerge in Domostroy. The growing and increasing complexity of the family community, both socially and economically, puts the stability of the family group and its internal cohesion at the forefront. Orthodox ethics play an enormous role in solving this problem. This is the “nucleus” of the economic organization and allows the family economy to adapt to a wide range of specific economic conditions and situations. In analyzing the Domostroy options for managing the private sector under market fluctuations, it should be noted that it is sometimes virtually impossible to say where the subsistence regulations end in the “police state management model” and entrepreneurial rationalization begins. Moreover, in the first articles of the Domostroy, the regulation of household life was sanctified by church authority. True, the first-part rhetoric in subsequent parts replaces the purely business document style and as a result, the role of the church organization in the last chapters has been wiped out, that is, churchism here is just a frame within which a rather good national economic management activity unfolds, with frequent illustrations of positive, virtuous examples. It is a very peculiar form of governance and self-governance, combining deep traditionalism of the organization’s economic core with the novelty of situational behavior. Such a household can certainly accumulate some potential for the transition to purely entrepreneurial forms.

4.5

Major Factors in the Development of Management Thought in Russia of the Seventeenth Century

From the mid-sixteenth century, Russia entered a period of turbulent development of a monarchy of representatives of nobility, which began in the fifteenth century with the involvement of the representatives of townships, lands and principalities in the local management of territories affiliated to the Moscow State. By the time of the reign of Ivan the Terrible, Russia was already a state vast in scale (2.8 million km2), second after the Holy Roman Empire and the German nation. Russia’s population was 6.5 million people. In accepting the royal title, Ivan IV, among other points in his program, charted the extension of the borders of the Russian state. This was in the interest of small and medium-sized feudal, who sought to increase their fiefdoms and estate. The extension of the territory of the State went along with its further centralization. By the early seventeenth century the process of centralization in Russia was complete. Characteristic of the period (mid-sixteenth to early seventeenth centuries) was the emergence of new, bourgeois links within the feudal society, the allocation and growth of a new social force, the class of merchants or the trade bourgeoisie, among the urban population. Agriculture, predominantly crop farming, continues to be the mainstay of Russian production in this period. Industry had so far evolved on

240

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

the basis of farming needs. The economy continued to be natural, but there was a noticeable increase of output to the market, and agricultural merchandise was growing and developing. The inclusion of feudal ownership in the system of monetary relations had led to the organization of various types of industrial production. Thus, for instance, the economy of the famous feudal, boyar B.I. Morozov had large potassic and distillery production, an iron factory, leather and linen manufacture. Salt, forestry, fur, and fishery industries had visibly developed as well as smallscale production in cities—handicraft and craftsmanship. The number of cities in Russia increased dramatically (from 160 in the early sixteenth century to 226 in the early seventeenth century), as well as the industrial population in urban areas. But craftsmanship production could no longer respond to the demands of the growing market and the needs of the state. In the first half of the seventeenth century large manufacturing enterprises emerge. Steel, iron, glass, leather, and paper factories were built. New major trade centers emerged, the Makarievskaya, Irbitskaja, and Svinskaya All-Russian fairs had been established, which were of great importance in the development of central Russia’s trade relations with the suburbs, and several regional fairs in large cities (Pskov, Novgorod) had been established, where Russians and foreign merchants gathered. Russia’s foreign trade with the East and West developed rapidly, aided by annual international fairs in Arkhangelsk and Astrakhan. At the same time, weaknesses in the organization of both internal and external management of the Moscow State had begun to manifest themselves. The shortcomings had also been manifested as reasons for the prolonged “nebulous era of impostors” and debilitating wars with Poland and Sweden, and in many ramifications (in the times of the recovery of the consequences of the Time of Troubles and war). In Russia the phase of so-called vibrations in the choice of public management to correct the outlined deteriorating trend in the country and of the country. On the one hand, having sufficient experience in good management, state leaders attempted to find new funds in their own old sources that were most often fiscal in the form of an increase in the number and amount of taxes, each time “constraining private interest in the name of state claims.” However, the disproportion of funds with the challenges that had arisen had quickly become apparent, in addition, the Russian people had become more resistant to such actions by the Government, as has been the result of numerous rebellion and riots that had taken place throughout the country between 1630 and 1671. For example, in the reign of Aleksey Mikhailovich “popular discontent” was expressed in numerous rebellion throughout the country: in 1648, the salt riot in Moscow, Ustyug, Kozlov, Solvychegodsk, Tomsk, and other cities; in 1650, riots in Pskov and Novgorod; in 1662, a new rebellion in Moscow due to the entry of copper money; in 1670–1671 in the Volga region, a major uprising of Don Cossacks and another people led by Stepan Razin against the higher classes of the Russian society. It was then that the long-established trend toward the use of other means of solving the country’s national problems was exacerbated in Russia. It involved referring to foreign experience and strength. It was then that the country began to engage in purposeful and massive involvement in Russia (for the second time in its

4.5 Major Factors in the Development of Management Thought in Russia of the. . .

241

short eight centuries of history) of foreign warriors, foreign weapons, foreign masters, and many other “foreign items.” Starting in 1630 before the war with Poland with the invitation of major foreign military units (up to 5000 persons) and foreign officers, they moved to the invitation of instructors to train Russian military people. Starting with major purchases of foreign arms and shells (tens of thousands of muskets and swords, tens of thousands of puds of gunpowder, iron cores), they “began to think of the manufacture of own weapons” [2; vol. 3, p. 249]. The needs of weapons factories had forced attention to the mineral wealth of the country. At that time, iron had already been mined and processed in Russia in small volumes and in artisanal conditions for the production of household goods. This capacity was clearly lacking to meet the needs of the state’s military department, which forced it to purchase (“order”) iron in thousands of puds (two stones or 16 kg) from Sweden, with whom we fought periodically. The danger of being in strict dependence on the supplier was already understood by Russian tsars’ back then, but the determination to attract foreign craftsmen to build and strengthen the domestic industry was only done by tsar Mikhail Fyodorovich. In his era, foreign “ore experts,” mining engineers and craftsmen were invited to Russia to develop metallurgical production. In 1926, the English engineer Bulmer, known in the world, since “with his craft and intelligence knows and is capable of finding ore of gold and silver and a copper and precious stone, and knows plenty such places” [2; vol. 3, p. 249], was invited to Russia. And, with the assistance of foreign craftsmen, geological expeditions involving Russian people were set on foot to search for and develop ore deposits in Solikamsk, the Northern Dvina, the Yugorsky Strait, beyond the Pechora, in Yeniseysk, and many other suburbs and cities of Russia. The search for extractable resources, wood for the construction of ship masts, sites for salteries, and so forth, had gradually engaged the entire country and, above all, the wealthy people of Russia. This process gradually engaged “Moscow’s financiers in the circle of economic concepts and relationships unknown to them,” and it began to create an entrepreneurial spirit within the country while at the same time understanding that tax increases, as the principal means of financial management of the state, had reached their limits, that it now “must be preceded by a rise in the productivity of the people’s labor, and for that purpose it must be directed towards new profitable production, the discovery and development of the country’s vainly existing wealth, for which masters, knowledge, skills and business organization are required.” And “when a desire arises in society, that responds to a pressing need, it gains possession over people, as fashion or an epidemic, agitates the most receptive imagination and causes painful preoccupation and risky ventures” [2; vol. 3. p. 252]. In Russia, special awards had even been issued to those who discover and identify new ore deposits or other profitable places for the national economy. The algorithm for this stimulus was roughly as follows: “If a great alabaster mountain in the North Dvina is reported to Moscow—from Moscow an expedition is sent with a German at the head to examine and describe the mountain, negotiate with trade people, and two stones of alabaster could be sold overseas, workers could be hired for the stoning” [2, vol. 3, p. 252].

242

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Along with military and industrial ideas, elements of Western European culture, art, living, household and garments began to emerge in Moscow from the West. And, along with them, the realization that all these results and achievements are impossible without certain knowledge and skills. It is then in Russia, for the first time, “mental curiosity, interest in scientific education, a desire for reasoning on subjects that were not part of the normal range of vision of the ancient Russian man, into his daily basic needs” awakened. And at the same time a circle of influential admirers of Western European comfort and education formed at the King’s Court. Among them is the uncle of King Alexei—Nikita Ivanovich Romanov, the richest man after the king and the most popular of boyars, patron and admirer of Germans, a great lover of German music and dressing; tutor and brother-in-law of King Boris Ivanovich Morozov, the de facto head of the government in 1645–1648, who contributed to the development of domestic trade, industry and finance; okolnichy Fyodor Mikhailovich Rtishchev, patron of science and school education; head of the Embassy order, educated diplomat Afanasy Lavrentievich Ordin-Nashchokin. The fruit of the labor of these people were the translations of numerous Western literature, including educational guides and encyclopedias, business and technical literature, the opening of a number of state schools where literacy, military techniques, and craftsmanship were taught. The Embassy order, the most educated institution of the time, “translated entire books, together with political news from western newspapers for the King, for the most part manuals of applied knowledge” [12; c. 449]. The recovery period that started in the seventeenth century, had been, both in the form of recourse to western experience and capital, and in the form of a search for domestic opportunities, a period of preparation and implementation of a number of innovations and reforms essential to the future of Russia—the improvement of the old and the development of a new legal frameworks for management, improvement, and development of the country’s trade and industry, strengthening of public finance in the country and strengthening the national defense capability. Most of the reform plans developed during the reign of Mikhail Fyodorovich Romanov (1613–1645) and Alexei Mikhailovich (1645–1676) were subsequently implemented by Peter the Great (1682–1725) and other Russian emperors. Even in the case of the Time of Troubles, the process of rebuilding its consequences and destruction as part of the “human relations disorder,” engendered by the exacerbation of class and dimensional contradictions, was seen as a period of renewal and reform, as the time of the “New Kingdom started to be built.” It was at this time and for that purpose that a unique legal instrument was developed—the Sobornoye Ulozheniye (legal code) of 1649, consisting of 25 chapters and 969 articles (!) and regulating practically all aspects of the life of the Russian state, including the organization of centralized power, the judiciary, the activities of state and local government (the Boyarskaya Duma, Orders, County Councils), issues of management of vital sectors of the national economy—public service and employees, the financial system, the army, urban planning, hydroconstruction, communication routes, and distillation.

4.6 Yurij Krizhanich

243

The programs of change and reform in Russia had been prepared and developed by a number of persons—representatives of different classes and dimensions, concerned about the state of affairs in the country, critical about the “home order,” who brought forward public issues in numerous speeches and addresses to the leadership of the country—letters, notes, tales and petitions. Among the authors of the programs were prince Mr. Hvorostinin, Patriarch Nikon, the boyar and statesman B.I. Morozov, the scribe of the embassy order G. Kotoshikhin, the duma nobleman and diplomat A.S. Matveyev, the outlander-missionary catholic Y. Krizhanich and the statesman A.L. Ordin-Nashchokin, author of many “projects” I. Pososhkov, encyclopedist M.V. Lomonosov. All of the reformers listed have contributed to the development of domestic management thought. We shall stop at the works of the four latter reformers.

4.6

Yurij Krizhanich

Yuriy Krizhanich (1617–1683), a Croatian, born a subject of the Turkish sultan, was then as a poor orphan taken to Italy, studied at the theological seminaries of Zagreb, Vienna, Bologna, and entered the Roman College of St. Athanasius, on the basis of which the Roman Congregation (Roman Curia) prepared missionaries for the dissemination of the Catholic faith in the countries of the Orthodox East. As a Slav, he was assigned to work with schismatics (separatists) of Moscow. This was and his long-established dream—to reach Russia, and therefore he collected information about the country, studied the history of Slavs and Moscowia, the habits and customs of Slavs and Moscovitans, taught himself the Slavic language, prepared materials for Slavic grammar, encyclopedia, dictionaries. Pretty soon, he concluded that “moscowitans are not heretics or schismatics because of superstition, but simply Christians, wandering in ignorance, in their innocence,” and that the Moscow Slavs, like the rest of the Slavs, are in undeserved distress. One of the reasons for the enslaved position of the Slavs is their lack of integration. It was then that Krizhanich was occupied by the idea of uniting all Slavs with the political center in Moscow. But for the Slavs from different countries to come together, they need to understand each other, which is first of all impeded by their language diversity. For this, according to Krizhanich, three things need to be done: First, to raise the Slavic language by writing a grammar and lexicon for it, “so that we may speak and write correctly, so that we have the abundance of sayings that is necessary for the expression of human thoughts in common people’s affairs.” Second, to write the history of Slavs, in which “German lies and slanders” were refuted. Third, “to discover the tricks and enticements with which other nations deceive us, Slavs.” With such plans in 1659, Krizhanich arrived in Moscow, willingly running from Rome. In Moscow, he hid his Catholic missionary, and was accepted as many foreigners who had offered themselves for public service, simply as the “descendant-serbenin Yuriy Ivanovich.” In order to create a strong official position, he offered King Aleksey Mikhailovich a variety of services: to be the tsar’s librarian,

244

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

to be the Moscow and All-Slav publicist, to write the true history of the Moscow Kingdom and the entire Slavic people in the rank of the tsar’s “chronicler historian.” However, he was able to obtain only the job of writing Slavic grammar and lexicon. At the time, he wrote about himself: “I’m called a wanderer, a tramp; That is not true: I came to the king of my tribe, came to my people, to my fatherland, to the only country where my work could be used and bring benefit, where my goods could be priced and marketed—I understand dictionaries, grammars, translations” [2; vol. 3, pp. 232–233]. But just over year later, accused of espionage, he was sent to Tobolsk, where he remained for 15 years. In other words, he had only seen Moscowia for two years. And yet this lack of experience in communicating with Moscowitans did not prevent him from summarizing what he had seen and heard in Moscow and in exile, writing a mass of articles, notes, and in 1663, a treatise on “Talk on domination” or “Talk on governance,” more prominent in modern scientific literature under the name “Politics.” This essay was intended for King Aleksey Mikhailovich, and the author often referred to him personally in his treatise. However, none of the author’s proposals had been implemented during the reign of Aleksey Mikhailovich, although the treatise “Talk on domination” was a desk book not only for both the last tsars but also Peter I, or as biographies say, it was “upstairs,” in the palace of the great tsar, and therefore there is reason to assume that it did not remain without influence over the Emperor [10, vol. 13, p. 150]. Many historians see the reforms of Peter I as a manifestation of the ideas and thoughts of Y. Krizhanich, as outlined in his main essay. There is no epigraph in Russian in Krizhanich treatise, but in the foreword he quotes Philip, Prince of the Czech power in the German land that could well become an epigraph, for it reflects the purpose of the treatise: “A good state structure becomes known in three things: firstly, by good roads—if there are good bridges and it is possible to whereabout around the country without fear of thieves and other dangers; secondly, a fine coin—if trade does not suffer from ineligible money; and thirdly, by good courts—if it is easy for all to obtain a trial and timely justice.” Though, with his own addition: “That Prince really did say well, but, however, he did not mention everything, only the basics. For apart from these three concerns, rulers also need other industries that we shall be here to discuss recount here” [20; pp. 20–21]. The treatise on structure consists of 47 sections, which are combined into three large parts, in accordance with Krizhanich notion on the three pillars of a prosperous state, “On Wellbeing” (4 sections), “On Power” (7 sections), and “On Wisdom” (36 sections). But by form the treatise looks something like this—first, in each part (sometimes in the section too), the results of Krizhanich observations of this field in Russia in the form of criticisms of the state of the field in Russia (public management; the organization of trade, industry and crafts; military affairs; level of culture, living, science and education); second, the desired state of these areas, their ideal model or the positive experience of Western countries in this field are described; and third, recommendations are made to eliminate Russian shortcomings and to achieve the desired conditions. As we see, the form of reporting is similar to the modern interpretation of the essence of strategic management.

4.6 Yurij Krizhanich

245

In the first part in the section “On trade,” consisting of 64 chapters, these are the basic methods of enriching the state, “by which my treasury is replenished fairly, in a divine way and honestly, without vile greed, without cruel-hearted requisitions and without the unbearable and inhuman burdening of subjects. And in essence, such industries are three: agriculture, craftsmanship and trade. And the fourth industry is a economy or common structure, and it is the foundation and soul of all the others. Those are called lucrative industries.” He further affirms his main message: “If the king himself wants to be rich, he must first ensure that there is plenty of gallimaufry and bargain in the kingdom. And this the king can achieve (as far as is possible in his power), if he is to make sure that people with all care and vigor have become involved in agriculture, crafts, trade and the nation’s economy” [20; p. 32]. The first of these to be analyzed is trade, resulting in Krizhanich determining 10 major ailments in the organization of domestic and foreign trade in Russia: Firstly, there are little auctions in this country, and we need more... Secondly, there is no gold, silver, copper, tin, lead in the country... nor good iron. Thirdly, there are no precious stones, pearls, corals nor paints. Fourth, no sugar, saffron, pepper... nor other spicery or incense. Fifthly, the oppression of olives, grapes, almonds, lemons... and many other harvest. Sixthly, there are none of some absolutely essential things: that is, cloth and other materials for clothing -wool, silk, paper. Seventh, the country is deprived of stone, and a better forest for buildings and good clay for dishes. Eighth, the minds of our people are not developed and slow, and people are unskilled in craftsmanship and little competent in trade, in agriculture and in the household. Our traders are not taught arithmetic and numeracy science. Therefore, foreign traders are always easy to outsmart and allegedly deceive... Ninth, the routes in this broad power are long and arduous because of wetlands and forests and are dangerous because of attacks... by robbery people. Tenth, the country is full of fur, or lambskin and hemp, and since some time, potash. And the honey, wax, caviar, wheat, rye, linen, leather and other goods that are being exported are not brought out because of their abundance but, if necessary, because of foreign wiles, and in doing so we are ourselves deprived of the fruits of our land and experience a lack of them.

And “to help the people in so many of their needs, there is only one way, that is, let the sovereign king take on his name and into his own hands all trade with other peoples... For only in this way will it be possible to keep account of goods so not to export too many of our goods, which we do not have in abundance, and not to import foreign goods we don’t need. In this way, the king will be able to multiply the markets and guard required by state to accompany the goods. And foreign traders will have nothing to do here. And all German goods can go through our hands... to Bokharan and to Indians,... to the Persians, to the Turks,... to the Circassians and to the Walachs... Conversely, the goods of those people will reach us through our hands to, to the Germans, to the Poles and to the Lithuanians. The entire state will make a fortune and all the inhabitants would rejoice from such actions. This would not be nice only to large merchants, the incomes of which will partially reduce. But that is not worthy of consideration, since it is about a common benefit to the entire people” [20; pp. 34–36].

246

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

We shall remind the reader that in Russian script of the sixteenth to seventeenth centuries the residents of many Western European countries were known as “Germans.” The use of the word “German” in the meaning of “Outlander from Western Europe” is also found in with Krizhanich, but in most cases it takes on a specific meaning. For Krizhanich, “Germans” are not Spaniards, French, Italian or Hungarian, that is, “latinians” in Russian script, but Germans, English, Dutch, Danes and Swedes. Thus, “Germans,” in the understanding of Krizhanich, are Lutherans and Protestants living in the cities of Western Europe [20; p. 489]. Following the call to engage in foreign trade, Krizhanich convinced the tszar that he should not be ashamed of leading foreign trade, citing examples from the Bible and the experience of France, Spain, England, and Portugal. And then he sets out the seven principles of foreign trade management, which at times resemble the modern guide for a sales manager: 1. The royal stewards should not sell anything at home that is bought in their power, but they must sell all that will be bought from royal subjects to foreigners with the greatest possible profit and at the highest price. 2. And when buying from subjects, they must not stint, but pay generously as possible. 3. And what they buy from foreigners, they have to sell to them without any or at least with the lowest profit. 4. To foreign people, may they sell these goods as expensive as possible. 5. They should not sell separately, only wholesale. And sell in only two or three places in the country. 6. In normal and good times, Royal Duma members and trade guards should, first and foremost, ensure that trade people do not cheat the sovereign king and do nothing to harm the people. And that, in the case of tsarist trade, the price of goods was not increased, but that, on the contrary, all goods in the country would be cheaper than they could be in the trade of the individual. 7. And when any local merchants want to buy goods from state stewards, the stewards must sell them to all at the same ordered price. And in cities it is necessary to give a monopoly on a commodity to the local traders who promise to sell them cheaper [20; pp. 38–39]. Krizhanich proposed a set of measures to address the above shortcomings in the organization of foreign trade in Russia. In particular, there is a need to increase the number of auctions, since “the more auctions in the kingdom, the richer it is.” He names specific places on the map of Russia, where they should have been placed and why, and the directions of trade routes. So, “one market could be set up on the Don opposite the Azov for trading with the Turks, the other in the Kalmyk lands: on the Irtysh at the Salt Lake for trade with India, the third in Putyvl for the Ukrainians and Volochs. And the Khvalyn (Caspian) sea would be good to be filled with royal ships for the transport of Persian goods” [20; p. 39]. Next, Krizhanich offers specific marketing advice, with approximate calculations of the possible benefit, demonstrating the breadth of its strategic vision and its entrepreneurial grip. And the benefits of his calculation are as follows: “1. Having

4.6 Yurij Krizhanich

247

a harpoon on the Irtysh by the Salt Lake, we could annually acquire from the Kalmyks 30 or 40 thousand raw ox and sheep skins. We should have tanned them in barrels near native salt right away. That’s what the English do, because that’s what makes the skin thicker and stronger. Then we could sell them to the Germans if we could find a way via the Irtysh at sea and to the portage, and through the portage in the winter on dry land again to the Arkhangelsk Sea. And there, if it were possible, to set up a harpoon for the trade of Indian and Siberian goods. 2. Now our warlords, who go for salt to the Salt Lake, must drag the salt from the lake to the river on their back half a day, or transport it on barrows. And if there had been a harpoon, they would have brought salt on horses. And we could then get salt not just for our own use, but we could sell it to the Germans by sea. The Germans import salt from the Portuguese land. And it would be closer from here.” Then comes reasoning on cloth, spices, precious stones, color metals, fruits, and many other goods that are possible for sale and resale in the territory of this harpoon. The general conclusion is: “These trade affairs are so important that it would be useful, sparing no labor, to find a place in the Kalmyk lands to build a harpoon and to establish such trade. No expense or labor required for this affair may be excessive: if we even give the Kalmyks many thousands for free, even that would mean nothing compared to this profit... Siberia is useful to us even now, but it can be much more useful” [20; pp. 41–43]. Krizhanich makes similar proposals for the organization of foreign trade sites, on their bidding, potential suppliers and buyers, and preliminary calculations with the examples of the Khvalyn Sea, the Don, the Azov Sea and the Black Sea coastal area. However, Krizhanich does not forget the incidental sources of income. Thus, by proposing to the king to build a merchant fleet at sea for the purpose of arranging mutually beneficial trade with the Persians, he also produces such calculations: “The Khvalyn Sea has a circle of 2800 miles. With good wind, it’s width can be overcome in five, and it’s length—in 6 days. There are many islands in the sea, both inhabited and empty. The sovereign king could have populated empty islands with our people, and from the inhabited islands, in time, receive tribute. The entire circle or all the shores of this sea need to be examined to find out where there is a lot of grapes, and if it’s nowhere to be found, find a place where it can grow. And with the help of their own and local people, to set up such vineyards, that they should have enough for all our nation. If the sovereign king had filled the sea with his ships, he would have become master of the sea and would have collected tribute from the nomadic nations living on his shores and beyond the authority of the Persian king, and from merchants sailing there, as Venetians do on the Adriatic Sea... If half, a third or at least a tenth of what we have talked about so far, our state would have quickly become full of good in abundance” [20; pp. 43–45]. Here are some more of Krizhanich management ideas aimed at improving and developing public management, although, as we have seen before, his remarks in the spirit of entrepreneurial innovation are also applicable to private business, even at the current level of development.

248

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

In the chapter “On developing domestic trade,” he made a double assessment of the effectiveness of fairs as a means of managing trade. In some countries (“Germans and Poles”), the fairs had taken both time (once or twice a year), and space (“on the seashore”), where either all or some merchants can exhibit their goods for one or two days. There are no such fairs in Italy, and this is considered to be the right solution, “for because of these fairs distract people from farming, and goods are unnecessarily transported from place to place and become more expensive” [20; p. 45]. Nevertheless, Krizhanich offers organizing such fairs in Russia, and also managing their activities according to his recommendations. For example, “we must keep the roads free of robbers and repair bridges, transport and passageways through the mountains and swamps.” Merchants with goods while moving to the marketplace must be protected on land, on rivers and on the sea, and it is even better to build fortified harpoon along trade routes, where merchants can hire supply and escorts. Krizhanich devoted a great many articles to the control of sales—money, weights, and measures, proposed the introduction in each major city of a special public measuring post, detailing its functions. The functions include educational ones. Krizhanich demanded that the public measurer “keep in public sight samples of different coins—good and ineligible ones, domestic and foreign. And to whomever wants to make sense of coins, let him show their merits and shortcomings: what and to which extent they lack,” and “may he keep in sale printed books, which shall contain writing on trade arithmetics or on the science of accounting, and also on measures and weights.” And he demanded that “it is not allowed to hold shops of goods to those who do not know enough literacy and numerical art (except for those who sell such goods, that do not require an artful account).” Krizhanich was harsh against resellers, who inflated prices for grain, bread, and other “eatable goods.” He wrote: “Resellers of grain and those who inflate the price of bread must be punished without any mercy. And resellers of other eatable goods should not be allowed to offend the people or to allow them to buy anything before noon or on the roads in front of the city under the threat of imminent punishment” [20; p. 49]. He called for the opening of regular loan offices, by the example of foreign states, where the subjects of the State would be able to obtain loans “without any growth and extortion with good collateral, that is to say, the mortgage of houses of stone, inheritance, against pledged items and bail.” To facilitate trade, Krizhanich proposes to legalize the activities of “money changers” in the state that are similar to those of Europe. Usually money changers are people from among wealthy traders, who change, at the request of any citizen, some coins for others by charging interest for exchange and a fixed fee. “If changing a ruble, one shall take an Altyn, groschen or a kopeck. And also, if you have a hundred, thousand, or many thousand rubles, and you’d like to move them to some other city, but are afraid of robbers or other calamities, or that your money is not in circulation in that town or is cheap, you go to a money changer and give him your money, and he gives you a letter to his companion, and he immediately counts off as much money as will be written... But you have to give the money changer the usual fee: he takes a ruble, two, three or more from a hundred, pending on time, more or

4.6 Yurij Krizhanich

249

less risk, or expense. Such transactions are very convenient and immensely useful to travelers and facilitate trade” [20; pp. 53–54]. It seems that this is what the Russian “Western Union” model was like in 1663! In the same chapter, he proposes to create commercial mail in Russia using specially trained messengers, as in Europe, where these messengers are “obliged to ride each week on a horse from leg to leg with letters from different people. Each town is assigned a day and an hour a week, and at this hour a messenger must get on horseback and ride at full pace. And he delivers letters on his span, 15 or 20 versts, to the other nearest messenger... be it during the day or at night, in dry or in rainy time... Thanks to these messengers trade and mutual relations between traders shall develop” [20; pp. 46–47]. Of significant interest are his observations and proposals for reducing the risks of transporting goods when large European merchants, when sending goods to another country “do not put all their merchandise on one ship, and each of the merchants, as many as there are, divide their merchandise among all ships so that if the ship is lost, not all of his merchandise will be lost” [20; p. 54]. He urged warchiefs and stewards (derzhavniks, or rulers of cities) to control the availability of daily necessities in the required quantity so that “there are some routinely needed goods on special shelves: flour, grits, malt, oatmeal, beans, fish, caviar—in one word all that is suitable for food... Also, dishes and tools, and all the things made of all the good materials, such as dishes, the circles mugs and spoons of white tin, from cast copper... And if those things disappear from shops, the city measurer must notify the steward, and the merchants responsible for the neglect must pay a fine” [20; p. 55]. Krizhanich’ ideas on the royal order are very interesting and modern. This strongly resembles today’s programs of production planning and implementation of state order products. Krizhanich writes that the warchiefs and city governors, together with the king’s merchant, “must take care to negotiate with the craftsmen about any craft, amateur goods.” Acting sensibly and without violence, they will order to prepare for the king as many knives, axes, pitchforks, locks, sickles, scythes, razors, hooks, needles, mirrors, buttons, linen, cloths, and all sorts of other things useful to people worth many thousands of rubles, wherever possible. The goods should, first, be sold to the royal traders in the same place they were made; second, they must be brought to appointed large cities to be bought by county council traders for the needs of the economy; third, for export to overseas markets for sale to other nations; fourth, to give them to the soldiers and to all the people in service of the tsar, instead of payment, but not by force, but only to those who wish and seek [20; pp. 55–56]. In the first part, in the section “On Crafts,” which consists of 15 chapters, Krizhanich raises questions about the development of craftsmanship and industry, the corresponding raw material base and personnel training. While remaining a “policeist” in spirit, he proposes in this area to do everything behalf the sovereign and begins by recommending a special Order in the country that should govern craftsmanship affairs in the country, “must know how many handicrafts there are, what their essence is and what they are intended to do.” And to do that, specially

250

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

trained people are necessary, “we need to translate into our language the books of writers who wrote about craftsmanship... From these books, to prescribe what would be useful and necessary to know,” to invite to the country “skillful craftsmen from everywhere and offer them to teach various arts to boys for a high fee” [20; p. 57]. Furthermore, an appropriate legal environment (“privileges and laws”) is required, which would stimulate the craftsmanship industry by providing the people employed within it with certain benefits, freedom of choice of profession, “teachers,” places of study and follow-up work, and guarantees for the protection of these freedoms. This should be done under the aegis of the country’s sectoral bodies for each craft to have its own druzhina (workshop) and its elder, who would have the right to deal with mutual disputes related to the craft, “for instance, if the master does not pay the worker for his work, or if they dishonor one another.” There is, in particular, an article like this: “No one dares to harm craftsmen and force them to work. No one ruler compels them to work for him for free.” [20; pp. 58–59]. For feudal Russia Krizhanich’s proposal to bring up to date the country’s need for trained personnel and specialists sounded original. He believed that “the following law would serve in favor of the development of craftsmanship in this kingdom: if anyone’s slave has two or more sons, he must be allowed on behalf the Order to choose one of them to give for study of some intellectual craft: that is, making locks, clothing, scythes, glass, paper and other similarly complicated and artful things, not hats, dresses, or boots. And if he perfectly and skillfully masters such an intellectual craft, he will be free from slavery or bondage. If he does not master it skilfully enough, he will have to remain a slave or buy himself free from his master” [20; p. 59]. Krizhanich expressed important and relevant recommendations to date on the development and use of the commodity base in the country. His motto is: “Where there is no raw material, there are no products,” and since “many of the necessary materials are not available in our land, it is necessary to ensure that from other countries, all raw materials and unfinished products are brought to us.” At the same time, he categorically opposed the export of raw materials from the country: “It would be necessary to firmly establish, and to punish the disobedient, that no raw material be exported abroad,... And that our people at home would do all sorts of items, as much as they can, and the finished goods be sold abroad.” Krizhanich gives an instructive example of paper production in Russia in the middle of the seventeenth century: “Not one hundred, if not a thousand rubles are earned every year by the Germans for writing paper in Russia, although Russia could sell paper to the Swedes, Lithuanians, Poles, Turks... I don’t know what tricks the Germans have to blind our people so that paper business has not been started in Russia. I think they’re selling their paper seemingly cheaper than domestic paper may have initially been worth. But this is an obvious deception. For how can they sell paper brought from overseas, cheaper than domestic paper could be sold? Of course, our paper will be cheap, and white and good, if the material for it is good and cheap... and that has to be taken care of... and to strictly ban the import of foreign paper, even if domestic paper was more expensive and not so good. For, with such a

4.6 Yurij Krizhanich

251

ban, it is likely that people would soon start the necessary industry so that our paper could become both good and cheap” [20; 60–61). He provides a similar example with the call for performing production reform in the country in connection with leather products: “we sell raw leather to the Germans and do not process them ourselves at home and do not use them for clothing. We sell one skin for three or four rubles, and if we wanted to buy it from the Germans processed, we’d have to give 30–40 rubles. It is absolutely essential that these skins should be processed here and that our people should make dresses from them... Then we’d have a profit from dresses as well.” [20; p. 61]. After watching a TV story about the visit of the Russian Minister of Industry and Trade Mr. Igor. Klebanov to Russia’s largest pulp and paper enterprise, it has to be noted that for more than 340 years this is only being said about, but all is done in the same old fashion, for round wood still being exported from Russia for free, and large items made from Russian forest are being imported at triple the price. Krizhanich raises issues of quality control: “Orders must be given to the craftsmen’s druzhinas to monitor all the gear, dishes, and clothing for sale, and to indicate if what is impurely, badly or ungracefully done. And let them grasp and teach how it could be done better... The elders shall not allow such goods to be tendered, and if they do, they must be dissolved or confiscated” [20; p. 63]. He particularly raised the issue of the development of large industries: “More than anything else, care must be taken of obtaining all the craftsmen who are capable of melting and molding iron, copper, tin, silver and gold, and to process it for all kinds of needs and make various dishes, weapons and tools that are invented in the world... Houses also have to be built, not bought on the side and all the tools that these ore masters, silversmiths, minters and all blacksmiths require.” And to do so it is necessary, first, “to assign and order that various gear from all the land be brought as samples... all kinds of weaponry, dishes and all the domestic and field tools used in the world... Next, we have to order to bring clothes of all styles in the world. Thirdly, we must call upon all skilled craftsmen and tailors that could make for us, show and teach us how to make all kinds of weapons, tools, dishes and various types of clothing.” And with foreign masters, he suggested “distributing to cities where it would be more convenient for them to be located because of the proximity of water, linen, fur, iron... And let them make all their products in large numbers for the king, by agreement, for a proper fee.” Here too, Krizhanich does not forget how to stimulate craftsmanship in cities, of tax incentives for urban entrepreneurs: “In any newly explored craft, promise and give cities a few years’ privilege, in order for a city where cloth or something else will begin to be produced, not to pay the domestic fee for it, and other cities shall not be allowed to adopt this craft for a known time” [20; pp. 65–66]. Krizhanich’s final conclusion on the development of craftsmanship is as follows: “Thanks to craftsmanship, the country gains wealth and cities are filled. If we made all the goods at home which we buy and what we could do in Russia, this country would have a many thousands more inhabitants than there currently are, and the treasury would have had more profit, and the cities would be more populous, and the entire kingdom would be stronger” [20; p. 67].

252

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

In the section “On Agriculture,” Krizhanich offers lots of valuable advice, suggestions and recommendations on the promotion of agriculture, the translation of specialized literature and the training of specialists in this area, and the conduct of research in the country to assess the possibilities of producing various agricultural products. Similar proposals are also in the section “On Ore,” where his idea of stimulating the search for different kinds of deposits in the country is noteworthy: “It would be due to order for all village constables and stewards, that every steward upon taking office declared, that the one who first, second and third informs of some ore, be it iron or salt, or sulfur, or nitrate, or something else, he shall not undergo any punishment if nothing happens. And if there is anything that is necessary and useful, this applicant will be given a large sovereign salary” [20; p. 88]. In the following two parts, Krizhanich presents his observations and recommendations, which, together with the proposals mentioned above, constitute a comprehensive transformative program for improving public economic management in the form of four groups of activities. First, strict autocratic regulation of all activities in the public and private lives of the state. “You, tsar,—Krizhanich turns to King Aleksey Mikhailovich,—hold in you hands the miraculous rod of Moses, which can do the wonders of command: In your hands is full autocracy.” Second, political freedom, or “political exempt.” Under autocracy, there should be no cruelty in management, encumbrance of the people with unsustainable extortion and bribes, which Krizhanich calls “people abuse”; this requires certain political rights, class self-governance; merchants must be given the right to choose their own elders with a class court, craftsmen are to be united into guilds, all industrial people are to be given the right to claim their needs and the protection from district rulers before the government, the peasants are to be ensured freedom of work and choice of professions. Third, accelerated development of science, universal education, the organization of book printing in the state. Referring to Aleksey Mikhailovich, he wrote about books as follows: “It is useful for all other people to learn wisdom from their own experience, and it is not good or useful only for supreme rulers.” This doctrine is mentioned in the proverb: “People learn from their mistakes,” but the king’s mistakes cause enormous and irreparable damage to the people. Therefore, Kings need to learn wisdom from good teachers, from books and councilors, rather than from their own experience” (allocated by me—V.M.) [20; p. 135]. And finally, the compulsory extension of technical and vocational education is mentioned as the last guideline. To that end, the state must intervene in the national economy, set up technical schools for all cities, to establish even women’s colleges of handicrafts and economic knowledge via decree with the obligation for the groom to ask the bride “a testimony of what the bride is capable of, and whether she is capable of learning”; give will to bondmen who mastered a complex technical skill; translate into Russian the literature on the conduct of trade, crafts, farming, ore, instruments; invite foreign teachers and craftsmen to develop the country’s natural wealth as soon as possible and to ensure the broad dissemination of new industries. In conclusion, we shall define an overall assessment of the contribution of Y. Krizhanich in the development of domestic management thought. Having been acquainted with his multipage treatise, you wonder how a foreigner could in

4.7 Afanasij Ordin-Nashchokin

253

two years see so much in such a large country, to be able to systematically summarize what he saw, and to make serious judgments and assessments and policy proposals for correcting shortcomings. It is obvious that Krizhanich was not a bystander to the sad state of Russia, and was interested, principled, but as a result, very upset, because from Rome Russia appeared to him to be a powerful stronghold of all Slavs, he hoped to make the World Slav Center from Moscow, however, when he arrived in Moscow, he was upset, but not disappointed. That is why the results of his observations seem quite plausible, and the suggestions and recommendations must be accepted as sincere and honest, although sometimes contradictory, naïve and immature in terms of the specific historical situation. The time of implementation of his set of ideas came a little later—in the era of the first Russian emperor, who was very similar to Krizhanich in his sweeping and courageous steps throughout the nation’s economy in order to raise the well-being, security and self-consciousness of the Russian people.

4.7

Afanasij Ordin-Nashchokin

Unlike Y. Krizhanich, who was never able to see the transformations he proposed implemented, and at the same time as Y. Krizhanich was in exile, another Russian reformer, Afanasij Lavrentievich Ordin-Nashchokin can be said to have enjoyed the implementation of his projects and programs, reforms, and changes at all levels of government and the testing of his reformative management ideas in many branches of the national economy. We shall note from the beginning that many of OrdinNashchokin’s proposals resemble the recommendations of Y. Krizhanich—on the development of trade and industry as the foundations of a strong state, the use of best practices in state and local governance, the establishment of a special industrial and trade Order, the stimulation of “geological works,” on political freedoms, protectionism in foreign trade, and the development of science and education in the country. A.L. Ordin-Nashchokin (approx. 1605–1680) was from a family of an unwealthy Pskovian landlord. He received a good education, knew several foreign languages, and studied mathematics. Successfully fulfilling some of the responsible diplomatic assignments from his young years under King Mikhail, he then quickly advanced to leading positions in local and public management. Already in 1656, he was appointed warchief of cities of Druya, Kokenhusen and a number of other Livonia cities conquered by Russia in the war with Sweden. In 1658, his efforts resulted in the Treaty of Valiesar with Sweden, favorable for Russia, for which he was brought into the Dumny nobility that same year. In 1665, he was appointed warchief of his home city of Pskov, but was soon withdrawn from Pskov for negotiations with Poland. In January 1667, after tiring 8 months of negotiations with Polish representatives, he concluded the Truce of Andrusovo with Poland, putting an end to a war, devastating on both sides of the 13-year conflict. For his diplomatic merits, OrdinNashchokin was raised to the boyar rank, appointed chief governor of the Embassy

254

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

order and head of several other institutions. In this connection, he received the glorious title of the “great state embassy affairs and the state seal of the protector,” that is, the chancellor [5; vol. 13, p. 76]. During his last term of office, he underwent a number of important activities in the field of public management, industry, domestic and foreign trade, including the publication of the New Trade Charter of 1667. His ideas on management at the state and local levels and concrete proposals to address the shortcomings, in both cases, had significantly contributed to the development of domestic management thought. In all his transformations and programs, Ordin-Nashchokin was a frank Westerner. “Careful observation of the foreign order and the habit of comparing it with that of his fatherland made Nashchokin a jealous fan of Western Europe and a relentless critique of domestic welfare” [2; vol. 3, p. 317]. That was his main idea— to take example of the West in everything, to do all “by the example of foreign lands,” which have succeeded in peaceful and military life, “to borrow from them that in which they had been stronger” [10; vol. 13, p. 92, 103]. In modern terms, Ordin-Nashchokin used benchmarking in public management. In doing so, he was selective and, unlike the other westerners, he proposed adopting not everything without regard, saying: “What do we care of foreign customs, their dresses do not suit us, and neither is ours fir for them.” Monitoring the achievements and causes of these achievements in the countries of Western Europe enabled him to conclude that the main disadvantage of the management of the Moscow State was the disregard of State management via the development of the country’s productive forces. By increasing, as usual, taxes in the event of new public expenditure, the Government had not taken any measures to increase the population’s fiscal capacity. Ordin-Nashchokin, as usual, accompanied his conclusion with proposals for the development of domestic industry, domestic and foreign trade, and finance. He was one of the first in Russia to express the idea that the national economy itself should be one of the most basic subjects of public management, but that this management should be performed in a more democratic way than the police management model. In order for the nascent industrial class to be able to act more productively, it was necessary to relieve it of the oppression of commanding authority. He opposed strict regulation in Moscow’s management, where everything was based on the petty custody of subordinates behalf the highest central institutions, and the executors were blind tools of the mandates given from above. He therefore required some freedom in decision-making by lower level executives and executors: “Not to await the sovereign’s rule for everything, warchief consideration is necessary everywhere,” that is, it is permissible for the warchief to act upon its own initiative, based on the circumstances of the particular situation. But, by demanding selfreliance for the executors, he placed a great responsibility on them. OrdinNashchokin called such activities, based on experience, personal initiative and responsibility of the business person, industry. He wrote: “Brutal force means little. Superior to all power is industry; it’s about industry, not the high amount of people; thus the Swede is more desolated than any neighboring sovereign, yet outperforms them all in industry; no one dares to challenge the will of the industrialist in his

4.7 Afanasij Ordin-Nashchokin

255

country; to sell half the army and buyout the industrialist—and that’d be more fortunate.” [2; v.3.323]. As warchief of Pskov, Ordin-Nashchokin attempted to apply the ideas of delegation of authority and the experience of Western countries in improving local governance. Before his arrival in Pskov, as in many other Russian cities, there was hostility among townspeople. The city was dominated by so-called “men-bawlers,” wealthy merchants who, taking advantage of their power in city public management, “hurt mediocre and little people” in the allotment of tribute, in assignment to public service, led the town’s affairs in “their own liking,” without control behalf other townsmen. Having become warchief in 1665, Ordin-Nashchokin proposed a series of measures to the local townsmen society (in the form of “decree recollections”) to improve the situation in the city. First, in order to raise the general welfare of the city, he proposed to annually hold two international duty-free bi-weekly fairs in Pskov— one from January 6, the second from May 9, and besides local townspeople, no one had the right to trade with foreigners. “All states are famous for trade that does not take customs into account,” he said. His second proposal was also linked to foreign trade. At that time foreign merchants often cooperated and, with large aggregate capital, found medium and small (“low-power”) merchants in Russia, gave them credit for which they bought Russian goods for the Germans at the lowest possible price, content with a small fee. Ordin-Nashchokin wrote: “From this inretention, the Russians traded with foreigners from having low income, and fell into deep poverty.” Besides, by doing so, the “lowpower” merchants reduced the prices for Russian goods, disrupted the affairs of major Russian merchants and, themselves, being in constant debt due to low profits, became ruined. Ordin-Nashchokin proposed the following series of measures: to make lists of all low-power merchants; to identify their trade interests and industries; distribute the low-power merchants between the “best” trade people in Pskov to control their industries; to establish a special fund under the county council hut for the granting of loans to low-power merchants using urban funds; to issue loans to the low-power merchants to purchase goods that need to be taken to Pskov at least one month before the fair (in December or April, respectively); for the best people to organize a reception of imported goods from their assigned low-power merchants at the county council hut; for the best people to pay for the goods received at a preliminary price equal to the purchase price plus a certain allowance “to make a living”; in January (or May) for the best people to participate in the winter (or spring) fair and to sell to foreigners the goods that had been entrusted to them in bulk at contract prices; to pay the low-power merchants the difference between the preliminary price and the actual price (the “companionable dividend”). Ordin-Nashchokin’s third proposal referred to the organization of the sale of wine in the territory of Pskov and its suburbs. It is known that the sale of wine has always been the most valuable source of state and local revenue in Russia. At the time, however, illegal import of wine products from nearby Pskovan border villages was established, from which “foreigners secretly smuggled lots of rotten wine and German beverages,” which resulted in a drop in sales of wine “from state-owned taverns.” The responsible towns “persons and sworn-men” had to cover the

256

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

“shortages,” as they were charged for them. To compensate for the shortages swornmen counter-claimed the “charges” on the city’s inhabitants, attempting to “remove the prohibited goods from the residents.” As a result, “these removals caused ruin to the people, and no profit to the treasury” [10; v. 13, c. 93]. Ordin-Nashchokin proposed to establish free sale of wine with a duty to the local treasury at the rate of two denga per ruble (i.e., 1%). But “if anyone trades beverages more than other products, then they’re to be charged a hryvnia per ruble” (i.e., 10%). Finally, the fourth group of measures referred to the organizational structure of local governance. According to Ordin-Nashchokin’s proposal, the urban Society of the city was to choose from its environment 15 people who would be in charge of all the affairs of the city for three years, five people each year. These “elected county council people” were in charge of the city’s business management; supervision of beverage sales, customs duties and trade relations of Pskovan people with foreigners; the courts “over townspeople in all commercial and offensive cases.” The duties from court affairs resolved by the five elected persons went to the county council hut “to cover metropolitan costs.” Only the most important criminal offenses were left by Ordin-Nashchokin to be resolved by the war chiefs. For the resolution of particularly important urban cases, the governing third of representatives was to assemble a Council with the rest of the elected persons and, if necessary, to invite the best people from the townspeople community to the Council. He also proposed the same local public management structure for the suburbs of Pskov. In other words, the Pskov warchief had voluntarily foregone a significant share of his authority in favor of urban self-governance [10; vol. 13, p. 93], [2; vol. 3, pp. 325–326]. In April 1665, the county council elders, having meet with the “best people” at the county council hut (city hall) “for a general popular council,” began to discuss all the proposals of Ordin-Nashchokin. The council met on many occasions, and there were lengthy discussions, as some Pskovians liked the proposals, others demanded to keep everything the same. The debate continued until August 13, 1665, when, finally, the Pskovian townspeople wrote their petitions on accepting the warchief’s proposals, brought them to the Trinity Cathedral and received the blessing of Archbishop Arsenius. After that the petitioners were sent to Moscow, where Ordin-Nashchokin’s project “On Urban Structure” in the form of 17 “report articles” or the Regulation on public management of the city of Pskov with its suburbs was approved by the King and entered into force from August 1665. Following OrdinNashchokin’s withdrawal from Pskov for public service in Moscow as head of the Embassy order, his position was several times canceled and restored in the original form. There are two other important facts from the biography and activities of OrdinNashchokin as a “domestic management guru.” The first is the characterization of his personality as an effective executive. With all his promptness, responsibility and strictness to himself, bordering with suspiciousness, Ordin-Nashchokin differed with attentiveness to his subordinates, which was rare for major statesmen of that period, compassion to their personal problems, “humane attitude towards the governed, the

4.7 Afanasij Ordin-Nashchokin

257

desire to spare their strength, and to place them in a position in which they would be able to bring the most benefits to the state with the least effort” [2; vol. 3, p. 324]. The second is his statement as the main author and editor of the New Commercial Charter of 1667 [21, 22]. The Charter consists of 94 articles and contains legal rules governing domestic and foreign trade under state control and in the interests of the treasury and large merchantry. The articles of the Charter relating to the regulation of domestic trade were based on the Trade statute of 1653. The merit of OrdinNashchokin, first and foremost, is that, for the first time in the history of the country, the regulation of foreign trade had been reflected in the form of a unified law for the entire state. And in this document Ordin-Nashchokin manifested himself as a Westerner, starting the charter with reference to the experience of foreign states: “In all the surrounding states, free and profitable trade is considered among the foremost public affairs; there is caution against trade with great prudency and they are held at liberty to collect duties for the common secular possessions.” The charter determined that all fees of Moscow’s Customs and city County Council huts should be used as assistance to the poor, “lacking people.” The charter demanded that all trade with foreigners be carried out only through “white officers’ trading men,” in order for the best traders to “protect the low-power trade people,” help them to obtain loans so that they “in sale to foreigners would not ruin prices and not borrow money from them,” as was already said in the Pskov charter of “city structure.” The preamble and the first articles of the statute elaborate on the organization of the activities of customs and the largest international fair in Russia in the City of Arkhangelsk during the arrival of foreign and Russian merchants; work at the customs and fair of the “guest and comrades” elected “by review, not friendship or unfriendliness,” by professional qualities, and “not by wealth.” The warchief did not have the right to interfere in customs trade affairs, into “any complete reprisal in trade affairs which the elected guest and comrades governed” (arts. 1–32). All the articles on foreign trade are imbued with a spirit of protectionism. These include sections of the Statute on the promotion of Russian wholesale trade (arts. 33–34), on high duties for foreign merchants (arts. 36–38, 56, 59, 77–82), on the prohibition of duty-free trade in Russian territory by foreign merchants “Russian goods of their own fraternity” (arts. 40–41, 63), on compulsory exchange by foreign merchants and Russian people of imported foreign currency (gold and silver coins) for Russian currency at the prescribed rate (arts. 72–74), on trade only in bulk and only in three cities—Arkhangelsk, Pskov and Novgorod, on a ban for foreigners to trade in retail and to purchase goods in Russian cities and at fairs (arts. 83–84), the need for foreign merchants to obtain a special permit—of the “letters of grant from the great sovereign on the trade under a red seal,” to travel from Arkhangelsk, Pskov and Novgorod to Moscow and other cities in the country (art. 85); on the prohibition of import of defective and counterfeit goods into the country (art. 7 of the enclosure). The Charter repeatedly states the repercussions of the Pskovian “city structure,” for instance, when it comes to restrictions on the import of foreign wines and sugar into Russia. The import of wines resulted in “in sovereign taverns losses are caused by this as well as significant shortages,” and wine trade in Russia was almost always a state monopoly. Western foreign merchants were to pay high fees from the sale of

258

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

wine in barrels and sugar in order to compensate for the shortages. Much smaller duties (about 10 times less) were levied on the sale of church wine. The sale of wine in small tanks (“in vials and half-shtoff bottles”) to foreign merchants was prohibited (arts. 51–55). The New Commercial charter had two articles (88 and 89), which proposed the creation of a single central authority for the management of trade and merchantry in Russia. This idea was also sponsored by Ordin-Nashchokin on whose initiative as early as 1665 the pskovan townspeople in Moscow put in for “all their affairs being managed in one order, rather than being dragged to various Moscow institutions,” arguing that “to the great tsar’s treasury there will be significant duties replenishment and the merchant people will be relieved of procrastination.” And in the New Commercial Charter of 1667, this thought was expressed similarly: “For many bureaucrats of all orders it is decent to manage all merchant people in one decent order, where the great tsar will direct his sovereign boyar; this order would have been defense for all merchant people in all foreign cities from other states and, in all cities from warchief tax it would be protection and authority” (art. 88). “In the same one order to give court and authority, if the merchant people make obeisance to other ranks of the people” (art. 89). Agreeing to the Charter, tsar Aleksey Mikhailovich established the Order of merchant affairs, which was the beginning of the formalization of the country’s commercial and industrial population into a self-governed class. This order was the predecessor of Moscow Rathaus or Burmister’s Chamber established by Peter the Great in 1699, which dealt with all the affairs of all the cities of Russia. Besides the stated areas of activity, Ordin-Nashchokin is known as a reformer in a number of other industries where his management ideas had been demonstrated. Thus, for instance, he is the author of the projects for the conversion of the military structure within the country and the mounted constabulary of the city nobility, the organization of the first posts in Russia, the construction of a domestic fleet at the Baltic and Caspian Seas, the organization of trade with Eastern countries (Persia, Central Asia, China, India), the creation and strengthening of the domestic metallurgical and iron works industry. He took active part in the organization of paper production, leather and glass plants. Even the mere beautiful gardening in Russia with the usage of brought in trees and flowers was not without the involvement of Ordin-Nashchokin. In concern with the dissemination of science and technical knowledge in Russia, Ordin-Nashchokin invited specialists and school teachers from abroad to teach Russian people crafts, military techniques. In assessing his educational program as a whole, three main strategic objectives can be identified: the improvement of public institutions, the establishment of strict order and promotion of professional discipline among them; the selection of competent and conscientious leaders; increasing government revenue through the enrichment of the people through the development of industry and trade.

4.8 Reforms of Peter Great as a Stage of the Development of Management Thought

4.8

259

Reforms of Peter Great as a Stage of the Development of Management Thought

A special era in the development of Russian management theory are the reforms of Peter the Great on the improvement of economic management. He left behind some written material by which the development of his views on management could be judged. But he had done so much in the field of management that the reforms themselves speak of the breadth and courage of his management ideas and programs. Many of them were prepared by his father and the reformers associated to Aleksey Mikhailovich. But we cannot minimize the merits of Peter I in the fact that he dared to implement many of the “projects” designed before him and for him, assessing all available opportunities and expected results. And there were so many programs, that, at the beginning of the eighteenth century, the term “project literature” even appeared, which included numerous notes, “expressions,” “propositions” or simply “paragraphs,” submitted to the government of Peter I and containing draft reforms to manage the social, military, political and economic life of the Russian state. Among them is A. Kurbatov’s project to strengthen centralized state control over “the ore mining and manufacturing affairs, iron plants, saltpeter production, gunpowder factories, potavpai and resin plants and stables and sheep folds,” A. Nesterov’s project on the census of population and the “equalizing payment” (1713), where, for the first time, a poll tax was suggested instead of the outdated court system of direct inplacements; A. Philippov’s project on improving local governance; F. Saltykov’s Project— “Profitable expressions of the state”—on the development of the domestic industry, the structure of manufacturies and factories “in the entire state at all governorates,” which would result in “a great amount of money being held in the Russian state” [23]. The range of Peter I’s managerial action is very broad, ranging from a change of calendar to the establishment of a new state management apparatus. The most significant management reforms were in the following areas: – – – – –

Change in central and local government Development of large industries and state support for craftsmanship Promotion of agricultural development Strengthening the financial system Intensifying the development of external and domestic trade

The funds used by Peter I were suggested by the reformers and life itself. Among the tools, the use of Western experience and western executors (of all levels) is very noticeable. The Western influence on Russian life had reached its peak in the Petrine era. As we have seen from Krizhanich and Ordin-Nashchokin’s projects, new rules, behaviors and technologies had not been developed domestically and had to be imported. For example, Peter I, in the absence of suitable Russians, was forced to recruit Germans and other Europeans en masse. “Peter I, by provoking the Germans to come to Russia, set their salaries twice as much as the Russians.”

260

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

“It is particularly noteworthy that the proportion of people of non-Russian origin who belonged to the highest classes since the time of Peter the Great and thereafter” wrote the Russian sociologist Pitirim Sorokin.—“Peter spared no effort to attract talented foreigners to Russia and, like his successors, he gave them senior posts and honors. Under his successors, the Scots, the French, the Dutch, the Italians, the Georgians, the Poles, the Lithuanians, the Tartars, the Mongols, and especially the Germans, were represented in the higher classes in a relationship that greatly exceeded their share of the Russian population.” [24]. Peter I, upon coming to the throne, set the task “to assemble the scattered house of all Russian merchantry,” that is, to bring back to the merchantry the greatness and national economic significance lost in the previous centuries. This was done so that “everywhere from this real state benefit would outspread,” or, simply for fiscal purposes. To accomplish this task, Peter I conceived the city reform in 1699, in which the townspeople (regular citizens) are divided into two categories, the first and the second being named guilds, and the third category is outside the guild grid. The first guild citizens (they were called nationals), included bankers, wealthy merchants (former “guests” and members of the guest and cloth hundreds), jewelers, healers, seafarers; the second (“villainous citizens”) are small traders and craftsmen. The third category (“villainous people”) included workers and stewards. Guild citizens had been given the right to choose their representatives in the new city selfgovernance bodies formed by Peter (as in Holland!) -burgomaster chambers, magistrates. The former municipal authorities (warchief and steward huts) were retained. The rathaus and magistrates were instructed to ensure that “merchant people” were not ruined and that “there be replenishment of the Great Sovereign’s treasury”; they were transferred the supervision of all trade and industrial affairs from stewards. This undertaking, however, did not work. Starting with the Dutch-style reform, Peter I left behind the political and economic liberties of the urban communities he saw in the Netherlands, the class formalization of the Dutch bourgeoisie and all the other elements of the bourgeois socioeconomic structure. The young tsar decided to use only the fiscal experience he had learned in Holland. The self-governing authorities promoted by Peter I soon became bodies of unprecedented theft and bribery, and the “merchant people,” with the focus on which the reform was first and foremost conceived, were caught in a double trap of bribery and oppression: from the “old” warchiefs and “new” burgomasters. Instead of the desired gain as the agents reported to the tsar, “numerous thefts from the treasury had been revealed.” Of course, Peter I did a lot for the rise Russian merchantry. For Russian commerce he “chopped the window” to European markets; put it behind a wall of protectionism against insolent competition from foreigners; expanded the capacity of the domestic market, etc. However, he did nothing for the class disengagement of the Russian trade bourgeoisie, leaving it with the serfdom burden—poll tax. The distinguished Russian economist, the merchant and the industrialist Ivan Tikhonovitch Possochkov, in his remarkable “Book on Scarcity and Wealth” (1724), addressed to the emperor, noted with bitterness: “In the German lands, the people are

4.8 Reforms of Peter Great as a Stage of the Development of Management Thought

261

especially preserved and above all merchant people and the merchant people are extremely rich. But our folks... do not at all preserve people, and with this negligence they drive the kingdom into poverty, for in which kingdom the people are rich, the kingdom itself shall be rich; in which kingdom the people are miserable, the kingdom itself cannot be rich... Trade is a great deal.” [25]. The essay of the great compatriot did not appear to have made it through the bureaucratic roadblocks, to Peter I. It was sent to the secret archives, and its author had been confined to the Peter and Paul Fortress, where soon, beaten by rods, he ended his life in prison bunks. And in many ways (even in the name of his book), he had overtaken by a whole half-century the economic reasoning of A. Smith. Peter I is rightly regarded as the father (Tugan-Baranovsky calls him “The Godfather”) of Russian industry. In fact, upon coming to the throne, he discovered in a vast country no more than a dozen manufacturies which issued the most primitive products, but left behind 223 (by other sources—233) factories capable of producing better weapons and facilities for their time. From his young years and until his death, Peter I was overwhelmed by a constant idée fixe: to turn Russia into an industrialized power. For the implementation of this idea, he devoted everything: his rigorous energy, organizational talent and the economic resources of the entire country. Three seemingly overwhelming obstacles stood in the way of the development of Russian industry: (1) stiff competition from foreigners; (2) lack of skilled workers; (3) lack of a market for future products and manufacturies (it is clear: guns, muskets, sail cloth, etc. are not consumer goods). Peter I resolves these problems by measures typical for his rule: (1) establishes stringent protectionist tariffs; (2) opens possessional factories with forced labor, to which fugitive peasants and any socially disadvantaged rabble are assigned; (3) instead of the market, implements what it the Soviet times is called government order. As for what is perhaps the most difficult issue: where to get funds to organize such a capital-intensive area of economic activity such as the industrial sector, Peter I resolves it by means of the pressureorder method. He orders a list of the most “capital” merchants in Russia and then to take them to Moscow (some under escort), where they were commanded to organize commercial industrial companies (as in England!). In these companies (numbering 18–20), the sovereign also attracted noble capital, including the capital of the peerage—Apraksin, Sharifov, Menshikov, Tolstoy, and others [23]. Thus, Peter I managed to mobilize, within the shortest time, large capital for time for the needs of the military industry, accumulated largely by the trade bourgeoisie. And the Petrine factories and plants began to work. Those who call Peter I the father of Russian industry are right. But is it possible to name the first Russian emperor the father of industrial entrepreneurship, as many researchers in the economic history of Russia do? The answer to this question is straightforward: no. The development of domestic industrial entrepreneurship (i.e., market, capitalist mode of production) under the feudal-serfdom mode of Petrine Russia did not and could not take place. This is not difficult to ascertain if we try to attach a modern understanding on what entrepreneurship is to the Petrine system of industry (economic freedom, property, readiness for market-based competition, risk, innovation, etc.). The Petrine industrial

262

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

entities correspond to none of the essential entrepreneurial characteristics. Amazing, but the fact is: merchants whose capital was mobilized for industrial needs and who were involved in the “Kumpanes” were not owners of the enterprises they managed: the owner was the state. And since there was no industrial entrepreneurship, there was no industrial bourgeoisie. At best, one can only say that, in the era of Peter I, sufficient preconditions and the necessary conditions were created for the industrial bourgeoisie to rise in Russia. These prerequisites and conditions were maintained under the numerous successors of Peter the Great, but the situation with the formation of the industrial bourgeoisie was practically unchanged. State-owned industry which was in the hands of the state and represented a peculiar military-industrial complex of the eighteenth century, was, in fact, merely one of the areas of the serfdom economic system. We conclude this section with a list and evaluations of the numerous reforms undertaken by Peter I in the field of managing the economy of the country in the words of the Russian historian Vasily Osipovich Klyuchevsky/“Among the fluctuations and turns back or to the side, among partial and recurrent transformative attacks, either to that or to another branch of management (emphasized by us— MV), either the well-thought-out principles or the gullible goals of the management reform began to emerge. They were: (1) a more precise distinction between the central and regional administrations, very unclearly conducted in the old Moscow order; (2) the experience of the systematic distribution of departments by type of case in both the central and regional departments with a decisive attempt to isolate court cases as part of the management; (3) an inclination toward the failed collegial system of institutions for the old Moscow administration, which was carried out rather firmly in the center and unsuccessfully in the province; (4) an incompletely realized idea to create local executive bodies for the central boards and (5) a threedegree regional administration.” [2, T.4, pp. 174–175].

4.9

Ivan Pososhkov

Among Russian reformers, who wrote in the spirit of the police management model, the above-mentioned Ivan Tikhonovitch Pososhkov (1652–1726) and his main work, the “Book on scarcity and wealth” should be highlighted [25]. Many of Pososhkov’s thoughts were ahead of their time. Thus, he considered it possible to divide peasant and landlord lands and determine the exact size of the peasant’s service. However, after many decades, under Catherine II, the government made a modest attempt to limit the number of bondhold days. In military affairs Pososhkov protests against the unconscious act of a tightly closed system and expresses thoughts of solitary actions of the soldier. The same conclusion was reached by Suvorov in his own time, but this was brought to life only after the Crimean War of 1854–1855. The reasoning of Pososhkov about rational forest management was

4.9 Ivan Pososhkov

263

almost 100 years before the emergence of forestry science. Among suggestions on fisheries a series of regulations matching those of the fisheries charter, adopted in 1859, could be found. The famous historian of the twentieth century M. Pogodin wrote: “Many of the important political measures that glorified the reigns of Catherine II and Alexander II had already been proposed by Pososhkov.” He called Pososhkov “the projector of All of Russia” [26]. Pososhkov tried to become an assistant to the reformers of Russia of the time, believed in the progress of the country, in the happiness of her people: “Without doubt I can say... our great Russia will be revived both spirituality and in citizenship.” [26]. I.T. Pososhkov lived at the turn of the seventeenth and eighteenth centuries. His land and court were in the ward of Saint Nicholas in Kotelniki (the region of Moscow). Pososhkov was of Moscow peasantry origin, but his father and grandfather were also engaged in craftsmanship. Nowadays, historian scientists have uncovered many new documents that clarify and disclose the new lifestyle and interests of Pososhkov. In textbooks on the history of economic teachings, he is represented as a jewelry craftsman, a silversmith, as well as a talented writer. But no less interesting are I.T. Pososhkov’s activities at the national level, as the organizer of monetary circulation in the country, a reformer of domestic industry and trade. I.T. Pososhkov’s program developed on the basis of a deep understanding of the foundations of Russia and the transformative activities of Peter I, expressed the interests of the nascent commercial and industrial bourgeoisie of Russia. I.T. Pososhkov was not only a theoretical economist but also made a great contribution to the practice of improving Russian money, as well as to the coin reform of the late seventeenth to early eighteenth centuries and to the reorganization of the Russian monetary system. I.T. Pososhkov’s interests are very broad: he did gun smithing, inventiveness and had distilling factories. He became a merchant and businessman, was a vibrant businessman and public figure. But the main specialty of Pososhkov is monetary affairs. He wrote the “Letter on Monetary Affairs,” “On Warlike Behavior,” and “Reporting on newly begun money.” New documents, studies of his work and research make it possible to clarify and supplement the information on him [27]. The activities of Pososhkov in monetary affairs are at the time of the fundamental reform of the Russian monetary system and the restructuring of coin affairs in late seventeenth to early eighteenth centuries. Information on Pososhkov’s engagement in monetary affairs is confirmed by the Transfers order documents devoted to the investigation of the case of Abraham, hegumen of St. Andrew’s Monastery. Monetary Affairs that were assigned to Pososhkov were to establish the first Russian coins: copper coins of mechanical production, and from 1704—the largest silver coins of the Petrine time rubles. One more testimony: the entry into the receipt and payments book of the order of the grand treasury for 1703—“The copper mint to the statute master Ivan Pososhkov 100 rubles.” Taking into account that the salaries of workers in the mint were 35 rubles per year, 100 rubles could only be paid for special merit. And this merit was the establishment of mechanical mint at the copper mint of the order of the

264

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Grand treasury, the first regular copper mint—and at the Kadashevsky mint, in the imposition of the Order of Military naval affairs. At the Kadashevsky mint gold and silver were minted. And then copper money [27]. Pososhkov’s activities to improve monetary circulation in Russia determined the specifics of his economic beliefs. He paid great attention to state-wide issues. The first experience of Pososhkov’s consideration of macroeconomic public issues was the “Paternal Will,” written between 1715 and 1719 for his son Nikolay [28]. This writing is intermediate between the “Mirror” and “The book on scarcity and wealth.” There is still a lot of theological speculation, but issues of governance, military affairs, housekeeping, and legal proceedings had already been raised. Pososhkov’s attention had always been drawn to macroeconomic and business issues. The main issue of his teachings is the state economy. Half a century before the famous scientist Adam Smith and his work, “An Inquiry into the Nature and Causes of the Wealth of Nations,” Pososhkov wrote about the state economy in his “Book on Scarcity and Wealth” (1725) and in other earlier works. I.T. Pososhkov wrote “The book on scarcity and wealth” in a deep old age, during his eighth decade. The book was written for Peter I, in 1724,2 one year before Peter’s death. Whether the book had reached Peter, and whether he had read it, remains unknown. After Peter’s death Pososhkov was arrested and died five months later in the Peter and Paul Fortress. It should be noted that the precise reasons for the arrest of Pososhkov in the archival documents were not specified, but the arrest was apparently linked to the book. “The book on scarcity and wealth” had put Pososhkov in the ranks of the eminent representatives of the world economic literature. The purpose of Pososhkov’s book is to identify the reasons for the country’s economic immaturity and to determine under what circumstances it is possible to achieve its prosperity. How to achieve prosperity in the country, what are the conditions for “popular enrichment”—these are the issues that Pososhkov raises in the book. Pososhkov, like all Russian economists, unlike western mercantilists, does not equate wealth and money. Pososhkov, as well as Krizhanich and OrdinNashchokin, saw the wealth of the state in the creation of conditions within the country where the continued growth of government revenues will be achieved through the enrichment of all the people. Pososhkov sees the power of the state in the wealth of all the people of the country [27]. Not enrichment of the dominant classes, but improvement of the material wellbeing of all the people, he believed, creates a solid economic basis for the state. “In which kingdom the people are rich, the kingdom itself is rich, and in which kingdom the people are lame, the kingdom itself cannot become rich.” When the people are rich “the King’s treasures are filled with excess,” and in case of need, it will always be easy to take “surplus exaction.” In Pososhkov’s view, it is more useful to take care of the increase in material goods, which is what makes up wealth, rather than multiplying money, enriching the Treasury. Wealth, according to Pososhkov, can be tangible and intangible. Tangible wealth is the wealth of the people. Unreal

2

More than 50 years before the publication of a similar treatise by Adam Smith.

4.9 Ivan Pososhkov

265

wealth is “righteous,” just laws. On “righteous” laws the growth of the material wealth depends. In his remarks about the wealth of the people and on “righteous” laws, Pososhkov sought to free the nation’s economy from countless taxes. A great lot of space is devoted in Pososhkov’s book to the issue of money. Pososhkov believed that in Russia the king would be free to set the purchasing power of money, but only copper, change money. The purchasing power of money, from Pososhkov’s point of view, is independent of its metallic content and may be established “by the will of his Imperial Majesty.” “For us it is not the weight that has power, but the imperial will,” wrote Pososhkov. He considered it possible to reduce the weight of copper money. And when it came to foreign trade operations and the prestige of Russian money, he here argued for full-bodied money. In the affairs of the Admiralty office, there is a “record on oral report” by Pososhkov to the Golden Chamber of October 16, 1706. It follows from this document that Pososhkov, in order to stop the emergence of counterfeit money, offered to introduce new money. Ten rubles were given to Pososhkov for the production of “exemplary copper money,” which is followed by the signature of Pososhkov himself. In 1718 Pososhkov filed a “report” to Peter I of which he himself mentioned in Chap. 9 of “The book on scarcity and wealth.” In the “report,” Pososhkov opposed the lowering of the fineness of silver Russian money that was renowned on the world market for the extra purity of metal. In addition to international prestige, Pososhkov was also guided by the idea that low-grade money would be “very suitable for theft, and the very driver for money thieves (counterfeiters).” In fact, Pososhkov’s money theory justified the financial policy of Peter I who, in order to finance wars, resorted to the minting of inadequate money. Pososhkov was deeply convinced that the value of money is established by state power. This view of Pososhkov on the value of money is in direct connection with his perception of the nature of state power. Pososhkov was a staunch supporter of unrestricted autocracy, a proponent of the model of police management. Both autocracy and the entire feudal order did not evoke Pososhkov’s criticism. But he gave an objective assessment of the situation of peasants. Pososhkov did not criticize serfdom as such. He recognized the compulsoriness of servitude to the landlord. And yet, in the chapters “On Peasants” and “Land Affairs” Pososhkov created a vivid picture of the very hard work of peasants. Here he proposed a program to improve the situation of peasants under serfdom. Among the reasons for the poverty of peasants Pososhkov was particularly specific on the arbitrariness of the landlords. He demanded that the tsar guarded the peasants from the coercion of the landlords. Of great interest are Pososhkov’s comments on the admission of peasants to literacy. The spread of literacy among peasants, in Pososhkov’s view, would play a major role in restricting autocracy, self-will, and extortion behalf the king’s servants. Their arbitrariness causes peasantry great losses. Pososhkov had even argued for compulsory teaching of literacy to peasant children. However, he does not ignore the interests of landlords and the needs of the State apparatus. “And whom shalt be taught in literacy and writing, they will be more convenient not only to landlords to do their deeds, but they will also be eligible

266

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

for public affairs. Especially they shalt be suitable as sotskie and fifties and no one will offend them nor take anything from them in vain” [28]. Pososhkov demanded of the tsar that he cared for peasantry and merchantry as much as the tsar cared for nobility. And although Pososhkov was far from encroaching upon the foundations of the political and economic domination of the nobles, the measures he proposed would significantly weaken landlord oppression. For his time, his program on the peasantry issue was very progressive. Pososhkov’s merit is not only that he understood his current basic tasks in Russia, but also the struggle to carry out these tasks. He, for instance, was concerned about the moral and mental state of society. In the “Teaching to his Son,” Pososhkov acted as a moralist, with a high degree of respect for one’s work and duties. He argued that only work and the faithful performance of one’s duties constitutes the distinctive qualities of a true citizen. The desire for easy gain—taught Pososhkov—will not do you good: “Work with all righteousness, no laziness, no deceit: Do not drive a day to the evening, but business to finish...” [28]. As we have already noted, Pososhkov placed the most importance of all economic activities on trade. He wrote: “Trade is a great affair! Merchantry enriches any kingdom, and without merchantry, there can be no, even small state.” He expressed dissatisfaction with the fact that the various dimensions of society were seeking trade regardless of their affiliation. Trade, in his view, should be the privilege only of representatives of the merchant dimension. At the same time, he considered the entry of representatives of wealthy peasants into the merchant dimension possible. Pososhkov advocated that the Russian merchantry monopolized all trade in the country. The merchant dimension should be closed not only to “outside” people but also to foreign merchants. Pososhkov was a proponent of righteous “trade,” “holy,” without deception. He also attached great importance to foreign trade, considering that trade with foreigners should be organized and carried out by consent of the merchant “commander,” at predetermined prices, according to the agreement of the entire “companionship,” that is, the special organization of Russian merchantry in the form of a single trading company, with the exclusive right to trade with other countries. It was during the years of Pososhkov’s work on the book that Peter I issued a decree establishing companies for trade with overseas that never came into effect. In trade, Pososhkov sought to eliminate competition and thus ensure high profits for merchants. With regard to domestic trade, Pososhkov proposed to set the same prices for goods “so that it, in the first shop, would be the same in the last.” The “established price” was to be appointed by the state or “merchant board.” Trade compliance with “established prices” was to be ensured by a strict system of surveillance of dealers [27]. He considered the development of a large domestic industry, the creation of large enterprises to saturate the domestic market as one of the most important means of achieving wellbeing in the country. I. Pososhkov has no concept of “manufactory,” but there are many categories that describe the industrial forms of the time. These are “workshop houses,” “yards,” “mills.” All of these terms are “house-type.” The fact is that the historical data show that there is no fundamental difference between urban

4.9 Ivan Pososhkov

267

and rural households, and that “industrialization” had acquired specific features in Russia. Industry segregation had not been sharply expressed, as in many Western countries of the manufactory period. The conditions of economic management were such that Russian manufactories in many cases resembled an extended household concentrating within its territory not only the main industrial production, but also a large subsidiary plot, up to agricultural land, where the families of workers were working, where social facilities—canteens, dormitories, schools and kindergartens—began to emerge. Such “manufacturing nests” or “estate factory” are a characteristic form of large production in a new location or in a village. These huge manufacture complexes were self-sufficient and the large subsidiary plot was economically viable. I. Pososhkov merely revealed the secret of the formation and management of the domestic manufacturing industry [27]. In the development of domestic industry, he devoted a special role to the state, considering the implantation and development of domestic industry as an important means of preserving and multiplying money in the country. He proposed to strengthen the construction of new enterprises by increasing state subsidies. He recommended to Peter I, “for the sake of sovereign enrichment,” to build industrial ventures using state funds “in those cities where bread and grub are cheaper” and to give them to servage “so that people be enriched, and the imperial treasury be multiplied.” He considered developing domestic industry necessary to get rid of the cost of purchasing foreign goods in order to satisfy domestic demand and to export finished goods and products abroad. In that regard, he advised that financial assistance should be provided to merchants for the establishment of enterprises, and that loans should be provided to merchants from the rathaus at a low interest rate. Pososhkov advocated that the finished product be shipped from Russia, not raw materials: “Rather than selling them linen and hemp, we’d better sell them readymade canvas and ropes, and strings, and to take from them for those canvas foreign silver coins and other currently required things... This is very much needed for which materials, where they are born, there they shall be put to use.” Contrasting the high prices of “raw materials and edible supplies” abroad, their relative cheapness in Russia, Pososhkov wrote: “I long for that we could make canvas for all of Europe and at a much more remunerative than the present price to sell to them.” Pososhkov sees the setting of low prices for industrial products made abroad as a strong tool in the competition for capturing the European market. Like Y. Krizhanich, he recommended the creation of a state-owned handicrafts organization in Russia (sort of sectoral ministries), explaining all the shortcomings of the Russian handicrafts by the lack of state control over the crafts men’s activities, and proposed a number of concrete measures to improve handicraft production in the country. Like his predecessor, he advocated the creation of a professional labor market, and therefore called upon the Emperor to organize the translation of the necessary books on various arts, to organize special technical schools, to invite foreign specialists and craftsmen to teach the Russian people skills. He recommended the imposition of a solid period of discipleship, prior to the expiration of which disciples were categorically, under the threat of enforced military recruitment, forbidden to leave their master, and, in turn, to establish an institution of

268

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

wardens to supervise the work of all the masters. The duties of the senior warden also included quality control of the products. Pososhkov suggested that the product should be branded by masters and warders, and that the sale of defective items should be subjected to a high fine of the master, the warder and the merchant selling the goods. His reasoning on the introduction of piecework pay instead of the existing time payment was original for Russia and many of the countries of the time. He proposed replacing the compulsory three-month work of peasants in Saint Petersburg and elsewhere with a work assignment system, as: “to look at their work is doleful, because they drive the day to the evening, not work to finish.” After completing the working assignment, for at least one month the peasants were to be considered to have completed their obligations. He advised the taskwork system to be applied even at state enterprises: “it is necessary to establish that any work assigned to them be given as taskwork. And their monthly salary must be abolished and given by work completed by them, then all business will be done faster.” Pososhkov called for the promotion at the state level of domestic inventors and innovators in industry, and even to introduce some kind of patent protection within the country by issuing a patent law. In this regard, he wrote: “The civil charter should be established so that for the invention of a new craftsmanship or industry others would not at all be allowed to enter so long as the inventor lives.” Pososhkov, like his predecessors, touched on the legal aspects of the country’s economic management. These are, for example, his proposals for innovation in the drafting of a new Regulation. He considered drafting of the Regulation necessary to be entrusted to the “multinational council,” which historians usually compare with a medieval representatives of nobility institution, the Zemsky Sobor (assembly of the land). “And to the writing of that legal book,—says Pososhkov,—to select two or three persons from the spiritual rank of the intelligent, and bearing in mind the people skilled in divine scriptures too, so shall it be from citizenship, who are in judicial and other governing affairs skilled, from the high rank, who are not proud and are gracious to all people, and from the lowers, who are not highly intelligent, and from the steward people, who are reasonable in affairs, and from the nobility, who are reasonable and truthful, and from merchantry, who have been through all sorts of affairs, and from soldiers, who are reasonable both in service and had experienced needs and are truthful, and from among the Boyar people, who pursue business, and from among the fiscals. And I believe, adds Pososhkov, it would not hurt to select for peasants too, who had been elders and sotskies and had experienced various needs and are reasonable” [27]. The all-sociability of the “multinational council” he proposed is obvious. He provides for members of the clergy and the civil ranks and lists administrators and judges, high and low officials, nobles, merchantry and soldiers, and even points to the new Petrian post of secret supervision and inquiries—“the fiscals.” It is particularly noteworthy that he considers necessary the participation of peasants who were among the most experienced in public affairs, who had been elders and sotskies, as well as the boyar people, that is, bondsmen, from the patrimonial rulers and stewards.

4.10

Mikhail Lomonosov

269

Pososhkov was a proponent of an absolute monarchy, although he knew other forms of government. “We have the most imperious and of the whole monarch, not an aristocrat, below a democrat,”—he says. “Our tsar is not a merchant, but an autocratical ruler, as he rules anything to be, so it shall permanently be, and neither to the slightest degree to the right nor to the left shall it move. As God owns all the world, so does the tsar have power in his possession.” [27]. The notion of a monarch as the Orthodox King, exercising the will of God and whose authority is of divine origin, is inherent to Pososhkov. The ecclesiastical character of his views on the origins of power and the state becomes clear from such of his judgments: “We admire our monarch as god and guard his honor with fear and his will we most diligently execute,” “the court is one for all, and thus so is justice of Heaven.” We have heard something similar from the lips of the lords Eastern Kingdoms. He strongly expresses the idea of “common good” and “popular advantage” as the task of state power. It is enough to recall what his earlier stated expressions that “care should be taken of popular enrichment,” or his words that “the most royal wealth, were all the people... to be rich.” The state must make sure that “nothing be wasted anywhere in vain and that no man would eat bread for free, but all would work and yield fruit.” He talks a lot about establishing justice. As a result of implementing his proposals, “enmity and resentment shall all be consumed.” In relation to central state institutions Pososhkov proposed establishing a “particular office, in which the ruler was the closest and loyal to the tsar, and he would have been the eye of the tsar, the true eye, supreme to all the judges and rulers would he be.” He must supervise his colleges and judicial institutions and receive complaints from the petitioners; access to him must be free for petitioners. The basic managerial thought of Pososhkov, as an ideologist of the police state management model is: “The state is the same large household where each has his own specific responsibilities. And his well-being depends on the consent of all people living there. The ruler is the head of the household, the father of the ‘family of estates’. Within the family, everything has to be based on obedience to the head. And thus in the state, all people must implicitly obey the tsar.” [25].

4.10

Mikhail Lomonosov

The great Russian scientist, Mikhail Vasilyevich Lomonosov, was born in 1711 in the Arkhangelsk Province, in the family of a state peasant farmer who engaged in agriculture, fishing and hunting for sea beast. From the age of 10, he accompanied his father in sailing the Northern Dvina River, the White and Barents Sea. Aged 19 Lomonosov walked on foot to Moscow, where in January 1731 he was accepted at the Slavic-Greco-Latin Academy. In December 1735, he was sent to continue his education to the Petersburg Academy of Sciences, where he was sent abroad in September 1736 to study the mining business. In June 1741, he returned to the Petersburg Academy of Sciences, where he continued his research activities,

270

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

developing atomic-molecular teaching, mechanical theory of heat and chemical solvents teaching. Many works and discoveries in these and other fields of science were written with his pen. Based on the idea of development and changes in nature Lomonosov approached the explanation of geological and biological phenomena: the emergence of mountains, minerals, the origins of plants and animal organisms. Along with Lomonosov’s immortal merits in the field of natural sciences, his achievements in the development of Russian management thought are significant. He was not only a theorist in the organization of production or in the development of the domestic industry. He considered all of his scientific work, first of all, in terms of practical application. He called for science to go “to the farthest places,” to explore the “land and the depths and the steppes and the deep forest.” The desire to test their own managerial and entrepreneurial ideas led to a specific case when in 1752, in the town of Ust-Ruditsa, he himself founded “a factory of colored glass and beads,” resuming mosaic, which had been neglected in Russia since the twelfth century and arranging production on an industrial scale. The main objective of state policy must be, according to Lomonosov, “the wellbeing, glory and the prosperity” of the country. By this he understood, first of all, the political and economic independence of Russia, the development of productive forces, the improvement of the people’s material situation and the rise of the country’s culture. Here are just a few of the Lomonosov’s quotes that demonstrate his very modern views on HR management in an organization. “In the allocation of responsibilities, due proportionality must be observed: no more work and money should be spent where less of them are needed, and vice-versa, where more of them are needed, less cannot be spent... In the allocation of posts... a permanent link between senior and subordinate staff must be established so that everyone would, as far as possible, be intimately close to the other. It follows those equal to one another, especially from among executives..., would live with friendly communication and exercise legitimate authority over subordinates, and these latter will give them due obedience.” [29]. These words only confirm his rational and cost-effective approach to the management of specific organizational matters, which he had at least (probably even more) as many as the number of scientific interests, as can be seen from the following facts. He arranged and supervised the first scientific chemical and physical laboratories in the country; organized geographical study of our homeland and its mapping; organized and equipped a number of astronomical expeditions; organized a North Sea expedition; organized work to study the water regime of the Volga, the Don and other Russian rivers; developed a project (i.e., a “business plan”) and organized all preparatory work for the establishment of Moscow University and grammar school (drafting of regulations, statutes, instructions, curricula, and programmes); restructured the head of studies of the Petersburg Academy of Sciences and managed the unit alone; led the geographical department of the Academy for a number of years; organized, for the first time in Russia, the production of colored glass, “for which I have performed 2 184 experiments in flames”; he revived mosaic art and personally ran an open factory at Ust-Ruditsa—this is by far an

4.10

Mikhail Lomonosov

271

incomplete list of Lomonosov’s affairs and undertakings to manage various organizations. All the documents relating to Lomonosov’s organizational and economic affairs (there are over 600 of them) are a precious source of management thought, since they represent almost all branches of the national economy and many management issues, from complex to small details. He had, for instance, carried out all kinds of calculations of manageability and labor-intensity standards; prepared many lists of requirements for management and production personnel, scientific and technical staff, and developed their rights and responsibilities; constructed various management organization structures and corresponding staffing tables. His creativity is astonishing not only due to macropolymathy—the range of solved scientific and organizational issues and challenges, but also micropolymathy—the breadth and detail of the issues examined in the resolution of an individual scientific or organizational task, or the complexity and the systematicness in all his affairs. It is enough to familiarize oneself with the plan for changes at any organization when he writes: “1st, it is necessary to address the most vast disadvantages and decline”; second, to show the origin and causes of that decline and drawbacks; 3d, to provide a way for their prevention and correction. And the proposed ways of restructuring “must always be solid.” So, speaking of rearrangement of the Academy, he wrote: “Looking for a way to establish a good and proper structure for the Petersburg Academy of Sciences, as needed for the desired success of all the most important affairs, for the good of the public directed, it must be understood how, by laying the strongest foundations, to establish upon them the entire composition of the great mass, for otherwise all shall be in fluctuation, sliding. In stagger and, moreover, shall threaten the collapse of the building before it is even completed” [29]. Having led the country’s production of mosaic glass at a factory of only 26 people, in five years he had already achieved that, first, “the quality of invented mosaics was equal to the Roman ones.” Second, His predictions came true: “If most graciously it were allowed to sell mosaic tables, cabinets, mirror frames, caskets, stools and other home gear and fancy goods, then the factories themselves shall pay-off and eventually make a profit.” And third, Russia, from a mosaic importer, formerly importing only from Rome, became the largest exporter. Whatever Lomonosov did, he always “thought and cared only of what was necessary for the good of his motherland,” N. Chernyshevsky wrote of him. And Lomonosov himself wrote of his principles and goals as follows: “The honor of the Russian people demands that their capabilities and intensity be demonstrated in the sciences, and that our fatherland may use our own sons not only in the military courage and in other important affairs, but also in the reasoning of high knowledge.” Although the new type of business undertook by him and the risks associated with it had opened a character trait of Lomonosov, mostly unknown to researchers— entrepreneurial spirit, which served, probably, as a catalyst for the development of this phenomenon in Russia and the special dimension of entrepreneurs.

272

4.11

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

We mentioned about the reforms of Peter the Great in the management of the economy of Russia and his attempts to develop entrepreneurship in the country in Sect. 4.8. Here we will also dwell on the events and legislative acts of Catherine II and Paul I in the same context—in improving and even developing the management of the economy of the Russian state with the help of actual formation of entrepreneurship and training Russian entrepreneurs. In the history of Russia, the eighteenth century, “started by the carpenter tsar, ended with the empress-writer,” as the historian Vasily O. Klyuchevsky wrote [2; T. V, p. 31]. In the 37 years, from 1725 (the year of Peter the Great’s death) to 1762 (the rise to power of Catherine II), seven rulers succeeded in Russia. “From Peter the Great the throne passed to his widow Empress Catherine I, from her to the grandson of the transformer Peter II, from him to the niece of Peter the Great, daughter of tsar Ivan Anna, Duchess of Courland, from her to her child Ivan Antonovich, son of her niece Anna Leopoldovna of Braunschweig, daughter of Catherine Ivanovna, Duchess of Mecklenburg, native sister of Anna Ivanovna, from the stated child Ivan to the daughter of Peter the Great Elizabeth, from her to her nephew, son of another daughter of Peter the Great, Anna, Duchess of Holstein, to Peter III, who was put down by his wife Catherine II” (highlighted by us— M.V.) [2, T.IV, p. 297]. The reason for this unique broken trajectory of the succession was Peter the Great, who by his law of February 5, 1722 abolished the two orders of the throne in force in Russia—the “will” and “cathedral election” and replaced them with “personal appointment, discretion of the reigning sovereign” [21, Vol. VI, No. 3893]. The June coup of 1762 made Catherine an autocratic Russian empress. Catherine was crowned with the kindest of intentions. “May Heaven disgrace all those who take to rule nations without having in mind the true good of the state,” she wrote before her reign. “I wish only good to the country to which God called me for. The glory of the country is my own glory; this is my principle; I would be very happy if my ideas could contribute to it. I want the country and subjects to be rich... I want laws to be obeyed, not slaves; I want a common purpose of making people happy, not whims, not cruelty” [30]. And her very first imperial document “The Manifest of 1762” [31], by which she ratified the Decree of Peter III of February 18 (March 1), 1762. “On granting liberty and freedom to all Russian nobility,” heralded the emergence of a new force, which will henceforth guide the state life of Russia. For the nobles the Manifest was a fundamentally important document. It was a real breakthrough in the direction of civil society. Many gladly greeted the manifest, but a general escape from service did not occur, because most nobles could not get by without a state salary. However, the possibility of choice itself: to serve or not to serve, proved to be very important. It is with the Manifest of 1762 that historians associate the flourishing of noble estates, which became centers of distribution of

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

273

European life and culture, as, by the way, with severe serfdom at times as well. It is important that with this document a long process of emancipation of Russian society begins—its liberation from the heavy pressure of the state. At the same time In connection with the Manifest in 1762 landlord peasants, excited by rumors about the forthcoming “will,” rose to fight [32]. Catherine II promised that she would soon approve new laws that would define for all state institutions the limits of their activity—in the field of both implementation of foreign policy and internal management of the economy and other activities in the country. It took about five years to develop a set of laws. In the beginning of 1767, the famous “Commission’s Order on the Composition of a Project of the New Code” was born, largely compiled personally by Catherine II. At the same time in her letters Ekaterina (and even more so researchers of the “Order (Nakaz)”) did not deny the fact that “the Order” in the most part is a compilation compiled on several works of political, legal and economic direction, known at that time in Europe and Russia [2, 10, 13], The main of them are the treatises of S.L. Montesquieu “Spirit of laws,” Cesari Beccaria “On crimes and punishments” and H.G. Justi “The bases of power and welfare of kingdoms” mentioned in the previous chapters of the tutorial. It was on the instructions of Catherine II that the treatise by G. Justi was translated into Russian and published in St. Petersburg in 1772. A fervent admirer of French physiocrates, Catherine II in correspondence with great educators expressed a determined intention to transform the socioeconomic structure of Russia on the beginnings of bourgeois liberalism. In turn, the “interlocutors” attempted to strengthen the young Empress in her aspirations. Thus, in one of the reply letters Denis Diderot, who was patronized by Catherine II, wrote: “It is possible for a private person to comprehend the thought of the sovereign and ordinary man to understand the plans of a genius, I see that Your Majesty is quietly striving for the creation of the third social stratum” [33, p. 47]. Catherine II was forced to admit that at the time of her coming to power up to 1500 landlords and monastic peasants “departed from obedience” (“factory and monastic peasants were almost all in straightforward disobedience of the authorities and at places landed estate peasants began to join them”). And all of them, according to the Empress, “were to be restrained.” Among the peasants particularly widespread were various kinds of false manifests, decrees, by virtue of which the peasants refused to work for their former masters. Armed riots of peasants began [32]. The “Order” contains 20 main and 2 additional chapters. In the main chapters we are talking about autocratic power in Russia, about subordinate bodies of government, about equality and freedom of citizens, about crafts and trade, “about the middle kind of people” (about the third estate, the commonality), etc. In two additional chapters (1768) it is about deanacy (or police) and about state economy (on income and expenditure): 1. Chapters 1–5 (arts. 1–38)—General principles of the organization of the State. 2. Chapters 6–7 (arts. 39–79)—“On Laws in general” and “On Laws in detail”. 3. Chapters 8–9 (arts. 80–141)—Criminal Law and Judicial Procedure.

274

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

4. Chapter 10 (arts. 142–250)—The concept of criminal law from the point of view of Cesare Beccaria. 5. Chapters 11–18 (arts. 251–438)—Community Organization. 6. Chapters 19–20 (arts. 439–521)—Issues of Legal Techniques. 7. Chapter 21—Fundamentals of Police Administration. 8. Chapter 22—On the regulation of financial matters [34]. There is no better way to explain the need for a “Nakaz (Mandate),” than it was formulated by Catherine II herself in the first articles of the Nakaz in such words: Art. 9. The sovereign is autocratic; for no other power, once united in his own person, can act in the likeness of the space of such a great state. Art. 10. A spatial state assumes autocratic power in the person that rules it. It is necessary that speed in solving issues sent from remote countries, rewarded the delay caused by the remoteness of such places (highlighted by us—M.V.) Art. 11. Any other rule would not only be harmful to Russia, but also bring the country to its last penny. [34; c. 3].

The formal formation of the “entrepreneurial class” or “third dimension” in Russia began in the 70–80s of the eighteenth century, with the intention to plant within the country “an average human dimension,” which “is enlisted neither in nobility nor grain farmers,” that is, the national bourgeoisie, declared by Catherine II. In the “Commission’s instructions on the composition of the new Regulation” (1785), the empress gave her own definition of the new dimension. “In cities, she wrote, the lower middle class dwells, which practice in crafts, commerce, arts and science. This dimension of people that the state expects so much good of,... is the middle.” As we see, the empress referred the trade and industrial dimension and representatives of so-called liberal professions to the “middle-class.” “Art. 359. Cities are inhabited by philistines (rus. meschans, similar to the bourgeois, or boroughs of England, Wales and Ireland and burghs of Scotland), who practice crafts, trade, arts and sciences.” “Art. 377.... here it is also useful to establish a position on the grounds of hard work based on good morality and by thus achieved, which will be used by those whom this may concern. Art. 378. This class of people, about which it is necessary to speak, and from which the state expects much good, if shalt receive a firm position based on good morality and encouragement to hard work, is middle” [34]. As we see, the Empress listed among the “middle class of people” the commercial and industrial estate and representatives of so-called liberal professions. In the “Draft laws on the rights of the middle class of state residents,” developed by Catherine II, middle class was interpreted as follows: “This middle kind of people is divided according to their exercises into three parts. Namely, 1. Into those practicing sciences and services 2. Into those trading and 3. Into those practicing different jobs appropriate to meschans (philistinism)...

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

275

Those practicing sciences and services are divided into: 1. 2. 3. 4.

White clergy Scientists in different sciences Dignitors and clergymen and Into artists Traders are divided into:

1. Merchants 2. Breeders and manufacturers and 3. Keepers of seagoing and river vessels and seafarers. Practicing various jobs appropriate to the meschans (philistinism) are divided: 4. Into craftsmen 5. Just meschans 6. Those released” [35]. Special attention was paid to the improvement of the social status of merchantry, giving it unprecedented rights. The first thing that the Empress did to form the new dimension was deriving the “merchant people” from the “villainous dimension” by releasing them from the feudal burden. Instead of a poll tax, they were divided into three guilds, paying a tax of 1% on the capital, “by conscience of the declared.” If before the reign of Catherine II, the collection of taxes from merchants was reminiscent of hunting into a pen with red flags, from now on it became an unburden some hunt with a call-duck. At the same time, as a call, that is, effective lure, the impressive privileges imposed at the instigation of the Empress for guild merchantry were used—up to receiving awards, ranks, and even the nobility ranks. Often merchants would overprice their capital, running into debt in order to pay a larger tax and to enroll in a higher guild. But a particularly attractive incentive for correct and uninterrupted payment of taxes on the first guild was the receipt of personal and then hereditary nobility. This prospect infatuated many representatives of the recent “villainous dimension,” which were included in a frenzied race for the receipt of ranks, decorations and noble ranks. The acrimonious publicist of the late eighteenth century prince M.M. Shcherbakov (grandfather of P.A. Chaadaev) christened this phenomenon “merchant rank rage.” Strictly speaking, from an economic perspective, the new fiscal principle laid down in the establishment of the guild organization of the commercial and industrial dimensions was nothing less than disguised trade of noble ranks, decorations and titles by the state. By introducing this “innovation,” Catherine II did not discover anything new: she just used world experience. Thus, back in ancient China (243 B.C.) one nobility rank could be acquired for 1000 tributes (or 30 tons of wheat). Open trade of posts and ranks took place in many countries of Europe, particularly in France, and lasted until the nineteenth century. The business policies conducted by the Empress are convincing of the breadth of her economic beliefs. In addition to the creation of the third dimension, that is, the fatherland’s bourgeoisie, her undeniable merits include the following: (1) the

276

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

abolishment of state monopolies in trade and industry; (2) provision of full economic freedom in business ventures to the third dimension; (3) the legalization of private ownership of the means of production for all, regardless of affiliation; (4) reorientation of the domestic industry from the satisfaction of military orders to the production of consumer goods (mainly textiles); (5) an increase in the breadth (through the newly conquered large areas) and depth (through increased demand from the peasant consumer) of the domestic market. [36, pp. 52–53]. Thanks to the permissive measures, the nobility began to engage in entrepreneurship, though in meager scale, as compared to England and even France. The only industry that the Russian nobles had learned with great enthusiasm is distillation. Catherine II should be credited with the publication on October 31, 1765 of the Decree approving the Plan and Charter of the Imperial Free Economic Society, the first Russian community of expert economists [16]. The idea of creating a scientific community belonged to M.V. Lomonosov, who in 1763 published the “Opinion on the Establishment of a State College of the provincial (rural) economy,” which says: “The idea is to remove agricultural issues from the framework of academic reasoning, to study state agriculture and the provincial economy.” In 1765, six months after the death of M. Lomonosov, an IFES was established. At the meeting of the IFES, held on October 5, 1765, a state-institutional approach was developed to study the national economy of Russia: “The society also understood that all its arguments would be boring and of little use if they were not based on a thorough study of Russian agriculture and conditions of Russian life. It recognized that before advising one way or another, this or that innovation, it was necessary to find out the existing shortcomings and methods of the economy, and carefully consider the local natural and economic reasons for the beliefs and customs that the farmers had, so that the advice was directly applicable to the case, but did not contradict the experience of local agriculture” [37]. Among the truly outstanding activities of Catherine II on the formation of the industrial bourgeoisie are the decrees signed by the Empress in 1766–1767, which allow all those who have the means to plant textiles and other manufacturies “without asking for the permission of superiors.” The peasant on quitrent of the central provinces of Russia, who had accumulated capital from commercial and intermediary operations, took advantage of this. By combining the temporal, labor, and financial resources of their families, it was the peasants on quitrent (especially Old Ritualists) who demonstrated the wonders of entrepreneurship in the establishment of manufacturies and factories at landowners’ ancestral lands. Thus, in Russia, such a phenomenal occurrence as the serf bourgeoisie emerged, grew and strengthened, and from its environment the largest and most prestigious dynasties of domestic millionaire capitalists emerged: the Guchkovs, Gubonins, Morozovs, Soldatenkovs, Alekseevs, Naydenovs, and many others. The famous Russian historian Mikhail Ivanovich Tugan-Baranovsky in his treatise “Russian Factory in the Past and Present”3 writes: “Our large-scale production up to Ekaterina developed 3

First published in 1898.

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

277

extremely slowly, and only from that time development went faster. Upon the accession to the throne of Catherine (1762), 984 factories and plants were considered (not counting the mining plants), in the year of her death—3161” [38, pp. 40–41]. If the Russian nobility, unlike the Western European and especially the English, did not show a noticeable zeal in the development of industrial production (since serfdom rents continued to provide them with a sheltered life), the merchantry invested their capital into industry with an extraordinary zeal. Thus, with the direct support of the Russian government, a dimension of industrial entrepreneurs emerged and rapidly strengthened in Russia, combining the qualities of capitalist owners, talented organizers of industrial production and managers. By her orders and decrees, Catherine II legalized the order by which factories and “useful needlework” could be opened by anyone and wherever they wanted, except Moscow and St. Petersburg (to conserve the forests around both capitals). Continuing to reinforce her management ideas with official documents, in 1785 Catherine II publishes the famous “Nakaz,” which provides unique methods of development of private property and entrepreneurship in Russia: In the ownership of private people factories and manufactures themselves, so that they are not otherwise clear as their own estate, which everyone can freely dispose of without requiring any permission from the superiors. No business related to trade and factories can be forced; but cheapness will be born from a great number of sellers and from free multiplication of goods.

And concerning the inefficient treasury-owned skin production factory the “Nakaz” of 1785 read: When this factory is not in the hands of the state, then, I believe, there will be sufficient skin. Monopolism attached to this executed factory, was harmful to the people, and the profits yielded from that did not reward that harm [33, pp. 21–22].

The turbulent events of the French Revolution with the execution of the king, the insanity of the Jacobin dictatorship, the rapid rise of the bourgeoisie and its coming to political power in France, killed the enthusiasm of Catherine II in “reproduction of people of the middle kind.” But the process, as is said nowadays, had begun and become unstoppable. The only thing that the elderly empress managed to do and pass this principle as a relay to all subsequent autonomous sovereigns of Russia was to break off any of the domestic bourgeoisie’s intentions toward political power. Russian entrepreneurship was left with one path—“exercising” in economic affairs, discarding any political thinking. And in this job, Russian entrepreneurs had proven themselves to be highly professional. Mention should be made of the beneficial role in the Paul I’s development of entrepreneurship, who, on his own initiative, established escort offices designed to credit the merchantry’s foreign trade enterprises in five cities of the Empire. Escort offices are entrepreneurial credit institutions that did not exist in Russia before. Except for two merchantry attempts in this direction (Peter Larin in Lyubichi village of the Ryazan province and Maxim Anfilatov in Slobodskoy of the Vyatskaya province), the Russian banking system, founded in 1733, had previously served only the nobility, enserfing not only labor but also capital. And though escort offices

278

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

as commercial credit institutions did not exist for long (1797–1806), they encouraged the government to set up the State Commercial bank (1818), from which the State Bank of Russia was subsequently raised (1860). The Russian Government provided paternalistic support to such a purely capitalist form of business as a shareholder business. When in 1767, 30 merchant corn chandler of Nizhny Novgorod formed one of the first joint stock companies in Russia and proposed Catherine II to lead the supervisory council, the Empress not only gave her most gracious consent, but also ordered an interest-free loan of 20,000 rubles from the treasury for “the assistance” of the merchants’ interesting venture. By the early thirteenth century, there were five joint-stock companies in Russia. Special attention should be given to the preparation of entrepreneurs in Russia during the era of Catherine II, Paul I and Empress Maria Feodorovna, as one of the means of disseminating managerial knowledge and skills among the population of the country. It was Catherine II who supported the idea of establishing the first higher technical school in Russia. The initiator of the opening and beginning of construction at his own expense of the first mining school in Russia for the training of managers and specialists of mining and was Bashkir ore industrialist Ismagil Tassimov, who in 1750s was engaged in the supply of ore to mining and copper smelting (treasury and then private) plants of Russia. He was already known among entrepreneurs as the developer of the Code of Mining Law for the new Regulations of the Russian Empire of 1754. And in 1771 I. Tassimov and his companions “engaged in mining ores in the Perm province, appealed to the Berg Collegium to ask them to develop the government-owned copper mines and to deliver ore to the South plants for a fee. However, they petitioned the Government for the establishment of the Mining School at the Yugovskih smelting plants and its contents until the latter existed, they promised to yield from each two stones of the ore supplied by them a polushka4 from the payment received by them” [39, pp. 10–11]. The purpose of opening a school for training managers and specialists of mining was expressed by I. Tasimov and his partners with such words: “... in order to improve the crafts, and to strengthen the mining economy, and through how for themselves and their descendants, and for society, it may be useful, they (Tasimov and companions) have need for leading executives (emphasized by us—M.V.). Therefore, they ask for the establishment of an officer’s school, on the same basis as the Cadet Corps were established, so that the heads of the factories or the supervisors of their labors and crafts be knowledgeable people, for they must often be asked, and one’s more willing to listen to instructions from the intelligent and willing than from the foolish know-nothing.” Most likely, the promise of financial support for the opening of the school served as an equally important argument for Empress Catherine II’s favorable treatment of the initiative. In the report to the Senate “On the establishment of a mining school,” the Berg Collegium approved the proposals of the initiators, and recognized “not only it is useful, but also necessary for the entire 4

Approximately ¼ pennies.

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

279

Mountain Corps” [40]. Officially, the Mining School was opened in October 1773, and in 1866 it received the status and appellation “Mining Institute of Empress Catherine II.” The revitalization of private and economic life in Russia of the late eighteenth century and the subsequent expansion of enterprises and the increasingly difficult tasks of management prompted the Russian entrepreneurs to take care of preparing their children not only in a particular brand of the country’s economy, in which their parents were often employed, but also to give their children special commercial education. On the whole, the relationship with management of the economy would be manifested in the training of managers and specialists of several functionals of companies—finance, personnel, procurement, sales, accounting, etc. In 1772, nobleman Prokofiy Demidov approached Catherine II with an offer to open at the Educational House in Moscow an “Educational School of Merchant Children for Commerce.” He donated a significant sum of 205,000 rubles for the school institution. Preparation of the curriculum was entrusted to the director of the Educational House, prominent educator Ivan Betsky. His plan became the first pedagogic and educational program and at the same time the Charter of the school. The plan was approved by the Decree of Catherine II. The main task of the new educational institution was to form the personality, and obtaining the necessary knowledge for commerce was secondary. Every three years, six-year-old boys were accepted. Until reaching the lawful age (reaching the age of 20–21), they were in the walls of the school. The tuition was free of charge, and only those who accomplished the entire course received a certificate of completion. In 1779, by decree of Catherine II the school became known as “The Demidov Commercial School.” Admission to the school was carried out every three years, 20 people at a time, thus, for 27 years of the Moscow period of the school (1772–1799) nine receptions took place. Out of 239 admitted, only 46 completed the course. Mostly it was the children of nonrich or ravaged merchants. During the 15 years of study, students of the school, divided into five to three years ages (from 6 to 21 years) studied many subjects: reading (including in a foreign language), drawing, dancing, singing, playing musical instruments, writing, arithmetic, geometry, history, geography, Slavic language, mechanics, navigation or seafaring, other languages, eloquence, accounting, basics of commerce, agriculture, “home-building,” commerce and accounting, public law, and economics. It should be noted that in the last age group (from 18 to 21 years) theoretical training was would come to its conclusion, and the practice—making the first commercial transactions—was to begin. The idea of opening a commercial school in Russia was progressive and even unique.5 However, already in the Moscow period of the school there were problems with the recruitment of pupils because it was not profitable for merchant families to

5

According to the author of the article about this school in the Brockhaus and Efron Encyclopedic Dictionary, the first commercial school originated in Russia at a time when “there was no school with such a specialty in the West.”

280

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

break their children away from themselves for 15 years and they usually taught their children accounting and commerce in family offices. In other words, few of the “sufficient merchantry of the empire” wished to send their offspring to this school. As early as 1796 after Catherine II’s death, Emperor Paul I appointed his wife Maria Feodorovna as “the chief over the Educational Society of Noble Maidens,” in 1797 she took into administration the Moscow and St. Petersburg educational houses, and with them the former Demidov School of Commerce. The fate of the Demidov school was largely predetermined by the content of the document “Report of the State Empress Maria Feodorovna to the Sovereign Emperor on permission to submit for consideration of a special commission Her Majesty’s note on the transformation of the Commercial School.” It is marked December 13, 1798. Motivating the need for transformation the report says: the Demidov Commercial School “has so far been completely out of line with the charitable intentions of its founder. The blame for this seems to lie with the administration of the institution, which did not pay due attention to the proposed task—to educate bankers, merchants and seafarers for the state... The intention of the founder was to make this institution a breeding ground of negociants, bankers and accountants; however, still, despite the nearly 25 years of existence of the School, none of the pupils had in fact devoted themselves to commercial pursuits, and a mere not more than a dozen of them became accountants.” The same note outlines the beginning of the proposed reform, which formed the basis of the new charter of the Commercial School... First of all, Empress Maria Feodorovna considers it necessary to transform the School in such a direction that it were commercial not only in the composition of pupils, but also in the general layout of tuition.6 “The Commercial School differs from all other educational institutions, as the purpose of its founder was not only to give pupils a thorough education, but also to prepare them for a certain purpose, and therefore the School should receive and nurture children destined for commercial pursuits, and all training should be directed to this purpose... As far as the order of training sessions is concerned, their main objective should be to study the sciences that are especially necessary and useful for commerce, which is why it would be very useful to place at the head of this institution, if not a negociant,7 then at least a person who has studied the sciences necessary for this kind of activity, and even who is responsible for his own business, because such a person would be most able to observe the activities of the pupils and judge their success... I would like to see the new charter to be drafted for the School, the rule is made that pupils who have distinguished themselves by diligence, ability, behavior, and morality, can be placed in the offices of court bankers or in various state offices, both in Russia and abroad, with Russian bankers or consuls. I would like it even to be accepted as a rule, in case if any of the pupils would like to start their own business at the end of the course, to give to such pupils small loans secured

And that is more than 80 years before the opening of the first School of Business in the United States (1881). 7 Entrepreneur, merchant, wholesaler operating mainly outside their country. 6

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

281

by the property of their parents (emphasized by us—M.V.). Thus, the School could deliver bankers, merchants, commercial brokers and good accountants to the state.” The note also raised a question about the movement of the School: “The School on its own location in Moscow cannot, in my opinion, improve, as in Moscow young people are deprived of any opportunities to familiarize themselves with marine navigation, port and customs procedures. Therefore, I would propose to transfer the School to St. Petersburg... Here pupils will have the opportunity to follow all trade exchange operations, to see with their own eyes all the activities of the commercial port... In addition, the Academy provides the opportunity to have classes with the necessary professors, while in Moscow it is difficult to find teachers who can compare with those here. This paragraph is extremely important.” On 10 May 1799, the Charter of the new school “received the Highest Approval.” The first lines of it say: “The commercial school, established in 1772 at the request of nobleman Prokofiy Akinfievich Demidov, is appointed to bring up and educate children submitted from Russia, to make them knowledgeable merchants over time. Because of its multiplying benefits, it moves from Moscow to St. Petersburg.” (ibid. pp. 21–22). Empress Maria Feodorovna was well acquainted with both the principles laid down by Catherine II in the basis of the program of educational institutions of Russia, and with the state of affairs in all areas of educational activity. At the same time, Maria Feodorovna with her characteristic German pedantry, took the most direct part in the processes of formation of organs and management structure of the Learning, following the approved Charter. The management of the School, “given the variance of its subjects, was entrusted to the Council of the School, the Board of Teachers and the Economic Office.” Let us give the statutory rules of formation of governing bodies, management personnel and organizational structure of the School, reflecting, first of all, the high level of competence of Paul I and Maria Feodorovna in field of strategic management of Russian educational institutions, including competencies in the field of personnel management unique to Europe and even more so to Russia of the eighteenth century. “The Council is composed of an ober-director, his assistant, a director, six honorary members, a secretary and a scribe. The Ober-director must be a member of the guardianship board, a person of tested integrity and piety, if not a scientist, at least knowledgeable and loving sciences. He shall accept for the benefit of future generations this useful work not for the sake of salary and other benefits, but only in the hope of the high sovereign’s favor, in the greatest recompense of the imputable, and out of inner confidence, that works for the benefit of the coming offspring... all parts of the School are subordinated to the Ober-director, he has the main supervision over teachers, students and all its economy,... he reports about the state of affairs of the School to Her Imperial Majesty and the Guardian Council every week. The assistant ober-director, in addition to the qualities required in the oberdirectory, must be a person of tested gifts and a thorough scientist, accepting this work voluntarily and without any remuneration, but out of equal love for the good of humanity and in the undoubtfulness of the high monarchal favor.

282

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

The director should be an excellent scientist, especially knowledge of pedagogical, or teaching sciences and because of that differing from teachers. All teachers and students are subordinate to him. Educational image and teaching subjects and all education of the youth belong mainly to the position and supervision of the director, who is personally capable of being responsible for both success in sciences and good mores brought up in this Youth School. In addition, he should have a review of the management of the economy without having to be required to go into the internal details of the economy. Six honorable members of the most prestigious and venerable St. Petersburg merchants, who have valuable information about the merchantry, hold these positions of honor not for salary, but only of love of the homeland. Their position is to be present at the meetings of the Council, to reinforce it with word and action, to report the necessary guides to the commercial education of children and to try zealously and with good faith as of it, and of the recruitment of candidates of commerce. The School Council is subordinate to the guardianship council on all its resolution in general and especially on the economic part, but the guardianship council is included neither in the internal affairs of the School, nor in the image, nor in the subjects of its teachings. The main supervision over all these parts belongs to the Council of the School. The latter receives reports on everything that the board of teachers and the economic board will be set... Economic management consists, under the chief supervision of the director and his assistant, of the director, steward, accountant and scribe. The steward manages all household affairs and disposes of the treasury of the entire School. Without his knowledge, no purchases or expenses are done, and the position of treasurer the sending accountant shall not pay for anything without his orders. All the orders in the house, food, clothing, servants of the pupils and the chief authority over all the servants shall be entrusted to him.” [30, Vol. 4, pp. 18–22]. And finally, “On September 28, 1800, the School was sent 51 pupils from Moscow, two teachers of French language, inspector assistant Podshivalov, 4 supervisors and several of the lower-ranking employees,” where it became known as “St. Petersburg Commercial School.” [30, Vol. 4, p. 26]. In 1904, the School was granted the status of Imperial and officially ceased to exist in 1918. Moscow’s merchantry was not satisfied with the performance of the work of education in the Demidov School, and in 1796 the Main People’s School was established in Moscow, in which Moscow’s Merchantry funded the training of accountants. But this did not yield results and in 1800 the accounting classes were closed. As a result, up until the establishment of the Moscow Commercial School on Ostozhenka in 1804 Moscow remained without a commercial educational institution, which will be discussed in Chap. 5. Completing the characteristics of the contribution of Catherine II, Paul I and Maria Feodorovna to the formation of entrepreneurship and to the development of economic management of Russia, we shall bring the words from the work of Sergey Tsvetkov “Catherine II and Diderot: the story of one philosophical-political novel” [41], which used original texts from “The Note of Empress Catherine the Second” [42]

4.11

Catherine Ii, Pavel I and Empress Maria Fedorovna and Russian Entrepreneurship

283

“The best minds of the eighteenth century shared the views of the political philosophy of their time, which gave exaggerated importance to forms of government. State theorists of the time were sure that the moment a plan of the state structure is drawn, a reasonable system of government institutions is created, immediately public relationships change, abuse ceases and new mores of the human hostel are created.” Diderot, acting in the spirit of this historical misconception, drew up a comprehensive plan for the redevelopment of the empire for Catherine—a classic utopia of the Age of Enlightenment. In order to eradicate the despotism of the Russian autocracy, the empress had to give up sole power and rule together with the popular electors. Diderot tried to inspire Catherine the idea of the need for universal public education, offered to abolish the privileges of the estate, to give freedom of development of industry and trade, which was to lead to the appearance of the third estate—this “softening spring” between the inhabitants of palaces and huts, advocated the abolition of serfdom, the removal of clergy from the administration of the state, etc. We will note that it was said by the person who admitted that “he hardly saw anything except the empress herself.” And yet he bravely suggested to her to move mountains or, it is better to say, to tax firewood. Catherine summed up the outcome of her “political” conversations with Diderot in the following words: “I often spoke with Diderot for long; he occupied me, but I bore little benefit. If I were guided by his considerations, I would have to put everything upside down in my country: laws, administration, politics, finance— and replace everything with infeasible theories. I listened more than I spoke, and therefore a witness to our conversations could have mistaken him for a harsh educator, and me for a dutiful student. Maybe he himself was of that opinion, because after some time, seeing that none of his extensive plans were being executed, he pointed it out to me with some disappointment. Then I explained with him frankly: ‘Mr. Diderot, I have great pleasure in listening to everything that your brilliant mind has prompted you. But with your great principles, which I know very well, it is possible to compile fine books, but not to govern a country (emphasis added by us—M.V.). You forget in your plans the difference of our position: you work on paper that would tolerate anything, which is flexible, smooth and does not put any obstacles either to your imagination or to your pen. Meanwhile I, the poor empress, work on human skin, and it is very sensitive and irritable’ (highlighted by us—M.V.). After this explanation, he, I am convinced, began to treat me with some condolences, as an ordinary and narrow mind. Since then, he has spoken to me only about literature, and political issues have never been touched.” Diderot himself subsequently agreed that “ideas, having been moved from Paris to Petersburg, take a different color.” With such mood and results in managing the economy Russian society entered the nineteenth century.

284

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Test Questions 1. What are the specifics of the ideas on management of the economies of principalities and the first states in the ancient Rus’? 2. Expand on the meaning of the “Russkaya Pravda” as a source of management thought in the eleventh to fifteenth centuries. 3. Expand the content of Russia’s management thought at the stage of the formation of the centralized Moscow state. 4. Describe the most important management ideas according to Sylvester’s “Domostroy.” 5. What are the main management ideas of Y. Krizhanich? 6. What are the main management ideas of A.L. Ordin-Nashchokin? 7. What are the similarities and differences between the ideas of Ordin-Nashchokin and Y. Krizhanich? 8. What is the essence of the management ideas of I. Pososhkov? 9. Give a brief description of Peter I’s management ideas using the material of his reforms. 10. What did M.V. Lomonosov’s entrepreneurial thought manifest itself in? 11. Describe the “Mandate” of Catherine II as a source of management ideas. 12. What was the merit of Catherine II in the establishment of Russian entrepreneurship in Russia? 13. What management ideas were reflected in the first training programs and legislation on the need to train entrepreneurs in Russia? 14. What are the management ideas in Paul I’s reforms? 15. Describe the continuity of views on management of the thinkers of the Ancient East and Russia of the ninth to eighteenth centuries. What did the “policeism” in the work of Russian thinkers and statesmen express itself in?

References 1. Konstantin Bagryanorodnyy. Ob upravlenii imperiey. M.. Nauka, 1989 g 2. Klyuchevskiy VO Sochineniya v devyati t omah. M., Mysl’, 1987 g 3. Polnoe Sobranie Russkih Letopisej (PSRL) v 43 tomah. 1775–2007 4. Brachev VS Peterburgskaya Arheograficheskaya komissiya (1834—1929). — SPb.: Nestor, 1997. — 161 s 5. Galicko-Volynskaya letopis’. / Perevod na sovremennyj russkij yazyk i kommentarij O. P. Lihachevoj. // Pamyatniki literatury Drevnej Rusi. XIII vek. M., 1981. S.236–425 6. Pamyatniki russkogo prava / Pod red. S. V. YUshkova. Vyp. Pervyj. Pamyatniki prava Kievskogo gosudarstva X—XII vv. / Sostavitel’ A. A. Zimin. M., 1952 7. Drevnerusskie knyazheskie ustavy XI—XV vv. / YA. N. SHCHapov. M., Nauka, 1976 8. Stoglav. — M.: tip. E. Lissnera i YU. Romana, 1890 9. Stoglav // Rossijskoe zakonodatel’stvo X—XX vekov. — T. 2 : Zakonodatel’stvo perioda obrazovaniya i ukrepleniya Russkogo centralizovannogo gosudarstva / Otv. red. A. D. Gorskij. M.: YUr. lit., 1985. C. 241–439 10. Solov’ev SM Istoriya Rossii s drevneyshih vremen. (V 18 knigah).M., Mysl’, 1991 g 11. Vernadskiy GV (2001) Kievskaya Rus’. M., AGRAF

References

285

12. Platonov SF (1899) Polnyy kurs lektsiy po russkoy istorii// V trekh vypuskah3. – SPb.: Stolichnaya Skoropechatnaya 13. Rossiyskoe zakonodatel’stvo X-XX vv. (v 9 tt.). M., YUridicheskaya literatura, 1984–92 gg 14. Istoriya russkoy ekonomicheskoy mysli (pod red. A.I.Pashkova). M., 1955 g 15. Vsemirnaya istoriya ekonomicheskoy mysli (nauchnyj redaktor CHerkovec V.N.)// V shesti tomah. M., Mysl’, 1987–1997 gg 16. Hodnev AI (1865) Istoriya Imperatorskago Vol’nogo ekonomicheskago obshchestva s 1765 do 1865 goda. – SPb.: Tipografiya Tovarishchestva «Obshchestvennaya pol’za» 17. Pravda Russkaya / Pod redakciej akademika B. D. Grekova. — M.; L.: Izdatel’stvo AN SSSR, 1940–1963 18. Opisanie knig piscovyh, perepisnyh, dozornyh, perechnevyh, platezhnyh i mezhevyh // Opisanie dokumentov i bumag, hranyashchihsya v Moskovskom arhive Ministerstva yusticii. SPb., 1869 19. Domostroy. Spb. Nauka, 2001 20. Krizhanich Y (1997) Politika. M., Novyy svet 21. Polnoe sobranie zakonov Rossijskoj imperii. Sobranie 1-e. SPb., 1830. T. 1. № 408 22. CHistyakova EV (1958) Novotorgovyj ustav 1667 g. // Arheograficheskij ezhegodnik za 1957 god. M. 23. Pavlov-Sil’vanskiy NP (1897) Proekty reform v zapiskah sovremennikov Petra Velikogo. SPb. 24. Sorokin P (1922) Sovremennoe sostoyanie Rossii. Praga 25. Pososhkov IT (1951) Kniga o skudosti i bogatstve. Moskva 26. Pogodin M.P. ZHizneopisanie Ivana Tihonovicha Pososhkova//Predislovie k “Knige o skuposti i bogatstve” I. Pososhkova. Moskva, 1842 g 27. Platonov DN (1989) Ivan Pososhkov. Iz istorii ekonomicheskoy mysli. M., “Ekonomika” 28. Pososhkov IT (1893) Zaveschanie otecheskoe. SPb 29. Lomonosov MV (1952) Polnoe sobranie sochineniy. (V 10 tt.). M.-L., AN SSSR 30. Imperatorskoe Moskovskoe Kommercheskoe Uchilishche na Ostozhenke // Istoriya Moskovskogo Kupecheskogo Obshchestva. — M., 1914. 31. Manifest o darovanii vol’nosti i svobody vsemu rossijskomu dvoryanstvu 18 fevralya 1762 g. // Polnoe sobranie zakonov Rossijskoj imperii, T. XV. № 11444, str. 189–191 32. Anisimov EV (2008) Imperatorskaya Rossiya. SPb., Piter 33. Berlin PA (1925) Russkaya burzhuaziya v staroe i novoe vremya. L.-M. 34. Nakaz Ekateriny II Komissii o sochinenii Proekta Novogo Ulozheniya// pod redakciej N.D. CHechulina. Imperatorskaya Akademiya Nauk, SPb. 1907 35. Proekt zakonov o pravah srednego roda gosudarstvennyh zhitelej // Sbornik Russkogo istoricheskogo obshchestva.SPb., 1882, T.36, S. 179–180 36. Galagan AA (1997) Istoriya predprinimatel’stva rossijskogo. Ot kupca do bankira. Moskva, Os’-89 37. Kulyabko-Koreckij NG (1897) Kratkij istoricheskij ocherk deyatel’nosti I. V. E. Obshchestva so vremeni ego osnovaniya — SPb., Tip. V. Demakova 38. Tugan-Baranovskij. M.I. Russkaya fabrika v proshlom i nastoyashchem. SPb., 1907 39. Loranskij AM (1873) Nauchno-istoricheskij sbornik. S.-Peterburg 40. http://www.hrono.info/text/2007/mut03_07.html 41. Cvetkov SE. Ekaterina II i Didro: Istoriya odnogo filosofsko-politicheskogo romana // Ezhegodnyj doklad franko-rossijskogo analiticheskogo centra Observo «Rossiya-2016». http://www.ccifr.ru/ru/public/Yearbook_2016_-_Sommaire_RU.pdf, (http://zaist.ru/news/ pravlenie_ekateriny_ii/ekaterina_ii_i_didro_istoriya_odnogo_filosofsko_politicheskogo_ roman/). 42. Zapiski Imperatricy Ekateriny Vtoroj. S.-Peterburg, Izdanie A.S.Suvorina, 1907. -772s

286

4 The Emergence and Formation of Management Thought in Russia (Ninth to. . .

Additional Literature Pamyatniki russkogo prava/ Pod red. S. V. YUshkova.. Vyp. vtoroj: Pamyatniki prava feodal’norazdroblennoj Rusi XII–XV vv. Sostavitel’ Zimin A. A. M., 1953, s. 160–185 Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU ((pod nauchnoj red. V.I.Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. (https://www.econ.msu.ru/science/conferences/mciumb/)

Chapter 5

Management Thought in Russia in 1800–1917

Abstract This chapter of the textbook reflects the development of management thought in Russia in the 1800–1917. At this time, the works of M. Speransky appeared, for the first time, сameralist branches at Russian universities were opened, treatises on management of higher school and materials of the-trade and industry and Industrial Congresses (which focused on relevant issues of management) were published, and management reforms led by Russian government officials were implemented. The objects of comparative analysis of views on the management of the Russian state and private economy were representatives of four major sociopolitical movements in Russia that existed in Russia during the period under review—the revolutionary democrats, the populists, the bourgeoisie, and the proletariat. In addition, this chapter discusses various forms of creating and developing management ideas—the opening of commercial and legal schools, special training courses in management, holding major all-Russian trade and industrial congresses, etc.

5.1

The Sources and the Main Directions of Management Thought in Russia in 1800–1917

The sources of development of management thought in the nineteenth and early twentieth centuries were heterogeneous materials: articles in magazines and monographs; legislative acts; educational courses of universities (and “carriers” are teachers and graduates of these universities); works of scientific societies, scientific committees of ministries and departments; congresses of representatives of a number of branches; and treatises of researchers, memoirs, and diaries of practicing executives. These materials reflected real management practices and problems of management of the public and private economy, relevant in specific historical times (see [1, 2]). The royal government actively promoted the setting up of shareholder business in Russia and regulated the process. Thus, the decree of Alexander I to the Governing Senate (1805) and the Manifest “On the granting of new benefits for merchants” (1807) proclaimed full support for the new form of business and established types of © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_5

287

288

5 Management Thought in Russia in 1800–1917

private collective business associations: full partnership (family firm), trust partnership (a family firm with the participation of secure shareholders from within), as well as “community partnership” (i.e., shares, stakes, equities), which were actual shareholders’ associations. The legal norms adopted were consistent with the nature and content of Russian entrepreneurship. The Russian entrepreneur was initially—at the level of small-scale production—said to be both the reaper and the sewer and the pipe player. Following the principles of the “Domostroy” by Silvester, the entrepreneur held in his hands all the strands of the business of his firm, from supply of raw materials to disposal of finished products. In business families, as a general rule, children (especially sons) had been taught the business of their fathers from their young years. The childhood of many representatives of the merchant-industrial clans took place behind the counter or in factory workshops; then, growing up, they learned the wisdom of Venetian accounting, the maintenance of cash books, deal-making, the sale of goods, etc. And, having become adults, children often took a share in their father’s business and became their parent’s business partners. Thus, Russia has a stable type of family firm—“a full partnership,” that is, an economic union of undivided relatives. Small enterprises grew into mid-sized ones, the work front expanded, profits increased, but firms had in most cases been managed by a single person who was senior in the family by position and age (father, elder brother). If entrepreneurial affairs were promoted by luck, it had often been the case that family capital had no longer been sufficient for modernizing production or expanding it, and capital had been attracted from beyond with the inclusion of the owners into the partnership. Such alliance of entrepreneurs was called a trust partnership, and according to the Trade Charter (1805), such an alliance was required to include in its title together with the surname of the owner of the company “. . .and K
.” Contributors from beyond (the very “. . .and K
”) were not entitled to conduct business operations on behalf of the trade house (this is where their position differed from the members of full partnerships), and their rights for profit and liability in the event of failure were limited to the sum of the “capital invested into the company,” as was the order of Alexander I to the Governing Senate in 1805. By the way, the principle of limited liability, proclaimed in Russia in the early nineteenth century, was only applied in the West in half a century later. In a trust partnership, as in a full partnership, the company’s “master” remained the legitimate manager of the enterprise. The experience of many countries shows that sole governance is the lot of small and medium-sized businesses. Since the beginning of the Great reforms of the nineteenth century, when shareholder business was under rapid development in Russia, the number of joint-stock companies increased from 128 to 2263 (by 1914), with equity companies accounting for two-thirds of the volume of all industrial production. But the family firm, as a type of economic organization, tenaciously held traditional positions, overcoming the number of shareholder companies (9.2 thousand) by four times. Moreover, many of the largest dynastic “fiefdoms” of Russian businessmen (the Porokhovys, Mamontovs, Morozovs, Guchkovys, the “Russian America” of S.I. Maltsov, the financial empire of the

5.1 The Sources and the Main Directions of Management Thought in Russia in. . .

289

Ryabishinsky brothers), who had started their business back in the late seventeenth and early eighteenth centuries, remained family firms. At the beginning of the nineteenth century, Russia in the political and military sense achieved its highest influence in Europe, especially after the victory over Sweden in 1809 and Napoleon in 1812. However, economically, Russia continued to lag behind Europe. One of the reasons was a clear discrepancy between the development of manufactories and industry and the level of competence of managers and specialists, both in the private sector and in the state economy, which was recognized by the Emperor and his Ministers. On the training of entrepreneurs The situation changed dramatically with the beginning of the reign of the liberal Alexander I, when the ideas of European education began to infiltrate the middle strata of Russian society. “Those sensible among Moscow’s merchantry and bourgeoisie” finally realized the need for special education for their heirs, and on June 22, 1804, in a large gathering of honored guests in Moscow, in a rental house at Taganka, the commercial school was opened, which lasted until 1917. It was a literal institution of a closed type, in which highly professional staff of managers in all areas of business—commercial, industrial, banking—were prepared. As envisioned by its creators, the commercial school was designed to enhance the intellectual strength of the emerging trade and industrial class. Moscow’s commercial school accepted boys of ten years of age of two categories: (1) envoys of Moscow’s Merchant Society, which were supported with business donations; (2) pensionaries, which lived off the expense of their parents. Initially a third category was conceived—the “newly arrived,” that is, those who “residing outside the school shall attend the given lessons,” or, in other words, the children of the rich Muscovites. The head of the newly founded in 1803 Ministry of National Education, Earl P.V. Zavadovsky, wisely decided to avoid possible social conflicts in the teaching environment and eliminated “the newly arrived” from the school. The students of the commercial school were divided into four ages (grade), the duration of their stay in each of them was two years; thus, the full period of education was eight years. As can be seen from the first education program, here the students were taught merchant layout, the beginnings of bookkeeping, geography—physical and commercial (economic), natural history, the technology of factory production, the basics of the business literacy in Russian, German, and French (later in English), essays, and style. Then new disciplines were introduced: drafting, chemistry, natural history, etc. As can be seen, it was difficult to study at Moscow Commercial School (MCS), especially since utmost discipline had been established. Teaching here was only endured by the able and diligent. Those of limited abilities and disreputable were expelled from MCS at any “age.” Such indicators are therefore not accidental: of the 895 pupils admitted to MCS from 1804 to 1854, over half—462—dropped out early (i.e., without completing their studies); only 433 persons completed the full course. Although the commercial school was not a higher educational institution, its graduates were given the degree of candidate of commerce.

290

5 Management Thought in Russia in 1800–1917

Brilliantly professionally trained, proficient in 2–3 foreign languages, raised in the spirit of Christian morality, the graduates of MCS were soon “met” with ready entrepreneurial firms. By the way, MCS graduates were very highly valued among Moscow brides from the rich and richest households. They were distributed as follows: the pensionaries were sent to serve in the businesses of their fathers (the Titovs, Mazurines, Kukins, etc.), and the envoys—to administer estate affairs, to commission major merchant enterprises, to manage the workflow of state institutions, to manage factories and plants (of Rybnikov, Bobykins, Krestovnikovs, Veretennikov, etc.). In other words, in terms of the ratio of entrepreneurial functions, part of MCS graduates (mainly pensionaries) were both owners and managers, and part of them initially became “pure managers.” The training programs of MCS and other special educational institutions themselves were sort of a reflection of the level of management thought development in both the eighteenth century and the following years, not only in Russia but also in other countries. In November 1828, by the decree of Emperor Nicholas I., the “St. Petersburg Practical Technological Institute of Emperor Nicholas I” (SPPTI) was opened; the purpose of which was “to prepare people with sufficient theoretical and practical knowledge to manage factories or parts thereof” (emphasized by us—M.V.) [3]. The initiative to create the Institute belonged to Yegor Frantsevich Kankrin, Minister of Finance of Russia in 1823–1844. Until 1862, graduates of the Institute (which was the secondary school) did not have the right to enter the civil service and receive ranks. The Institute acquired the status of a higher educational institution only in 1862 under Alexander II. According to the new Regulation, it was determined that “the St. Petersburg Practical Technological Institute is a special educational institution of the highest rank, with the goal of educating skilled and knowledgeable people in the technical field for the construction of factories, plants and industrial enterprises in general and for managing them (emphasized by us—M.V.), as well as the dissemination of technical knowledge in general.” Students studied subjects such as geography; history; natural history, “drawing in general and especially machines, plans, structures, patterns and decorations”; mathematics, “necessary parts of applied mathematics”; “geometry and some concept of the practical measurement of land”; mechanics, machine building and design in mechanics; mineralogy; “thorough knowledge of practical chemistry in relation to crafts and arts”; “the knowledge of physics necessary for crafts and arts”; political economy; industrial statistics of Russia, etc. The most significant difference of the Institute from other educational institutions of Russia in the nineteenth century was that for the practical training at the Institute there were chemical laboratories1 and many workshops: mechanical (for the manufacture and repair of various machines related to factory business), blacksmithing, locksmithing, turning, carpentry, foundry (“in small form and with all that a small steam engine”), dyeing; “for cutting and shaping and for engraving on planes and 1

In this laboratory from 1863 to 1872 worked great chemist Dmitry I. Mendeleev.

5.1 The Sources and the Main Directions of Management Thought in Russia in. . .

291

cylinders.” In addition, according to Section 7 of the Law “In order to strengthen and disseminate the practical knowledge of the Institute’s pupils, they visit wonderful factories and factories in St. Petersburg and its environs by order of their superiors, where teachers and craftsmen accompanying the pupils are obliged to explain the course of production to them.” [4] On March 23, 1887, Alexander III approved a new, slightly amended Regulation on SPTI, in which “bookkeeping, building art with architecture” was added to the set of disciplines, and practical classes “take place both in the workshops and laboratories of the institute and outside it: in factories, factories and construction works” [5]. Curiously, the rector of SPPTI in 1853–1858 was mining engineer-major-general Ilya Petrovich Tchaikovsky (father of the great Russian composer P.I. Tchaikovsky), and from 1875 to 1880—the great scientist and future Russian Finance Minister Ivan Alekseevich Vyshnegradsky. Among the graduates are Ivan Aleksandrovich Semenov, founder and owner of the largest mechanical engineering plant in Russia 1890–2017, and who in 1911–1918 worked at SPPTI as a visiting teacher. The above list of disciplines, the availability of competent permanent and invited teachers-practitioners at the Institute, and the material base (including their own building, provision with laboratories and workshops) became the main reasons for the graduates of the Institute to move fairly quickly along the career line, starting with masters, engineers, and main engineers of enterprises, then became directors, managing directors, chairmen of boards, and owners of enterprises, realizing their managerial ideas in these positions. In addition to these educational institutions in Moscow in the nineteenth century, the Imperial Moscow Technical School (IMTS) was established. The history of IMTS began in 1826, when the Dowager Empress Maria Fyodorovna issued the Decree on the establishment at the Moscow Educational Home of “large workshops for various crafts, with bedrooms, a dining room and other needs” on 300 people, and moving all the artisan pupils there from the Educational Home. The first Charter of the Moscow Craft Educational Institution (MCEI) thus established was approved on July 1, 1830, it was opened in 1832. The full course of the training was six years old, consisting of three preparatory classes and three workshops. Already in 1843, Moscow newspapers vied with each other about the successes of the first graduates of the MCEI. In 1868, MCEI received the status of “imperial” and began to be called the Imperial Moscow Technical School (IMTS). The new status required a great deal. Along with several similar institutions (of which there were very few in Russia at that time), it was intended to train engineers for domestic industrial enterprises. The first paragraph of the Charter said: “The Imperial Moscow Technical School is a higher specialized educational institution with the main goal of educating mechanical builders, mechanical engineers and process engineers.” The fact is that in the middle of the nineteenth century in Russia mainly foreigners worked in this area. Highly qualified Russian personnel were required, for the training of which a unique educational system was created at IMTS. A graduate of the MCEI Dmitry Sovetkin, left as a tutor at the MCEI, back in 1858 proposed a system of practical training for the profession, combining pedagogical and technological requirements. Improved

292

5 Management Thought in Russia in 1800–1917

by professors of IMTS, it was included in the training of engineers and combined with theoretical courses. This engineering education system brought the school worldwide fame and was called the “Russian training system.” The professors and teachers of IMTS along with D. Sovetkin were such outstanding world-famous scientists as D.I. Mendeleev, N.E. Zhukovsky, P.L. Chebyshev, S.A. Chaplygin. In June 1894 (even under Alexander III), the Russian Minister of Education Ivan Delyanov proposed a new charter of the Imperial Moscow Technical School, which added some academic disciplines, and, like in SPTU, it was stated that the practical classes “take place both in the workshops and laboratories of the school, and outside it: in factories, plants and during construction work” [6, p. 459]. The charter was introduced on February 8, 1895, by Emperor Nicholas II [7]. By the end of the nineteenth century, IMTS reached the European level, having won the Big Gold Medal at the World Exhibition in Vienna in 1873, after which IMTS was ranked among the best polytechnic schools in the world. The press talked a lot about the achievements of former students of the Moscow school, who, having completed a full course of practical and theoretical training, worked for several years in the factory field, and then began to manage factories themselves. There were not so many graduates of this educational institution (about 170 people), and therefore “there were enough factories for everyone.” The special study of Russian engineering entrepreneurship on the materials of 159 IMHTS graduates of the late nineteenth and early twentieth centuries revealed the following facts. Most graduates—62 people (38.9%) became directors of various factories and plants in different regions of the country. . . For example, Mikhail Konstantinovich Stutzer—Director of the Romanovo-Borisogleb linen manufactory, Sergey Alexandrovich Shcherbakov— director of the flax spinning factory of Shcherbakov with families (that is, most likely, ру was a co-owner) at Kohma station; Alexander Vasilyevich Seleznev—director of the factory of the Yuzhno-Russian Comrade of foam and rope products, Semyon Antipovich Nechaev—director of the Olminsk sugar plant;. . . Vladimir Alexandrovich Cheglokov— Director of the Board of the Nevsky Shipbuilding and Mechanical Plant, Konstantin Lukich Losev—Director of the Board of the Partnership of Manufactories of Ivan Konovalov with families (Moscow). . . Nikolai Ierofeevich Sergeev—Director of the Management Board and Head of Mechanical Works of Aksay Joint Stock Company; Alexander Ivanovich Bakakin—Director of the Management Board of the Yurievskaya flax and spinning industry and managing director of the Board of the Volga Manufactory Partnership [8, pp. 3–4].

Of particular note is the growing demand for such emerging new industries as oil (mining, refining, petroleum engineering) in the regions of Apsheron (the Caspian Peninsula), where in the second half of the nineteenth century, due to the emergence of the oil boom in this region, the companies of Vasily Kokorev Nobel, Mantashev, Rothschild were created and the management of which were graduates of IMTS. Among them, for example, Bardsky K.L. (graduated from IMTS in 1883, mechanical engineer, Manager of oil fields, Baku, Caspian-Black Sea Oil Society), Barsky M.L. (graduated from IMTS in 1887, engineer-technologist, Assistant Manager of a tin factory, Baku, village of Balakhany), Bardsky L.L. (graduated from IMTS in 1890, engineer-technologist, Manager of oil fields and a trading company, Baku),

5.1 The Sources and the Main Directions of Management Thought in Russia in. . .

293

Adamov A.P. (graduated from IMTS in 1891, mechanical engineer, Managing Director of the Oil Fields “Abiyants and K
”, Baku, village of Balakhany) [9]. Demand for graduates of SPPTI, MСS, IMTS in Russia of the nineteenth to twentieth centuries was great. Among those most interested in applying and developing new management ideas were representatives of nearly 200 years of experience with business dynasties of the Prohorovi, Demidovs, Mamontovi, Morozovi, Guchkovi, Maltsovi, Ryabushinskie, businessmen G.G. Solodovnikov, V.A. Kokorev, I.D. Sytin, S. Polyakov and many other representatives of the Russian merchants and the booming bourgeoisie. At the same time, as we further learn from the materials of All-Russian congresses (see Sect. 5.4), the quality of graduates of higher technical and commercial schools in Russia nevertheless caused criticism of the participants in the congresses. It should be noted that the activity on industrial and commercial education in Russia continued at the beginning of the twentieth century, including in the form of organizing and holding special congresses on commercial education, the works of which are also a source of developing views on the management of Russian industry and trade [10]. Simultaneously with the growing need for managers for the private sector, a wave of enthusiasm for solving problems of state and economic management swept over all the Imperial Russian universities, where in the 1840s special departments (categories) were opened at the law departments for the training of cameralists, or “managers of the palace treasury,”“managers of the state economy” (this was already discussed in Chap. 1 and it will be said in Sect. 5.5). During this period, another rich source of management ideas was the materials of Russian societies and congresses of scientists and entrepreneurs, which will be discussed in Sect. 5.4. The Main Directions of Managerial Thought During this period of domestic management thought, attempts were made to systematize perceptions of management. State management remains the subject of much of this research but at the same time, the ideas of rational management of private economy in various branches of entrepreneurship, begun in the eighteenth century, began to be applied more and more: commercial, industrial, banking, agricultural, and others. In the studies of Russian scientists of the period under review, in the areas of history, law, management, sociology, political economy, and politics, there are chapters and whole sections containing historical analysis of the development of management thought. This analysis begins at times with an analysis of the treatises of the Ancient world, which dealt with and addressed management of public economics. Trends in global management thought were reflected in the studies of Russian authors in the dominance of the police management model characteristics, based on a centralized approach with strict regulation of most of the elements of the management system—goals, functions, methods, management personnel. Nevertheless, the wave of studies on the legal model of management, that had emerged in the West, had also reached Russia, where theoretical developments in the

294

5 Management Thought in Russia in 1800–1917

area of the legal model had become quite buoyant, and attempts had been made to introduce these developments, particularly in the form of improved legal frameworks for the field of management. In Russia, the concept of a state of law was developed by M.M. Speransky, I. Platonov, N. Rozhdestvensky, V.N. Leshkov and I.E. Andreevsky, B. Chicherin, E. Berendts, A. Gorbunov, and V. Ivanovsky. In particular, in Speransky’s major study “Note on the establishment of judicial and government institutions in Russia” (1803), the content of many categories on the substance of modern management science and their interrelationships is disclosed: goals and principles of management, functions and structures of management bodies, managers, and management methods. Here is one of his characteristics: “A management organization should generally be: (1) consistent with the general state law and institutions; (2) based on unity of execution; (3) subject to reporting in the form and substance of business; (4) decreed in a single plan and in all of its parts; (5) comprehended with local institutions and (6) equivalent to the means of execution.” [11, p. 15]. As we noted, in the last quarter of the nineteenth century in the Russian liberalbourgeois and liberal-populist environment, the modification of the concept of “the rule of law” (or “constitutional state”) and corresponding management model, the “cultural state,” which marked the beginning of the third paradigm stage in development of history of management thought (HMT), began to evolve. Ideologists of the new direction attributed to this phenomenon by the fact that even the constitutional state of law had deceived the expectations of those who had previously advocated the rule of law; it did not meet the new demands and needs of the citizens of the state. Representatives of the new direction in Russia were V.A. Goltsev, V.F. Levitsky, M.M. Kovalevsky, N. Chicherin, N.K. Mihaylovsky, S.N. Krivenko, and others. Russian scientists and practicing leaders of this period, depending on their scientific interests and practical activities, developed economic, legal, or organizational—administrative problems of management. At the same time, it should be said that works of Russian scientists and practitioners generally covered almost all of the methodological issues in management, namely: the concept of management (in general and the economy in particular), the place and role of economic management in the system of state or public management, the content of managerial activity, branches and functions of economic management, the subject and methods of management teaching, the goals and objectives of the science of management, the various classifications of management teaching sections, the critical work of the methodology of the teachings on management of Western scientists, etc. In general, managerial thought in Russia in 1800–1917, especially after the reform of 1861 to abolish serfdom, recalled a broad stream, emerging from a multitude of currents, among which the most complete and systematic were the concepts of representatives of the dominant class—the noble, then the representatives of the developing class—the bourgeoisie and, finally, opponents of both the creations of the ideologists of peasantry and the working class. We shall give characteristics of each stream, illustrating the causes and factors that gave rise to relevant views on management, and start with the representatives of the nobility.

5.2 The Characteristics and Achievements of the Noble Management Thought

5.2

295

The Characteristics and Achievements of the Noble Management Thought

Nobility of the pro-reform Russia (since 1861) remained a dominant class, although in the 1860s the power of landlords was shattered: they sustained, not final, though, but still decisive defeat, that they had to “leave the stage.” The nobility “left the stage” in various ways. One part—the reactionary nobles—continued to defend feudal ideas, trying at all costs to preserve the inviolability of landlord estate, and linked the future of Russia to the success in development of landlord organization of the economy. The other part—the liberal nobility—differed from the reactionaries but not in substance. The noble liberals, while agreeing to and making some concessions to peasantry, advocated confining class privileges, electivity, and belonging to all classes of some of the most important administrative bodies, nevertheless, demanding the preservation of land property of landlords, remaining solitary with their like-minded, reactionaires. It would seem that one could speak of some progressive managerial thought among the representatives of the class of pro-reform Russia, leaving the stage. And yet, nevertheless, if we imagine the capabilities of the nobility to express their interests, namely the preservation of the dominant political positions; possession of a large part of the material base in the agricultural in structure public production; maintenance in the country of a high proportion of “serving” nobles; possession of ideological influences on the scientific community (possession of most of the periodic press and publishing houses, preservation of important posts in scientific and technological communities such as the Free Economic Society, multiple regional societies of rural masters); next, taking into account the specifics of the class’ position and behavior, shattered in their sense of constant and habitual leadership condition, searching for all possibilities to preserve it—all this becomes conditions, causes, and opportunities that could not have been the strongest sources of all kinds of scientific and practical search and “discovery” of noble management thought. These discoveries were, of course, most notable in the areas of public management, local governance, and the management of agricultural sectors. In addition, the nobility was also burdened by internal class contradictions, in particular, between the landlords and the “serving” nobles (due to differences in the legal situation, a growing divergence of views and interests between the local nobility bought and the “serving,” which was losing its link to land) and the nobles who were drawn into business capitalist activities. This had only widened the many reasons for the emergence of noble management thought. Interest in noble thought from the point of view of HMT is also due to views and proposals of the nobility regarding the organization of state management of the economy, central and local government, had very often become the official doctrine, and have engendered the views and ideas of opponents. In other words, apart from the fact that the changes in the views of the representatives of this class are of interest themselves, they have, in whole or in part, continued to serve either as a platform, basis or as an opposition to the forming of views of representatives of other classes, groups, and social categories

296

5 Management Thought in Russia in 1800–1917

of pro-reform Russia. After all, periodically “serf owners, not completely beaten by reform” [12, v. 1, p. 291], made themselves known, and then nolens volens public thought responded to the thoughts and actions of the dominant class: the reactionary part greeted, the liberal—equalized the ideological platform of the “senseless and brutal reaction” [12, v. 1, p. 291], of landlords, and the foremost—mercilessly destroyed the foundation of this platform. The mentioned arguments are perhaps sufficient to justify the scientific and practical interest in noble management thought. It is natural that the ideologies of the nobility saw the future of Russia in a developed manor economy, that is, the “main answer” to the major question on the future of the country was, in principle, clear to them. Only new issues corresponding to the “main answer” emerged—on the nature of the country’s agrarian evolution, the ownership of land, the forms of land tenure, and rational organization of the large landlord and smallholder economy. The nobility was, of course, concerned about the nature and the ways in which the capitalist industry, trade (domestic and foreign), financial and personnel policies were developed, but they were all determined in the interests of this class. But the main current and, at the same time, vital new question for the nobility was something else: how to maintain the broad pro-reform influence that the nobles had possessed, how to still influence the destiny of Russia, and how to hold the initiative and the primacy of public management in all spheres of Russian society: via external and domestic policy, economic, public service, national relations, directions in art, education, etc. It is this question that had compelled the nobility to seek, find, and propose, and sometimes to impose specific measures on society to improve “public management.” These were measures to organize the old and new central management bodies, improve provincial management, a wide range of economic measures-state credit and allowances, act tariffs and high prices (for agricultural products), educational measures to train agricultural personnel, including estate managers, etc. The content and wording of the measures being developed and proposed by the nobility changed according to political, socioeconomic and other conditions within and outside the country, but the need for leadership remained the driving motive. The nobles had more “rostrums” for the expression of their claims than other social classes. First of all, these were the remaining noble assemblies that possessed significant rights. They were the main rostrum. The noble assemblies could apply to the emperor himself, addressing the request to the monarch’s own hands. In the early years following the reform of 1861 the nobility, while admitting (as a result of a vote in the turbulent meetings of various noble assemblies) the return to the old order was not possible, nevertheless requested the government to reconsider the “Regulation on the peasants who came out of serfdom” of February 19, 1861 (hereinafter referred to as the “Regulation”). Given the situation in the country and especially the beginning of peasant riots, applications were of a moderately liberal spirit. Grouped in the report of the then minister of internal affairs, Peter A. Valuev, they looked as follows: (1) To proclaim the principle of compulsory ransom of allotment by peasants with unconditional payment of the full ransom to landlords and immediate allotment of land; (2) Granting the landlords an unconditional right to transfer peasants from serfdom to servage without their consent and guaranteeing by

5.2 The Characteristics and Achievements of the Noble Management Thought

297

government of due receipt of levy payments; (3) Granting owners of corvee estates to transfer their peasants for ransom without first transferring them to servage; and (4) Legislative confirmation of the inviolability of landlord property. As means and conditions for the solution of these tasks, the nobility called for the restoration of public credit and credit institutions, the streamlining of labor force employment, acceleration of construction and improvement of railway performance, provision of assistance to squireens, noble owners of small estate, revision of the rural charter (in the direction of strengthening the measures to combat grasses and stumpage), and others, legal norms (in particular the introduction of all class, oral and public court with independent and irremovable judges; introduction of provincial self-government with elected officials performing the duties without the approval of management and replaceable only by court); and, finally, establishment of the Central Noble Electoral Office (as a deliberative body) to participate in the affairs of public management [13]. It is already evident from the incomplete list that if the government met the requests of the noble assemblies, it would satisfy the nobility’s desire “to retain the initiative in the affairs of change which the nobility has deemed necessary” [14, p. 244] which had always been the primary cause and motive of all the nobility’s requests. After a portion of the nobility’s petitions were granted (the liberally determined officials at the central apparatus and zemstvo systems [district councils] were dismissed, it was allowed to transfer peasants to ransom without a prior transfer to servage, instalment of landlord debt was allowed, allowances to a series of landlords were paid, etc.), the noble thought continued to develop new ideas and projects to strengthen its position in public management. ‘In the expression of desires of that kind the nobility had run to extremes, which sometimes led to dissatisfaction of the government and the monarch when, once again, at the Moscow meeting, the noble thought had reached the point that a compromise (for both reactionaries and liberals) proposal to create a central representative consultative body from two chambers was addressed to Alexander II: from the lower (all class) and upper (noble), the reaction of the monarch was negative. On January 29, 1865, a highest prescription of Alexander II was addressed to Minister P.A. Valuev, which we will bring almost entirely to illustrate, in addition to the content, the style and forms (phrases and speeches) in which the emperor had expressed his dissatisfaction with the nobility. Peter Alexandrovich. . . I am not unfamiliar with the fact that, during its meetings, the Moscow Provincial nobility assembly entered a discussion of matters that were not subject to their direct conduct, and touched upon issues relating to prior to change of the substantial beginnings of institutions of the state of Russia. The successfully accomplished. . . and now, by my instructions, further committed transformation is sufficient evidence of my constant care to improve and perfect, to the extent possible and in the way I have determined (emphasis added—M.V.) different branches of state structure. The right of enforcement to the main parts of this gradual improvement belongs exclusively to me(emphasis added). . . and is inextricably linked to sovereign power. . . The past, in the eyes of all my faithful, must be the promise of the future. None of them is given the opportunity to warn my continuous care for the welfare of Russia and to prejudge the substantial grounds of its general state institutions. No social class has the legal right to speak in the name of other social classes. No

298

5 Management Thought in Russia in 1800–1917

one is called upon to accept, before me, an application for the general benefit and needs of the state. Such evasion of the order established by laws applicable may only complicate my following of my prescriptions (underlined by us—M.V.), and in no case contribute to the achievement of the goal to which they may be directed. I firmly believe that I will not further encounter such difficulties on behalf of Russian nobility, whose age-old merit to the throne and to the fatherland have always been memorable to me, to which my trust has always been, and currently remains steadfast. I instruct you to inform all Governor-Generals and Governors of this. . . I remain in favor of you. . . Alexander. [15]

The Emperor’s reason, as we see it, is care for the future of the state, the honor and interests of all social classes. The motive is obvious—fear for his royal throne. The emperor did not want to admit anyone to addressing critical political issues. Nevertheless, the nobility in subsequent years made requests, petitions, and motions, reflecting the desire to strengthen their positions, in the form of decisions of noble assemblies, and often made progress. As a result, the nobility achieved much: the State Noble Bank was established (1885), providing credit to landlords of traditional nobles on security of estates on favorable terms; significant concessions were made to the nobility in rail tariffs (1889 and 1893), which facilitated sale of bread in domestic markets and increased treasury expenses by several million rubles; in the field of education, the nobility had made a strict class selection to educational establishments, the transfer of nobility scholars to the treasury account, an increase in the number of places for children of traditional nobles in Cadet corps; at the request of landlords, the Ministry of State property was reorganized into the Ministry of Agriculture and Public Property (1893), which naturally led to an increase in government concern for landowners, including in the management of economies. In view of the growing layer of landlord entrepreneurs, government measures aimed at improving the management of “land”-related industries—distillery, beetsugar, the tobacco industry, agricultural machinery, and extractive industries— should be added to these measures. The second, after the problem of representation (“constitutionalism”) at the state level, problem for the nobility was increasing their influence on local government issues and hence their representation in local government. After the creation, in accordance with the “Regulation,” of county-based state institutions of the world’s mediators, which were mandated to implement the “Regulations” and which in their activity abided by a special government document [16], very soon deviations from the official documents began to appear. The fact is that yesterday’s landlord serf-owners could not accept that they (even as “world mediators”) must satisfy all the legitimate demands of peasants. In addition to forcing the peasants to work off servitude, imposing fines, selling the property of debtors for arrears, they arranged for mass floggings of the disgruntled and dispatched the disgruntled with forces of military and police teams. And if at the World Congresses of mediators decisions unfavorable to the nobility were taken, they protested and demanded from the government the right to protest the congress’ decisions. Mass complaints about the conduct of landlords led to the re-election of

5.2 The Characteristics and Achievements of the Noble Management Thought

299

world institution bodies, but in the new composition they were represented mainly by the local nobility. “The world mediators of the first order were dissolved and replaced by people who were unable to deny serf owners swindling peasants and disengagement of land itself.” [12, V. 4, p. 430]. All subsequent governmental measures taken before the end of the nineteenth century and legitimized by the highest commandment—the establishment of the Institute of Magistrates, County, and district presence on peasant, three well-known Valuev commissions (on Zemstvas—county and district councils—1864; on the Duty reform—1871; for the study of the situation of agriculture and the rural industry in Russia—1873), the establishment of a special governmental Kahanovskaya Commission for the drafting of local government projects and the invitation of the according people (among large landlords), and as a result, the establishment of the position of county chiefs (also caused by “difficulties in proper development of well-being” due to “the lack of strong government authority close to the people” [17, p. 507])—all of these and other such measures of concern for the “well-being of peasants” have brought representatives of traditional nobility to peasant management bodies, reinforcing the oppression on behalf of landlords, which greatly worsened the situation of peasants. From the point of view of HMT, each of the measures taken is factor of the development of HMT and extensive source, for prior to its entry into force, in the process of elaborating a document, and also in the process of implementing the measure, it was “accompanied by” a large number of materials of preparatory nature (such as the records and work of congresses of rural masters, meetings of the mentioned commissions), of operational nature (notes to State Council and other central authorities), final documents and acts (types of government decrees, state laws, regulations, supplements), and assessment materials of the progress or impact of one or another management activity. Of all the richness of materials on addressing management issues, we’ll concentrate on improving provincial management. In addition, we shall examine the methodological developments of one of the representatives of the liberal nobility. D.I. Pikhno, who, in his work, “Reasons for political economy” [18], in some sense abandoned the link between the methodologists of the noble and bourgeois management thought. Finally, in the same section, we shall briefly refer to the reflection of domestic management thought in the works of the Free Economic Society, essentially representing the interests of the nobility and dealing mainly with agriculture throughout its existence. The Zemstvo reform of 1864, and Noble managerial thought Let’s follow up on the development of noble management thought aimed at endorsing the leadership of the nobility in local economic management, on the example of the development of documents for the Zemstvo reform. The nobility have always had a sustained interest in the “economy in regions,” and this is natural because the landlords’ economies were heavily dependent on the state of the “local economy.” In the mid-nineteenth century, local government objects were traditionally the directorates of county services, national provisions,

300

5 Management Thought in Russia in 1800–1917

“public” charity, construction and roads, healthcare, veterinary service, postal services, telegraph, “local measures and orders relating to the development of trade and industry modes in the governorates and the county” [19, p. 20]. Interest remained, of course, in the local economy on behalf of the sovereignty. The sovereignty, represented by the local government, despite setting itself the task of local improvement, was first and foremost concerned with the state treasury, which was replenished largely by the “collection of treasury taxes” (mainly from peasants). Officially local (county, district, and city) economic management in the pro-reform Russia of the nineteenth century was carried out in accordance with the “Establishment of Provinces” adopted in 1775 by Catherine II and even several regulations and laws of the time of Peter I. In fact, there was no single local economic management: “all economic matters common for provinces and counties are coordinated by provincial places” (Provincial committee and special presence on county duties, provincial office, treasury chamber, national provisions, construction and road commissions, Regulations on social welfare), “or given to the police and to some deliberative institutions which do not have a consistent and positive structure” (some county presences on district duties, special temporary county trade and pricing presences, county road commissions, apartment committees) [19, pp. 1–2]. As for central governance bodies, in fact all ministries were “in charge” of some or other affairs locally—ministries of finance, interior, public property, allotment, the military ministry, the main directorates of communications and postal routes. The local management had evolved many times, but the Zemstvo reform of 1864 is the most prepared and organized undertaking, and some Russian historians compare it in scope and importance to the reform of 1861. Prior to the 1861 reform, in the context of feudal relations and subsistence farming, the so-called “public needs” and issues of “public management” in part did not concern the noble idea since there were no particular problems. More precisely, in order to “keep in pace,” the nobles participated as electives in all the local government bodies, but only intervened in matters of budgeting, and mainly in issues of district duties. This participation was sufficient to propose and select candidates to fill leadership positions in the field, to eliminate, through the authorities, the abuses and inconvenience “observed in local government” and, in general, to pursue policies in local governance in accordance with the interests of the nobles. Even before the abolition of serfdom at the Ministry of the Interior, a special commission had been established with the task of improving local management and, to that end, draft provisions for county and district institutions under the aegis of the same ministry. According to the notion on the content of the two groups of local government functions, it was pointed out that projects should contain proposals, first, on the “structure of administrative police institutions”; and, second, the “structure of economic management institutions.” With regard to the improvement of economic management itself, a special section of the commission regulation made the task more specific: “in organizing executive and investigative police, to enter the consideration of the economic management office in the county, which is now divided among several committees and is often part of the police department. In this

5.2 The Characteristics and Achievements of the Noble Management Thought

301

consideration, it is necessary to provide the county’s economic institution greater unity, greater autonomy and greater confidence; and the degree of participation of each social class in the county’s economic management should be determined” (emphasis added—M.V.) [19, p. 2]. A similar task was also set with regard to provincial institutions’ projects. The work of the 1859 Commission was prolonged, the reform of 1861 was already carried out, the situation in the country changed dramatically, and the main change was the situation of the nobility. And if before the reforms, as we have already noted, the nobility managed local affairs with little effort, after the reforms, due to the emergence of new capitalist relations, the complexity of the socioeconomic structure, the change in the alignment of forces, and other causes, the nobility gradually, but increasingly understood its new position and acutely changed its attitude toward local government issues, local economic authorities, and more intensely advocating the strengthening of local self-government, the realization of the same ideas of all class representation as at the level of the country’s central authorities. There were several points of view on the means, but the purpose of the nobility was single—to adopt an executive position at the county council, “to become the head of the emerging county council.” The noble assemblies included in the agenda of their meetings the elaboration of projects and proposals in the developing district reform in an effort to establish its advantageous provisions. Most of the meetings were for the empowerment of local self-government, while activating the participation of the nobility in local government, for merging with council. The assumption was simple: “However close and equalitarian this connection may be, we will long have a huge excess, which we had acquired via our position, the advantage of mental and explicit education and a greater or lesser habit of own affairs” is a recording in the draft decree of a conservative society, the Smolensk Assembly [14, pp. 211–212]. The decree itself, which was sent to the Commission, does not contain these lines [20, pp. 395–397]—the Assembly did not reveal its secrets! How did events unfold, how did the views of the nobility on some of the items relating to economic management in draft versions of the future “Regulation on provincial and county district institutions” (hereinafter referred to as the “Regulation-2”) approved on January 1, 1864. First, of the stages of forming the “Regulation-2.” Following the approval of the Commission’s composition and its program of work (in October 1859), one of the first results of its work was the extensive report No. 2. (March 10, 1862) “On the structure of economic management office at provinces and counties” [19]. The report consisted of two “parts.” The first part. A historical review of the development of provincial and county management in Russia on economic management issues (we’ll call it Document No. 1). The second part. The existing management of county council economic affairs in the provinces and counties (Doc. No. 2). Besides, at the Commission’s direction, the economic department prepared an extensive report on the modern structure and management of public charity in Russia (Doc. No. 3). And the basis of these three documents and notes, amendments, supplements, proposals by citizens, and some “extracts from the

302

5 Management Thought in Russia in 1800–1917

decisions of the county nobility meetings on the issue of county institutions” [20] sent to the Commission, it published the so-called “County council economic Management Considerations” (Doc. No. 4). The Commission then continued to receive comments, additions to the proposal, and to discuss them at its meetings. On the basis of the additional material received and on the basis of Document No. 4, the Commission developed the first constructive version of the Regulation-2, which was entitled “Outline on the Regulation on provincial and county land institutions” (Doc. No. 5) discussed at the two general meetings of the Commission (March 10 and 12, 1862). As recorded in the journal of the second meeting: “Presentation of the Regulation outline. . .the high Government to submit for the kind consideration of the Minister of the Interior.” Minister P. Valuev “kindly considered” to present the “Outline” for consideration by the Council of Ministers. A working commission was established under the Council of Ministers, which reviewed the “Outline,” amended it, and submitted it to the Council of Ministers on March 15, 1862. It was then reviewed and adopted as a “Draft Regulation” (Doc. No. 6) and was considered and approved as a draft at the meeting on June 28, 1862. In both committees, the emperor participated, having “had the grace to provide it with” several comments on three articles of the Regulation, and without comment, the emperor ordered “to exclude” article 76, which in document No. 5 went as follows: “No administrative penalties may be imposed on the County council assembly” [21, pp. 395–397]. Further movement and development of the project were determined by the highest commandment of the Emperor (Doc. No. 7) specially issued on July 2, 1862, in which the “main directions of provincial economic management” were approved, and the Commission was also ordered to immediately compose consideration on the implementation of the “Statutes of the provincial and county council institutions,” to submit in short time a draft Regulation in the light of these “considerations,” to the Council of State, to draw up proposals on “necessary changes, for the first time, changes in existing economic regulations” [21, pp. 395–397], and, in the future, a fundamental revision of them, and to propose executive measures necessary to open new county institutions. From that point on, virtually all subsequent documents of the Commission and then the Council of State repeat the Emperor’s instructions entirely. These “management guides” led to the introduction by the commission of a special “Division for outlining the beginnings of transformation of county institutions,” which on July 13, 1862, prepared a further project document, “Mandate to County Council Institutions” (Doc. No. 8), that is, “the definition and development of the responsibilities of county institutions in issues committed to them by law.” [21, pp. 395–397]. If up to that point the question was mainly the content of local government functions, the Mandate expanded on the content of the functions of bodies of local government. In addition, the order of enforcement of the Regulation, temporary rules on the functions of three groups of local government (coordinating county council duties, national provisions, and public charity) and instructions for opening the initial establishment of county institutions and starting their operation were laid out in the Mandate. In the Mandate changes directly related to the nobility

5.2 The Characteristics and Achievements of the Noble Management Thought

303

had already been made to the existing local government mechanism. Thus, if before the Mandate private social-class duties (including, above all, the nobility) were coordinated by county council institutions, they were now proposed to be removed from county institutions. At the general meeting of the Commission (July19, 1862), the material provided by the Division of the Commission was considered as “preliminary determination of the system and sequence of upcoming works” and some amendments were made. The work of refining the paragraphs of the Regulation (Doc. No. 6) and the Mandate (Doc. No. 8) continued. The mentioned division of the Commission met weekly, three times at its meetings (September 13 and 20, October 11, 1662) discussed the comments and supplements to the Mandate, and finally, at the last meeting, it was decided: “the Mandate project with annexes, to be submitted for consideration of the general presence of the Commission. . .,” which was done [21, pp. 395–397]. Simultaneously at the same meeting, it was decided to submit for consideration of the general meeting of the Commission the “Temporary rules for county council institutions” (Doc. No. 9), which were previously discussed by the division of the Commission (September 27 and October 4). The subject of the “Temporary rules” was harmonization of the rules of the draft “Regulation-2” with existing economic regulations (prior to the previous revision). The fact is that, of the four necessary statutes that would guide future county councils—duty, national provisions, social charity, and mutual insurance county councils—only the latter were created for the first time and at the same time as the “Regulation-2.” The first three statutes were drafted well in advance of the Commission’s work in 1859 and therefore “were subject to a fundamental review,” which took time. That is why the “Temporary rules” were created. After multiple discussions of documents No. 6, 8, 9 at the Division’s general meetings and department meetings, it was eventually decided to include the Mandate as a special section in the draft “Regulation-2” and now after the general meeting (March 18, 1863). The Commission submitted to the Minister two documents—the “Regulation-2” (Doc. No. 10) and the “Temporary Rules” (Doc. No. 11) for further legislative action. It is in the latter version that both documents together with other “explanatory materials” (all nine previous documents, the registers and reports of the Commission, statistics, special opinions of the Commission members, redrawing of orders from the 13 governorate assemblies of the nobility, received by the Commission), “A General Explanatory note to the Projects” (Doc. No. 12) and Comments of the Chief Manager of the II department of S.E.I.V. of Baron Korf’s office, received by P. Valuev on May 6, 1863 (Doc. No. 13),2 the Minister of the Interior, P. Valuev, submitted Council of State on May 26, 1863. It should be noted that P. Valuev submitted a version of the draft of Regulation-2 that took into account the comments made by Korf to the State Council. Besides, prior to discussion, the State Council received comments from Ministers of State

2

For these comments, see [22].

304

5 Management Thought in Russia in 1800–1917

property, the imperial court and the military minister. Then, at the eight general Meetings of State (in July 1863) [23], the draft Regulation-2 and the Temporal Rules were discussed, amended and submitted, already as a state verdict, to the emperor for approval. On January 1, 1864, these documents were approved by the Emperor and entered into force in 33 provinces of Russia [24]. What was the evaluation of the reform at the time? The Zemstvo reform of 1864 had been specially prepared for five years, and its organization and results have been evaluated very highly by contemporaries. Baron Korf, in his remarks, wrote: “If this job, in volume and complexity, cannot be equal to the prepared Statutes of court, or to the regulations of February 19, 1861 on peasants, yet, in terms of importance in the public sector, as well as in difficulty and novelty of the issues it encounters, it is hardly inferior to them.” [21, pp. 412–413]. Particular emphasis was placed on the novelty of this major event, “on which the very idea had occurred to us so recently. . . that there was not yet a single firm belief or beginning in public opinion, in practice of other legislation or in science.” [21, pp. 412–413]. Indeed, in novelty, scale, and intensity, this reform is a unique event in many ways, including managerial sense. A number of activities and transformations had been implemented as a result of improved local governance. The functions of local government (“types of County affairs”) and their content were defined. The argument for allocating these functions was: “The County Council affairs of provinces and counties should be local interests of the provinces and counties” [21, p. 356]. Multiple such affairs had been identified (as we have written above). The most complex were the issues and activities related to the formation of new county council bodies. Instead of a multitude of local government bodies that “had conducted excessive participation and control of government authority in county affairs” [21, p. 353], only two types of bodies had been established: the County Council Assembly (county and district) and County Council authority (county and district). The assemblies were granted management power and authorities were allocated executive power. Both were “made up of representatives elected by the people in the county or province.” New grounds and forms of this representation had been formulated. The arguments for these transformations are also interesting: “coordination of County Council affairs of counties and provinces” must be “granted to the people of the county and provinces themselves,” “the theoretical beginning and provisions of the law are consistent with historical experience and with economic practical considerations: no one can be more diligent and caring in economic business as the one owns it, no one feels the consequences of bad orders as much and bears as much material responsibility for them as the master of the business.” With regard to the separation of powers, the arguments are the following—the content of local government functions should be twofold. “On the one hand, they should reflect the needs, opinions and desires of the local population (in county council affairs), establish and consider common local interests; on the other hand, there is a need for permanent, properly organized power to implement the general orders on county council affairs, to fulfill the right and legitimate desires and needs of the county council, and there have been “two categories of institutions”—administrative and executive” [21, p. 364].

5.2 The Characteristics and Achievements of the Noble Management Thought

305

The first type of bodies, as exponents “of the whole area and its interests,” should be composed of persons directly elected by the local population; the number of elected should be large enough (because there are many interests and “public opinion” could be claimed); the elected should “maintain a permanent link with locality and society” they represent; updating and changing the composition of bodies should depend on society. On the basis of these requirements, it was necessary that the new body should be of a temporary nature (rather than “the nature and properties of a public office”), “called to work within known time and in known cases” [21, p. 364]. Therefore, they were named the “zemskie (county council) assemblies.” Constant and continuous executive activity was assigned to the created county council authorities, whose members were elected at county meetings. In P.Valuev’s explanatory memorandum, the wishes of the nobility were taken into account (from the decisions of their assemblies) regarding representation in meetings in the following words: “In the first and entirely new experience of establishing local representation, it is necessary to give some weight in the composition of the county council meetings to a class that is more educated and developed, to a certain extent still embracing political rights, and already in some way experienced Civilian life.” [21, p. 375]. How was it that P.Valuev wanted to reconcile this premise with preservation of government influence on local government policies (more precisely, as any minister hoping for the duration of his dominion and so eager to hold a significant share of power in the local government in his hands) and to what extent he had succeeded, we will follow one article—article No. 47 of the draft Regulation-2 (Doc. No. 10). The metamorphosis of article 47 (very short but very informative) is interesting from the point of view of HMT. In doc. No. 10 the article was as follows: “The chairman of the County Provincial assembly shall be appointed from among the members by his Minister of the Interior” [21, p. 38] (underlined by us—M.V.). There is not a word in any of the aforementioned comments made by ministers and Baron Korfa to the draft “provisions” on article 47. Most likely the ministers and the Baron didn’t want to hurt their colleague. At the same time, almost all the decisions of noble assemblies received by the Valuev Commission proposed such a revision: “District assemblies are presided over by a County Leader of Nobility.” [21, pp. 381–409]. But P.Valuev nevertheless ventured to attain the Council of State’s approval of his own version, thus legitimizing a certain authority of the Minister at least at the county level. However, the Council of State again, as in many other cases, listened to the views of the noble assemblies (and, of course, to personal opinions of the members of the Council of State, since, in terms of class belonging in 1863, almost all members of the State were the nobility [25]) and made such arguments and doubts at a general meeting: “The rule presupposed in article 47 may lead to inappropriate complaints against the government in the intention, the appointment of the chairman” (underlined by us— M.V.) in the County Council assembly, and give them the importance of their authorities. The Council of State then expressed its concern about the position of

306

5 Management Thought in Russia in 1800–1917

the Minister: “Appointment of chairpersons. . . by the Minister of the Interior among the members of the assembly is impracticable in practice as well, because with a large number of county Assemblies the Minister would often encounter difficulties, and there could have been cases of unsuccessful appointments.” Well, if the minister is not resent, “The Council of State also finds the appointment of the chairman at the choice of the meeting itself inconvenient.” What choice remains? Since “it is very important for both the Government, and for the County itself, that the chairmen of the County Council meetings be trustworthy people who can be fully relied upon,” and these requirements in counties are “mostly met by county leaders of the nobility” since they “have the confidence of the local landowners, who are most interested in Zemstvo affairs” (underlined by us—M.V.), and the final decision is clear: “The Council of State assumed to decree that the county Zemsky Assembly shall be presided over by the district Leader of Nobility.” That’s it, the Minister! In the discussion of this article, there were other arguments that demonstrated the relationship of the members of the highest governmental body with the working class, more precisely, the absence of relationship with them: The Council of State believes that assignment to the Leaders of the nobility “to preside over the just seven-day meetings (so that the Leader has time to demonstrate the subjective!—M. V.), and establishing their definitions based on the majority of votes (and, as is known in advance, the majority belong to landowners—M.V.), it cannot be accepted with dissatisfaction or initiate the contending antagonism” [21, cc. 485–491]. The members of the Council of State did not conceal their noble motives in the discussion of other rates of the draft Regulation that significantly affected the alignment of forces by local management (such articles were no more than 30 of over 300). It was clear that the decision on article No. 47 “had dragged on” the changes in a number of other articles as well. Thus, in some articles, the Council of State ventured even to “abstract” some of the rights of the Emperor in favor of the nobles. It is likely that the emperor himself ceded them when he read Valuev’s note made by the emperor’s will. This is “Valuev’s note to Alexander II on the issue of which of the rights, that the nobility currently possesses on the coordination of county affairs, will be provided to the new county council institutions and what rights will then remain for the nobility” [21, pp. 485–491]. For instance, during the drafting phase of the “Regulation-2,” article 56 was as follows: “The county Zemsky Assembly is presided over by one of the local landowners, by the direct appointment of His Imperial Majesty, each time specially announced by the Minister of the Interior.” In the first instance, the Council of State expressed approval for the importance of such appointments. In the view of the Council of State, “it would be extremely prudent to make the appointment of chairmen by the Assembly’s own election by a majority vote, since the election of a person would be much dependent on various contingencies influencing the cast of votes, the momentary devotion or party intrigues”(underlined by us—M.V.). The appointment of the presiding officers for the special appointment of the Emperor, as a proposal, was expressed and endorsed at the meeting of the Council of Ministers in

5.2 The Characteristics and Achievements of the Noble Management Thought

307

1862, and it was suggested that “state dignitaries who had achieved general respect for merit in public service activities” could be used in this position. And now, at the meeting of the Council of State, there is a naive counterargument: “The secondment of state dignitaries and other noblemen from St. Petersburg to all provinces would be costly for the Treasury every time.” And right here there is a contradiction: “The appointment of such persons would then be limited to some few cases of particular importance” (underlined by us—M.V.). Well, since, again, persons “charitable and capable” who are “permanently in the province and who are already members of the Assembly” [21, pp. 485–491] are required, there is no choice—they are the Provincial Leaders of the nobility, and they are approved by the king, as they say, the wolves are fed and the sheep are safe. That’s how in “the manner of nobility” many of the issues of the “county’s self-governance” were solved! In addition, the “Regulation-2” itself established such rules for the number of recruits and the conditions of representation at meetings of three curias (agriculture, urban, and rural), that the nobility’s leadership in local government was guaranteed to be permanent and substantial. It was so insignificant that the owners of the commercial and industrial enterprises of many of the provinces of Russia had repeatedly contacted in this regard (especially in the late nineteenth and early twentieth centuries) to the Council of State with letters and petitions in which relevant numerical justifications were provided. In the very first elections in the provinces, in accordance with the “Regulation” representation of landowners was significant (74 cent of all vowels), followed by representatives of the trade and industrial bourgeoisie—10.9 cent—and peasants— 10.6%. In the early 80s among county vowels the nobility had accounted for 81.5%. And in county councils, more than half of the chairmen and members were representatives of the nobility. Valuev’ argument of “inexperience and temporality of establishment of the local office” has dragged on. In due course, Vladimir Lenin cited such figures from the “Industry and Commerce” magazine in 1913, confirming the continuation of the balance of power in the county assemblies after almost half a century after the Zemstvo reform (Table 5.1):

Table 5.1 Number of vowels in Russian Zemstv in 1913 From the first electoral assembly (noble landlords) From the second electoral assembly (trade and industrial enterprises, etc.) From the first and second electoral meetings, jointly From rural societies In 34 county provinces total Source: V. Lenin article in [12, v. 23, p. 91]

Number of vowels, persons 5508 1294

% 53.4 12.6

290 3216 10,308

2.8 31.2 100

308

5 Management Thought in Russia in 1800–1917

It is evident from the table that “counties in Russia are entirely in the hands of the landowners” [12, v. 23, p. 91]. But Lenin was justly outraged not so much by this fact, but rather by “Keith Kitychey” (representatives of merchants) calculations in confirmation of their rights and their conclusions. As we have pointed out more than once, the main function of local government was the management of county duties, and within it—the assembly stage. So, according to 1913 statistics, the sum of county levies (distributed) made by the first electoral assembly was 24.5 million rub, the second—49 million rub, and rural societies 45.5 million rub. Dividing these amounts by the corresponding number of vowels, “it turns out that the noble “census” is 4.5 thousand rubles, that of merchants—38 thousand rubles, of peasants—14 thousand rubles”. Thus, it can, of course, be considered as “indiscriminate law as a matter of purchase and sale,” • writes V.I. Lenin. But behind these numbers is also other information: “in fact, the unevenness of county charges, of course, is egregious. But the burden of this inequality falls not on industrialists, but on peasants and workers . . . Keith Kitychi don’t see it. They only want only that not exclusively nobles would have privileges, but ‘evenly’ merchants as well” [12, v. 23, p. 92]. There were, though, in Russia “peasant” provinces (for instance, Vyatskaya, Permskaya, and Vologdskaya), where there was almost no noble land, and therefore the majority in the Zemstvo belonged to the peasant vowel. But the predominant positions, the duties of the chairmen of the county office, were in the hands of the nobles, who defined the policies of local government. In addition, county councils in such governorates were “even more tangled by the network of all kinds of bureaucratic bans, obstructions, restrictions and explanations” [12, v. 23, p. 295]. Yet, even the imposition of these kinds of “defused and downed” county councils in more than 10 governorates of Russia was not performed by the sovereignty together with the nobility. As a result, the Zemstvo reform was never introduced in all the governorates of Russia. And one of the reasons for the resistance to the imposition of county councils in the remaining governorates of Russia was the concession to the nobility. The arguments of the opponents of Zemstvo in the Council of State are frank: “There are no nobles there”. . . And “If there are no noble landlords, the ‘people’ have not grown even to the maintenance of roads and settlement of hospitals” [12, v. 23, p. 296]. As a result, of course, the nobility achieved that the main points of the wishes of their meetings were almost unequivocally reflected in the “Regulation” of 1864. At the same time, it should be noted that this reform was bourgeois in essence, an objectively necessary mean of adapting to the needs of capitalist development in Russia. Therefore, it was contradictory, inconsistent, and incomplete. It retains the old “Charter on Zemstvo duties,” and at the same time a new system of new elections had emerged. Both provided the benefits and advantages to the nobility and to a lesser extent took into account the opinion of the still politically indifferent trade and industrial bourgeoisie, but progressively more and more vocally casting vote. This, incidentally, is one of the reasons for the second Zemstvo reform in 1890. Local self-government, proclaimed in the 1864 reform, was in reality a visibility, as sovereignty made concessions to the nobility and liberal-bourgeois elements only in the solution of local economic issues. It retained administrative authority at places

5.2 The Characteristics and Achievements of the Noble Management Thought

309

and, in particular, the right to cancel the decisions of county assemblies unfavorable to the government and even to close down the county councils advocating their rights. In addition, the source of income of county councils in the 1860–1880s were mostly real estate property charges: land, houses, factory and plant enterprises and trade establishments, and the income itself was small. Expenditure on roads and construction, maintenance of civil managements, prisons, justices of the peace, charity houses, and other so-called “mandatory costs,” together with “non-binding” (“fortunately” for county councils) expenditures (on health, national education), has grown from year to year and has always surpassed the income of county councils. Thus, no special opportunities and rights for local government at county councils were granted by the Regulation of 1864. In other words, many of the principles and starting-point liberal requisites of the reform expressed by P. Valuev and members of his Commission remained at the level of utopian reasoning. In completing the characteristic of transformations made under the Regulation of 1864, some sections of organizational and legal innovations and activities should be pointed out. In the Regulation there was a special section that described “the substance, extent and limits of the authorities of county council institutions.” The best assessment and characterization of the “limits of power” of the county councils in addition to the already stated, there was also an article on the Regulation, under which the chief of the province (i.e. the representative of the supreme administrative authority in the province) was granted the right, in the event of inaction behalf county council institutions, to “remind and enforce.” In the case of the “failure of this measure,” the governor could proceed, with the permission of the Minister of the Interior, “to direct orders on the county council’s account.” There were also articles on the scope of the meetings and management; the organization and forms of control, reporting, and accountability of county institutions; the rules of “coordination of county council property,” “preparation of county estimates and layouts,” “approval and activation of county estimates,” “the order of meeting county needs.” The county council measures for buildings and constructions, construction and maintenance of roads and road facilities, and “measures of promoting local trade and industry” were indicated. A fairly detailed description of the process of development and approval of Regulation-2 is given as an illustration of the long process of making a managerial decision at the state level that determined the fate of Russia for many years to come, and in terms of subject levels of HSR and HMT (see Chap. 1)—as an illustration of the third level: “history of society-science relations.” That is why we give the consequences of the reforms and the implementation of the noble management thought. According to Russian historian S.F. Platonov, “the liberation of the peasants has substantially changed all the foundations of Russian state and public life. It created in the central and southern regions of Russia a new, crowded (21–22 million) social class. Previously, to manage it (emphasized by us—M.V.), they were content with the landowner patrimonial authority. Now the state had to manage it. The old Catherine’s institutions, which established noble self-government in the districts, were no longer suitable for the new districts of the district population. It was

310

5 Management Thought in Russia in 1800–1917

necessary to re-create the local administration and the court. Peasant reform, therefore, inevitably led to other transformations . . . Only class self-government knew the old laws; now all-class institutions were created. Elected persons from the population were involved in managing the economic affairs of each province and each county. It is all landowners, traders and industrialists who have real estate of a certain value, as well as rural societies, who have the right to elect representatives from their midst for three years (‘vowels’) to county zemstvo assemblies. These meetings, chaired by the county leader of the nobility, meet annually for a short time to guide the county’s business affairs. The county zemstvo assembly elects from its midst a county zemstvo council consisting of a chairman and two members. The government is a permanent institution; on the basis of the law and powers of the zemstvo assembly, she is in charge of all the zemstvo affairs of her county. Every year, a congress of deputies from county zemstvo assemblies of the entire province takes place in the provincial city. Under the chairmanship of the provincial leader of the nobility, these deputies constitute the provincial zemstvo assembly. It has as its subject the general management of the economic affairs of the whole province. To constantly conduct these matters, it elects from its midst a provincial zemstvo council consisting of a chairman and several members. The activities of zemstvo institutions (‘zemstvos’) are subordinate to the supervision of governors and the Ministry of the Interior. In cases of misunderstanding, the zemstvos are allowed to file complaints with the Senate. Zemstvos are subject to public education, public health care, food, road business, insurance, veterinary medicine. Schools, charity, medical care, the construction of roads and bridges, mutual fire insurance and other zemstvo affairs require large amounts of money. Therefore, zemstvos were granted the right to levy the population of counties with duties and duties on zemstvo needs, form zemstvo capital, and acquire property. With its full development, Zemstvo activity was to achieve great complexity and encompass all aspects of local life. Thus, new forms of local self-government not only made him omnipotent, but also expanded his circle of powers. Earlier, before the reforms, the entire County nobility was managed by a noble corporation (emphasized by us—M.V.), which represented the entire composition of the full county population. The right of self-management then had in mind monosemous, noble interests. In the new zemstvos, the nobles were predominant; but all other residents of the county with property qualifications, as well as peasant societies, were also involved in zemstvo farming. The place of class interests was replaced by pan-European needs and interests. Self-government has become so widespread that many have understood it as a transition to a representative form of government. Therefore, on the part of the government, soon after the introduction of the Zemstvo institutions, the intention to keep the Zemstvo activity in the circle of exclusively local affairs and not allow communication between the Zemstvo corporations of different provinces became noticeable . . . A little later, Zemstvo self-government were [sic] created. New forms of urban self-government. Not only a new management order, but at the same time a general change in the social system had a beneficial effect on the development of urban life in Russia in the second half of the nineteenth century. Prior to the peasant reform, in

5.3 Management Ideas of the Revolutionary Democrats and the Populists

311

most provinces the dominance of patriarchal forms of serf landlordism continued, which retained until recently the features of the natural economy. Cities had few buyers and consumers from counties; they were scarce in capital; their population was not distinguished by enterprise, it was poor and ignorant. With the liberation of the peasants, county life revived; there was a zemstvo with its economic enterprises; reinforced construction of railways began; many commercial enterprises and banks were founded. The upsurge in the economic life of the state affected to the cities in the most decisive way; the cities came to life and, using the new self-government, took a completely different look. From administrative centers they began to turn into centers of national economic activity” [26, pp. 793–795]. Evaluation of reforms implemented by Alexander II, in the language of “control,” is best expressed by the Russian historian A. A. Kiesewetter: “If the art of rule (highlighted by us—M. V.) is the ability to correctly identify urgent needs of the era, to open free exit inherent in a society viable and fruitful aspirations, from the heights of impartiality to appease mutually hostile parties by force a reasonable agreement,—it is impossible not to admit that the Emperor Alexander Nikolaevich has correctly understood the essence of his calling in the memorable 1855–1861 years of his reign” [28, p. 64]. These are some of the results of the interaction between the real management of the country’s economy and the noble management thought in post-reform Russia of the nineteenth century.

5.3

Management Ideas of the Revolutionary Democrats and the Populists

The Russian revolutionaries democrats were representatives of a special stream in the history of world public thought. As spokespersons for peasants and ideologists of the peasant revolution, they developed original management ideas. As the ideology of peasantry was heterogeneous, the concepts of their spokespersons differed considerably. In the history of the Russian liberation movement in the nineteenth century pro-reform Russia, two major groups of peasant ideologists are selected. The first group is the Revolutionary Democrats of the 60s and the revolutionary populists proclaimed the need for a revolutionary struggle against the remnants of serfdom in Russia. The second group, the liberal populists, argued for various kinds of liberal means of “struggle” with sovereignty, often limited to “snorting”3 at the current pro-reform situation. In the process of creative activity, representatives of revolutionary democracy, the most profound critics of serfdom and its residues, the ruthless critics of capitalism (often without realizing the progressiveness of its free development for Russia, and

3 Expression of the famous Russian sociologist Nikolay Konstantinovich Mikhailovsky (1842–1904), noted and quoted by V.I. Lenin [12, Vol. 1, p. 179, p. 291].

312

5 Management Thought in Russia in 1800–1917

unaware of the forces that would be summoned to destroy it) also affected “management” problems. They were deeply involved in the problems of the boundaries of the capitalist state economy, “government intervention in the economy” and the regulation of the economy under capitalism, the improvement of factory legislation, etc. In their purely theoretical work (most often of a utopian nature), they considered the draft Regulations of the Russian state, issues of social capital formation, public credit, projects of various kinds of associations (craftsmanship and industrial, pastoral, agricultural, etc.), and the programs of educational establishments that correspond with these associations. Let’s consider how management issues in the work of Russian revolutionary democrats and revolutionary populists had been highlighted. Development of management issues in the work of Russian revolutionary democrats The author of one of the Statutes was the Russian revolutionary democrat, the talented scientist N.A. Serno-Solovyevich. At the age of 24 he developed a detailed Regulation containing parts relating to the management of the state economy. Thus, in revealing the content and form of the executive power of the state, he wrote: “§ 30. The executive branch focuses on: common to the entire state—at ministries, local—at provincial assemblies and the governors. § 31. Ministries are the following: Popular education. 2. Finance. 3. Trade and industry and popular welfare. 4. Internal and spiritual affairs. 5. Foreign affairs. 6. Military. 7. Naval” [28, pp. 55–56]. The document reflects one of the first attempts to justify the establishment of a special state economic authority. In their economic and other types of work, N. Serno-Solovyevich raised other issues related to management topics. In the article “On measures to multiply the wealth of people and to improve the material conditions of people’s labor in Russia” [29, pp. 78–98] after enunciation of “unfavorable conditions,” which production faced in Russia (mental, economic, natural, political), he proposes a number of measures to address these conditions. Among the measures proposed were organizational and administrative arrangements [29, pp. 84–85] aimed at eliminating the remnants of the trusteeship system, the rigid centralization and bureaucratic forms of management, the shortcomings of the complex system of tribute and taxes, and the reduction of the army and government officials; educational: “The training of the people should take a practically technical direction. We are lacking worker specialists, typists, technicians to the utmost. Hardly any plant or vehicle in Russia are activated without foreign aid. And yet people by nature are extremely capable of all these exercises. But for them capability alone is insufficient. Positive information is required. Therefore, the establishment of various real technology schools is one of the most significant issues for Russian industry. They need good teachers. . . But it’s doubtful that there’s a lot of them at the moment. They must be prepared, and they can only be prepared abroad. Training abroad can have two objectives: theoretical— for the education of teachers and practical—for the improvement of the various branches of industry. Another measure leading to the same goal is the concentration of all special establishments coordinated by different departments in the Ministry of Public Education and their transformation into establishments like polytechnic

5.3 Management Ideas of the Revolutionary Democrats and the Populists

313

schools, but open ones. If seven or eight such special establishments located in Petersburg alone are transformed into four or five open polytechnic schools at different points of the state, this would be very good for the development of all industries without any increase in costs.” [29, pp. 86–87]. Economic: instead of private banks, as credit centers in the bourgeois society, he proposed the creation of public banks. One of the objectives of public credit is to promote the entire urban and rural population, crafts, industry, and commerce [29, p. 87]. “Railway construction,” “establishment of freedom of trade,” “abolition of civil ranks,” etc., are also indicated among the measures. In the view of N. SernoSolovyevich, due to the last measure “the unproductive and extremely burdensome for people class—officialdom, as a special class—will be destroyed. There will be only so many persons in the service and maintenance of the State as are essential to the needs of the service.” [29, p. 94]. Another representative of the revolutionary-democratic movement, A.P. Shchapov, had in much of his work carried through ideas of “rationality” and “realism” in the management of the economy based on the knowledge and application of objective “natural scientific patterns.” The most precise description of the program for the implementation of these ideas is set out in his work, “Realism applied to the national economy” (1866) [30, pp. 25–72]. First of all, in his view, “in order not to divert by the gift of natural wealth given to us, so that we do not use it unconsciously and unaccountably, we need to know our cash and to possess, dispose it not at random, but on the basis of a rational, strict economic plan.” This implies the “greatest need for the education of the masses (emphasized by us—M.V.), for whom the knowledge of nature is not only a strength, but also the first condition for reasonable action” [30, p. 26]. In formulating the two tasks, he further outlines the extensive plan for industrial and managerial public education (as the first tool) and the projects of science and economic associations, the main purpose of which is to disseminate knowledge “among the people” (as the second means of solving the formulated goals). Shchapov A.P. thought it necessary to start people’s education “from the provision of natural-economic, industrial and educational technology schools” [30, p. 28]. Parallel to general grammar schools, “secondary technical or industrial establishments are needed. . . They could have brought up technologists, typists, agronomists, pastoralists, factory masters and managers.” [30, p. 30]. The general idea of organizing such technical or industrial educational institutions could be roughly this. In all of these establishments, common, for all departments or faculties and mandatory: mathematics, physics, the main basis of chemistry, cosmography—links with geology, geography and short history, physiology with short anatomy, hygiene with short medical geography and statistics, etc. The number and subjects of naturaleconomic faculties in different provincial grammar schools can and even should be, at the first stage, different, pending on local economic conditions and needs. In some, such as secondary industrial education establishments or grammar schools, such departments or faculties may be:

314

5 Management Thought in Russia in 1800–1917

. . .III. Department or faculty of factory. With the same general educational subjects, it would include special ones: technical chemistry, a study of industrial or factory products of the three kingdoms of nature, and practical application of this knowledge to different or only to some factory production industries, considering especially local industrial conditions [31, pp. 31–32].

Further, Shchapov A.P. puts forward a number of principles for regional distribution of secondary educational establishments in the country. His comment on the methods of training at these grammar schools is very interesting and modern: “. . .it is needed that. . . emphasis was placed on the practical study of one or another industrial branch, for instance, through farms, workshops, zoological and botanical gardens and groves, through business trips with teachers to factories and plants, fairs and markets, industrial exhibitions, etc.” [30, p. 32] The system is completed with specialized education: “in parallel with the higher educational institutions—universities and academies—special and higher specialized economic, industrial and educational establishments are particularly needed . . . These higher industrial and educational establishments, as well as their faculties, can also be varied, ranging from different areas of nature conservation, or as diverse principal, main areas and the needs of people’s labour. There may be a necessity, for example, for agronomic, pastoral, technological or factory, mechanical, forestry, marine, mining, architectural or, in particular, zoo-economic, mineral and industrial, etc. academies” [30, p. 33]. Again, the variations of possible faculties at academies, relevant curricula, teaching methods, etc., are described. Thus, supposing the possibility of admission to special academies among secondary educational institutions, Shchapov A.P. recommends the establishment of a “General Preparatory Faculty” at academies, with a specific set of subjects introductory to the specialty. Only then does the student choose the specialization and the corresponding “industry” faculty. Concerned about the common culture and education of the nation’s commoners, Shchapov A.P. looks for all kinds of ways to achieve this objective. Thus, as one of these ways, he considers factory and plants themselves, which “with a quite rational and improved structure and greatest prevalence in our industrial classes, could also serve as important practical schools and, at the same time, as sources of people’s well-being. . . They could additionally include schools for workers or their children. . .” At factories and plants and their established schools, workshops, and laboratories, workers “would acquire the technological, chemical and mechanical information, or accurate natural knowledge of the productive forces of nature conservation necessary to them,” would become practically familiar with the various production processes, the production technology, and would learn “. . .modern discoveries and inventions in the field of industry and production and politicoeconomic sciences” [30, p. 65]. Through such forms of knowledge of “natural scientific realism,” Shchapov A.P. moves on to the second means of effectively disseminating and using scientific laws—the creation of various associations. These include factory, chemical, technological, mechanical, agronomic, and other associations. They should be composed of “highly developed professionals” of the appropriate profile and should promote

5.3 Management Ideas of the Revolutionary Democrats and the Populists

315

knowledge among commoners. Thus, “enlightened mechanical associations could serve as a beneficent means of propaganda of machine production and mechanical knowledge in Russia. Their machine facilities could be made by the finest and most useful colleges of practical mechanics, similarly to England” [30, p. 68]. Factory associations would serve as means of promoting “new rational techniques of fabrication,” and factories and plants are the appropriate schools. Through this type of association A. Shchapov dreamt to achieve that “in different factories and nature labs, we would actually develop, grow, and spread a new, better, intelligent business type of generation” [30, p. 72]. Another renowned revolutionary democrat, Nikolay V. Shelgunov, who had devoted himself to the study of the issue of the destiny of capitalism in Russia, has worked on the issues of state intervention in the economy and on the organization of the state economy. He believed that, from the perspective of law, “the state can, of course, establish factories and plants and engage in agriculture; but as a state economy is not a legal matter, but an economic one, it is clear that in order for it to be properly evaluated, inquiries should be made not in Roman law, but in economic science.” [31, v. 2, p. 147]. The experience of Western countries has shown that public (treasury-owned) economy needs to be minimized. Shelungov’s logic is as follows: “if the government engages in competition with its people or in state revenues, monopolizes production,” in these cases “the State exceeds its limits; it places itself in contradiction with itself and creates the scattered and hostile interests in which the Treasury and its property are something counter-steering people.” [31, v. 2, p. 147]. His explanation of the motivation and behavior of employees (officials) of state enterprises is very interesting, “the private businessman wants the business to succeed, the official is afraid of failure. For an official, it is not increasing the benefits, that do not give him the corresponding service reward, that is important, but rather failure, which could lead to accountability. That is the reason why all state enterprises are routine and timid, backward and slow, unknown in private affairs.” [31, v. 2, p. 148]. If in the understanding of natural phenomena Shelgunov maintained materialistic positions, his views on the development of public life were idealistic. He did not understand the classical nature of capitalist production and therefore misjudged state economic policy. Considering that the “state has the purpose of a common good” [32, p. 243], the law and other State measures, in the view of Shelungov, should, firstly, be aimed at achieving this objective, and secondly, every educated and conscientious Russian person must seek such means. For Shelgunov, as well as for other Russian revolutionary democrats, the motivation to seek these means was, above all, the economic backwardness of Russia. “Economic underdevelopment, the lack of industry and the impossibility of industrial action against Europe had given place to the development of such aspirations and desires, which had led Russia to the creation of the need to review all domestic economic life conditions.” [33, pp. 119–120]. In the work of Shelgunov, it is possible to encounter judgments on associations as an organized measure to combat the Smith principle of division of labor and, as a result, to increase the productivity of

316

5 Management Thought in Russia in 1800–1917

public labor in capitalism. If A. Shchapov’s associations are inherently spiritual and their main task is to disseminate knowledge among “people,” Shelgunov’s associations are the only way to save small producers in the fight against large capital. Even in the peasant community, he tried to use the association method. “Only through the establishment of associations in industry, agriculture, the broad development of folk production, including through changes in banking and credit” [33, p. 120], the introduction of technological achievements into industry and agriculture, in Shelgunov’s view, Russia’s economic backwardness be eliminated. To the end of his life (1891), N.V. Shelgunov believed in “association,” in the peasant socialist revolution, in various kinds of utopian measures “improving the people’s welfare.” Most revolutionary democrats of the 1860s were influenced by the famous Russian philosopher Nikolai Gavrilovich Chernyshevsky (1828–1889), including his assessment of the boundaries of government intervention in the economic life of the country, as set out in the treatise on “Outlines from Political Economy (on Mill)” [34]. But in the beginning a few words about John S. Mill and the appearance of his treatise “Fundamentals of Political Economy” that prompted N. Chernyshevsky to make assessments of this treatise. John Stuart Mill (1806–1873) began studying political economy at the age of 13 years under the guidance of his father James Mill (1773–1836), who in 1826 published the book “Elements of Political Economy.” In writing this book, Mill was assisted by his son, who writes down after his father from the memory of his lecture. As soon as D. Ricardo published “The Beginnings of Political Economy,” J.S. Mill read it, comparing it on his father’s advice with A. Smith’s book “Wealth of Nations.” Therefore, by the age of 40 years, John S. Mill had already formed his own ideas about the economy and in 1.5 years he wrote a treatise, “Fundamentals of Political Economy,” publishing it in 1848. The book survived seven editions during the author’s lifetime (1848, 1849, 1852, 1857, 1862, 1865, and 1871) and in our days is still in demand and is reprinted in the original. Here is how J.S. Mill formulated the task in 1848: “Political economy, as it was properly understood, was at the time of Adam Smith in its infancy and has since grown up, and the science of society, from which this outstanding thinker almost never separated his specific discipline, went far beyond the state in which it was under him, although he still remains in the early stages of his development. However, to date, no attempt has been made to combine his practical method of studying political economy with the theoretical ideas that have grown since then in this field or to establish a connection between economic phenomena in society and the best social ideas of our time, as Adam Smith perfectly did in relation to his philosophy. century. This is the task that the author of this work has set himself.”4 In the context of the presented installations of J.S. Mill briefly describe the provisions of N.G. Chernyshevsky on the issue of state intervention in the management of the economy. N. Chernyshevsky, like many of his predecessors and contemporaries, considered that “government participation is required in all cases 4

John S. Mill. Fundamentals of Political Economy. T.1., Foreword. M.: Progress, 1980, p. 2.

5.3 Management Ideas of the Revolutionary Democrats and the Populists

317

where it is useful for the material well-being of people” [34, p. 460]. As these activities require monetary costs, it is necessary to identify certain economic means and sources. As such, he refers to various types of taxes, reduction of unproductive costs (military, management), and others. The overall assessment of Chernyshevsky’s boundaries of government intervention in the economy is as follows: “we fully recognize the merits of insights which Mill uses to proove that it is necessary to wish for a possible restriction of government intervention in economic life, and indeed accept Mill’s general conclusion: non-intervention should be a general rule, and intervention should be the exception.” [34, p. 520]. The rationale and arguments for this conclusion are as follows: first, John S. Mill allows government intervention that does not embarrass personal freedom. “There is no violation of freedom, there is no burdensome or humiliating restraint if the government prepares the means to achieve a known purpose, leaving the private person free to use the other means he believes are best. . . A national bank or a government factory can exist without any monopoly of private banks and factories. The mail may exist without any penalties against forwarding letters in other ways.” [34, pp. 514–515]. Second, “the objection to government intervention is based on the principle of the division of labor. Any new obligation assumed by the government is a new occupation for an institution already too heavily encumbered by responsibilities” [34, p. 515]. Generally speaking, there is a way out of this provision, if “the necessary conditions for good management” (emphasized by us—M.V.) are fulfilled, when “the principal rulers. . . have the dominant, but only general, oversight of the overall progress of all interests, to a greater or lesser extent, of the responsibility of the central authority,” that is, “if the internal organization of the administrative mechanism is skillful, provides subordinates and, where possible, local subordinates not only performance, but also, to a large extent, control of details, it requires them to report the actual results of their actions, rather than their actions (emphasized by us – M.V.), except when the actions themselves are subject to trial; if all the best measures are taken to ensure that persons are appointed in an honest and capable manner; if a broad road is open for promotion from lower administrative ladders to higher levels; if the treasury is given a greater latitude by the official to take new measures, without waiting for orders, so that thoughts of each of the principal rulers may be focused on the great public interest of the country in its part, if so, the government will probably not be excessively burdened by the number of cases, whatever the number of proceedings may be useful to lay on it; but excessive encumbrances will remain a serious new inconvenience in increments to other inconvenience in the case of “bad government organization”” [34, pp. 516–517]. Third, the government is naturally limited in its possibilities to attract and use knowledgeable and interested persons in the state apparatus. But even if the government were “able to reconcile, in each case, all the great mental forces and practical talents of the entire nation, it would still be better to leave the most significant part of public affairs in the hands of persons directly interested in them,” considers N.G. Chernyshevsky following J. Mill.

318

5 Management Thought in Russia in 1800–1917

And this is why “Business life is a most vital element in the practical education of the people.” Therefore, “the people who are accustomed to expect the government to redress in all public affairs, expecting the government to do everything that is out of the habit of habitual routine for them—such a nation’s abilities develop only by half; their upbringing lacks one of the major facets” [34, p. 518], namely the practical. Consequently, the government must create as many opportunities as possible for people from all classes to do business that is personally relevant to them, it must “bring people as much as possible into voluntary cooperation” [34, p. 519]. N. Chernyshevsky goes further in his assessments. He believes that the measure of boundaries of government intervention in economic life should be “the basic principle of economic science: there is no need to do anything excessive, because the use of force in any redundant case or any excess of the case is a waste of money that reduces the means of action that is necessary and useful . . . If a person can walk well without external support, there is no need to slip him with an unnecessary helping hand. By this general rule the Government should not deal with such cases, which go well without its cooperation or control.” [34, p. 521]. At the same time, “government management of economic enterprises” on the basis of economic science is in most cases successful. An example is given of effective management of State railways in Belgium [34, p. 524]. Further N. Chernyshevsky, together with J. Mill, indicates those branches of material production and non-productive areas that should be classified as stateowned, that is, should be subject to public management, with the coexistence of private “enterprises” permitted. First, it is the upbringing and education of citizens of the State. In these areas, “government intervention is justified by the fact that it does not belong to objects in which the quality of the goods is sufficiently ensured by consumer interest and concern” [24, p. 532]. Basic education must be accessible to virtually everyone, that is, be free of charge or at negligible cost. Second, in addition to the upbringing of the younger generation, “the state should, as far as it is able to know and execute, protect children and minors from excessive burdens of work” [34, p. 533]. Third, there are issues that are solved by a single individual and “whose usefulness is expected of him in the distant future.” For human beings it is common to be wrong, so the state must control such cases, acts (various kinds of contracts, longterm obligations, marriage, etc.), that is, to prevent their occurrence or, if they have occurred, to mitigate their consequences, if necessary (e.g., terminating obligations). Fourth, state intervention is permissible and even necessary in all cases where a private individual leads (or has intention to conduct) a case only through the attorney. In these cases, “treasury management” is proposed as a substitute for “shareholder management,” which is better controlled (than in the case of a corporate monopoly), and is in many cases organized just as well. Such cases include all urban economy, post, telegraph, railroad, sea, river, etc., types of transport, defense industries, etc. The coexistence of private enterprises and monopolies is acceptable here, but then “the government must either set the appropriate conditions for the common benefit” (including guaranteeing “good performance”), or “leave such

5.3 Management Ideas of the Revolutionary Democrats and the Populists

319

power over it that society is not deprived of at least the benefits that the monopoly has.” [34, p. 536] Fifth, the state guardianship of the elderly, old aged, and various kinds of benefits for the poor, the sick, the unemployed, etc. Chernyshevsky’s assessments of the effects of the guaranteed benefits offered by the state are very modern, interesting, and correct, in our view. He writes: “each benefit should take into account two kinds of consequences: the impact of the benefit itself and the consequences of confidence that it will be provided. The consequences of the former are generally useful; but the consequences of the second kind are almost always harmful.” As far as there may be a general rule, it is: “if the benefit is given in such a way that the situation of the person receiving the benefit is no worse than that of the person who acquires the same security without benefit, the allowance is unhealthy when people are confident that they will be given it; but if it is available to everyone, it leaves the man with a strong impression to dispense, if possible without benefit, it is almost always useful. If the situation of the person receiving the benefit is no worse than that of the employee making a living of his or her work, it is a system that destroys the very roots of all personal industriousness and selfmanagement.” [34, p. 540] The general conclusion of Chernyshevsky’s views on this issue is that “the government should take on all those affairs that are necessary for the common benefit of mankind or of future generations, or for the real benefit of the parts of society that need external assistance.” But prior to taking on such an affair, the government must always consider, . . . that with government activities it will be executed better than by the jealousy and generosity of individuals. . . But it is necessary to add that, in fact, government intervention may not always stop at the boundary of affairs, which by their very nature require it. There are times and such provisions of the nation that for almost every affair“ truly important for the common good, it is useful and necessary at times to be performed by the Government, because private individuals, though they may, are not willing to do so. . . There are times and cases in which there will be no roads, no docks, no channels, no piers, no work for irrigation, no hospitals, no primary nor higher schools, no printers, unless their organized by government: the public is either so poor, that it has no means of being mentally retarded, that it cannot appreciate their benefits, nor is accustomed to common action, that it cannot handle these cases.” [34, p. 543]. In all these cases, according to Chernyshevsky, the boundaries and goals of government intervention in the economy need to be substantially expanded. All the above-mentioned considerations on government intervention were carried out by N.G. Chernyshevsky equated “government” with any “public activities” and expressed a general conclusion about the small boundaries of government intervention in economic life in the case of preservation of private property in society. But the same problem had arisen in a society that had been written and dreamt about of by N.G. Chernyshevsky—in the future socialist society, to which mankind will inevitably come. In this society, the power of the government (state) economic authorities will remain on primary stages, but will tend to zero.

320

5 Management Thought in Russia in 1800–1917

This does not contradict his assertion of “social activity” being strengthened under socialism. Chernyshevsky was a supporter of socialist, state public property governed by the power of the working. He wrote: “That form of land ownership is the best for the success of agriculture, which unites the owner, master and the employee in one person. State ownership with communal possession of all forms of ownership is the most appropriate for this ideal.” [35, p. 434]. At the same time, Chernyshevsky, unlike Russian sociologist Alexander Herzen and other supporters of the community, regarded the community merely as the starting point of socialism and rightly assumed that socialism was developing and thriving on the basis of largescale machine-based production. Soviet researchers of the political economy creativity of Chernyshevsky noted his shortcomings in the rationale of socialism, his lack of understanding that only public production produces public property, although in much of his work he speaks of the unity of both. Chernyshevsky believed that the basis of socialism could be created if there was a form of public property, although there was no public production. However, it should be noted that rather specific, detailed elaborations not only of forms of public property but also of forms of public production belong to Chernyshevsky. For instance, in the plan to create “workers’ associations in production” [34, p. 37], Chernyshevsky saw partnerships as the means of achieving the autonomy of all workers of socialist society, of implementing his idea of “unionized production between people” [35, p. 742] (i.e., socialist production) and, at the same time, the efficiently manage “large production.” The mentioned plan, from the point of view of developing world management thought, is of great interest. Materialistically developing and historically specificating the ideas of the Western European socialist-utopians, Chernyshevsky’s plan in turn served as a starting point for further development of progressive social thought. Before we begin its analysis, we note that N.G. Chernyshevsky not only believed in the inevitability of the victory of socialism in Russia, he had all his adult life attempted to prove, achieve this victory from the development of the economic foundations of society, and in the case of the Russian society, he sought ways and means to reduce the phase of capitalist development in his dialectic scheme—serfdom, capitalism, socialism. And the “partnerships of workers” were one of such means. This form of “union production” organization assumed, according to Chernyshevsky, deliberate distribution by society of all types of public works in the fields of production, taking into account the importance of each of them in terms of the well-being of the members of the society who are autonomous workers. He had consistently classified the needs of society and their corresponding products into groups: “needs of material well-being, mental activity and aesthetic joy needs” and “basic necessities, comfort items and luxury goods” [34, p. 294, 297]. In other words, this form of organization of production was the basis of a conscious, managed organization of public or “unionized production” [34, p. 294, 297]. In his plan, Chernyshevsky outlines the creation of a partnership, the organization of production itself at partnerships, the distribution and consumption of the products of their activity. He believed that “industrial-agricultural partnerships” were created either individually or on the basis of public loan capital devoted by the treasury and

5.3 Management Ideas of the Revolutionary Democrats and the Populists

321

“repaid by gradual contributions from the partnership’s profits.” The head of the partnership is initially appointed by the government as a “conscious and conscientious person,” that is to say, the idea of partnerships is new and requires “theoretical preparation” [34, p. 37]. The partnership is a voluntary organization, so during establishment those willing are invited, but with the approval of the Director, who, according to Chernyshevsky, should give preference to family persons (over those with no family). In establishment the partnership should consist of 400–500 families (approximately 1500–2000 persons), that is, 800–1000 adult workers. Withdrawal from the partnership is also voluntary, as is accession. To start its activities, the partnership will require a building that is either newly built or a purchased and repaired old one. It is one of the conditions that “at the building there are as many fields and other land as is necessary for agriculture according to the calculations of working forces of the partnership.” [34, p. 38]. This building is primarily used for the housing of members of the partnership and is therefore designed by them. The building must contain “accessories that are required by the morals or advantage of the members of the partnership”—a school, library, theater, concert and evening halls, a hospital, etc. The rent to be installed should cover the need for repair and provide “normal profit for capital construction in a given state” [34, p. 38]. All necessary and missing tools and objects of work to begin “farming and handicrafts” [34, p. 38] are acquired by the partnership for the same allocated funds. Before proceeding with production itself, the Chernyshevsky proposes distributing the workers among spheres of activity, taking into account the needs of the partnership, on the one hand, and on the other, guidance on the basis of the principle of “one does what he wants.” Priority is given to the first principle and cases when a specialist (such as a jeweler) will not be provided with material are possible in the partnership. Initially this review of the “possible and impossible” is carried out by the director of the partnership and the outcome of the problem depends on his prudence. But there are other ways of implementing the first principle (meeting needs). Thus, during planting and harvesting periods, the partnership will require additional manpower. In addition to volunteering, the partnership may use methods of material motivation by imposing “such a fee on farm work, so that the vast majority of its members who engage in ordinary fields of work, can see the benefit of transferring for a time to farming” [34, pp. 39–40]. And, finally, the scale of production and the multiplicity of organizational issues require, in Chernyshevsky’s opinion, the establishment of regulatory, executive and control units in the partnership. To this end, once the composition of the partnership has been determined, its members are divided into “industry fields of work,” and the representatives of each “field of work” select the administrative council, with the consent of which most important economic and management decisions are made, related to this field of work, and “all members of the partnership select the general administrative council, which is constantly in control of the director and selected assistants, and without whose consent nothing important is done at the partnership” (highlighted by us—M.V.) [34, p. 40].

322

5 Management Thought in Russia in 1800–1917

After a certain period of the Partnership’s activity (for Chernyshevsky, a year), members will know the affair and one another so well that no need for the government to appoint the director of the Partnership and the authority of the former director is terminated, and “all the management of the affairs of the partnership goes to the partnership itself.” In other words, it chooses “its own rulers” from among its members (by the type of the board of directors of a joint stock company), adjusts and modifies, if necessary, the previously adopted partnership statute, by retaining the best in it, ensuring that the main goal of organization of “federal production” is achieved for the sake of the well-being of all its members, who are free people and workers in their favor, “not in favor of any owner” [34, p. 40]. Chernyshevsky further outlines the organization of the distribution of profits received by the partnership. First of all, comparing production at partnerships with production in private enterprises, Chernyshevsky rightly believes that since the members of the partnership participate with interest in receiving and distributing the “profit from their work,” the partnership will have a much higher productivity rate than similarly sized private farms and factories with employees, and hence profit. After deduction of wages and other costs of production from profits, the partnership retains a large share of the profits, which is divided into several parts. The first part covers social and household needs (repair and construction of new schools, hospitals, etc.), the second is for the payment of interest for the loan capital, the third is a size-defined part for “spare capital,” and for Partnership insurance “from various accidents.” Chernyshevsky is concerned with the organization of public production in the future socialist society, so he implies the possibility of partnership cooperation, including the possibility of creating a common “insurance capital” for mutual insurance of partnerships. From the same part of the profits, funds needed to create new partnerships are taken. After these deductions, the remainder of the profits is distributed as a dividend among the members of the partnership “for each of their working days.” It should be noted that in the same treatise N. Chernyshevsky, reasoning about the tripartite division of the product, suggests the need to take into account and evaluate managerial labor by singling out part of the remuneration for “business management labor,” “the art of business management” (highlighted by us—M.V.) [34, pp. 220–221]. At the stage of consumption, additional advantages in organizing public production in the socialist society emerge through the creation of public housing, public canteens, kitchens, shops, etc., in which goods, products, and services will be sold and delivered at wholesale prices rather than retail. This is Chernyshevsky’s plan for the organization of public production, which truly reflects the possibly basic but nonetheless “understanding of the orderly organization of production in the socialist society.” The plan was an illustration of Chernyshevsky’s thesis on significant reduction of government intervention in the management of the economy in the future socialist society. At the same time, it was in this version that the plan caused the indignation of some French theorist economists, who perceived it as an encroachment on administrative custody of the economy: “terrible, terrible: society is placed in Asian dependence on the government: a democratic centralization is being introduced, to which the current excessive French administrative trusteeship is

5.3 Management Ideas of the Revolutionary Democrats and the Populists

323

nothing.” [34, p. 44]. Chernyshevsky easily and simply dispatched his critics, citing a mass of examples of the so-called “administrative custody,” against which “in France there is no firm possibility to resist commercial, industrial or any desired business, if the management wants to impede it.” [34, p. 45]. Chernyshevsky convincingly proved that state authorities’ apologists feared in his plan not bringing government intervention into the economy to zero, but the increase of workers’ participation in the management of the economy to the maximum. At that time, Chernyshevsky established a clear functional link between the increase in public output in the future society and the consequent increase in the participation of workers in government. He writes: “The form of production structure must be such, that each enterprise has more than one owner and hundreds of masters, and that no one has to deal with the business, except the master, otherwise, to say that anyone related to it is the master of it for as far as he is related,” each participant in labor must be a participant of the economy’s rights. At the same time as the rationale for worker participation based on his “theory of production,” he cites part of the “consumption theory” in terms of contemporary issues in introducing full accountancy at enterprises. Namely: “we find exactly the same requirement in the conditions of a satisfactory economic calculation. It is only possible when each consumer is aware of the exact value of the product consumed, the quality of the work force used for production; this may be known only to the master of production; consequently, each consumer of the product must be its own master producer” [34, pp. 140–141]. Perhaps it is in connection with this “plan,” V.I. Lenin referred to N.G. Chernyshevsky as a “Great Russian utopian.” In the development of management thought, there was no issue that was not developed or at least affected by the most advanced progressive class in Russia of the second half of the nineteenth century. These are the boundaries and areas of government intervention in economic management, the combination of centralization and decentralization in management, administrative and economic management methods (Chernyshevsky, Shelgunov), and the development of methods (measures) in economic management (Chernyshevsky, Serno-Solovyevich), the creation of various kinds of productive and creative associations and union associations, artels, partnerships (Shchapov, Shelgunov, Chernyshevsky), personnel problems (SernoSolovyevich, Shhapov), and others. An analysis of the work of even a small number of Russian revolutionary democrats showed how large the “management Inheritance” they had created was the search and study of which needed to be continued. Development of management issues in the work of Russian populists The management ideas of the revolutionary democrats have been developed primarily in the work of the finest representatives of the Russian revolutionary populism, to which Piotr Lavrov (1823–1900) belonged. In his views the ideas of I.Shelgunov, N. Chernyshevsky, and other revolutionary democrats developed. P. Lavrov had thoroughly and constructively explored and developed the problem of gradual “extinction” of the state element in the future society of working socialism in

324

5 Management Thought in Russia in 1800–1917

Russia in the treatise of the same name “The state element in the future society” [36]. He performed not only theoretical discussion of the problem, but also the substance of a concrete action program, a guide for real activity on organizing economic management in that society. Considering himself a socialist and a supporter of the peasants’ way of developing society, passionately opposed to all kinds of monopolies and competition, he opposed “the dominance of the pathological needs of an economic monopoly and of universal competition that directly contradict the solidarity of members of society, a task underlying any notion of social union” [36, p. 46]. Both monopoly and competition, and religion were associated by P. Lavrov with power, so also relating to the state element, the element of the coercive power of one part of society over another, it should be asked: to what extent “the element may be necessary in a society built on the basis of working socialism, or essentially of a new society, or temporarily, in different stages of the development of a new society” [36, p. 50]. P. Lavrov also, like N. Chernyshevsky, believed that in any state, there would be a “public service” industry under any form of government, that is, “public works,” which will have to be carried out, with “their costs to be paid for by society as a state”—ensuring “public security (police and justice),” “medical service,” “scientific research of various kinds, scientific expeditions, etc.” (since “no private company would take the risk of rewarding scientific works that may not lead to any more or less important discovery capable of bringing means to the company”), mail, telegraph, etc. This includes “those jobs that require extensive combined work, the combined efforts of a large number of workers; these proceedings are therefore in need of a single supreme leadership, which can only be given to public management.” [36, p. 53]. While recognizing the objective need of the public service sectors in the future society, P. Lavrov was forced to recognize the need for them performing enforcement, forced subordination. However, he believed that the future socialist society would consist of “people raised by the ideas of social solidarity in the upbringing, in custom, in literature, in science, in philosophy” [36, p. 75], and so “power” will not be forced but, in the knowledge of the public, selected by these people. Illustrating their reasoning through the participation of members of the future society in one of the coal unions, P. Lavrov writes: “Every member of society may at any minute leave the mine, but as long as he is involved in their development, he is morally obliged to obey freely-elected leaders of the works. Public opinion would oppressively descend upon him if he were to abandon his work light-mindedly and if he did not obey the leadership of the persons entrusted to manage the work by the very union to which he had voluntarily embarked. It seems to me that with such a structure—and in future the structure may be invented in a way that is incomparably more sophisticated than we are capable of imagining today—no “monopoly” or “exploitation” whatsoever, the interference of any state or public authority is completely unduly...The state element in the future society, when this society is fully receptive to the beginnings of working socialism,

5.3 Management Ideas of the Revolutionary Democrats and the Populists

325

may not only reach a known minimum, but may become completely extinct” [36, pp. 75–76]. In this case, P. Lavrov considered state authority not as the government of the time, but the Society of “working socialism,” since “there isn’t and cannot be any reconciliation or agreement between the state and the working socialism” [36, p. 45]. In the chapter “On the next day after the Revolution” of the treatise analyzed, P. Lavrov proposed a scheme of gradual extinction of the state (more precisely, the power) element necessary at the beginning of the revolution. This element is needed for some time for “economic sustainability, social development and social relations,” as well as for the “provision of security in society” [36, p. 105]. And it will be brought to an end as society reaches the state of working socialism, when all land is transferred to “Russian peasant communities,” the means of communication and transport—to workers, and ultimately, exploitation of people by other people will be destroyed altogether. His draft program of action for organizing economic sustainability of people who had committed the peasant-proletarian revolution, led by the “social revolutionary union,” whose members, “convinced and organized socialist-revolutionaries,” understood the tasks of working socialism, including economic ones, was of greatest interest to management science. The organization of the “working socialism” society itself is based on three principles: public ownership of the means of production (“common allotted property”), compulsory universal labor, and solidary union of all workers (for the establishment of the ubiquitous new order and their control, for reflection of the onslaught of the surviving internal and external enemies of the working Russia) [36, p. 102]. On the basis of these principles, the social revolutionary union develops and presents a finished program of action to all people and then directs its implementation. P. Lavrov, a populist who says that “The main ground for revolutionary activity in Russia” will be the Russian peasant community, is understandable. However, already in the 1870s (prior to the emergence of the “Labor liberation” group in 1883), he mentioned at the head of the rebelled revolutionaries’ representatives of the proletariat, workers of factories, plants, coal copies, and railways. And how does the leadership of the members of the social revolutionary union combine with P. Lavrov’s previous principle on the disappearance of power and exploitation in a new society? P. Lavrov rightly believes that the members of the union, in the majority are of ordinary people, and in their activities and influence on masses they have neither power nor coercion, but rely on the trust and confidence of their people. The above-mentioned three principles apply to all citizens. In particular, according to the second principle, compulsory universal work for the general benefit will immediately be required to be personally demonstrated by members of the “social revolutionary union,” that public affairs managers should participate in the most difficult jobs on an equal footing with other workers. . .” [36, p. 108]. As “the work of common affairs will be divided” among the members of the union, they will have the opportunity to give some of their time to physical work to “produce the means of existence” of the new society. P. Lavrov laid great emphasis on this principle, believing that it is in this form of implementation that the “association

326

5 Management Thought in Russia in 1800–1917

of the representatives of power and elimination from everyday work” [36, p. 108] will be destroyed once and for all in the new society and elimination from everyday work. So, for economic sustainability of members of the new society, first, it is possible for some time to use existing (“restocked”) foodstuffs, etc., dwelling and land, and second, immediately after the revolution, it is necessary to “free the production of consumer goods.” P. Lavrov believed that members of the social revolutionary union, as the most prepared and advanced party of the people accomplishing the revolution, should know in advance (this is “their direct duty”) the status and location of stocks (in flour, grain, cattle for slaughter and working cattle, in instruments of labor, in the main items of consumption, etc., and in the dwellings and lands of all kinds of territory in which they work. Some should, as far as possible, collect correct information on these objects and relevant to the nearest territories, where the revolution had not yet taken place, but is quite likely. They need to know the size and location of the population in the country, which must be provided with basic necessities. In this regard, central warehouses for foodstuffs, clothing, and working tools should be immediately arranged; “common herds and taboos under the supervision of the elected people; must be organized; distribution of all necessary must be organized from warehouses; a list of all the premises should be drawn up and the workers accommodated (by decision of the working union or by lot”) [36, pp. 111–112]. P. Lavrov was sufficiently aware of the enormity, magnitude of the challenges ahead and tried in his economic program to envisage many managerial functions, at least in terms of expanded reproduction. In addition to the above-mentioned, he envisaged the implementation of the functions of redistribution of the stock of public production, the specific characteristics of which in the new society were unequal allocation and distribution of the country’s cash reserves (regarding the “needs of the population”). Therefore, in order to ensure proper needs, “bread from the fists’ barns” and speculators will have to be transported immediately to the barns of the undernourished rural communities; cattle—to be redistributed from landowners’ hamlets through communal stages; clothing from city shops—to rural warehouses, etc. “Only the redistribution of these essential items, the working tools, etc., redistribution performed with the knowledge of the situation, local needs, local means, and yet performed vigorously, may truly help the majority of the population.” [36, p. 113]. Besides, production itself of both the means of consumption and the means of production had to be planned and organized (“set up”) in the New Society. For this purpose, P. Lavrov proposes to immediately “plough all the borders and destroy the outer boundary signs” on the new public land, to calculate the needs of the population, and therefore to make a new tillage (“Certainly—better than fields”). Further, based on the assumed needs, the construction of new residential buildings, central warehouses, granaries, barns, cowhouses, etc., must be organized, and by “common labor.” “The manufacture of clothing (which may be more convenient to be concentrated in cities) should also be is consistent to the need . . .” According to

5.3 Management Ideas of the Revolutionary Democrats and the Populists

327

P. Lavrov, the production of luxury goods may be suspended “until the new regime is consolidated,” and “production at general consumption factories” has even been expanded, “especially of labor tools.” P. Lavrov raised the issue not just of the organization of production, but of the “rational” organization of production. He writes: “The number of participants in these factories must be increased so that the work of everyone is less long; all participats should immediately an artel to discuss the techniques by which the work would be made easier and safer without reducing the number of items produced, but even increasing it in case of need.” [36, pp. 112–113]. Ensuring the equitable redistribution and sale of the country’s essential products will require the organization of transportation and other communications (telegraph, mail). And this is provided for in P. Lavrov’s program: “. . . from the very first minute, the disposition of carrier vehicles and the increase in the means of communication should be one of the main concerns of the organizers.” [36, p. 113]. And since “the means of communication were more in the hands of the state or large companies, the social revolutionary union would need to pay particular attention to the composition of the working transport communities and the artisanal by introducing them as required by the members of the union” [36, p. 114]. Having uncovered the functions of the economic welfare of the young “working socialism” republic, P. Lavrov moves to the organization of this sphere of activity, and the characteristics of both the structure and the process of organization are so detailed and clear that they often resemble modern “methodical instructions,” although it was only the “future” of society in the whole new form that P. Lavrov wrote about. So, part of the members of the revolutionary union of the territory should make up the so-called “work and provision committee: that is, they are ordained in advance that, on the next day after the revolution, their activities would be devoted to the provision of economic sustainability of the people of “that territory and the disposition of its carrier vehicles” [36, p. 116]. For the organization of these works, the representatives of the “committee” have all the rights and means (including all information on stocks). The “Committee” is divided into “County Council unions,” and those are divided into “an appropriate number of local groups.” In order to carry out a large range of work, the Zemsky union is supplemented by specialists from various industries, possibly from among those who sympathize with the revolution and even from “outside the movement,” unless the members of the union consider them “trustworthy, honest, clever, wielding and knowledgeable.” [36, p. 116]. The Zemsky union, a multisectoral business body, is divided into a number of branch sections, “each of which will have its own special affair (railways and telegraphs . . ., bridges and roads, etc.)” and, for the performance of the work, it will select the staff from the territory’s working population. A coordinating body, the Administering Council, should be between the “committee“ and the “zemsky union.” In general, the procedure for the formation of all listed bodies according to P. Lavrov is as follows: “Members of the social revolutionary union, situated in this territory will select among their environment a work and provision committee, and it selects from its environment an administering council which itself invites

328

5 Management Thought in Russia in 1800–1917

assistants, i.e. calls a Zemsky union, handing over to the rest of the members of the committee division into local groups.” [36, pp. 116–117]. This scheme of economic management bodies is not consistent in terms of methods and procedures for formation. P. Lavrov was an opponent of all sorts of power and, therefore, his organizational concept included measures that weaken the initially necessary revolutionary power, as far as working Russia expands and strengthens throughout the entire territory of the country at the meeting of socialrevolutionary union representatives in certain periods of time (“three months, for instance”), it is necessary to raise the issue of practicability of preserving the administrative council elected from members of the work and provision committee. If the members of the Union decide that the working population of the territory of Russia is already prepared “to start a new structure more consciously,” which at the same time would mean that the Work and Provision Committee covered the majority of the consciously working population, the formation procedure and corresponding relationship between the committee, the administrative Council and the provincial union will significantly change. That is, from that moment on, “the revolutionary power of the Administrative Council, which is the power of the minority, is moving into the rational self-governance of the majority of the working population, which consists the committee for work and food; it devotes from its environment a Zemsky union by selecting for the management of general affairs of the territory on economic sustainability of the population.; the Zemsky union, whose members had so far been invited by the administrative council, will now be chosen by this administrative council from its own environment, for better conduct of business, and may change its members as necessary.” At the same time, the specialization of the Work and Provision Committee is expanding. “When the social-revolutionary union embraces the majority of the population, and thus, step by step, it will lose its separateness, of course, the members of the Work and Provision Committee do not specifically address the issue of economic sustainability of the population, but divide their time between different activities. . . A generation will pass, . . . all appointments and invitations to posts would become redundant; free choice of occupation, free choice of agents by the participants themselves, will be established little by little in all of the branches of the economic sustainability of the population; and unseen from the social and revolutionary system organized on the next day after the revolution with a great deal of power in the governing councils, this proportion of power will be obliterated in view of the complete implementation of the federative beginning of working socialism.” [36, pp. 117–118]. In the end, in the country of working socialism such an order and organization of economic sustainability issues will be established, that is in form an “old, traditional, historical body of public life of the Russian people.” It is the worldly gathering, but it has a very different meaning now. He refers to the “common similarity of a power community,” consisting of all workers co-sponsored to the rebellion “[36, p. 120], that is to say, those who took part in the uprising, and who sympathize with him among the hesitant, but good, conscious specialists.” When this happens, (and this “association” will be “the last act of revolutionary power of the social revolutionary

5.3 Management Ideas of the Revolutionary Democrats and the Populists

329

union persons”), according to P. Lavrov, “the state element in the economic sustainability orders of the population can already be brought to a very small minimum: all are involved in the management of works and stocks; everyone is subject only to a decision in which he had freely participated; the dominance of one over another on the at the gathering depends only on mental and moral superiority and not on any economic pressure, and even abuse of this predominance is eliminated by the strict mutual control of the most advanced members of the community.” [36, p. 120]. P. Lavrov had continuously searched for means of reducing the state-power element in the society of working socialism; however, his recommendations were so detailed (given the absence of a “pilot test of the proposed model”) that the thoughtfulness, completeness, and systematicness of P. Lavrov’s concept of managing the economic welfare of the future socialist society only cause surprise. In conclusion of the analysis of the views of P. Lavrov, we shall quote one such means which he had devised and which, in his view, had guaranteed the removal of the “sores” of power and had ensured the real (and not simply in words) equality of all citizens in the management of the economy, but also in the management of the future working socialist society. The idea of this means is that people in the future will knowingly work for society for some time, taking a commitment, for example, to the “normal distribution of occupation”: 5 h of muscular and 7 h of brain work per day. And this time should be allocated to many types of work belonging to different economic societies, unions (branches of the economy). The example of one of the citizens, P. Lavrov, explains this idea. The citizen is also a member of the “dams and canals support and repair society,” which works 2 h a day, a “member of the streets “maintenance community” in the city and is employed by it for 1 h daily, a “member of the society for the manufacture of optical instruments” (2 h); he is also a member of the bureau of statistics, the society of translators and the works of higher mathematics, which has a total of 7 h of work. Also, depending on personal characteristics and working conditions, he may change jobs during the day or on another schedule. If, for instance, he enters the “mines development society” as a coal digger, devoting 2 h a day to it, and at the “dam and canal support” society he declares that he is going to work there in a day, in the end he still gives his time, in fact, remaining free in the choice of occupation. P. Lavrov deliberately provides for the inequality of this citizen in various unions, which only strengthens society. For example, he is a mere coal digger in one society, one of the leaders of the optical tools work and the “president of the mathematics union—the discoverers for the entire country. Conversely, ‘the invited chairman of the Mines Management Committee’ may be a grass-roots member of the Cobbler Union, an executive for the union of chemists, etc. Both give society their entire strength. Both shall receive from society only all that is necessary for their existence and development.” [36, p. 120]. At the same time, “any member may be selected in a general meeting (emphasis added—M.V.) to the management committee, may even be chosen by the chief of the work if he had invented a better system of conducting these works.” Of course, for the general management of vast economic affairs, there will be a “power that would give them unity and purpose, to which all parties would

330

5 Management Thought in Russia in 1800–1917

obey” [36, p. 120]. But it is an authority elected by those who obey it, and it only exists until it is necessary for the rational conduct of affairs. The distribution of equal members of socialist society in various sectoral alliances also precludes the emergence of monopolies in an industry for many reasons, says P. Lavrov. First, because every member of this society is at the same time a member of other unions from which he will be excluded for attempting to monopolize the industry. But the main reason is that “such an idea cannot even arise in a society composed of people who had grown up under the influence of social solidarity in the upbringing, custom, literature, science and philosophy” [36, pp. 74–75]. As a result, the state’s “coercive” power will disappear in the future and with it “human control (coercion).” Every citizen of a socialist society will voluntarily join and be an equal member of various types of sectoral alliances. “These multiple strands, which link man to society and are essential for human personal development, in order to expand his mind and his abilities, will compose one of the most important warranties that no individual will have the opportunity in any particular branch of activity to try to counter his or her personal interest to common interest.” [36, p. 75]. From the perspective of today, more than 100 years after the great October socialist revolution, the mostly materialized predictions and plans of P. Lavrov on the “transition time” after the revolution, which he had made 40 years before the socialist revolution, his historic instinct on the aims and objectives of the socialist state of a “more distant period, sound rather dramatic.” From this point of view, the “injections” that he was exposed to behalf not just contemporaries, but even ideological allies, seem to be too insignificant. I am referring first and foremost to Peter Tkachev and his work “The Anarchist State” and, especially, “On the eve and on the morrow of the revolution” [37]. In them, he demanded of Lavrov neither more nor less than a precise indication of the day after the revolution, in which organizational changes must take place in the management of the economy of the “working socialism” country, the exact ratio of the representatives of all the above-mentioned five groups of persons (who remain in socialist society for some time) in the Work and Food Committee, the Status Committee, etc. This “critique” only restrained the development of progressive revolutionary thought rather than hone it, as P. Tkachev believed. Engels’ assessment of Tkachev’s conclusions on Russia’s readiness for the revolution (thereby defending Lavrov’s protection) is known. Tkachev accused the “Vpered” magazine of slowness, referring to Lavrov with such words: “Your philosophical War, the pure theoretical scientific propaganda that your magazine has been given. . .from the standpoint of the interests of the revolutionary party, not only is not useful, but even harmful.” [37, p. 38]. He declares in return: “Who does not believe in the possibility of a revolution in the present, does not believe in the people, does not believe in their preparedness for the revolution . . . That is why we cannot wait, that is why we say that the revolution in Russia is urgently needed and necessary at this time; We do not allow any postponements, no delay. Now or at a very distant date, maybe never.” [38, pp. 20–21]. It was these calls from Tkachev

5.3 Management Ideas of the Revolutionary Democrats and the Populists

331

that Friedrich Engels called “childish,” and Tkachev himself “a green, rarely immature schoolboy.” [38, Т.18, 532]. F. Engels was especially angered by the ripening proclamation of the “young” Tkachev addressed to Russian peasants. In it, Tkachev describes the order in the country after the end of the social revolution: “And the wit would live in clover, live a merry life. . . not by corroded pennies, but by pure gold would his purse be filled. He wouldn’t have an account for any of the cattle or birds of his home. He’s got various meat at the table, and anniversary pies, and the wine is sweet from the dawn of the dawn. And he would have eaten and drank deviously into the belly, and worked as much as he wanted. And no one would dare to constrain him: eat, if you like, lie on the stove—if you want. . .” [37]. Of course, Engels could not have described the author of such a proclamation as an “immature schoolboy.” Unfortunately (for Russian public thought), Tkachev found himself in isolation, and only history has shown and proven who was, at that time, right of two Russian revolutionary populists, who warmly loved their motherland and sincerely dreamt of the victory of the oppressed classes in the social revolution. But in connection with this and other similar facts, we would like to make a few general comments. As we study managerial thought of the pro-reform Russia, we have often encountered such astonishing sources of thought, where it would seem that the interests of representatives of the same class should unite to combat a common opponent, who, in particular, the ideologues of the working class have had enough. However, time and energy have gone more toward clarifying scientific relations and seeking the scientific truth precisely in discussions with like-minded and colleagues. Sometimes these discussions took place in a harsh form and in tone and resulted in a rupture in friendship relations, in the disintegration of groups in scientific societies, in the division of revolutionary circles and alliances. This was what Lavrov did with respect to the revolutionary populist anarchics, in his own time G. Plekhanov sharply parted with Lavrov and V.I. Lenin tore down with Plekhanov. Of course, in every such case, progressive public thought, and with it managerial thought, had only acquired something qualitatively new, moving forward in its development. But there is another thing to emphasize. The fact is that new ideas that became right over time and “advancements,” as opposed to discoveries in natural sciences, often could not be tested experimentally, and proponents of opposing views continued to hold on to their beliefs for the rest of their lives (again, as opposed to the behavior of most natural scientists in such types of conflict situations). The severity and extremes of the situation in the class capitalist society, the objective absence of an experimental base, the personal properties of the character and psychology of the scientist, etc., are conditions that cannot be discounted in assessing the development of HMT, and we have spoken of this more than once. But the same conditions often led to the dispersal of the forces of the like-minded community, and to the deposition of the representatives who had so far been greatly credited. The example of Tkachev is not given to marginalize

332

5 Management Thought in Russia in 1800–1917

Tkachev’s merit in the development of progressive revolutionary thinking. None of the like-minded people doubted the sincerity of his desire of the oppressed class’ victory in the fight against the oppressors, he was one of the first to spread Marxist work and propagate Marxism in Russia, and he was the author of the proclamation “Towards society!”, he was repeatedly referred to as part of the revolutionary student movement, he wrote the appeal: “Philosophers, theorists and practitioners should be truly linked to each other in close, inseparable bonds. So long as their antagonism continues, humanity cannot move forward.” [37, p. 171] And he was the author of the aforementioned peasant riotous proclamation, and he entered into polemics with P. Lavrov and F. Engels, and even with M. Bakunin, and proved to be essentially isolated, while in exile when he was only 30 years old. Of course, this was objectively a loss for the general development of world public opinion. Questions arise: was it not early that the world’s public thought had abandoned Tkachev’s services? Were there any progressive forces in society that were supposed to be Tkachev’s “re-education,” to achieve his second birth? And if they existed, how could they organize these activities? It is possible that these issues are idealistic, but the fact remains, the common group (quite small in Russia in the 1870s) of progressive public thinkers fell short of one of the representatives who, in his previous actions and work, proved that they contributed to the general development of public thought. We stopped on one occasion, but there were many. Acquaintance even with some of them already enables making the following scientific hypothesis. In nonexperimental social sciences, in addition to recourse to history as a “real experiment” (as we wrote in the first chapter), there is still a need to provide specific conditions for scientific activity, for the organization of scientific work, for establishing a creative scientific environment. It is primarily a matter of ensuring that the scientific community has a regime of “scientific tolerance.” In one of the works of the Master of Lomonosov Moscow University, G.F. Symonenko, there are a few words on this topic: “Scientific intolerance has the least right to manifest itself in social sciences, since they hardly realize the still so fully clarified, verified, and proven positions, that someone among the serious thinkers who are involved in them can say with confidence that there is no doubt that this is true, but that is a lie.” [39, p. XVII]. But let’s return to P. Lavrov’s deliberations on economic sustainability of the “Working socialism” created after the revolution. Since these ideas were raised before Lavrov (and he did not deny it), he was aware of their criticism by M. Bakunin, who in his work “Statehood and Anarchy” wrote: “No scientist is able to determine even for himself how people will and should live on another day of social revolution. This will be determined, firstly, by the situation of each nation and, secondly, by the aspirations that will be shown and strengthened, not by the guidance nor by any theories clarified at the top and invented on the eve of the revolution.” [40, p. 38]. In the same work M. Bakunin expressed its

5.3 Management Ideas of the Revolutionary Democrats and the Populists

333

opposition on the dominant position of the proletariat after victory in the social revolution. And P. Lavrov, however, in his draft retained the functions of power over the proletariat in the resolution of political and economic affairs that arose immediately after the revolution, “for since the advent of the proletariat does not dissolve its enemies, the old organization of society has not disappeared.” [38, v. 18, p. 611]. It can be assumed that P. Lavrov was aware of the position of K. Marx on this subject, as he had stated in the “Summary of Bakunin’s book “Statehood and Anarchy”” (1875) [38, v. 18], and that is why P. Lavrov did so. Marx, in particular, wrote: “The class dominance of the workers over the resisting layers of the old world should last until the economic foundations of classes are destroyed.” [38, v. 18, pp. 617–618]. But P. Lavrov was not only occupied with managerial issues of the state. Developing a large economic program for the society of “working socialism,” its constructive part for implementation “On the other day after the revolution,” P. Lavrov had also conceived more detailed developments relating to individual stages of the socialist social production process, some of which, as we have seen, have entered the larger program. We learnt one of the “ideas” from one of P. Lavrov’s handwritten notes (autographs) found in his personal archive [41]. On the one hand, externally they resemble a summary of the work of some authors and, on the other hand, they are very similar to the future work plan (which may have intended to use the works of these authors). Unfortunately, none of the historians of management thought had so far managed to decipher this part of Lavrov’s archival fund, but we are inclined to believe that own work on economic and management issues had been conceived. From individual pages it is clear that Lavrov was planning to develop several teachings. In some cases, the plan is decrypted. Here’s a partial note by Lavrov: “2. A doctrine of consumption” [41, Sheet 8] “3. Production doctrine a) production and technology. b) human labor. Ч.253-279.К .201-202 c) benefits delivered by nature . . . d) labor productivity. . . e) size of production. . . e) organization of production. “4. Exchange doctrine. a. the phenomenon of exchange in general. b. primitive exchange. с. importance of the technique of means of communication. d. markets and forms of trade.” [41, Sh.3, Sh.9]. These are some of the ideas and the development of the issues in management of the economy implemented by P. Lavrov.

334

5.4

5 Management Thought in Russia in 1800–1917

Management Ideas of the Representatives of the Bourgeoisie

In Russia in the second half of the nineteenth and early twentieth centuries, one of the forms of reflection of the development of management thought, primarily bourgeois, was various industry-wide and industry exhibitions and congresses (both all-Russian and regional). The organizers of these exhibitions and congresses were various scientific and scientific and technical societies—the Imperial Free Economic Society—IFES (established by Catherine II in 1765), the Imperial Russian Technical Society— IRTS (created in the era of Alexander II in 1866), the Society for the Promotion of Russian Industry and Trade is the SRIT5 (created in 1867 as the first All-Russian Association of Entrepreneurs), many regional and branches of these societies, as well as sectoral societies such as the Unions and Societies of Miners,Gold Producers, Oil Producers, Agriculture, Timber, Paper Manufacturers, Sugar Refiners, etc. In December 1861, the Political and Economic Committee, the only one of its kind in the Russian Empire, was created under the IFES. Largely due to the possibility of discussing theoretical issues related to economic development in the IFES, Russia began to develop its own economic school, which was reflected in the periodical publication “FES Proceedings.” From its very foundation, FESPs have been distinguished by a wealth of content. In them, according to the historiographer of the society A.I. Khodnev, “all real knowledge of the late 18th century, with all its light and dark sides,” was collected [42]. Members of the Political and Economic Committee were scientists, economists, high-ranking officials, as well as writers and publicists. Created initially “to encourage farming and provincial economy in Russia,” the IFES understood that the prosperity of agricultural production in Russia is impossible on a narrow industry basis. In this regard, the Political and Economic Committee and the Literacy Committee were created, at the meetings of which reports and messages were discussed that were not directly related to agricultural production, but reflecting a diversified approach to managing the country’s economy. For example, a message on the topic “Golden monometallism and its significance for Russia,” a report “On the organization of local agricultural bodies,” and “The Possibility and Benefit of Establishing a Society Promoting Agricultural Labor.” The last message was made by Dmitry Mendeleev, who proposed “the creation of a Society with the goal of helping peasant production: (1) sell household products of its members and (2) loans, both to individual members and entire communities, under the provision of unsold goods, mutual responsibility and various values.” The history of the establishment and activity of the IFES was described in some detail by the secretaries of this Society—the above-mentioned A.I. Khodnev [42], N.G. Kulyabko-Koretsky [43], and A.N. Beketov [44]. An initiative group of the creators of society was going to call it “Society for the promotion and prosperity of domestic industry.”

5

5.4 Management Ideas of the Representatives of the Bourgeoisie

335

All scientific and practical acts of the IFES are reflected in “The Proceedings of the Imperial Free Economic Society” (281 issues), published from its very foundation through 1915, “distributing them, in the amount of 600–6000 copies, by subscription, sale by separate books or gift distribution,” not counting over 150 separate essays on various issues and publications of the Literacy Committee, who worked at the company from 1861 to 1895 [43, p. 6]. The society has created an excellent scientific library, numbering about 400 thousand books. In 1890, the Secretary of the IFES A.N. Beketov wrote: “There was not a single question in the economic and economic life of the country in which our society would not participate, and often would not be the initiator” [44]. No less fruitful in terms of formation of knowledge about economic management was the activity of two All-Russian societies—IRTS and SPRIT, which had branches in many of the largest cities of Russia. In particular, the statutory purpose of IRTS was the development of equipment and industry in Russia, and the most important tasks were: 1. Dissemination of theoretical and practical information about the achievements of technology and production through periodicals, lecture activities, organization of exhibitions and competitions; 2. Promotion of technical entities; 3. Proposal for resolution of technical, technological and scientific issues in the interests of the domestic producer. IRTS notes (from 1867 to 1917) presented Russian and foreign industry and trade, provincial and industry reviews of the state of the Russian industry; reviews of the conducted congresses and exhibitions, characteristics of Russian enterprises; notes on the development of crafts; information about fairs and other materials on the history of Russian industry and technology [45–47]. According to the charter of another society, SPRIT, its purpose was to “promote the development of domestic industries and the spread of domestic and foreign trade of Russia” [48, N45169]. According to the idea of SPRIT organizers, society should be, first, “representative of all trade and industrial interests not of some locality, but of all of Russia, all classes of the Russian population”; and, second, it “should strive to make sure no thought useful to Russian trade and industry . . . is not left without due attention and necessary assistance to its implementation.” [49, p. 4] The 30 issues of SPRIT works (from 1872 to 1913) reflected issues such as the state and development of factory and artisanal industries; currency, financial and monetary system; trade and industrial policy; volume and sectoral structure of imports and exports, customs policy; agrarian policy and state of agricultural production; railway policy and construction of railways; development of navigation and seamanship, position of the merchant fleet, construction of ports; worker issues and factory legislation; the level of industrial, professional and commercial education; organization of scientific expeditions and various surveys; and issues of nature protection. Nor were political issues alien to the Society. An 8-hour working day, child labor, and insufficient peasant land ownership were discussed. In February 1899, the report “Can Popularism be reconciled with Marxism?” was even discussed [50–58].

336

5 Management Thought in Russia in 1800–1917

Tremendous attention was devoted by SPRIT to the consolidation of national business, its unity with representatives of science. The SPRIT Committee, in an instruction sent to local offices (1901), stressed: “In society, a strong means of converging trade figures with industry figures and with true representatives of economic science should be seen. How members of society can meet here, speak out in public conversations and printed writings, can mutually make themselves clear the scientist economist and craftsman, banker and factory worker, administrator and accountant, capitalist and experienced specialist worker”can go hand in hand (emphasis added by us—M.V.) [57]. SPRIT existed until 1917, having played an important role in the development of various branches of Russian industry and trade. In particular, SPRIT has earned the authority of a consulting center in Russia on a variety of economic and managerial issues. Many entrepreneurs and even organizations have applied to SPRIT with various business ideas and projects, proposals and questions of general economic importance, such as new communication line construction, exploration of mineral deposits. It is possible to credit all the mentioned societies with educational activities in Russia, and as a result, the sharp growth of entrepreneurship in Russia, which had become expressed in the fact that over the last decade of the nineteenth century 30,000 new enterprises in various sectors of the economy emerged in the country. As a result, the number of mining and factory workers grew (from 1.3 million to 2.1 million people), but it exploded (almost doubling) particularly “on railways” (from 218 thousand to 415 thousand) [59, p. 288]. However, the situation changed with the onset of economic crisis at the end of 1899. M.I. Tugan-Baranovsky wrote: “The winter of 1899–1900 was devoted to the elimination of the preceding industrial upturn. From all over Russia news came of stagnation of trade, bankruptcies, unemployment” [59, p. 272]. During 1900–1903 about 3000 industrial enterprises closed, employing over 100 thousand workers, railway construction reduced by several times (5 times), production of steam locomotives—by 2 times, and train cars—by 2 times. The crisis began in the light industry, but heavy metallurgy and engineering took the greatest impact, encountering production decline of 25–30%. And in Europe the crisis ended in 1904, but in Russia it went into a depression that lasted until 1909. Rather curious is the assessment of the nature and consequences of the crisis of the 1900s in the 1904 edition of the Proceedings of the SPRIT: “As severe as the crises are, they have that positive side that, during their time, enterprises founded irrationally or with speculative purposes should reduce their productivity or even cease to exist and give way to those enterprises based on: knowledge, rational state of affairs and the ability to conduct it” (emphasized by us—M.V.) [58, p. 19]. During this period in Russia the Works of the Imperial Free Economic Society, “Notes of the Imperial Russian Technical Society (IRTS),” the works of the “Society for the Promotion of Russian Industry and Trade,” the magazines “Yuridichesky (Legal) Bulletin” (the editor of which in 1880–1883 was our familiar V. Goltsev), “Russian thought” (the actual editor of which in 1885–1906 was V. Goltsev), “Russian Courier,” “Technical and Commercial Education,” “Industry Bulletin,”

5.4 Management Ideas of the Representatives of the Bourgeoisie

337

“Exchange Vedomosti (Times),” “Morning of Russia,” “The Journal of Manufactures and Trade,” “Trade Collection,” the newspapers “Russian Vedomosti (Times),” “Luch,” “Pravda” et al. continued to be published, which contained articles on relevant problems of industry, agriculture, trade management, issues of training of management personnel, political economy, law, finance, and history. The extent of the source database can be seen at least by the number of periodical publications. So in 1911 in Russia there were 176 (!) publications on industry and trade issues alone [60]. Note that the numerous materials published in these publications are the most important source for studying the history of managerial thought in Russia in the nineteenth and early twentieth centuries. On trade and industrial congresses In the second half of the nineteenth century— the beginning of the twentieth century, three All-Russian Trade and Industrial congresses, several dozen branch and regional congresses, and congresses of scientific and technical societies took place in Russia. At the congresses organizers of various industries, leaders and specialists of industrial enterprises, railways, postal and communications, managers and specialists in the agricultural sector made addresses. In addition to scientists at the congresses, there was a wide range of practitioners, economic executives, whose reports included, among other issues, the sectoral issues of organizing and managing production and ways to solve them. “The first All-Russian Congress of manufacturers, breeders and persons interested in the domestic industry” was held from May 16 to June 16, 1870, in Saint Petersburg. It was organized by the Russian Technical Society and Society for Promotion of Russian Industry and Commerce, and in conjunction with the All-Russian manufacturing exhibition. During the Congress, two general meetings were held and the six branches of the Congress held 17 meetings. The designation of industrial conventions was stated in the opening words of the Vice-president, the Chairman of Political-Economic Committee of the IFES Vladimir I. Veshnyakov [61], and owner of a large mechanical plant Vasily A. Poletika.6 The V. Veshnyakov said: “The industry felt the need for self-knowledge, understanding its own needs.” [62, p. 4]. Among the principal means of achieving “such self-knowledge,” he referred to industrial and technical congresses as well as economic, long-known in the world, but which had not by that time occurred in Russia. Among the reasons for the need for self-knowledge and joint discussion of industrial issues V. Veshnyakov, who knew the development experience of large industrial states, named an objective rejection of the policy and management model of the police state (with its strict regulation) and the transition to a policy of free trade and industry. It is the functioning under a large number of degrees of freedom that had quickly led to the need to consolidate the efforts of industrialists in solving

6 In 1864, V.A. Poletika published public lectures “On the Iron Industry” in Russia, St. Petersburg, Publishing House of N.P. Reichelt.

338

5 Management Thought in Russia in 1800–1917

similar and just common problems and to centralize the management of some of them. Vasily Poletika formulated the main reasons for the convening of the All-Russian congress: “The lack of rapprochement between our industrial people; lack of harmonization between different industrial interests; the lack of deliberation in our common industrial endeavors has long been felt in our industrial life” [62, p. 7]. And thus, “in order to awaken in our public interest in our industrial issues, to elicit statements from industrial figures and to explain to ourselves how best to focus our further activities, to substantially meet the most pressing needs and requirements of our industry” [62, p. 8], was the first Russian trade and industrial congress convened. The Preparatory Committee proposed to the congress a program which, in our view, is of interest and thus we will bring forward some questions (7 of the 18 questions of the congress): 1. What was the impact of the construction of the current railway network on the development of the factory and plant industry? (Agenda question of the Congress’ first department). 2. What measures can we take to raise our mountain and mechanical industries? (second department). 3. How can our manufacturers and fabricants participate in the collection of industrial pin-point statistics? 4. What changes in the Charter of the factory, plant and handicraft industries would be most desirable? (both questions of 3 dept.) 5. What was the impact on industry of the Tariff of 1868 (4 dept.)? 6. How can we increase abroad sales of our factory and plant production? (5 dept.). 7. To what extent do young people who have been educated at higher technical institutions meet the needs of industry? (6 dept.) [62, pp. 2–3]. Already from this incomplete list of issues, the broadness and systematicness of the approach to management issues resolution is visible. If the breadth of the problems discussed is taken into account in each of the issues, the list of directions and proposed actions for resolution, the assumptions about the systematicness and complexity of the approach are again confirmed. Some of the proposals and recommendations, both of this and all other industrial congresses, were reflected in government decisions, the Industrial Charter, in real actions and changes in the country’s public management. However, for known objective reasons, most of the proposals of the Russian congresses had not been implemented into actual practice. We’ll name one reason among them. In the study of HMT of Russia of the nineteenth and twentieth centuries, there were many facts confirming the trend toward convergence between the theoretical positions of the ideologists of the two dominant classes—the nobility and the bourgeoisie. And yet, the nobility, exercising the right of precedence, the right of the first and final decisive vote, carefully considered and evaluated the proposals of the bourgeoisie before implementing them, seeing in each of them the potential danger of strengthening the position of the bourgeoisie. The nobility was very reluctant to relinquish their positions and, generally speaking, based on lots of

5.4 Management Ideas of the Representatives of the Bourgeoisie

339

tactical data we can judge the primacy of the nobility in making final decisions, the alleged union of the nobility and the bourgeoisie in many crucial economic issues. These classes had formed an alliance in the struggle against the common enemy— the peasants and the proletariat, but if their own interests had been confronted, the nobility never gave in. Moreover, part of the nobility, using the supreme power, had changed, distorted the more or less sensible proposals of the bourgeoisie concerning the economic situation in the country, to such an extent, that the economic problem remained, if not becoming more acute. It is known, for example, that after long discussions in the bourgeois press and various bourgeois business organizations, the issue of the shortcomings of artificial measures to support the ruble in foreign markets, the Ministry of Finance, once again (in 1876), took such a measure, ostensibly for the benefit of the industrialists, and for that purpose sold 60 million rubles abroad in gold, but it was only the landlords who spent enormous sums abroad, and the intermediate bankers who were enriched by this. It was of these measures that K. Marx had written about in his letter to P. Lavrov: “The Russian government . . . it was foolish again, trying for 2 or 3 weeks to artificially support the ruble exchange rate on the London stock exchange—such a fact surpasses all borders. It cost them about 20 million rubles, which is equivalent to them throwing that money into the Thames. This ridiculous operation—artificial support of the exchange rate at the expense of the government—belongs to the eighteenth century. At present, only the alchemists of the Russian Treasury resort to it. Since Nikolay’s death, these intermittent senseless manipulations cost Russia at least 120 million rubles. This can only come from a government that still seriously believes in the omnipotence of the state.” [38, v. 34, p. 170]. Another example. One of the means of improving the overall efficiency of the national economy had always been the policy of customs tariffs and duties on imported and exported raw materials and products. After in the 1850s, in Russia, the need for imported machines and equipment (especially in connection with the construction of railways) increased, following the policy of free trade and striving “to raise popular wealth and to fill the treasury’s purse” [63, p. 40], the government had reduced to zero the duty on machines and machine parts. Despite numerous performances by the industrialists in the press, the government up to 1868 did not change the tariff on machines. At the same time, the noble seal (led by Katkov’s “Moscow statements”) poisonously ridiculed the “patriotism” and arguments of capitalists. During the same period, there were rather high tariffs on imported (and necessary) cast iron. As long as the dispute between protectionists and free traders took place, the venturesome breeder-casters did not hesitate to make advantage of this. Since the duty on machines was zero, in fact “building machines was a great educational affair in Russia, and it was not allowed, so it was surprising: in order to obtain cast iron for welding from abroad, all ships were given duty-free machine parts of the most crude casting. They were broken at the plant and molded in the required cast iron objects.” [63, pp. 40–41]. The situation changed dramatically with the introduction of the new tariff in 1868; the results of which were discussed at the first Trade and industrial convention in 1870.

340

5 Management Thought in Russia in 1800–1917

But the most striking purely managerial example is related to repeated attempts to establish a single public authority for industrial, agricultural and trade management. The need arose even before the abolition of serfdom, and after its abolition, the projects were included in the programs of leading public persons, scholars, and a number of ministers. All the major industrial countries had a single management of the state economy. Only Russia had not rushed to do so, for, as we have noted in the previous chapter, the national interest had been taken aside if the nobility began to feel strengthening of the competitor’s ascendancy position. It, through most representatives, invented various kinds of excuses, used the old technique of delay and endless discussion of issues, the problem quieted down, but it did not disappear completely. In other words, at the end of the day, economic and managerial issues remained and often even gained momentum. All the above-mentioned reasoning has been made only to explain why the same strategic issues have often been repeated in the programs of Russian Congresses, which seem to have already been drastically resolved. These issues, mainly related to credit, customs and tariff policies, as well as staffing issues, were included in the agenda of the congresses, were discussed for several days, decisions were taken, resolutions and recommendations were forwarded to government authorities (the Ministry of Finance, Ministry of National Education, The Ministry of Internal Affairs, etc.). It was not surprising that the wording of the question was identical, but the level of its decision, from which the discussion had begun at the next Congress. When reading the contents of the reports, it is clear that the problem had been known to the convention’s participants for a long time, that the way to solve it was in principle also known, but since economic and other conditions had slightly changed, and the previous time the decision was not fully implemented (either not implemented at all or implemented in a distorted way), the congresses are forced to return to its deliberations. For instance, the resolutions of the first All-Russian Congress on personnel matters: “To increase the benefits to the industry from young people who have been educated in higher technical institutions, the congress expresses the wish: (a) that, without reducing the amount of theoretical education at higher technical institutions and keeping it constant at the level of recent advances in science and technology, the practice of young students learning at these institutions was strengthened, with the requirement that the work assigned to them be clearly executed. (b) that manufacturers, producers and, in general, entrepreneurs of large industrial enterprises would not refuse recruiting young people, who graduated from higher technical institutions and under their supervision accustom them systematically to practical exercises and would contribute to the final formation of technician specialists who are fully aware of their business. (c) that, for the same purpose, concessions for industrial enterprises issued with a guarantee from the government would be subject to the following condition: at the start of organizing technical business—to recruit a known number of young people who have completed their courses at Russian higher technical institutions.

5.4 Management Ideas of the Representatives of the Bourgeoisie

341

(d) that real gymnasiums be placed in a condition where they can continue to exist and develop, as they must deliver the main contingent of pupils who meet the requirements of higher technical institutions” [62, p. 15]. In the course of the discussions on personnel issues, interesting views were expressed on the issue of training engineers and technicians “stewardship” skills. So, the already famous Professor of the Petersburg Technology Institute, I.A. Vyshnegradsky (and future Minister of Finance) noted that the higher specialized educational institution could not provide ready practicians: it can prepare a specialist who is very soon to become a good practician; it can provide a specialist with much knowledge, much practical information, but it “cannot give him, without any doubt, neither the diligence that is needed in practice (underlined by us—M.V.) cannot provide any of the other numerous qualities that are needed and that are only obtained by the fact that a person is constantly in business, constantly drawing his attention to it, and little by little, gets accustomed to it.” And further, in proposing measures to address the problem of “managerial skills” development, I. Vyshnegradsky said: “. . . It is highly desirable that he (the higher education institution graduate—M.V.) from the very beginning at the factory or plant, does not occupy a fully responsible position, it was desirable that he should first be able to assimilate the properties which, apart from theoretical education, were essential in order to be responsible and take charge of the case. This includes: knowledge of local means, knowledge of the market, knowledge of the workers, skills of treating them, and lots of other knowledge and skills without which the most educated technician would be a poor steward.” [62, p. 9] (underlined by us—M.V.) Another member of the Congress, Dmitry N. Kajgorodov (founder of “The Russian Society of Lovers of World Studies,” “father” of Russian phenology, professor of the St. Petersburg Forest Institute, 1846–1924) pointed out a different solution to the problems: “In order to achieve practical results, in order to eliminate the lack of practicality” [62, p. 31] of students in technical faculties, it is necessary for the universities to conclude a contract with the manufacturers and producers that they “would admit students to business in order to familiarize them practically and to increase their practice; the current practice of 5–6 weeks at factories is very inadequate; at the same time, in this practice, students are confined to a generally descriptive party, but very little has been done to familiarize them with practical techniques. Thus, it is necessary for students to become acquainted with the factories they would then be involved in, getting an at first small reward. . .” [62, p. 11]. How modern the problems sound and how rational are the proposed means of solving them, formulated more than 150 years ago! In the program of the Second Trade and Industrial Congress (July 1882), staffing issues, specifically discussed at the VII section on “Statistics and technical education,” are reappearing among the 36 issues: “2) Does the knowledge acquired in technical and commercial schools satisfy the requirements of our industry?

342

5 Management Thought in Russia in 1800–1917

3) How can a closer link be established between manufacturers and producers and those completing the course at technical schools?” [64, p. X]. Note that if the First Congress only dealt with issues of railway, mining, metal, cotton industries and the commercial fleet, the second one added to the problems of all other sectors of the factory and crafts industry, agriculture, cooperative production and also trade, post, and telegraph. Here is an example of an industry question: “What should we do in the types of development of our leather, linen, cotton, wool and silk industries?” [64, p. VII]. The Second Trade and Industrial Congress is remarkable to HMT by the fact that it adopted, for the first time, a resolution on the desirability of the establishment of a special ministry of trade and industry, which was to be addressed by the organization of local industry and trade bodies. The proposal was put forward at the general meeting of the congress by world-famous chemist Dmitry Ivanovich Mendeleev. The main rapporteur on this subject was lawyer Leopold Nisselovich, who made the following conclusions in the report: “Both central and local institutions should be based on a select start; they must be given autonomy and a decisive vote; it is necessary to establish an organic link between the central and local institutions and, finally, their actions must be transparent.” [64, p. 155]. A single “central-economy body” was to combine “into one organic whole all the branches of economic management,” which were “decentralized to the ministries” at the time, and which, according to the rapporteur, were difficult to manage because each agency sought “unilateral respect for its interests.” Centralization, however, would “establish a friendly and energetic impact” on the multi-million working masses, and would allow for the control of “the correct attitude of production towards the needs of wellbeing and improvement of the Russian common family” [65, pp. 10–11]. As for personnel issues, in terms of HMT it is interesting to see how “real management,” official government authorities responded to the staffing problems raised by the two congresses of 1882 and later reflected in periodicals, in the materials of the Commission for Technical Education of the Russian Technical Society. A month after the Second Trade and Industrial Congress, the first All-Russian Congress of the Russian Technical Society (August 1882) took place, at which the special X department considered 13 personnel issues. Here are examples of two questions: “1) On the extent of compulsory school attendance by all child and minor workers, with the determination of the age for which attendance must be compulsory. . . 8) Bearing in mind that one of the reasons for the slow development of our industry is insufficient training of craftsmen and managers of various kinds of industries (emphasized by us—M.V.), and the disadvantage of this comes from the inaccessibility of our exemplary plants for those who want to get acquainted with the improvements and techniques practiced in these factories—how to reach a general agreement of craftsmen and manufacturers and to make such plants available to technicians, and how to proceed in a case if such an agreement is not reached” [66, pp. XII–XIII].

5.4 Management Ideas of the Representatives of the Bourgeoisie

343

After waiting for long, the Russian pedagogical and scientific intelligency achieved the creation of a special branch of the Scientific Committee for Technical and Vocational Education of the Ministry of popular education. On January 13, 1884, this department was entrusted with the task of preparing a draft reform on technical and vocational education. This was not the first attempt, considering that on February 21, 1878, the preparation of such a reform was by the highest order entrusted to the Ministry of Finance, to which until 1881 most of the technical higher education facilities belonged. But since 1881 “all the concerns about the organization of industrial education” in Russia were entrusted to the Ministry of Popular Education. In the autumn of 1884, the draft reform was prepared and submitted to ministries and departments for consideration, and then corrected in the light of comments and in 1886 submitted to the State Council for consideration. By that time it was called “Draft general normal plan of industrial education” [67]. Although the author is not specified in the published “Project,” many Russian historians of education in Russia considered Ivan Alekseevich Vyshnegradsky (1831–1895), the author of the “Project,” the famous Russian mechanic and scientist, design engineer, future Minister of Finance of Russia (1887–1892), the very one, who back in 1870 by the report on improvement of higher technical education in Russia opened the meeting of the sixth branch of the first trade and industrial congress. “The main and exceptional merit in carrying out the real education system, which made up the epoch in the history of public education in Russia, belongs to. . . Ivan Alekseevich Vyshnegradsky, as the author of the “General normal plan of industrial education” [68, p. 15]. Perhaps work in government circles was the reason for such modesty. I.A. Vyshnegradsky had experience in practical implementation of many of the proposals set out in the “Project.” He was known not only as a scientist, author of many scientific results in mathematics and mechanics, as a teacher-professor of the Artillery Academy and the St. Petersburg Practical Institute of Technology (1862–1875), but also as an organizer of higher education. Since 1875, when he was appointed Director of St. Petersburg Institute of Technology (by the way, it was the first time a representative of teaching staff was appointed director of the Institute), many changes had been performed at the Institute on his initiative: at the first two courses, weekly consultations (rehearsals) on the main subjects were introduced, the curricula and programs had been changed to reflect the accumulated experience, analysis of the work of graduates and new needs for staff, scholarships had been increased 1.5 times, the “Technological Institute News” began to be published. In 1884 he was appointed a member of the Council of the Minister of Popular Education, participated in the drafting of a new university charter. In 1886 he was appointed a member of the State Council (Department of State Economy), and from January 1, 1887—Minister of Finance. Vyshnegradsky’s “Project” is a kind of surge in HMT (at least in the development of personnel problems) and therefore deserves to be briefly focused on. Striking, first of all, are the systematicness and complexity of the content of this “Project.” In the beginning, the “Project” formulates the requirements for the developed plan. First, it must be properly aligned with the needs of industry. “Industrial

344

5 Management Thought in Russia in 1800–1917

education must prepare for industrial activity persons who are really fit for it, armed with the necessary knowledge and skills to the extent that they are, without special difficulties, after not excessively long practical lessons when leaving school, capable of becoming useful figures in the corresponding childbirth and at the corresponding stages of industrial area” [67, p. 2]. It should be unique in each of its five parts, in accordance with the five hierarchical levels of management and production structure described below. As a special education plan, it must be coordinated with the “system of appropriate levels of general education,” continuing and completing the relevant general education. It should only prepare a specialist for practical activities at a certain level and should not be considered at each of the five stages as a transition “to a school for preparation of public figures of the highest level. Experience shows that schools that pursue these two goals do not achieve any of them.” Finally, “the industrial education plan should, as far as possible, include, or at least not exclude, the rather numerous existing technical and craft training courses. institutions” [67, p. 3], eliminating the revealed shortcomings in them. The plan then reveals the five categories (“degrees”) of managerial and industrial personnel that industry needs and for whom the plan has been prepared. 1. These are engineers with experience, “scientific and technical education, capable of improving production on the basis of the latest domestic and foreign scientific achievements, ready to lead a successful struggle between different industrial institutions, both in terms of improving the achievement of products and in the direction of reducing the cost of their production.” Vyshnegradsky believed that if there are no such engineers in the country, “then the country will be condemned either to stagnation and gradual decline of its industry or to constant dependence on foreigners. . .” [67, p. 4]. 2. These are “commercially educated executives of industrial affairs who, understanding its technical nature, could independently lead the actual trading side of the industrial enterprise, operating even in the most extensive sizes, and which would have sufficient technical knowledge” [67, p. 4] to discuss technical improvements with engineers. 3. These are technicians, the closest assistants to engineers, who must have the information “necessary both for thorough and correct conduct of production,” and for the execution of design and research works. 4. These are craftsmen who know the technical side of the production industry, can guide workers and “possess the necessary information to successfully direct the activities of their workshop to achieve the best industrial result.” 5. These are workers who, under the guidance of the craftsman, “with proper precision and accuracy” perform the tasks entrusted to them. “General development, moral level, conscious attitude to work are very important in workers. . .” [67, pp. 4–5]. The plan further clarifies the requirements for each group of personnel, assesses the existing organization of training and shortcomings for each of the five groups, details the content of training, curricula, and training programs, forms and terms of training, calculations of the cost of organizing training for each group of personnel, a

5.4 Management Ideas of the Representatives of the Bourgeoisie

345

list of necessary new institutes, real and craft schools, workshops are given as well as their territorial distribution across Russia. The author of the “Project” compares them with the current situation in the issue under discussion all the time, trying to find maximum possibilities of a “painless” transition from the old organization to the new one. In cost calculations, the author provides detailed items of expenditure, ranging from the equipment of the institution to the salary of teaching and support staff. The “Project” was approved by the State Council only in March 1888 in the form of “Regulations on industrial schools” with many amendments, additions, and most importantly with significant changes, which violated its slenderness, integrity, systematicity, and complexity. In the “Regulations” it was only about the last three categories of personnel, it was supposed to open a significantly smaller number of educational institutions even for these categories of personnel, then many institutions were created of a joint type and mainly in Moscow’s and St. Petersburg’s educational districts, curricula, and learning plans had been radically changed. As a result, for most of its proposals, the “Project” remained just that—a project. Let’s get back to the trade and industrial congresses. Not only personnel, but also many other issues pertaining to the organization and, above all, to the improvement of the organization of the management of production remained unresolved from congress to congress (either in principle or: the situation has changed, and therefore problems have persisted. In this connection, a number of issues, including personnel, were raised again at the III All-Russian commercial and industrial Congress. Let’s bring forward the two main personnel issues to the III Congress: “26) in which techniques—with higher, secondary or lower technical education—the domestic industry is now predominantly in need . . . 29) The organization of courses for adult workers . . .” [69, v. 1, pp. XII–ХШ]. And at this convention, almost every “personnel” report (there were 41) pointed out the shortcomings of the managers of production, engineers and technicians who served as reasons for discussing them at the congresses. They were most concentrated in the report of engineer S. Shishkov: “Abundance of superficial information, in the absence of deep knowledge of any one, favorite specialty. Unfamiliarity with commercial geography, life and customs of one’s country, the Russian laws, principles and the importance of commercial accounting. The often wrong, non-commercial view of one’s profession. Lack of criticism in their affairs, in the choice of their assistants, and so on, in one word, excessive business untouchedness, lack of elementary economic and conventional experience. Lack of initiative and sluggishness; hence the desire for a public place, the leave from direct engagement to teachers, officials. Uncharacteristicness. Lack of habit to fast work “with finish” [69, v. IV, p. 68]. The measures proposed from year to year by practitioners and scientists to address the shortcomings in the training of practitioners, managers, engineers, and master technicians whose work inevitably involves people are in our view very valuable and correct. All the rapporteurs on the first issue criticized the existing practice organization at universities and suggested that it be expanded and, more

346

5 Management Thought in Russia in 1800–1917

importantly, that a new form of learning and leadership skills should be added—to “live and work at the factory” (emphasized by us—M.V.) [69, v. IV, p. 15] prior to obtaining a diploma. These are the critical words of production practice from the report of the technologist A.F. Zimmermann: “Every practician tried to learn invariably from the techniques of production and strongly did not want to pay attention to anything else. . . This lack of attention to everything, according to future technician, untechnical, very sensitively reflects on him afterwards. Sooner or later, the technician himself becomes the steward of the plant, and he begins a series of failures and troubles.” Faced with a number of practical problems, an engineering scientist is not able to cope with them, or copes with difficulty, and ultimately the owner of the factories “learns about the managerial and economic capabilities of the administrator,. . .engineering scientist, and, having asked: what do they teach you? suggests him to seek “a new job”” [69, v. VI, pp. 92–93]. And here are the already known measures to improve the development of students’ practical skills. “I would have thought that, in addition to the broadest use of every opportunity to familiarize a young person completing a course with the practical side of the work to be done (assignments to factories, workshops, mechanical and chemical laboratories, etc.) it would be necessary to require, prior to granting an engineering diploma, that he spends a year at a factory or plant, at least for a small job, to get acquainted with the practice of the business, the life and relations between working people, for the sake of extract.” [69, v. VI, p. 118]. The report of engineer S.A. Nazarov on the involvement of practitioners to the reading of lectures and courses was of great interest. On its basis the resolution of the congress was adopted: “It is recognized useful that at higher specialized educational institutions, in addition to professors’ readings, practitioners are given some additional information.” [69, v. I, p. 57]. (emphasized by us—M.V.) We note once again that along with the All-Russian industry-wide congresses, regional and industry congresses were held, at which actual issues of training managers and specialists for regions and industries were almost always discussed. Among these issues were: – the presence in Russia of appropriate educational institutions aimed at innovative sectors of the economy, generated by fundamental changes in Russia at the end of the nineteenth century (when the “age of steam, coal and iron” was replaced by the “era of electricity, steel, oil”), – the state of the material base of educational institutions, – the composition and ratio of compulsory and special disciplines, – relevance and effectiveness of training programs, – the availability of teachers and the level of their special training. Changes in the sectoral structure of the country’s economy gave rise to changes in the choice of educational careers in Russian society—large merchant families began to send their children to higher technical institutes and schools—St. Petersburg, Kiev and Warsaw Polytechnic Institutes, to the Imperial Moscow Higher Technical School, etc. At the end technical universities, graduates with an engineering degree showed much faster managerial competencies in enterprises, starting from the

5.4 Management Ideas of the Representatives of the Bourgeoisie

347

position of chief engineer in the production, and became managers of the middleand top-level enterprises, and even directors of the Board of various partnerships. At the same time, many of the graduates of Russian technical universities, having gained experience in economic and managerial activities in private companies and at the state level, were invited as teachers and professors of educational institutions [68, 70–73]. In general, observing only the development of “personnel” issues at three Russian congresses, the following conclusions may be drawn. First, the problem of the quality of training for production managers and professionals was understood by scientists and practitioners throughout the entire period under review. Second, the main reasons for the constant recourse to this issue were the insufficient number of educated managers and specialists and the lack of their specialized management training. Third, the need for special training for future leaders, primarily due to their profession, that is to say, a complex of technical and social tasks, has been consistently noted (with increasing urgency). Listed conclusions, which is least relevant to HMT, but rather to Management Science, can even be strengthened and specificated, considering that similar issues had been raised in virtually all the sectoral and regional so-called provincial congresses, were reflected in the work and minutes of special meetings (all-Russian and regional, scientific and technical), in the materials of commissions on the position of various industries, at meetings of business organizations. These conclusions are most clearly found in the materials of industry commissions and the works of societies. This is due to the specifics of these materials, as tools that rapidly respond to the reactions of scientists and practitioners to emerging management issues, to the process of confronting ideas and perceptions, to the clash of science and practices that give rise to new problems and issues. The link in this pattern is mutual and we have been able to find a few vivid examples of its operation both on the one side and the other. This is the case for many years of discussions and often corresponding changes in the organization of centralized and decentralized management of Russian industries (mining, railway, metallurgical and metallic industries, sugar and distillery industries, education), economic measures affecting industry, agriculture, transport, trade (credits, tariffs, duties, taxes, prices), legal and organizational problems of economic management (industrial statute, factory legislation, organizational structures; functions, rights and duties of employees and workers), information and statistical aspects of production management (accounting standards, bodies of collection and processing, storage of statistical information, classification of industries and products), by elements of the personnel system (content, forms and methods, duration of training, curricula and programs, enrolment, and teaching staff), etc. Much of the monitoring of the progress of the collective view has been made possible by the specificity of the sources, that is, the proceedings of the congresses and societies. Unlike the modern submission, in Russia, together with reports all the meetings of сongresses (general meetings and sections or branches) were taken down in shorthand and protocoled, and all relevant documents were published. The proceedings of the commissions of societies (in the form of magazines, reports,

348

5 Management Thought in Russia in 1800–1917

occupations, works, etc.) were also protocoled and published in detail. Their accessibility and, at the same time, detailed information on such activities in the periodical press in several dozen magazines and newspapers often led to interest behalf the reading public, as expressed in written responses, commentaries, and criticism. The communication and sometimes some of the reports of the congresses were published in the magazines “Russian Courier,” “Russian Thought,” “Ural Mountain View,” “Rumors,” “Rus,” “Russian labor,” and others. In particular, the famous to us Victor Goltsev made a report at the first Congress of the Russian Technical Society in 1882 on local business councils, in which he set out his own ideas on self-governance, on representing the interests of consumers in these councils—“members of the Council should include the representatives of our self-government, i.e. the County Council and the city” [74, p. 460]. In a month, the “Russian Thought” magazine placed a note on the report with comments [75], although the Congress’ studies were published in 1883. Information on both Congresses was in the Official Gazette for 1882. This circumstance is a constant interest and a fairly rapid reaction of the periodical press to events in the nation’s scientific life—it is necessary to remember the historian of Russian management thought and, where possible, to use the materials of the press as a major source of HMT. In addition to the aforementioned existing Russian entrepreneurial societies in the early twentieth century, new diverse regional and sectoral unions of entrepreneurs began to emerge. Thus, starting in 1905, the St. Petersburg Society of Producers and Fabricants, the Society of Fabricants and Producers of the Central Industrial District, the Society of Fabricants and Producers of Moscow industrial area and other regions of Russia (in Riga, Warsaw, Wilno) were established. Activities of new regional and sectoral unions and business organizations (including exchange committees, trade committees, and manufacturers) were coordinated by the highest representative organization of the bourgeoisie approved in the summer of 1906—the “Congress of Representatives of Industry and Trade.” The current affairs of the “Congresses” were managed by the Council of Congresses. During the years of the existence of the “Congresses” (from 1906 to September 1918), nine regular congresses were held, the magazine “Industry and Trade” was regularly published [76]. The works of the ninth (last of the regular congresses) with the program topic “On measures for development of productive forces of Russia,” held in Petrograd in May 1915, are given in the work [77]. At the ninth Congress, in the midst of World War I, it was decided to create military-industrial committees (MICs) “to assist the government in mobilizing industry for the needs of the front.” In July 1915, the first Congress of the MIC took place. At its meetings, along with economic issues, political issues were raised, including the creation of a government that is trusted by the State Duma. In August 1915, a normative legal act was adopted that assigned to the committees the functions of assisting government agencies in supplying the army and navy with the necessary equipment and allowances through the planned distribution of raw materials and orders, their timely execution and pricing. By the beginning of 1916,

5.4 Management Ideas of the Representatives of the Bourgeoisie

349

220 local MIC were created.7 To coordinate the actions of local committees in Petrograd, the Central MIC was created, which formed a number of sections in such sectors as mechanical, chemical, army supply, clothing, food, sanitary, inventions, automobile, aviation, transportation, coal, oil, peat and forestry, mobilization, large shells, machine tools, etc. In order to effectively implement their statutory activities, the sections attracted practitioners, teachers of educational institutions, and scientists specializing in the management of these industries. Apart from the “Congress” in February 1917, the “Main Committee for the Protection of Industry” was established under the Provisional Government of Russia. In its short period of operation (February to October 1917), the Main Committee established 13 representative regional industrial organizations. Moreover, with all the tensions of the political and economic situation in the country and in the midst of the ongoing international military events, it was the Main Committee that sought opportunities to prepare, to organize and hold the First All-Russian Trade and Industrial Congress in Moscow on March 19–22, 2017, with the aim of uniting all trade and industrial representative institutions of Russia. The initiator and organizer of the congress was Pavel Pavlovich Ryabushinsky, a representative of the most famous merchant Old Believer dynasty, head of the Moscow Military Industrial Committee. Interestingly, the congress originally scheduled for January 2017 did not take place, “without being allowed by the Minister of Internal Affairs, who recognized the Moscow meeting of representatives of industry and trade untimely and undesirable.” Nevertheless, “representatives of exchange committees and other trade and industrial organizations gathered to Moscow, despite the ban of the authorities, in the evening of January 25 gathered in the house of P.P. Ryabushinsky, where a private meeting of trade and industry figures was held to discuss the present moment. . . The meeting was opened with a speech by P.P. Ryabushinsky” [78, p. 3], excerpts of which, containing management ideas, are given below: “The economy of the entire state body at the core differs only in magnitude from each private economy, and here, as in a drop of water, everything essential is reflected; and by the practice of this small cell we can judge the correctness of the organization and the large economy. First of all, we know that the success of each industrial or commercial enterprise rests on the abilities of its manager and the business of its chief employees” (emphasized by us—M.V.) [78, p. 4]. Immediately after the February Revolution of 1917, “shortly after the fall of the old state system, in the very first days of political freedoms, namely on March 4, 1917 in the house of P.P. Ryabushinsky an emergency meeting of representatives of trade and industry was again held. . . at which it was decided to summon the congress for March 19, inviting all exchange committees, merchant companies, committees of trade and manufactures, as well as all professional trade and industrial societies and organizations.

7

The head of the Moscow (local) MIC was a famous businessman Pavel P. Ryabushinsky.

350

5 Management Thought in Russia in 1800–1917

On March 19, on Sunday, in the Large physical auditorium of the Moscow University (emphasized by us—M.V.), in the presence of over a thousand people, the First All-Russian Trade-Industrial Congress was opened. It was destined to become the first8 not only in a number of congresses of representatives of trade and industry, but also to be the first in a long series of all-Russian congresses of representatives of other professions summoned under the renewed state structure, in the conditions of free political life of the country” [78, p. 6]. Analysis of the development of views on the solution of even one of the managerial problems on the materials of the congresses shows that this source of HMT is significant and beneficially differs from other sources and HMT storages in its specificity—operational efficiency (in terms of time of occurrence of the problem), multi-aspectness (in terms of the content of the reflected views on the solution of the problem), dynamism (in terms of reflecting the process of solving the problem), and conflict (again in terms of the content of the reflected views). I would especially like to note the latest quality of materials of the congresses. It could be defined as “dialecticism” if real managerial activity was reflected in the struggle of views, in the clash of viewpoints, in the confrontation of points of view, in the instant reflection (it is, of course, the materials of one congress). But this conflict (or “branch dialecticism”) nevertheless contains real-life objectively in the views of opponents. In the discussions at the congresses, most authors refer to personal experience, and if not, knowing the speaker, the sources of his arguments become clear. The materials of any of the conferences presented here could be the subject of a special scientific study on HMT. Nevertheless, our experience in analyzing the materials of the Russian congresses on the management of industry and trade suggests that this source of HMT is materialized, reflecting HMT’s dependence on all the factors we have identified in the first chapter. On the management of productive labor and on the development of elements of scientific organization of labor (SOL) In addition to the materials of the congresses, one should mention another source of HMT in Russia of the late nineteenth and early twentieth centuries—publications and other forms of expression of management ideas by representatives of the bourgeoisie, as the most powerful class in the pace of its development and participation in the management of the country’s economy during this period. Even according to the abovementioned quotes and references to the writings of congresses participants (V.I. Veshnyakov, V.A. Poletik, D.N. Kaigorodov, etc.), it is evident that entrepreneurs began to declare their rights to accept decisions to shape the economic policy of the country, creating increasingly powerful organizations to support private entrepreneurship in industry, trade, banking, agrarian sector, etc. As the Soviet sociologist Igor A. Golosenko wrote: “The Russian bourgeoisie (nineteenth century) waited for specific proposals to increase the organization and productivity of labour in order to obtain additional profits” [79, p. 163].

8

And the “last” in pre-Soviet Russia.

5.4 Management Ideas of the Representatives of the Bourgeoisie

351

And it is not only management objects that were in the attention of business managers. And the subject area of management attracted the attention of management practitioners. And the range of subject area, formed in 1900 by the creators of the preceding history of management thought and reflected in previous sections of the Tutorial, did not expand (from management of separate functions to the elements of the control system) to the extent that it had been clarified and detailed in their assumptions with the use of new means of knowledge of management activities and generalization of obtained knowledge and experience. In particular, in Russia after the abolition of serfdom works on the role of “productive” classes in the economic situation of Russia began to appear, on the situation of the working class in Russia, on sources of labor replenishment, on household life, the problems of production personnel management—organization of labor, employment, labor productivity, pay, working conditions, fatigue, housing conditions, etc., were researched. It became increasingly clear to researchers and practitioners of management that “a single reform on February 19, 1861 did not produce, and could not make a serious improvement in the situation of the masses,” the practical insolvency of the “work policy” of tsarism was becoming apparent. In addition, the struggle of the proletariat and the influence of the ideology of Marxism increased. Eight years after the abolition of serfdom in 1869, Vasily V. BerviFlerovsky’s treatise “The Situation of the Working Class in Russia” was published, which was highly appreciated by C. Marx, recognizing it as second only to the famous work of F. Engels “The Situation of the Working Class in England”9 in terms of significance. Marx wrote: “A few months ago I received Flerovsky’s essay ‘The situation of the working class in Russia’ from St. Petersburg. This is a real discovery for Europe. Russian optimism, spread on the continent even by so-called revolutionaries, is mercilessly exposed in this essay. . . This is the work of a serious observer, a fearless worker, an impartial critic, a powerful artist and, above all, a man indignant against oppression in all his kinds, not tolerant for any kinds of national hymns and passionately sharing all suffering and aspiration of the productive class. Works such as Flerovsky and as your teacher Chernyshevsky, indeed honor Russia and prove that your country too begins to participate in the general movement of our century” [38, Vol. 16, pp. 427–428]. In turn V. Bervi-Flerovsky wrote in his treatise: “The more the fabricator has power over the worker and the public, by means of low wages and the protection system, the less a technician and politico-economist are necessary for him,—he then does not seek an honest and knowledgeable official and judge, and he needs an ignorant bribe-taker, who is easy to bribe and force to whip and oppress workers. An intellectual worker will only then be needed by the capitalist and the landowner, when from it is impossible to extract income to the detriment of the workers and to the detriment of the buyers of the works from capital and land, and when it will be necessary to elevate the productive power of capital and land.” He called for selfgovernance in Russian enterprises, when “employees can usefully participate in the 9

V. Bervi-Flerovsky’s Book prompted Karl Marx to start learning Russian.

352

5 Management Thought in Russia in 1800–1917

management of industrial establishments, where the course of business is often known better to them than to the master” (highlighted by us—M.V.) [80, I]. In Russia, attempts were made to carry out special experiments for the study of the “working issue,” which were discussed at meetings of scientific societies and congresses, on the pages of specialized journals—“Industry and Health,” “Journal of Industrial Legislation and Occupational Hygiene,” “Factory Business,” etc. As a consequence of the onset excitement in the working-class environment in 1882, the institute of “factory inspection” was established in Russia [48, III, Vol. II, № 391]. The factory inspector was appointed by the state, did not report to or depended in his opinion on the factory administration, and had the right of disciplinary punishment toward employees of the local administration up to the initiation of criminal proceedings. Largely due to the efforts of factory inspectors and their reports, scientists and management practitioners learnt about the content and working conditions of Russian enterprises, professional qualification, on occupational injuries and diseases of workers, wages and conditions of employment, labor conflicts, hygiene and household life of workers, and organization of labor at enterprises.10 Until the end of the nineteenth century, reports of regional factory inspections were the main source of information on the aforementioned topics. Note that some prominent Russian economists, politicians, and sociologists emerged from the environment of factory inspectors of the nineteenth century. Among them—Ivan I. Yanjul, P.A. Peskov, Vladimir V. Sviatlovsky, Evstafiy M. Dementiev, Sergey N. Prokopovich, Konstantin A. Skalkovsky, and K.S. Davydov. One prominent representative of factory inspectors was V.V. Sviatlovsky, who in 1889 published the famous treatise “The Factory Worker” [81], which appeared ten years before the (no less famous) work of M. TuganBaranovsky about the Russian factory [59]. In the foreword to it, V.V. Sviatlovski indicated that it was a result of his five-year activity as a factory inspector first of the Kharkiv (1884—1886) and then of the Warsaw districts (1886—1888). Here 5500 large, medium and small industrial establishments, ranging from artisanal workshops to solid plants and factories, were subordinated to him. Over five years, he personally surveyed 1500 institutions where 125,000 workers of both sexes worked. As methods of his research, V. Sviatlovsky used both surveys of workers and inspections of enterprises. As he writes: “Over a five-year period of time we examined about 1500 industrial establishments, of them 700 inspections account for Kharkiv district and 800 for Warsaw” [81, p. 8]. Another famous factory inspector Eustafiy M. Dementiev published the famous treatise “Factory, what it Gives to the population and what it takes from him” in 1893, as a generalization of his perennial experience [82]. The fact is that in

10 By the end of the nineteenth century, there were only 30 factory inspectors in Russia, whereas in England by 1878 there were already 55 factory inspectors. In Russia, the institute of factory inspectors initially experienced numerous difficulties, including, inter alia, the excessive size of the inspected districts and the small number of personnel.

5.4 Management Ideas of the Representatives of the Bourgeoisie

353

1879–1885 E.M. Dementiev conducted the first comprehensive survey of sanitary condition in 109 factories of three counties of Moscow Governorate. E. Dementiev researched all aspects of labor and life of factory workers in various industries of the Russian Empire: the mode of work and rest, the number of holidays, weekends and non-working days per year with classification by industry, locality, factory, etc., living conditions of workers and their families, average wages by gender, age group, type of production and occupation, relationship of workers with land, labor intensity, the impact of factory working conditions on the health of workers, etc. Materials collected and processed by E. Dementiev in this treatise, numbering over 1500 (!) sources in a special Appendix [82, pp. 257–296], are used by V.I. Lenin in the writings “What are ‘friends of the people’ and how do they fight against the social democrats?”11 [12, Vol. 1] and “Development of Capitalism in Russia.”12 [12, Vol. 3, pp. 293, 539–540]. We have given examples of activities of only two Russian factory inspectors, culminating in large-scale scientific publications and even defense of a thesis (as in the case of Vladimir Sviatlovsky), in order to illustrate the multiplicity of sources of management thought, in general, and discussion of issues about the organization of labor at enterprises of Russia in particular. It is obvious that the extensive list of reports of factory inspectors and the work of researchers of problems of labor organization at Russian enterprises [80–90] shown in the reference list are the next historical inheritance of management ideas, which requires continued collection, scientific analysis, systematization, and transformation into historical heritage of management thought. The dual nature of the SOL movement requires some comments. Obviously, attempts to introduce “scientific organization of labor” (SOL) into production management in the history of production management have been made since ancient times and always with an unconcealed purpose—increasing the productivity of employees at enterprises, and on this basis—increasing the volume of production, the volume of sales of manufactured products, increasing the income and profit of enterprises. At the same time, factors or sources of increased productivity of workers and production volumes were “sweatshops” and/or a 12–14 hour working day of workers of all ages, and also socio-ethical and techno-technological innovations.

11

“As for the large machine industry in Russia—and this form is quickly taken by the largest and most important branches of our industry—шт our nation, despite all our identity, it has the same property as in the rest of the capitalist West, it absolutely no longer tolerates the maintenance of the worker’s connection to land. This fact was proved, by the way, by Dementiev with the help of accurate statistical data, from which he (quite independently of Marx) concluded that mechanical production is inextricably connected with the complete excommunication of the worker from land” [12, Vol. 1, p. 214].

12

“Mr. Dementiev researched in detail the impact on the gap with the land of the place of birth of workers, drawing differences between locals and newcomers, the differences between classes (bourgeois and peasants)—and it turned out that all these differences fade away before the influence of the main factor: the transition of manual production to mechanical” [12, Vol. 3, p. 539].

354

5 Management Thought in Russia in 1800–1917

The creators of this kind of innovation were both foreign and Russian inventors, some of which will be discussed below. We know from Chap. 3 materials that, in the early nineteenth century, Robert Owen not only called for more respectful treatment of workers (or, as he put it, for “living machines”), but actually introduced social responsibility programs in his factory, turning his factory in New Larnaca into an “industrial oasis.” In the 1830s, Charles Babbage’s experiments led to the creation of a computer to handle mail correspondence. We mentioned some methods of owners of enterprises and the results of their actions in relation to the “working class” in Russia of the nineteenth century in the context of reports on the example of factory inspectors. The creative achievements of Ivan A. Time will be further demonstrated, whose inventions were successfully applied in the production processes of 5–6 branches of the Russian economy in the second half of the nineteenth century at all levels of Russian enterprises—from workshops to enterprises as a whole. Continuing the tradition of “rationalizers of production processes” of the nineteenth century after about a century in the 1940–1950s, “automated technological processes control systems” (ATPCS) were developed and applied, and most recently “all the sudden” concepts of digitalization of production and “robotization of the workplace” began to appear with quite noble purposes—replacing physical labor with machine labor and increase productivity. These attempts have acquired the term “technological revolutions” or “technological ways” and depending on the level of productive forces and the emerging industrial relations they have resulted in differing results in efficiency (both successful and not very). We shall discuss some consequences and after actions of “workplace robotization,” including manifestations of the “luddite” movement (the late eighteenth century) and “new luddite” (in the twenty-first century), in the eighth chapter of the tutorial. We should mention some Russian practitioners and researchers of the period under review, whose works attracted the attention of the Russian and foreign public and contributed to the development of management thought, including in solving the problems of scientific organization of labor (SOL). First, we will talk about the little-known in domestic literature Ivan Augustovich Time (1838–1920), his activities and numerous publications [91–100]. Ivan A. Time was born on July 11, 1838, in Zlatoust. In 1851 he went to study in St. Petersburg, where in 1854 he enrolled at the Institute of the Corps of Mining Engineers (later the Mining Institute), from which he graduated in 1858, receiving a gold medal. In 1859 he entered to serve on the Berezov treasury-owned gold industries near Yekaterinburg as a warden at the Vasilyevsky mine. Here Ivan Time built a new gold processing factory based on the type of Siberian crafts, and upon completion of this construction was appointed warden of the Nizhne-Isetsk Iron Plant, where he was given the task the construction of the newly built puddling and welding factory on peat. At the same time (1868) in the workshops of Lugansk foundry, I.A. Time conducts his classical studies of the process of shavings formation. The results of the research, which later received worldwide recognition, were published in the “Mining Journal” in 1870 under the title “Resistance of metals and wood to cutting”

5.4 Management Ideas of the Representatives of the Bourgeoisie

355

[91], where for the first time the theory of cutting metals from a strictly scientific perspective was stated. The Council of the Mining Institute admitted this work of I.A. ime as a thesis for the title of professor. From this time the pedagogical activity of I.A. Time in St. Petersburg begins. After the defense of his dissertation, I.A. Time was elected on October 1, 1870, as Professor in Ordinary of the Mining Institute in the Department of Applied and Mining Mechanics. In 1873, he published the article “A Memoir on the planning of metals” [93]. In 1874, I.A. Time publishes the “Reference book for mountain engineers and technicians” [94]. This essay is a summary of the course on mining mechanics, which I.A. Time read at the Mining Institute and it became a table book of every Russian mining engineer and technician of the nineteenth and twentieth centuries. In addition to achievements in the mining industry, I.A. Time conducted thorough and deep experiments on iron rolling mills with flywheels. He proposed a simple and witty method for determining the power absorbed by the stan when rolling in ironrolling machines with the flywheel and also developed a mathematical formula to determine this power [92]. The final stage of the development of Time’s theory of iron rolling mills was his classic study on rolling steel rails published in 1883 as a separate book “Indicator experiments over rolling steel rails at the Putilov plant” [95]. But the most significant for HMT was a two-volume essay by I.A. Time published in 1885, “Fundamentals of Mechanical Engineering. Organization of machine-building factories from the technical and economic perspectives and production of mechanical works” [96]. This work is compiled on the basis of I.A. Time’s long-term study of mechanical business in Russia and contains a number of ideas on improving the technological characteristics of the production process at enterprises of several industries taking into account technical and economic aspects. From 1883, I.A. Time performed work for the special commission for the design of the oil pipeline from Baku to Batum and simultaneously conducted tests of the first Russian injector in which the pulverization of oil was produced mechanically. The results of multi-year tests were published in 1894 in the article “Silent oil heating—the privilege of Tentelev” [99]. The significance of this work is that for the first time in the domestic technical literature there were calculations of oil injectors.13 In 1895, after 25 years of teaching, Time received the title of Honored Professor of the St. Petersburg Mining Institute, where he carried out pedagogical activities until June 1909. In 1900, I.A. Time became a permanent member of the Moscow Polytechnic Society at the Imperial Moscow Higher Technical School. During his scientific and pedagogical and practical activities Ivan Time published over 600 (!) scientific papers. Among them, in addition to the above-mentioned works, was the two-volume “Practical Course of Steam Engines” (1887) [97], the two-volume “Hydraulics Course” (1891–1894) [100], etc. [91–100]. Ivan Time’s work on the organization of production in metallurgical, mining, oil and other

13

oil emulsions spraying devices.

356

5 Management Thought in Russia in 1800–1917

industries, as well as almost all his work on other issues, was original, created as a result of practical, pedagogical and scientific activities and played an important role in the management of production in these industries. Of course, the works of I.A. Time require further study as the richest sources of domestic management thought. At the beginning of the twentieth century, the subject of SOL became more specific in connection with the publication of the articles of F. Taylor—“Management of the workshop” (1903) [101] and “Scientific foundations of management” (1911) [102], which could not be left without the attention of Russian entrepreneurs. As for “Taylorism” as an ideology of “scientific” production management (which will be discussed in detail in Sect. 6.1), in the early 1900s estimates of Taylorism in Russia “developed from the perspective of acceptance or rejection of Taylorism.” [103, p. 28, 104]. The “reaction” and estimates of Taylorism in Russia at the beginning of the twentieth century are described in detail in the collection “What to read on SOL” [105], in the works of Soviet scientists Holosenko I.A. [106], Koritsky E.B. [107], Dmitriev A.L. and Semenov A.A. [108–112], the materials of which we shall use in characterizing and evaluating the activities of some Russian practitioners and researchers in the field of technological aspects of SOL and production management. One of the schools in the field of technological aspects of SOL in Russia of the early twentieth century was the school of Professor Nikolai N. Savvin (1877— 1954). Representatives of this school began practical activities to implement the principles of scientific organization of labor at many factories, primarily in the plants of St. Petersburg, built and/or modernized by the latest European technology and production organization. It took place at the “Mechanical Plant of EngineerTechnologist I.A.Semenov,” at the factories of entrepreneur Yakov M. Ayvaza (at the engineering plant “Ayvaz” and at the plant “Svetlana,” which first produced electric lamps and then carried out military orders and on which A.K. Gastev worked in 1913), at the “E.A. Yakovlev First Russian Plant of Kerosene and Gas Engines” (later the “Vulkan” plant), at Petra A. Freze’s factory—“Joint Stock Company of Crew Construction “Freze and K”14 and other factories in Russia. It should be noted that N. Savvin was invited to many plants of St. Petersburg as a consultant for the implementation of its developments on SOL. In addition, N. Savvin was actively engaged in teaching activities since 1904, when he was invited as a teacher to the Imperial St. Petersburg Polytechnic Institute, opened in 1899, to the Department of Applied Mechanics and where he taught a number of courses—steam machines, heating and ventilation, mechanical technology, drawing, machine parts, industrial statistics—which demonstrates the breadth of views of the young teacher and researcher. In 1908, N. Savvin was appointed head of mechanical workshops, in 1909 he was elected extraordinary professor, and in

14

Russian entrepreneurs Evgeny A. Yakovlev and Peter A. Freze are known as the initiators of the construction of the first Russian horseless crew, which became the basis of formation of the Russian automotive industry at the Vulkan plant.

5.4 Management Ideas of the Representatives of the Bourgeoisie

357

1911—to the position of professor in Ordinary at the Polytechnic Institute, which he held until 1918. Over the years he published courses of his lectures [113, 114] and a number of other works [115–121], in which he often emphasized the importance of development ща the metallurgical industry for Russia. Here’s how he himself expressed concern about the “metal and fuel famine” of Russia, which escalated during World War I: “In deepening and expanding private consumption of metal— the future of the Russian metal industry; intensive development of domestic engineering, consuming expensive labor of the worker in large quantities, the satisfaction with the products of this engineering of the needs of the agricultural and factory industries are the objectives to be pursued” [119, p. 358]. At the beginning of World War I, “fate” confronted N. Savvin with the earlier forementioned “Congress of Representatives of Industry and Trade” (CRIT). Recall that from 1906 to September 1918 the CRIT was the most representative institution that expressed the interests of the Russian bourgeoisie. N. Savvin’s activities in the field of industrial statistics and tariff policy were noticed by the heads of the Council of Congress, and in 1914 he was involved in the mentioned Central MilitaryIndustrial Committee (CMIC) established by the Council of Congresses, as Head of the Mechanical Section of CMIC [122, pp. 217–218]. N. Savvin’s activities (reports, reviews, etc.) were used in the CMIC in making effective decisions on management of the economy of the country in wartime and, as a result, contributed to his career advancement after the February Revolution of 1917 in the office of the Provisional Government of Russia. On March 9, 1917, by order of the Ministry of Trade and Industry N. N. Savvin was appointed Comrade Minister of Trade and Industry, and on September 24, 1917, Governor of the Ministry of Trade and Industry. Briefly on some representatives of the bourgeoisie who contributed to the development of Russian management thought. First of all it is Ivan A. Semenov (1862–1930), founder and owner of the largest machine-building plant in Russia and Europe, N. Savvin’s colleague at the St. Petersburg Polytechnic Institute. In 1889, I. Semenov constructed the most productive in those times cigarette machine for the tobacco industry. Then, going from a mechanic at the A.N. Shaposhnikov factory to owner of the workshop (1890) and the plant (1906), I. Semenov demonstrated everywhere his achievements as an inventor (designed and produced lathes, automatic scales for the dispersal of tea and other bulk materials), entrepreneur and manager (from a workshop of 15 people to a factory of 300 people). One-third of Semenov’s production was exported, the rest went to Russian tobacco and tea factories. In pre-revolutionary Russia, the I. Semenov plant was hardly the only Russian plant of precision engineering, working largely for demand from the foreign market. Almost all countries in Europe, as well as the United States, Argentina, and Japan, bought Semenov’s machines. At the Paris World Exhibition in 1900 and at the Nizhny Novgorod Exhibition in 1906, these machines were awarded special medals. For HMT the most significant “product” of I. Semenov’s creative activity should be considered his report “Organization of the factory economy” at the Society of Technologists in 1912 in St. Petersburg and publication of the abstract of this report

358

5 Management Thought in Russia in 1800–1917

in the Notes of the Imperial Russian Technical Society [123]. The report reflected the author’s idea of one of the important elements of the management system—the organizational structure of enterprise management. The organizational structure of the machine-building plant presented by him with a fairly detailed list of functions and duties of five line and functional managers (commercial, preparatory, distribution, design departments, and “time and labor department”) demonstrates the systemic approach of I. Semenov to management, which is rather significant for the early twentieth century [110, p. 114]. Only four years later, Henry Fayol’s treatise “General and Industrial Management” appeared in Russia, which gives a similar scheme of “6 Types of Activity.”15 Another practitioner in management is Nikolai Francievich Charnovsky (1868–1938), son of a Polish non-commissioned officer. Having lost his parents at 12 years of age, N. Charnovsky enrolled and successfully graduated from the military school of cantonists16 and began to earn a living from early childhood. In 1886 he graduated from the Novocherkassk Gymnasium with a gold medal. In the same year 1886, he enrolled at the mathematical department of the Faculty of Physics and Mathematics at the Imperial Moscow University. After graduating from university in 1891 with a first degree diploma, he continued his education at the Imperial Moscow Technical School (IMTS), which he successfully completed in 1896 with a diploma in engineering-Mechanics under the scientific direction of the rector of IMTU Professor Alexander P. Gavrilenko. After graduating from IMTS, N. Charnovsky first worked at the factory in Mytishchi (Moscow region), and in 1899 he was accepted for the position of mechanical engineer in the joint stock company “Sormovo,” where he worked until 1907 in leadership positions. At Sormovo plants N. Charnovsky for the first time in Russia introduced an 8-hour working day instead of 12 hours in the hot shop, which he led at the time. All the shops worked in two shifts. He introduced mechanization that allowed for the introduction of three-shift work. And achieved an increase in workers’ pay. From 1904 N. Charnovsky began teaching the course “Organization and Equipment of Mechanical Plants” at IMTS, and in 1907 he was elected adjunct professor at IMTS. In the characterization of the recommendation of the commission of the school on replacement of the post of professor of the department of mechanical technology of metals and wood it was noted that during numerous tours of Russia and abroad, using his own experience gained at large factories, “the inspector of training workshops of the school, N. F. Charnovsky, has shown a very valuable capacity for private cases of application of scientific methods of solving problems.” From 1914 Charnovsky was a professor at IMTS at the Department of Metal and Wood Technology of the Engineering and Mechanical Branch. In addition to IMTS,

15

More detais about Henry Fayol are in Sect. 6.3 of the Tutorial. Military educational institution of the lower level, which gave elementary general education knowledge. 16

5.4 Management Ideas of the Representatives of the Bourgeoisie

359

he was a freelance extraordinary professor-lecturer at Moscow School of Commerce (MCS, 1909—1924). The main contribution of N. Charnovsky to the development of Russian management thought in the field of technological problems of SOL in the period up to 1917 is the publication of a course of lectures delivered by him at IMTS and MCS, on the topic “Organization of industrial enterprises for metal processing” in several publications. The first edition was published in 1911, and the second edition in 1914 [124]. In the course of lectures and in this work N. Charnovsky managed to summarize the technical and economic principles of the organization of production processes: continuity and compaction of technological processes; specialization and combination of production; the most complete load of capacities and rational operation of equipment; simplification of production structure of the plant. In the second (substantially augmented) edition of the treatise, N. Charnovsky paid great attention to the understanding of “organization,” as an object of management (or phenomenon), and “organization of the enterprise” as a process or system of enterprise management functions. In particular, he formulated the original and modern-sounding definition of “organization” and its expansive interpretations. The originality of his statement justifies the size of the quotation given by us from N. Charnovsky’s treatise: “the name organization of the enterprise means a combination of administrative, financial, technical and supervisory forces, which represents a permanent system of mutually related bodies with precisely defined functions strictly delineated duties and responsibilities, united by the common goal of fulfilling the planned production program and achieving the highest economic success. It is clear that since all these functions are distributed and differentiated, so long as the same enterprise as a whole can be called “organized.” And further: “We have to distinguish between 3 kinds of organization, in fact—between closely related among themselves and hard to divide: (1) a general administrative organization that includes higher management bodies of the enterprise (the “Management Board”), then the person standing at the head of the entire administrative part at the plant itself—the director of the plant, and all the bodies subordinated to him for the management of the general progress of production; (2) technical organization mobilizing all technical staff of the enterprise, from chief engineer to worker, directly implementing the program of production of products, using the developed system of instructions when performing works, control and acceptance of products, and (3) a commercial organization the task of which is control of production and accounting of it, in the sense of assessing the results of technical work, as well as providing the enterprise with all necessary materials (often labor as well), finally selling products and all external relations” (emphasis added everywhere by us— M.V.) [124, pp. 186–187]. As in the case of the organizational structure at Ivan Semenov’s plant and earlier statements of the creators of management thought, Nikolay Charnovsky was ahead of H. Fayol’s claims, but in this one of the axioms of “scientificness” of assertions in the subject area of management as a science,— “management relations,” manifests itself, it is the independence of observers of the processes of management of social organizations (but at the same time the dependence of the results of scientific statements on specific observations, specific

360

5 Management Thought in Russia in 1800–1917

historical events and specific observers, in which the idiographic nature of management science is manifested). The movement on the scientific organization of labor was reflected in the Russian literature of the early twentieth century. In 1912, the engineer Leonty A.Levenstern founded his own publishing house and began publishing the books of the special series “Administrative and Technical Library” in Russian with the aim of spreading Taylor’s ideas and his followers in Russia. Along with foreign works (F. Taylor, F. Gilbreth, G. Gantt, F. Parkgorst), the works of domestic authors were published in this series. In 1913, L.A. Levenstern published “Scientific Foundations of Plant Management. Scheme of scientific organization of the plant,” [125] which highlighted two basic principles of the scientific system of organization of labor. The first principle was: “The scientific system of the organization is really based on scientific data” [125, p. 4]. “The second principle of scientific organization of labor is scientific selection on the basis of laws, machines, materials and people developed from a scientific perspective” [125, p. 5]. Characterizing SOL, Levenstern noted, “The scientific system does not rely on any new principles; it represents only a consistent implementation of old, already known principles with new, appropriate relations between them, ensuring high productivity of labor and machines. The scientific system consists of 75% analysis and 25% common sense” [125, p. 19]. Even from the examples given, the conclusion follows that it is difficult to name the “date” of the first attempts to “scientifically organize production labor,” which in the twentieth century acquired the acronym SOL, but it is unquestionable that such attempts had been made more than once in the multi-millennial history of establishment of various industries and in the history of management of production organizations. In the years of World War I and “military communism” scientific principles of organization of labor could not be widely spread, they were used in a truncated form and only on separate enterprises of military production. At the end of the Russian Civil War (1918), with the transition to a new economic policy (NEP, 1921), the movement for scientific organization of labor quickly intensified.

5.5

Management Training Courses at Russian Universities in 1880s

Another affluent source of HMT, more precisely of materials on the development of methodological and applied management problems in Russia, was the work of representatives of the higher school, teachers of Russian universities, the courses read by them, teaching materials, articles. Moscow University management issues were looked into by professor V.N. Leshkov, then his student V.A. Goltsev, Professors I.I.Yanzhul, V.F. Deryuzhinsky, A.I. Chuprov, I.T. Tarasov, I.I. Kovadevsky; at St. Petersburg University these problems were investigated by

5.5 Management Training Courses at Russian Universities in 1880s

361

I.B. Avdreevsky, at the University of Warsaw—G.F.Simonenko (he defended both theses at Moscow University) and A.V. Gorbunov, at Kazan University—Y.S. Stepanov and V.V. Ivanovsky, at Kharkov University—K.K. Gattenberger, N.O. Kuplevasky, and V.F. Levitsky, in Kiev—N.H. Bunge, D.I. Pikhno, A. Antonovich, in the Demidov Legal Lyceum (Yaroslavl)—N.K. Nelidov, M.S. Shpilevsky, E. Berendts, and others. All these authors worked at law faculties of higher education institutions (at departments of political economy or branch of law). A very small part of them read a special management course (more often a section in a more general course on political economy, on state, police or administrative law). To get an idea about the development of management thought we often had to find and study lithographed courses, to allocate in them what relates to management (management of the “popular economy,” “welfare,” “economy,” “production”). The search led to the discovery of rare (sometimes archival) educational materials, which should be further researched. From the entire list of authors of management training courses known to us, we have selected those who systematically developed methodological problems of management. At the same time, it should be said that the work of other scientists in general covered almost all methodological issues of management, namely: the concept of “management” (in general and of an economy in particular), the place and role of economic management in the system of state or public administration; the content of management activities, industries, and functions of management of the economy, subject, and methods of teaching management, goals, and objectives of management science, various classification of sections of doctrines about management, critical works of methodology of management doctrines of foreign scientists, etc. Of course, the scientific level of the developments was determined by the classsocial, worldview position of the author. Most of the listed authors were united by recognition of the inviolability of the dominant classes in capitalist society and, as a result, the proposed corresponding set of measures for improvement of public administration. But it is impossible to deny numerous attempts of scientists to address general scientific and/or methodological management problems. V.A. Goltsev’s “Doctrine of management.” One of the developers of methodological problems of management and the author of the training course “Doctrine of management” Victor Goltsev (1850–1906), was a well-known individual in a wide range of Moscow and Petersburg academics, writers, lawyers, students, “a beacon on the turbulent political sea” [126]. Following liberal bourgeois views, V.A. Goltsev was one of the organizers of the Russian populist newspaper “Samoupravlenie” (“Self-Management”) [127], published in 1882 in Geneva. By that time, he had already been dismissed from Moscow University, where he had read the “Doctrine of Management” course to students of the Faculty of Law in the 1881/82 term.17 The basic printed material for this course—the lithographed publication, prepared by two students—has unfortunately still not been found. The fact is that the course 17 It was about this course that we wrote in Chap. 1, comparing the activities of F. Taylor and V. Goltsev in 1881.

362

5 Management Thought in Russia in 1800–1917

was issued in a small volume and spread only among students and trainees and was not distributed to university and public libraries [128, p. 108]. However, a detailed Program of the course, found by us in the Archive of city Moscow [129], the studies in this area of his teachers and followers, V.A. Goltsev’s numerous articles on the individual issues dealt with in the specialized course (see, for example, works [130–137]), provide a fairly clear picture of the methodology, structure and main results of V.A. Goltsev’s “management doctrine.” V.A. Goltsev’s scientific activity began at Moscow University, where he studied at the Faculty of Law from 1868 to 1872. At the time, the university taught researchers such as I.K. Babst (Political Economy), V.N. Leshkov (Public Law), I.I. Janzhul (Financial Law) and others, whose courses were attended by V.A. Goltsev. By the time of graduation V.A. Goltsev presented an essay on “Economic legislation of Peter the Great.” After passing his exams, he was sent to a biennial foreign assignment to prepare for his professorship. V.A. Goltsev studied at the universities of Paris, Heidelberg, Vienna, and Leipzig, collected materials for a master’s thesis on “The state economy in France of the XVII century,” and attended lectures by renowned economists and jurists—J. Bluntschli, K. Knies, W. Roscher, the political scientists Fricker, Stobbe, and others. The most significant influence on shaping V.A. Goltsev’s worldview was that of the famous at the time Lorentz von Stein, whose lectures V.A. Goltsev attended at the University of Vienna during the autumn and winter of 1876. Upon his return to his motherland, V.A. Goltsev was given the opportunity to defend his master’s thesis (1878), but he was not able to take control of any of the two promised departments—state law and police law. After his defense, he had been published for several years in various newspapers with scientific and political articles, strongly criticizing the existing Russian educational system, the Ministry of Public Education and minister Dmitry Tolstoy. This aggravated his situation at the university. Though in 1881 he was approved as an associate professor, and in the 1881–82 school year he was permitted to conduct the “Management study” course, in the fall of 1882 he was De from teaching activities and was asked to resign. Since then and until the end of his life (December 1, 1906), V.A. Goltsev, dreaming and thirsting for teaching activity all the time, was not allowed to do so. Nevertheless, possessing the talent of a scientist and writer, he was published many times in newspapers and magazines on political, law, public management, etc. After becoming the de facto editor of the “Russian Thought” magazine in 1885, he regularly conducted the “Internal review” and “Foreign review” sections, and published articles on scientific, political and economic issues in the journal. As the organizer and secretary of Moscow Society of Lawyers, he often spoke at its meetings and was printed at the body of the Society—the “Legal Gazette” Journal. Overall, V.A. Goltsev published over 200 scientific and journalistic articles. An analysis of V.A.Goltsev’s studies showed that he held liberal views on the organization of State management in capitalist Russia (including the promotion of popular welfare), preaching all-dimensionality of elected bodies, self-government in county councils, constitutionalism as means, and form of mitigating class controversy.

5.5 Management Training Courses at Russian Universities in 1880s

363

Like L. Stein, V. Goltsev followed the theory of the separation of powers, which, in its third part—the executive branch, naturally led to management activities. The idealists of Stein’s school considered the content of the state’s activities as “improvement of the individual.” The Supreme State principle of governance is the realization of full harmony of all the interests of all the members of the living community. “The science that provides guidelines and rules for management for the stated purposes is the doctrine of management” [131, p. 270]. But unlike the proponents of the idealistic concept of “the rule of law,” Goltsev considered the content of State activities somewhat broader, and was one of the first in Russia to formulate a new idealistic concept of a “cultural state” in the Science of public management what we wrote about in Chap. 1. Here we repeat some of his words: “The first and greatest of the State’s objectives shall undoubtedly be the exercise of justice in mutual relations of citizens and between them and the government. In addition to this great goal of public activity, there is another one. The issues of public welfare attract more and more attention of modern scientists and public persons. . . While preserving the best features of the rule of law, respect for human thought, the sanctity of the human person, the state of our time takes on such tasks of well-being as are overwhelming to an individual citizen or public alliances of people. The rule of law shall thus be replaced by a cultural state” [131, pp. 272–273]. Goltsev believed that “the complex tasks of a cultural state are determined primarily by the legislation of the country. The legislative branch sets limits and means of action for the executive. The latter, within the limits outlined by law, shall issue orders and regulations. These orders and regulations serve either as interpretation of law or govern local, temporary needs.” [131, p. 273]. Overall, Goltsev considered management as various activities of the State and organized society, focused on the promotion of justice, security within society and against external enemies and the achievement of popular welfare. The area of teaching on management “should include everything that is not a matter for the individual but for the government, the church, and self-government” [128, p. 109]. Commencing with his teachings, Goltsev begins with what he considers “impractical. . . adhering to law as the title for our subject. Legal relationships represent the result of the addition and decomposition of social forces . . . The result of yesterday’s economic struggle, a certain law shifts economic relations from tomorrow. The consequence turns into the cause, the cause becomes the consequence. Scientific study of “law” is therefore possible only in connection with the study of all social life. This provision, which is just as it is, is particularly important in relation to management issues. Here, right surveils step by a step the growth of public needs. Within the limits of the law, there is a continuous fluctuation in the unforeseeable multitude of orders, which live only one day, in only one point of the country.” [131, pp. 275–276]. That is why with “the law” the study of public life should be ended. The objective of the doctrine of management was, in his view, to study the cultural activities of the State and the various social unions and to examine the relevant “historical changes” in the legal norms involved. “The ultimate aim of any study of this kind is to reveal the laws of coexistence and sequence of phenomena.” [131, p. 276]. To meet this

364

5 Management Thought in Russia in 1800–1917

challenge, Goltsev considers it necessary to use historical, comparative, and statistical methods of scientific knowledge, which are “to observe and analyze phenomena, to establish a causal link between them and to discover the laws of their coexistence and consistency” [131, p. 276]. In another part V. Goltsev wrote: “Observing the past and modern life of mankind,—to the extent to which modernity lends itself to unbiased and proper assessment—illuminates the path for the future, equips us with the knowledge and ideas through which we can direct the course of history, rather than be powerless witnesses, the unwitting victims of this tide” (emphasized by us—M.V) [128, p. 110]. It should be noted that V. Goltsev not only called for the use of these methods of study of management issues and disclosed their importance, purpose, and substance, but also specifically implemented them in his scientific activities. Thus, in addition to the dissertation work on the state economy in France, V. Goltsev organized, edited, and carried out translations of similar works published in the same years as the specialized course—the “State structure of Belgium” (1881), “The state structure of the Netherlands” (1882), “Benjamin Constant’s Political ideas” (1882), “On the Responsibility of Ministers” (1883), and others. Considering that the specialized course’s program contains questions on “Historical overview of public management in the west and in Russia”, several questions about English public management, French and German self-government and the formation of social unions (joint stock companies) in the same countries, the United States, the Netherlands and Austria [129], the system and breadth of Goltsev’s views, the enormity of his planned research on governance and the choice of empirical research methods become clear. Selection and use of these methods of research, in Goltsev’s view, allows for the establishment of sustainable management principles required in real management activity. “The objective of the application part of the doctrine on management18 is. . . to develop principles in an infinitely broad area of relations between managers and the managed.” [132, p. 227]. V.A. Goltsev expressed and developed the issues and ideas of the training course in numerous scientific works, magazine articles, including the above-mentioned newspaper “Self-governance.” Most often, he returned to the issue of self-governance—in the work “The State and Self-Governance” [133], “Self-governance and Decentralization” [134], etc. This is how, for instance, he divided administrative decentralization, that is, local management without legislative authority; Stein’s selfgovernance and self-governance itself in “The State and Self-governance.” “Both theoretical thought and historical experience point out. . . the impossibility of the right simultaneous existence of two beginnings, one of which is the basis of nationwide management and the other of local self-government. These two beginnings will inevitably come in conflict with one another. A strong central authority

18

Or “the art of management” as V. Goltsev calls this part in article [132, p. 256].

5.5 Management Training Courses at Russian Universities in 1880s

365

will reduce self-government to the degree of an official authority, turn it into a disguised bureaucracy. For central authority, there are significant advantages in this arrangement: many public needs begin to be covered by ostensible self-government, which is responsible for increasing taxes in the eyes of the population. Local representative institutions become, in fact, the tax collector, the financial agents of the State, which estranges itself of the unpleasant duty to stand face to face with the people. All the benefits are on the government’s side, and all the responsibility on the side of powerless self-government. . . It is clear that those who will hold office in such self-government. . . will become obedient tools for the management, since it ultimately determines the request of these individuals and of the institutions themselves. On the contrary, strong self-government naturally strives upwards to extend its principle to the entire structure of state.” [133] It is not necessary to think that Goltsev, fearing censorship, had so veiledly expressed the ideal of a future communist society (even utopian). On the next page, he, as a loyal apologist of autocracy, writes: “In addition to representative institutions (i.e. “all-estates” in his concept of self-government—M.V.) there are two other forms of government structure: direct resolution of all issues in the management of the people, the councils and the bureaucratic way of governing. As for the first form, it is not feasible in the larger states of the new world. Everything healthy and fundamental in this principle is carried out with broadly developed selfgovernance. For complex and nationwide cases, such a system is not applicable. . . It is excessive to speak of the unsuitability of a bureaucratic regime of public life, since unsuitability is obvious. It is only with the removal of bureaucratic shackles that bind the people’s lively movement that the monarchy is able to exercise its lofty calling, that is, being the bearer of justice, the patron of the dispossessed in the historic struggle of the strata of the people” [133]. Critics, noting the originality of the content and structure of V. Goltsev’s training course, at the same time noted the lack of completion of the course, the absence of some of the planned parts, the insufficiency (in terms of volume) of issues and welfare management functions, activities related to economic life. The shortcomings were due to the novelty of the course and the lack, unfortunately, of the possibility of repeating its conduct at the university. And even in this form (and especially by estimating the contents of V. Goltsev’s other, later works) the specialized course “Doctrine of governance” not only embraced and explored systematically for the first time in Russia all the methodological issues of management science (its subject, objectives and methods of study, functions and relevant administrative bodies), but also developed the views of the representatives of world management thought. The “Internal management doctrine” of V.V. Ivanovsky. Regardless of V. Goltsev, a similar course began to be red in 1883 at Kazan University by Victor Victorovich Ivanovsky (1854–1926). V.V. Ivanovsky graduated in 1878 from the Faculty of Law of the University of Kazan. There he defended both dissertations: a master’s thesis in “The study of the activities of provincial self-governing bodies in Russia” (1882) and the doctorate on “The organization of self-government in France and Prussia” (1886). From 1886, he was a professor at the Department of Public

366

5 Management Thought in Russia in 1800–1917

Law. For two years (1883–1885) he worked on probation at universities in Berlin and Vienna. In 1883, he first conducted a course on “The doctrine of internal management”, which was largely interrelated with the theoretical views of L. Stein. In a generally accepted form V. Ivanovsky began his reading with an introductory lecture in which he outlined the main content, logic, and structure of the course. His scientific concept of Management is based on the content of the functions of State activity. He believed that every state (since the emergence of the first states, which had taken place, according to Ivanovsky, “not before the end of the XV and the beginning of the XVI century”) performs two tasks: “protects the individual from the dangers that threaten it” and “contributes positively to the welfare of the individual by taking those or other positive measures for this purpose by establishing those or other institutions” [138, p. 2]. If, in the first case, the state acts in a coercive manner, in the latter state activity is of a “promotional or board nature.” Though, while investigating the history of the establishment of the science of internal management (police science) points to periods in the development of states where the welfare police (as part of the state’s activities) were coercive, when “the state. . . possessed an undeniable right of unlimited interference in private life, with the aim of beneficiating citizens, in order to make them happy at any cost. . . only by the end of the former, and especially the beginning of the current century, a more coherent understanding of the objectives and the nature of government activity in the area of internal management begins to gradually penetrate both the minds of state persons and thinkers. . . It has become clear that a state in the cause of people’s welfare can and should take the role of only, so to speak, an accomplice, to be with its activities where there is a genuine need, that is, where private individual or social activities are insufficient.” [138, pp. 4–5] Starting approximately in the 1830s the terms management or internal management are used to refer to all internal activities of the State. More specifically, “in the states that have attained the highest level of development, a branch of state activity which is intended to assist citizens in meeting their needs, in their development and in their improvement, is considered as internal management, since their own forces are inadequate” [138, pp. 4–5]. V. Ivanovsky intended to read only the part relating to state activities in a positive form, that is, in the form of guardianship, the establishment of various types of welfare institutions, and the use of a variety of organizational and other means and measures. In an attempt to understand many of the tools and forms of internal management and to take advantage of the historical and comparative method of research, V. Ivanovsky examined the activities of many States and concluded that there was a need to systematize both management measures and forms and the relevant sections of science. Having studied the history of various states, for “only observing and studying real life, and not any artificial constructions, can give us a notion of the nature of the State” [139, p. 21], V. Ivanovsky concludes: in order to develop a “satisfactory system of internal management, we must emerge. . . from the basic notion of the welfare or well-being of the human person, since the latter is the ultimate goal of

5.5 Management Training Courses at Russian Universities in 1880s

367

state activity in the area of internal management. In defining this concept empirically, we must recognize that the well-being of the human person is the best satisfaction with its needs, its further development and improvement. . . Consequently, the State shall promote welfare in no other way than contributing to meeting the needs of the individual.” [138, pp. 6–7]. Structuring and systematizing the various activities of the State in the area of internal management had thus resolved itself to arrangement of “human needs.” This task is part of the scientific objectives of political economy, as Ivanovsky believes. “It examines these needs, divides them into groups, and classifies them in some way” [138, p. 7]. According to this science, all needs are divided into “two categories”— physical and spiritual. Therefore, there are two kinds of government activities in the area of internal management. That is, “all the various measures and institutions of the State, one way or another, indirectly or directly contribute to the satisfaction of the physical and spiritual needs of the individual” [138, pp. 7–8]. But because it’s a very general classification, because “there is a whole lot of measures, . . . about which it is not possible to tell precisely what needs they are contributing to” [138, p. 8], Ivanovsky continues to clarify it. He proposes to separate the methods of public management themselves (measures to meet needs) rather than needs. This is now a different classifier, involving the knowledge of all possible methods of management. Ivanovsky divides all management methods into two groups: directly contributing to the satisfaction of physical and spiritual needs and indirect methods. The first methods can immediately be divided into two groups (physical and spiritual) and the latter require further refinement of the process of meeting needs. Ivanovsky believes that in this process a person enters some or other relationships, first of all, with the material world, because of the need for a certain number of so-called economic benefits, and secondly, with other people, because of the need for their help. Since the acquisition (in the necessary quantity) of economic benefits is difficult for one person (and sometimes even for “whole public compounds”), “the state takes the task of promoting the acquisition of economic benefits.” The function of “promoting the economic well-being of the individual” is a separate area of internal management. In the process of meeting needs, the individual, as a social being, enters “a known relationship with others”, which (the relationship) has a known influence on the manner in which these needs are met. V. Ivanovsky warns that the existence of economic benefits does not mean the existence of special economic needs other than physical and spiritual. Economic well-being is only a special relationship with the material world that allows a person to satisfy his or her physical and spiritual needs, that is to say, in some way, the nature of the relationship and the degree of satisfaction of the needs. Ivanovsky then brings us to the role of public management corresponding to these human relations. He considers that the multiplicity of conditions and situations that arise in society affect the individual, thereby “losing his or her autonomy.” In the meantime, meeting the needs of spiritual and physical life, improving the means of doing so, and further developing these needs is possible only if the individual is selfreliant, subject to freedom.” [138, p. 9].

368

5 Management Thought in Russia in 1800–1917

Table 5.2 Facilities and functions of State Internal Management Functions of the state 1. Direct internal management functions

Human needs 1. Physical 1.1.1. Population management 1.1.2. Health management

2. Indirect internal management functions

2.1.1. Regulating relations with the material world

2.1.2. Regulation of social relations

2. Spiritual 1.2.1. Managing personal moral development 1.2.2. Management of the religious development of the individual 1.2.3. Management of the aesthetic development of the individual 1.2.4. Managing personal intellectual development 2.1.1.1. Management of the development of the economic life of the State (in general) 2.1.1.2. Managing the development of individual branches of economic life 2.1.2.1. Family relations management 2.1.2.2. Management of the Relationship between the individual and church 2.1.2.3. Managing relationships in and between social categories 2. 1.2.4. Managing relationships in classes and between classes

Sourse: V. Ivanovsky [138, p. 11]

Again, as in the case of the acquisition of economic benefits, a person is often unable to retain or “return lost” autonomy. This circumstance gives rise to another “function of state activity, namely the regulation of social relations, the destruction of the dependence of the individual on other similar individuals and public associations, in influencing the conditions that create this dependency, as far as such influence is possible, that is, to the extent that it is not contradict the law of social life” [138, p. 9]. Thus, the subject of the science of internal management, constructed by him, should be the diverse activity of the state, aimed at resolving welfare issues and presented in four parts. The first two reflect the functions of the State in direct provision of physical and spiritual needs, respectively. The second two are the functions of the State on indirect ensuring of the same needs—“the state’s attitude to the economic life” of the individual and “the state’s attitude to social life” of the individual. From other works by V. Ivanovsky, it becomes more understandable, what constitutes each of the four common functions. This view that V. Ivanovsky had on the functions of State welfare management we displayed in Table 5.2. The same

5.5 Management Training Courses at Russian Universities in 1880s

369

functions are the four sections of Internal Management Science (according to V. Ivanovsky).19 As we see, the subject of internal management science has become a specific system and has acquired a certain degree of structure and confinement. Unlike V. Goltsev, V. Ivanovsky somewhat more distinctly outlined the goals and objectives of internal management science. The goal of this science, according to Ivanovsky, is “to find those permanent causes, which give rise to state activities in the area of internal management, which provide it with one or another direction, penetrating all of this activity and affecting its individual parties, focused on the development of one or another sector of popular life in particular.” [138, p. 11]. The value of this wording is the reference to the search for objective management patterns, however, the tautologicness (“direction”—“directed”) and the cumbersomeness make it a hard, broadly interpretable one. In later works V. Ivanovsky “simplified” the system of management science proposed earlier (see [139, 140]). Firstly, the entire block of autonomy provision, independence of the individual in the regulation of social relations had disappeared (the last four functions in Scheme 4.1). Secondly, along with the guidance activities of the State in the management of welfare (which was only recognized by him in a lecture in 1883)), he also introduces state enforcement activities based on various types of law (factory legislation, health and medical law, national education legislation, including university charters, etc.). This forced him to return to the old term “welfare police”, which he admitted to be an anachronism in his lecture “as no longer corresponding to the content of science”. Thirdly, the management of economic benefits was called the “economic management system”, the concept of “economic management” was introduced, the list of functions within this concept (based on the history of the economic management of European States and Russia) and relevant sections of internal management science were clarified. V. Ivanovsky considered “ economic management” as state activities aimed at the economic well-being of the individual, which in turn satisfied his physical and spiritual needs. The objective need for economic benefits, on the one hand, and the limited availability of individual opportunities for their acquisition, on the other, are the reasons that give rise to this kind of business activity behalf the state. The content, organization and forms of these activities are determined by “the general structure of state and social life” and “those laws that govern phenomena of economic life”. As we see, V. Ivanovsky quite closely approached the definition of the term “economic management” in the modern wording that we are accustomed to. Recognition of the importance of this area of activity required from V. Ivanovsky even special wording for “the goals of the Science of internal management in relation to this area of state activity”, which, like the overall goal, is to find and explain all the

V. Ivanovsky often changes terms and instead of “functions” appear “types of activity”, “measures of state activity”, “relations of the state to . . .”.

19

370

5 Management Thought in Russia in 1800–1917

causes and factors that give rise to and influence the economic activity of the State. As the main scientific method of research to achieve this goal, V. Ivanovsky refers to (and uses) a historical and comparative method, while pointing out its shortcomings. The latter he explains with imperfections of historical science itself, not the elaboration of the method, but most importantly—the objective “insufficiency of the number of objects observed, i.e., states: in a comparative historical study, all States have to be borne in mind, but only those that can be compared, i.e. living in roughly the same natural conditions.” [140, p. 15]. Apart from quantitative and geographical conditions V. Ivanovsky does not indicate any types of other causes. It’s hard to understand which meaning V. Ivanovsky gives to the words “roughly under the same natural conditions”, but the absence of a specific reference to “socio-economic conditions”, to “a specific historical period” does not allow his methodological assessment of the potential of the historical-comparative method to be considered correct. Along with this method in the studies of V. Ivanovsky, it is possible to find reasoning and actual use of methods of observation and description of phenomena, inductive and deductive methods, reasoning about experience (such as “artificial reproduction of complex phenomena, or artificially establishing interactions between phenomena”, which, due to the difficulty of which in social life, the capabilities of experience in the science of management, according to V. Ivanovsky, are limited). And yet, the author’s achievements in the development of the structure of the internal management science, the refinement and addition to its sections, should be attributed to his merits. Thus, V. Ivanovsky, developing the ideas outlined in the introductory lecture in his course on administrative law in the late nineteenth to early twentieth century [141], proposed a different structure for the section “economic management” in the Science of internal management, as a consequence of the functions of economic management of the European States. Adhering still to two parts: general measures and sectoral measures to promote economic welfare, he clarifies both parts. To general measures (and from the context it becomes clear that these are often objective functions of state economic management), he refers: (1) ensuring “property security” (so that “everyone may enjoy the fruits of their labour”), (2) continuous improvement of the monastic estates system (with the goal of equalization, softness of taxes); (3) Improvement of administrative and judicial institutions (“lack of integrity and skill in judges and administrators, slowness, hustle and non-profitableness of office work pose a heavy tax burden on persons having to apply to courts; in view of this, improvement in management and justice is a measure to promote economic well-being”); (4) improvement of the passport system (including “destruction of passport fees and removal of employment restrictions”); (5) Improvement of transport, post, and communication management (as a “measure to facilitate, in particular, the exchange of economic benefits and indirectly affecting production”); (6) improvement of the system of measures and weights (also as a measure “facilitating the transition of economic benefits from one person to another”); (7) improving the monetary system (“having the same goal”); (8) Improving the credit system (including facilitating the acquisition of credit as a means of increasing production and improving the “circulation of economic benefits”);

5.5 Management Training Courses at Russian Universities in 1880s

371

(9) Improvement of the insurance system (“contributing to preserving the value of economic goods”). To build a system of industry measures V. Ivanovsky uses a known division of all industrial branches into four groups: extracting industries (mining, fishing, etc.), agricultural (agriculture, cattle breeding, etc.), manufacturing (handicraft, factory, and plant industry) and trade. This is a conditional classification, because it has many intersections—especially the conditions for the selection of a group of agricultural industries. What is the general content of promoting economic well-being according to Ivanovsky? He believes that the State either implements positive measures, encouraging a particular type of production, creates conditions for increasing production and improves the quality of production products, or negative measures—eliminates economic impediments to the exercise of particular industries (i.e., grants everyone the same rights to engage in one or another type of economic activity, “eliminates privileges and monopolies”, weakens the former police regulation of production activities). Let us recall that all of this very large set of economic management measures (functions) was the result of V. Ivanovsky’s study of specific historical economic activities of various states. At the same time, he writes that a number of measures to promote economic wellbeing “that may also be specified from a purely theoretical point of view—such as, for example, the education of educational institutions for the improvement and distribution of various kinds of technical knowledge, the promotion of model farms, the promotion of congresses of different branches of labor, the promotion of the formation of exhibitions of products from different branches of labor, etc.” [141, pp. 440–442]. With regard to sectoral measures, V. Ivanovsky offers a list of them and brief characteristics Measures of State influence on the factory industry (Functions of the public management of the manufacturing industry) 1. Measures to ensure proper development of the factory industry 1.1. Removal of legal and economic obstacles to those wishing to engage in this industry (destruction of privileges and monopolies; decrease in the number of manufacturing regulations).20 1.2. Granting of various benefits and privileges to producers (promotion of manufacturers to the highest social categories; exempting them from the general jurisdiction of civil cases; granting them benefits in the payment of duties and fees of various kinds; establishment of protected customs tariffs) 1.3. Dissemination of scientific and technical knowledge and information (establishment of educational societies, organization of congresses for commercial and industrial producers and manufacturers, industrial and technical museums, exhibitions (national, local and international), conduct of public lectures, publication of scientific and technical recurrent publications); opening of polytechnic institutions, polytechnic schools, urban, and real schools)

There are known cases in the era of “police states,” when the government strictly regulated, for example, how long and width shawls should be manufactured by manufactories and factories, what color to paint products, what shape to make hats, how to make cloth, etc. Violators of regulations lost the right to manufacture, and products were destroyed.

20

372

5 Management Thought in Russia in 1800–1917

1.4. Promotion of expansion of inventions and discoveries (granting of privileges for new discoveries and inventions). 2. Measures to prevent hazards in connection with factory-plant production 2.1. Economic measures (prohibition of the construction of factories and plants requiring large quantities of fuel; control of the production of certain items to prevent possible deception of consumers, in particular the establishment of a sample (government stamp) on gold and silver products) 2.2. Fire-fighting measures (choice of place of construction and compliance with standards in the construction of new factories and plants; compliance with factory and plant operation standards) 2.3. Sanitary measures on air pollution, river contamination, installation and standardization of tooling and machinery work, organization of hazardous production, including harmful products; compensation for industrial injuries, arrangement of hospitals, maintenance of factory doctors, etc. 2.4. Criminal measures (state control over the production of weapons, poisonous substances) 3. Measures governing relations between fabricants and workers 3.1. Trade legislation governing the conditions of imprisonment, duration and termination of the working contract, conditions of wages, conditions of female and child labor, duration and order of the working day. 3.2. Factory Justice bodies, factory Inspectorate, factory courts, voluntary courts. [141, p. 442]

This is generally the economic management system developed by V. Ivanovsky. It is clear from the provided material that V. Ivanovsky considerably expanded the notion of the elements of internal management, presented them in a defined system, clarified the subject, goals, and objectives of the Science of internal management, formulated numerous methods and functions of management and disclosed their content, clarified the wording and made use of a number of methods of scientific research of internal management. In addition, V. Ivanovsky developed the historiography of the science of management and, as a result, substantially developed the ideas and concepts of both Russian specialists in the field of public administration and representatives of world management thought (in particular, L. Stein’s concept). Valuable are also his insights into the development of a complex, but practically necessary science of management. D. I. Pihno’s “Organizing of production” Let’s mention another higher school representative, the developer of production management issues, a professor at the University of Kiev Dmitry Ivanovich Pihno (1853–1913). D. Pihno attempted to understand the development trends in the Russian economy and, in recognition of the capitalist route, published in the “Kievlyanin” and separately articles calling to unite the “economic efforts” of landlords, on commercial restructuring of landowners’ farms and the need to adapt them to competitive market conditions, on rational organization of the “capitalist landlordry”, on state intervention in the management of the branches of the economy and the process of creating monopolies. Many articles had been scientifically synthesized in his major works and in two editions of the training course on “Foundations of Political Economy” (1890 and 1899). For HMT, he is interesting as being the author of one of the first doctrines on “The organization of production”, methodologically based on his perceptions of

5.5 Management Training Courses at Russian Universities in 1880s

373

political economy (its subject, methods of study, foundations and parts) and part of his extensive training course on political economy [18]. D.I. Pihno was born on January 1, 1853, in a large family. His father came from farmer peasants (in time there was even a “Pihnov farm” in the Kiev province). Following his older brother and his petition, D. Pihno was admitted to the Kiev Grammar School (in 1862). He was relieved of his fees for poverty, and starting from the fifth grade (1866) he began to give lessons. He graduated from the Grammar School at age 16 (1869), but was not accepted to the university the same year due to his age. This year he taught the children of K.D. Ushinsky’s, who undoubtedly had an influence on the young Pihno. In 1870 Pihno entered the Faculty of Law of the University of Kiev, where he specialized in civil law and graduated in 1894, defending with a gold medal the final scientific essay on “The historical outline of civil penalties measures in Russian law”. This was his first publication [142]. But in the last years of university studies he had absorbed issues of political economy and police law. He was made fascinated by these two subjects by Professor N.H. Bunge (future Russian Minister of Finance), who taught at the university. Nikolai Bunge was the author of many training courses in both subjects [143]. The fascination was so strong that by the time of the master exam D. I. Pihno began preparing for particularly these two subjects. In 1876, he defended his first dissertation on the topic of “Commercial operations of the State Bank” as a master of Police law. And starting January 1877 D. Pihno—a private-docent of the University of Kiev—began lecturing on political economy and statistics. The same year he began to be published in the newspaper “Kievlyanin,” and after the death of its founder V.Y. Shulgin, from 1878 he became the editor of the newspaper. D. Pihno also dealt with practical economic problems. In the 1879–1880s he was a member of the Kiev Subcommission on the Study of railway business in Russia. From 1885 to 1888, he was, by the invitation and order of the Minister of Finance, N.H. Bunge, appointed first as special assignment official for the Ministry of Finance and subsequently a member of the Ministry in the Council of the Minister of Communications. During these years, under his leadership, operations on acquisition and transferred to the Treasury of a number of private roads, which violated guarantees received from the Government, had been conducted. When N. Bunge was replaced by I. Vyshnegorodsky, disagreements with the latter forced D. Pihno to leave St. Petersburg. He spent some time collecting materials (at home and abroad) for a doctoral thesis on “Railway Tariffs”, and after his defense in the same 1888, he returned to the Department of Political Economy of the University of Kiev and again led the newspaper “Kievlyanin”. In almost every issue of the newspaper he published articles on economic topics (in the form of a front-page newspaper or in the section “unofficial part”). In 1890. the first, and in 1899 the second edition, of his lectures on political economy, which contain a large section on “Organizing of Production”, were issued. The last years of his life D. Pihno actively engaged in state activities. Since 1907, he was a member of the State Council of Russia. To assess the place and role of his teachings on manufacturing management in the general course, we shall lay out the logic and structure, as well as basic definitions

374

5 Management Thought in Russia in 1800–1917

and categories introduced in the general political economy course. D. Pihno considers public reproduction to be a process of four known stages—production, distribution, exchange and consumption, performed in order to meet human needs (physical and spiritual). After the concept of need has been formulated, the sources of needs in their historical development have been identified, the classification of needs and their “economic importance” have been given, D. Pihno begins to study production itself. It is in this part, in contrast to the many political economy courses of the pre-reform Russia of the nineteenth century known to us, after the characteristics of productive forces and factors of production, he discusses in detail the organization of production—the causes of joint work, division of labor processes and the organization of divided labor, the size and form of enterprises, the functions of entrepreneurs and other. Next, D. Pihno begins an analysis of the distribution process, the development of the “distribution system” and the characteristics of the elements of the system (analyzing the notions of value, market, forms, and tools of exchange, means of communication, trade, etc.).21 The first edition of the tutorial contains sections: Introduction, Requirements (Section One), Production (Section Two), including Chap. 3. “Organizing of production”, Chap 4. “Economic enterprises and their forms”, Distribution (Section Three), including Chap. 5. “Value theory”. The second issue contains sections on markets, money, credit, ways of communication, trade, additional chapters on distribution, consumption, the nation’s economic balance and population laws. Here are the main definitions from Pihno’s general training course. Pihno considers political economy (or the science of the national economy) as the science that “studies the economic phenomena in people’s lives and the domestic laws to which these phenomena are subordinated” [18, p. 1]. In turn, the economy is “human activity with a goal to meet needs via material means”. These activities consist of a combination of tools and processes: firstly, economic activity itself (the aggregate of processes by which a person achieves various business goals); secondly, the organization of these activities (“various combinations of the factors involved in the business”); and thirdly, a combination of material resources (both as factors and as results of economic activity) [18, p. 1]. The categories introduced by him in the process—“purpose”, “requirements”, “means-factors” and “results”, required a meaningful streamlining. And in this normalization, Pihno abides by, in our view, a reasonable approach in terms of setting economic objectives by singling “means” out all categories. He writes: “The distinctive feature of economic activity is not so much its goal—to satisfy needs”, since any activity (scientific, artistic, etc.) are of the same nature and “not a type of need”, as the physical and spiritual needs are met by several types of activity, but “the means by which economic activity reaches the stated goal”, namely, material

Unfortunately, we were not able to find the second issue of lectures, devoted mainly to the disclosure of the stages of the distribution stage. The data on the structure of the second issue below are taken from the works of Pikhno’s students. 21

5.5 Management Training Courses at Russian Universities in 1880s

375

means. Therefore, “the task of economic activity is to deliver the material means to meet all needs”. What are the material means (i.e., usefulness, if they are natural, or “values, such as converted benefits as a result of some kind of effort”)? They consist of, according to Pihno: “(1) things. (2) useful natural forces, (3) actions of man or services, and (4) the human relationship with other people, things and forces.” [18, p. 2]. Since all members of society (both employed in production and the unemployed) meet their needs, then “economic activity is common to all members and classes of society, all social unions and institutions, in one word, to the entire nation; economic relations permeate all people’s lives, constituting a particularly important and vast area of life, business or economic.” [18, p. 3]. As we see, by entering a key category, “material means”, Pihno attempts to reach the highest level of aggregation. The same principle of movement from private to general is applied to generalizations of another kind. He introduces several new concepts through “economic activity”. Thus, if business activity is carried out by an individual (i.e., for the sake of “personal well-being or otherwise, private interests”, writes Pihno), this is a private economy. Generalizations are possible within the private sector by means of the entity: either the private entity is one person, family, and the genus (blood unions), or “private-economic unions of many persons (industrial and commercial societies and partnerships)”. All of these are private entities [18, p. 3]. But, at the same time, a person is a member of a variety of social unions (or public institutions) engaged in activity on satisfying public interest. They are created to solve tasks that are unachievable or difficult to implement (at a high level of quality) by a single person. These unions (and institutions) possess material resources and conduct business activities, that is, have a so-called public economy, which serves the public union for the public purpose and for satisfaction of public interests. There are as many public economies as many social unions are possible—these are, for example, the public economy, the earthen economy, the urban economy, the farming community, the economy of scientific societies, charitable societies, the economy of educational institutions, hospitals, etc. Pihno concludes the section on the types of economies with reasoning on the relationship between private and public holdings, their interrelatedness, and, as he says, the organic link while retaining individual traits: a private economy is a body of more extensive economic areas; the public sector, in turn, serves the private sector (in the area of security, the organization of the branches of the non-productive sector). So, “the aggregate of such organically linked private and public economies of an entire nation is the national economy”, writes Pihno [18, p. 5]. The next step of the synthesis is exercised in connection to the presence of multiple States. The latter circumstance creates international economic relations in terms of which “individual economies are represented by the links of the world economic chain, and the totality of the interconnected economies in permanent relationship, according to Pihno, is more an abstract organization than a real one.” However, some examples of worldwide cooperations (for instance, several postal and telegraph unions) give hope for greater realism of this economy. In other words,

376

5 Management Thought in Russia in 1800–1917

the notion of “world economy” is not a pure abstraction, since it serves, firstly, to distinguish between individual national economies and, secondly, “to clearly understand the many economic phenomena that are dependent on the movement and the balance of economic forces not in one country, but in the entire civilized world (direction of production, pricing, etc. under the influence of international rivalry). The importance of the world economy, understood in this sense, grows together with the development of international economic relations and generally of cultural international communication.” [18, p. 5]. Let’s follow further the development of Pihno’s thoughts on political economic foundations of the “Organization of production” doctrine. Pihno suggest conducting a meaningful study of economic activities from three perspectives (in three aspects): “technical, economic and social”. The first approach is determined by the existence and need to use in all economic activities a variety of natural forces—mechanical, chemical, physiological, etc. So, studying the operation of these forces, their combinations, and the search for combinations of forces to achieve some goal—“constitute the subject of technique in the broad sense of the word”. On the basis of numerous experiments and theories, and using the results of the applied art (he refers, for example, to building arts, weaving, agronomy), technology teaches “how to nourish and plough the land, make the crop, weave the canvas or cloth, etc.”. He believes that technology explores economic processes as a manifestation of natural forces and unrelated to human needs and efforts: “technology decides on the means, but does not evaluate the goals of the economic process or the relationship between human endeavour and the achieved result” [18, p. 6]. The second approach—economic—relates to the two manifestations of the human factor in economic activity: the cost of human effort and the achievement of useful results. The “consideration and evaluation of the relationship” between them is “the economic side or economy of business activity”. The assessment is based on an “economic principle that requires the greatest possible amount of benefits to be achieved via the least possible expense”. In other words, Pihno expresses this principle as follows: “use all available productive forces and extract from them all the good they can give, and at the same time spend the smallest amount of forces (most prudently) on each individual economic task.” [18, p. 7]. And finally, the social nature of economic activity is linked to the interconnectedness and interrelatedness of public and private processes: “As a public phenomenon itself, business activity is subject to other areas of public life (the influence of the system of government, private and public law, morality, education, etc.) and, on the other—it has a great impact on all areas of public welfare.” [18, p. 7]. By disclosing the three facets of economic activity, Pihno clarifies the subject of political economy, reveals the two necessary characteristics of the economic law (logical and historical), characterizes the place of economic science (only the method of single and specific observations, the statistical method, the historical method and deduction are present here although in those years attempts to mathematically model economics were already known. But Pikhno’s assessment is known: “The exceptional application of the abstract method takes science from the solid soil of real life,

5.5 Management Training Courses at Russian Universities in 1880s

377

deprives it of reliable control, creates the poverty of theoretical thought . . . Moreover, attempts by some economists to use the purely mathematical method, turning economic issues into mathematical theorems, have no future. “To understand the laws of complex phenomena developing under the influence of many interacting factors, the mathematical method is completely powerless.” [18, p. 12]. The next step in Pihno’s scientific research is an artificial but conscious division of Economic Science (in the broad sense) into three parts: political Economy (the general or theoretical part that lays out general principles); “economic policy and the science of state establishment, which provide a more detailed analysis of the various branches of economic activity, indicating the state measures that promote popular welfare”; and public finance (i.e., the science of the State itself and its bodies). As we see, this “German system of economic sciences”, as Pikhno calls it, dogmatically consolidates in science the division of society into two parts—classes and the state (“superclass monarchy”) [18, p. 14]. The second element of the system is closest to the science of public management in the modern sense. However, Pihno believes that all “the practical business activity of individuals and different unions and institutions, as well as the measures taken by the State to influence these activities, which bear the name of state economic policy, constitute the area of economic art” [18, p. 16]. As a matter of fact, “art, as the ability to set practical tasks of one type or another, to find combinations of conditions for their implementation and to carry out these tasks in the most appropriate ways”, is distinguished from “science, the content and laws of particular phenomena” [18, p. 17]. The definition of art briefly discloses in substance all the stages of the decision-making process and implementation of the managerial decision. But the fact that in the second element of his system Pihno sees only art and does not see anything that is legitimate, actually scientific, impoverishes his teachings. It appears that it was necessary for Pihno to distance with those scientists who argued that “the purpose of political economy is purely practical and is to find such an organization of the economy and such laws and institutions as are the most conducive to the enhancement of popular welfare” [18, p. 17]. He is right when he says that we cannot turn political economy into a “compendium of recipes without a solid foundation and value” [18, p. 17], but by rejecting without explanation the teachings of L. Stein, Courcelle-Seneuil and other Western scientists, known to him (judging from the list of his proposed literature), he significantly integrated their developments, seeing and actually leaving only the field of economic art in the “Science of State Establishment”. Further text shows that Pihno, nevertheless, retains the right of political economy to accumulate within itself all the science of the nation’s economy. He writes: “Bearing in mind the theoretical goals,—the study of economic phenomena,—political economy provides multilateral assistance to economic practice, which is expressed, firstly, in the fact that political economy provides systematic knowledge of the national economy, i.e., solid scientific ground for practical combinations; secondly, it may, on the basis of scientific evidence, assess the likely impact of practical activities in the field of the private and public sector, such as the influence of one or another organization of production, distribution and consumption, the impact of the legislation and

378

5 Management Thought in Russia in 1800–1917

administrative activities of the government, etc.” [18, p. 17]. As we see, Pihno was close to highlighting the independent subject of the new science (which consequently became a subject of management science), but so far had preserved this right for political economy. In the terms of the modern management science, Pihno’s doctrine of organization of production is an attempt to develop theoretical issues related to the management of a specific functional of organizations at the country level—“management of social production.” [144, p. 37]. In this, D. Pikhno continues the development of the ideas of F. Taylor and his “followers”. For simplicity of analysis, Pihno divides the problem into two composing aspects: 1. cooperation and its types; 2. enterprises and their forms. A few words about each of them. 1. Pihno conventionally divides cooperation—an objectively necessary stage in an ever-developing economic world—into to two types (by form of “specific manifestation”, as he writes, although analysis of the text reveals that he attempted to meaningfully justify the allocation of these types). So the first type is the integration of labor (or simple cooperation), that is, organization of work, where people help each other by doing the same work. Forms of manifestation: (a) simple integration of homogeneous mechanical forces of several people for mutual assistance, for example, in the movement of heavy weight, traction, pressure, etc.; (b) integration of the homogeneous activities of several persons (or groups) of various forces and/or directions. In this case, it is important that the establishment of proportionality and the organization and regulation of common activities belong to a single governing body. Examples are the activities of a military squad, hunting and fishing squads, fire brigades, agricultural crews, masonry brigades, carpenters, miners, etc. He did not deny that the division of labor is almost always present. The advantage of this form of labor organization is the possibility of performing work that exceeds the strength of one person; increased productivity that exceeds the sum of individual results due to the manifestation of a special property of the “sum”; the ability to resist destructive forces of nature (e.g., in road construction, cleaning of rivers, fields, forests, and drying of swamps); the possibility of performing operational seasonal work; preservation of resources (again due to the property of the “sum”). The last three advantages are particularly interesting: simple cooperation arouses competition, which increases labor intensity; enables using methods inaccessible to one person (a living chain of workers transmitting objects) and a “more important meaning for the improvement of technical methods and the achievement of conservation in labor have the circumstance that integration of many workers for common work makes it possible to organize an improved management, i.e., management and control” (emphasized by us—M.V) [18, p. 74]. Since the Pihno intended to measure and assess the results of business activity, it is possible, in the event of simple cooperation, “if the work is accessible not only to the aggregate of employees but also to each of them individually” [18, p. 74].

5.5 Management Training Courses at Russian Universities in 1880s

379

The second type is the complex cooperation or division of labor in the process of private and public business. Its essence, according to Pihno, is that “individuals do not engage in all the various work required to meet their needs, but rather choose one branch of activity or several in a known branch of the economy.” Thus labor specialization emerges. . . Complex cooperation embraces not only groups of the population neighboring and knowing each other, but often involves producers belonging to different nationalities, speaking different languages, living in different states and different parts of the world.” [18, p. 75]. Pihno’s subsequent reasoning is also ascertaining. Having defined enterprise as “the integration of the productive forces for one or another business purpose, which represents the public economic unit”, introduced the concept of an entrepreneur as persons (integration of persons, legal entity), which organizes an enterprise, directs it, uses its results and is responsible for the business, he declares: “Ownership of the entire capital of an enterprise or a known part thereof shall be the ordinary but not an absolutely necessary condition of entrepreneurial activity.” [18, p. 89]. Concluding his course, Pihno quotes several business classifications of enterprise: – simple (“performing a single of the simplest types of business activity”) and complex (“multisectoral” and consisting of several simple branches); – private and public (by subject of “entrepreneur”); – small, medium and large (in capital, ratio of managerial and production functions performed by the entrepreneur. For example, “in large enterprises, an entrepreneur may not even perform all oversight and supervisory functions, but only the general essential orders administered by his assistants”; [18, p. 95]). – “domestic”, handicraft, craftsmanship, manufacturing and factory industries (“technical methods of production”); – sole and collective (partnerships) (by number of entrepreneurs). He described each of the classes briefly. As a whole, D. Pihno’s teaching of “Organizing of Production”, as a functional section of management science, is of interest primarily because it was the first in Russian HMT to set a scientific task although tackling this problem was somewhat contradictory to the ideology of nobility. But Pihno was more of liberal nobility convictions, preaching the capitalist way of development in agriculture and agreeing with it on the development of the Russian economy. Besides, it should not be forgotten that the training course was written by him in the late 1880s, that is, after its practical work in the governmental economic bodies and the study of real processes and changes taking place in the country’s economy. After that Pihno both in the training course, and in a separate monograph “Commercial and Industrial strike” [145], had also began to prove the economic sustainability of large enterprises (as compared with medium and small), had paid much attention to the process of creating capitalist monopolies and the influence of growing monopolistic capitalism on the economic policy of the country.

380

5.6

5 Management Thought in Russia in 1800–1917

The Contribution of Russian Statesmen to the Development of the Management Ideas

Once, a professor at Harvard University, Michael Porter, said: “The role of government should be to “encourage” and induce domestic industry to develop rather than to offer “aid“ to enable industry not to develop.” [146, p. 48]. This appeal was “popular” in many countries at all times. In Russia, in particular, in the late nineteenth early twentieth century, when the main strategic issue was being resolved—should Russia remain farming, agrarian or should it become an industrially developed country, the question of the state’s participation in the transition process, the areas, means and forms of intervention in the management of the industrial country, the support for industrial enterprise in the country, etc., was raised. It should be noted at the outset that, in these years, the Russian government had been most successful in combining direct and indirect economic management methods, developing the public industrial sector and providing untiring assistance and support to industrial entrepreneurship in legal, financial, organizational and other matters. An active start was made in this process by the reforms of the 1860s and 1880s, the effective operation of many reform commissions, implementation of the ideas of state intervention in the management of the country’s economy by prominent statesmen, practitioners and scientists of the era—P.A. Valuev, M.H. Reytern, N.H. Bunge, A.I. Chupov, I.A. Vyshnegradsky, I.I. Yanzhul, D.I. Mendeleev, I.V. Vernadsky, M.M. Kovalevsky, and others. The most outstanding figure, which led the process of establishment of the country’s public economic management system, and particularly the rapid development of productive forces and the industrial social class in Russia, was the identity of Sergei Yulievich Witte (1849–1915). For 17 years (from March 10, 1889, to April 15, 1906), tenure in “effective” leading government posts, including as Minister of Finance (from January 1, 1893, to August 16, 1903) he managed prepare and implement more than 10 major national economic reforms. First of all, it is: – reform of the tariff business, including the development of railway tariffs and the unification of grain tariffs; – Submission of the railway network to government control; a sharp increase in railway construction, including the Siberian Railway, and bringing the route through Harbin to Vladivostok; redemption of private railways by the treasury, including the Nikolaev railway; – creation of a network of private secondary and higher commercial and technical educational institutions, including the establishment of Russia’s first economic faculties in the framework of three universities (polytechnic institutes); – monetary reform, as a result of which the gold currency was restored in Russia; – introduction of a wine monopoly (drinking reform), that is, the abolition of the excise system and its replacement by the treasury sale of wine; – development of proposals for improving the agricultural industry;

5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas

381

– reform of the banking system, including the transformation of the charters of state and peasant banks, the expansion of private credit institutions and savings banks; – conversion of old and the conclusion of new state foreign loans; – conclusion of trade agreements favorable to Russia with Germany and a number of other events. After S. Y. Witte’ death in the “Historical Bulletin” Journal famous Russian public figure Boris Glinsky’s article was published in which the author wrote: “The era is so rich with events that, by reviewing the list of them, you wonder how the initiative and the nerve power of one leading person could have been sufficient enough to implement them. However the importance of S. Witte for the fates of our country is assessed, it is necessary to note that in the years when he was at the head of Russian finance and guided Russia’s economic policy were a time of extraordinarily tense creation,. . . Russian public finance have come to an unprecedentedly brilliant state. The chronic deficits of the 80s had been replaced by huge excesses of incomes over expenditure” [147, p. 268], and Russia had made an unprecedented progressive leap in its economic and particularly industrial rebuilding and development, neither before Witte nor afterwards. Judge for yourself. In one of his most comprehensive reports (to Emperor Nicholas II), S. Witte, as Minister of Finance, cites “the following data on the growth of our industry over the past 20 years:

No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Production Spinning processing Nutrient processing Processing of animal products Wood processing Paper production Chemical production Ceramic production Production of metal products Production not included in previous groups Total (excluding mining, flour milling and excise duty industries)

Year (in million rubles) 1877 1887 1892 297,7 464,2 581,6 17 37,9 47,9 67,7 79,6 72,6 16.8 25,7 33,3 12,7 21 25,5 10,5 21,5 35,3 20,4 29 32.3 89,3 112,6 162,3 8,6 10,4 19,5 541 802 1010 (rounded)

1897 946,3 95,7 132,0 102,9 45,5 59,6 82,6 310,6 41 1816

The average annual productivity increase was (in million rubles): 1878–1887—26, 1 1888–1892—41, 6 1893–1897—161, 2. From these data it can be seen that over the last five-year reporting period, the growth of the manufacturing industry was four times faster than in the five-year period of 1888–1892, and six times faster than in the decade of 1878–1888.

382

5 Management Thought in Russia in 1800–1917

The development of mining is best characterized by the following table:

No. 1. 2. 3. 4. 5.

Coal mining Oil production Cast iron Iron made Made of steel

Year 1877 110 13 23 16 3

1887 277 167 36 22 14

1892 424 299 64 29 31

1897 684 478 113 30 74

. . . In terms of the speed and strength of this growth, Russia is ahead of all foreign economically developed countries, and there is no doubt that a country that has been able to triple its mining and factory industry in two decades, is fraught with a rich reserve of internal forces for further development . . .” [148, pp. 131–132]. To explain this phenomenon of “personality” in the history of the national economy of Russia, we recall some biographical and background data about S. Witte and his surrounding social, political and economic environment. Sergey Yulievich Witte was born on June 17, 1849 in Tiflis into a noble family with a well-known pedigree (especially on the maternal side). His father, nobleman J.F. Witte graduated from the University of Dorpat, studied agriculture and mining in Prussia, served in the Ministry of Foreign Affairs, then was sent as an agricultural specialist to the Saratov province. There he met his future wife and mother S. Vitte— Ekaterina Andreevna Fadeeva. At that time, her father was the governor general of the Saratov province. He was married to Princess Elena Pavlovna Dolgoruky, the last of the great princely family Dolgoruky. Then grandfather S. Yu. Witte moved with his family to the Caucasus, where he was a member of the main department of the Viceroy of the Caucasus and managed foreign colonies in the Novorossiysk Territory under the Governor-General Prince Vorontsov. Father S. Witte moved to the Caucasus with the Fadeev family, where he was appointed director of the department of state property and was elected a member of the council of the governor of the Caucasus. He ended his career as director of the department of agriculture. It so happened that the upbringing of children (three sons and two daughters) in the family of S. Witte was mainly engaged in by the grandmother—Elena Pavlovna Fadeeva. She taught “to read, write and introduced into us the foundations of religiosity and the dogmas of the Orthodox Church.” It was precisely because of this that the Witte family was “archivirus”, so much so that the German surname Witte was unpleasant to her, the children were Orthodox, and Sergei was not taught the native German language. An uncle, General Rostislav Andreevich Fadeev, the closest employee of Field Marshal Prince Baryatinsky, a well-known military writer, author of the monographs “The Armed Forces of Russia”, “Opinions on the Eastern Question”, “Russian Society in the Present and Future (What shall we be?)”, and others. Contemporaries (in Russia and abroad) characterized R. A. Fadeev as a Slavophil, panslavist, ideologist of the reactionary nobility and at the same time noted the closeness of

5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas

383

his views to the theory of “official nationality” and the government program. The basis of the arguments of R. Fadeev was the “noble idea”—he demanded that the government strengthen the “qualifying nobility” and its dominance in the country. In particular, he proposed to make the zemstvo completely noble. As S. Witte writes, “Fadeev had a tremendous influence on my education and on my mental psychology.” Many years later, in the 1900s, Witte, refuting the accusation of the right by liberalism and rehabilitating himself in the eyes of the autocracy, began different ways to publicize and advertise the most vivid from a loyal point of view features of his biography. At this time (in 1911) in the Encyclopedic Dictionary of Granat brothers (vol. XII, cc. 343) appeared a biography of S. Witte, written by Pavel Nikolaevich Milyukov based on materials provided by Witte himself. At the mention of the young Witte’s fascination with Slavophile views on autocracy, Milyukov specifically emphasized the influence of Fadeev, who “turned out to be decisive for all Witte’s subsequent activities, despite the harsh lessons of life experience.” Under his influence, “Witte was carried away by the Slavophiles, Aksakov, Samarin, Khomyakov, Tyutchev, in particular, and the Slavophile view of the autocracy.” And uncle’s ideas about the “noble zemstvo” formed the basis for the argumentation of the untimely self-government in Russia in his famous note “Autocracy and Zemstvo” [149, cc. 515–516]. As experience and new knowledge were gained, ideas about economic policy and S. Witte’s economic program itself were formed, ideas about solving the most pressing problems of public administration at that time—the separation of public sector sectors, the monopolization of a number of sectors, a rational combination of centralization (for example, form of autocracy) and decentralization (e.g., in the form of zemstvos) in management, preparation, selection and placement of management personnel, change of organizational structures, effective management Research Institute of Finance and other sectors of the economy, relations with foreign capital. All of the above received concrete implementation in the form of the abovementioned numerous national economic reforms developed and implemented by S. Witte. In fact the establishment of a policy of active government intervention in the country’s economic management was initiated by Witte’s predecessors as Minister of Finance—M.H. Reytern and especially mentioned by us N.H. Bunge. The most common reasons were often the political situation in the country, financial and economic circumstances, difficulties faced by private enterprise, and the country’s serious and major problems—crises, crop failures, famine, wars, etc. M. Reytern already in the 70s, under the influence of the stock market collapse, proposed as a strategy of government policy “artificial restraint of competition,” and as concrete measures—extensive use of public means to regulate the ruble and securities in order to combat speculation. As a result, the government’s attitude towards the issues of private enterprise had emerged, the policy of the authorities had shifted to strict protectionism, the practice of government support of large (“solid”) enterprises and banks emerged, including through the issuance of non-statutory loans from the state bank.

384

5 Management Thought in Russia in 1800–1917

Professor N.H. Bunge was of liberal bourgeois convictions, based on the experience of advanced Western European countries and the United States. He proceeded from recognition that the primary factor in economic life and the best way for achieving economic well-being of the nation is economic freedom, competition, demand and supply. He proposed, as a regulator of effective State and enterprise interaction and support for the latter, “the publication of laws applied to modern economic development” [150, p. 59]. Here are the principles of interaction between the public and private sectors according to N. Bunge: “1. The state should help private initiative only when truly public interests require it, and not the interests of the private economy. 2. The state should undertake enterprises that are of a generally useful nature—means of communication, banks, the construction of ports, etc., and at the same time, if this really helps to reduce the cost of production. 3. Providing private individuals with participation in the public sector is necessary when private enterprise is cheaper and better than the state administration” [151, p. 32]. As the program areas for raising Russia’s economic well-being, N. Bunge primarily proposed improving the well-being of the bulk of the rural population, more even distribution of taxes by improving the tax system, ensuring the development of industry by properly and appropriately constructed patronage (“educational” protectionism), creating independent foreign capital of the national system of the national economy by developing credit and improving the monetary system. Due to his caution and indecision, N. Bunge was not able to realize many of his ideas and the planned reforms. Of the largest reforms he succeeded in, let’s say the adoption of laws on the establishment of mandatory redemption of their land for peasants (1881, 1886), on reducing the redemption payments of peasants (1882), on the abolition of poll tax and mutual responsibility (1883). In relation to other sectors of the national economy, Bunge, first of all, refused exclusively private construction of railways and laid the foundation for state-owned railway facilities. Under N. Bunge, 134 million rubles were spent on state-owned railway construction and on the purchase of railways from private companies, and the treasury had at its disposal a railway network of 3.5 thousand versts (out of more than 23 thousand versts). All this required large government expenditures and, therefore, under N.Bunge, budget estimates were always in short supply. It was for this reason, and also in connection with the adoption of laws regulating the conditions of factory work at his time, and the change in the general political course in the country on the pages of the famous conservative newspaper M. Katkov “Moskovskiye Vedomosti” against N. Bunge, an open campaign was launched, in which the future Minister of Finance, I. A. Vyshnegradsky, took an active part (at that time—Vice-Chairman of the Board of the Society of South-Western Railways). As a result, in January 1887, I. Vyshnegradsky headed the Ministry of Finance, and S. Witte replaced him (in connection with his illness) in August 1892. They both moved away from liberal “business” ideas of their predecessor and attempted to adapt economic policies as much as possible to the political doctrine of the reign of Alexander III, which was expressed in the promotion and implementation of conservative beginnings in agrarian policy (80–90s), in increasing state

5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas

385

interference in the economic life of the country. As S. Witte admitted, “in matters of economic, financial and political matters in general, I quite diverged from my predecessor in the Ministry of Finance—Nikolai Khristianovich Bunge” [149, p. 170]. In Sect. 5.4, we talked about the contribution of Ivan Vyshnegradsky to the development of Russian management thought in the context of training management personnel. Here we dwell to a greater extent on assessing the contribution of Sergei Witte to the development ideas for managing the economy and training management personnel in Russia. Overall, the economic policy of Witte was based on two foundations: prohibitive protectionism and attracting foreign capital. The most prominent implementation of protectionism policy was tariff policy and tariff legislation developed by I. Vyshnegradsky and implemented by S.Witte. The system of State regulation of bread Tariffs (1889) was introduced first and then the Customs Tariff (1891). In 1893–1897 the role of the government in the regulation of bread trade has been dramatically increased. If protectionism was not original, but in fact a continuation of I. Vyshnegradsky’s ideas, the second pillar called for Witte himself to sharply change his views, which was facilitated by the successful implementation of the monetary reform developed by him. If at the end of 1893 Witte very cautiously speaks of foreign capital attraction to the country, he expresses a concern that “Russian entrepreneurial spirit,” despite the “customs fence,” “is sometimes unable to defeat the rivalry of foreign entrepreneurial spirit,” by the end of the 1890s Witte began to advocate unrestricted attraction of foreign capital. In March 1899 at the ministerial meeting, under the chairmanship of the Russian Tzar, S. Witte’s report “On the need to establish, and then consistently adhere to a certain program of trade and industrial policy of the Empire” was discussed, which contained his views on the prospects for economic development of Russia. In the report he argued that the mentioned policy should be implemented “in a certain plan, with strict consistency and systematicity,” since it is precisely because of a strong trade and industrial policy that “the fundamental not only economic but also political task” may be solved—the creation of our own national industry. In the “formation of a fully independent national industry,” Witte cleverly linked both of the mentioned beginnings of this policy. Without denying the enormous financial difficulties faced by the population of the nation as a result of the introduction of the Customs tariff of 1891, while emphasizing the low quality of domestic products, particularly in the industrial sectors, and the general weakness of the national industry, Witte saw the solution of all problems in “capital, knowledge and entrepreneurial spirit,” and above all in capital, for without it “there is neither knowledge nor enterprise.” Russia is poor with capital, so it should be sought abroad. This logic allowed Witte to present the tzar the Government’s trade and industrial policy for 1891–1899 as a “coherent system, all parts of which are inextricably linked with one another.” Witte insisted on the maintenance of the customs tariff of 1891, and that “at least until 1904” there be no “restraint on the inflow of foreign

386

5 Management Thought in Russia in 1800–1917

capital, either by issuing new laws or by disseminate interpretation of the existing ones, especially by way of administrative orders” [151, pp. 36–37]. In the aforementioned comprehensive report of 1899 S. Witte self-critically assessed Russia’s achievements, recognizing the country as comparatively agricultural. In this connection, he wrote: “In the current political and economic international relations, a farming country that does not have its own industry, sufficiently developed to meet the basic needs of the population with the products of domestic labor, cannot regard its power as unshakeable; without its own industry, it cannot achieve genuine economic independence, and the experience of all nations clearly shows that only the self-sufficient nations are in a position to exercise in full extent their political power. England, Germany, the United States before becoming influential powers in international politics, with hard work and a comprehensive system of events implanted and developed their industry” [148, pp. 131–132]. By the early twentieth century, Witte’s policy acquired a rather specific and focused nature: in approximately 10 years to catch up with the more industrialized countries of Europe, to take firm positions in the markets of the Near, Middle and Far East. The same means were offered: customs protection of Russian industry and promotion of Russian export; attracting foreign capital; accumulation of domestic resources through indirect taxation, a state-owned wine monopoly and state railways. Vice-Director of the Department of Trade and Manufacturing of the Ministry of Finance of Russia Nikolai Langovoi wrote about Witt as “a brilliant Russian man who clearly understood the needs of his homeland, to which he devoted his whole life, and who rendered indisputable services to plant industry in the area in question, its strengthening and prosperity . . . . Sergei Yulievich held the view that the true state management of industry is not in the “regulators“ of production, but in eliminating the “obstacles“ to the development of productive forces” [147, p. 258]. S. Witte on personnel management According to N. Bunge, not one of the finance ministers of post-reform Russia used the means of state influence on the economy and management of the country as widely as Witte. However, he did not “disdain” the successful experience of private enterprise. We must not forget that for more than 10 years Witte has been practically realizing and evaluating the possibilities of the private economy, holding various leadership positions in the Joint-Stock Company of the Southwest Railways. S. Witte led the 30 thousandth collective and brought this private economy from a deficit to a profitable one. Already there, his abilities for work with personnel were revealed. He managed to create such a working mood and so skillfully choose people that the road began to work “miracles,” all its employees stood for each other and were ready to do everything possible and impossible for the road. Moreover, it was worth S. Witte in any department to meet the most prominent person, as he immediately arranged for him at home. And, nevertheless, having taken the state top position of the Minister of Railways, it was in this industry that he began to use all his knowledge and experience (and above all the experience of working with people) to make the state railway economy of the country profitable and efficient.

5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas

387

Understanding the importance of private initiative, appreciating the experience of professional entrepreneurs, S. Witte from the very first days of his activity as Minister of Railways, and soon the Minister of Finance, began to attract specialists from the private sector known to him, forming, as is now fashionable to express, a team of specialists and managers. At the same time, he had to overcome the established bureaucratic canons of the Russian ruling system. Fortunately, in the 1980s, Russia seriously and sharply discussed the question of canceling the system of official production, loudly voiced negative assessments of this system, which generated massive “legalized” incompetence and ultimately constrained the development of the country’s productive forces. Here is one of the arguments for the abolition of this system, expressed by the Minister of the Sea I.A.Shestakov: “Honoring ran out of time . . . Abuse of ranks has reached such an extent that it cannot be eradicated by laws . . . Ranks guide society in a false way in the economic sense, multiplying the number of those incapable of work and longing for rewards for their merits, which were expressed only by timely receipt of promotions” [152, p. 48]. At that time, in the interests of attracting specialists, a number of departments began to be replenished with people moving from private service to the state, and, consequently, either without ranks, or who were in ranks that did not correspond to their position. S. Witte also had personal experience in this matter. Recall that, as the manager of the South-West Roads, at the time he was appointed director of the Department of Railway Affairs of the Ministry of Finance, he had the rank of only grade IX (titular adviser), and immediately received the rank of grade IV (real state adviser). True, this case was unique, purely personified, carried out by decision of Alexander III and generated a lot of rumors and envious people in the capital’s society. About S. Witte’s personality “legends began to be created, jokes were associated with his name, and various vice-uniforms did not cease to refine their wit over the behavior, life, figure and manners of the “‘south-western railwayman’” [147, p. 247]. But there were other estimates. Prince V. Meshchersky writes of S. Witte as follows: “I saw in front of me a tall man, well-built, with a smart, lively and welcoming face, who was most impressed by the complete absence of any semblance of a bureaucratic type; this was evident in the absence of two features that distinguish one official from another: done humility and done self-worship. Witte immediately became sympathetic to me by its naturalness, its artlessness in the manifestation of his personality. In a black frock coat, cheeky and free in his speech and in each of his actions, he reminded me of the appearance of an English state man ... His mind was lively, original, sometimes deep, sometimes subtle and at the same time inquisitive and inquisitive. In addition, it was impossible not to appreciate the property, which I very rarely met in St. Petersburg smart people: Witte was able to listen and listen carefully, and the main charm of the conversation with him was that. That he unusually quickly grasped the idea being expressed and there was no need to stretch the speech for its explanation . . . During the conversation, he was always humble, in the dispute always showed respect for the objection or refutation, and

388

5 Management Thought in Russia in 1800–1917

never left the calm and impartial attitude towards the issue and to the interlocutor” [147, p. 249]. And Emperor Wilhelm II once said about S. Witte: “If I had even one such minister, I would have done miracles in Germany” [147, p. 254]. V.V. Maksimov, an employee of Southwestern Railways of Russia, spoke of S. Witt as follows: “Sergey Yulievich never trusted theoretical calculations—he practiced decisive and original measures in carrying out his projects from head to toe. For example, he needed to find out in what way it is more profitable to send bread—through Galati or through Odessa. Sergei Yulievich calls me and demands that I immediately buy ten thousand rubles two lots of wheat in Bessarabia and send these lots in both directions . . . . I bought wheat, sent both parties and calculated the costs in both directions, finding out the conditions, and got a complete and clear idea of the benefits of a certain path. Witte always resorted to such methods when it was necessary to verify the profitability and practical convenience of one or another assumption.. The Southwestern road was what is called a “thunderstorm” for all other roads, and Witte achieved this as follows. At all the junction stations of the railway, Sergey Yulievich had his own statistical agents (he was the first to introduce railway statistics), and at the meetings we knew everything that was being done on other people’s roads. Often there were such curiosities that South-Westerners had to state the state of other roads with figures in their hands, which the representatives of these roads could not do” [147, pp. 238–239]. Due to the urgent need for professionals, S. Witte initiated legislation was issued that established, contrary to the “Charter on the Civil Service,” new rules for determining persons in the civil service of the Ministry of Finance, which allowed him to legally implement his personnel policy. He invites people primarily from the South-West Roads Directorate to the service, experts in the field of tariff affairs, but often without any ranks or even rights to join the civil service. According to estimates of contemporaries and researchers, the selection of the composition of officials of the railway department of the Ministry of Finance S. Witte was a successful and also the first, most likely, in the history of the Russian bureaucracy attempt to introduce employees of entrepreneurial organizations into the middle bureaucracy. Having become Minister of Finance, Witte made a submission to the State Council at the end of 1894, requesting permission to accept all ministry departments up to V class inclusive (rank of State Councilor) of persons who did not have the right to be assigned to the service, but subject to their higher education. These events contributed to a significant increase in the number of people with higher education in state institutions. From 1893 until the end of 1896, their number increased by 64% with a total increase of 6% [152, p. 104]. We should not forget, evaluating Witte’s personnel policy and real events, that all this was carried out under the motto—to make the intervention of state institutions in the economic life of the country even more effective. Here is how S. Witte himself evaluates his qualities as a leader: “I had the happiness in general, wherever I served, to invite talented employees, which, in my opinion, is one of the most important and necessary advantages of administrators

5.6 The Contribution of Russian Statesmen to the Development of the Management Ideas

389

for major matters, and for public features. People who do not know how to choose people do not have a sense of smell for people who cannot appreciate their abilities and shortcomings, it seems to me that they could not be good administrators and manage a big business (emphasized by us—M.V.). As for me, I can say that I have this scent, maybe natural, very developed. I have always been able to choose people, and no matter what position I occupy, and wherever I may be, there is always a large galaxy of talented and capable workers. This was the case on the Southwest Railways, and this was especially evident in the broader field of my activity, i.e. when I was Minister of Finance for 10 ½ years. All the subsequent finance ministers who came after me, like Pleshke, Shipov, Kokovtsov, are all my former employees, whom I, so to speak, pulled out. Also among the members of the Council of State there is a whole series of members who were previously my employees in various fields. Currently, the main posts of the Ministry of Finance are all occupied by my former employees, and this can also be said of private societies” [149, pp. 142–143]. Many contemporaries noted S. Witte’s talent as the creator of the “like-minded team,” who used original methods of selection and training for this. So, being just over 6 months the Minister of Railways, he managed to change the psychological climate in the team for the better. “Without exaggeration, we can say that the Ministry of Railways, under the influence of the very first steps of its new boss, was definitely younger, more fit and inspired by a zeal for work. It turned out that the owner of the department and business was found in Witte. New orders were also wound up: the simplicity and accessibility of the relations of subordinates to the chief, but not to the detriment of the principles of discipline, appeared. The new boss listened to everyone in the case, demanded the truth from everyone, but did not let anyone cross the line, beyond which the cricket ceases to know its sixth; at the same time, one of the department’s ulcers—clandestine intrigue and various personal policies” was canceled [147, p. 251]. The same Boris Glinsky writes about the S. Witte’ “principles of personnel policy”: “They can blame me for anything, he told me (writes Glinsky), but no one can blame me for what I avoided smart and talented people. As soon as I noticed, having met someone from a particular environment, that a person with my knowledge and abilities can be useful in my work, I immediately brought him closer to myself and adapted to certain parts of the financial and administrative apparatus, unable to cope with with his conduit, nor with the caches of his private life” [147, p. 576]. So he brought in the apparatus of the Ministry of Finance of large scientistsspecialists on various issues of the national economy—Vladimir.I. Kovalevsky (for trade and industry), Alexander N. Guryev (for money circulation), Boris Ph. Brandt (for attracting foreign capital), Nikolay K. Brzhevsky (for tax policy), Nikolay N. Pokrovsky (according to the customs system), and many others. Many Russian engineers and professors worked actively in government bodies on the development of Russia’s natural resources. In this regard, Dmitry Mendeleev enjoyed great authority in the ministry of S. Witte, who contributed to the development of agriculture, railways, the mining

390

5 Management Thought in Russia in 1800–1917

and oil industries and was the defender of the mentioned customs “educational” protectionism, as a developer of a protectionist customs system and a common customs tariff. Together with S. Witte, Dmitry Mendeleev took part in the development of the Customs Tariff of 1891 in Russia. In his works “Letters on Factories” [153], “Explanatory Tariff, or a Study on the Development of Russian Industry in Connection with its General Customs Tariff of 1891” [154] and others [155, 156] Dmitry Mendeleev stood in positions of protecting Russian industry from competition from Western countries, linking the development of Russian industry with a common customs policy. The “Explanatory Tariff . . .,” the main work of Mendeleev on this issue, provides detailed comments on the customs tariff of 1891 with the economic justification for the tax rates for certain types of goods, a description of the state of the main industries and clarification of their development prospects. A wide range of sources used, the vastness of the material presented, the thoroughness of its processing and systematization made D. Mendeleev’s sensible tariff a kind of economic encyclopedia of post-reform Russia of the nineteenth century. In the work“ the Doctrine of industry” [156] Dmitry Mendeleev highly appreciated mining engineer Ivan Augustovich Time’s treatise “Fundamentals of mechanical engineering: Organization of machine-building factories in technical and economic relations and the production of mechanical works” [96] as one of the first in Russian literature devoted to “organization of machine-building factories.” Note that I.A. Time was invited as a professor to the St. Petersburg Mining Institute and, during his teaching career, Ivan Timé published more than 600 (!) scientific papers [91–100]. In the context of the development of state regulation of the economy, we shall note Witte’s merit in the establishment of a public system of commercial and technical education. “Among the means of moving forward industry and trade, Sergey Yuryevich rated technical, industrial, artistic and commercial education particularly high. He managed to put this matter of top state priority on a solid foundation, pushing aside all traces of “spiritual and conservative tutelage”“ and opening a wide space for private initiative in this regard” [147, p. 260]. The list of educational institutions that he had opened under the auspices of the Department of Finance alone shows how much he had done for popular education. In the beginning, he passed through the Council of State a Regulation on commercial education (1896) with the aim of initiating the activity Russian industrialists and entrepreneurs in the establishment and management of commercial schools. As a result, they were quite eager to “provide funds for the arrangement and maintenance of their commercial schools” and, in the end, 73 commercial schools were opened in 4–5years (!), with virtually no public expenditure, the Stroganov School of Technical drafting was reorganized, and several industrial art colleges were established. We should also credit Sergei Yuryevich for the law of 1897 on rural handicraft training workshops, “village technology institutions”-as he called them. This type of village school, “giving the village a sensible carpenter, joiner, blacksmith, and a fitter for caring for agricultural machinery and implements, has proven to be extremely viable and is now widely distributed, bringing untold benefits to the rural population.

5.7 Vladimir Lenin and the Proletarian Management Thought

391

Caring for the development of merchant shipping, Sergei Yulievich took over the so-called nautical classes in 1898, and by 1900 there were thirty-five such schools” [147, p. 260]. Developing the network of secondary commercial education, S. Witte launched a campaign to establish the first commercial and technical higher education institutions in Russia “that would contain different branches of human knowledge, but would have the organization not of technical schools, but universities”. Under his direction, the Statute of St. Petersburg Polytechnic Institute was drafted and adopted by the Council of State, followed by the establishment of this and two other polytechnic institutions (in Kiev and Warsaw) with economic and technical departments. In the era of S. Witte’s activities as Minister of Finance on February 9, 1895, the Minister of Education Mr. Delyanov I.D. approved the new Statute of the Imperial Moscow Higher Technical School, according to which “it aims to provide students with higher education in mechanical and chemical specialties and is subdivided, accordingly, into two compartments”. Here are examples of academic disciplines of Russian technical universities of the nineteenth century: higher mathematics, descriptive geometry, theoretical mechanics, physics, chemistry, anatomy and plant physiology, mineralogy, geognosy and geodesy, building art with architecture, applied mechanics and theory of building machines, mechanical technology, chemical technology, metallurgy, political economy, statistics, accounting. Graduates of technical universities, starting their career with the chief engineers of enterprises, quite often and quickly became the top-managers of these enterprises. This was one of the goals of the reforms of industrial education and the development of entrepreneurship in Russia, developed and implemented by S.Yu. Witte. Most of S. Witte’s activities in the field of training Russian management personnel were reflected in the journal “Technical and Commercial Education” [157]. On the whole, rightly classifying S.Yu. Witte as the creators of managerial thought and recalling his authorship in the development of the Program of Commercial and Industrial Policy of the Russian Empire back in the era of Alexander III, we must evaluate his creations as appropriate and reflecting the third subject level of the Historical and Scientific Research (HSR) and HMT—“History of relations between society and the creator of managerial thought” (see Chap. 1 of the textbook).

5.7

Vladimir Lenin and the Proletarian Management Thought

Since the main economic objective of the liberation movement in post-reform Russia late 19th early twentieth century was the liberation of the peasant economy from landlord tenure, and of the political—elimination of autocracy, these were also the immediate tasks of the proletariat, which stood in the vanguard of the liberation movement. Therefore, the ideologists of the proletariat in matters of “organization of

392

5 Management Thought in Russia in 1800–1917

management of the economy” were not interested in issues of “improvement” of the existing capitalist economy. However, the correct solution of fundamental political economic issues—on the inevitability of capitalism in Russia, its nature, laws and role, on its specifics and contradictions in Russia, as well as criticism of erroneous views on the organization of management of socialist public production of ideologists of peasantry made a significant contribution to the development of economic and managerial problems. Already in the early period of development of proletarian management thought, attempts were made to solve the problems of regularities of development of the capitalist mode of production in Russia, questions of objective need for production management, management as a form of cooperation under capitalism, the dual nature of managerial work and the inevitable growth of bureaucracy under capitalism, etc., and fundamental problems of organization of production management in the future socialist society. These issues were considered in many works of the representative of proletarian thought G.Plekhanov [158–160], they are also analyzed in sufficient detail in our first textbook “History of Management Thought” of 1987 year [161, pp. 179–207], but the works of Vladimir Lenin this period were a new step in solving methodological problems of management of public production. It is asked whether V.I. Lenin (1870–1924) considered any managerial problems of improving the existing economy of Russia in his works of the pre-revolutionary period? Could he be interested in applied management problems aimed at rationalizing the management system of public or private economy existing in those years? I think that no, and it can be confirmed by the words of V. Lenin expressing his interest and attitude towards the existing order in post-reform bourgeois Russia of the 90s. He wrote about the position of the Marxists towards Russia of this period and about the spotlights concerned about the improvement of the bourgeois economy of Russia: “What kind of a Marxist is one, when he does not understand that the social environment for which he is projecting his progress is a bourgeois environment, which is why all the “improvement of culture,” really observed in the peasant economy, means bourgeois progress, improving the situation of the minority and proletarizing the masses, what kind of a Marxist is he, when he does not understand that the state to which he applies with pipe dreams is a class state capable only of supporting the bourgeoisie and pressing the proletariat” [12, V. I, p. 201, footnote]. But at the same time, over the years (from 1883 to 1917). V.I. Lenin wrote and left us a huge legacy in the development of social thought (in particular, management thought), some of which we will describe and evaluate. First of all, V.I. Lenin, from the standpoint of Marxism, clearly defined the place of administrative relations in many social relations. Recognizing “relations of production” as the root cause of all others, in his work “What are “friends of the people” and how do they fight against the social democrats?” V. Lenin quotes the words of K. Marx: “In material production, people have to become in a certain relationship to each other, in production relations. The latter always correspond to the stage in the development of productivity that their economic forces currently possess. . . The totality of these industrial relations forms the economic structure of society, the real basis, above which the political and legal superstructure rises and which correspond to certain forms of

5.7 Vladimir Lenin and the Proletarian Management Thought

393

public consciousness. . . But at a certain stage of development of their productivity forces come into conflict with the relations of production between people.. Then the relations of production cease to correspond to productivity and begin to constrain it ... Hence—the era of social coup arises. With the change of the economic base changes the whole huge superstructure, rising above it. In considering these coups, it is always necessary to distinguish between a material change in the conditions of production, which must be scientifically established, and a change in legal, political, religious, artistic and philosophical words—ideological forms” [12, V. I, pp. 135–136]. V.I. Lenin introduced and revealed a new epistemological category of “repeatability,” which allowed him “to generalize the orders of different countries into one basic concept of a social formation. Only this generalization made it possible to move from a description/assessment in terms of ideal/social phenomena to a strictly scientific analysis of them, highlighting, for example, what distinguishes one capitalist country from another, and exploring what is common to all of them” [12, V. I, p. 137]. From his very first works V.I. Lenin honed his skill of “proper task setting” and criticized others for irregularities in this. Here is one example of Leninist questions in the work “Artisanal Census of 1894/95 in Perm and general questions of ‘artisanal industry’” (1897). This example concerned “buyers,” but which may well serve as a program of great scientific research. V.I. Lenin correctly called the tallymen—the representatives of trade capital—the largest industrialists. Therefore, it was important in the analysis of such forms of organization of production as “artisanal” crafts and capitalist manufactory, which included “work for the tallyman,” to find out the place and role in the historical development of forms of industry. These are the questions: “It is necessary to study in detail and carefully how the tallyman manages the household, how his capital is formed, how this capital operates in the area of procurement of raw materials, sales of products, what are the conditions are (socialeconomic activity of capital in these areas, how large the tallyman’s expenses are for the organization of procurement and sales, how these expenses vary depending on the size of trading capital and the size of purchase and marketing, what conditions sometimes cause partial processing of the raw materials in the shop of the tallyman and provision to the worker for further processing at home (sometimes the final finishing is done again by the tallyman) or the sale of raw materials to small industrialists in order to buy products from them on the market. It is necessary to compare the cost of production of the product from a small artisan, from a large industrialist in a workshop that unites several hired workers, and from a tallyman who distributes the material for processing at home. It is necessary to take as a unit of study each enterprise, that is, each individual buyer, to determine the size of its turnover, the number of those working for him in the workshop, or in workshops and at home, the number of workers engaged in the procurement, storage and marketing of raw materials and products. It is necessary to compare the production technique (quantity and quality of tools and devices, division of labor, etc.) at the small owner, at the owner of the workshop with hired workers and at the tallyman. Only such economic research can give an accurate

394

5 Management Thought in Russia in 1800–1917

scientific answer to the question of its importance in the economy, its importance in the historical development, forms of industry of commodity production” [12, V. I, p. 391]. Lenin’s research experience in 1893–1899 allowed him to create such a masterpiece of Russian social thought as “The development of capitalism in Russia. The process of creating a domestic market for large industry” (1899) [12, V. III, pp. 1–610]. This work was attended by representatives of almost all sciences. For management science this work is valuable first of all because it represents a science school of research of social production both in statics and in dynamics. In statics, it is a multifactorial statistical analysis of objects of all levels of social production, from home industry and crafts, through manufactories to large factories and plants of all types of production and industries, and in dynamics—it is an analysis of the processes of branch division of labor (“detailed” and “goods-wise”), both inside workshops and at the level of the entire national economy, colonization of the outskirts, the decomposition of the peasantry, the formation of rural-urban proletariat, crafts, fisheries and industries in the regions of Russia (territorial division of labor), separation of industry from agriculture, formation of the internal market and socialization of labor. The paper analyzes the development of over 10 agricultural productions (agriculture, cattle breeding, flax breeding, distillation, sugar beet production, etc.), about 40 types of crafts and fisheries, industries of manufacture (weaving, crafts for wood processing—crew, spoon, toy, etc., crafts for processing of animal products— leather, fodder, button, etc.), about 10 major branches of machine industry (including mining, metallurgy, forestry, construction industry), transport, trade. In each case, Lenin had gone to the essence, to such details and trifles in the organization of a particular industry, as if he had worked in this industry all his life. At the same time, we should not forget that he processed such statistics (official and unofficial), which was disordered, contradictory, contained a lot of inaccurate data (primarily due to terminological confusion in factory-plant statistics), in which there were no generalizations and conclusions and at the same time, there were incorrect groupings, object classes. Lenin had to carry out a great preliminary work on collecting, processing and systematizing a large amount of data (about 600 (!) sources), he developed, justified and introduced new definitions, criteria for classification of groups, etc. And if the previous formulations concealed many of the processes taking place in the economy of postreform Russia of the nineteenth century and characterizing, above all, its capitalist development, then, by introducing new justified political-economic definitions, corresponding groupings of statistical data, Lenin exposed these processes. These include, for example, the processes he discovered “artisans ‘leave for earnings” from one place to another, the transformation of artisans into producers, the growth of small—scale fisheries, the decomposition of small producers, the formation of capitalist simple cooperation, the formation of trade capital, specialization and concentration of production, expansion of technology and many others. Here are some examples of Lenin’s analytical work.

5.7 Vladimir Lenin and the Proletarian Management Thought

395

First of all, he defined “domestic industry,” “craftsmanship,” “capitalist simple cooperation,” “manufactory,” fishery, heavy machinery industry, specialization, cooperation, sectoral territorial division of labor, socialization of labor. On the basis of these definitions, he revealed a lot of shortcomings in official statistics, which appear to be unprincipled. Thus, in official county council statistics all construction workers were listed in the group of “artisans.” “From the political-economic point of view,—Lenin writes,—this mixture is absolutely wrong, as the mass of construction workers belongs not to independent industrialists working on orders of consumers,22 but to hired workers employed by contractors” [12, V. III, p. 330]. The following example concerns the conclusions on the “optimal” size of enterprises. Analyzing the dynamics of labor productivity, Lenin found its absolute increase in all the categories and ranks of industries introduced by him, relatively higher growth of large industries, where the best machinery was concentrated, where the best organization of work was introduced. You do not cease to be surprised at the fact that Lenin discovered in the little-known to the modern reader “brush craft” facts characterizing a “properly organized workshop.” There should be up to 15 workers. But in the hook fishery—9–10 workers in a properly organized workshop. Wellequipped workshops—“special workshops” according to Lenin—were introduced into study to analyze the dynamics of production. Such he found in toy craft, with mirror craftsmen, framers, etc. Lenin’s conclusion—large workshops are formed from small producers, as a transition to a higher form of industry. And his examples, which characterize the process of division of labor in various industries and allowed him to draw qualitatively new conclusions, once again confirm the correctness of Lenin’s thesis about the importance of taking into account all “without a single exception” facts relating to the investigated process. The analysis of this kind of manufactory crafts allowed Lenin to draw several conclusions from the characteristics of only the process of division of labor in them, preparing the transition to the emergence and organization of large machine production. Firstly, the division of labor in the manufactory due to the execution of individual operations by master specialists objectively demanded training of such specialists. Hence, the phenomenon of apprenticeship constantly accompanied the manufacturing industry, and in the commodity economy had always been the object of the greatest exploitation of child labor. Secondly, Lenin discovered many facts of introduction of machines and mechanisms in place of operations brought to automatism. He considered this stage as a transition to a large machinery industry and at the same time as a source of growth of small (servicing) industries: “in the weaving industry, the mechanical machine. . . has subordinated the production of simple fabrics;. . . in metalwork, the machine is applied primarily to one of the simplest operations—grinding, etc.” [12, V. III, p. 428]. The simultaneous growth of small-scale crafts, seemingly “independent” 22

That is how V. Lenin defined “artisans.”

396

5 Management Thought in Russia in 1800–1917

(according to the populists) was natural, and most importantly, that the process was subordinated to a large capital: “their product did not have any consumer value outside of other activities, with other parts of the product” [12, V. III, p. 429], and the producers themselves were “quasi” independent” [12, V. III, p. 435]. Thirdly, along with apprenticeship, the process of division of labor trained skilled professionals, masters and workers. In confirmation of this process, Vladimir Lenin cites many factors from the works of Russian researchers. He himself makes a generalized conclusion that “the heavy machinery industry could not have developed so quickly in the post-reform period, had it not been for a long era of workers’ training by the manufactory” [12, V. III, p. 429]. Having shown and proved the objective connection between a small (relatively) number of large workshops and a large number of small establishments, carried out mainly at the expense of trade capital, V.I. Lenin rejected the definition of “artisanal industry” as a concept “absolutely unsuitable for scientific research under which usually all and all forms of industry, starting from domestic crafts and handicrafts to employment at very large factories” [12, V. III, p. 451]. To confirm the subordination of many “artisanal” industries to large capital, let us give an example from the previously mentioned work on fisheries in the Perm governorate: “We can imagine with sufficient clarity the economic organization of shoemaking and many other related “artisanal” industries. This is nothing other than the separation of large capitalist workshops (“factories” according to the terminology of our official statistics), nothing more than partial operations of large capitalist leather processing operations. Businessmen organized a wide procurement of material, arranged factories for the production of leather and started a whole system of further processing them—a system based on the division of labor (as provided by technical) and employment (as a condition of economic): they perform some operations in their workshops (cutting shoes), others are performed at home by artisans working for them, entrepreneurs determine the size of production, the size of the charge, the types of goods produced and the number of products of each type. They also organized wholesale of the product. It is obvious that according to scientific terminology it is one capitalist manufactory, partly turning into the highest form, into the factory (precisely because machines and machine systems are used for production: large tanneries have steam engines). The singling out of some parts of this manufactory into a special “artisanal” form of production is an obvious absurdity, obscuring the basic fact of the dominance of wage labor and the subordination of all tanning business to large capital” [12, V. III, p. 395]. Seemingly harmless populist economists in the definitions of “artisanal industry” led them to astonishingly opposite conclusions, they mixed “the most heterogeneous types of economic organization” in this term. V.I. Lenin writes: Take, for example, mr. N.—on.23 On page 79 of “Essays” you will read the title: “The capitalization of the crafts,” and then straight, without any reservations and explanations, “Data on

N-on is mr. Danielson N.F., ideologist of liberal populism, author of the book “Essays on our Reformed Social Economy” (1893).

23

5.7 Vladimir Lenin and the Proletarian Management Thought

397

factories and plants”. . . simplicity, as you can see, is fascinating: “capitalism” ¼ “factory industry,” and the factory industry is what appears under this heading in official publications. On the basis of this “analysis” one of the most ridiculous and harmful prejudices about the opposite of our “artisanal” and our “factory” industry is formed, about the isolation of the second from the first, about the artificiality of the “factory” industry, etc.” [12, V. III, p. 395]. Among managerial problems V.I. Lenin paid much attention to studying questions of “territorial division of labor,” the issue of placement of public production in the territory of the country. The paper “Development of Capitalism in Russia” gives many examples illustrating the specialization of certain regions in the production of a single product, sometimes the same product variety, and even “of the known part of the product.” V.I. Lenin emphasized that the territorial division of labor is a characteristic feature of the manufactory in general, as a form of industry, and not only of Russia. However, the agrarian structure of the Russian economy was manifested in the fact that, firstly, the process of separation of industrial workers from agriculture in the manufacturing period in Russia was slower than similar process in the West (due to the presence in Russia of many institutions that attach peasants to the land), and secondly, the center of manufactory crafts became non-agricultural rural areas and villages (sometimes cities), “whose inhabitants are hardly engaged in farming and who should be listed as commercial and industrial settlements” [12, V. III, p. 432]. These centers were characterized by a relatively high standard of living, higher literacy and a level of needs of the inhabitants, who defiantly and sharply separated themselves from the grey matushka-village. In this, Lenin also saw the transition character of the manufactory in terms of the transformation of the spiritual exchange of the population, culminating in the large machine industry. One of the industries, the evolution of which was clearly affected by the process of territorial division of labor, is the construction industry of Russia. This process has led to “the formation of separate large areas in which the working population is specialized in some form of construction work” [12, V. III, p. 531]. Specialization has created markets for construction work, which in turn have created capitalist relations between contractors and construction workers. “Some of the contractors have 300–500 carpenters and have become real capitalists. . . No wonder local peasants say that “there is no more profitable trade for carpenters.” It is difficult to describe more clearly the essence of modern organization of crafts” [12, V. III, p. 532]. Lenin repeatedly returned to the issue of the emergence of a characteristic stratum of mediators between capitalists and employees who gradually became capitalists. Among personnel problems, Lenin was always interested in problems of capitalist bureaucracy, its nature and characteristic features, means and forms of struggle against it. He repeatedly returned to this problem in his writings. Moreover, Lenin’s views on bourgeois bureaucracy did not change in principle; however, the severity of the problem was emphasized more and more each time, moving from drawing attention to the bureaucracy in the work “What are “friends of the people” and how do they fight against social democrats? “(1894) [12, V. I] before the program

398

5 Management Thought in Russia in 1800–1917

call to combat bureaucracy, formulated in the “Tasks of the Russian Social Democrats” (1898) [12, V. II]. Thus, in his first work Lenin wrote: “In Russia, the remains of medieval, semi-serfdom institutions are still so infinitely strong (compared to Western Europe), they are such an oppressive yoke on the proletariat and on the people altogether, constraining the growth of political thought in all societies and classes—that one cannot but insist on the great importance for the workers of the struggle against all serfdom institutions, against absolutism, classism, bureaucracy. . .An especially impressive reactionary institution, which attracted relatively little attention of our revolutionaries, is the domestic bureaucracy, which governs the Russian state. This bureaucracy, composed mainly of raznochinetsi,24 is both by source of origin and nature of activity deeply bourgeois, but absolutism and enormous political privileges of the noble landlords gave it particularly harmful qualities. It is a constant weaver who believes the highest task in combination of the interests of the landlord and the bourgeois. This is a Judas who uses his serfdom sympathies and connections to double-cross workers and peasants. . . This is a dangerous hypocrite who is wise by the experience of Western European masters of reaction and skillfully hides his Arakcheyevan lust under fig leaflets of popular phrases” [12, V. I, pp. 296–297, footnote]. And in the second work Lenin already called for struggle: “Let’s take the institutions of officialism, bureaucracy as a special layer of persons specializing in management and placed in a privileged position before the people. From absolutist, semi-Asian Russia to a cultural, free and civilized England, we see these institutions everywhere, which constitute the necessary body of the bourgeois society. The backwardness of Russia and its absolutism corresponds to the total powerlessness of the people before the bureaucracy, complete uncontrolledness of the privileged bureaucracy. Against the all-powerful, irresponsible, bribed, wild, ignorant and parasitic Russian bureaucracy, numerous and diverse strata of the Russian people had been restored. But apart from the proletariat, none of these layers would have allowed full democratization of officialdom, because all other strata (bourgeoisie, petty bourgeoisie, intellectuals in general) have threads linking it with officialism, because all these layers are related to the Russian bureaucracy. Who does not know how easily in Holy Russia the transformation of an intellectual-radical, an intellectual-socialist into an official of the imperial government, an official comforting himself with what he brings” benefit “within the office routine—the official justifying this “benefit” the political inferentism, the laceism before the government of the whip and the clutches is accomplished? Only the proletariat is unquestionably hostile to absolutism and Russian officialdom, only the proletariat has no thread linking it to these bodies of noble-bourgeois society, only the proletariat is capable of irreconcilable enmity and resolute fight against it” [12, V. II, pp. 312–313]. In connection with these words of V. Lenin we can also recall the measures proposed in due time by P. Lavrov (see paras 5.3), the implementation of which

24

Nineteenth century Russian intellectual not belonging to the gentry.

5.7 Vladimir Lenin and the Proletarian Management Thought

399

would not allow in the future society of “working socialism” for the bureaucratic phenomenon to even emerge. It is about the private change of the heads of the “industrial associations,” the participation of all workers in the management of associations, learning management, and eventually, participation in the management of the country behalf “working socialism.” These ideas of the revolutionary populist were developed by Lenin in the early years of Soviet power, when in 1917 he wrote about the future communist society in 1917 in the treatise “State and Revolution”: “From the moment when all members of society, or at least the vast majority of them themselves learned to govern the state, took this matter into their own hands. . . from this moment the need for any management, in general, begins to disappear. . .Because when everyone learns to manage and will actually manage independent social production. . . the need to observe simple basic rules of any human dormitory, will very soon become a habit” [12, V. 33, p. 102]. And between these two works, which deal with bureaucracy, was the work “Economic content of populism” (1895), where Lenin had to prove on this subject the inconsistency of the “professorial point of view” of P. Struve, who, reproaching Marx and his “followers” in his passion for “criticism of the modern state,” wrote: “The state is first of all the organization of order.” Lenin justly answered this: “An attribute of the state is the availability of a special class of persons in whose hands power is concentrated. To speak of it that it is “primarily (?) organization of order”— means not to understand one of the very important points of Marx’s theory. Bureaucracy is that special layer in whose hands power in modern society is. The direct and close connection of this body with the class of bourgeoisie dominating in modern society is evident both from history. . . and from the very conditions of education and acquisition of this class, in which access is open only to bourgeois “descendants of the people” and which is linked to this bourgeoisie by thousands of the strongest threads. The author’s error is all the more annoying because it is the Russian populists against whom he had such a good idea to fight, having no idea that any bureaucracy in its historical origin, and in its modern source and purpose, is a purely and exclusively bourgeois institution, to which, from the producer’s viewpoint, only the state ideologists of the petty bourgeoisie are capable of applying to [12, V. II, p. 491]. The early works of V.I. Lenin contain many lessons of research of the processes of development of social thought, which are invaluable for such young science as the History of management thought. One such lesson is his work, “What inheritance do we give up? “(1898), which analyzes the development of social thought from the “heirs” and “enlighteners” of the 1860s and populists of the 1860s–1870s to the “pupils” of the Russian advanced social thought, to which V, I. Lenin attributed himself [162]. Lenin continued to create in the following years. In 1900–1917 V. Lenin published over 250 works (articles, monographs, speeches, performances, etc.), many of which dealt with the development of public production in Russia and key problems of economic management.. Among them is the policy document “What to do? Acute issues of our movement” (1902); republication of the fundamental work

400

5 Management Thought in Russia in 1800–1917

“Development of capitalism in Russia” (1908); the philosophical work “Materialism and Empiricriticism. Critical Notes on One Reactionary Philosophy” (1909)25; “Scientific sweating system” (1913); “About A. Bogdanov” (1914); “The Taylor System—the enslavement of man by machine” (1914); “Imperialism as the High Stage of Capitalism” (1916); “The State and Revolution” (1917) [12]. As can be seen from this list of works V. Lenin did not pass over the article by F. Taylor “The Principles of Scientific Management” published in 1911. Thus, in 1913 Lenin wrote in the article “Scientific sweating system”: “They talk the most now in Europe, and partly in Russia too, about the “system” of the American engineer Frederick Taylor. Not so long ago in the assembly hall of the Institute of Engineers of Communication Lines in St. Petersburg Mr. Semenov26 read a report on this system. Taylor himself described this system labelled “scientific,” and his book is assiduously translated and promoted in Europe. What is this “scientific system” all about? To squeeze three times more labor out of the worker during the same working day. Make the strongest and most agile worker work; special hours are recorded—in seconds and fractions of a second—the amount of time spent on each operation, each movement; produce the most economical and productive methods of work; replay the work of the best worker on film tape, etc. And as a result—in the same 9–10 h of work three times as much labor is squeezed out of the worker, ruthlessly exhausting all of his strength, sucking out every drop of neural and muscle energy of the employed slave with triple speed. He will die sooner?—Lots of others are at the gate! The advancement of technology and science means progress in capitalist society in the art of squeezing out sweat” [12, Vol. 23, pp. 18–19]. It should be noted that the nature of the emergence of such a system had been described in 1898 by M.I.Tugan-Baranovsky in his monograph about the Russian factory: “. . . large production is growing—a factory that destroys small workshops and drives craftsmen into their huts, from which the happier ones then move to the factory, and others remain helpless victims of the sweating system that reigns inseparably in our so-called artisanal industry” (emphasis added by us—M.V.) [59, p. 362].27 With the gift of “vision,” back in 1914, in the mentioned article “Taylor’s system—the enslavement of man by machine,” Lenin wrote: “Taylor’s system, without the knowledge and against the will of its authors, conditions the time when the proletariat would take over all public production and assign their workers, as a criticism of A. Bogdanov’s treatise “Empiriomonism” and of A.V. Lunacharsky’s articles on machism. 26 Here, Lenin speaks of the owner of a large machine-building plant, Ivan A. Semenov, whose activities are briefly presented in Sect. 5.4 of the textbook. 27 In 1898 M.I. Tugan-Baranovsky published a monograph “The Russian factory in the past and present” [58] and on its basis defended his doctoral dissertation at the Imperial Moscow University, receiving a doctorate in political economy. His opponent was the world-renowned economist Professor Alexander Ivanovich Chuprov. 25

5.7 Vladimir Lenin and the Proletarian Management Thought

401

commissions to correct distribution and regulation all social work.. Large production, machinery, railways, telephone—all of these give thousands of opportunities to cut working hours of organized workers in four, providing them with four times the welfare than now. And the workers’ commissions, with the help of the workers’ unions, will be able to apply these principles of reasonable distribution of public work when it is spared from enslavement by its capital” [12, Vol. 24, p. 371]. In his studies, V.Lenin repeatedly deliberately returned to the factory and plant topic—it is, firstly, the scientific definition of “a factory” given by him, it is factory fines and working day laws, these are the problems of factory-plant statistics, these are the issues of the organization of factory-plant business, its organization in Russia, it is, finally, industrial courts. And in neither of the works of Lenin did he hide that the factory-plant problems interest him not in themselves, not only and not so much from scientific purposes, but only from the viewpoint of achieving final goals set for itself and for all the Russian Marxists—to lead the Russian proletariat to victory in the struggle against all its class gates. All the works of V.I. Lenin, as well as his whole life, represent a large school of lessons/and their analysis/formation of life and struggle for rights behalf the frontline part of humanity, lessons of the foundation of self-consciousness of the proletariat, the lessons of development of all branches of human knowledge, human social thought. It is necessary to admit that this school is not yet known by us, it is still largely unexplored inheritance, what you are convinced every time even in the case of repeated study of the works of V.I., Lenin. Therefore, Leninist inheritance, in its words, should not only be kept, “as archivists keep old paper,” but constantly, painstakingly and continuously creatively study and turn into an actively functioning heritage, including to expand the horizons of domestic management thought. This chapter introduced the main directions for the development of management thought in Russia in the 1800–1917. Many of the “creators” of Russian management thought presented in this chapter of the textbook are objects of comparative analysis in the article by the author of the textbook [101] and subject of the discussion at the International conferences HMT&B regularly organized at Moscow State University [111]. The materials of these conferences can be found at: https://www.econ.msu.ru/science/conferences/mciumb/ The materials in this chapter demonstrate a fairly high saturation in Russia of the nineteenth to early twentieth century with many sources of managerial thought, the causes of occurrence, and forms of manifestation of different views on the management of social organizations. In addition, once again we wanted to emphasize the inertia of the vital processes of the socio-economic system (or the non-Markov nature of these processes) and the idiographic nature of the HMT as science, which must be taken into account as a factor in assessing the development of social thought, including worldwide, Soviet, and modern Russian management thought.

402

5 Management Thought in Russia in 1800–1917

Test Questions 1. Which management ideas exist in the projects and reforms of M.M. Speransky? 2. What was the cause of opening of the first university training programs for entrepreneurs and managers in Russia in the nineteenth century? 3. What managerial issues were “solved” by the noble managerial thought? 4. What are the main ideas of management in the studies of Russian populists? 5. What issues of public production management were considered in the work of Russian Social Democrats? 6. What concerned the Russian bourgeoisie in the field of management (based on materials of business and industry congresses)? 7. Describe the basic training courses on management of Russian university professors at the end of the nineteenth century. 8. What are the main ideas of the management personnel training system according to I. Vyshnegradsky’s draft? 9. Give a description of the management ideas of Russian entrepreneurs in their particular cases. 10. What is the merit of S. Witte in the development of domestic management thinking? 11. What are the relationships between the views of representatives of different classes and social categories in Russia in the nineteenth century? 12. What is the merit of V. Lenin in the development of Russian managerial thought?

References 1. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU (1996–2019 gg.), Izd-vo MGU, Moscow, 1996, 1998, 2000–2005, 2008–2019 gg. (sm. https://www.econ.msu.ru/science/conferences/mciumb/) 2. Marshev Vadim I (2019) Formation of management thought in Russia and early USSR from the 1800s to the 1920s: Heroes and their creations. J Manage Hist 25(3):285–303 3. Vysochajshe utverzhdennoe polozhenie ob ustrojstve S.-Peterburgskogo Prakticheskogo Tekhnologicheskogo Instituta. Polnoe sobranie zakonov Rossijskoj imperii, sobranie vtoroe. Tipografiya II otdeleniya Sobstvennoj Ego Imperatorskogo Velichestva kancelyarii, SPb (1830) T. III, 1828, № 2463, S. 1034–1038 4. Vysochajshe utverzhdennoe Polozhenie o S.-Peterburgskom Prakticheskom Tekhnologicheskom Institute (1862) Polnoe sobranie zakonov Rossijskoj imperii, sobranie vtoroe, T. 37, №38439, S 601–609 5. Vysochajshe utverzhdennoe Polozhenie o S.-Peterburgskom Prakticheskom Tekhnologicheskom Institute (1887) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie (1881–1913). T.7, №4310, SS 115–121 6. Vysochajshe utverzhdennoe Polozhenie o S.-Peterburgskom Prakticheskom Tekhnologicheskom Institute (1894) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie (1881–1913). T.14, №10789, SS 458–464 7. O vvedenii v dejstvie Vysochajshe utverzhdennyh Polozheniya i shtata Imperatorskogo Moskovskogo Tekhnicheskogo Uchilishcha (1895) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie (1881–1913). T.15, № 11358, S 82

References

403

8. Berseneva IV. Rossijskoe inzhenernoe predprinimatel’stvo konca XIX–nachala HKH vv. (k istorii problemy). [Elektronnyj resurs]. Rustrana: [veb-sajt]. URL: http://xn%2D% 2D80aa2bkafhg.xn%2D%2Dp1ai/21096/Rossiyskoe-inzhenernoe-predprinimatelstvokontsa-XIX%2D%2D-nachala-XXvv-(k-istorii-problemi). Data obrashcheniya: 05.04.2020 9. https://www.ourbaku.com/index.php/. obrashchenie 17.05.2020 10. Materialy po kommercheskomu obrazovaniyu. M-vo fin. Ucheb. otd. – Spb.: Tip. i lit. V. V. Komarova, 1901–1906. – 25 sm. – Tip. vyp. 2: YU. A. Mansfel’d; vyp. 3–5: A. V. Orlova. Vypuski: Vyp. 1: Kommercheskie uchilishcha: S”ezd direktorov i predstavitelej popechit. sovetov v iyune mesyace 1901 g. v g. S.-Peterburge. – 1901. – VIII, 163, III s. Vyp. 2: Kommercheskie uchilishcha: S”ezd direktorov i predstavitelej popechit. sovetov v yanv. mesyace 1902 g. v goro. S.-Peterburge. – 1902. – 695 s. razd. pag.: il. Vyp. 3: Torgovye shkoly: Soveshchanie g. g. predstavitelej popechit. sovetov, uchreditelej, uchreditel’nic i. – inspektorov v yanv. mesyace 1905 g. v g. S.-Peterburge. – 1905. – VIII, 298 s., 6 l. il. Vyp. 4: Otchet o sostoyanii kommercheskogo obrazovaniya v Rossii za 1903–4 uchebnyj god i uchebnyh zavedeniyah vedomstva Ministerstva finansov. – 1905. – VII, 103 s. Vyp. 5: Svedeniya o sostoyanii kommercheskih uchebnyh zavedenij vedomstva Ministerstva torgovli i promyshlennosti v 1904–5 uchebnom godu. – 1906. – VIII, 214 s. 11. Speranskij MM (1901) Zapiska ob ustrojstve sudebnyh i pravitel’stvennyh uchrezhdenij v Rossii (1803 g.). Sankt-Peterburg, 53 s 12. Lenin VI (1962) Polnoe sobranie sochinenij v 55 tomah, 5-e izd., Politliteratura, Moscow 13. Obshchee Polozhenie o krest’yanah, vyshedshih iz krepostnoj zavisimosti ot 19 fevralya 1861 goda. Polnoe sobranie zakonov Rossijskoj imperii. Sobranie Vtoroe, T. 36, Otdelenie pervoe, 1861, № 36657. Sankt-Peterburg, 1863, ss 141–169 14. Korelin AP (1979) Dvoryanstvo v poreformennoj Rossii 1861–1904 gg. Nauka, Moscow 15. Vysochajshij reskript, dannyj Ministru Vnutrennih Del (1867) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie Vtoroe, T.40, Otdelenie pervoe, 1865, № 41729. SanktPeterburg, s 114 16. Polozhenie o gubernskih i uezdnyh po krest’yanskim delam uchrezhdenij (1863) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie Vtoroe, T.36, Otdelenie pervoe, 1861, № 36660. Sankt-Peterburg, cc 202–218 17. O preobrazovanii mestnyh krest’yanskih uchrezhdenij i sudebnoj chasti v Imperii (1891) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie Tret’e, T.9, 1889, №619 SanktPeterburg 18. Pihno DI (1899) Osnovaniya politicheskoj ekonomii. Vyp. 1. Kiev, 1890. Vyp. II. Kiev 19. Doklad №2 “Ob ustrojstve hozyajstvenno-rasporyaditel’nogo upravleniya v guberniyah i uezdah” Komissii o gubernskih i uezdnyh uchrezhdeniyah Ministerstva vnutrennih del. Sm. “Materialy po zemskomu obshchestvennomu ustrojstvu”. Spb., Tom 1 (1885) 20. Izvlecheniya iz postanovlenij gubernskih sobranij dvoryanstva po voprosu o zemskih uchrezhdeniyah (1885) Sm. “Materialy po zemskomu obshchestvennomu ustrojstvu”. St. Petersburg, Tom 1 21. Materialy po zemskomu obshchestvennomu ustrojstvu (1885) St. Petersburg, Tom 1 22. Garmiza VV (1957) Podgotovka zemskoj reformy 1864 g. Izd-vo Moskovskogo universiteta, Moscow, ss 206–224 23. Istoricheskaya zapiska o hode rabot po sostavleniyu i primeneniyu Polozheniya o zemskih uchrezhdeniyah. Bez mesta i goda (b.m.i g.) 24. Vysochajshe utverzhdennoe Polozhenie o gubernskih i uezdnyh zemskih uchrezhdeniyah (1867) Polnoe sobranie zakonov Rossijskoj imperii. Sobranie Vtoroe. T.39, 1864, №40457, Sankt-Peterburg, ss 1–14 25. Zajonchkovskij PA (1978) Pravitel’stvennyj apparat samoderzhavnoj Rossii v XIX v. Mysl’, Moscow, ss 195–201 26. Platonov SF (1917) Polnyj kurs lekcij po russkoj istorii. Petrograd 27. Kizevetter AA (1929) Na rubezhe dvuh stoletij. Vospominaniya (1881–1914). Praga

404

5 Management Thought in Russia in 1800–1917

28. Lemke Mihail (1908) Ocherki osvoboditel’nogo dvizheniya «shestidesyatyh godov». St. Petersburg 29. Serno-Solov’evich NA (1932) O merah k umnozheniyu narodnogo bogatstva i uluchsheniyu material’nyh uslovij narodnogo truda v Rossii. Revolyucionnoe dvizhenie 1860-h godov. Izdatel’stvo Vsesoyuznogo Obshchestva politkatorzhan i ssyl’noposelencev, Moscow 30. Shchapov AP (1937) Realizm v primenenii k narodnoj ekonomii. Sobranie sochinenij. Dopolnitel’nyj tom. Irkutsk 31. SHelgunov NV (1903) Gosudarstvennoe hozyajstvo. Sochineniya v 3-h tomah. St. Petersburg 32. SHelgunov NV (1871) Podatnoj vopros. ZHurnal Delo. St. Petersburg, № 10 33. SHelgunov NV (1881) Vnutrennee obozrenie. ZHurnal Delo. St. Petersburg, № 11 34. CHernyshevskij NG (1949) Izbrannye ekonomicheskie proizvedeniya. OGIZ, Moscow, T III, ch. 2 35. CHernyshevskij NG (1949) Polnoe sobranie sochinenij. V 15 t. Goslitizdat, Moscow, T. IV 36. Lavrov PL (1876) Gosudarstvennyj element v budushchem obshchestve. London 37. Tkachev PN (1976) Sochineniya v 2-h tt. Mysl’, Moscow, T.2, g 38. Marks K, Engel’s F. Sochineniya v 39 tt. Izdanie vtoroe. Izdatel’stvo politicheskoj literatury, Moscow, 1955–1974 g.g. 39. Simonenko GF (1870) Gosudarstvo, obshchestvo i pravo s tochki zreniya zakonov narodnogo hozyajstva. Moscow, tI 40. Bakunin M (1965) Gosudarstvennost’ i anarhiya. Cyurih, 1873. V “Revolyucionnoe narodnichestvo 70-h godov XIX v”. Sb. dokumentov i materialov. M.-L., T.2 41. CGAOR (Central’nyj gosudarstvennyj arhiv Oktyabr’skoj revolyucii). Fond 1762, Lavrov P.L. Opis’ 2. Delo 224 42. Hodnev AI (1865) Istoriya Imperatorskago Vol’nogo ekonomicheskago obshchestva s 1765 do 1865 goda. Tipografiya Tovarishchestva “Obshchestvennaya pol’za”, St. Petersburg 43. Kulyabko-Koreckij NG (1897) Kratkij istoricheskij ocherk deyatel’nosti I. V. E. Obshchestva so vremeni ego osnovaniya, Tip. V. Demakova, St. Petersburg 44. Beketov AN (1890) Istoricheskij ocherk dvadcatipyatiletnej deyatel’nosti imperatorskogo Vol’nogo ekonomicheskogo obshchestva s 1865 do 1890 goda. St. Petersburg 45. Kratkij istoricheskij ocherk deyatel’nosti Imperatorskogo russkogo tekhnicheskogo obshchestva s ego osnovaniya po 1 yanvarya 1893 g. St. Petersburg, 20 s (1893) 46. Filippov NG (1976) Nauchno-tekhnicheskie obshchestva Rossii (1866–1917). Uchebnoe posobie. MGIAI, Moskva, 213 s 47. Stepanskij AD (1979) Istoriya obshchestvennyh organizacij dorevolyucionnoj Rossii. MGIAI, Moskva, 81 s 48. Polnoe sobranie zakonov Rossijskoj imperii. V tipografii Vtorogo otdeleniya Sobstvennoj Ego Imperatorskogo Velichestva kancelyarii, St. Petersburg, 1830–1885 49. Ob”yasnitel’naya zapiska i proekt ustava po uchrezhdeniyu Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, 31 s (1867) 50. Otchet o deyatel’nosti Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli s 1867 po 1892 g. St. Petersburg, 99 s (1892) 51. Ermanskij A (1909) Krupnaya burzhuaziya do 1905 goda. V kn. Obshchestvennoe dvizhenie v Rossii v nachale HKH veka. T. 1. St. Petersburg, S 313–348 52. Trudy Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, CH. 1, 240 s (1872) 53. Trudy Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, CH. 17, 286 s (1886) 54. Trudy Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, CH. 23, 461 s (1895) 55. Tihomirov YU (1989) A Trudy obshchestva dlya sodejstviya russkoj torgovli i promyshlennosti. Vspomogatel’nye istoricheskie discipliny, T.20-S 127–135 56. Trudy Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, 1872–1910 (https://lib.rgo.ru/dsweb/View/ResourceCollection-1093)

References

405

57. CGIA SSSR, f. 150, op.1, d.149, l. 37–37 ob. 58. Trudy Obshchestva dlya sodejstviya russkoj promyshlennosti i torgovli. St. Petersburg, 1904. https://lib.rgo.ru/reader/flipping/Resource-11075/RuPRLIB12095612/index.html 59. Tugan-Baranovskij MI (1907) Russkaya fabrika v proshlom i nastoyashchem. 3-e izdanie, M. 60. Berlin P.A. Russkaya burzhuaziya v staroe i novoe vremya. M.-Pg., 1922, 1925 61. Veshnyakov VI (1870) Russkaya promyshlennost’ i ee nuzhdy. ZHurnal “Vestnik Evropy”, t. 5, kn. 10, ss 508–528 62. Protokoly i stenograficheskie otchety pervogo Vserossijskogo s”ezda fabrikantov, zavodchikov i lic, interesuyushchihsya otechestvennoj promyshlennost’yu, 1870 g. St. Petersburg (1872) 63. Curriculum vitae zavodchika i fabrikanta Fr.K.San-Galli, St. Petersburg (1903) 64. Trudy torgovo-promyshlennogo s”ezda, sozvannogo Obshchestvom dlya sodejstviya russkoj promyshlennosti i torgovle, v Moskve, v iyule 1882 g. St. Petersburg, T.I (1883) 65. Kashkarov P (1882) Obshchaya razrabotka voprosov, zadannyh programmoj torgovopromyshlennogo s”ezda. Moscow 66. Trudy s”ezda Russkogo Tekhnicheskogo Obshchestva v Moskve 1882 g. St. Petersburg, T.1 (1883) 67. Proekt obshchego normal’nogo plana promyshlennogo obrazovaniya v Rossii. St. Petersburg, 1886. (93 stranicy teksta i prilozhenij) 68. Maksin IN (1909) Ocherk razvitiya promyshlennogo obrazovaniya v Rossii. St. Petersburg 69. Trudy vserossijskogo torgovo-promyshlennogo s”ezda 1896 g. v Nizhnem Novgorode (v 6 tt.). St. Petersburg (1897) 70. Spisok lic, okonchivshih kurs v Imperatorskom Moskovskom tekhnicheskom uchilishche i byvshem remeslennom uchebnom zavedenii s oboznacheniem roda ih zanyatij/1845-1889gg/ M (1889) 71. Sostav direktorov pravleniya na 1897g. St. Petersburg (1897) 72. Torgovo-promyshlennaya Rossiya. Spravochnaya kniga dlya kupcov i fabrikantov/pod red. Blau/St. Petersburg (1899) 73. Lichnyj sostav vsekh pravlenij i otvetstvennyh agentov na 1901-1902gg. St. Petersburg (1901) 74. Trudy chlenov Russkogo tekhnicheskogo Obshchestva v Moskve 1882 g. St. Petersburg, T. 3 (1883) 75. ZHurnal “Russkaya mysl’” (1882). St. Petersburg. Kn.HI, Razdel “Vnutrennee obozrenie” 76. Promyshlennost’ i torgovlya. St. Petersburg, 1911 77. S’ezd predstavitelej promyshlennosti i torgovli (1915) Doklad soveta s’ezdov o merah k razvitiyu proizvoditel’nyh sil Rossii/Devyatyj ocherednoj s’ezd predstavitelej promyshlennosti i torgovli. Petrograd, Tipografiya P. P. Gershunina, 424s 78. Pervyj vserossijskij torgovo-promyshlennyj s”ezd v Moskve. 19–22 marta 1917 goda (1918) Stenograficheskij otchet i rezolyucii. Moscow (http://library6.com/3596/item/408773) 79. Golosenko IA (1984) Empiricheskie issledovaniya rabochego klassa v russkoj nemarksistskoj sociologii nachala XX v. Sociologicheskie issledovaniya, Moscow, №2, aprel’-maj-iyun’, s 163–168 80. Bervi-Flerovskij Vas (1869) Polozhenie rabochego klassa v Rossii. St. Petersburg, Izdanie N. P.Polyakova, 494 s 81. Svyatlovskij VV (1889) Fabrichnyj rabochij. Materialy dlya medicinskoj geografii i statistiki Rossii. Dissertaciya na stepen’ doktora mediciny. Varshava: tip. Varsh. in-ta gluhonemyh, 272 s 82. Dement’ev EM (1893) Fabrika, chto ona daet naseleniyu i chto ona u nego beret. M., Tipolitografiya T-va I.N.Kushnerev i Ko. (V Prilozhenii bolee 1500 istochnikov – monografij, statej, otchetov inspektorov) 83. YAnzhul IA Ocherki i issledovaniya. Sbornik statej po voprosam narodnogo hozyajstva, politiki, zakonodatels’tva. V 2h tomah. Moskva, 1984 g 84. Kollontaj AM (1906) ZHizn’ finlyandskih rabochih. St. Petersburg

406

5 Management Thought in Russia in 1800–1917

85. Naumov G (1914) Byudzhety rabochih Kieva. Kiev; Poplavskij IA (1914) O vliyanii zhilishch na zabolevaemost’ i smertnost’ rabochih. Moscow; Prokopovich S (1909) Byudzhety peterburgskih rabochih. St. Petersburg; Timofeev P (1906) CHem zhivet zavodskoj rabochij. St. Petersburg; Feyanberg L (1913) ZHilishche bakinskih neftepromyshlennyh rabochih (po dannym ankety professional’nogo obshchestva rabochih). Baku; SHilov A (1916) Bakinskaya i peterburgskaya anketa o zarabotkah rabochih i ih raskhodah na alkogol’. Moscow 86. Materialy ob ekonomicheskom polozhenii i professional’noj organizacii peterburgskih rabochih po metallu. St. Petersburg, 1903; Larin YU (1909) Rabochie neftyanogo dela. Moscow; Savickij A, SHer K (1912) Ocherk polozheniya rabochih pechatnogo dela v Moskve. Moscow; Pankin A (1909) Organizaciya promyshlennyh predpriyatij i sistemy zarabotnoj platy. Zap. russkogo tekhnicheskogo obshchestva, № 2–3; Polyakov R (1914) Nastoyashchee polozhenie voprosa o primenenii sistemy Tejlora. Byul. politekhnicheskogo obshchestva, № 6 87. Pozhitkov K (1906) Polozhenie rabochego klassa v Rossii. St. Petersburg 88. Delevskij YU. O formah otnositel’noj solidarnosti mezhdu rabochimi i predprinimatelyami (kollektivnyj dogovor i klassovaya bor’ba). Sev. zapiski, 1914, № 3; 1915, № 9–10 89. Pokrovskij P (1913) Kak zhivet doneckij shahter. Russkoe bogatstvo, № 12, s 257 90. Leont’ev V (1912) Ob izuchenii polozheniya rabochih. Priemy issledovaniya i materialy. St. Petersburg, s 19–20 91. Time IA (1870) Soprotivlenie metallov i dereva rezan’yu. Sankt-Peterburg: Gornyj uchebnyj komitet 92. Time IA (1872) Teoriya i postroenie zhelezoprokatnyh mashin. Sankt-Peterburg 93. Time IA (1877) Memuar o stroganii metallov. Gornyj zhurnal, S.Peterburg, ss 1–15 94. Time IA (1879) Gornozavodskaya mekhanika. Spravochnaya kniga dlya gornyh inzhenerov i tekhnikov po gornoj chasti, St. Petersburg 95. Time IA (1883) Indikatornye opyty nad prokatkoj stal’nyh rel’sov na Putilovskom zavode, St. In: Petersburg 96. Time IA. Osnovy mashinostroeniya. Organizaciya mashinostroitel’nyh fabrik v tekhnicheskom i ekonomicheskom otnosheniyah i proizvodstvo mekhanicheskih rabot. V 2-h tt. Sankt-Peterburg: Tip. i hromolit. A. Transhelya, 1883–1885 97. Time IA. Prakticheskij kurs parovyh mashin. V 2h tomah. St. Petersburg: Tip. i hromolit. A. Transhelya, 1886–1887 98. Time IA (1889) Ocherki sovremennogo sostoyaniya gornozavodskogo dela v Doneckom bassejne. Gorn. zhurn. T. 1 99. Time IA. Besshumnoe neftyanoe otoplenie – privilegiya “Tenteleva”. Gornyj zhurnal 1894 g., № 11,.cc. 78–94 100. Time IA. Kurs gidravliki. V 2h tomah. St. Petersburg, 1891–1894 gg. 101. Taylor FW (1903) Shop management. Trans Am Soc Mech Eng 24:1337–1480 102. Taylor FW (1911) The principles of scientific management. Harper & Brothers, New York 103. Kerzhencev PM (1923) Pamyatka organizatora. Krasnaya nov, Moscow 104. Polyakov R (1914) Nastoyashchee polozhenie voprosa o primenenii sistemy Tejlora. Byulleteni Politekhnicheskogo obshchestva, № 7, ss 345–358 105. CHto chitat’ po nauchnoj organizacii truda/I.N. YAnzhul, E.G.Liberman (1925) [predisl. F.R. Dunaevskogo]. [Har’kov]: Proletarij. 224 s. Okolo 700 nazvanij. http://books.eheritage.ru/book/10071145 106. Golosenko Igor’ A (1991) Idei F. Tejlora v dorevolyucionnoj Rossii. Sociologicheskie issledovaniya (10):64–72 107. Korickij EB (2005) Razvitie nauki o menedzhmente v Rossii v1900–1950-e. Rossijskij zhurnal menedzhmenta, Tom 3, № 1, S 127–144 108. Dmitriev AL, Semenov AA (2007) Tejlorizm i nauchnye sistemy upravleniya v rossijskoj pechati nachala XX v. V kn.: Dmitriev AL, Semenov AA (red.) Ocherki istorii rossijskih firm: voprosy sobstvennosti, upravleniya, hozyajstvovaniya. Izd. dom SPbGU, St. Petersburg

References

407

109. Semenov AA (2010) Poyavlenie sistem nauchnogo menedzhmenta v Rossii. Nauchnye doklady, № 6 (R). SPb VSHM SPbGU 110. Dmitriev AL, Semenov AA (2011) Ivan Aleksandrovich Semenov – peterburgskij predprinimatel’-tejlorist. Rossijskij zhurnal menedzhmenta 9(2):109–124 111. Dmitriev AL, Semenov AA (2012) Pervye shagi amerikanskoj sistemy nauchnogo menedzhmenta v dorevolyucionnoj Rossii. Vestnik S.-Peterburgskogo universiteta. Ser. Menedzhment. Vyp. 2, ss 131–155; Dmitriev AL, Savvin NN (2014) i stanovlenie tejlorizma v Rossii. Rossijskij zhurnal menedzhmenta Tom 12, № 3, ss 131–148 112. Dmitriev AL, Savvin NN (2014) i stanovlenie tejlorizma v Rossii. Rossijskij zhurnal menedzhmenta. Tom 12, № 3, ss 131–148 113. Savvin NN (1906) Tekhnologiya metallov: lekcii, chitannye v 1906 g. na tekhnicheskih otdeleniyah SPb. Politekhnicheskogo in-ta N.N.Savvinym. Sankt-Peterburgskij politekhnicheskij institut, Kassa vzaimopomoshchi. Lit. I.Trofimova, St. Petersburg 114. Savvin NN (1908) Mekhanicheskaya tekhnologiya: kurs, chitannyj v 1907/8 g. na tekhnicheskih otdeleniyah SPb. Politekhnicheskogo instituta. CH. 1–3. Tipo-lit. I. Trofimova, St. Petersburg 115. Savvin NN (1905) Bystrorezhushchaya instrumental’naya stal’. Izvestiya Sankt-Peterburgskogo politekhnicheskogo instituta. St. Petersburg, № 4 (1–2):245–262 116. Savvin NN (1908) O soprotivlenii metallov rezaniyu na tokarnom i strogal’nom stankah. Opytnoe issledovanie zavisimosti mezhdu razmerami struzhki i davleniem na rezec. Tipo-lit. SHredera, St. Petersburg 117. Savvin NN (1910) Teplota rezaniya: Opytnoe issledovanie. St. Petersburg 118. Savvin NN (1911) Ohlazhdenie rezca. Eksperimental’noe issledovanie smazochno-ohlazhdayushchih zhidkostej. Iz mekhanicheskih masterskih SPb. Politekhnicheskogo instituta. Izvestiya Sankt-Peterburgskogo politekhnicheskogo instituta, St. Petersburg, № 15, ss 587–711 119. Savvin NN (1913) K voprosu o potreblenii metalla i metallicheskih izdelij v Rossii. Vestnik Obshchestva tekhnologov, № 11, ss 356–358 120. Savvin NN (1914) Ispytanie stankov. Vestnik Obshchestva tekhnologov, № 4,6,7,8,10,11 121. Savvin NN (1915) O poshlinah na stanki po obrabotke metallov. Vestnik inzhenerov, № 1 (7), ss 269–272 122. Savvin NN (2008) Letopis’ dnej moih: vospominaniya o S.-Peterburgskom Politekhni cheskom institute dlya moih amerikanskih druzej-politekhnikov. Nestor: ezhekvartal’nyj zhurnal istorii i kul’tury Rossii i Vostochnoj Evropy, № 12, ss 175–235 123. Semenov IA (1912) Organizaciya zavodskogo hozyajstva. Referat doklada, chitannogo v Obshchestve tekhnologov inzhenerom-tekhnologom I. A. Semenovym. Zapiski Imperatorskogo russkogo tekhnicheskogo obshchestva, № 8–9, sc. 282–296 124. CHarnovskij NF (1911) Organizaciya promyshlennyh predpriyatij po obrabotke metallov. Vyp. 1. M.: tip. Rusckogo tovarishchestva-va. 110 s.: Vtoroe izd., dopoln. M.: tip. “Russkaya pechatnya” S. K. Popova, 1914, 308 s 125. Levenstern LA (1913) Nauchnye osnovy zavodoupravleniya. St. Petersburg 126. CGAOR SSSR. Fond 63, Opis’ 8, 1888 g. Delo 181, List 62 127. CGAOR SSSR. Fond DP “Obzor vazhnejshih doznanij, proizvodivshihsya v zhandarmskih upravleniyah imperii po delam o gosudarstvennyh prestupleniyah za 1888 g.”. List 11,13,90–93 128. Suhoplyuev I (1907) V.A.Gol’cev kak uchenyj. Russkaya mysl’. Moscow, № 2 129. CGIA g.Moskvy. Fond 418, Opis’ 51, Delo 7, Listy 146–149,130–141. 130. Gol’cev VA (1876) Znachenie politicheskih uchenij. Neskol’ko zamechanij. ZH-l YUridicheskij vestnik, T.1, ss 125–135 131. Gol’cev V (1880) Uchenie ob upravlenii (zadachi i metody). Probnaya lekciya, chitannaya v Imperatorskom Moskovskom universitete. YUridicheskij vestnik. St. Petersburg, № 6, ss 253–278

408

5 Management Thought in Russia in 1800–1917

132. Gol’cev V (1883) K voprosu ob opredelenii “ucheniya ob upravlenii”. YUridicheskij vestnik. St. Petersburg, № 2 133. Gol’cev V (1882) Gosudarstvo i samoupravlenie. Istoriko-yuridicheskie ocherki. Moskva, Tipografiya I.N. Kushnerev i K
, 44 s 134. Gol’cev V (1885) Samoupravlenie i decentralizaciya. ZHurnal YUridicheskij vestnik. Moscow, № 2, ss 269–274 135. Gol’cev VA (1885) Dvizhenie russkoj ekonomicheskoj nauki. ZHurnal Russkaya mysl’, № 3 136. Gol’cev VA (1896) Ob ekonomicheskom materializme. ZHurnal Russkaya mysl’, № 4 137. Gol’cev VA (1914) Arhiv V.A.Gol’ceva (pis’ma). Moscow 138. Ivanovskij V (1883) Vstupitel’naya lekciya v kurs ucheniya o vnutrennem upravlenii. Kazan’ 139. Ivanovskij VV (1899) Voprosy gosudarstvovedeniya, sociologii, politiki. Kazan’ 140. Ivanovskij VV (1885) Russkoe gosudarstvennoe pravo. Kazan’ 141. Ivanovskij V (1904) Uchebnik administrativnogo prava. Kazan’ 142. Pihno DI (1874) Istoricheskij ocherk mer grazhdanskih vzyskanij po russkomu pravu. Universitetskie izvestiya. Kiev, № 8–10 143. Bunge NH (1870) Policejskoe pravo. Kiev, 1873–1877. Osnovaniya politicheskoj ekonomii. Kiev 144. Organizaciya upravleniya obshchestvennym proizvodstvom (1984) Uchebnik/Pod redakciej G.H.Popova i YU.I.Krasnopoyasa. Izd-vo Moskovskogo universiteta, Moscow 145. Pihno DI (1885) Torgovo-promyshlennye stachki. Universitetskaya tipografiya, Kiev 146. Porter M (1993) Mezhdunarodnaya konkurenciya. Mezhdunarodnye otnosheniya, Moscow 147. Glinskij B (1915) Istoricheskij vestnik, T.140, № 7 148. Vitte S, Yu. O polozhenii nashej promyshlennosti. Dokladnaya zapiska Vitte Nikolayu II, Fevral’, 1900g. ZHurnal Istorik-marksist, 1935 g., № 2–3 149. Vitte S, Yu (1960) Vospominaniya (v 3h tt.). Izd-vo social’no-ekonomicheskoj literatury, Moscow 150. Laverychev V.YA (1974) Krupnaya burzhuaziya v poreformennoj Rossii. Moscow 151. Krizis samoderzhaviya v Rossii. 1895-1917, Leningrad, Nauka, 1984 152. Zajonchkovskij PA. Istoriya dorevolyucionnoj Rossii v dnevnikah i vospominaniyah (v 13 tt). Kniga, Moscow, 1976–1989, T.4, CH.1 153. Mendeleev DI. Pis’ma o zavodah. ZHurnal Nov’. 1885. № 10. ss 230–254; № 21. ss 34–58; 1886. № 1. ss 37–62 154. Mendeleev DI (1892) Tolkovyj tarif ili Issledovanie o razvitii promyshlennosti Rossii v svyazi s eyo obshchim tamozhennym tarifom 1891 goda. Sankt-Peterburg: Tip. V. Demakova 155. Mendeleev DI (1897) Osnovy fabrichno-zavodskoj promyshlennosti. Vyp.1. Izdanie D. Mendeleeva, Sankt-Peterburg 156. Mendeleev DI. Uchenie o promyshlennosti. 1900—1901. T. 1, CH.1. Sankt-Peterburg: tip. AO Brokgauz-Efron, 1–5 paragrafy. – 1900; 6–9 paragrafy. – 1901 157. ZHurnal “Tekhnicheskoe i kommercheskoe obrazovanie”. St. Petersburg, 1892, g. i dalee 158. Plekhanov GV. “Ob chem spor?” (1878 g.), “Zakon ekonomicheskogo razvitiya obshchestva i zadachi socializma v Rossii” (1879 g.), “Pozemel’naya obshchina i ee veroyatnoe budushchee” (1880 g.) 159. Plekhanov GV (1956) Izbrannye filosofskie proizvedeniya. V 5 tomah. Gospolitizdat, Moscow 160. Plekhanov GV (1928) Sochineniya v 24-h tomah. M.-L.: Gosizdat 161. Marshev VI (1987) Istoriya upravlencheskoj mysli. MGIAI, Moscow 162. Vladimir Il’in (1899) Ekonomicheskie etyudy i stat’i. Sankt-Peterburg, Tipolit. Lejferta, ss 227–261

Part II

New and Newest History of Management Thought

Chapter 6

Western Schools of Management of the Twentieth Century

Abstract This chapter introduces the main western schools of management of the twentieth century. In all known works in the history of public opinion, this era is referred to as the era of scientific management. The characteristics of management schools show both their continuity with the management ideas of the past and their fundamentality and paradigmality in terms of future theories and concepts of management. The objects of comparative analysis are both the creators of new concepts, theories, and even schools of management (F. Taylor, A. Fayol, E. Mayo, G. Minzberg, etc.), and the axiomatics and results of the schools of management themselves (the school of “scientific management,” administrative school, school of human relations, the roles of managers, etc.).

Instead of an Introduction Let’s name the period of history of management thought (HMT) covering the entire twentieth century and the first years of the twenty-first century the New and contemporary history of management thought. This period is characterized by the fact that, for the greater part of it, in the world of science and applied developments there were two major centers. One was (and still is “based”) in the USA and “served” a capitalist economy, searching for models of efficient management of organizations in a market system, thus creating the so-called Western managerial thought. The second center—the Center for Eastern Management thought—was established shortly after the American, was situated in the USSR until the late 1990s, and served the management of the socialist economy which had been transformed since the early 1990s into a new post—Soviet model of management, largely inertial preserving the ideology of the Soviet period. Over the last 100 years, managerial thought had given rise to such a number of concepts, theories, science schools, which had not been created by the whole world scientific thought throughout the entire previous period of human existence. Perhaps the breakthrough was made because the world management thought by the beginning of the twentieth century had accumulated such an enormous legacy that expected a successful and new combination of the accumulated achievements in management and other sciences and the already existing research tools together with the exertion of initiative behalf researchers to meet the new challenges of © Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_6

411

412

6 Western Schools of Management of the Twentieth Century

management. After all, we owe the emergence of new scientific directions in the field of management—historical and management studies—to particularly this state and level of maturity of the management as Science and practice. Since the ideology of science, its goals and purpose, and also the methodology of research in the two world management research centers varied considerably, we presented the material on new history of Western and Eastern thought of the twentieth century separately. This does not mean that the development of management thought occurred independently from one another, that there was no communication or exchange of views between management researchers and practitioners, that there was no interaction and effective “study and use of foremost foreign experience” (which is now referred to as “benchmarking” in scientific literature). This was, of course, from the major joint scientific research programs to the “critique of foreign experience” and mutual “snorting” in scientific literature, including at conferences and in scientific literature [1, 2]. But there were so many different things that it predetermined the structure of the material’s composition. Some differences in understanding basic concepts—“organization,” “management,” “history of management,” “history of management thought”—were discussed in Chap. 1. Once again, we consider the Russian word for “upravlenie” as a translation of the English word “management,” and in the sense of the term “management” is understood as a professional activity, the definition of which is given in Chap. 1. At the same time, one common feature of the methodologies of both studies in both of the mentioned centers should be noted—the organization and conduct of targeted large-scale experiments in the field of production management (state, private or public), generated by the relationships between the participants in the management processes of organizations, which were inherently social and therefore contained elements that were difficult to measure in their subject area. In general, the entire twentieth century is similar to the multifaced field of social experiments, part of which were purely scientific (with careful preparation and at the scale of “factory laboratories”), and part—strictly applied (without special preparation, but at the scale of entire countries). Both in the first and second direction, a great variety of experiences are accumulated, which remain to be explored for a long time by common efforts of scientists from around the world. In any case, there is great hope that contemporary history, including the recent history of managerial thought, is shaping conditions for a more fruitful rapprochement of the regional centers for scientific and applied research that emerged in world management thought over the past century. In contrast to Russia, where at the beginning of the 1900s, there were no public organizations in the field of management, in the United States in 1915 the Taylor Society was created, which began to publish the Scientific Office Management bulletin, which actively contributed to the acceleration of scientific and technological progress in different countries of the world. The end of the First World War in 1918 strengthened the trend of cooperation in scientific research on management issues, contributed to the formation of “international platforms” for scientists and management practitioners, including in the form of holding international conferences and congresses on the problems of managing

6 Western Schools of Management of the Twentieth Century

413

organizations. In 1922, France hosted the First International Conference on the “Welfare” of Industrial Workers, convened by the International Union to study and improve human relations and working conditions in industry. In 1923, the first meeting on the normalization of production took place in Bern (Switzerland). In 1924, the First International Congress on Management was held in Prague, in which the delegation from the Soviet Republic took part. In 1925, the Second International Congress on Management was held in Brussels. In the same 1925, in Vlissingen (Holland), the First Congress of the International Union was held to study and improve human relations and working conditions in industry, which united the efforts of 18 countries. Let us single out the themes of the reports read at the congress: “On the various types of nervous workers,” “On the need to select workers not only according to their abilities, but also by temperament”. According to the author of last report, workers of the same temperament should be selected to work together; it is also necessary to take into account the selection of temperaments between superiors and subordinates: if the director is hot and quick-tempered, then his secretary should be of a meek disposition, etc.”1 One of the forms of communication between management researchers and practitioners, the exchange of scientific achievements and discussion of pressing management problems has become the Academy of Management (AOM), established in the United States in 1940. Briefly, the history of AOM looks like this. On November 2, 1936, Professors Charles L. Jamison of the University of Michigan and William N. Mitchell of the University of Chicago sent letters to teachers of management courses, in which they invited them to a meeting at the Quadrangle Club, University of Chicago, to discuss the formation of an organization of educators to advance the philosophy of management. The history of AOM looks like this. The participants in the initiative meeting on December 28, 1936 agreed that the new organization should be called the Academy of Management (AOM) and whose mission will be to support research in the field of management as an academic (rather than practical) organization. They decided that they would hold annual AOM meetings and use these meetings to present and discuss scientific reports on management issues. AOM holds conferences annually (usually for 5–6 days in the month of August), with the exception of emergency situations. So, the AOM conferences did not take place during the Second World War. Scheduled for August 2020, the 80th AOM conference was also not held offline due to the occurrence of COVID-19 (or coronavirus) disease in the world, but was held online. Since its beginning in 1936, AOM has evolved from an organization of 10 members to an organization of over 19,000 members from nearly 120 nations. Today, AOM’s 26 professional divisions and interest groups promote excellence in established management disciplines. Among the divisions there are two that are directly related to the subject area of our textbook: “History of Management” and

1 Quoted from the report of Andrey D. Kuzmichev at the 4th International Conference on the History of Management Thought and Business [3].

414

6 Western Schools of Management of the Twentieth Century

“Theory of Organization and Management”. AOM publishes the latest research results on its website aom.org and in the pages of its numerous journals [2]. This chapter will describe “Western” schools and concepts of governance that emerged from the early 1900s and developed up to the late 1990s. During this period there were several paradigmatic scientific in the new history of Western management thought, many different theoretical schools of management had emerged, with their founders, leaders, followers, publications, and opponents. The dates of their appearance are usually found in the publications of the founders of schools. In 1903, and then in 1911 the first was “School of Scientific Management” [4], the representatives of which, led by F. Taylor, carried out special experiments in the field of production management and organization of labor. Then in 1916 came the Henri Fayol’s “Administrative School of Management,” which resulted in the principles and functions of administrative management [5]. Together, both schools are called the “Classical School of Management.” In 1933, the results of a unique sociomanagerial experiment lasting since 1926 were published, which signaled the emergence of an entirely new concept of management and its developers, the “School of Human Relations” [6–14]. Further emergence of the schools followed in this order: in 1950, it appeared with a triple title, “Empirical School,” “Managerism” or “Management science” [15–18]. Judging by the English name and statements of the founders of the school, it did not claim to replace the “School of Scientific Management,” but rather to the original position as a general management science, or at least the scientific synthesis of previous schools, based on the methodology and empirical research. Empirics were complemented with new scientific ideas by the “School of Social and Socio-technical Systems,” which was based on a common system theory and a systematic approach to research. The school also dealt with the issues of making rational and irrational decisions by man. Advances in areas of cybernetics, computer electronics, and economic and mathematical modeling, as well as the “Operation study” ideology and tools remaining from the military years, had led to the emergence of the “new management school.” Sooner or later, the number of accumulated scientific schools of management, often resembling a “jungle in Management science” [19, 20], had to lead to a qualitative leap. Formally this occurred in 1971, when Robert Mockler’s article “Situational Theory of Management” [21] appeared in the famous HBR magazine encouraging scientists not so much to abandon abstract thinking and formalized research tools, but to increase the attention of researchers to the external environment of the organization, to the analysis of specific management activities (context), and, on that basis, to the development of results-based management practice recommendations. Actually, the call to take into account the external environment and specific situations was proclaimed earlier, but the authorship of the term has been secured by R. Mockler. In the same chapter, we decided to acquaint the reader with the fundamental social and psychological foundations of management, developed in the twentieth century, more precisely, with the substantive and process theories of motivation, in many respects explaining the natural and acquired needs of individuals, their needs to create social organizations and, as a result,—actualizing the internal

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

415

organizational behavior of the members of organizations and “behavior” of the organizations themselves [22–42], as well as with the development of views on the roles of managers [43–58]. The main data sources in which these schools, concepts and approaches are presented were original works of the authors of these schools (see papers [4– 114]), research of historians of production management and history of management thought, philosophers, sociologists and psychologists [70, 115–130], works of international conferences held in the United States and Russia [1, 2], research of the author textbook [131–133], articles on HMT published in special journals [134– 136]. Let’s describe the main characteristics of the above-mentioned schools of scientific management.

6.1

Frederick Taylor’s School of Scientific Management and His “Followers”

It is time to become acquainted with the person who we mentioned several times. It is Frederick Taylor, whose name is always associated with the words “scientific management,” although in Chap. 3 we spoke of the first attempts to organize and carry out special scientific experiments to solve the problems of governance. Nevertheless, the merit of Taylor and his team, in the face of the Henry Gantt, Walter Polyakov, the Gilbreth spouses, Maurice Cook, Wallace Clark, and many others, is that they not only reasoned on the benefits of science in government, but actually pursued the scientific approach by conducting management experiments and systematizing the methods and results of these experiments. Starting with Taylor, the subject of scientific methods has never been more relevant to management practice. The quotes in the word “followers” in the title of this paragraph of the tutorial are caused by the fact that quite a large number of famous supporters and like-minded supporters of F. Taylor, members of the Taylor Society, as their own development and understanding of the essence of “governance” went on, turned into its scientific competitors, interpreting the “scientificness” of management in their own way. At least, these should include Henry Gantt, Walter Polyakov, Leon Alford, Frank and Lilian Gilbreth, Werner Sombart. The following examples often illustrate two of the three levels of Historical and Scientific Research (HSR) and/or key factors in the development of management thought (sometimes paradigmatic development)—it is “filiation of ideas” and “the history of relations within the scientific community, the relationship between members of the scientific community, the development of the scientific community,” mentioned in clauses 1.4 and 1.5 of our Tutorial. Frederick Taylor was born in Philadelphia in 1856. He was lucky to be born in a relatively wealthy family and had enough leisure time to think about factories situated around. Taylor was born in a family of a lawyer, he studied in France and Germany, and enrolled in Harvard Law School in 1874, but due to deterioration of

416

6 Western Schools of Management of the Twentieth Century

sight he was unable to continue his studies and became a press worker in the workshops of the hydraulic factory in Philadelphia and then grew to become a driver at the same enterprise. In 1878, Taylor went to work at the Midwell Steel Company, initially as a general worker, then a gage maker and mechanic, and from 1882 to 1883—head of the mechanical workshops. During his last work, he demonstrated incredible creative activity in studying mechanics by taking evening courses and at home, in 1883, he received a higher technical education and a diploma in mechanical engineering at the Stevens Institute of Technology. In 1884, Taylor became the company’s chief engineer, and in the same year, for the first time, he used a system of differential payment at the company, and from 1895 Taylor began to carry out regular, now famous experiments on scientific organization of labor. During those years, he has filed some 100 patents for various inventions.2 From 1890 to 1893, he held the position of Chief manager of a manufacturing investment company in Philadelphia, became the owner of paper presses in Maine and Wisconsin, organized his own management consulting business, perhaps the first in the history of management. In 1906 he became president of the American Society of Mechanical Engineers, and in 1911 he established the Society for promotion of scientific management, which, after his death in 1915, became known as the Taylor Society. Certain fundamental points of his position must be taken into account in order to assess the value of science in Taylor’s system. First, Taylor believed that the legitimacy of management was based on its ability to maximize the welfare of both employers and staff. This, he believed, was necessary for success, since personal interest of both groups has a mutually stimulating effect. In the long run, you can’t have one without another. But if workers are expected to demonstrate maximum productivity, they must do the best they can, and this requires managers to subject the working process to a scientific study and to teach workers the best ways of doing the job. Although Taylor argued that the interests of employees and employers were interrelated, he remained a realist. He knew that many years of doing work in the same old way make change very difficult. Workers often believe that it is in their interest to stall work, that is, to work at a pace far from optimal, and that the management systems in existence at that time actually acted for the benefit of such workers. The methods used to perform most of the working operations were based on inefficient empirical rules rather than on science-based methods. The most effective systems for management in Taylor’s time, or the “most perfect type of good management,” were those that included reward for the highest performance. Taylor called it management for initiative and encouragement. The problem with these systems was that the responsibility for work was almost exclusively on the employee. But Taylor believed that managers should share this

2

In the same years, Frederick Taylor was actively involved in tennis, and in 1881 he even won the First U.S. Championship in doubles, paired with Clark Clarensham, husband of Frederick’s sister. U.S. Championship in doubles, paired with Clark Clarence, husband of Frederick’s sister.

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

417

responsibility. Managers would have to collect, integrate into tables and classify information and, using scientific methods, to put it into principles, rules, laws, and formulas that compiled all the experience accumulated by workers and could be used as a guide to achieve better results in performing daily assignments. The practical rules and regulations resulting from the application of management could be taught to workers, and besides, certain measures should be taken to guarantee compliance with the relevant principles. Taylor’s system required managers to perform new, vital, and highly needed tasks. Their duties included the scientific development of all elements of human labor and the replacement of outdated rules of an empirical nature. In this process, they should, using scientific approaches, select, train, and upgrade the skills of workers with the goal of maximizing their potential. A crucial element of this development process had been the preparation of each worker in an appropriate way to perform a variety of assignments. Taylor was in favor of a scientific approach to the problem of productivity, since he had a high opinion of its impact on industrial efficiency. He was also aware of the danger that mechanical application of science might entail. He emphasized that the “mechanisms” of scientific management should in no way crowd out its philosophy. The philosophy was a scientific position which, as a prerequisite, included data collection, processing, and application of scientific knowledge to the problems of industrial society. The mechanism was meant to be a set of technical strategies such as timing, the brigade-type method, working transaction maps, differentiation of piecework rates of pay, and cost-accounting systems. Those were nothing more than mechanical techniques. However, scientific management was a sort of an “intellectual revolution” that promoted new methods of managing labor processes. In one of Taylor’s first articles “Shop Management” (his report to the American Society of Mechanical Engineers in June 1903) [4, 1], it was specifically about techniques or mechanisms for increasing labor productivity. The purpose of writing another work, “Principles of Scientific Management” (1911) [4, 2], which in many respects coincides in the text with the previous article, was to outline the main provisions of management that the “intellectual revolution” needed. Taylor thus formulated the three goals of the second work: First. To point out, through a series of simple illustrations, the great loss which the whole country is suffering through inefficiency in almost all of our daily acts. Second. To try to convince the reader that the remedy for this inefficiency lies in systematic management, rather than in searching for some unusual or extraordinary man. Third. To prove that the best management is a true science, resting upon clearly defined laws, rules, and principles, as a foundation [4, 2, p.4].

Taylor considered the use of scientific methods as the most important condition for the development of production management: “Genuine science, i.e. the one that indicates the path to full-fledged professional practice is more than technical methods, formulas and laws.” However, Taylor himself evaluated the scientific significance of formulas and technical methods in production management: “the development of the science involves the establishment of many rules, laws, and formulas which replace the judgment of the individual workman (emphasized by

418

6 Western Schools of Management of the Twentieth Century

us—M.V.) and which can be effectively used only after having been systematically recorded, indexed, etc.” [4, 2, p.31]. Taylor understood that for the wide practical dissemination of his system of increasing labor productivity, evidence of its successful application was needed, and he provided convincing data in support of his system. As he noted in the reports of the Bethlehem Steel Company, his observations, research, and rationalization of the processes for loading pig-iron blankets made it possible to increase labor productivity by almost 400%, while wages increased by only 60% [4, 2, pp.33–40]. Assessing the overall contribution of F. Taylor to the development of management thought, we note that in all his works “Shop Management” [4, 1] and “The Principles of Scientific Management” [4, 2] this is essentially not about “the science of management of the organization as a whole” (reflecting the management of dozens of functional of organization, as stated in Chap. 1 of the tutorial), and not even about “scientific management of an organization” (with the science of management at its basis), but only about management of one though paramount, key functionality of the organization—production,3 or “production management” implemented by the administration and workmen. The equally important issues of the separation of managerial and production labor and the management of key functionalities such as purchases, sales, after-sales services, finance, accounting, and logistics, which were considered before Taylor in English treatises, for example, Charles Babbage “On the Economy of Machinery and Manufactures” (1832) and Andrew Ure, “Philosophy of Production” (1835), mentioned in the Chap. 4 of the textbook. To illustrate our assessment of the “scientific nature of Taylorism,” we will give the wording of paragraphs of Chap. 2 of F. Taylor’s major work “Principles of Scientific Management,” set out on 128 pages (in Russian translation): CHAPTER 2. FOUNDATIONS OF SCIENTIFIC MANAGEMENT §6. The best type of conventional management. §7. Four main features of the scientific management organization. §8. The first example of application of scientific management organization: transfer of cast iron in bolvanes. §9. Continuation of the first example: the science of carrying cast iron dumps; the basic law of physical endurance. §10. The second example of application of scientific management organization: working with a shovel. §11. The third example of application of scientific management organization: brick laying. §12. The fourth example of application of scientific management organization: sorting bicycle balls. §13. Fifth example: application of scientific management organization to complex types of mechanical production—manufacture of machine parts. §14. Continuation of the fifth example: the art of cutting metals. §15. General elements of the mechanism of scientific management and the main methods of its implementation. §17. Scientific management ensures fair interests of both workers and entrepreneurs and benefits the nation as a whole [4, 2, pp.1–2].

3

Read—“labor”.

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

419

Moreover, all the examples are carried out by Taylor and given in paragraphs 8–14 of his treatise to confirm the main idea: “The most experienced directors . . .recognize the task before them as that of inducing each workman (highlighted by us—M.V.) to use his best endeavors, his hardest work, all his traditional knowledge, his skill, his ingenuity, and his good-will—in a word, his “initiative,” so as to yield the largest possible return to his employer. The problem before the management, then, may be briefly said to be that of obtaining the best of every workman” [4, 2, p.26]. At the same time, everywhere in the treatise, there is a separation of personalities and labor—administrators (“warders”) and workers. One day, abruptly and roughly speaking with one of the employees of the Bethlehem Steel Company named Schmidt about the increase in the volume of pig-iron ingots transported, Taylor “self-critically” expressed himself in the treatise as follows: “This seems to be rather rough talk. And indeed it would be if applied to an educated mechanic, or even an educated laborer. With a man of the mentally sluggish type of Schmidt it is appropriate and not unkind, since it is appropriate in fixing his attention on the high wages which he wants and away from what, if it were called to his attention, he would possibly consider impossibly hard work” [4, 2, pp.38–39]. And hence his presentation of “the image of the worker, suitable for handling pig-iron ingots”: “Now one of the very first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox than any other type (emphasized by us— M.). The man who is mentally alert and intelligent is for this very reason entirely unsuited to what would, for him, be grinding monotony of work of this character. Therefore the workman who is best suited for to handling pig iron is unable to understand the real science of doing this class of work. He is so stupid that the word ‘percentage’ has no meaning to him (emphasis added by us—M.V.), and he must consequently be trained by a man more intelligent than himself into the habit of working in accordance with the laws of this science before he can be successful” [4, 2, pp.49–50]. And in a couple of pages, “he was a man so stupid that he was unfitted to do most kinds of laboring work, even. The selection of the man, then, does not involve finding some extraordinary individual, but merely picking out from among very ordinary men the few who are especially suited to this type of work” [4, 2, p.52]. Nevertheless, it should be noted that in this treatise F. Taylor touched upon certain functions of production management—goal-setting, planning, stewardship, motivation, accounting, analysis, control. Here is his words about planning work: “the most prominent single element in modern scientific management is the task idea. The work of every workman is fully planned out by the management at least one day in advance, and each man receives in most cases complete written instructions, describing in detail the task which he is to accomplish, as well as the means to be used in doing the work. And the work planned in advance in this way constitutes a task which is to be solved, as explained above, not by the workman alone, but in almost all cases by the joint effort of the workman and the management.” [4, 2, p.32].

420

6 Western Schools of Management of the Twentieth Century

But at the same time, he expressed himself about “scientific” methods of execution of plans as follows: “close, intimate, personal cooperation between the management and the workman is of the essence of the modern scientific organization of production supervision (highlighted by us—M.V.)” [4, 2, p.21]. Taylor was not the only one to advocate for the application of science to management issues. He had many diligent followers, but few were loyal to him more than Henry L. Gantt, born five years after his mentor. Henry Gantt grew up in a completely different environment than Taylor. The Gantt family owned a plantation in Maryland, but lost its fortune as a result of the civil war. Although Henry was later able to go to attend John Hopkins College, his childhood was quite rough. He only knew a few things of what is called “good life,” which was better known to Taylor. After graduating from the Stevens Institute of Mechanical Engineering, he became Assistant Chief Engineer (to F. Taylor) at the Midwell Steel Company. Gantt and Taylor successfully cooperated in their young years and together received six patents. Their activities were so successful that Gantt followed Taylor to the same company as to where Taylor switched his job. Just like Taylor, Gantt opened his own consulting firm and implemented several projects, which made him widely known. In the last publication of Gantt, the scientific method in management was not as important a topic as it was in his early work. In the book “Work, Wages and Profits” (1910) [64], the first chapter was focused on the importance of the role of science for management of people. According to Gantt, in order to achieve a high level of productive efficiency, managers must undergo every detail of the labor process with the same thorough analysis as chemists and biologists. His presentation of a precise scientific analysis of managerial issues will always unmistakably show the possibilities for improvement in working methods that were not previously anticipated. Gantt considered that there was no other way to develop general laws except through scientific analysis, and there was ample evidence of the applicability of such an analysis of work and labor. As Gantt argued, it is necessary to eliminate all risks and accidents in order to optimize management. Prosperity in management is the successful achievement of the goals by applying the knowledge gained from scientific analysis. He made it clear that the legitimacy of management was based in no small measure on the achievement of high results with the aid of scientific methods. This requires applied research on production issues, which leads to practical research into the rank of “pure” forms of scientific argumentation. Of particular interest is the way in which Gantt perceived the idea of analysis and synthesis proposed by Frank and Lillian Gilbreth. He supported the idea of examining complex operations by breaking them down into simple components and studying each one (analysis). Once the analysis of all the elements is complete, the complex is rebuilt by consistently summing up the simple components (synthesis) until the most efficient form of the complex operation is found and applied. Gantt argued that seeking to replace an intuitive opinion with scientific knowledge was the true meaning, or spirit, of scientific management. In his insight, we could pitch upon a more acceptable expression, such as “the scientific method applied to management.” Taylor’s system was built on the application of science

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

421

to production issues, and Gantt accepted almost all of Taylor’s ideas, except for his system of remuneration. He developed his own system of jobs and bonuses, in which workers received a bonus in addition to their regular daily pay if they followed their instructions and completed their assignment within the prescribed time. The masters also received bonuses together with their workers, and besides, remuneration was provided for rationalization proposals which lead to higher productivity. This system of jobs and bonuses showed a great deal of concern for workers than was envisaged by Taylor’s system, and his article entitled “Training workmen in habits of industry and cooperation” [65] was welcomed by many specialists for distinctive penetration into the humanistic aspects of management and labor. In this article, Gantt noted that with the formation of industrial labor skills, the task of acquiring knowledge and qualifications by workers is greatly simplified. It becomes possible not only to improve their productive abilities, but also to develop an effective system of cooperation with the owners. G. Gantt became world-renowned for the rather simple scheme of accounting and production planning he developed, known as Gantt Charts (or Maps). In the development of the Chart he was assisted by his colleague—the Russian Walter Polyakov. This graphic method is so simple that one can quite believe Gantt when he writes in “Organization of Labor” [66] that a worker said to him: “If we could put everything on a card, as we do here, then anyone could run a factory.” Due to the simplicity of this method, it is not a mysterious tool in the hands of a rationalist, which is understood by neither the administration of the enterprise nor the workers, but rather a practical and convenient way of accounting and planning, which does not require any rationalization exercise. As engineer, Gantt did intentionally deal with these economic and organizational problems, over which little thought had been given by former engineers. “We should not forget,—writes Gantt,—that an engineer has to deal with two different tasks. First, to build machines and then work with them. Before it was given mainly to the first task. This was the natural result of the following conditions: various machines were small in number, simple and independent of each other. Now with numerous machines of all kinds the work of one of them is often closely connected with the work of another” [66 , p.24]. Generally speaking, Gantt was characterized by a certain uniqueness, which goes to some extent beyond the ideas of his mentor. This is particularly true when it comes to responsibility of the business, which, in the view of the Gantt, managers assume in relation to the worker and society as a whole. In other words, Gantt proved to be much more enlightened than Taylor in matters of individual and social well-being and understanding of the essence of ‘’management of social objects.” One of the reasons for this direction of his worldview is his personal experience. The point is, as we said, Gantt wasn’t spoiled after he was born. The civil war affected the fate of the Gantt family: prosperity had been replaced by material deprivation. Under these circumstances, Gantt came to an understanding of this aspect of work, which did not appear to have been evaluated by Taylor—the prospects for workers. It seems that Gantt had always been better aware of the worker performing his work, and for that

422

6 Western Schools of Management of the Twentieth Century

reason he had given more importance to such things as motivation, leadership, and training. The phrase: “Of all the problems of management, the most important is the problem of the human factor” belongs to him. Regardless of the importance of the views of the Gantt on workers, his ideas regarding the social responsibility of business and management were even more important. As his work was published, Gantt increasingly believed that management should focus on its “broad commitments” to society. In the last book, “Organization for Work” [66], published a few months before his death in November 1919, he wrote about “the difference in paths,” which he feared could happen if the American free enterprise system did not find any ways to reconcile profit-seeking with the welfare of society. Gantt clearly envisioned industrial companies in the form of institutions that exist for the good of society. If one day a society considers that the costs of a corporation are excessive compared to the profits, then it is possible, and even probable, that relevant sanctions will be applied. He believed that all industrial societies should distribute their income among the aggregate factors of production, with particular attention to the labor factor. Capital is only entitled to the profits it deserves. All that is more is excess profit. He was extremely concerned with the obvious desire on the part of business to make a profit over the interests of society. If the business is unaware of its social responsibility and does not dedicate itself to the service of society, then ultimately, as Gantt supposed, society would attempt to take on these functions in order to act in its own interests. In the book “Organization of labor,” G. Gantt rose to the level of broad public concerns and revealed the social responsibility of business, which can only provide its long-term perspective. He wrote that the business system must accept social responsibility and devote itself first of all to serving society, otherwise society will eventually attempt to crush it, to act freely in accordance with their own interests. Concerned about the severity of social contradictions and the strike movement, G. Gantt argued that a prerequisite for the stability of enterprises and society could be mutually beneficial relations, not conflict, and the ultimate goal of economic activity should be service, not profit. In this sense, Gantt’s particular concern was in relation to large business. He was convinced that small enterprises, by virtue of their position in a competitive market, should focus on serving clients and society, if they wanted to survive. In his understanding, as they increase in scale and begin to control more and more market share by gaining monopoly power, they are less responsive to clients’ demands and seek excess profitability through price rises. There is a need here for state intervention to regulate relations in society. Gantt respected democracy, both in government and at the workplace. To the great surprise of many of his American colleagues, he was influenced by the goals that the Government of Soviet Russia had set for itself. Many of his works were published during the 1917 revolution, and it was only natural that he was well acquainted with the economic and social philosophy that led to the overthrow of the Russian emperor. His sympathies for socialism did not inspire respect for him in the business circles in the United States and other countries [116], but that’s what allowed him to work slightly differently from Taylor. Together with the previously

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

423

mentioned Russian Walter Polyakov, G. Gantt, a year after the death of F. Taylor, demonstratively and publicly spoke at the conference of the American Society of Mechanical Engineers (ASME) against the basic provisions of Taylor’s scientific management and L. Alford’s “systematic management,” which will be discussed below. But first, a few words about V. Polyakov and his cooperation with G. Gantt. Walter Nikolaevich Polyakov was born on July 18, 1879 in Luga, Russia. He graduated from the Royal Institute of Technology in Dresden (Saxony), where he received a degree in mechanical engineering in 1902. Having returned to Moscow, in 1902 he married Antoinette Petrova, and in 1903 he attended a special course in psychology and industrial hygiene at Moscow University. From 1903 to 1906 he participated in construction and worked as an engineer at the Tula steam plant. In 1906, he emigrated to the United States with his wife. In the United States, he studied at the English Evening School and was able to find a job as an engineer at American Locomotive Company. It was here that he met the pioneer of scientific management, Henry L. Gantt and joined his consulting firm in 1910. This meeting was the most successful, because it was Gantt who became the main starting point for most of Polyakov’s career. Working at Gantt’s firm, Polyakov met Taylor, the Gilbreths, Emerson, and other famous figures of the movement of scientific management. In addition, Polyakov at the same time became a partner and consulting colleague of two other persons who will later become important persons in his future life— Charles Day and Wallace Clark. In particular, in 1912 C. Day decided to create his own consulting firm and invited Polyakov to join. W. Polyakov joined ASME and was a member of the “short-lived” American Society for the Promotion of Efficiency. In 1915 he founded his own consulting firm, joined The Taylor Society (Society to promote the science of management), where he supported the Marxist view of capitalism,. simultaneously maintaining contacts and communicating with the creators of “scientific management.” According to Daniel Wren, communication and admiration of Gantt made Polyakov a supporter of Gantt’s philosophy on the crucial role of an engineer as an industry leader [70], which was particularly evident at the 1916 ASME conference.4 At this conference, Gantt led a large fraction that, in protest of the ASME ideology preached by ASME administrator and spiritual leader Leon Alford, withdrew from the conference to hold its meeting under the auspices of the “New Machine.” About 50 members of ASME joined Gantt, declaring war on “inefficient industrial governance.” As ASME administrator Leon Alford wrote, “the goal of the “New Machine” was clear and ambitious: the “New Machine” should become an organization for the acquisition of [sic] political as well as economic power” [77 , p.264]. The fraction developed and presented two documents: one was Gantt’s call for industrial reform; the other was Polyakov’s analysis of the inefficient use of industrial resources, which led to high production costs and high prices for consumers. Gantt, Polyakov, and the others agreed that the industry should be placed under the hegemony and leadership of engineers. According to Gantt: “An engineer 4

A year after F. Taylor's death.

424

6 Western Schools of Management of the Twentieth Century

who has several opinions, many facts and many deeds, must be given economic leadership, which is his proper place in our economic system” [77 , p.296]. Continuing the illustration of “relationships within the scientific community” as a factor of development of management thought, let us give some data about Leon Alford. He was a supporter and a practical implementer of so-called systematic management and preached this ideology of management in ASME and in American Machinist magazine, of which he was editor-in-chief for several years in the 1910s. This system of principles of governance, partly based on the ideas of Charles Babbage, developed jointly with Alexander Hamilton Church, paved the way for modern production management. Their views contradicted the approach of scientific management advocated by F. Taylor. In 1912, Alford together with A. Church published critical articles of Taylor’s scientific management in the American Machinist magazine, which undermined Taylor’s claims for success [75, 76]. Later in 1912, Alford moderated a meeting of the ASME Committee, which discussed whether or not to publish Taylor’s book “Principles of Scientific Management.” Leon Alford’s criticism of Taylor’s works and his management methods essentially formed the Committee’s position. Since the committee’s report was ambiguous in assessing the merits of Taylor’s scientific management, ASME refused to publish F. Taylor’s book. L. Alford advocated a reformist approach to labor and trade unions, flexibility in “industrial relations” and “human engineering” and rejected fixed and rigid approaches to labor management, such as like Taylor’s scientific management. His approach to work soon became the dominant practice of corporate liberal management. In 1920 L. Alford became a co-founder of the Division of Management within ASME. Due to its activity and scientific position, the Division of Management soon became the largest division within ASME. Returning to W. Polyakov, we note that after the United States entered the First World War in 1917, Gantt and Polyakov advised Emergency Fleet Corporation, where they completed the development of the now famous “Gantt Chart.” Following D. Wren, we note that under the influence of W. Polyakov, G. Gantt too called for “socialization of industrial production under the control of managers,” adding to the assessment of production results and “analysis of W. Polyakov’s inefficiency in the industrial context” [70]. After the death of G. Gantt (November 23, 1919) W. Polyakov joined ASME again. Like his spiritual mentor, G. Gantt, W. Polyakov believed that engineers, more so than representatives of other professions, can lead the social, economic, and physical aspects of society, not only in industrial production. W. Polyakkov is the author of a number of major works on production management [67, 68, 71, 137]. He often visited the Soviet Union, was chairman of the Society of Russian Engineers in the United States. For all of his conscious life he believed in the inevitability of socialism in all countries of the world, Polyakov believed that the Scientific theory of management contains the potential to pave the way to socialism because it is focused not on profit, but on production. It develops performance planning and effectiveness accounting for workers at all levels, thereby

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

425

Fig. 6.1 Place of “Foremanship” in production (Source: [71 , p.2])

providing a comfortable environment and working conditions that are based on equity and on objectives defined with the participation of employees. In this regard in the large treatise “Mastering Power Production” (1921) Polyakov wrote: “At the heart of the economy, industry and activity are the merits of all previous generations. A sewing machine is capable of increasing the productivity of its operator, but only at the cost of labor invested in it by a mechanic who absorbed all the achievements of scientists, philosophers, craftsmen, etc., all those who directly served to make their lives and work possible throughout the history of centuries, starting from primitive people. Today no one can develop a technique of production if it does not rely on the huge amount of knowledge that has been accumulated in all countries and at all times... The economic evolution of society takes place in a certain direction, and no one can distract or delay it. All that can be done is the choice of means to reduce the pain and suffering caused by the transitional period” [68 , p.12]. In 1921, Walter Polyakov together with his colleagues wrote chapters of a textbook on entrepreneurship labeled “Foremanship” for the Christian youth volunteer organization The YMCA [71] and in the textbook he places a unique, in our opinion, and quite modern scheme of “Foremanship” relations with the elements of the business environment of the production organization (see below Fig. 6.1), very similar to our Fig. 1.1 in Chap. 1. The other distributor of Taylor’s ideas was the engineer Frank Gilbreth (1868–1924). Although Frank Gilbreth never directly cooperated with Taylor, he enthusiastically took Taylor’s scientific approach and moved it to the study of labor actions. Taylor focused primarily on the timing and calculation of the amount of work that a “first-rate” worker can do during a given period. Gilbreth supported the idea of timing, but only if the number of motions in the labor process had been

426

6 Western Schools of Management of the Twentieth Century

defined sufficiently and the “only sure way” of performing a certain kind of work was found. The similarities of the first years of private life between Taylor and Gilbreth were much larger, than between Taylor and Gantt. Taylor had the opportunity to study at Harvard University, but instead chose to become a mechanic. Gilbreth was preparing for entry into the Massachusetts Institute of Technology, but decided to become a bricklayer, as the people of this profession were considered “the kings of mechanics.” While working as a bricklayer, Gilbreth quickly noticed that the people teaching him how to lay bricks used three different sets of movements: one set to teach a person how to lay bricks, the second to work at a slow pace, and the third to work at a fast pace. Watching these and other variations of the motion models used by masons in his work, Gilbreth wondered about the problem—which set of movements is the best and most effective. And since then, the problem of “learning motions” had fascinated him so that he devoted the rest of his life to it, developing various means of monitoring movements in the workplace in search of “a single best way.” Aged of 36, he married Lillian Moller (1878–1972), who defended her doctorate in psychology and became Frank’s closest assistant in scientific management for the rest of his life. For the Gilbreths, scientific management was based on measurement, the task of which was to eliminate production losses and reduce the fatigue that the worker experiences while performing the job. As the Gilbreth spouses wrote in their work, “Applied Motion Study” (1917), “in order to gain public recognition as an art or science, management had to deal with issues by applying the scientific method, dividing the problem into its constituent elements and subjecting each element to a detailed study.” [84]. Thanks to a careful analysis of labor motion carried out under bricklaying, Frank Gilbreth managed to increase the number of bricks stacked by one mason from 175 to 350 per hour, thereby increasing productivity by 100%. According to Claude George, Gilbreth reduced all motions of the hand into some combination of 17 basic motions. These included grasp, transport loaded, and hold. Gilbreth named the motions therbligs—or “Gilbreth” spelt backwards with the letters given in their original order. He used a motion picture camera that was calibrated in fractions of minutes to time the smallest of motions in workers [20, 115]. The obtained photographs (chronocyclographs) allowed to determine terbligs, which were then applied to the Simultaneous cycle motion (“simo”) charts. These charts helped to determine, for example, how effectively the right and left hands are involved in the operation [13, 85]. It should be noted that the popularization of the system of analysis of movements developed by the Gilbreths contributed to the Summer School of Scientific Management organized by them in 1913 with its course “Scientific Management for University Professors” [85 , p.61], as well as the article published in 1920 by Fred Kelly on the study of the movements of baseball pitchers [86]. In most of the Gilbreths’ studies, the problems themselves became clear because of their distinct scientific formulation. They analyzed many types of work and labor movements as functions of dependent variables, while measuring the effect on them

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

427

of independent variables that affect the state of workers (muscle strength, experience, fatigue, etc.), the state of the environment, equipment and tools (clothing, lighting, labor standards, etc.), as well as the speed of labor movements. Despite the fact that during the lifetime of Frank Gilbreth the practical and scientific value of his system of motion learning was questioned, as the means of photography improved and became cheaper, the impact of the Gilbreth method in the production environment increased. The system of studying movements became part of the official methodology of production engineers, industrial psychologists, and experts in human resources of American companies. In a speech made to nation by President Woodrow Wilson on August 25, 1919, he was quoted as saying: “Better standards of living are impossible without producing more. Men cannot consume what has not been produced. On American labor rests grave responsibility, if labor itself is not to suffer.” [90 , p.1]. During the First World War (1917–1918) Frank Gilbreth served in the military unit of Fort Sill (Oklahoma) with the rank of Major. But even before W. Wilson’s speech F. Gilbreth offered his services to the president. According to a family legend, on the day of the entry of the United States into the war, F. Gilbreth sent President Woodrow Wilson a telegram of the following not very modest content: “I arrive 7-30. Washington Station. If you do not know how to use me, I will explain it to you.” [88 , p.54]. Highly appreciating the concept of the Gilbreth’s “rationalization of movements” and their article “What scientific management means to America’s industrial position” [84 , pp.3–20], Vladimir Lenin in his “Notebooks on imperialism” singled out the following words of the Gilbreth’s articles with the Latin acronym NB: “The movements of each individual, no matter what his work is, have been studied and standardized... Now there is a “huge waste” from scattered, repeated etc. “research”... “It is the United States Government’s job to establish such a bureau for the standardization of mechanical crafts. The standards established and collected there would be public property, and independent researchers would be able to invent on the basis of their further standards.” And V. Lenin completed the abstract of the Gilbreth’s article with the following words: “a beautiful example of technical progress under capitalism to socialism” [16, v.28, pp.132–134]. In his work “Motion Study” (1912) [81] Frank Gilbreth divided all of the known management systems into classes depending on the scientific basis that had been used in this system in dealing with specific management problems. Traditional management was a term that denoted management systems based on empirical practice and passed on from one generation of workers to another and from the master to the worker. The concept of transitional management was used to refer to such systems, which sought to implement a number of improvements made by Taylor’s “intellectual revolution.” Scientific management, or “the marginal management system,” was the type of control that Taylor recommended. Lillian Gilbreth used the same classification system and in her work “The Psychology of Management” (1914) [82], she gave a more specific definition of the marginal system as a type of management, which is “science and had been developed through research and experimentation.” In her submission, any study of management, if it purports to be scientific, must be conducted on the basis of analysis

428

6 Western Schools of Management of the Twentieth Century

and synthesis. Via analysis one aspect of management, such as work, is highlighted and broken down into basic elements. As part of the synthesis, the elements are reconnected, but in this complex there are only those elements that are needed to complete the task. Such an approach creates a sufficient logical framework for the study of labor motion. Well understood scientific management, according to the Gilbreths, contributes to the welfare of workers by raising wages, generally improving working conditions, reducing unnecessary motion and worker fatigue [83]. There is another important issue of governance that had been touched by the School of Scientific Management. This refers to considering the triad “target-objective-result” as the main driving force of the organization and the essential component of the systems that Taylor, the Gilbreths and others designed. F. Taylor argued that “the most prominent single element in modern scientific management is the task idea.” This idea included, as far as possible, the full planning of each worker’s work at least 1 day in advance and the issuance of written instructions detailing the assignment and the means required to complete the task. By the way, the task was used as a standard in determining the bonus premium that could be obtained if the job deserved it. Some modern researchers at the School of Scientific management believe that Taylor’s idea of the task largely contained practical justifications for the widespread use of certain technical strategies, including targeted management. One can, of course, argue about the authenticity of targeted management and task-related management, but nobody will dispute the fact that the first discussions in the Taylor era on the topic of “task” had revealed the critical importance attached to setting goals. Taylor’s task idea was supported and complemented by Lillian Gilbreth. While Taylor pointed to the importance of the task, she described in detail the essence of that concept as a professional psychologist and preacher of Taylor’s system. It is difficult to say whether it is the knowledge of psychology that explains Lillian Gilbreth’s interest in the “goal-task” issue or by the fact that she was the mother of 12 children (!).5 For those who have read her book “Cheaper by the Dozen” (1948),6 written by her son, Frank junior, and daughter Ernestine, or seen the 1949 eponymous film, things like setting goals, organizing and controlling for effective management of such a large household become clear [88]. The task, as L. Gilbreth believed, could not be anything other than a goal, and the goal could not be defined purely accidentally and theoretically. The goal is a direct consequence of a well-designed process of measurement and synthesis, and in the context of scientific management the task is determined by a complex process of analysis and synthesis. According to L. Gilbreth, synthesis that precedes analysis must result in the connection between the various composite labor units in the same task. But when we’re considering a job in this aspect, then the standard for

In 1959, the “Society of Production Management” Lillian Gilbreth was awarded the title “Mother of the Century”. 6 In Russian, the book and eponymous film (published in 1949) were translated as “Cheaper by the Dozen (wholesale)”. 5

6.1 Frederick Taylor’s School of Scientific Management and His “Followers”

429

performing the job is not some abstract dream that is defined in a purely theoretical way, but rather a standard for a particular activity based on what has been “practically done and what is expected to be reproduced.” The task is not some imaginary ideal or an unattainable dream that we hope to see embodied, but rather “the sum of operations observed and performed in time plus a certain and sufficient percentage... to overcome fatigue.” [82]. Lillian Gilbreth couldn’t understand the resistance of managers and workers to the idea of the job. She believed that this resistance was primarily caused by the lack of understanding of the term “task.” Although L. Gilbreth did not like the term because of its ambiguity, which, in fact, makes Lilian’s objections justifiable, she could not think of a better name. Yet Lilian was clearly aware that the fulfillment of goals implied a “means—goal” relationship when she argued that each member of an organization should have a specific task, such assignments should be developed for the organization as a whole. Individual and organizational tasks should be related in such a way that the implementation of the former would lead to the achievement of the latter’s goals. It was a good and scientifically validated understanding of the complex process, especially in the early stages of scientific management. Such notion forms, for example, the basis for the mutual reinforcement theory and the management logic on which targeted management is built. The idea of the task, which was developed in the early years of management history, underlines the importance of the preliminary development of objectives. “We must realize that a task is a goal in the most direct sense of the word.” Yet its meaning is very different from the meaning given to the modern meaning of the concept of “goal.” In the discussions of our time, goals are understood as the desire or the things we can do if we concentrate our efforts and work with maximum impact within the next year. In the view of Taylor, the Gilbreths, as well as the Gantt, a task is a provable empirical reality. This means that the task, or the effective purpose of the workplace, department, or organization, is to achieve a possible result if (1) the tools and conditions of work are rationed; (2) the method by which the work is to be performed is instructed; (3) the time required for the performance of the work is given scientific credence; (4) fatigue is taken into account; (5) qualitative indicators of results are formulated. Concluding the section on the Gilbreths, we note that the ideology and works of the Gilbreths are often associated with the works of Frederick Winslow Taylor. Indeed, initially F. Taylor expressed interest in F. Gilbret’s experiments on the rationalization of masonry movements and included a chapter describing Gilbret’s masonry method in his work Principles of Scientific Management (1911) [4, 85]. After that Taylor and Gilbreth began to communicate quite closely. However, Taylor never included F. Gilbreth in the circle of his students. Only so-called official followers of F. Taylor could implement the Taylor system at enterprises. Frank Gilbreth had permission to implement the Taylor system only in cooperation with one or several authorized representatives. There was a significant philosophical difference between the Gilbreths and Taylor, which gave rise to a new view of the management of social organizations. The symbol of Taylorism was a stopwatch, more precisely, Taylor was interested, first of all, in reducing the time of

430

6 Western Schools of Management of the Twentieth Century

the production process. The Gilbreths, on the contrary, sought to make the processes more efficient by reducing unnecessary, distracting motion of workers, leading to worker fatigue and exhaustion [83]. They felt that their approach was more related to the welfare of workers than to Taylorism, which workers themselves often perceived as primarily profit-making. The Gilbreths sought to improve Taylor’s system by shifting the focus from increasing profits to the “human factor,” and replacing time measurement with a stopwatch with other measurement methods and evaluation, for which they developed the idea of filming work movements. Frank Gilbreth stressed that his “motion learning system” was not a mechanical tool for profit, but a comprehensive program to improve the working conditions of the employee, which makes the laborer more valuable and competent from the enterprise management viewpoint. The conflict of interests between Taylor and the Gilbreths led to tension in the relationships between engineers and then to open hostility, reaching its climax in 1914 when Gilbreth introduced methods of scientific labor organization at the American textile factory “Herrmann, Aukam&Co.” This factory at the beginning of its creation (1862) specialized in the manufacture of handkerchiefs, then in the production of men’s shirts, collars and cuffs and women’s underwear [85 , p.62]. It began with the fact that, without Taylor’s consent, Gilbreth moved away from “Taylor’s” traditional method of reorganization, developing, and implementing a number of other methods of observation, analysis and change in the movement employees. F. Gilbreth hoped that factory workers would accept his proposed method with more enthusiasm than the original Taylor method, as it was aimed not at increasing the speed of the operation, but at increasing productivity through more efficient use of time [85 , p.61]. Taylor did not want such an intervention, considering the system he created perfect. The managers of the “Herrmann, Aukam&Co” complained to Taylor about the speed and quality of Gilbreth’s work, as a result of which Taylor entrusted the completion of the project to his apprentice Horace K. Hathaway [85 , p.62]. In response, Gilbreth created a consulting company to implement his own system—Frank B. Gilbreth Incorporated, Consulting Engineers. And then, having received an order to perform works at the German Auergesellschaft enterprise (city of Berlin), Gilbreth left the “German-Okam Company” project unfinished and went to Germany [124 , p.455]. This example once again illustrates one of the three subjects of development of scientific thought—“development of scientific community, history of relations within it” mentioned in clauses 1.4 and 1.5 of our Tutorial.

6.2 Organizing and Principles of Effectiveness of Harrington Emerson, Morris Cook,. . .

6.2

431

Organizing and Principles of Effectiveness of Harrington Emerson, Morris Cook, and Wallace Clark

Possessing the great legacy of A. Smith and C. Babbage in the area of ideas for improving production efficiency, management thought of the twentieth century has given birth to its hero. It was Harrington Emerson, who, like his predecessors, devoted all his scientific life to finding answers to the questions: What are the reasons for the ineffectiveness of work and organization activity? And How to make it up? And he had achieved much in addressing this issue, significantly enriching management science with the results of his research and experiments. H. Emerson was born in 1853 in Trenton, California, New York. His father was a professor of English literature and a Presbyterian missionary. Young Emerson studied in Germany, England, France, Italy, and Greece, spoke 19 languages (!), and not surprisingly, he led the Faculty of Foreign Languages at the University of Nebraska at the age of only 23 years. It had not been 5, however, that he gave up the university career and went into business. Over the next 20 years, he had been engaged in economic and engineering research for the “Burlington Railroad” company, while consulting firms around the world. As a consulting engineer, he reorganized the companies “Archison” and “Topekau Santa-Fe Railroad,” where he introduced cost calculation systems, accounting, and bonus payroll. It was in connection with this success that he became known as the first “efficiency engineer.” Influenced by European education, Emerson admired the organizational efforts of the Prussian general Von Moltke, who developed the general concept of personnel management and made the Prussian army an extremely efficient machine in the mid-nineteenth century. In 1909, Emerson’s famous treatise “Efficiency as a Basis for Operation and Wages” was published in the Engineering Magazine [59]. In this work, he compared the ineffectiveness of human action and the effectiveness of the methods used by the environment surrounding man, on the basis of which he concluded that only human inefficiency was the cause of humanity’s poverty. He believed that the problem of inefficiency of work could be addressed in two ways. First, by means of specially developed methods that would enable people to achieve the maximum results they can achieve in addressing objectives and meeting their set goals. Second, by means of goal-setting methods that require maximum performance that the performer is capable of. Although Emerson maintained close relations with F. Taylor and his students, he never belonged to their group. With all his commitment to Taylor’s ideas, his notions differed significantly from that of the patriarch of the School of Scientific management. This concerns Emerson’s idea of the dependence of efficiency on the size of the organization and its organizational structure. And the conclusion of his studies is as follows: economies of scale, or increased returns on scale, have a limit, after which inefficiencies or reduced returns arise, and the cause of inefficiencies in

432

6 Western Schools of Management of the Twentieth Century

production is an ineffective structure of the Organization (or inefficiencies in the structure of the planned scale of production). Emerson suggested the use of standards (more than tasks) to evaluate performance, bearing in mind professional standards or “predetermined sets of rules that are recognized by the majority in this field of production.” He paid particular attention to standardizing cost accounting, knowing from his own experience that there was a great potential for efficiency gains. In his treatise, Emerson explored human capabilities (human resources), the relationship of time-use (or job) performance standards and the corresponding bonus. He addressed all problems in the context of efficiency, which at the end of the treatise was defined as: “efficiency is the basis for economic activity and wage fixing, and it is not expected from overworked, low-paid and acerbated people,” and efficiency is achieved when “the right thing is made appropriately by a suitable worker in the right place and at the proper time.” Perhaps never has the idea of effectiveness been determined as accurately as by Emerson. The synthesis of the results of research and life experiences was the second monograph by Emerson, “Twelve Principles of Effectiveness,” which was published in 1912 [60]. Emerson humbly stated that he did not discover anything new, since they have been operating for many millions of years in various forms of nature and life, that these principles are simple, understandable, and elementary. Let’s bring up these principles: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Clearly articulated ideals and objectives of the Organization Common sense in decision-making Involvement of experts in decisions made Discipline in work Honesty in the conduct of business Direct, adequate, and permanent accounting Dispatch (or scheduling) The usage of standards and graphs Standardization of conditions Standardization of operations Standard instructions Remuneration for effective work

In Emerson’s view, inefficiency and losses in the organization of any work may be eliminated only when all 12 principles are in force. Maximum inefficiency can occur for one of two reasons—either these principles are unknown at the enterprise or are known but not practiced. In any case, effectiveness suffers. Therefore, if the principles are not in place, effectiveness is virtually unattainable [61]. Besides Emerson, other engineers, including Morris Cook and Wallace Clark, were also interested in efficiency problems in those years. Morris Cook was the initiator of efficiency ideas for the management of public organizations, more specifically the efficiency of municipal and university management. Morris L. Cook was one of four people, including the Gantt, whom Taylor recognized as his true followers, who were worthy to represent and teach his ideas

6.2 Organizing and Principles of Effectiveness of Harrington Emerson, Morris Cook,. . .

433

and system. Cook was born in 1872 and was awarded an engineer’s degree at Lehigh University (“Alma mater” of the famous Lee Iacocca). Prior to meeting with Taylor, Cook began addressing industrial inefficiency issues and attempted to use scientific methods to eliminate losses in organization of work. Taylor was impressed by the young engineer, and Taylor recommended him as a researcher of performance of the American High School management with financial support from the Carnegie Foundation. Cook’s extensive report, published in 1910, entitled “Academic and industrial efficiency” [62], brought the author wide popularity. In the report, M. Cook pointed to the shortcomings in the structure of higher education in the United States— incompetent decision-making, lifelong occupation of teaching positions, inadequate assessment of academic performance and biased criteria for remuneration of professors. As could be expected, Cook’s assessment, already an efficiency expert, of university professors and administrators, did not receive a warm welcome from them. The report contained something that none of them wanted to hear, namely: decision-making at the university committees is cumbersome, the system of indefinite occupations conceals the unproductive activities of too many, and the faculties function independently of each other. The report was one of the first publications to form the basis of the Peter Principle of total incompetence of managers. In his recommendations, Cook called for the introduction of “credit hours for students” as a measure of efficiency, the encouragement of teachers on the basis of achieved productivity and such a university system that would be more self-critical and would not be superior to any criticism from society or the taxpayer. Cook was aware of the crucial role of the high school of the time in the training of tomorrow’s industrial leaders. This position was already expressed and implemented by the Russian reformers of training cameralists in 1840s, as we have written in Chap. 5. In 1911, again on the recommendation of Taylor, M. Cook assumed the post of the head of public works in Philadelphia, where he plunged into implementing his ideas of efficiency, but now in the public sector. In 1918, his second work “Our cities arise” [63], which contains many practical recommendations for improving municipal governance. The realization of his ideas only for garbage collection in the city within four years had yielded more than $1 million in savings. In addition, he personally initiated a lawsuit against the “Philadelphia Electric” Company to force it to lower electricity tariffs. As a result of the out-of-court settlement, the company paid more than $1.2 million to the city. In general, Cook’s contribution to the development of ideas for effective management and the real efficiency motion was very significant. Prior to his appearance, the only area of application of management was industrial production. M. Cook applied the same principles to higher educational institutions and government institutions at all levels. In so doing, he was convinced that almost all the principles of so-called business management were applicable to other areas of human activity, if efficiency became the hallmark of that activity [121]. Around the same years when M. Cook transferred the principles of scientific management to other areas of activity, another American research consultant Wallace Clark spread these ideas and principles of scientific management to other

434

6 Western Schools of Management of the Twentieth Century

countries. W. Clark was born in 1880, and graduated from the University of Cincinnati in 1902, then worked as an assistant manager at The Machine Tool Co. (Cincinnati). From 1910 to 1917 he worked as personal secretary to the President of the “Remington Typewriter” company. At this factory in 1910, Clark met Henry Gantt, who, as a consultant, was engaged in the reorganization of the factory. From 1919 to 1920, Clark worked as a full-time engineer at the Gantts’ consulting company. Before opening his own consulting practice, Clark undertook several trips to Poland, England, and France, trying to apply the principles of scientific management there [80]. As a follower of Henry Gantt and his graphics planning and scheduling techniques, Clark believed that the Gantt Chart could be useful for monitoring five-year plans in socialist Russia. It was in connection with this idea that he cooperated with the aforementioned Walter Polyakov, who promoted the implementation many of the ideas of scientific and management in the USSR which is thoroughly set forth in Clark’s articles [73, 74], in the P. Devinat’s work [123] and in D. Wren’s article [70]. In 1920 Clark founded his own management consulting company Wallace Clark & Co. in New York, specialized in international management continuing to publish articles [78, 79]. It grew with offices in London, Berlin Prague, Warsaw, Geneva, and Athens. Among his employees was Walter Polyakov, who had launching his own consulting company in 1915, American engineer Paul Eugene Holden, Frenchman Serge Heranger, who wrote the article “Applying the Gantt Chart in France.” Clark also took some ideas about human nature put forward by Gantt. He was eager to cooperate with unions to increase efficiency in the workplace. Yet Clark remained in memory, primarily because of his desire to extend the ideas of scientific management and productive efficiency in Europe. Thanks to him, management “overcame” the Atlantic Ocean, which led to the expansion of the circle of individuals and groups acquainted with American systems of management [121 , pp.41– 42]. Daniel A. Wren traced the implementation of the Gantt chart in Europe, and especially in Britain. He found that “developed to meet the shipbuilding and use needs for the Great War (World War I), the Gantt chart was disseminated through the work of Wallace Clark during the 1930s in numerous public sector and private organizations in 12 nations. The Gantt concept was applied in a variety of industries and firms using batch, continuous processing and/or sub-assembly lines in mass production. Traditional scientific management techniques were expanded for general management, such as financial requirement through budgetary control. Clark and his consulting firm were responsible for implementing a managerial tool, the Gantt chart, in an international setting” [72]. One of the most prestigious awards in our time in the area of management for outstanding contribution to the development and implementation of scientific governance at an international level is the Wallace Clack award established in 1949 by the American Society of Mechanical Engineers (ASME). The founders of scientific management understood the importance of analysis and synthesis for the creation of management science. At the same time, they mastered analysis, or the separation of complex processes, such as work, into individual

6.3 Henry Fayol’s Administrative School of Management

435

elements much better than synthesis. The development of a single theory based on analysis and synthesis became the task of another group of authors, which contributed to the development of an organizational, or rather functional, view of management. One of the representatives of the “other group of authors” was the classic of German sociology Werner Sombart (1863–1941), who in the treatise “Modern Capitalism” (1902) [22] defended a systematic idea of enterprise management. He wrote: “The term“ scientific management ”turned into a popular slogan after Taylor, with his typical American naivety and ignorance, applied it to his “time studies.” In the heat of fierce debate about the “value” or “worthlessness,” “advantages,” or “dangers” of the Taylor system, they completely forgot to soberly and accurately determine what exactly should be understood by the expression “scientific enterprise management.” In order for an enterprise to be of a scientific nature, it is required that the principles and rules of enterprise management are discarded from individual identities and become universal principles and rules that can reasonably be applied to each individual case; it is required that they be objectified in a whole series of requirements, where the form of the enterprise is given in the form of some general idea even before this or that enterprise was really formed. This process of abstraction, generalization and objectification of scientific principles and rules is an essential sign of any “science,” therefore it has to be taken as a basis even in the case when we want to give the most general definition of the concept of “scientific management of enterprises.” So, “scientific management of enterprises” we must state in all those cases when an enterprise is organized according to certain general principles. Principles may contain incoherent, unsystematically separate rules taken directly from experience. An enterprise guided by such practical instructions can be called scientifically represented only in a very general sense of the word... On the other hand, principles can rest on systematic thinking, proceed from general ideas and end with a complete system of rules. An enterprise guided by such a system of rules can be called scientifically posed in the full sense of the word” [22 , pp.384–385].

6.3

Henry Fayol’s Administrative School of Management

Another representative of the systems management approach was Henri Fayol, whose name is most frequently mentioned in the history of management in relation to the functions, principles, and tasks that he and his followers had identified and highlighted. If authors who are writing today for popular business press knew more about Henri Fayol, they would surely compare Lee Iacocca with the French industrialist. Both had done something that only a few managers had been able to accomplish, namely: save giant corporations from bankruptcy. Henri Fayol was born in 1841; he was the youngest student in the group of graduates of the French Mining Institute.

436

6 Western Schools of Management of the Twentieth Century

He was only 19 years old when he started working as an engineer at a mine in a large French mining and metallurgical Company, “Commentary Fourchambault.” In 1888, he was appointed to the post of general manager of the company when it was on the brink of bankruptcy. He linked his entire professional career to this firm and, following his resignation in 1918, he continued to maintain the post of general manager and President of the company until the last days of his life. H. Fayol dedicated the last years of his life to the organization of the French Center for Administrative Studies and tried to use some of his ideas to reorganize the French public management. H. Fayol died in 1925. Having taken control of a company on the brink of bankruptcy, he left it one of the most powerful, financially stable, renowned for its administrative, technical, and scientific personnel among French concerns. In all the success achieved by the company that he led, Fayol permanently saw the result of a consistent and systematic use of a number of simple, but, as he was firmly convinced, most effective and universally applicable principles. Fayol’s views were reflected in a number of his reports at engineering conferences during 1900–1908. Based on his own experience, Fayol began to formulate the ideas of administrative theory already in 1900, when he made a management report to members of the International Congress on Mining and Metallurgy. It was in this report that he pointed out the importance of the administrative function, but did not present the “elements” of management, which made him known later. In 1908 he prepared theses for the Anniversary of the Extractive Industry Society, in which he put forward the following 14 “general principles” of governance or management: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

The division of labor. The power. Discipline. The unity of management (command). Unity of leadership. Submission of private interests to the general. Remuneration. Centralization. Hierarchy. Order. Justice. The constancy of the staff. The initiative. The unity of the staff.

Fayol’s principles were derived from those that he used “most often” in his own experience. Fayole’s understanding of the principles was not as rigid as it is in the natural sciences and means rule or law. Fayol’s management principles are a kind of building block in his discussion of the elements of a management system. They were intended to manage as guides in theory and practice and did not exhaust all the possibilities and were not interpreted as rigid in application. The existing factory system of the Fayol era reflected many of these principles in practice, but Fayol’s

6.3 Henry Fayol’s Administrative School of Management

437

contribution was that he was able to combine them into a conceptual scheme. And he made it so that much of the modern management literature was built on the ideas and terminology of Fayol. In this we cannot but see the uniqueness of his understanding. For his time and in the context of a lack of literature on management, his ideas were new, fresh, highlighting milestones on the path of a developing discipline of management. The most famous of Fayol’s works on management was the book “General and Industrial Management” (1916) [5], in which Fayol considered management as a consistent series of operations or functions. He defined management, which was applicable to any type of industrial entrepreneurship. Fayol intended to write a large four-part management work, which should include: Part I—The need and the possibility of management training; Part II—Principles and elements of management; Part III—The personal observations and experiences; Part IV—The lessons of war. Unfortunately, parts III and IV never appeared, but the beginning was enough to see Fayol’s emphasis on the importance of managing any accomplishments, be they “big or small, industrial, commercial, political, religious, or any other.” This “universality” and “systematic nature” of management are the main contribution, since it allowed us to overcome narrow ideas and views on management and to relate to the study of management not as ourselves, but as an instrument of influence on any system. As a matter of fact, Fayol had essentially proved that, in order to build management science, it is necessary to monitor not so much the activities of the employee, who are governed, but the performance of the manager, the supervisor. The School of Scientific Management that preceded it was designed without any supervision of real managers, apart from individual and time-limited experience of a manager who had proposed a theory based on self-observation. In fact, the formal theories of managerial behavior were advanced even before the monitoring of their work became the focus of researchers. All we knew about behavior of the executives and what managers actually did, until the late 1950s, was based on impressions and myths rather than empirical evidence. For example, Frederick Taylor did not have any management experience, and he relied solely on his own research. F. Taylor began with the implementation of his methods at the workshop level and then made conclusions based on the experience of managing this unit. A. Fayol built his general management system from the point of view of a top-level manager and then applied it to lower organizational elements. The fact that academic researchers in management have paid little attention to the behavior of real managers is alarming but not surprising. Management is strictly applied science and, beginning with the first work of ancient thinkers and public management figures, emphasis had been placed on the development of guidelines, methods and recommendations that would promote the improvement of management. The purpose of management research and theories had never been administrative behavior or managerial behavior itself. In this area of research, attention had generally been focused on the expected results rather than on the day-to-day activities of managers. While the focus on analysis of the executives’ work is recent, attention towards the results of management activity had emerged long ago. It was

438

6 Western Schools of Management of the Twentieth Century

Henri Fayol that created the generalized image of an executive as a visionary, organizer, coordinator, and controller, which consequently became known as the executive’s functional image. Industry, or the business world, as Fayol had imagined, covers six types of activity: 1. 2. 3. 4. 5.

Technical activities, which include manufacture and production. Commercial activities such as procurement, sales, and exchange. Financial activities, including the search for optimal sources of capital. Security provision work to protect against fire, theft, floods, and public disorders. Accounting activities, including data collection, submission of financial reports and statistical information. 6. Administrative (or managerial) activity, covering foresight, organize, ordering, coordination, and control. Elaborating on this, Fayol in the aforementioned work, claimed that “to manage is to forecast and plan, to organize, to command, to coordinate and to control” [5]. Well-organized technical, commercial, and financial operations ensure the accumulation of resources that must be preserved and guarded. This calls for the necessity of the last three types of activity. While Fayol was interested in the development of guideline principles to improve management practices and to promote understanding of management as a process, its fundamental goal was, after all, to develop theory of management. He was particularly concerned by the fact that there were no educational institutions or schools at his time where people could study management. There were no such establishments, he believed, because there was no general theory or doctrine of management that could be studied. Each manager followed his own methods, principles, and theories, but no one had ever before him tried to combine acceptable rules and experience in the framework of administrative theory. No one reached the generalization of ideas and finds. Fayol summarized his experience in theory, indicating that (1) management is a separate skill applicable in all types of enterprises and organizational activities; (2) and this skill became more and more important and decisive as one ascended the hierarchical ladder; (3) managerial knowledge and skills can be trained. But without a general theory of management, teaching management is impossible. The principles and ideas he had proposed were part of his strategy for constructing such of management theory that would enable training of practicing executives and future managers. Responsibility for the level of management education rests with schools, companies, the state, and family. If the family were to give more weight to the principles and norms of home life, then management ideas would penetrate the soul of the child and would form the basis for further study at school. Even if higher education, in Fayol’s submission, becomes more widespread through the teaching of arts and sciences, it should still include a management training course. Organizations should conduct seminars and stimulate all basic training in management and development in management, and the state should set an example by introducing governance into the school curricula of public schools.

6.3 Henry Fayol’s Administrative School of Management

439

Fayol advocated a decrease in technical training and increased training in organizational knowledge. The education of those years was based on the premise that the value of engineers and industrial leaders depended directly on the number of years devoted to studying mathematics. He regretted the emphasis on mathematics: “Long personal experience has taught me that the use of higher mathematics counts for nothing in managing business... Basic mathematics helped train the mind, but further study should be devoted to management rather than more mathematics.” Fayol sought some balance and recommended young engineers to study “their behavior, character, abilities, work, and even their personal interests.” For Fayol, everyone should study management, as “it was necessary in the household as well as in industrial and non-industrial enterprises” [5]. In Chapter 1, “The need and the possibility of management training,” Fayol sought to prove his righteousness regarding the necessity of management training. In the last part, he had attempted to indicate what should become the subject of study. One can only regret that Fayol’s unfinished book contains only half of the four parts he had planned. But even so, the book contains irrefutable arguments in favor of training executives. The view of the management activity outlined by Fayol is perfectly consistent with the classical economic theories and Taylor’s scientific approach. If we wish to take a scientific approach to a problem, we must first define it, develop a plan of action, analyze, and choose the best approach, and then ensure that the goal is properly achieved. Fayol believed that management should be treated in the same way and, in addition, he developed managerial methodology and techniques. This technique was logical and simple, and was demonstrated using the example of the functions of management. To forecast and plan is to explore the future and find ways to implement the designs. In fact, Fayol proposed a unique concept, arguing that forecasting and planning should be considered only consistent parts of a broader function called foresight. Foresight encompasses prediction, or vision of the future, but not only that. It also includes systematic preparation of this future, which becomes revealed in the forecasting process. In addition, the diagram presented by Fayol, planning too is more than a formal plan. The result of the foresight process includes how the plan is executed. Modern interpretations of the result are more of a series of set goals and strategies for their implementation. Foresight is an action-oriented approach to planning. To organize is to design the company’s activities, determine the effective balance of human and material resources. Organizational activity involves the development of a structure that will contribute to the achievement of the goal. Coordination is the consolidation of all types of activity within the organizational structure. Through coordination, elements of organizational structures are given the necessary status and means are aligned with the goals, the achievement of which they serve. Coordination and organization allow the manager to mobilize the resources of the given organization to achieve the goal. To ordering is a function that enables an organization to work in accordance with its intentions. Leading helps the organization function properly. In a very general

440

6 Western Schools of Management of the Twentieth Century

sense, leading includes attempts to motivate staff and leaders to achieve the goals of the organization. And finally, control implies the fulfillment of the objectives in accordance with the plan adopted pursuant to the orders issued and in accordance with the principles on which the plan was based. When these functions are properly implemented, the rational and provident executive seeks unity within the organization, enabling it to carry out appropriate and effective operations. In Chap. 2 of the book, Fayol detailed the content of each function separately to confirm the unity of the management process. He thought executives were logically reasoning, well-informed people who have a goal, a plan, and the will to get the results. This is only possible if the executive approaches the issues in the following ways: First, successful executives must have the ability to foresee. Their responsibilities include ensuring a futuristic vision in planning. The plans must be vertically aligned, and the plans on the lower levels of the organizational structure are logically derived from the plans that are developed at the top. In other words, the goals of each division should directly reinforce the overall objectives of the organization, and the goals of individual working groups should focus on the division’s objectives. Second, since there is a need to coordinate the activities of the working groups, horizontal unity is also important. All goals of production units and marketing departments should be closely interrelated. At the same time, financial plans and assignments in the supply and lending divisions are intended to facilitate, rather than brake, the achievement of goals in conjunction with divisions such as production and sales. This point underlines the importance of the communication and coordination link between divisions. The plans should be clear enough to indicate direction and flexible enough to adapt to changing circumstances. The best plans, in the Fayol’s submission, are the unity of experience and effort. Ideally, the establishment of an enterprise is expressed in its provision with “everything necessary for operation: raw materials, tools, capital and personnel.” Fayol paid much attention to the organization of human relations, using the army analogy of the chain of command and quoting Taylor, when he argued that many people had sufficient potential for successful management and should be given the opportunity to lead by decentralizing the organizational structure. Speaking of organization, Fayol at the same time did not cross the line and did not support Taylor’s idea of senior workers for fear that “Taylor’s system,” as he called it, negated the principle of the unity of command. As an executive and theorist, Fayol was apparently not in a position to recommend an organizational system in which employees report on results to more than one boss. On this occasion, Fayol wrote: “The organization system praised by Taylor for managing workshops in large machine-building enterprises ... is based on the following two ideas: 1. The need to reinforce the heads of workshops and craftsmen with the establishment of the General Staff 2. Denial of the principle of unity of command.

6.3 Henry Fayol’s Administrative School of Management

441

As far as the first seems to me good, just as the second seems false and dangerous.” [5]. After the executive has made effective planning and organizing, he must move everything into motion. There’s leading (or ordering) on the stage here. The goal of a manager’s general leading is to obtain as much profit as possible from each employee at his or her disposal. This should be under the supervision of the controller. At the same time, Fayol warned that initiative would be developed and maintained only if workers were entitled to errors. Harmonization of all aspects of the organizational structure is achieved via coordination. Units working in harmony are being set up at well-coordinated companies, and weekly meetings of divisional managers are useful in creating such a relationship. And finally, control confirms that everything is happening in accordance with the plan. Control of commercial activities requires verification of quantity, quality and prices. Control of technical operations covers operations, financial control is focused on cash and other assets recorded in financial documentation and records. In the last quarter of the twentieth century, followers of Fayol moved the logic of his rhetoric to managerial behavior and proposed two concepts that are supported by some and rejected by others: (1) the universality of managerial functions and (2) the possibility of using management expertise. Since Fayol said that all the functions he had classified were applicable to the management of organizations in all branches of industry, the idea of universality of functions had gained increasing support. All executives, including the presidents of industrial companies, generals, leaders of universities and churches, had begun to plan, organize, coordinate, lead and control. Thus, the functions of management have become universal. In Chap. 7, we will demonstrate the development of views on the composition of management functions using the example of the management school of Gabriel Popov. As a person within the organizational structure moves on the career ladder to purely managerial positions, he performs fewer technical functions, so that the work becomes primarily managerial. Considering this situation, Fayol suggested that a person performing purely managerial functions could apply his or her abilities in other branches of the economy and even in other areas of activity. The head of the company can use his managerial experience and make a career as a political executive, chief physician at a hospital, a faculty dean, or an army general. As we noted earlier, Carl Clausewitz proceeded from the opposite (from military to civilian executive positions), but the conclusions were the same. Of course, not everyone would agree to such expansive interpretations. Many continue to insist that the governance of healthcare and public institutions is significantly different from that of private companies.7 If we turn to the testimony of

7 In this sense, instructive is one of the latest works by Henry Mintzberg, “What is wrong with healthcare? Myths Problems. Solutions”. M.: Mann, Ivanov and Ferber, 2017.

442

6 Western Schools of Management of the Twentieth Century

people who have successfully worked in more than one industry or company, supporting examples of the extended understanding of governance are easy to find. The perception of managerial work put forward by the Fayol is sufficiently rigorous to include extremely qualified workers who meet the requirements of this task. He wrote: “A rational and provident executive is a person who has all the knowledge necessary to resolve the managerial, technical, commercial and financial issues he faces, as well as sufficient physical and intellectual energy and efficiency to be able to carry the very heavy burden of business contracts” [5]. In conclusion of this paragraph, we note that along with the expression “relationship in the scientific community” as a factor in the development of management thought, for example, differences of views on the management of F. Taylor and A. Fayol also obviously a factor of “filiation of ideas” or “disadvantages of a particular management concept give rise to a new concept” (which we also mentioned in clauses 1.4 and 1.5 of our Tutorial). In the latter case, we mean “Scientific Management” by F. Taylor, who was essentially “scientific production management” or “elemental management theory,” and A. Fayol’s concept, which is a vivid example of developing “a system management theory” that covers not only the “production” functional, but also a number of other functionalities of the organization—purchase, sales, finance, accounting, security, administration, etc.

6.4

The School of Human Relations

In the 1920s, a somewhat earlier critique of the School of Scientific Management sharply intensified and opposed the new direction that was called the “Humanist Challenge.” As a result, after a nearly 25-year monopoly of scientific management, the development of management thought in the direction of human rights and needs, increased attention of scientists to the issues of employee motivation, led to the emergence of a New Scientific School of Management. Together with scientific criticism, there were events in real business as well that confirmed new scientific developments. In the early 1920s, the managers of the American company “Western Electric” at their factory in Hawthorne (near Chicago) proposed to conduct a study of working conditions and productivity. After researchers in Hawthorne published their results, it became apparent that a unique, integrated scientific direction was being born. In fact, these work meant the entry into the age of the School of Human Relations in the theory of management and related sciences. Sociologists were suddenly interested in industrial problems, and issues such as motivation, communication and leadership became legitimate subjects in management research, together with labor motion and time, planning, organization, and control. The emergence of the School of Human Relations is linked to the name of American sociologist Elton Mayo. In many ways, however, his ideas about social factors and means of improving productivity were justified in the work of Mary Parker Follett (1868–1933).

6.4 The School of Human Relations

443

M. Follet is an American sociologist and management consultant and a recognized pioneer in the theory of organizations and organizational behavior. She recognized the holistic nature of the human community and put forward the idea of “mutual relations” in understanding the dynamic aspects of the individual in relations with other individuals. Follet put forward the principle of what she calls “integration,” or the noncoercive division of power based on its use of “power with” rather than “power over.” Her ideas about negotiation, power and employee participation were very influential in the development of organizational research, alternative dispute resolution methods, and human rights relationship movements. Along with Lillian Gilbreth forementioned in Sect. 6.1, Mary Follett was one of two great female gurus in management in the early days of the theory of classical scientific management. In particular, Peter Drucker, who studied the works of M. Follett in the 1950s called her his “guru.” Mary Follet anticipated what today is known as micromanagement and the “puppet power system,” and some management researchers deservedly consider her the “mother of scientific management.” The publication in 1909 of her first major work “Speaker of the House of Representatives” [81] caused great public attention, and is rated as the best study of this government position ever and U.S. President Theodore Roosevelt tracked her down and hired her as his personal consultant on the management of non-profit, non-governmental and community organizations. It was at that time that her ideas had a great impact on Chester Barnard, who was an adviser to President Franklin D. Roosevelt. C. Barnard stressed in his works the important role of “soft” factors such as “communication” and “informal processes” in organizations, taking advantage of the undisclosed works and thoughts of Mary Follett. M. Follett was one of the first women to be invited to speak at the London School of Economics, where she discussed topical issues of management. Today Follett is increasingly recognized as the creator of “advanced” ideas, in the theory of organization and public administration. These include the idea of finding “win-win” solutions, community-based solutions, emphasis on power in human diversity, situational leadership and focus on process management involving and with the help of people. The following allegations belong to her: “Management is the art of getting things done through people.” The most successful leader of all is the one who sees another picture not yet actualized. He sees the things which are not yet there. . . Above all, he should make his co-workers see that it is not his purpose which is to be achieved, but a common purpose, born of the desires and the activities of the group.

Calling for an integrated approach to the analysis of management processes, M. Follett criticized Taylorism for unilateralism, mechanism, neglect of psychological aspects. Management theory, she argued, must be based on advances in scientific psychology rather than intuitive, routine notions of human nature and the motives for behavior. Follett pays special attention to the issue of “power” and “authority.” She opposed the absolutization of authority in the spirit of the formal and bureaucratic

444

6 Western Schools of Management of the Twentieth Century

concepts of the theories that preceded it, in an attempt to delineate power and authority. Follett put forward the idea of “joint power” instead of “dominating power,” which is characteristic of supporters of the unity of command, stressing that it is not power-sharing and delegation, but integration of the activities of all parts of the organization that ensures maximum effectiveness. Follett regarded power as an inherent function of the organization. From this point of view, transfer, delegation of authority is nonsense, contradicts the very notion of management, which she considers to be an inalienable form of power. The distribution of responsibility and subordination is therefore possible only through the integration of authorities of all units into a single, total, continuous, and harmonious system. Authority, unlike power, is alienable, that is, it can be given to certain individuals, bearing in mind that the authority of any executive derives from the function that he exercises, as well as from the changing circumstances in which the person acts. Follett argued that as the organization expands, there is a degree of diffusion of authority within it because of the need to possess expertise that, due to their heterogeneous nature, may be possessed only by workers of different positions and training. As a result, the former concepts of “final” or “central” authority came to be replaced by theories of “functional” authority or “pluralistic” authority. Follett also pointed to a gradual change in understanding of the role of experts, especially “staff counselors.” They are no longer mere consultants who can be consulted or neglected: their recommendations, while not formally an order, assume much greater weight than mere advice in the ordinary sense of the word. Follett was one of the first to put forward the idea of “worker participation in management,” believing that, just as there is no demarcation line between planning and execution, “the distinction between those who manage and those who are managed is in some way vague.” Follett was convinced that workers were inevitably involved in management when they were able to decide on how to follow the orders of their executives. However, “progressive leading” should develop a sense of ownership, not only of the individual, but also, and above all, of shared responsibility. Follett called for the creation of an atmosphere of “genuine community of interests” at enterprises, on the basis of which maximum contribution of all workers and employees to organizational performance could be ensured. A significant part in the work of Follett is the problem of conflict within an organization. She put forward the idea of a “constructive conflict,” thereby recognizing that conflicts should be regarded as “a normal process” of an organization’s activities, “through which a socially valuable distinction is registered to enrich all concerned.” Follett distinguished three types of conflict resolution: “dominance,” that is, victory of one side over the other; “compromise,” that is, an agreement reached through mutual concessions; “integration”—the most constructive reconciliation of contradictions, in which neither side sacrifices, and both parties win. Follett numerously approached the topic of formal management by order. Without denying that they had to be implemented, she insisted on taking into account psychological and other factors. In particular, she drew attention to the importance of taking account of the time, place and circumstances in which orders were given. She

6.4 The School of Human Relations

445

believed that remoteness of the performer from the authority, from which the order proceeds, diminished the effectiveness of the latter, since the effectiveness of a positive response to orders is inversely proportional to the distance they take. Special attention is given by Follett to the psychological reaction of the persons receiving the orders, emphasizing that it is impossible to force people to perform satisfactorily if they are limited to claims and orders. The prevalence of the command form of control (as a type of police model) necessarily elicits resistance as a reaction. Follett pointed out that the problem could not be solved through the art of persuasion, as conviction could be regarded as a manifestation of pressure and a veiled form of order. In order to avoid both extremes, an unnecessary fascination with orders, on the one hand, and the practical absence of them, on the other, Follett suggested dehumanizing orders, to seek to bring together all the persons concerned to study the situation in order to discover the pattern of the case and to reveal the real needs, and to organize obedience respectively. Work, she wrote, should be organized in such a way that, instead of orders, the superior and the subordinate would follow what the situation required. Then the place of “personal control” will be taken by “control of facts,” based on an objective analysis of alternative ways of action, what must be done will be determined, and therefore orders will result from actions rather than actions from orders. Follett called for the most effective methods of work to be standardized to maximum at all levels of execution, especially as people tended to follow established practices rather than obey arbitrary orders. Unfortunately, M. Follett did not leave a systematic composition of her views in the form of a monograph. She gave lectures, reports, and articles that promoted the idea of a “new approach” to the process of management, linking it to criticism of Taylorism. Follett’s collection of works was first published in 1942 under the title “Dynamic Management” [7], which included its most prominent articles and reports, “Constructive Conflict”; “The Giving of Orders”; “Power”; “How must Business Management develop in order to possess the Essentials of a Profession”; “How must Business Management develop in order to become a Profession”; “The Meaning of Responsibility in Business Management”; “The Psychology of Control”; “Leader and Expert”; “Some Discrepancies in Leadership Theory and Practice”; “Individualism in a Planned Society” and others. The activities and achievements of M. Follett in the development of managerial thought as a result, including her criticism of Taylorism once again confirm the legality of one of the three factors of development of scientific thought—“the development of the scientific community, the history of relations within it,” mentioned in paragraph 1.4 of our Tutorial. Back to the Hawthorne experiments. The origins of the experiment are traced up to 1910 and include non-related organizations such as “General Electric,” “Commonwealth Edison,” trade associations, the National Electric Light Association and the National Research Council of the United States. And the idea of experimenting is likely to have emerged at the same time as General Electric’s decision to increase the sales of light bulbs. Naturally, the increase in the number of electrical light bulbs meant that electricity generation was increasing, and this was of interest to

446

6 Western Schools of Management of the Twentieth Century

“Commonwealth Edison.” The National Research Council relied on the influential executives of firms such as “Commonwealth Edison” and “General Electric” as advisers and consultants, so it became interested in electric light bulbs and electricity. Some of the scientific articles published so far had suggested that there is some connection between worker performance and illumination, but careful research was needed to confirm this link, and true science had sought to create a “non-profit” image that the National Research Council could establish. The council was persuaded to set up an industrial lighting committee with the participation of the honorary President of the Council, Thomas Edison, and one of its members working for the AT&T company immediately proposed as a test site a factory in Hawthorne belonging to “General Electric.” At the factory phones were assembled for AT&T. Thus, commercial interests suddenly coincided with pure scientific interests. Studies in Hawthorne had gone through four stages and covered more than 20,000 workers. Experiments were conducted in the assembly of the relay to analyze the impact of working time on productivity. There was also experience in reducing working hours and breaks for rest and offering additional incentives to work. Experiments were carried out on the Mica cleavage section to determine the impact of leisure time and working hours on productivity. An extensive survey program was to identify workers’ attitudes to working conditions. All of these experiments and results were important and interesting, but the most scientific resonance was gained by the experiments in the group’s arrangement control workshop, where radical changes in the philosophy of motivation were begun. Experiments here have focused on some aspects of informal organization. Gradually, researchers had come to realize that work, even in the worst of times, is more than a process of earning a living, and that workers are also receive substantial social benefits from work. In fact, a working group is a social unit that can limit the output of each individual worker, establish a standard of daily productivity, and even use its influence effectively to ensure that people receive remuneration in proportion to the quantity and quality of work performed. The Hawthorne experiments call in memory two names: Elton Mayo and Fritz Roethlisberger. George Elton Mayo was born in 1880 in Australia, where he studied ethics, logic and philosophy. He studied at a medical institution but did not finish it. Mayo came to the United States in the early 1920s to engage in research at the Rockefeller Foundation before he started work at the Industrial Research division at Harvard in 1926. His most important books are “The Human Problems of an Industrial Civilization” (1933) [8], “The Social Problems of the Industrial Civilization” (1945) [9] and “The Political Problems of the Industrial Civilization” (1947) [10]. Fritz Roethlisberger was born in New York City in 1898, and was a gifted child with a passion for geometry, chemistry and physics. He studied at Columbia University and the Massachusetts Institute of Technology, received a degree in each of them, was disappointed in higher education, and returned to Greenwich with the intention of becoming a writer. Fortunately, decided to try his fate one last time and went to Harvard University where he was “taken” by a young professor

6.4 The School of Human Relations

447

from Australia Mayo. This random encounter ultimately changed the course of management history. Taylor’s famous utterance on iron ingot loaders shows how little progress had been made in the theory and practice of motivation over the period of scientific management. All this changed with the advent of Mayo and Roethlisberger’s publications. In the “Management and Workers” Book (1939), Roethlisberger and Dixon (one of the executives at Western Electric) promised not only to tell about the Hawthorne studies, but also to report on the “probations and tribulations” they encountered [11]. Based on the social nature of work, the authors suggested that organizations should introduce “well developed” techniques for diagnosing human relations. This emphasis should be the philosophy of the organization’s action and be brought to the attention of all people in management and management. It is not enough to have a small number of well-trained persons who are able to provide advice. Such skills are lost as soon as a person retires or changes his place of work. It was important to attract as many people as possible and to create a climate in an organization that would stimulate human relations. Managers must be consciously involved in the process of studying and managing these relationships based on what they have learned. Penetration into human nature, which was achieved by Roethlisberger in Hawthorne, was further developed in his publications. In the book “Management and Morale” (1941) [12], he contended: Human behavior is determined more by the mood rather than money, and groups influence the behavior of an individual in such a significant way that it even encourages managers to recognize that business firms are more than just economic institutions, they are social organizational structures composed of human beings and should be managed accordingly. Unlike F. W. Taylor, who considered an “organization” the same economic object as the “employee of this organization,” F. Roethlisberger believed that “an industrial corporate group... is also an organization of people in which their hopes and enthusiasm seek to be embodied” [12 , p.27]. F. Roethlisberger made a great contribution to the development of the problems of the organization as a social system, to the study of ways to overcome various barriers to communication in organizations, to the study of the impact of informal groups on the performance of the enterprise. In his theory of organizational behavior F. Roethlisberger emphasized the need to teach people the skills of “social behavior.” However, unlike E. Mayo, who in the late 1930s opposed the creation of powerful trade unions in the United States, F. Roethlisberger supported the adoption of a new system of collective bargaining. In his opinion, the presence of trade unions will enable managers to realize the dramatic importance and necessity of understanding the dynamics of human relations in the workplace. Later F. Roethlisberger developed the concept of participative management, which implied the involvement of ordinary employees in the management processes. Another treatise, “Man in organization” (1968) [13], testifies to the breadth of the views of Roethlisberger. The relationship between a worker and an expert in efficiency or a technologist illustrates the types of relationships that Roethlisberger

448

6 Western Schools of Management of the Twentieth Century

wrote about. The technologist, he believes, operates on the basis of the “logic of efficiency” and considers technology, specialization and automation as a way of reducing fatigue. Let’s recall how all engineers in the period of the introduction of scientific management argued that specialization and automation would free workers from hard work. However, workers see in the same factors the means to reduce the level of skills required for work and to consistently reduce the importance of the role of the individual. What is used as a saving tool in the language of efficiency becomes a source of discontent in the language of sentiment. Roethlisberger was one of the first to understand the unique position of the lowerlevel manager as a link between people. He was a supporter of executive training at lower levels of production, but at the same time felt that only people with appropriate facilities should be covered by such training programs. “Executives must be ready to learn all their lives, and it is also necessary to train future managers to raise questions, to be attentive and to make decisions” (emphasis added—M.V.). One might expect the ideas of Roethlisberger to reflect the ideas of his teacher, Mayo. In a way, it was. But Mayo’s works have distinctive features that are not in Roethlisberger’s works. Mayo studied all problems against the backdrop of social problems of the developing industrial society. His book “The Human Problems of an Industrial Civilization” begins by warning that “in industry, as in medicine, those who seek a simple cure for all diseases are doomed to fail.” In management, there are never easy answers or very quick decisions, and woe betide the manager who seeks such an answer. If one is found, it is likely to be false. Mayo was interested in many industrial problems, including fatigue, monotonous work and motivation. Investigating spinning workshops at one of the textile factories near Philadelphia, he noted that work in them met all the criteria of the “monotonic model.” The semi-automatic process required the workers’ attention sufficient enough to call this process annoying, but insufficient for the process to fully consume their cognitive abilities. The workshop never complied with the set standards, and pessimistic workers regarded life in all its aspects. The turnover reached 250%. Mayo suggested breaking down and pay for work, as a result the turnover of staff stabilized at 5–6%. The workshop was a model for all other branches of the factory. In discussing this study, Mayo advanced one of the fundamental principles of all theories of human relations, namely the principle of individual differences: “All individuals are different. What’s annoying to one, stimulates the other.” Workers are individuals, and any theory of work that induces the manager to treat everyone equally will not succeed. An experienced manager and an effective organizational structure always recognize the uniqueness of each individual. This principle sounds simplistic, but it’s complicated, it sounds corny, but it’s really deep. A worker may not like a specific program of work stimulation, and he may even resist any kind of change, but everyone would like to be recognized and treated as an individual. Mayo defended the socio-psychological interpretation of productivity growth in Hawthorne. The output had increased, he thought, because working conditions had become more tolerable and workers had been given more freedom to act. In fact, his interests had become increasingly social and political.

6.4 The School of Human Relations

449

Mayo pointed out that all societies have two main objectives. The first is to ensure material and economic existence of all its members. The second is to maintain “spontaneous cooperation” in the entire social structure. The challenge was to work out ways to achieve those goals. It appeared that the “mixer” or “invisible hand” hypothesis, which was characteristic of classical political economy, was no longer able to provide voluntary cooperation. Management must be super creative to make cooperation a reality. Mayo and to some extent Roethlisberger had formulated the following guiding principles, which are as useful as they are practical: 1. Individuals have unique needs, requirements, objectives and motives. Positive motivation requires that workers be treated as individuals. 2. Human problems cannot be simple. 3. A worker’s personal or family problems may adversely affect productivity in the workplace. 4. Good communication and constant exchange of information are important, and effective information is a decisive factor in productivity. 5. Few managers are sufficiently educated and have practical experience to solve the human, social and political problems of industrial Civilization. According to Mayo and his followers, “man is a unique social animal that is likely to achieve complete freedom, only having completely dissolved in a group.” It is characteristic that Mayo himself and many other early representatives of the School of Human Relations had criticized some of the features of the “Industrial civilization” and the newly created production social environment, as the names of the main scientific works of Mayo suggest. He wrote that the process of industrialization was destroying cultural traditions that fostered social solidarity, with the result that the immediate fruits of economic progress were “social disintegration” and “unhappy individuals.” Responsibility for restoring the foundations of “social stability” should lie on the administrators of large industrial firms: if company management is people, rather than product-oriented, the prospects for social sustainability and the resulting “meaningful life for the individual” will increase significantly. In short, the essence of Mayo’s concept is that work itself, the production process itself and “purely physical requirements” are relatively less important than the social and psychological of a worker in the production process. Therefore, all production problems must be viewed from the perspective of human relations, taking into account social and psychological factors. Modern management theorists are rebuilding the essence of the School of Human Relations to three provisions: 1. Man is a “social animal” 2. Rigid hierarchy of subordination and formalization of organizational processes is incompatible with human nature 3. The solution to the human problem is businessmen’s job. The ideas of the patriarchs of the School of Human Relations were further developed by the Professor of the Industrial Management School of the Massachusetts Institute of Technology, D. McGregor, professor at Yale University, C. Argyris, the director of the Institute of Social Studies of Michigan University, R. Likert.

450

6 Western Schools of Management of the Twentieth Century

Concluding the discussion of the emergence, development and consequences of the impact of the School of Human Relations (SHR) on the management of social organizations, the impact of SHR on the development of other sciences should also be noted. In particular, one of the articles published in the journal “Management History” [14] deals with the impact of the SHR on the formation of the known and paradigmatic theory in the field of sociology—The Social Exchange Theory (SET), the author of which is J. Homans (1958).

6.5

Motivation: As a Content and a Process

Continuing to develop ideas of experimentation and Mayo and Roethlisberger’s thoughts about human nature, as well as issues of humanization of work, psychologists, sociologists, and managers focused on motivation problems, more precisely, on identifying the basis of motivation and mechanisms of motivation processes. The first direction gave birth to a number of meaningful motivation concepts (answering the question “What is motives?”), and the second—to several process-driven concepts of motivation (answering the question “How does the motivation process occur?”). . The universally accepted leader of world management thought in the development of the first direction is Abraham Maslow (1908–1970). A. Maslow was born in Brooklyn in 1908, and studied at the University of Wisconsin where he received a PhD in psychology. Soon he was able to obtain the post of a scientific assistant to the famous psychologist E. L. Thorndike at Columbia University and he completed his scientific and pedagogic activities as dean of the Faculty of Psychology at the University of Brandeis. By that time, he had been recognized in the world of scientists as the founder of Humanistic Psychology. Many of his publications made a significant contribution to psychology, but in the context of the issue of motivation, the book “Motivation and Personality” (1954) [23] is the most famous. In 1967, A. Maslow was elected President of the American Psychology Association. Maslow defined motivation as a “study of human limits.” While all people have essentially the same goals, different social cultures influence the ways in which these goals are achieved. An important part of Maslow’s theory is that people needn’t fully achieve their goals. If one need is met or one goal has been achieved, the other need or goal replaces it. Maslow formulated three fundamental assumptions about human nature, which form the basis of his theory: (1) People are in essence needy animals whose needs can never be met; (2) The condition of partially or totally unmet needs prompts a person’s action; (3) There is a hierarchy of needs where the lower levels of basic needs are at the bottom and the needs of the higher level are at the very top. Before describing the hierarchy of needs according to Maslow, it should be recalled that as early as 360 BC in the treatise “State” Plato in the words of his protagonist Socrates, designing a model of an utopian state, spoke about the natural needs of man as follows:

6.5 Motivation: As a Content and a Process

451

We will deal with mentally building the state from the very beginning. As you can see it is created by our needs... And the first and greatest need is obtaining food for existence and life... The second need is housing, The third—clothes and so on... [24, Volume 3, Book II, pp.369с–369d]

And today a brief description of Maslow’s hierarchy of natural8 needs looks like this. The hierarchy is based on physiological needs for food, water, clothing and housing. These are the survival needs without the satisfaction of which a person dies. These needs are natural, and they are inherent to the individual from the date of birth. As physiological needs are met, safety needs and social needs arise. People need to be protected from the dangers and uncertainties of the future. In developed countries, food may no longer be a problem for the majority of the population, but it has an urgent need to protect itself from the inability to earn a living in an old age, from serious diseases and other dangers in the uncertain future. Not all needs relate to safety and survival of the individual. People also need communication and a sense of belonging. Hence the third level of the hierarchy is the need for belonging. People need recognition from others and a sense of belonging to the community. Further there is the need for respect and recognition, for each of us aspires to it. We need to believe: that what we do makes sense; that we are honest, noble; that we are accepted as friends, as distinguished colleagues. When we are confident of such an acceptance, our need for respect and recognition is satisfied. At the top of the hierarchy is the need for self-actualization—the best possible revelation of talents and skills that we have developed. While the remaining needs are often met, few “normal” individuals actualize themselves. Self-actualization is a search, a target, not a particular achievement. There’s always work to be done, relationships that need to be improved, and capabilities to be used. Note here that in none of the available published works of Abraham Maslow, we could not find, first, a reference by A. Maslow to the above-mentioned original words of Plato about needs, said more than 2000 years ago, and second, the use of the term “pyramid” and/or a graphic representation of needs in the form of a pyramid. In his hierarchy, Maslow divided needs into two large categories. Shortage needs cover needs at the lower levels, including physiological, safety and belonging needs. The needs of growth and development are the essence of the need for respect and actualization. It should be noted that shortage needs are met by factors external to the individual, such as, food, a healthy environment, friends and loved ones, while the needs for growth are inherent in the personality and his intrinsic characteristics.

The author of the textbook added the characterization “natural” on his own, hypothetically assuming that Abraham Maslow had been engaged in identifying precisely the “natural” needs of a person all his life, starting with a study of himself, his complex life in childhood and adolescence. Abraham was a lonely, shy and depressed young man. As he wrote: “Considering my childhood, one can only wonder that I am not mentally ill ... I was lonely and unhappy. I grew up in libraries, among books, without friends” [23].

8

452

6 Western Schools of Management of the Twentieth Century

The importance of maintaining a favorable working environment was revealed by Maslow in its discussion of “The theory of threat.” The broad public in general and staff at an organization may experience serious psychological problems when they are exposed to danger. When an individual encounters difficulties in achieving his or her vital purpose, a conflict arises. Examining the causes and consequences of threats resulting in conflicts, Maslow introduced the notions of threatening conflict, when an employee is forced to choose between two equally important but mutually exclusive goals (a weak threat) and a catastrophic conflict, when the employee is deprived of a choice because of a serious threat, such as dismissal or early retirement. Unlike most psychologists, Maslow studied a healthy, not a pathological human person. Most of the book “Motivation and Personality” is devoted to discussing the self-actualizing personality. Maslow used his own life, the lives of his friends, acquaintances and students, who, as he assumed, had sufficient motives for their own actualization, as objects for his theory. The first significant characteristic feature of the self-actualizing personality is individual attitudes towards life. Selfactualizing people “live in the real world of nature rather than in the artificial clutter of ideas, abstractions, beliefs, expectations, and stereotypes that most people confuse with the real world.” The self-actualizing individuals perceive what is real, not what they want and hope to see real. They’re not selfish, they are interested in the lives of others. But even if the self-actualizing personalities care for the well-being of others, they’re entirely focused on problems, so they are often thought of as cold and haughty. Yet this type of personality constantly seeks closer relations with the people closest to them. A more complete knowledge of these “others” constitutes their permanent objective. Partnership needs also become the needs of the self-actualizing person, and caring is an essential element of friendly relationships. This portrait of a very healthy personality represents a person who needs privacy, but loves and cares about others. The self-actualizing individual who sets goals and works to achieve them, at the same time, is guided by principles and the Code of Ethics, which compels at times appearing to people as “kind,” that others may even dislike someone who so clearly demonstrates a role model for more “normal” people in their organization. During the last years of his creative life, A. Maslow conducted research at the University of Brandeis of “self-actualizing personalities,” which allowed, first, to formulate a positive, humanistic view of human nature and, second, to expand the perception of the hierarchy of human needs. He wrote: “Many people consider their lives meaningful only when they feel a need for something, when they seek to satisfy some shortage. However, we know that self-actualized people, despite the fact that their basic needs are satisfied, find a much richer meaning in life, because they know how to live in the reality of Genesis... Equally important to me was the growing understanding of what I called the “Complaint theory.” In short, my observation is that the state of joy born of the satisfaction of need is short-lived—it is soon replaced by dissatisfaction, only of a higher order (ideally). Apparently, the human dream of eternal happiness is

6.5 Motivation: As a Content and a Process

453

unachievable. Of course, happiness is possible, it is achievable and realistic.9 But it seems that we have no choice but to accept its transience, especially if we are talking about the higher, most intense forms of happiness and joy. The highest experiences do not last long, and they cannot be durable. The intense experience of happiness is always episodic. This observation forces us to reconsider our understanding of happiness that has governed us for three millennia and determined our conception of the pastures of Heaven and the promised heavens, the good life, a good society, and a good person. Our fairy tales traditionally end with the words: “And then they lived happily ever after.” The same can be said of our theories of social improvement and those of social revolution. We have waited too long—and were therefore subsequently disappointed—with very specific, but limited, social reforms. We expected a lot from the trade union movement, from giving women the right to vote, from direct Senate elections, from the introduction of differentiated income tax and from many other social benefits, in which we grew up and without which we cannot imagine our life—to take at least amendments to our Constitution. Each of these reforms was presented to us as the final solution of all problems, promised the advent of the “golden age,” an endless era of happiness and prosperity, and ultimately caused universal disappointment. But disappointment means that there was fascination, the collapse of illusions suggests their presence. We have the right to expect the best, and we have the right to hope for a better order of things. However, we must understand that there is no absolute perfection, that eternal happiness is unattainable” [23 , pp.18–19]. A. Maslow figuratively wrote about the hierarchy of needs as follows: “Looking over the hierarchy of needs and meta needs I had created, I caught myself thinking about it. I have found that this hierarchy can be thought of as a buffet (highlighted by us—M.V.), full of delicious food. A person who happens to be at this table has the opportunity to choose dishes in accordance with his taste and in accordance with his appetite. I am leading to the fact that in any judgment of the motivation of human behavior, the character of a gourmet, connoisseur, judge is always traced. A person plays what motivation to ascribe to the observed behavior, and does it in accordance with his own worldview—optimistic or pessimistic” [23 , pp.16–17]. It was the mention of the “buffet” that prompted us to start searching in the writings of A. Maslow for the use of the term “pyramid of needs.” The hierarchy of human natural needs developed by A. Maslow of seven levels, developed a little later, can be represented as a list as follows: 1. Physiological (hunger, thirst, etc.) 2. Safety (feel secure) 3. Love/belonging (love and be loved)

9

Here A. Maslow’s arguments about happiness intersect with the ideology and teaching of eudemonism, the ideology of happiness developed in the Draenei of Greece and served as the basis for the formation of the first model of management of the Polis economy—the model of the police state, which was discussed in Chap. 1 of our textbook.

454

4. 5. 6. 7.

6 Western Schools of Management of the Twentieth Century

Respect/honor (competence, approval) Knowledge (to know, to be capable, to understand, to explore) Aesthetic (harmony, order, beauty) Self-actualization (realization of their goals and abilities)

Like all theories, the needs hierarchy moved forward by Maslow is not free of defects. One of the most obvious is that it is hierarchical linearity in the process of meeting the needs. The second drawback is impossible for ordinary employees to recognize the different levels of the hierarchy. If these levels cannot be identified or highlighted, it is difficult, and sometimes impossible, for managers to personalize and specifically address motivation programs. The third drawback associated with the second—is not indicated in his works10 the measure of satisfaction of a specific need, sufficient and/or necessary to move to the next need in the hierarchy. Obviously, the third drawback was one of the factors, and possibly one of the reasons for the formation of the two-factor Herzberg model, which will be discussed below. In response to this criticism, Clayton Alderfer (1940–2015) advanced his theory of human needs of existence (E), relatedness (R) and growth (G) published in the book of the same name in 1972 [25]. According to this theory, human needs are divided into three categories: existence, relatedness (relationships), and growth. The needs of existence correspond to Maslow’s physiological needs and to the need for safety; the need for relatedness is similar to the needs of belonging and involvement, recognition and respect, and growth needs may be compared with the need for recognition and respect on behalf of others and for self-actualization. Although Alderfer’s concept found broad recognition because of its relative simplicity, it is, in large part, the same as Maslow’s concept. Both concepts are based on the existence of different types of needs and involve linkages that can be exploited in devising programs of motivation and promoting individual conduct at organizations. At the same time, Alderfer does not define needs within the hierarchical structure and argues that all needs can be active at any given time. However, if a need of the upper level is not satisfied, the level of impact of a lower level need increases, which shifts the attention of the individual to that level. According to Alderfer, the hierarchy of needs reflects the rise from more specific needs to the less specific. And therefore, if the needs of the upper level are not met, the so-called reverse top-down movement or shifting to a more specific need occurs. Alderfer called the process of moving up the levels of needs the process of meeting the needs, and the reverse (moving down)—the process of frustration, or defeat in meeting the need. Alderfer tried to establish a connection between the satisfaction of his identified needs and their activation and as a result identified the following seven principles: 1. The less satisfied the needs of existence (E), the more they manifest themselves. 2. The weaker the satisfaction of social needs in relationships (R), the stronger the

10

Anyway, we could not find.

6.5 Motivation: As a Content and a Process

455

effect of the needs of existence (E). 3. The more fully satisfied the needs of existence (E), the more actively social needs (R) express themselves. 4. The less social needs (R) are satisfied, the more their effect is enhanced. 5. The less satisfied the needs of personal growth and self-realization (G), the stronger the social needs (R) become. 6. The more fully satisfied social needs (R), the more actualized the needs of personal growth (G). 7. The less satisfied the needs of personal growth (G), the more actively they manifest themselves. The more the need for personal growth is satisfied, the stronger it becomes. Thus, Alderfer showed that the order of actualization of needs may be different than Maslow pointed out, and depends not only on its place in the hierarchy but also on the degree of satisfaction of this need, as well as some other needs. Besides, Alderfer’s concept provides for cycles to meet the same need. Thus, for example, the need for growth or other needs may practically strengthen as they are met. Although the results of research of human needs are generally better explained by Alderfer’s theory, it received only limited support from researchers. Another meaningful concept of motivation was developed by the American psychologist David McClelland (1917–1998). It is known as the concept of three acquired needs: achievement, affiliation, and power. David McClelland was born in Mount Vernon, New York, 1917. He studied foreign languages at MacMurray College and graduated from Wesleyan University in 1938. He received a doctorate degree in psychology at Yale University, and then from 1956 he worked at the Department of Public Relations at Harvard. David McClelland died in 1998 in Lexington, Massachusetts. Fundamental to the McClelland’s study was the idea that the need for achievement, at least some part of it, is decisive for economic growth or economic development. Specifically, the study was aimed at proving whether there was a link between the need for achievement and the levels of productivity of separate individuals, organizations, and societies. McClelland wrote of this in his first major scientific work “The Achieving Society” (1961) [26]. Having once discovered such a connection, McClelland developed a training program to promote the need for achievement among managers, small business owners, and other groups. To illustrate the practical significance of this idea, McClelland in the work “Managing motivation to expand human freedom” (1978) [27] pointed out that the owners of small businesses who had developed needs for achievement had been more active in municipal management, invested more in expanding their business, provided jobs to twice as many people as those who had not received such training. Several conclusions can be drawn from McClelland’s studies. The most important conclusion concerns the motivation of entrepreneurial capabilities in society as a whole. McClelland argued that stronger-motivated societies give rise to more energetic entrepreneurs, and these entrepreneurs in turn accelerate economic growth.

456

6 Western Schools of Management of the Twentieth Century

Entrepreneurs must take risks, and willingness to take a certain share of risk is associated with a higher demand for achievement. Besides, data show that people with more advanced motivation for achievement are themselves convinced that they are more likely to succeed than those who have little confidence in achievement. People with developed motivations show greater energy, capacity, a more active and creative approach. Finally, these people receive more satisfaction from the fact that they are fortunate than from public recognition and praise. Another of McClelland’s conclusions answered the question of how the motives for the high achievements evolve and could develop. First, it is important that parents or managers set high standards of behavior, and are kindly and immediately responsive when children or workers act in compliance with these standards. For countries that want to use high standards of behavior to accelerate economic growth, it is necessary to: (1) renounce the focus on tradition and promote the development of the personality of its citizens; (2) strengthen the need for achievement through actions such as the adoption of high-efficiency principles and the establishment of highproductivity standards; (3) achieve a better allocation of existing labor resources by channeling those who are most suited to the activities in areas where they can have a maximum impact on organizational and social efficiency, as well as recognizing and rewarding achievement-focused people within the firm and country. The need for affiliation, as in Maslow’s concept, is manifested in the people’s desire for friendly relations with others. People with a high need for complicity try to establish and maintain good relationships, seek the approval and support of others, and are concerned about what other members of the organization think about them. It is very important to them that they need someone, and that their colleagues are not indifferent to them and to their actions. They prefer to hold positions at organizations and to perform work that allows them to interact actively with people (colleagues, clients). The need of power is also acquired, that is, developing through learning and life experience and that the individual seeks to control the resources and processes that occur within his environment. He seeks to influence the behavior of those around him, to take responsibility for the actions and behavior of others. This need in leadership concepts has taken a key position in explaining the sources of human power within a group. Its main provisions are reflected in the work of D. McClelland “Power: the inner experience” (1975) [28]. There is another concept—the Two-factor theory of motivation of Frederick Herzberg (1923–2000), that has traditionally been referred to meaningful motivation concepts, although in fact it is not so much about human nature or new needs identified by him, as about studying the nature of work, based on the assumption that work and its relevance to the worker must be a constant concern for all aspiring managers. From the individual to the place of work: Herzberg’s two-factor motivation theory. A group of psychological service researchers in Pittsburgh, working in the mid-1950s on motivation issues, found the existing Maslow’s and McClelland’s theories of motivation imperfect, resulting in the book “Job Attitudes: Review of Research and Opinion” (1957), written by Frederick Herzberg and his colleagues.

6.5 Motivation: As a Content and a Process

457

F. Herzberg was born in Lynn, Massachusetts, in 1923. He studied at the University of Pittsburgh, where he defended his master’s thesis in the field of health and received a doctorate in psychology. He then began his work in psychological service in Pittsburgh as a research director. He was later a professor of psychology at Case Western Reserve University, and then a professor of management at the University of Utah. Frederick Herzberg died in 2000 at the Salt Lake City Hospital. Having gone through several thousand publications on the subject of motivation, Herzberg came to the conclusion that there is a lot of confusion in this area and a “fresh” approach is needed. The main contribution of F. Herzberg and his colleagues in management science is associated with the development of the motivational and hygienic theory and the creation on this basis of the concept of labor enrichment. Having studied several thousand publications on motivation, Frederick Herzberg and his colleagues Bernard Mausner and Barbara Snyderman came to the conclusion that there was a lot of confusion in this area, “that in this area there is a diversity of opinions and disagreement” and a “fresh” approach is needed, as they wrote in 1957 in their first joint work “Job Attitudes: Review of Research and Opinion” [29]. As F. Herzberg wrote in the Preface to the second work with colleagues “Motivation to Work” (1959): “In the course of this study, my colleagues in the Pittsburgh Psychological Service have created a classification of problem areas in the area of people’s attitude to work, having studied almost two thousand sources, that is almost everything that was published on this topic from 1900 to 1955... The aim of the study was to find a clear answer to the question: “What do employees want from their work?” [30 , p.6]. In “The Motivation to Work,” Herzberg and his colleagues took a completely different approach than the one contained in the first book. The study of literature convinced the authors that the main mistake of previous studies was their fragmentarity. Thus, studies dealing with factors influencing the employment of workers rarely covered the consequences of these facilities. At the same time, research of the effects of the labor force was not related to their origin. In Herzberg’s opinion, there was a lack of research on staff attitudes to work in general, which would simultaneously address factors, attitudes, and consequences. This was called the complex or the “factors-effect-consequences” cluster. It was this approach that was used by F. Herzberg and his colleagues in a natural experiment, and the results are presented in the work “Motivation to Work” [30]. The two-factor theory was developed on the basis of data collected by Herzberg and his colleagues from interviews with 203 engineers and accountants in the Pittsburgh area whose professions were in great demand in that period in the business world. Respondents interviewed and asked to speak about cases where they were extremely satisfied or very dissatisfied with their work. As for the questionnaire and data collection process, as F. Herzberg writes in one of his articles, it happened like this: “Briefly, we asked our respondents to describe periods in their lives when they were exceedingly happy and unhappy with their jobs. Each respondent gave as many “sequences of events” as he could that met certain criteria—including a marked change in feeling, a beginning, and an end, and contained some substantive description other than feelings and interpretations...

458

6 Western Schools of Management of the Twentieth Century

The proposed hypothesis appears verified. The factors on the right that led to satisfaction (achievement, intrinsic interest in the work, responsibility, and advancement) are mostly unipolar; that is, they contribute very little to job dissatisfaction. Conversely, the dis-satisfiers (company policy and administrative practices, supervision, interpersonal relationships, working conditions, and salary) contribute very little to job satisfaction.” [31]. Analysis of the results revealed something that researchers of motivation to work did not previously know. They started the experiment on the assumption that there are only two job evaluations or reasons for job motivation: “job satisfaction” and “job dissatisfaction.” After the experiment scientists had come to the conclusion that the process of satisfaction and the process of increasing dissatisfaction with work in terms of their factors are two different processes, that is to say, the factors that led to an increase in dissatisfaction, did not necessarily increase satisfaction when they were eliminated. In the course of the experiment, two more evaluations of work or attitude toward work were revealed: “no satisfaction” and “no dissatisfaction.” The theory of work motivation created by F. Herzberg and his colleagues, also called the theory of “atmosphere-actualization” factors, borrows ideas from Christian myths, Darwinism and psychology. It is based on a hierarchical approach to human needs in the research of biblical myths about Adam and Abraham and on the theory of A. Maslow, which we have written about in the Maslow section. The study of Christian myths allowed F. Herzberg (as well as Socrates in the “State”) to conclude that they express the types of motivation common to all mankind. And following Maslow, the starting points are the notions that a person has a complex hierarchical structure of needs, at the top of the pyramid of needs is the need for selfactualization, which can only be satisfied in the process of work. As F. Herzberg wrote, “Obviously, the motivational and hygienic theory meets several requirements for all theories capable of performing practical functions.” She “provided a stingy explanation of both the adaptive, passively predetermined by Adamova, that is, hygienic, and creative, actively predetermined Abraham, that is, motivational nature of humanity. Critics often call such stingy oversimplification. But the paradox cannot be simple, and the motivational and hygienic theory explains human nature as a paradoxical combination of two opposing dynamics (not two factors), i.e. the desire to avoid pain and the desire to achieve growth: man is predetermined to be a predeterminer” (highlighted by us—M.V.) [30 , p.10]. In such a case, managers need to know that if the staff are not satisfied with their working conditions, even the low cost of painting the equipment, increasing leisure time and creating a musical background may help to resolve motivation problems in the company. The factors that increase satisfaction are identified by researchers as motivators, and the factors that reduce dissatisfaction are called hygienic (most likely due to the scientific orientation of Herzberg as a specialist in healthcare). The results of the studies had aroused great interest among managers. Herzberg demonstrated that certain aspects of labor are “necessary but not sufficient conditions of motivation.” Factors such as company policy and management, interpersonal relations with superiors and colleagues, as well as general production conditions, are only basic working conditions. Just as public water pipes do not

6.5 Motivation: As a Content and a Process

459

make humans healthy, but merely do not allow them to become “sick,” these hygienic factors cannot be motivators. They merely create normal, healthy working conditions. The employee hopes for a healthy environment, a sound company policy, and a pleasant relationship with the boss and colleagues. If these conditions are not present, the worker will be dissatisfied with the work, but if they are, it does not necessarily raise the status of job satisfaction. At the same time, motivating factors create opportunities for achievement, recognition of good work, greater responsibility, and provide for career growth. These factors underline the fact that work should be a source of self-actualization and personal growth. The manager should bear in mind that hygienic factors that can only increase dissatisfaction in their absence are external or uncharacteristic of the workplace. They are related to the environment, co-workers, and company policy. However, motivators are internal factors, that is, they are inherent in the work itself. According to Herzberg, the secret of motivation is simple enough. If you, as a manager, he advises, want to motivate your employees or other managers, give them a meaningful job that implies possibilities of achievement, growth, and recognition. This recommendation has undoubtedly generated ideas for the motivation of labor and the enrichment of work, which play an important role in modern management theories. A few words about the reasons (factors) that prompted the development of management thought on the example of the achievements of Herzberg and his colleagues in the 1960s, as the root causes of the emergence in the beginning of the twenty-first century of the school of ”positive organizational behavior” [33]. As Herzberg writes about his creative life (starting with health care) in the preface to the treatise “Motivation to Work”: “From general clinical training, during which all our ideas about mental health and a sound state of mind were based on the absence of disease, I moved to a health care school, where the emphasis was on a positive mental state. In a year of school of health care, I wrote the work “Mental health11 is not the opposite of mental illness.12” Forty years ago we talked about positive health, which in our time has become the most fashionable topic. Some scientific insight takes forty years to gain popularity” (highlighted by us—M.V.) [30 , p.6]. We should also note the international invariance of F. Herzberg, for which Herzberg and other researchers conducted a number of studies in the USSR, Japan, Zambia, India and other countries in the 1980s. On this occasion, F. Herzberg wrote: “In 1987, I summarized the results of cross-cultural repetitions of the experiment described in “Motivation to Work,” in the article “Workers’ Needs, the Same Around the World,” Industry Week13 and in the publication of

11

Read—“job satisfaction” (M.V.). Read—“dissatisfaction with work” (M.V.). 13 Herzberg F. Workers’ Needs: The Same Around the World. Industry Week, 21 September, 1987. 12

460

6 Western Schools of Management of the Twentieth Century

the Academy of Sciences of the USSR “ Journal of sociological research.”14 Despite cultural differences, workers in all parts of the world tend to receive satisfaction from intra-labor factors and dissatisfaction from extra-labor. Japanese researchers were particularly surprised to find that the “pleasant sensations” referred to by the Japanese workers, were caused by their own achievements and successes in the study of their craft, and not by company politicians or by interpersonal relations with colleagues15” [30 , pp.9–10]. The main conclusion is that the Herzberg’s theory focuses on the job and the ways in which work becomes more meaningful. If Taylor, Gantt, and the Gilbreths were obsessed with the idea of formulating and measuring the working task, and Mayo, Roethlisberger, Maslow, and other authors, who wrote of human relations, insisted on recognizing that tasks were performed in a particular environment, Herzberg himself, together with his colleagues, argued that work and work assignments must have meaning and an idea. Assessing the hierarchy of natural needs of A. Maslow, we pointed out the shortcomings of his model, which is that company managers have difficulties in developing programs to meet the needs of company employees, and Maslow’s works do not indicate (at least we could not find) measures satisfaction of a specific need, sufficient and/or necessary to move to the next level of need in the hierarchy. It can be assumed that F. Herzberg recognized this shortcoming and tried to eliminate it. It is up to the reader of the textbook to judge whether Herzberg succeeded, but we will express a certain hypothesis in the form of a verbal and formal equation, to which we were led by the following words of A. Maslow: Human life will never be understood unless its highest aspirations are taken into account. Growth, self-actualization, the striving toward health, the quest for identity and autonomy, the yearning for excellence (and other ways of phrasing the striving “upward”) must by now be accepted beyond question as a widespread and perhaps universal human tendency” [23 , p.15].

And our hypothesis sounds like this: “The level of any natural need N” (Yn) multiplied by the “Measure of satisfaction of natural needs N” (Mn in %%) is a constant value, or Yn
Mn ¼ Const

ð6:1Þ

For example, if in Maslow’s seven-level model, some three needs are at levels (or have numbers) N2 (Safety), N4 (Respect/Honor), and N7 (Self-actualization), and the measures of their satisfaction (in %%) are equal to M2, M4 and M7, respectively, then

14

Herzberg F., Miner M. Motivation to Work versus Incentive to Labor. Journal of Sociological Studies, USSR Academy of Sciences, Moscow, September, 1990. 15 Kobayashi ¥., Igarishi H. An Empirical Test of the Herzberg Theory about Job Satisfaction. Tohoku Psychologica Folia, 40, 1981—pp. 74–83.

6.5 Motivation: As a Content and a Process

461

Y2
M2 ¼ Y4
M4 ¼ Y7
M7 ¼ Const: If our hypothesis is correct, then in a pragmatic sense it suggests that company managers should not get carried away with creating conditions for satisfying the lower (scarce) natural needs of the company’s employees, but strive to develop programs aimed at satisfying the employee’s needs at a higher level in the Maslow hierarchy. Of course, only the constant value remains in question! The peculiar development of F. Herzberg’s two-factor theory of motivation can be considered process theories of motivation, some of which will be discussed below. Process motivation theories The most general scheme of the process of motivation is reduced to the following sequence of actions and conditions of a person. A person, having realized the tasks and the possible reward for their solution, correlates this information with his needs, motivational structure and capabilities, adjusts himself to a certain behavior, develops a specific location and carries out actions leading to a specific result, characterized by certain qualitative and quantitative characteristics. There are a number of theories that talk about how the process of motivation is built and how to motivate people to achieve the desired results. The main points of some theories will be discussed in this section of the textbook. These theories attempt to explain why people are willing to take certain actions by spending more or less effort, and how managers should work on people to encourage them to work effectively. Thus, these theories give managers the key to building an effective system of motivating people. The motivational process, the ultimate goal of which is the result of performing a particular job, is the subject of these theories. Studies of this kind have shown that any individual in the process of performing a job is faced with the problem of choosing among possible actions, taking into account current situations or information factors, as well as the expected outcome. The first theory, which we have outlined, is related to the employee’s own assessment of the results that will be obtained in the process of choosing one of the behavioral options when the simple goal of maximizing impact is set. A person is seen here as a rational agent oriented towards maximizing the benefits of limited energy expenditure. Expectancy theory The theory of expectation dates back to the 1930s and is largely associated with developments in the field of change management by Kurt Levin. The main developers of the actual concepts of expectation in relation to the motivation and behavior of a person in an organization can be called Victor Vroom [34–38], as well as L. Porter and E. Lawler [138]. In 1964, Victor Vroom in his treatise “Work and Motivation” [34] first proposed the “Theory of Expectations.” He first introduced two important terms. The first is expectancy, which, according to Vroom, is “faith in the probability that a specific action would follow a particular result.” The second is valence, meaning the attraction, or the perceived value, that a person ascribes to each particular result. The value of the valence is determined by the extent to which the result becomes a

462

6 Western Schools of Management of the Twentieth Century

means of obtaining something that is of value to the individual. For example, a worker might want to work intensively because he thinks that hard work will be higher paid (high expectancy). The valence of higher earnings is determined by whether the money received is expected to buy a new car, which is so necessary for the worker and his family. Therefore, the motivational pressure on a person to perform a certain action or to choose a certain alternative is the perceived probability (expectancy) that the action will produce the desired result, multiplied by the perceived value (valence) of that result. According to Vroom’s expectancy theory, the expectancy process of motivation rests on three components: effort-performance-outcome. A theory is devoted to the interaction of these components. Efforts are seen as a consequence and as a result of motivation. Execution is seen as a result of the interaction of efforts, personal opportunities and the state of the environment. The result is treated as a function dependent on performance and the degree of desire to achieve the results of a particular type. From a practical point of view, the essence of Vroom’s theory can be summarized as follows. The motivation of a person to spend effort on any task depends on: (1) expectations, that is, a person’s awareness of the likelihood that the cost of a particular effort will result in increased productivity; (2) mechanical action, that is, a person’s consciousness of the relationship of higher productivity and a higher return, such as better earning and promotion; (3) valence, that is, an awareness of the desirability of obtaining a specific remuneration. In his studies Vroom with colleagues used the mathematical apparatus to measure valence and other model parameters. The main findings of Vroom’s work are as follows: First, the expectation of remuneration is more significant than is often assumed. People make choices on the basis of what they believe will happen in the future, rather than on the basis of the events of the past. Second, remuneration should be closely and unequivocally linked to such actions as are necessary for the given organization. The types of conduct that are considered useful to the organization should be rewarded openly, regularly and generously. Third, people value rewards in different ways, so that by distributing rewards in accordance with the results achieved by the organization, the wishes of each individual employee should be taken into account. Fourth, and finally, the remuneration should be equivalent to the effort spent on performing the working task [35–38]. The expectancy theory is complex enough to be applied because it is abstract. At the same time, it is quite specific and simple in another aspect: we are all aware of the importance of the expected outcome in shaping our behavior, and the theory of expectations allows us to apply everything we know about ourselves to the motivation of those who we work with. In the expectancy theory, one implicit assumption is made about the rationality of human nature. People in theory are regarded as counting machines; even with limited information, they evaluate behavior today in terms of its likely outcome tomorrow. The lack of fair reward estimates in Vroom’s theory of expectations led to the emergence of the Theory of equality (or justice). The emphasis in it was placed on the constant desire and desire of people to get a fair assessment of their actions.

6.5 Motivation: As a Content and a Process

463

People, although not to the same extent, want to be treated fairly. Moreover, justice is associated with equality in comparison with the attitude towards others and the assessment of their actions. This axiom in many ways resembles the conclusions of F. Herzberg, and at the same time is an original development of his two-factor model. If a person believes that they are approached in the same way as others, without discrimination, evaluate his actions from the same positions as the actions of others, then he feels the fairness of his attitude to himself and feels satisfied. If equality is violated, if individual members of the organization receive an undeservedly high assessment and reward, then the person feels offended, and this leads to frustration and dissatisfaction. Moreover, dissatisfaction (more precisely, “lack of satisfaction” according to Herzberg) can occur even when a person receives a high reward in relation to the cost of his labor. The influence of this moment on the relationship of a person with an organization is the basis of the theory of equality. The founder of the Theory of Equality (TE) is John Stacey Adams, who, based on research conducted by him at General Electric, formulated the provisions of this theory. The main idea of the TE is that in the process of work, a person compares how his actions were evaluated with how others’ actions were evaluated. And on the basis of this comparison, depending on whether he is satisfied with his comparative assessment or not, a person modifies his behavior [39]. The theory is built-on the belief that employees become de-motivated, both in relation to their job and their employer, if they feel as though their inputs are greater than the outputs. Employees can be expected to respond to this in different ways, including de-motivation (generally to the extent the employee perceives the disparity between the inputs and the outputs exist), reduced effort, becoming disgruntled, or, in more extreme cases, perhaps even disruptive. As stated in the TE on the basis of empirical studies, a person feels a sense of satisfaction if equality is respected. Therefore, he seeks to maintain this state. Equality is bad when overall performance is low. In this case, equality will lead to the preservation of this level. If the overall level of performance is high, equality is an important motivating factor for the successful work of members of the organization. It is important to also consider the Adams’ Equity Theory factors when striving to improve an employee’s job satisfaction, motivation level, etc., and what can be done to promote higher levels of factors. Inputs factors typically include: 1. 2. 3. 4. 5. 6. 7. 8.

Effort Loyalty Hard work Commitment Skill Ability Adaptability Flexibility

464

9. 10. 11. 12. 13. 14.

6 Western Schools of Management of the Twentieth Century

Acceptance of others Determination Enthusiasm Trust in superiors Support of colleagues Personal sacrifice

Outputs typically include: A. Financial rewards (such as salary, benefits, perks). B. Intangibles that typically include: 1. 2. 3. 4. 5. 6. 7. 8.

Recognition Reputation Responsibility Sense of achievement Praise Stimulus Sense of advancement/growth Job security

While obviously many of these points can’t be quantified and perfectly compared, the TE argues that managers should seek to find a fair balance between the inputs that an employee gives, and the outputs received. And according to the theory, employees should be content where they perceive these to be in balance. The TE allows us to draw some very important conclusions for the practice of managing people in an organization. Since perception is subjective, it is very important that information is widely available about who, how, for what and how many receive rewards. It is especially important that there is a clear payment system that answers the question of which factors determine the amount of payment. An important conclusion from the theory of equality is that people are guided by a comprehensive assessment of remuneration. Remuneration plays an important role in this comprehensive assessment, but far from the only and not necessarily decisive. Therefore, managers should take this into account if they try to create an atmosphere of equality in the team. In the event that the individual believes that he is rewarded insufficiently or unnecessarily, he has a feeling of dissatisfaction (in the second case, this feeling is less pronounced). Considering the assessment of his work to be unfair and unequal, a person loses motivation for active, creative, from the point of view of the organization’s goals, actions, which leads to many negative consequences. A few words about some of the process theories of motivation, trying to make up for the shortcomings of the two previous theories, focusing on the advantage of a targeted approach and an objective assessment of the employee’s contribution in achieving the goal of the organization. At the same time, the emergence of new theories manifests the influence of the “filiation of ideas” factor in the development of management thought.

6.5 Motivation: As a Content and a Process

465

One of them is the Goal Setting Theory (GST), which proceeds from the fact that a person’s behavior is determined by the goals that he sets for himself, since it is for the sake of achieving his goals that he performs certain actions. At the same time, it is assumed that setting goals is a conscious process, and conscious goals and intentions are what underlies the definition of human behavior. The GST originates in the works of F. Taylor, the target approach is reflected in the works of Lillian Gilbreth, Henri Fayol, Peter Drucker, and Douglas McGregor. However, Edwin Locke, who in 1968 published an article “Toward a Theory of Task Motivation and Incentives” [139], is considered to be the developer of the GST itself). In general terms, the basic model describing the goal setting process is as follows. A person, taking into account the emotional reaction, is aware and evaluates the events occurring in the environment. Based on this, he defines goals for himself, to the achievement of which he intends to strive, and, based on the goals set, carries out certain actions, performs certain work. That is, he behaves in a certain way, reaches a certain result and receives satisfaction from it. There is a definite and fairly close relationship between the characteristics of goals and the characteristics of performance. The authors of the GST argue that the level of work performance directly or indirectly largely depends on four characteristics of the goals: 15. 16. 17. 18.

Complexity; Specificity; Acceptability; Commitment.

These characteristics of the goal affect both the goal itself and the efforts that a person is willing to spend in order to achieve his goal. Getting acquainted with these four characteristics of the goal, how not to recall Shang Yang’s words about adherence to management goals and the perfect wise ruler of Ancient China (see Sect. 2.3 of our textbook) and the words of 18-year-old Russian poet Mikhail Lermontov: “It’s easy to rule the people if they passion for one common passion ... ”. At the same time, when considering the dependence of performance on goals, TPC authors emphasize that the quality of performance depends not only on the employee’s efforts determined by the goal but also on two groups of factors: (1) organizational factors and (2) employee’s abilities. Moreover, these groups of factors can affect not only the quality and content of execution but also on goals, thereby providing an indirect effect on motivation and, therefore, an additional effect on performance. However, the GST has some significant drawbacks that complicate its practical implementation. First, it does not have a uniform application for all people. There is a different degree of target orientation for different groups of people, differing from each other by gender, age, education, profile of activity, etc. Second, there is no single answer to the question of who should set goals and how. Whether goals should be set by management, or should they be based on broad participation and discussion determined by those who will achieve them. Third, many uncertainties

466

6 Western Schools of Management of the Twentieth Century

arise when the question of who the subject of goal setting is being decided: an individual or a group. There is no single answer defining the priority of setting goals for individuals or for a group. Fourth, there is no clear answer to the question of what should be the stimulus. Should it focus primarily on achieving the goal or should it be aimed at motivating the achievement of a higher and better performance. This prompted researchers of the motivation process to try to eliminate the indicated shortcomings of the GSC, to increase the emphasis on human participation in the formulation of goals and objectives of the organization’s management, to identify additional human motives to take part in managing the organization, which led to the development of a more advanced theory—the Concept of Participatory Management (CPM). The CPM proceeds from the fact that if a person in an organization is interested in participating in various intra-organizational activities, in deciding on issues related to his functioning in the organization, he thereby, receiving satisfaction from it, works with greater efficiency, better, with higher quality and more productively. CPM gained distribution in the United States in the 1950s and 1960s. It is difficult to name the author of the CPM, but in many ways this concept is similar to Mc Gregor’s “Theory Y” [140]. In organizations that have traditions and a high proportion of creative, hardworking, and executive workers working in line with the “Theory Y,” we can talk about a logical connection between self-management and motivation employee. The “Theory Y,” and then in the CPM, is based on the following premises: • People’s motives are dominated by social needs and a desire to work well; • Physical and emotional efforts at work for a person are as natural as during a game or on vacation; • Unwillingness to work is not an inherited trait inherent in a person. A person can perceive work as a source of satisfaction or as a punishment depending on working conditions; • External control and the threat of punishment are not the main incentives for a person to take action to achieve the organization’s goals; • Responsibility and obligations in relation to the goals of the organization depend on the remuneration received for the results of labor. The most important reward is one that addresses the needs for self-expression; • An ordinary educated person is ready to take responsibility and strives for this; • Many people have a willingness to use their knowledge and experience, but industrial society makes little use of the intellectual potential of a person. Participatory management exists in the following forms: • Employee participation in profits and property; • Employee participation in income; • Employee participation in management. Initially, the spread of participatory management was associated only with improved employee motivation. Recently, participatory management is increasingly associated with improving the use of the full potential of the organization’s human

6.5 Motivation: As a Content and a Process

467

resources. Therefore, the CPM can no longer be associated only with the process of motivation, but should be considered as one of the general approaches to managing a person in an organization. The ideas of participatory management can be correlated with the ideas of previously presented theories of motivation, while generalizing their conclusions. In particular, participation in solving the organization’s life issues contributes to the satisfaction of the natural needs for self-realization and self-affirmation identified by Maslow. At the same time, participation in decision making, in setting goals and in their subsequent implementation contributes to meeting the acquired need for achievement (according to McClelland). There is a definite connection between participatory management and Viktor Vrum’s theory of expectation, since participation in the decision makes it more realistic and clear for the employee what to expect as a result of their activities and what the reward for their activities may be. In the meantime, we will briefly introduce another process theory of motivation— the theory of operant reinforcement of B. Skinner, which was based on his own concept of operant learning. This concept opened a completely new direction in human behavior studies, the so-called learning-behavioral direction in personality theory. Psychologists define learning as any relatively constant change in the existing relationship of the stimulus and the reaction to it. In terms of the concept of learning, a personality is the experience that a person has acquired during his lifetime, it is the accumulated set of behavioral models that have been studied. The specified direction focuses on open, or available for direct observation by human actions, as derived from his or her life experience. Unlike the researchers who sought the root causes of human behavior in his “mind” and internal mental phenomena, Skinner and his followers viewed the external environment as a key factor of human behavior. Burrhus Frederic Skinner was born in Susquehanna, Pennsylvania in 1904. The atmosphere in his family was warm and uncoerced, learning was respected, discipline was strict and rewards were given when they were deserved. In 1926, he received a Bachelor of Arts degree in English Literature at Hamilton College in New York State. Ironically, Skinner did not attend any psychological course at college. After college, he returned to his parent home and tried to become a writer. The attempt failed. As he himself wrote in the “Autobiography” (1967): “I read aimlessly, built models of ships, played the piano, listened to the newly invented radio, dashed humorous notes to the local newspaper, but never wrote anything else and considered a visit to a psychiatrist.” But “hit” the psychology department at Harvard University. His passion for psychology is due to the experimentation of the Russian physiologist Ivan Pavlov. In 1931 he received his doctorate from Harvard University, from 1931 to 1936 he performed scientific work at Harvard, concentrating his research efforts on the nervous systems of animals. In 1936, he became a teacher at the University of Minnesota and remained there until the fall of 1945, when he became head of the Department of Psychology of the University of Indiana. In 1948, he returned to Harvard and remained there until retirement in 1974, gaining fame as one of the leading behaviorists in the United States. B. Skinner died in 1990.

468

6 Western Schools of Management of the Twentieth Century

According to the reviews conducted by psychologists, Skinner was one of the most influential psychologists of the twentieth century. The Skinner box bears his name, a box designed to study the principles of operant learning. In 1958, the American Psychological Association awarded him the Distinguished Contribution to Science Award, noting that “few American psychologists have had such a profound impact on the development of psychology.” He received many professional awards, and prior to his death received an unprecedented honor: for his outstanding contribution to psychology he was, during his lifetime, included in the roll of honor of the American Psychological Association (1990). In the course of his years of scientific activity, Skinner wrote about 20 large monographs, but in fact none of Skinner’s books had been devoted directly to management. He studied the behavior of pigeons, not people. However, the results of his research have also been transferred to management, and it is for this reason that we should consider his views on motivation and learning (see for example [40–42]). Skinner believed that motivation theorists devote too much attention to the “intrinsic essence” and relevant factors such as needs, motives, and desires. On the contrary, his theory focuses exclusively on observable phenomena—the incentives and reactions to them and therefore there is a kind of concept of learning. Learning can occur in two ways: by using a classic reinforcement or by using operant reinforcement. In the classical reinforcement (or conditioning), the stimulus precedes the reaction, as was the case during the famous Pavlov experiments with dogs. With operant reinforcement, the reaction takes place before and in anticipation of the stimulus. This premise was the basis of Skinner’s theory. Skinner argued that operant reinforcement is a process in which behavior is changed and taught. The learning process is facilitated by a positive reinforcement of the necessary behavior. A positive reinforcement can be any factor that increases the frequency of occurrence of the required response, each time it takes place. For example, a cash reward for a well-performed job is a positive reinforcement. But the key to understanding Skinner’s theory is rather in the way in which reinforcement is performed, more precisely in the reinforcement mode. Until this point, there is virtually nothing unique in the theory of operant conditioning. Even Frederick Taylor recognized the potential motivational effect of positive reinforcement. However, the system offered by Taylor with different rates of pay, according to Skinner, was tantamount to continuous reinforcement. Each time a worker produced a unit of production within or below the standard, he received the same wage. Even if the standard had been accomplished, remuneration was paid continuously, but the wage rate had been changed. Such continuous reinforcement is quite popular at organizations. Every time we finish a week’s or a month’s work, we get our wage and its value is based on a contractual agreement rather than on performance achieved. If we express operant behavior (the production of another unit of output or the end of another working day) as O and, the consequences (the receipt of a daily rate or a wage) as C, we can demonstrate what is meant by a continuous, reinforcement regime, as follows:

6.5 Motivation: As a Content and a Process

469

О—С, О—С, О—С, О—С This reinforcement regime encourages stable but unenthusiastic behavior. The main incentive here is to work over a period of time required to produce a weekly wage or to produce enough output to maintain a job. In addition to continuous support, the manager may use some form of partial reinforcement. As the name suggests, the required consequence occurs not after each reoccurrence of the action, but is performed at fixed intervals or at some variable interval. Furthermore, we will deal only with the ratios of these intervals, although the principles remain the same as for the usage of time intervals. When reinforced with a fixed interval, the consequence occurs after a certain time. For example, three or four tasks may be repeated before the worker receives a positive reinforcement. Symbolically, this can be presented as follows: О—О—О—С, О—О—О—С: After performing each of the three tasks in a row, a reward or result is followed. For instance, the manager hires a consultant and tells him that partial payments will be made at intervals at 30, 50, or 100% of project completion. The incentive here is to complete the project as soon as possible in order to obtain a contractual payment. Such an approach is likely to lead to intensive and rapid work, but there are also potential problems. How, for example, can we combine the consultant’s accelerated performance with its high quality? With reinforcement at a variable interval, it is impossible to predict the exact repeatability that will lead to the desired result. Symbolically, this can be presented as follows: О—С, О—О—О—О—О—С, О—О—С: This scheme can be illustrated by gambling. No one can predict exactly when the winning card is laid in a poker game or at what point the “one-armed Bandit” (slot machine) gives an opportunity to win. Such a reinforcement scheme is one of the main motivations of the researcher’s activity in the laboratory. No one can know whether another repetition of the experiment will lead to the results of greater scientific significance. Such a scheme is considered one of the most stimulating forms of reinforcement. The problem is how the scheme can be applied in the area of management. It is clear that neither trade unions nor any of the workers will allow entrepreneurs to pay a casual salary. At the same time, there are quite a few examples of how operant reinforcement ideas had been applied at different organizations in large and small businesses [121 , pp.142–145]. A variety of concepts of person motivation to work and motivation by work was well explained by Jack Duncan with these words: “So much has been written about management and motivation that managers often cannot navigate conflicting

470

6 Western Schools of Management of the Twentieth Century

prescriptions of motivation theories. How can a manager sort out a field of research in which scientists themselves cannot agree? Managers should turn their attention to fundamental similarities rather than worry about differences. A careful study of these issues cannot but take into account the fact that people are not the same—they have different experiences, strive for different goals and are driven by different needs. Of course, even the most responsive manager cannot create a motivation program that would suit all employees. And if he could, the organization would hardly allow him to do this. Nevertheless, managers must treat their employees as individuals. They must reckon with the fact that each person who works with them and for them has unique abilities and potential in order to help achieve the goals of the organization” [121 , p.145]. But even such a brief analysis of the concepts of motivation, given in this section of the textbook, illustrates the manifestation of the “filiation of ideas” factor in the development of views on motivation as a method of managing the organization’s personnel (in content) and as a technology for managing the organization’s personnel (as a process).

6.6

Empirical School of Management

As noted above, the materials of many researchers of the history of managerial thought are used in our textbook. In particular, the presentation of the content, characteristics and main “heroes” of the four following schools and theories of the twentieth century—Empirical, Social Systems, New and Situational—will largely use the results of research (including links to original texts) of the Soviet sociologist, academician Jermen M. Gvishiani presented in his treatise “Organization and Management” [116]. The identification of the problem and the specific content of this school is a major constraint, first of all because the empirical nature of this area leads to a sufficiently wider range of differences among its representatives. Doubtlessly, this school is the most numerous and has a constant influence on other streams, concepts, theories, etc. However, it is the approaching researchers who claim to be the creators of the general science of management or managerism, which is proclaimed as the final word of the science of management, which is greatly facilitated by the fact that a large proportion of its representatives are large managers, presidents, vice-presidents of companies, consultants, etc. Therefore, the research conducted by the empirical school is carried out by specialists from a wide variety of industries: manufacturing engineers, economists, sociologists, statisticians, psychologists, and others. In all the claims for the universality of scientific findings and the diversity of views developed within the empirical school, its proponents are characterized by a frankly pragmatic orientation, which is based on the study of management practices with a view to justifying recommendations that are generally of immediate practical importance. Although this school generally emphasizes that math, cybernetics, and other sciences should not be neglected, they are nevertheless inclined to attach

6.6 Empirical School of Management

471

decisive importance to the direct experience of institutional management, proving that management activities in themselves remain largely an art that is taught not so much by theory as by practice. Yet, managerists recognize that in the modern era, theory can guide the management of new and very effective directions of development. They therefore proclaim the need for a common management theory, system, system of systems, etc. It is rightly pointed out that, as a subject of independent scientific discipline, management study necessarily marginalizes economic, engineering, psychological, sociological, and other aspects, while in practice it is a single process. A modern enterprise manager, as management theorists consider, is in need of a comprehensive development of management problems, which equips him not with one-sided concepts but a solid theory, since he deals with all the executive functions, rather than with separate, isolated aspects of governance that can only be divided into purely research purposes. Of course, the question of creating a comprehensive theory of modern production management is not in itself objectionable. However, there is a lack of such a holistic approach in the empirical school. If the engineering, technical and, to a certain extent, economic aspects of management are developed in detail in this direction, psychological and especially sociological problems often disappear from its field of view or are analyzed from non-scientific positions. In the second half of the twentieth century, an empirical school developed in two relatively independent directions. These are, on the one hand, specific, organizational and technical, economic studies of some aspects of the management of an enterprise, and, on the other hand, the sociological research of a largely applied nature. The merging of these two lines had led to scientific management, which was once largely an engineering-economic discipline, becoming more and more an applied sociological theory. It is not accidental, therefore, in the curricula of business schools and management textbooks, along with traditional sections, the structure and principles of a business organization, the financing of business enterprise, production planning and control, payroll, product cost calculations, and so on, are increasingly related to industrial relations, labor relations, human relations, industrial society and management, social and economic aspects of business management, the social responsibility of the business, the nature of power, and the separation of ownership and management. In 1960s, special and general sociology was set up in the scientific literature on sociology. The introduction of both of these terms is attributed to Anthony Giddings, who believed that sociology could be divided into general, or fundamental sociology and special sociology [141]. General sociology—the study of universal and fundamental phenomena in societies. A. Giddings applied the term “special sociology” to research, which studies in detail a single phase of social organization or community development. Industrial sociology, also included in special sociology, the emergence of which is directly linked to the Hawthorne experiments and Elton Mayo’s School of Human Relations mentioned in clause 6.4. Representatives of industrial sociology saw their merit primarily in the specific study of labor and labor relations, in developing a set of recommendations to

472

6 Western Schools of Management of the Twentieth Century

improve productivity. Their research had expanded over time to include issues of organization of production, specific economies, political economy, labor psychology, social stratification, and social mobility. Prominent representatives of the school described, D. Miller and W. Form, in their famous book “Industrial Sociology” [97] emphasized that the sociology of labor relations is becoming a study of the relationship between work and the social environment in which workers live. Miller and Form used the concept “industrial” in the broadest sense, including all forms of economic activity, financial, commercial, productive, and professional initiatives overall. The subject of industrial sociology, the authors have pointed out, was examining the relationship between the individual’s labor behavior and other aspects of his social behavior. The technical process itself, they claimed, could not resolve everything, even the main problems of the normal functioning of the enterprise; they can only be understood by examining the relationships between people in the area of industry. Production, incomes, and the entire industrialized world are increasingly dependent on the consciousness that industry is a complex of interacting groups and individuals. Solving the problem of the correct relationships between people in the industry will ensure, in the opinion of the theorists of industrial sociology, successful resolution of all the problems of modern industrial society. The issues raised by industrial sociology have become more prominent in the works of managerists. However, a number of specific problems relating to the management of a modern enterprise as a complex—from the creation of an organization, the organizational structure of an enterprise to the management of the production process to the supply and marketing of products, continued to characterize the empirical school. Since all business functions are performed by people, managerism representatives had stated that the problem of managing a business for the manager is a problem of managing people. And it followed that managerism should provide managers with the knowledge that would enable them to manage their subordinates successfully, to make the latter perform their work most effectively. Managerism, its authors proclaimed, is not misdirected knowledge, but a scientifically developed, practical tool to enhance the production management art. Although theoretically, the empirical school is an eclectic paradigm of many academic disciplines, it had, however, formulated and developed real management problems for a large business organization, and many of its recommendations had undoubtedly contributed to the effectiveness of an organization’s activity. Most theorists at the empirical school had distinguished the notion of Scientific Management or scientific management and Management Science. Scientific management was considered as a science-based management practice, performed by management science, that is, a theoretical study of the management mechanism and process. Gifford Symonds, in the article “Institute of Management Sciences” (1957) stressed that, unlike scientific management, the science of management is part of a recognized knowledge that is systematized and formulated in accordance with established common truths or common patterns. “It is comprehensive, deep and philosophical knowledge. A variety of unrelated facts may be relevant to improving

6.6 Empirical School of Management

473

the art of management, but they are irrelevant in the science of management... Management science requires many disciplines, including mathematics, economics, psychology, sociology, engineering, etc. However, we believe that the science of management can also be defined as a separate science... According to our definition, management science is part of a broader science of sociology. It is adjacent to economics and political science, but different from them... The science of management is thus not only a combination of many disciplines but also a new branch of science in sociology.” Despite the wide variety of perceptions about management theory and practice, almost all managerism representatives agree that management, or the art of human governance, is a specific, independent area of activity and knowledge. E. Petersen and E. Ploumen, the authors of the well-known in the business world book “Business organization and management,” write: “In a broad sense, in social terms, management is a technique or method that is developed as a result of a person’s tendency to form groups.” Examples of such groups are governments, clubs of various types and business enterprise. Whatever the group, it should have its own management. In this sense, management can be defined as the set of methods by which the goals and objectives of a human group are established, clarified and implemented.” This overall concept of management, as noted by the authors, varies in detail for different types of human groups, but remains at the heart of its unchanged nature. In this connection, Petersen and Ploumen distinguished six main types of management that correspond to certain social groups. 1. The government. Although the concept of management is generally not applied to government activities, its activities are in all respects in line with the overall definition of management. 2. Public management. The organization of any State institution and the exercise of power over its employees. 3. Military management. A special kind of public management. The organization and command of the armed forces. 4. Associative, or club management. As in public institutions, there is a need to organize and direct the work of a group of employees. 5. Business management. A special type of management for business or commercial enterprise, different from state and government. 6. Management of public property. A special kind of business management. Besides functions of the private business sector, public and social concerns and considerations also influence the nature of management. Petersen and Ploumen stressed that all of these management varieties were based equally on fundamental considerations of human nature and behavior. The main principles of management, they write, are certainly applicable to human associations that exist for any purpose and to groups of all sizes. Elaborating further on their definition of management, Petersen and Ploumen reduce it to psychological interpersonal relationships, which are considered to be essentially independent of material conditions, since the latter are indefinitely diverse. Management, they write, can be defined as the psychological process of administering subordinates, through

474

6 Western Schools of Management of the Twentieth Century

which the main human aspirations are met. It provides a logical framework for the individual division of labor and specialization within a group. Management exercises leadership by taking authority, sharing responsibilities and establishing accountability for all actions taken by people in the organization. Of a view other than that of Petersen and Ploumena is a renowned theorist and management consultant, Peter Drucker. Today his opinion on any issue of management is an almost universally accepted dogma of leadership among all the management gurus. Peter Drucker was born in Austria in 1909 and studied at the University of Frankfurt. After the Nazi party came to power in the 1930s, he went to England and then to the United States. Drucker’s scientific activity lasted many years and was conducted in a variety of directions: from a journalist and economist to a consultant and a college teacher. He taught management at the University of New York, other colleges, and universities in the United States. He is the author of textbooks, novels, and autobiography. But most famously, he wrote the book “Management Practices” published in 1954. It was in this work that he opposed an expansive interpretation of the concept of management, considering that it should refer only to a business enterprise whose raison d’être was the production of goods and the provision of various economic services. Although Drucker recognized the existence of general principles of governance, he still believed that management is an art or a way to manage business. Accordingly, management, in Druker’s view, is the principles and methods of management of the business, because art, competence, management experience cannot, as such, be transferred and applied to the organization and management of other institutions. This empirical specification of the concept of management for business organizations is typical of most modern theorists in managerism. Drucker criticized various definitions of management, proving that it was often simply an attempt to answer the question of what kind of activity was to be attributed to managerial activities. He protested against the often identifiable notions of the boss and manager, noting that the owner and manager were usually different persons, and stressing that management was a specific economic body of industrial society. This view had been supported to some extent (and is still supported) by most business theorists. For example, Professor William H. Newman of Columbia University Business High School, known as an expert in the democratic business enterprise, in his work “Administrative Action” (1956), called the management the main social technique. Skillful managers, he wrote, are vital to any dynamic, prosperous enterprise. Other factors, such as capital and technical knowledge, are also necessary, but without competent managers, no company will be able to maintain a leading place for a long time. These people have to plan, guide, and control the business. W. Newman defined management as direction, guidance, and control of the efforts of the group of individuals to achieve some common goal. “It is clear that a good manager is one who strives for the group achieving its goals, involving minimum of resources and effort.” Newman noted that often the posts of business managers were held by persons who demonstrated outstanding abilities in the

6.6 Empirical School of Management

475

particular industry they managed. For example, a manager of a baseball club could have been the best baseball player in the past; the vice president responsible for production at a company that produces radar, a highly qualified electronics engineer, etc. Successful fulfillment by capable people of their responsibilities in any of the specific areas facilitates their promotion to work with a broader range of responsibilities. No one denies that personal experience and expertise are very valuable qualities of a manager. However, Newman says, it’s not really enough to be a manager. There’s a lot of evidence that the best sales specialist or the best designer is not necessarily a good manager. And at the same time, a person who had not particularly proven himself in any special work is often a very capable manager. This means that the art of management is somewhat different from the technical skills of the business that is being managed, concludes Newman.Some of the main evidence of the specificity of a manager’s activity is, according to Newman, the fact that the same person is able to successfully manage different businesses. In fact, he writes, this art of management is so important that capable managers can move from one post to another and achieve outstanding results in each case. For example, the same person successfully performed the work of a sales manager at a company that produces crusher, the general manager of a knitting factory, and the president of the chemical concern. This is not an isolated case. Perhaps even more convincing evidence that the ability to manage is a special kind of art is the use of army and naval officers as managers at business firms. These former officers, without any special knowledge of the area in which they are beginning to work, are nevertheless successful in their duties because they have a general understanding of the management process. As we see, from the point of view of managerists, the art of human management, regardless of the specific conditions of its application, is the main element of any management in general, and this type of activity is qualitatively different from all other activities. Just as a good driver can achieve perfection in driving a car, without knowing the technical details of its production, a good manager of a company can obtain everything possible from his subordinates without knowing exactly how each of them is doing his job, but being sufficiently aware of the potential of each area of activity and how to use it to achieve optimum results. Representatives of the empirical school thought that it was the responsibility of each supervisor to determine to what extent his work was managerial and to what level it is of an engineering and technical nature. This applies not only to the top managers of an organization, but also to all people, without exception, who exercise managerial responsibility to varying degrees. Often, a qualified professional has difficulty in managing the work of his subordinates, not in the technical field. Therefore, the acquisition of some general science-based and proven management practices plays a crucial role in the conduct of competent and effective management of any business. The empirical school therefore supports the idea of professionalization of management, that is, turning the manager’s function into a self-employed profession. While generally sympathetic to this trend, Drucker, however, cautioned against excessive interest in it, believing that management would never be an exact science.

476

6 Western Schools of Management of the Twentieth Century

The criteria of quality of management, he continues, will always be a measure of practical success in business. In other words, management is more a practice than a science or a profession, although it contains elements of both. Drucker focused on the creative, constructive side of a manager’s work, trying to prove that it is the main driving force of any business. A manager, according to Druker, performs two specific responsibilities, which are not available to any of the other employees in the business. The first is to create, from within existing resources, a truly whole production unity. In this regard, a manager is similar to an orchestra conductor. But the conductor has a musical score written by the composer, and only interprets it, the manager, though, is both composer and conductor. The challenge of creating productive unity requires the manager to eliminate all weaknesses and maximize the development and use of all the strengths of the organization and, above all, its human resources. A manager must always keep up with the daily activities of the enterprise and the results accomplished in order to achieve the necessary synchronization. Just as the conductor must always hear the entire orchestra, in particular the second oboe, the manager must always keep track of both the overall activity of the enterprise and the market environment. He must constantly observe the enterprise as a whole, but not lose sight of individual trees in the forest, because in certain circumstances private issues become crucial. The second duty of a manager, according to Druker, is to keep in mind, in every decision and action, to take into account the requirements of the present, remember of the future, and the prospects of the enterprise. Every manager has to do a lot of things, which, as Drucker pointed out, are not managerial. However, there are some general mandatory functions for all managers, regardless of their positions. First, the manager defines the goals of the business enterprise, decides what needs to be done to achieve them, and ensures that they are implemented by setting specific targets for people. Second, the manager organizes. He classifies the work, distributes it, creates the necessary organizational structure, and selects the appropriate management staff. Third, the manager provides motivation and communication. He creates a team of persons responsible for different jobs, using all the means available to him, including bonuses, awards, and higher positions. The manager achieves the necessary cohesiveness of the entire team through constant communication, both from himself to the subordinate and vice versa. Fourth, the manager analyzes the activities of the organization, determines standardization, and assesses the activities of all persons working at the enterprise. Fifth, the manager provides for human growth. Depending on how he performs his functions, he either contributes to the growth of people or, on the contrary, complicates it; either strengthens unity or destroys it. Each manager, Drucker supposed, necessarily performs all of the functions listed, whether or not he is aware of it. He can do it all well or badly, but he always does. It should be borne in mind, Drucker further underlined, that each of these functions constitutes an integrated form of activity, decomposable into elementary parts. Thus,

6.7 School of Social Systems

477

the manager’s work is a most complicated complex, and performing each category of functions requires different qualities and qualifications. Drucker believed that it would evidently be wrong to claim a serious knowledge of all the specific problems that the manager encounters in managing the enterprise. A manager cannot be a generic genius. He has his own specific tool of work, namely information. The manager encourages, directs, organizes people to work, but not more. His only tool is the written or spoken word, or the language of numbers. Regardless of whether the manager’s work is related to technology, calculation operations or product sales, effectiveness depends on his ability to listen and read, talk, and write. He needs to master the art of conveying his thoughts to others, as well as the art of revealing the opinions of others. Drucker, and with him and all the representatives of the empirical school, argued that if the head of a new business was a narrow specialist who claimed personal contribution to the engineering or scientific solution of problems, there was a clear danger to the effective performance of the entire team. This is because, first, the manager, even a good specialist, is inevitably limited in scope of his specialization and tends to see the problem primarily through the prism of his profession. If the problem the team is working on is a complex one (and under modern circumstances it is typical), the manager’s deep knowledge of a special aspect of the problem is often an obstacle to its impartial analysis and complete development. In such a case, it is preferable, to have, though amateur, but still a more or less comprehensive, understanding of the problem than good knowledge of one of its aspects and one-sided commitment of the side of business closest to the administrator. The ideas and developments of Peter Drucker and other representatives of the empirical school on the nature and characteristics of management have now been widely recognized among theoreticians and practitioners.

6.7

School of Social Systems

The theorists of this school considered the organization’s research as a social whole, by investigating the motivation, encouragement, authority and power, communication in the organization, the making of decisions by a person, modeling in-house processes, and their combinations, finding out which of these combinations are most effective for the goals of the organization. The spiritual father of the School of Social Systems is Chester Barnard. One of the most prominent its representatives is a professor of the Carnegie Institute of Technology, a Nobel Prize laureate for Economics, Herbert Simon. In turn, the Carnegie Institute had long remained the scientific center of the School of Social Systems, where, together with H. Simon, professors Igor Ansoff, Richard Cyert, and James March worked. In subsequent years, the ideas of the School of Social Systems were critically developed by Philip Selznick and Amitai Etzioni. Chester Barnard (1886–1961) is known for having successfully combined theoretical studies with intensive administrative work at industrial firms during his

478

6 Western Schools of Management of the Twentieth Century

lifetime. He was born in Malden, Massachusetts, attended Harvard University, but did not finish it. He himself said that he had obtained a degree the hard way, namely, “earned it in business.” In 1909, Barnard took office as a statistician at the AT&T Corporation and quickly climbed the career ladder. His rapid growth in the corporation was not the result of the education he had received, but was probably due to his knowledge of foreign languages. He soon became an expert on international telephone rates and, from 1927 onwards, he was president of a major American corporation, New Jersey Bell Telephone Company. The best known is his book, “The functions of the Executive” (1938), which is still considered a classic work for managers in management. Another of Barnard’s works “Organization and Management” (1948) is a collection of his papers and lectures red in different years. Another of Barnard’s books, “Elementary Conditions of Business Morals” is quite popular. Based on a systematic approach, Barnard sought to create a holistic theory of management organization. He defined his method of study as a comprehensive method based on the application of philosophy, political science, economics, sociology, psychology, and physics. He was not satisfied with the traditional definition of an organization as a group of persons, some or all of whose activities are coordinated. The drawback to this formula was that the logical stress is on the members of the organization rather than on the functioning of the organization, not on the organization’s management processes. According to Barnard, the most significant characteristic of the group is the system of interaction between its members. Accordingly, he defined an organization as a system of consciously coordinated activities by two or more persons. This meant coordinating the various activities of people, so that each part is linked to each other in a meaningful way: “The whole is always larger than the sum of its parts.” On this basis, Barnard believed that the measurement of this ratio (“greater”) and constitutes the main performance indicator of the organization. Barnard described all organizations (except the state and the church) as private cases of large systems, because they depend on large systems. There are also comprehensive formal organizations that are included in an informal, unfinished, and foggy system, commonly referred to as “society.” Most characteristic for a formal organization, as Barnard considered, was the so-called scalar, or hierarchical type, where coordination is achieved through the subordination of parts to a single central authority. This type of system enables, in Barnard’s view, to reduce the number of dysfunctions, reduce friction within the organization and strengthen and preserve its power, even at the cost of reducing freedom. Another type of formal organization is a lateral organization where, unlike the scalar, coordination in the system is achieved only through settlement. The lateral system of the organization does not have its own formal means to prevent friction, disputes, and disorganizing action. In the analysis of the organization functioning mechanism of Barnard, considerable attention was paid to the motivation of people and, in particular, to the problem of balance between “contribution” and “satisfaction.” He began with the thought that the individual, while contributing to the activities of an organization, though possessing usually limited freedom of choice, does it effectively only when being

6.7 School of Social Systems

479

provided maximum personal satisfaction and benefits. If a member of an organization received only what he invested, there was no incentive, that is, no net satisfaction from cooperation. What he gets back should give him the benefit of satisfaction, which almost always means benefit, but not in the form in which he does his part. The very existence of an organization depends, according to Barnard, on maintaining a balance between contribution and satisfaction. From this point of view, contribution is always in the form of activities and not of any purely material delivery. At the same time, the satisfaction that the individual receives in exchange for his contribution is interpreted as bait or stimulus from the perspective of the organization. Therefore, Barnard stressed that the primary responsibility of administrators is to manage the economy of incentives within the organization. Barnard has a special place among theoreticians, who had developed the milestones of motivating people’s behavior in the organization and criticizing the concepts of the economic person. Barnard frankly admitted that “he began to understand human behavior in the organization only when he put economic theory and economic interests in the second, albeit irreplaceable, place.” Considering the multiplicity of different kinds of human satisfaction in the organization, Barnard identifies four groups of specific motivations (incentives) for activity in the organization: (1) material incentives (money, things or physical conditions); (2) personal intangible opportunities for distinction, prestige and personal authority; (3) desired physical working conditions; (4) spiritual inducements (pride of craftsmanship, sense of conformity, altruistic service to the family or other purposes, loyalty to the organization, patriotism, aesthetic or religious feelings, etc.). Analyzing the effect of these specific incentives, Barnard came to the conclusion that, in anticipation of Herzberg’s later similar conclusions, material remuneration was crucial only to certain limits. As long as the minimum required for the existence of a human being is achieved, the material reward itself becomes a manifestly inadequate incentive, that is, it does not further enhance the effectiveness of individual activities. However, this provision does not imply that inadequate material incentives can be directly substituted for intangibles. This kind of substitution can only be effective at certain limits, which are, of course, different in each particular situation. Apart from specific incentives, Barnard provided four types of general incentives influencing a person’s behavior in the organization: (1) attractiveness inherent in the work; (2) working conditions and their compatibility with the person’s views and skills; (3) the opportunity to feel personally involved in the event; (4) the possibility of communicating with other persons, the conformity of the working environment with the person’s views on the norms of partnership and mutual support. Unlike many of its predecessors and contemporaries, such as Taylor, Emerson, Follett, Mayo, and others, Barnard attempted to introduce new content into the notion of effectiveness, defining it as the organization’s ability to provide effective motivation in quantities sufficient to maintain the balance of the social system. The best and ultimate assessment of the effectiveness of the organization is, according to Barnard, its survival, which depends both on the internal balance of the organization and on the balance between the system and the overall situation external to

480

6 Western Schools of Management of the Twentieth Century

it. Considering the existence of a wide variety of organizations from these perspectives, Barnard concluded that successful cooperation both within and outside the organization was an abnormal case. In “The functions of the executive” he wrote: “We observe daily that the succeeded are those who survived, among countless losers... In our Western civilization, only one formal organization, the Roman Catholic Church, claims a significant age ... Failure to cooperate, unsuccessful cooperation, collapse of the organization, disruption, disintegration, destruction of the organization and reorganization—these are the characteristic facts of human history.” The issue of the relationship between formal and informal organization has a high priority in Barnard’s works. He assumed that in all cases the existence of formal organizations implied the existence of informal ones. The difference between them is that the former is a system of consciously coordinated activities, and the latter are unconscious. Informal organization, unlike the formal, is very uncertain and essentially unstructured. Barnard drew attention to the existence of very close links between the formal and informal organizations. On the one hand, it is informal organizations that form a formal ones and, on the other, the creation of formal organizations inevitably leads to informal ones, which in turn affect formality, making them viable. As a result, it turns out that both types of organizations cannot exist without each other. Recognizing that an informal organization may act and despite the formal, Barnard stressed that there are at least three positive functions that can only be carried out by informal organizations for the benefit of formal bodies. It is, first, the dissemination of intangible facts, opinions, judgments and suspicions that cannot pass through formal channels without creating problems; Second, maintenance of sustainability of the formal organization and, third, maintenance of the sense of personal integrity, self-respect, independence of choice, preservation of the personality of the individual, despite some of the effects of the formal organization. Barnard noted the importance of taking account of the factors listed for the functioning of the organization in the context of conflict between a person and a formal organization, pointing out that individuals who were unable to maintain the sense of their “me” and the sense of ability to make choices at will, could not function effectively in the cooperative system. Based on the notion of formal and informal organizations, Barnard explored the issue of authority in the organization, for which he introduced the notion of accepted authority. Considering orders in a formal organization as the most important manifestation of authority, Barnard stressed that the attribute of authority was not contributed to orders by the persons giving orders, but rather by those to whom the orders were addressed. In other words, the final criterion for assessing authority is acceptance or failure to accept on behalf of individuals the orders addressed to them. In order to be accepted as authoritative, orders, Barnard continues, must be: (a) understandable; (b) consistent with the purpose of the organization; (c) comparable in general to the personal interests of those to whom they are addressed to and (d) feasible.

6.7 School of Social Systems

481

Barnard believed that the problem of accepting authority within an organization should be considered in connection with the so-called indifference zone, meaning that each individual would be willing to take orders only within certain borders that are, of course, subject to change. Administrators must be able to determine this zone if they want subordinates to obey their orders. Obedience to orders within the indifference area is also supported by the organization’s views and the group’s views. Emphasizing the concept of accepted authority, Barnard pointed out that the unaccepted authority was essentially a fiction of the highest authority, based on the right of veto, which is in the hands of those who receive orders. This veto right may be applied as more often as more persons in executive positions demonstrate incapability, ignorance of the conditions or inability to properly express what must be fulfilled. At the same time, people in the organization are willing to recognize the much greater authority of an executive who goes far beyond the normal zone of indifference if such an administrator combines the formal authority of his post with abilities, knowledge and understanding, so that the authority of leadership is ultimately created. Based on this interpretation of authority, Barnard developed an original concept of perception and a known theory of power as a formal organization attribute. Barnard linked power with information exchange. In fact, he defined power as the “information link (command),” which makes information perceived by members of an organization as a tool for the management of their activity. Usually, power is perceived by the employees when the teams are considered legitimate and necessary. According to Barnard’s theory of power, power is conferred upon the executive by people who want to be governed. In other words, the reality of power is less related to managers than to employees. In his latest works, Barnard extensively explored the question of moral responsibility, morality of the organization, and so on. The notion of responsibility came to a set of moral, legal, technical, professional, and organizational codes. By regulating the activities of the organization, they proved to be effective not because of external sanctions, but because of a sense of moral obligation on the part of a member of the organization, a sense of internal guilt that arises when he renounces an obligation. In this regard, Barnard pointed to the need to carefully take into account the moral factors influencing the functioning of the organization, emphasizing that in their basis they refer to the field of informal organization. In Barnard’s view, the failures of many administrators are often due not to their technical inability, but to some sort of paralysis such frustration, loss of determination, etc. All this is the result of conflicts arising from the complexity and contradiction of various codes, as well as from reactions to opposing codes. Barnard noted that management decisions are always related to moral issues, but the most well-known and recognized moral principles, including Christian ethics, have only a minor bearing on the moral problems of the business world. However, moral problems of administrative behavior have not yet been adequately developed, so in the book “Elementary Conditions of Business Morals” Barnard insisted on the importance of relevant research.

482

6 Western Schools of Management of the Twentieth Century

As mentioned above, a special part in the works of Barnard was the issue of information communications, which he interpreted as an attribute of the organizational system. Any form of cooperative activity, Barnard pointed out, maintains its integrity as a result of the ability of its members to communicate with each other. That is why the main function of the organization’s managers is to establish a communications system. One of the most important in their series is the formal organizational structure. The lines of authority are formal communication channels and administrators may be defined as communication centers. The larger the organization, the more variable are its activities, the greater the importance of communication as a special management issue. Barnard attempted to define a set of formal principles for communication and transmission of information in organizational systems and noted: 1. The channels of communication must be precisely determined and well known to all members of the organization, which can be achieved by a precise recording of the duties and rights of each official and a broad-based warning, indicating the specific persons holding certain positions. 2. The need to define formal channels of communication among all members of the organization. In other words, each person in the organization must have some formal link in the form of subordination or superordination with someone else in the organization. 3. The line of communication should be as direct and as short as possible. The shorter it is, the faster tasks are solved, the fewer errors within solving. 4. The connection line should always be used in its entirety. Bypassing intermediate points leads to contradictory messages, misinterpretations and undermining of responsibility. 5. The competence of persons who are communication centers (i.e., executives) must be adequate. At communication centers of large organizational systems, it is not possible to expect one responsible person to be competent to deal with all the diversity of complex communications. Hence the need for assistants, deputies, and staff experts. In the most complex and large organizations, the highest administrative power is exercised by an organized group rather than by an individual executive. 6. In the functioning of an organization, interruption of the line of communication cannot be allowed. This requires carefully designed measures that automatically ensure the temporary replacement of posts during the period of incapacity or absence of officials. 7. Each communication should be authentic. This means that every person giving an order or direction is obliged to act within the limits of their competence, and those who follow the instructions must have a clear idea of the competence, duties, and powers of the manager. Barnard stressed that while in smaller organizations most of the above stated principles are automatic, their implementation is proving to be difficult in large organizations.

6.7 School of Social Systems

483

The consideration of an organization as a communications and information flow system is merely one aspect of Barnard’s concept, though very important. He placed even more emphasis for the organization’s activity on the decision-making system. Instead of individual decisions based on unconscious and automatic reactions, Barnard suggested organizational decision making based on rational analysis, reflection and calculation: “The difficulties which organizational decision-making encounters all the time are usually related to the fact that many individuals are involved and that each individual decision is only an insignificant element in a long chain of decisions. Moreover, only a relatively small part of the decisions can be formally covered by the orders. Most decisions do not reveal any immediate evidence of their existence, and knowledge of them can only be obtained through the accumulation of indirect data.” It has been stressed by the Barnard that “decision makers should be able to distinguish between those facts that have an impact on the achievement of an organization’s main goals and those that do not play a significant role here.” The constant search for strategic factors in the functioning of an organization is equally necessary. This is most difficult because the technical methods of identifying such factors in economic systems are very poorly developed. “A similar discrepancy, Barnard noted, exists between economic and other social factors of the environment: “In the social field, there is no such powerful magnifying glass as a balance sheet, which focuses attention on the difference between income and expenditure; there is no universal invention, the sensitivity of which would approximate the amount on the current account underlying the balance sheet.” Pointing to the complexity of the methods of systems analysis of economic and social organizations, Barnard stressed that this difficulty could not be addressed simply by logical methods; it is therefore necessary to develop non-logical intellectual processes. That’s what he called a mental process that could not be expressed neither in words nor in judgment. This, explained Barnard, happens, perhaps because these processes are unconscious, or perhaps because they are very complex and, at the same time, so transient, that their analysis proves impossible, at least for the individual in whose brains they are being committed. A strict logical conclusion for both the mathematician and the lawyer or accountant is possible only on the basis of precise information. When this information is speculative or hybrid in nature, it is, as Barnard expressed, not able to withstand the gravity of the stringent logic. It is absolutely clear that this was about the role of the executive’s intuition in the process of exercising his official functions. Barnard rightly notes its important role not only in theoretical study, but also in practical organizational work. However, he is far from overestimating the meaning of an intuitive solution, which is often erroneous. In “Organization and management” Barnard outlined his vision for solving planning problems. He therefore drew attention to the danger of ignoring the real behavior of people in complex organizations. In his view, most of the plans of a global nature were based on completely insufficient information not only about the future, but also about the past and present. Planners in complex organizational systems are bound to make many mistakes, because they would, as Barnard claimed, have to act unconsciously as spokesmen spontaneous automatism of the intellectual,

484

6 Western Schools of Management of the Twentieth Century

emotional and political, that is, more subtle and even more covert than the invisible hand of unplanned economic systems. According to Barnard, true planning is the process of developing and applying knowledge and intellect to our business. He also identified the following major planning types from his perspective: strategic, which includes tools and speculation about causes and consequences; functional, related to building or maintaining systems; evolutionary, that is, achieving any future state of the system through a number of intermediate states. Barnard emphasized that “each plan is more than what can be expressed in formal documents; it is not a plan until it is adopted as a basis for action. From this perspective, each plan should include the following elements: (1) goals to be achieved; (2) feasibility; (3) data on the situation; (4) funds allocated; (5) positive interventions in the event of unforeseen circumstances and (6) responsibility for action. Furthermore, any plan implies the existence of an informal organization as a binding basis for any sustainable organization. As we see, Chester Barnard’s research hand touched on a wide range of theoretical and practical problems in managing organizations that significantly promoted the development of management thought and created a platform for further research. The first to pick up the torch from Barnard another distinguished representative of the school of social systems, Herbert Simon (born 1916). Simon studied political science at the University of Chicago, where he defended his doctorate in 1943; he worked at the International Association of City Managers and at the Bureau of Public Management at the University of California, and also taught at the Illinois Institute of Technology before being transferred to Carnegie Mellon University in 1949. Prior to his retirement he worked at the University of Richard Mellon as a professor of computer science and psychology. For over 30 years, Simon had studied the issues of decision-making and artificial intelligence. The recognition of his extremely important merits was the election to the National Academy of sciences and awards of the American Association of Psychologists, the American Association of Economists and the Institute of Electrical Engineers and electronics. In 1978, he won the Nobel Prize in economics. Probably more than anyone else, Simon had enriched the science of management and our understanding of how human problems are solved and decisions are taken. His main scientific works: Administrative Behavior (1947) and Public Management (1950), written in conjunction with Donald Smithburg and Victor Thompson; Models of Man (1957), Organizations (1958) co-authored with James March; The new science of Management Decisions (1960). Whereas Simon’s first works were largely a development of Barnard’s views, the next were about the psychological and theoretical cognitive aspects of decision-making processes. In the last of his works, H. Simon essentially equated concepts such as decision-making and management, calling decisions “the essence of management activity.” Simon saw organizations as systems in which people were the decision-making mechanisms. The essence of the activities of managers, administrators and their authority over subordinates is to create actual or value pre-conditions on which the decisions of each member are based.

6.7 School of Social Systems

485

The first decision taken by any member of the organization is the decision to participate in it or, on the contrary, not to participate. Following the principle of Barnard’s equilibrium, Simon believed that every person who invested his work or capital in this organization assumes that the satisfaction he would derive from the net reversal of the motivations for contributions (measured in relation to their usefulness for him) was more than the satisfaction he would have received by refusing to participate in the organization. Thus, the zero point in such a function of satisfaction is defined in relation to the possible cost of participation in the organization. If, in considering participation in the organization, the individual is motivated by personal considerations, after a positive decision is taken, personal goals gradually recede into the background and become subordinated to the goals of the organization. If the organization’s influence mechanism is set in such a way as to create a balance between prompting and contribution, in which all members of the organization are ready to participate actively in its activities, giving all their energy to the tasks of the organization, the organization has, by Simon’s definition, a high moral level. This kind of balance is achieved, in his view, in the process of identification of the individual with the organization, and though such identification is always limited by the individual’s past experience and external influences, it nevertheless accelerates by encouraging the loyalty of the people of the organization. The function of identification is precisely to create the appropriate conditions, incentives to encourage all members of the organization to identify personal interests and interests of the organization and, therefore, to take the necessary decisions for the latter. Simon examined in detail the various constituent mechanisms of influence, in which authority is critical, and other external influences are also explored: training, recommendations that attract the attention of the message, and so forth. The essence of Simon’s concept is that managers must effectively use all forms of external influences to manipulate a worker’s personality, to transform a person to the extent that he does the desired action as a result of his own motivation, rather than under the influence of the instructions received at the moment. Simon defined authority as the power to make decisions that guide the actions of others. He objected, however, to the consideration of the authority as a legal phenomenon based only on formal sanctions. Simon stressed that a person in an organization would be willing to accept orders not so much because of the fear of punishment, but because of the desire to achieve the goals of the organization, the psychological willingness to follow others, social sanctions imposed on oneself by the group to which he belongs. Simon stressed the need to create an environment where the manifestation of categorical authority might be necessary only to reverse an incorrect decision, that is, when the reactions were wrongly anticipated. Paying due tribute to the School of Human Relations, Simon tries to connect it to a systematic approach to the management of an organization. It paints an ideal pattern for the functioning of an organization, in which the activities of all its members are motivated by a desire to contribute to the effectiveness of the organization through the optimum identification of personal and common objectives. This, he was convinced, would make the need for authority merely to adjustments, since the need for its application in the form of sanctions would lose any significant

486

6 Western Schools of Management of the Twentieth Century

meaning. Simon makes an even more far-reaching conclusion, saying that modern society gives more and more authority to the functional status and fewer and fewer to hierarchy. From this perspective, the members of an organization are increasingly accustomed to accepting the proposals of functional specialists, as there is, on the one hand, a belief in competence and, on the other hand, good intentions for the power that be. The problem of communication in the organizational system has received considerable attention from Simon. He defined connection as any process by which the preconditions for decision-making are transferred from one member to another. He pointed out the two-way nature of communication: the flow of information to the center where decisions are taken and the transfer of decisions from the center to other parts of the organization. In other words, the process of transferring the decision is conducted not only vertically, but also horizontally, or, as Simon expressed, laterally throughout the organization. Unlike Barnard, Simon attaches less importance to the formal network of authority, emphasizing the importance of informal channels of communication. Simon analyzed in detail the various difficulties and impediments encountered in the communication process, noting the possibility of blocking in any of the three stages of the communication process: initiating, transmitting, or receiving information. The nature of these obstacles in the system can be very different from the warnings, the differences in the reference system of the receiving persons, the differences in status that cause a filtering and distorting effect, to the difficulties associated with the geographical distance and the partial processing of information both by the sender and the receiver. In addition, Simon further noted, the constant influx precludes the possibility of giving due attention to all communications. Due to the complexity of providing organizational communication in most organizations, there is a need to establish special communication services not only to collect and transfer internal and external information, but also to store it in some form of organizational memory: archives, libraries or computers. However, in addition to the Special Communications Service, information is also disseminated through hierarchical channels via various general circulars, instructions, procedures, meetings, commissions, conferences, and so on. Simon attaches particular importance to meetings, conferences, etc. as methods that enable, through the creation of a common organizational language and a common reference system, the removal of some of the major barriers to effective communication. As noted above, Simon’s research had been dominated by the issue of decisionmaking. In this regard, he had studied extensively various organizational principles and mathematical methods of decision-making. But, while appreciating their importance and dealing with their special management-specific design, Simon at the same time denied the possibility to allow for the full rationality of solutions based on the theory of choice in economics, game theory, and theory of statistical decisions. He believed that the vulnerability of all these concepts was that they were based on the following unrealistic assumptions: first, that the decision maker himself possesses omniscience, that is, he/she is able to know all existing and possible alternatives and anticipate their future effects, or at least the probability distribution of the

6.7 School of Social Systems

487

consequences; Second, that the person has unlimited capacity to count; Third, that his mind contains a complete and consistent preference for all possible consequences. Simon categorically refuted such assumptions, arguing that true human rationality is neither entirely rational nor irrational. Therefore, he believes that organizational theory cannot be based on the notion of complete rationality; rather, the notion of coercive rationality is more appropriate, because from an infinite number of possible alternatives people are able to see only a few, as well as to predict only a few consequences, while allowing mistakes. Simon also points to the fact that the level of claims per se is not stable, unchangeable, and inelastic. He writes, as the individual in his search for alternatives reveals that it is easy to find satisfactory alternatives, the level of claims increases; as he discovers that it is difficult to find satisfactory alternatives, the level of his claims falls. Thus, rather than insisting on optimal solutions, a person is usually satisfied with the good enough or those that enable in some way do with decisions. Since, Simon continues, the rationality of the individual is limited and he simply lacks the intelligence to maximize his decisions, he must be satisfied with satisfactory solutions. That is the raison d’être of the organization itself, one of whose main functions is to compensate for the limited rationality of individuals. Simon thought it would be possible to build mathematical models of rational solution choices only if the above noted restrictions were accepted. These models, he pointed out, are similar to linear programming models. Unlike the latter, however, they do not serve to establish an optimal program, but to formulate a workable program. Simon sought to explore the possibilities of applying the ideas of servomechanisms theory to model decision-making processes, but introduced a number of specific limitations. He distinguished the concepts of programmable and unprogrammable solutions, referring those which are repetitive and routine to the former. Simon pointed out the importance of using mathematical methods of operations investigation as well as the use of computers in such types of cases to maximize automation of the decisionmaking process. This, in his view, would lead to a reduction in the number of mid-level managers and, at the same time, an increase in the centralization of decision-making. Although the non-programmable solutions are fundamentally different, Simon, in this area of organizational activity, explored the use of computers for partial automation as well. Computers may also be used to study the human decision-making process itself, as the best way to learn from the processes of thinking is, according to Simon, simulating them with computer software. Simon was convinced that further development of the theory of managing organizations should follow the process of organizational decision-making, and this type of study was in turn directly linked to knowledge of the thinking process itself. In his latest works, Simon devoted a lot of attention to issues of modeling the decision-making processes, including the problem of developing programs for heuristic task solving, arguing that decision-making processes consist of simple character manipulation operations. Simon was very skeptical about the classical management school. He strongly criticized the principles of Gyulik, Urwick,

488

6 Western Schools of Management of the Twentieth Century

describing them as homegrown parables, myths, slogans, and pompous nonsense. While recognizing the need for some formalization of organizational activities, Simon, like Barnard, strongly opposes the mechanism of Taylor’s classical school, continuing the so-called humanist challenge. A considerable amount of attention is being paid by representatives of the School of Social Systems to the problem of divergence or differentiation of organizational goals due to the complexity of the organization and the proliferation of units. Using a systematic analysis to the process of differentiation of the goals of the organization, March and Simon delimit four variables directly influencing and defining this process: (1) the system and procedure for the selection of personnel and the types of interaction that give rise to the common objectives of the members of the group, subgroup, or unit; (2) redundant organizational resources (weaknesses in the organizational structure) that groups or subgroups may use to form sub-goals different from those of the organization as a whole; (3) the effectiveness (operationality) or possible ineffectiveness of the overall goals of the organization as a whole, necessitating their refinement and clarification through the application of various incentives, including the reward system; (4) differences in individual perception, which are partly dependent on: (a) the number of sources of information; (b) the percentage of information received; (с) cognitive abilities that underpin the organizational decision-making process. Unlike the representatives of the classical school, who supposed that the material incentive system fully addresses the issue of accession of all members of the organization (individuals, subgroups, and groups) to its common goals, March and Simon deny the effectiveness of this path. Even in cases where the remuneration system is directly related to productivity, the criteria may not be subjectively operational, that is, effective, from the perspective of the organization as a whole. By analyzing the factors that contribute to improving the effectiveness of productivity criteria, March and Simon make a number of assumptions. The first is simply the size of the group of workers. They believe that incentive schemes will work better in small groups rather than in large ones. The higher the degree of programming, the authors write, the more likely the performance criteria will be subjectively operational. Assuming that a higher level of management in the organization reduces the degree of programming, we can predict that incentive schemes will work better at lower rather than at the highest levels of the organization. March and Simon attempted to identify the specifics of human behavior in order to determine the motives that determinate the formation of subpurposes and concluded the following: (1) human rationality is so limited that no individual is able to respond intelligently to a complex entity such as a total environment; (2) therefore, the goals, as well as the sub-goals, are distributed among the various groups and subgroups, and subsequently the subgroups tend to ignore other sub-goals and other aspects of the goals of the organization as a whole; the tendency of the members of an entity at the organization to assess their activities only in the light of their sub-goal, even when those sub-goals conflict with the objectives of the organization, due to at least three circumstances: first, the inherent inclination of individuals to see things only according to their established reference system, while filtering out other

6.7 School of Social Systems

489

perceptions; second, the content of intra-group communication; and, third, selective exposure to external incentives. Although March and Simon analyze in detail the nature of intra-group conflicts and the divergence of goals within the organization, they generally do not go beyond the affirmation of the need to minimize the dysfunctional conflict in the organization. Their studies hardly contain any specific practical recommendations. This deficiency is noted by a number of researchers in management who, in this regard, favor a prominent representative of the School of Social Systems, such as F. Selznick, the works of whom contain a large number of specific recommendations. His studies on the protection of the organization’s total objectives from divergence trends, which manifest themselves in the dominance of the goals and sub-goals of groups and sub-groups over the objectives of the organization, are particularly appreciated. Selznick proclaims one of the main objectives of management to institutionalize the organization’s total goals. The implementation of this problem requires that management creates and maintains a supportive social structure. Selznick identifies six aspects of its relevance to the policy of the organization as a whole: role distribution, internal interest groups, social stratification, according beliefs shared by participants, extent or the degree of participation of each member of the organization, and types of dependency among members of the organization. He believed that the management of an organization should keep in mind each of those aspects, making the necessary changes in order to achieve the overall goals of the organization. Selznick places particular emphasis on the process of a gradual change in the institutional embodiment of the goal. In this context, he introduces the notion of institutional identity, that is, the consistency of the formal and informal structures of the organization both with its overall goals and its current objectives. This match may be achieved to a large extent by proper selection of personnel, their training, creation, as Selznick says, of the primary homogeneous apparatus or institutional nucleus, to provide some assurance that the decisions taken correspond with the spirit and letter of the general policy of the organization. An important element of organizational management is, according to Selznik, formalizing procedures that contribute to reducing an organization’s dependence on the personal qualities of its members, normalizing routine processes, strengthening discipline, and enhancing the role of incentives. Selznick, however, cautions against premature formalization, for thereby “the danger of isolating management at an early stage... when it is most in need, and hence uncontrollable adaptation arises. A significant place in the studies of the School of Social Systems is the problem of selecting the design criteria for the units at an organization. While rejecting the principle of departmentalization put forward by classical theory, Simon believes that the division of the organization into units should be based on the types of decisions that will be taken, and the main criterion for evaluating the structure should be its impact on behavior. “In analyzing the prerequisites of critical decisions, Simon writes, it is possible to predict the main contours of the decision-making process and, based on the decision-making process, the main features of the organizational structure.”

490

6 Western Schools of Management of the Twentieth Century

The problem of choosing a framework for building structures is investigated by Simon in his co-authored with March book “Organizations,” already quoted by us, where, inter alia, an attempt is made to analyze the relationship between the size of companies and the choice of process or purpose as a basis for departmentalization. Departmentalization on the basis of a process, March and Simon write, usually makes more use of the potential savings from specialization than departmentalization on the basis of purpose; the latter leads to greater autonomy and lower coordination costs than departmentalization on the basis of a process. As the size of the organization grows, the small benefits initially generated by the process become less tangible, while the cost of coordination increases. Hence, as the size of the organization grows, the net efficiency balance moves from the organization based on the process to the goal-based organization. As the organization grows as well as the number of structural units, managing them becomes more difficult. With this in mind, March and Simon recommend a number of measures that increase the effectiveness of communication and enable greater tolerance of management towards the independence of individual units: (1) the development programs to manage routine processes; (2) establishment of classification schemes to determine which incentives trigger action; (3) the introduction of a formal set of estimates, projections, interpretations, etc., that provide the same model of reality for all units whose activities are to be carried out in a coordinated manner. Unlike Simon and March, Selznick addresses the problem of creating organizational units within the organization in the light of his concept of institutional implementation of the goal and the preservation of the organization’s institutional integrality. In establishing the structural units, he argues, the inherent tendency towards autonomy, the desire to consider oneself a special guard for one’s own special goals and objectives should be taken into account. In order to provide a sound basis for the overall policy of an organization, Selznick recommends that senior management continually seek internal sources of potential support, both by using existing units and by creating special new tasks, especially to meet new challenges. Selznick makes another interesting observation about newly created units. These formations, usually weak at the beginning of their existence, created to carry out the new tasks, in the first stage, are somewhat volatile, need protection against pressure from other, long-established structural units. It is advisable, therefore, that such units should, for a period of time, directly subordinate one of the highest governing bodies, or assign an existing unit with a very different function, but institutionally strong. In a number of circumstances that must be taken into account in making such a decision, Selznick emphasizes that the stronger, already existing units with functions and responsibilities similar to the newly established unit would be in danger of being exposed to its interests and could therefore be subject to attacks. This danger, in Selznick’s belief, greatly reduces the order of initial subordination of new structural units proposed by him. Special studies of the School of Social Systems also focus on the problem that the classical school defined as coordination through hierarchy. The task of coordinating the activities of the organization is inextricably linked to the existence of different

6.7 School of Social Systems

491

units, differentiated functions and specialization. Proponents of a systematic approach fully recognize the importance of this classical principle. From Selznick’s point of view, one of the main objectives of management is to eliminate rivalry and discord among subgroups, implementation of an institutional mission, institutionalized implementation of the goal, protection of institutional integrity and streamlining of internal conflict. This task is solved via coordination through hierarchy. The latter is also largely provided by centralized decisionmaking. This is particularly important in the initial period of an organization’s activities. When, Selznick writes, senior management cannot rely on the subordinates’ abidance by their concept, formal means of monitoring are required. On the other hand, when the assumptions of official policy are well understood and accepted everywhere, it is much easier to do without centralization. It follows that we must expect a relatively high degree of centralization in the early stages of institutional development. Later, when homogeneity is achieved, decentralization will be feasible without unnecessary loss of control. The importance of centralized decision-making as a means of coordination, professional competence and responsibility was also emphasized by H. Simon. However, he also pointed to some of the shortcomings of centralization which manifest themselves in the delay in decision-making, the blockage of communication channels, the diversion of senior management’s attention from important issues to insignificant ones. Simon and March, as well as representatives of the School of Human Relations, considered the most significant disadvantage of centralization to be its dysfunctional influence on motivation. From Simon’s point of view, the issues of centralization and decentralization do not exist regardless of the decision-making process. The adoption of decisions related to the organization as a whole reflects the essence of centralized management. Since every person taking decisions has only limited rationality, that is, limited by their unconscious skills, habits and reflexes, by their values and the concept of purpose, which may be incompatible with the goals of the organization, as well as with the degree of their knowledge and information, those in a subordinate position are likely to be less able to make decisions, which are rational from the point of view of the entire decision system, than executives. In determining the decision level, Simon notes that it is important to take account of whether this level corresponds in terms of the formal system to the level of group values, the group social environment. Simon refers to another criterion for determining the place of the decision-making process in the organization, the adequacy of this level to the availability of necessary information and a rational coordination of certain functions. In the book “Organizations,” March and Simon, looking more closely at the issue of centralization and decentralization in relation to motivation issues, the problem of conflict, decision-making (both routine and innovative), comes to the conclusion that decentralization, whether or not it has normal functional or dysfunctional consequences, is inevitable because of the nature of the organizational decision-making processes.

492

6 Western Schools of Management of the Twentieth Century

It is particularly important to resort to decentralization, involving many units and many levels of hierarchy, where innovative solutions are being adopted, not so much in the final decision as in finding alternative solutions to problems, comparing them with each other and making recommendations to the top. The need for decentralization and the involvement of a large number of participants are dictated by the boundaries of human learning opportunities, the inability to cover the whole range of multifaceted problems that require corresponding analysis. Such problems should be fractionated, that is, they are divided into parts, then distributed among the various specialized units that make up the whole system. This principle, in March and Simon’s opinion, should be taken into account even in the elaboration of the most detailed programs bearing in mind that, on the one hand, programs cannot be so detailed as to eliminate all possibilities for independent action and, on the other hand, they should be made so that they could be implemented independently of each other, remaining only loosely connected to one another. As for the coordination of routine work, it should be provided mainly by ways and means that do not affect the highest levels of the organization. It is characteristic that in the early work relating to the period, when the use of computational management was not yet on the agenda, Simon included in the decision-making process the division of issues into parts, which would in turn be divided into units, insisting that it be dominated by a decentralized form. In his later work “The new science of management decisions,” he concludes that the advent of computers and their new methods of decision-making leads to recentralization, that is, the restoration and further development of centralization and hierarchical management. Simon points out that the use of economic-mathematical methods and computerrelated techniques significantly alters the attitude towards delegation of responsibility and decentralization of decision-making, allowing for the search and transfer of more rational, better coordinated and faster solutions to middle-tier problems crossing the boundaries between units, than was possible under traditional methods. From the same starting point, namely, considering the management function of the organization as a decision-making process, Simon approaches the issue of a linear-staff relationship, the detailed development of which belongs to, as we remember, another classical school. To deprive the headquarters of any authority over the “superior-subordinate” line for the sake of the unity of command, recommended by classicists, is contrary, in Simon’s view, to the principles of specialization, the consistent application of which presupposes their dissemination to the decision-making process. The conferring of the unity of command solely on the line means, according to Simon, that the decisions will be prepared and adopted by far less than the most competent persons in this regard. However, it would be incorrect to conclude that Simon is simplistic in addressing the problem and sees no objective difficulty in reconciling the linear and headquarters functions correctly in the management of an organization. He criticizes the principle of the unity of command as classical theory puts it and, for his part, offers a slightly different way of resolving the conflict between headquarters and the line.

6.7 School of Social Systems

493

The two methods he recommends to this effect can be applied separately or in combination. 1. Unity of command in a narrower sense. It means that an individual can receive orders from several superiors, but in the event of conflict there is only one superior, whom he is supposed to obey. 2. Power-sharing. It is understood here that each unit is given a specific area (subject) in respect of which it has exclusive authority, and the intended decisions of any individual in this field must be subordinated to that authority. The methods proposed by Simon were met with very little support. They are essentially no different from the classical principle of unity of command and, as many management theorists are convinced, do not solve this problem. In this regard, it is worth mentioning the attitude of the School of Human Relations to the issue of linear-staff relations, which is constantly discussed by all western schools of management Thus, E. Lerned and some other representatives of this area are opposed to relying on formal definitions of relationships, seeing a potential threat to good relationships between headquarters and the line. In the book “Administrative action” E. Lerned, D. Ulrih, and D. Buz write the following on this matter: “In part, the confusion and friction between line and headquarters staff is likely to result from the fact that both groups, in search of a benchmark for their behavior, have turned to definitions rather than to the situation in which they are working. The definition game doesn’t help.” In the view of the authors, it is much more important than a formal decision to subordinate a headquarters staff officer to a central office or field management, to raise a sense of responsibility towards both. In analyzing the state of affairs, the staff member is obliged to do everything in his power to correct the deficiencies, bearing the same responsibility both to the level of control that in the organization is responsible for the status of the work examined, and to the authority to which he reports and makes according proposals. The decisive factor determining the conduct of headquarters in the organization is, in the opinion of the authors, the conduct of superior line executives in relation to headquarters. When asked who should obey whom, they respond: “The problem is not the extent to which headquarters controls the line, but rather achieving results through a linear structure of the organization, that embody the skills of headquarters. In the same vein, a solution to this question is offered by another prominent representative of the School of Human Relations, Douglas McGregor. He considers it necessary to create a climate of trust between the line and headquarters, based on the recognition of the latter’s responsibility to all levels of management, not just to the person to which he is directly subordinate, as well as limitations on the collection of control information by both the line and headquarters. This measure is due to the fact that the basic principle of management control is self-monitoring, while headquarters is characterized, first and foremost, as a consultant to the line. The relationship between them, therefore, resembles the relationship between a professional consultant and a client to a situation of interdependence in which no one usually exercises power over the other, although both sides have an impact on each other. This conception of the nature of the relationship between units, developed by the

494

6 Western Schools of Management of the Twentieth Century

School of Human Relations, has had a significant impact on the theoretical construction of the School of Social Systems. Looking at the development prospects of management in the light of the increasing use of economic and mathematical methods and the use of computers, representatives of the School of Social Systems sought to anticipate the impact of this kind of innovation on human relations. Simon supposed that while the new management technique was increasing centralization, it nevertheless significantly altered its forms in comparison with traditional methods, since in the new environment, centralization was becoming unpersonalized. Moreover, comprehensive mechanization and automation of certain managerial functions will facilitate, according to Simon, change in the nature of the work of middle management, both in terms of its streamlining through centralization and in terms of its implementation in the most favorable way (undermining the actions of opposite focus, usually experienced by this part of management, thereby providing a healthier psychological environment). The principles of a systematic approach seemed to us to be embodied to the fullest extent in the works of E. Goldner. In his view, there were two main areas of analysis of the organization: the models of rational and natural systems. The first of them is most prominently represented in the work of Max Weber, the second in the works of F. Selznick and T. Parsons. If Weber and his followers interpreted an organization as an instrument, that is, a rationally conceived means of achieving clearly expressed group goals, and the organization’s structures as instruments specifically designed for the effective implementation of these collective intentions, and the work of the organization itself as a whole was considered consciously and rationally managed, the natural model sees in the realization of the goals of the system only one of several important needs that the organization is oriented to meet. The composite structures of the latter are presented in the form of autogenous institutions, which may be understood only because of the diverse needs of the system as a whole. It is assumed that the organization has an inherent desire to continue its existence and to maintain equilibrium, a trend that may remain even after its successful achievement of clearly defined objectives. The structures of an organization are supported spontaneously and homeostatically, changes in organizational types are interpreted as the result of cumulative, unplanned adaptive responses to threats of a systematic imbalance in general; it is argued that the responses to problems take the form of protective mechanisms, in which shared values, firmly rooted in the minds of the members of the organization, play an important role. In this way, empirical research focuses on the analysis of spontaneously emerging and normatively sanctioned structures, and at the same time, as the emphasis is not on rationality, but on imbalances within the organization, deviations from the planned goals are not so much the result of ignorance or miscalculation as the result of restrictions imposed by the social structure. The natural system model is usually based on an organic model that emphasizes the interdependence of the constituent parts. This is why it is assumed that the planned changes should have a divaricate effect on the entire organizational system, and if the consequences are unforeseen, they are usually interpreted as deviations

6.7 School of Social Systems

495

from the plan. In general, the long-term development of an organization is seen as an evolutionary process that is subordinated not to plans, but to natural laws. Goldner introduced the notion of organizational tension. In his view, difficulties within the organization arose, for example, when technical specialties, organizational experience, and the abilities of subordinates differed from those of an administrator. It is natural that in modern organizations with deep division of labor and specialization, managers often lack competence in the various specific areas of activity of subordinates. Hence, there is a need to assert their authority primarily on the legal basis, that is, the fact of being in an executive position. This, however, does not exclude the power based on special expertise and experience. The conflict between the two types of power is usually manifested in the form of contradictions between headquarters and line management. The resolution of this contradiction can be achieved by allowing the administrator to exercise voluntary self-restraint in supervising the work of subordinate specialists, in particular the technical side of their activities, and only to evaluate the results. Another way is to roll up the essence of management merely to so-called work with people. In Goldner’s view, proponents of both natural and rational models underestimate the importance of the friction that arises when trying to meet the divergent needs of the organization. The disparity between bureaucratic rationality and the organization’s characteristics as a social system may be a source of friction within the organization. Thus, a rational premise that power in an organization should be granted to suitably qualified persons may be confronted with traditional values of the environment, requiring that old rather than young workers, men rather than women, and so forth be pasted over with the power. Goldner drew attention also to the fact that some parts of the organization could be retained after their separation from others, since, first, parts of the organization were unevenly dependent on each other, and second, that dependence was heterogeneous, asymmetrical. To explain these phenomena, he introduces the concept of functional autonomy. A higher degree of functional autonomy means a low degree of dependence, and vice versa. Since parts of an organization, to no less extent than the organization itself, seek to preserve their borders and maintain equilibrium, they should be expected to protect their functional autonomy from external encroachments. The center seeks to limit it. An example of such frictions is the contradiction between operational, executive divisions and the main offices, the hesitation between centralization and decentralizing, etc. Thus, according to Goldner, the organizational structure is shaped by permanent tensions arising from the struggle of centrifugal and centripetal forces, which, on the one hand, impose control over parts of the organization and, on the other, limit it; on the one hand, connect the parts, and on the other, separate them. In the early 60s, another significant figure emerged in the School of Social Systems—Amitai Etzioni. Like all members of the system school, he characterizes the organization as a large, complex social unit in which many social groups interact. Although these groups have some common interests (e.g., the economic viability of the organization), they also have interests that are incompatible (e.g., in relation to the question of distribution of the organization’s gross margin). They are equally

496

6 Western Schools of Management of the Twentieth Century

relevant to certain values, especially national ones, whose influence becomes apparent in times of crisis, but divergent in views on many other values, such as labor in society. Different groups may cooperate in some areas and compete in others, but they hardly are or can be one large group of happy people, which is often hinted at by writers belonging to the school of human relations. And Etzioni further notes that there are two groups within the organization whose interests often come into conflict, management, and workers, because management’s efforts to make the worker work often act aloof. Basically, Etzioni’s theoretical constructs in this respect assume that the right of ownership gives the right of authority, that those who provide the means also determine their use. Thus, all workers in all organizations are frustrated and unhappy because they cannot determine what they will be used for, because they do not possess the tool necessary for independent performance of the work that needs to be done. The School of Human Relations, rightly says A. Etzioni, indicated only a few ways to reduce disaffection, but it is not fundamentally capable of tackling this challenge. A day a worker spends at production may be more enjoyable with the development of informal groups at the factory, but his work does not become less repetitive or more creative. Etzioni also opposed to another, strongly recommended method of the School of Human Relations, to organize, with the participation of representatives of the lower echelons of the organization, all possible democratic discussions leading to a joint decision, although in fact it had already been adopted at the top and the true purpose of the debate is to persuade the inferior strata to consent. He sees in these procedures (or their variations) the creation of a false sense of participation and autonomy, which is caused deliberately, in order to obtain the cooperation of the workers in organization activity and their commitment to contribute to the fulfillment of the tasks the organization faces. According to Etzioni, organizational analysis is broader than the concept of human relations, including: 1. Formal and informal elements of the organization and the relationship between them; 2. The scope of informal groups and the relationships between them within and outside the organization; 3. The higher and lower levels of the organization; 4. Social and material rewards and their impact on each other; 5. Interaction between the organization and its surroundings; 6. Working and non-working organizations. In his analysis of organizations A. Etzioni uses the term complex organization, or a modern organization, which equates these concepts with an integrated, comprehensive approach. An organization, according to him, is a multidimensional and multipurpose formation. And an organization that implements several goals in parallel is, in Etzioni’s view, incomparably more efficient than an organization that has strictly specialized goals. By emphasizing the rationality factor, he draws up two models of this rationality for the various elements of the organizational system. The survival model defines the

6.7 School of Social Systems

497

combination of conditions and requirements for the existence of the system. Failure to meet these conditions will cause the system to be disordered. This model separates all organizational actions dichotomically: whether each of them is functional or dysfunctional for the organization. The effectiveness model assumes a larger range of ratings: more efficiently, less efficiently, etc. in terms of achieving this objective. A. Etzioni also formulates the principles of comparative research of organizations, while attempting to define a universal measure for this comparison. As such, he used an independent variable of consent, which he regarded as a factor of social order within the organization. According to this approach, the main problem of such consent is the relationship between the type of power used for control and the facilities, interests, and motives of the members of the organization. Thus, Etzioni makes sort of an attempt to connect sociological and psychological approaches by comparing organizational factors such as power and motive. Thus, as can be seen from the foregoing, the School of Social Systems seeks to draw heavily on the findings of the representatives of the School of Human Relations, considering a human being at an organization as a socially oriented and guided creature with multiple needs that affect the production environment and are in turn influenced by it; a creature whose reactions are seen as partly predictable, partly completely unpredictable. However, unlike the proponents of concepts of human relations, the School of Social Systems seeks to overcome the revaluation of informal factors. In this way, they are trying to make some kind of synthesis of the classical theory of governance with the doctrine of human relations. A number of researchers see in these aspirations a trend towards a realistic synthesis. This synthesis is based on a systematic approach that considers the organization to be a complex set of interdependent and interacting variables, and a member of the organization as one of the variables in the system. The essence of the systematic approach is, as we have seen, in the study of the most common forms of organization, which involves primarily examining parts of the system interacting with them, exploring processes that link parts of the system to its objectives. The main parts of organizational systems are individuals, formal structures, informal factors, groups, group relationships, types of status and roles in groups. The relationship between the components of a system is accomplished through complex interactions that cause changes in people’s behavior at the organization. The main parts of the system are linked to each other by certain organizational forms, which primarily include formal and informal structures, communication channels and decision-making processes. On this basis, overcoming of centrifugal tendencies behalf parts of the system and direction of all its constituent parts to the organization’s ultimate goals are achieved. Seeing in the individual a part of the organizational system, the School of Social Systems studied its attitude towards other parts of the organization, attempted to recreate the dynamic of their interaction, resulting in changes within the system, and conflict within the organization was interpreted as a natural by-product of group aspirations. We have already mentioned that the proponents of a systematic approach positively assessed the importance of the Hawthorne experiments for human and organization research, but had put forward a number of new ideas that

498

6 Western Schools of Management of the Twentieth Century

are essentially alien to the doctrine of human relations. The main premise of the system approach is the recognition that the needs of the individual and the needs of the organization do not coincide. The behavior of a person in the organization was viewed by this school as a motivated hierarchy of needs. Once the basic needs of the individual in the organization are satisfied, he refers to the ultimate source of satisfying self-actualization. In order to achieve it, the individual must maintain his independence, his autonomy, develop and express his individuality under the condition of complete freedom. However, the nature of any organization alone is such that it inevitably places some obstacles in the way of developing the selfactualization of the individual. Consequently, the conflict between an organization and the individual is inevitable, and its legitimate consequence is frustration. So if the mechanistic tradition in management theory was based on the fact that the conflict between man and organization is an anomaly, which could be prevented or overcome by the proper use of material rewards, if the doctrine of human relations considered the conflict as dysfunction, which is neutralized by the methods of humanization of work developed in this direction, the School of Social Systems notes that the conflict is a normal aspect of the functioning of an organization.

6.8

The New School of Management Science

Another area of Western management thought was the so-called New School of Management Science, which emerged on advances in computing, economic and mathematical methods, and simulation. The ideological content was made, as in previous cases of HMT, by predecessors (in particular, Simon and his colleagues), but the new school made a turn in the direction of improving the rationality (instead of satisfaction, according to Simon) of management decisions, but now on a new qualitative twist. And if in the framework of the school of social systems, a systematic approach had been used and developed by philosophers, sociologists, economists, practitioners and management theorists, in the new school the systematic approach remained pivotal, but specialists in cybernetics, operation studies, system, mathematics, and programmers had been the brain headquarters. Since methods and technical means of research were predominant at the new school, rather than scientific concepts, there were not only achievements at the new school, but also serious methodological limitations. But there is also the fact that the new research tools had not only made it possible to improve the methodological culture and scientific rigor in the management of social facilities, but also to significantly expand the scope of these studies. The very approach of the new school to the study of management issues was more normative than most of the previous descriptive of scientific directions, except for, perhaps, only Taylor. And since research methods are a rather rare symptom of the classification of scientific research, it seems that the integration of scientists into one school at this stage of the development of managerial thought is quite conditional.

6.8 The New School of Management Science

499

With the advent of the computer, the mode of use of this powerful “making” tool for representatives of all previous management schools, who had, in one way or another, begun to use the new tools, while remaining adherent to their scientific foundations. As for the theorists of the new school, they are united, first of all, by a common desire to improve the rigors of measurements in management experiments based on new scientific analysis and synthesis techniques, already proven in other areas of scientific research, such as cybernetics, optimal management, operations research, mathematical modeling, programming, and system techniques. For example, the development of cybernetics, as the science of management laws in complex dynamic systems, had led to the development of fundamental principles and methods for processing information that were materially translated into automation of production management functions. The creation of the computer contributed to the development of fundamentally new perceptions of the organization and management of production and created the material conditions to ensure reliability of the management of complex systems and the introduction of automatic devices into the process. The systematic approach and systematic analysis are the main paradigms of the new school, although the terms and ideas have long been known. The idea of systematicness in management studies had greatly strengthened its position first, by synthesizing the experience of operations research specialists, and second, by developing a common system theory, an automated management and cybernetics theory, which created a methodological apparatus for communication into a single whole of heterogeneous management tasks. The systematic approach since then had won the minds of all management theorists and practitioners in the rationale of management decisions in a wide variety of areas, including public and community management, and the management of productive and non-productive industries. It had become generally accepted that the systematic methodology provides the most structured and reliable framework for managing complicated complexes of heterogeneous but interconnected activities, allowing the components of the system to be uncovered and analyzed and coherently integrated. A systematic approach to the study of organizations assumes that any organization has a system, each of which has its own specific and limited objectives. Accordingly, the task of management is to integrate the foundations elements that can be achieved on the assumption that each executive, in addressing the issues under his purview, will approach from the point of view of systems analysis. The primary objective of a systematic approach is to optimize the effectiveness of the organization as a whole, which does not necessarily mean optimizing the activities of all without excluding its elements. The essence of the system approach is as follows: 1. Formulation of goals and clarification of their hierarchy before any activities related to the management and, in particular, decision-making; 2. Maximizing the impact in terms of attaining the goals at the lowest cost by comparatively analyzing alternative ways and means of achieving the goals and making the appropriate choices;

500

6 Western Schools of Management of the Twentieth Century

3. Quantitative assessment (quantification) of goals, methods and means of achieving them, based not on private criteria, but on a broad and comprehensive assessment of all possible and planned outputs. The most extensive interpretation of the system approach methodology belongs to the famous biologist, Professor Ludwig von Bertalanffy, who nominated in 1937 the idea of a common system theory. L. von Bertalanffy was born in 1901, near Vienna. In 1926, he received a Ph.D. degree at the University of Vienna, where he worked until 1948, first as a senior officer (1934) and then as professor. Bertalanffy subsequently continued his academic career in North America, first as professor and head of the Department of Biological Research at the University of Ottawa (Canada), then head of the Biological Research Center at Mount Sinai Hospital, and visiting professor at the University of Southern California, Professor of Theoretical biology and research associate at the Center for Advanced Studies in theoretical psychology at the University of Alberta (Edmonton, Canada) and, lastly, since 1969, professor at the State University of New York in Buffalo, United States. Since the 1950s and until his death (1972) L. Bertalanffy was involved in the application of the theory of open systems and general theory of systems in social sciences. Bertalanffy defined the subject of the general theory of systems as “the formulation and conclusion of those principles that are valid for “systems” in general. . . As a result of the existence of common system properties, there are structural similarities, or isomorphisms in different areas. . . This correspondence is due to the fact that the data of unity can in some respects be regarded as systems, that is, complexes of elements in interaction. . . In fact, similar concepts, models, and laws have often been detected in very distant areas, independently and on the basis of completely different facts.” Note that Bertalanffy regarded cybernetics as a private case of the general system theory: “Cybernetics, as a theory of control mechanisms in technology and nature, based on concepts of information and feedback, he writes, are only part of the general theory of systems; cybernetic systems are only a special, albeit important, case of systems with self-regulation.” Bertalanffy developed the ideas of the so-called organismic revolution, emphasizing that it was the concept of the system that was key within it, and that the basic ideological approach was the perception of the world as an organization. “The systematic approach, Bertalanffy wrote, is not limited to material unity in physics, biology and other natural sciences, it also applies to unity that is partly non-material and very heterogeneous. Systems analysis, of business, for instance, includes people, machines, buildings, raw material input, output, monetary values, goodwill, and other elements that do not lend themselves to measurement; it can give a final answer and practical advice.” [111]. Within the systematic approach research tools of system analysis had begun to be developed. At the beginning of active system research, an attempt was made to “disclose” basic terms. Some scientists had considered the systematic analysis methodology, as opposed to a systematic approach, as necessarily relying on the mathematical apparatus and submitting its findings mainly in a formalized form, while the system approach is based on broader, not necessarily mathematical

6.8 The New School of Management Science

501

categories. In other words, in the view of these authors, the systematic approach is a common methodology and the systematic analysis is the applied, maximum quantified methodology of study. Other authors held the opposite view. It is also worth noting that individual analysts, who performed systematic analysis, had referred to their studies as “operational analysis,” “cost-benefit analysis,” “cost-effect analysis,” and so on, following a particular terminology to a large extent depending on whether they had come to systematic research from a general theory of systems, operational research or econometrics. For some time, system analysis had been identified with “brain trusts” or major research organizations like RAND, the System Development Corporation, the TEMPO Center for Advanced Research and the General Electric Company. In Bernard Rudwick’s work “System Analysis for effective planning: principles and examples” an attempt was made to clarify the different approaches to the concept of system analysis. The author narrows these differences down to two main ones. The first approach emphasizes the mathematics of system analysis in order to optimize a certain quantified function of the system and to develop mathematical and logical equations that include different kinds of variables and limitations, for these purposes. The objective of systematic analysis here is to determine, on the basis of mathematical or simulation methods, the quantifiable and optimum, in the sense of the optimum criterion, solution. A feature of the second approach, as Rudwick noted, is that it comes primarily from the logic of systematic analysis. From these standpoints, systematic analysis is mainly seen as a methodology for understanding and streamlining (or structuring the problem), which can then be solved with or without the use of mathematics and computers. In this sense, the notion of systematic analysis is essentially synonymous with the concepts of systematic approach or systematic research as interpreted by some researchers. This kind of understanding of system analysis can be seen from the following definition given by the Rand corporation: “Systematic analysis is a study designed to help the manager, who makes the decision, in deciding on the course of action by systematically examining its actual goals, quantifying (where possible) the costs, efficiency and risks associated with each of the alternatives to the policy or strategy for achieving the goals, and also by formulating additional alternatives as necessary.” Some researchers had attempted to classify different areas of systematic research according to the characteristics of the problems that were the subject of analysis. Among them, the already known to us H. Simon, and also A. Newell, C. Optner, C. Cherchmen, R. Akkoff. The criterion for dividing various problems into classes is usually the degree of depth of their knowledge. Therefore, in the most general way, all problems can be divided into three classes: well-structured, unstructured, and ill-structured. Well-structured are those problems where essential dependencies are clearly expressed and can be represented in numbers or symbols. This class of problems is also referred to as quantified, and the methodology of operations research is widely used to solve the problems of this class. Unstructured is the class of problems that are mainly expressed in qualitative terms and characteristics and do not lend themselves to quantitative descriptions and

502

6 Western Schools of Management of the Twentieth Century

numerical estimates. A study of these qualitative problems is only given to heuristic methods of analysis. There is no possibility of applying logically streamlined procedures for finding solutions. The ill-structured class includes issues that contain both qualitative and quantitative elements. With uncertain, non-quantifiable constraints, features and characteristics tend to dominate these mixed problems. This class of problems includes most of the major tasks of an economic, technical, political, military, and strategic nature. It is the resolution of problems of an ill-structured nature that is the objective of systematic analysis. Formulating their understanding of the essence of system analysis, D. Cleland and W. King wrote in the book “System Analysis and Project Management” (1968): “The practice of systematic analysis is not a dogmatic application of a set of rules to a situation that may not be subject to regulation nor is a concession of the decisionmaking prerogative to a mystical set of mathematical equations or computers. At this stage, the practice of systematic analysis is largely an art. The foundations of this art had also included the basics of science and the laws of logic, and the conceptual framework is a serious basis for analysis, but in practice, human judgment and intuition play the most important role in the solution as such, in the analysis, in determining the criteria to be used... Detailed systems analysis models, whether mathematical, graphic, or physical, are in fact slightly different from the speculation models that each person creates to solve any problem. The basic difference is that systems analysis models are clear and can be much easier to manipulate and design so that they are more precise and comprehensive in reality than the subjective models that most people typically use to solve problems.” [103]. In the same vein, Alain S. Enthoven, former United States Assistant Secretary of Defense and one of the researchers in the system, answered what system analysis was. In an article published in 1970 in the National Journal, he wrote: “Systematic analysis is nothing other than enlightened common sense, which has modern analytical methods in service. We use the systematic approach to the problem, seeking to explore the challenge as widely as possible, to determine its rationality or timeliness from a public point of view, and then to provide the one responsible for decision making with the information that will best help him choose the preferred course of action. In order to make this choice, it is necessary to first identify alternative ways of achieving the desired objective and then to assess, on the basis of quantitative data, the advantages (effectiveness) and cost of each of these alternatives. Those aspects of the problem that are difficult to quantify should be formulated as clearly as possible ... Systematic analysis can be usefully applied to solve social problems. I am confident that a qualified analysis can be useful in the elaboration and consideration of alternative approaches to education, health, urban transport, justice and crime prevention, natural resources, environmental pollution, and many other problems... We attempt to measure what can be measured, and how clearly we can define what cannot be measured, leaving the difficult task of deciding on the “unmeasurable” [104].

6.8 The New School of Management Science

503

In the 1970s, a powerful system analysis tool was developed to manage the financial subsystem of the PPBS Enterprise (Planning Programming Budget System). Supporters of the PPBS system believed that it was designed to help develop long-term plans and to align them with investment decisions made by firm management. Some specialists had pointed out that the introduction of PPBS methods to in-house planning would ensure better alignment and coherence between the organizational and the programmatic structure of the governing bodies of firms, and would require measures to improve the reliability and detail of the results and costs of individual programs and program elements. The application of the PPBS system resulted in a change in the organizational structure of the bodies managing firms, expressed in the integration of the traditionally divided divisions of functional subdivisions of planning, finance and economic analysis. Other experts attached particular importance to the use of PPBS to plan, find and allocate resources for scientific research. Around the same year, the US began to carry out systematic studies for industrial enterprise management in general. Among these attempts, the work of the professor of the Massachusetts Institute of Technology, Jay Forrester, founder of the so-called Industrial Dynamics school, is particularly well-known. D. Forrester was born in 1918 and his first education was in electrical engineering. He worked in the area of hydraulic and electrical servomechanisms, then was driven by computer simulation modeling. J. Forrester expressed the main ideas of his approach in the book “Industrial Dynamics” (1961), widely recognized by scientists in many countries. Forrester, based on ideas and techniques of the theory of automatic regulation, developed a formal simulation dynamic model of the organizational system of an industrial enterprise, consisting of a production unit and an implementation unit. There are six basic parameters in this model, more specifically six related flows. Five of these are raw materials, orders, money, equipment and manpower, and the sixth is information, designed to aggregate all of them. Behavior in Forrester’s model is largely determined by its structure. The model itself represents a combination of amplifiers, lag, and integrating links associated with the above-mentioned flows. Based on this framework, it is possible to draw up equations for the behavior of the system and to quantify the processes associated with various perturbations and control effects. The most complex models of specific enterprises, which correspond to practical requests of general economic management, contain hundreds of equations and up to 3000 variables in total, although formal ratios (equations) are mainly structural in nature and elementary in mathematical terms. The methodology Forrester proposed for building and analyzing a dynamic enterprise model consists of six stages: the first stage identifies a specific production and business issue to be analyzed by the dynamic modeling method; the second stage describes the main dependencies that characterize the structure of the system being studied in words; on the third stage, a structural model is built, a system of equations is written in a special language for computer programming (Dynamo); on the fourth stage, the system is modeled on computers and the results of the simulation are compared with experimental data on its real behavior; on the fifth step the issue of modifying the model to provide an approximate match to the system’s

504

6 Western Schools of Management of the Twentieth Century

behavior on the existing experimental material is resolved; finally, the sixth final step is to find in the model appropriate changes to the parameters leading to improvements in its behavior and to translate those changes from the language of the model into the actual language of the system. As Forrester himself pointed out, dynamic modeling was made possible only through advances in four areas of scientific activity: (1) the theory of information systems with feedback; (2) study of decision-making processes; (3) experimental modeling of complex systems; (4) computers (as a means of simulating real processes on their mathematical models) [109]. The methodology Forrester proposed had been successfully applied in the modeling of the processes of management of research and design organizations. This was done, inter alia, by J. Forrester’s apprentice and successor Professor E. Roberts. In his book “Dynamic Modeling of Research and Development” (1964), he attempted to combine social, psychological, technical and financial factors into one model in order to construct a comprehensive theory of research and development [107]. Together with another member of the Forrester Roberts Group in 1963, he founded a special dynamic modeling consulting firm that served industrial concerns. Forrester was convinced that his method could also be used to exert a stabilizing influence not only on individual enterprises, but on entire production industries. His apprentice G. Harford has built a dynamic model that establishes the relationship of 140 variables of some importance in the transition from thermal power to atomic energy. The factors studied by Harford provide an insight into the conditions required for the development of nuclear power plants. Forrester, however, warned that the method he had developed is far from perfect and cannot be used to predict “certain events at a certain point in time,” that “dynamic modeling is intended to serve the purpose of a better understanding of the management process and to facilitate the adoption of successful solutions, without, however, guaranteeing their unconditional accuracy.” However, in a later publication, “Towards a better understanding of social Systems” (1969), Forrester wrote: “Our work focuses on principles that apply to any system the state of which changes over time. These principles cover systems in physics, technology, management, economics, medicine and politics—wherever the interactions between components change the state of the system as it moves from the present to the future.” [108].

6.9

The Situational Approach in Management

A large number of scientific schools of management that existed in the early 60s, demonstrating the process of differentiation in the area of management research, had led to a new trend in Western history of management thought of the twentieth century, namely, attempts to unify different schools and directions on the basis of certain common concepts. This was also facilitated by the calls on behalf of scientists to halt the turbulent flow of scientific research, which led to the state of a “Jungle in

6.9 The Situational Approach in Management

505

Management Theory,” as the former president of the American Academy of Management, professor of the University of California, H. Koontz in his cognominal article (1961). He was not supported by the famous H. Simon, who wrote in the article “Development of Management Theories” (1964) that “if it is a jungle, there are huge elephants wandering in them,” bearing in mind the availability of sufficiently well-established scientific schools and directions. Attempts to create a unifying theory raised objections to perceptions of the state of western HMT as jungles. In 1964, at the Conference of the American Academy of Management a resolution on the need to “create a common management theory” was adopted, which could explain the phenomena observed in management practices and at the same time reconcile the various, often contradictory, concepts, and then provide a basis for making practical recommendations to address the issues that arise in management. The new so-called situational theory of management was called the unifying concept. The authorship of the name of the theory belongs to a professor at St. John’s University (New York), Robert Mockler, who, in the article “Situational Theory of Management” (1971), asserted that: “talking about modern management theory as a jungle means ignoring the unifying thread that is the basis of theory, the situational theory of management today.” [21]. It was true that the author himself recognized that the nature of the situational approach was not entirely new. Thus, for instance, Peter Drucker, in his book “Management Practices,” which was released in 1954, highlights in the main features the background of the situational approach to management. Along with Drucker and his colleagues at the empirical school, the need for a specific analysis of situations to make good management decisions had been advocated by many other theoreticians of management. New, in Mockler’s view, are attempts to address the situational theory as a unifying concept, making it a fundamental principle of management thought, and the growing influence of this theory on many areas of research, training and retraining of management personnel. Mockler and his associates explained the emergence of the situational approach to organization and management issues not so much by aspiration to create a single theory of management, but rather by the consequence of effort to reorient management theory towards management practices. In explaining the reasons for this attitude to management theory, Mockler pointed out that specific situations, the specific conditions in which a manager operates, are so diverse that modern management theories had proven to be unsatisfactory in terms of practitioners seeking practical guidance in theory. “It may sound like heresy to the old theorists of management,” he writes, “but my own experience has taught me that few, if any, principles of management, designed for universal application, have been established once and for all.” It is because of this that many of the past management studies and publications, which have often attempted to develop such principles, have not been able to provide managers with a sufficiently practical guide.” [21]. These and the words cited below by R. Mockler confirm our hypothesis about the idiographic nature of management science. R. Mockler believed that “it is best to develop conditional or situational principles that are useful in certain specific business situations.” This assumption became

506

6 Western Schools of Management of the Twentieth Century

increasingly common both in management studies and in the training and retraining of managers. The new approach was expressed in that the emphasis had shifted to the examination of the actual conditions, the specific situation of a firm, and the development on that basis of a specific, unique, if necessary, organizational structure, corresponding with specific conditions and requirements. But the main premise of the situational approach was not so much to call on managers to act in a manner consistent with the facts and circumstances, as the desire to build a theoretical model of an organization in which these external circumstances would be characterized by a well-defined set of so-called contextual variables, and based on empirical evidence the interdependence of these variables and the organization’s main internal characteristics would be established in probability form. In this way, the proponents of the situational approach presented and addressed three main objectives: first, to develop a theoretical model for displaying the multiple situational factors and circumstances in the form of contextual variables (the situation model), second, to develop a model of functional relationships between contextual variables and the internal characteristics of an organization (the link model); third, on the basis of two models, to adopt and implement a decision on the management impact on the organization (in whole or in part). On this basis, the links of “technology” and “structure” (D. Woodward, D. Thompson, C. Perrow), “external environment and internal forms and mechanisms” (P. Lawrence and D. Lorsch, D. Dalton), “size” of the organization and the characteristics of the management system (P. Blau, D. Pugh, D. Child), the social and psychological characteristics of the organization’s members and styles of leadership and conduct in the organization (D. Lorsch, D. Morse) and other elements of the external environment and the organization were examined. In parallel with the situational approach, there had been some development of another close direction, called the Relativistic. The essence of this approach was articulated by the professor of Harvard Business School D. Lombard. He criticizes all the theories of management for their “dualistic approach” in the sense that each theory operates “one-dimensional” concepts (“universalities”) and is very simplistic in interpreting the truthfulness of the postulated principles of the organization. Assessing the organization from a relativism point of view, he called for a review of all the provisions of all theories in the light of the complex diversity of situations, goals and values and their inherently relative nature. The situational approach to organizational structures had been most consistently developed in the work of P. Lawrence and J. Lorshe “Organization and Environment” (1969). They described their approach as the Organization’s Contingency Theory, the starting position of which was the affirmation that there was no single way of organizing and that different types of organizational structures were needed at different stages of an enterprise’s development. The main content of Lawrence and Lorshe’s book is an analysis of different types of organizational situations, needs, determined by the company’s different stages of growth, and its interaction with the environment. On this basis, it is possible to select an organizational structure that meets the actual needs of the firm.

6.9 The Situational Approach in Management

507

This approach had also prompted specialists studying organizational structures, which had begun to abandon the development of formal schemes and traditional hierarchical structures in order to develop specific individualized organizational structures that meet the specific needs of particular industrial firms. It is characteristic that the situational approach had affected virtually all the major scientific schools of management, particularly in the research of management as a system and its individual elements. Thus, for instance, the situational approach to leadership was developed by F. Fiedler in his work, “A Theory of Leadership Effectiveness.” The author attempts to categorically determine the different types and situations of people’s group behavior in the organization, and therefore the style of management that is most effective for the situation. A similar approach is common to W. Whyte, who in the work “Organizational Behavior: Theory and Application” attempted to identify the types of group conduct within the organization and explored the influence of various management methods on group behavior and the behavior of individuals. These and other studies show that the situational approach had also become prevalent in management studies, which in turn meant some departure from the traditional desire of previous schools of management to form universal principles of managing people in the organization. It should be noted that the proponents of the situational approach saw the possibility of overcoming the existing differences between the School of Human Relations and the New School. In analyzing the nature of the operations investigation method, Mockler rightly stressed that this approach was based on a situation analysis. However, he writes: “It is curious that specialists in operations research very often do not use situational thinking as much as technical thinking, immersed in the mechanics of linear programming, queuing theory, game theory, and so on. And the more these people become immersed in their methods, the more they move away from business issues and are less able to find common language with managers. The methodology of the situational approach enables, in the opinion of its proponents, a consistent solution to this deficiency. One specific attempt to present the methodology of operations research from the perspective of the situational approach is the work of D. Miller and M. Starr, “Executive Decisions and Operations Research.” The authors of this book deliberately construct the composition of the material not around different formal methods, but based on the types of business situations and business practices, such as market operations, production, and finance. They are not so eager to make the readers of the book specialists in the different methods of operations research, but rather to show managers and investigators how to use quantitative analysis techniques in different specific situations. Among the proponents of the situational approach there were scientists who, despite the successes achieved through the latest management practices, persistent to prove that management science had not existed, did not exist at the time and is basically impossible, since management is primarily an art and therefore cannot be subordinated to rules, codified or decrypted. This irrationalistic at its basis concept was also complemented by empirical arguments: a reminder of the diversity and uniqueness of the conditions, situations, and problems faced by the manager,

508

6 Western Schools of Management of the Twentieth Century

pointing to the qualitative differences in management in different areas, underlining the importance of the identity of the manager, the decisive role of the subjective factor, etc. Correctly noting the insufficiency of abstract postulates and speculative conclusions, the proponents of this approach essentially denied the meaning of theory and reduced the management problem to personal abilities and empirical skills. The typical representative of this nihilistic in its essence point of view, is a professor of the University of Michigan, George C. Odiorne. In the article “The Management Theory Jungle and the Existential Manager” (1966), Odiorne argues that “general management theory is impossible.” He argued that behavioral concepts and formalized management models, which in his view only affected the least significant aspects of the manager’s activities, were insolvent. Unlike these speculative, according to Odiorne, constructions, empirical research may be of some importance, but only when they are directly related to specific experiences. Odiorne saw the way out in the application of some existential theory of management developed by him. Its main premise is the denial of the ability to conduct management activities under certain patterns, rules, norms: “From the perspective of an abstract scientist in management, the manager’s world often turns out to be irresponsible and undisciplined.” It is clear in any case that this is a world of subjective observations, of aspirations, of solutions that cannot be verified empirically. Consequently, the ignorance of specifics of management science must be abandoned. Odiorne joins Camus in saying: “We are faced with a difficult choice between a description, which is authentic, but does not teach, and hypotheses that pretend to teach but are not reliable.” A really functional, or existential, manager does not comply with the rules established by the scientific management, as much as most unexpectedly (suddenly also for his rival) violates them and thus succeeds. Odiorne stated that all modern-day management schools were very simplistic in considering the extremely complex and diversified activities of a real business manager, meanwhile suffering not so much from the lack of empirical evidence as its surplus. The representatives of the quantitative and behavioral theories attach importance only to systematic observation and analysis of the manager’s activities, criticizing the empirical school, which emphasizes not so much the systematicness of research as the understanding of the specific individual experiences of managers in all their distinctness. Odiorne supports the empirical direction in its polemics with the systemic approach. He claims: “The only alternative is to go back to the existential manager with all the horrifying complexity of his actions and choices. Surprisingly far from the dominant jungle theory of management, the roots of which go back to the quantitative, behaviorist and classical schools, the motion of thought, which is defined as existentialism, is actually, if not by recognition, a philosophy around which a successful manager organizes his life and work. Of all schools of management theory, it is most similar to the empirical school.” It should be noted that Odiorne’s empiricism, unlike the representatives of the empirical school, has a personal, unique, deprived of elements of validity of the manager’s existential experience. The key to this experience is not research, but survival, which can be an incentive to an existential ontology, or a doctrine of

6.9 The Situational Approach in Management

509

existence: “Ontology is, although unconscious, the guiding philosophy of the most existential manager, the philosophy of his choices and actions.” As is well known, existentialism considers existence as a subjective state of the human person, a state of complete disconnection from empirical motives, considerations, influences when the individual acts in his existence and is therefore completely free. Odiorne tried to apply this concept to a manager, although, of course, in terms of the philosophy of existentialism, the manager is not an existential individual, as his choice is determined by very specific desires, such as seeking to maximize profits. According to Odiorne, the manager’s essence is that he exists, decides, acts: “The manager exists first, then creates himself. Psychologists (behaviorists) attempt to portray the behavior of the manager on the basis of his objective, that is, non-personal, characteristics; mathematicians tend to raise the chaotic nature of his activities to a level of rational action. But both ignore the subjectivity, personality, impulse of the manager, as well as the situations in which he operates and which, as a rule, are not comprehended by abstract analysis.” Odiorne noted that “almost all schools of management are engaged in research into the management problems of large corporations, insulated from the multitude of factors faced by managers of smaller and smaller firms, due to their power. Theorists usually tend to ignore the activities of small firms, where managers usually do not only fail, but are also completely defeated. Almost all of the modern management concepts taught both in business schools and in different management courses are: How do you become a well-paid employee of one of the 500 largest American corporations? No one is thinking about how the same principles can be applied at 37000 firms, with the number of employees ranging from 100 to 500, in 4 300 000 firms, with a number of employees from 1 to 99. What kind of management theories are involved in such firms, whose average life expectancy is no more than seven years? All reasoning of management theorists, which relate mainly to professional managers, hiding in the shelters of large corporations, will not withstand any scrutiny if they expand the scope of their application at least slightly.” Odiorne tried to prove that most of the circumstances that surround the existential manager are simply not amenable to any theoretical analysis. In doing so, he referred to the statement made by one of the presidents of the American Association of Management, Lawrence A. Appley that “in many areas of management theory we are blind to the pariah” and stressed that management theorists are clearly underestimating the crucial role of these areas and factors: “We can neither plan nor avoid them, we can only fight against them, and eventually, be shattered or switch to annihilating each other.” He saw the fundamental impossibility of creating a management science due to the existence of five situational limits, the essence of which is the following. The first limitation is the permanent situationality of the manager himself, who, without managing to exit one critical situation, immediately enters another. He lives and operates in a constantly changing environment with many unknowns. He can hardly identify or solve any problem, as it is found that the number of difficulties is clearly multiplied precisely because some of them have already been overcome. He hopes to build on his past experience, but new challenges require new solutions.

510

6 Western Schools of Management of the Twentieth Century

Nevertheless, only by using his past experience to assess the specific situations through which he had passed, the manager can prepare himself, though, rather uncertainly, without any guarantee of success, to a new, always unexpected, usually paradoxical, situation. The second situational limitation is luck. Odiorne emphasizes that all theories, except for statistics and game theory, are discarded by this circumstance, whereas in reality it is of great importance to the actual manager. Odiorne considered “luck as a pure accident, something like winning a lottery for a ticket you didn’t buy, but found somewhere. No one knows the way to luck, doesn’t know where it awaits: it, like mischief, always catches by surprise. So naïve is the perception of management science that the manager is managing events. The most that is possible is the adaptation to circumstances. Because of this, the application of logical positivism to the manager’s activities encounters severe restrictions. Logical constructions, even if created on the basis of existing facts and factors, cannot be applied to new relationships.” The third situational limitation is the struggle and conflicts that accompany all the manager’s activities. Odiorne means, first of all, competition between entrepreneurs, in which managers are actively involved. However, without limiting oneself to a statement of this undeniable fact, Odiorne, following the existential methodology, narrows confronted competition under market conditions to a certain human situation, namely that “full agreement between people is impossible. People generally have a desire to build their relations from the perspective of the “domination of the strong,” through all kinds of machinations and manipulations, and the best that could be hoped for, is competition without overt hostility. At the heart of all this lies the general conflict between the limited resources of mankind and the unrestrained claims of human beings. From this perspective, competition is proving to be a natural and, alas, invariably critical situation. Limited resources are a source of dissatisfaction and discontent that is directed against those who have succeeded. No attempt can be made to resolve this conflict on the basis of behavioral or mathematical models, except, perhaps, to help one of the parties to win temporarily, or to become more likely to lose in the ongoing struggle.” The fourth situational restriction, which is fundamentally incompatible with any of the existing scientific theories of management, is the inescapable sense of guilt that accompanies the manager. This is a specific fault related to the knowledge of the performed offense. The feeling of guilt is a priori, and it is inherent to the manager, because he is the manager, i.e. he has made his existential choice; in fact, it is even independent of the manager’s relationship to other people: it is above all a consciousness of guilt before oneself for one’s own faults, failures that are inevitable as a result of the choice of managerial existence. The manager is doomed to the fact that always, along with success, he is expected to fail. Suffering failure, and anxious to extend the desired success, the manager, most of the time, even during the success period, is bound by a sense of unavoidable guilt, constantly saying to himself: “If I had only done something else.” A sense of guilt never leaves the manager and therefore cannot lack a continuous influence on his behavior.”

6.9 The Situational Approach in Management

511

Finally, the last existential limitation, “irreversible and unmanageable,” is the death of the manager, that is, his last chance: “not to be.” Since Odiorne reasoned about an existential manager, death is the strongest argument against the possibility of a scientific theory of management. “Death is not what happens at the end of life just as a conclusion, the final chord.” Death is what is present in life, in existing, because it is aware that it is going through itself. So, living means living by death, peering, listening to it, being aware that it’s getting closer to you, becoming more intimate, and that this intimacy will end only with your death. Reality is both simpler and more complicated. The motives guiding the manager are subjective, they are imbued with sympathy and antipathy, love and hatred, fear, and hope. To believe that the motives are based on well-founded evidence is to consider the manager from the outside. It would be much more persuasive to think that a successful manager is too busy achieving success to spend time on theories that attempt to explain his success. The existential manager is too busy to remain just existing.” Odiorne compared a manager with a practician that does not have time for research, or with a seaman so busy that he is not able to study the distracting issues that occupy the office theorist precisely because he is not at sea, but on the air of pure thought. “Where then is the place for management theory?” asks Odiorne and answers: “Eliminate the effect of all situational differences between managers, conflict, luck, guilt, death, and management theory will have the conditions for smooth sailing. But you will also eliminate the real world with its actual inevitability, and you’ll get some sterile exercises in abstract logic as a result. The complex nature of the human being and the environment in which it operates will not be simpler when viewed as a logical machine, but as a mathematical model or as a system of external computers. Yet we do not have the right to abandon the theoretical reasoning of managerial activity. The principles of this activity are irrational, but they do, nevertheless, exist. No one has so far discovered or described them. Those who attempted to do so went through a logical analysis, as if singling out principles, which are then subject to empirical verification. But this is not enough to understand managerial activities. The abstract approach reduced to nonsense all the moral and existential activities of the manager. The theory must be existential: its starting point may only be the insurmountable subjectivity of the human individual who is carrying out his life project.” So the crisis of scientific theory of management can be overcome only on the basis of a philosophical irrationalism, disclosing the irrational abyss of existence and a way of preventing scientific prejudice. This is briefly the essence of the idea of “situationality” and its various implementations in the works of the founders.

512

6.10

6 Western Schools of Management of the Twentieth Century

The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans

In Chaps. 2–4, we discussed the topic of developing views on the roles of managers, discussed attempts to answer the question “What should managers do and what are they really doing?” Using materials from ancient thinkers, reflections on the Table of Ranks, articles by scientists and practitioners, published before the twentieth century. In this section we continue to discuss the writings of the authors of the twentieth century, devoted both to the development of already known points of view on the roles of managers, and the formation of sometimes completely new ideas about the roles of managers. But we will begin the development of this topic in the twentieth century from the words of Lawrence Laughlin, which he said in the nineteenth century (more precisely, in 1887) in the treatise “Elements of Political Economy” and cited by us in Chap. 3: “The Manager is the one who selects the location for the factory, who selects the site of the factory, who controls the finances, buys materials, and sells the goods; who decides upon what machinery to use; who deals with the workmen, allotting the tasks, and classifying their labor; who watches the market, knowing when to sell and when to withhold his goods; who can find out satisfactorily what purchasers really want, and adapts the character of his goods to these wants—such a manager, who makes the most of everything, is in general. . . a rare man.” [43, Ch.5, p.52]. As you can see, in just one phrase, Mr. Laughlin mentions 6–7 functionalities that are managed by company executives! All subsequent authors clarified both the composition and content of the roles, identifying new factors for their changes and thereby reflecting in the roles the “new conditions” from our theorem presented in the epigraph to Chap. 2. And the reason for bringing down the words of L. Laughlin expressed in the end of the nineteenth century, in this chapter devoted to the twentieth century, again, it is to confirm our hypothesis of non-Markov or inertia of the processes of development of managerial thought. Of the most outstanding creators of the list and content of roles of managers of the first half of the twentieth century, of course, Frederic Taylor, Henri Fayol and Chester Barnard should be noted. Frederick Taylor in the spirit of L. Laughlin in 1911 wrote about the roles of the head of the workshop in the work “Shop Management”: “He must lay out the work for the whole shop, see that each piece of work goes in the proper order to the right machine, and that the man at the machine knows just what is to be done and how he is to do it. He must see that the work is not slighted, and that it is done fast, and all the while he must look ahead a month or so, either to provide more men to do the work or more work for the men to do. He must constantly discipline the men and readjust their wages, and in addition to this must fix piece work prices and supervise the timekeeping” [4, 1, pp.94–95]. Henri Fayol in his treatise “General and Industrial Management” (1916) expressed his ideas about the “qualities and knowledge of managers of large enterprises”:

6.10

The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans

513

1. Health and physical stamina. 2. Mind and mental performance. 3. Moral qualities: conscious, firm, persistent will; activity, energy and, in known cases, bravery; courage of responsibility; sense of duty, concern for the common interest. 4. A significant circle of general knowledge. 5. Administrative installation. 5.1. Foresight. Ability to develop and organize the development of an action program. 5.2. Organization. In particular, the ability to build a social organism. 5.3. The Stewardship. The art of managing people. 5.4. Coordination. Coordination of actions, merging efforts. 5.5. Control. 6. General acquaintance with everything related to essential functions. 7. A deeper competence is possible in a profession that is specifically characteristic of a given enterprise” [5 , p.49]. C. Barnard in the treatise “The Functions of the Executive” (1938), mentioned in paragraph 6.6, in the section “Ensuring Communication within the Organization” singled out the communication roles of the leader. He further stated the following: “The most important aspect required of a leader, and his most universal feature is loyalty; he must be dominated by an organizational personality... In secular organizations, this personality trait is called “responsibility,” in political—“loyalty,” at the state—devotion or loyalty, in religious—“obedience” to church dogmas and hierarchy of objective religious power” [91 , p.218]. In this way, Barnard singles out the special role of the manager—the “follower of culture,” the main characteristic of which is the loyalty of his organization and faith in what the organization does. The originality of this role also lies in the fact that it was not confirmed or disproved in the writings of the followers of C. Barnard. Among the researchers who studied the problem “What should and what is the manager really doing?” at the beginning of second half of the twentieth century it should be noted Sune Carlson and his work “Executive Behavior: A Study of the Work Load and the Working Methods of Managing Director” (1951) [44]. Carlson used the method of diary (or self-photography) in a study of top managers of the Swedish firm. Managers kept diaries of their work, recording contacts with colleagues and clients, data about their actual activities in the workplace, and actions taken. Carlson analyzed the collected material and came to the conclusion that the manager’s work is very fragmented, that managers must pay attention to a huge amount of information and communication with many people, and therefore they can’t practically control the distribution of time for various activities. In 1956, R. Guest analyzed the activities of 56 managers (middle and lower levels), giving each one a day. He found that they have very little free time, they are constantly distracted, they have many urgent problems and are constantly in contact with many people [45, pp.478486].

514

6 Western Schools of Management of the Twentieth Century

In 1957, G. Ponder formed a sample of 24 managers, giving each 16 hours. The author made conclusions similar to the conclusions of R. Guest that the surveyed managers have a huge number of different types of activities, more precisely, they perform 200–300 types of work daily [46 , pp.41–54]. In 1958 and later in 1967, Rosemary Stewart [47, 48] used the same method of self-photography of a working day in order to examine middle-level managers. She came to similar results as previous researchers, in particular, that the manager’s work is very fragmented, that managers should spend a lot of time communicating with a large number of colleagues, subordinates and other interested parties, but at the same time, managers cannot control how and with whom communication takes place. Studies could not answer the above question, but, in general, came to similar results, in particular, that the work of the manager is very fragmented, managers should pay attention to a huge amount of information and communication with many people, managers cannot control how and with whom there are communication, managers have very little free time, they are constantly distracted, managers have a lot of urgent problems. The surge in the development of the topic “the Roles of a manager” was caused by Henry Mintzberg, who published in 1973 a treatise “The Nature of Managerial Work” [49], which reflected two important results of special research obtained by Mintzberg and his colleagues. First of all they once again confirmed already existing at that time assumption that heads are “slaves of the moment,” compelled to act every minute, to answer calls, to communicate with people. Researchers made the following conclusions about the characteristics of managers: (a) (b) (c) (d) (e) (f)

Perform a huge amount of work at a non-stop pace, Take actions characterized by diversity, multiplicity, and fragmentation, Prefer tasks that are current, specific, and nonstandard, Prefer verbal rather than written means of communication, Operate within a network of internal and external contacts, Subject to strict restrictions, but may exercise some control over the work

Second, researchers were able to identify the following 10 roles of top-level managers: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Figurehead Leader Liaison Monitor of information Disseminator of information Representative Entrepreneur Disturbance handler Resource allocator Negotiator

6.10

The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans

515

These 10 roles Mintzberg divided into three groups: Interpersonal roles (№ №1–3), Informational roles (№№4–6) and Decision-making roles (№№7–10). For example, let’s give the characteristics of the “Negotiator” role of a manager according to Henry Mintzberg. “In the negotiator role, a manager must bargain with other units and individuals to obtain advantages for his or her units. The negotiations may concern work, performance, objectives, resources, or anything else influencing the units” [49, pp.93–94]. Mintzberg suggested that roles can vary depending on the functionality (department) and organization. Thus, the CEO pays considerable attention to external roles such as “Liaison,” “Representative” and “Disturbance handler.” For the lower-level manager, roles like “Resource allocator” and “Disseminator of information,” related to daily operational issues and workflow maintenance are more important. Interpersonal roles are more important for sales managers, informational roles for HR managers, and decision-making roles for production managers [49]. After the work of Mintzberg, new questions arose: “Are the 10 roles defined by Henry Mintzberg sufficient or redundant to characterize the content of all types of work of managers? Are these roles equally important in management of all functional of organizations?” Regarding the issue of the content of the roles of managers, we will add historical and scientific questions: “Why did the roles of managers change? What are the main reasons and/or factors that caused the need to change roles, top form and formulate certain rules, norms, labor functions, job descriptions, professional standards for managers? To answer these questions, we shall present the results of latest researches on the roles and skills of a manager. In 1974, Robert Katz, in an article on the skills and competencies of an effective manager, suggested that “effective management” is based on three managerial skills: technical, human, and conceptual. He argued that the role of the manager is influenced by his position in the hierarchical structure of the organization and the functions he manages. Conceptual skills are more important at the highest level of management, technical skills—at the lower level, and human skills—at all levels [50, pp.90–102]. In 1979 Stephen Robbins revealed a new role of manager—political. He claimed that it included persuasion of the manager, strengthening of political power, establishment of the right connections. According to Robbins, this role is more important for mid-level management [51]. In 1979, L. Alexander [52, pp.186189] and a little later J. Paolillo [53, ss.91–94] found that the importance of roles increases with the level of management, i.e. the higher the level of management, the greater the importance of competent or competent performance of the manager’s roles in connection with an increase in managerial responsibility. Based on the work of Mintzberg, McCall and C. Segrist conducted a study in 1980 to identify the dependence of the manager’s role on the position and functional capacity of the organization [54], and P. Allan in 1981, using the Mintzberg questionnaire, tried to understand the behavior of managers in government bodies of New York [55 , pp.613–619].

516

6 Western Schools of Management of the Twentieth Century

In 1983 Lance Kurke and Howard Aldrich conducted a study on a sample of four top-managers from various New York companies. The selected managers represented different sectors of the economy: public hospital, school, a high-tech company, and a bank. For a week, the authors met with each manager separately, conducted interviews and gained access to the necessary information. In general, the research methodology is similar to the Mintzberg methodology: the same sequence of actions and steps. It is important to note that Mintzberg, on the basis of a study of a small sample of top managers, extrapolated the results to managers of all levels. The authors of this article write that if conclusions can be drawn, then the maximum is for top managers. An important conclusion that the authors draw is that in the future it is necessary to measure the impact on research results of factors such as the size of the organization, industry (industry), the degree of stability of the external environment and the degree of state participation [56 , pp.975–984]. In 1983 Cynthia M. Pavett and Alan W. Lau conducted a study the empirical basis of which was the survey of 180 managers from different departments of organizations and occupying different positions in the organization. Respondents included 20 CEOs, 121 middle managers and 39 downstream managers. Of these, 34 managers were from sales and marketing departments, 37—from production and engineering, 14—from accounting and finance, 14—from R&D, 30—from HR and 51 CEOs [57]. The results of this study differ slightly from the previously mentioned results obtained by L. Alexander and G. Paolillo studies. According to L. Alexander and Paolillo’s studies, the role of “Leader” is equally important at all levels of management, while Pavett and Lau’s study found that leadership is more important at the lower level management than on middle and top. In addition, Pavett and Lau’s research also revealed the dependence of manager roles on functionality. For example, R&D managers appreciate the role of technical expert more, for sales managers interpersonal roles are more important, and information roles are more significant for finance managers and for accounting managers. In the course of this study, the authors identified the role of the “Technical Expert,” which Mintzberg did not have, and attributed it to the group of decisionmaking roles. Respondents equally appreciated the importance of the CEO’s ability to coordinate and integrate the activities of the organization’s employees. The results of assessments of the role of “Technical Expert” were unexpected for researchers: at all levels of management, this role is equally important [57 , pp.170–177]. At the end of this paragraph, we present the results of an extensive study of F. Lutans, D. Welsh, and S. Rosenkrantz, which was devoted to a comparison of the main characteristics of managers’ work in Russia and the United States. The results of the study were published in 1993 [58]. The research base was 66 managers of a large plant in Russian city Tver (where about 10,000 employees worked at one point in time), and 132 of their subordinates. The authors of the experiment suggested that there are four main categories of activities performed by managers:

6.10

The Roles of a Manager: From Frederck Taylor and Henry Fayol to Fred Luthans

517

Table 6.1 Results of the study of F. Luthans, D. Welsh, and S. Rosenkrantz (Source: [58]) Descriptive summary of the relative frequencies of activities of samples of managers from a large Russian factory and a cross-section of US organizations Managerial activities Russian sample (N ¼ 66) U.S. sample (N ¼ 248) Traditional management 42.5% 32% Communication 34.2% 29% Human resources management 14.8% 20% Networking 8.5% 19% Note: The U.S. data was gathered from a large number of diverse organizations by the same methods as the data from the Russian factory. The U.S. data is reported in Luthans, Hodgetts and Rosenkrantz [142]. These data are only descriptive and do not imply statistical inference/ generalizability

1. Traditional activities: include planning, coordination, decision-making, problemsolving, monitoring and control 2. Communicative activities: information exchange and documentation processing 3. HR-activities: motivation, conflict management, training, development 4. Networking Activities: interaction with stakeholders, socialization/formalization during work In the course of the study, the authors concluded that Russian managers spend about 3/4 of their time and effort on working with traditional and communicative categories of activities, devoting little attention to HR and very little to Networking (see Table 6.1). This table illustrates the answers to the questions posed by the researchers: “What does the Manager really do? What does he spend most of his time on?.” However, it is important to understand that this information applies only to one factory and it cannot be attributed to all managers in Russia. Also, the study does not explain the reasons why the time is distributed in this way. This sample of 66 managers only gives an answer to the question—What do managers of one particular factory do in a certain period of time. In addition, Table 6.1 illustrates the time distribution of American managers calculated using the same methodology, but in the US it was more diversified (more than one company was considered), and more accurate, since the sample was about four times larger. Comparing the time distribution of Russian managers with American managers, we can see that American managers devote less time to communications and traditional activities than Russian managers (61% and 76.7%, respectively), and more time to networking and human resources (39% and 23.3%, respectively). Obviously, it is difficult to determine how a particular distribution of time in these four categories affects the result (in this case, the result is the competence of the Manager), but, nevertheless, the authors tried to make such an assessment. Both regression analyses used in the study show that time spent on networking has more weight in assessing competence. In other words, the more time a Manager devotes to networking, the higher the indicator of their competence. The other three categories of activity do not show such a clear relationship.

518

6 Western Schools of Management of the Twentieth Century

In this study, the authors distinguish between the concepts of “Competence” and “Efficiency,” arguing that traditional activities do not have a strong correlation with competence, but it is a significant factor for the performance indicator. In other words, to be competent, you need to pay more attention to social factors, and to be effective, you need to pay more time to traditional categories of activities. These are the results of some research in the subject area on the topic “The Roles of a Manager,” carried out in the twentieth century, which influenced the development of management thought. Note that the subject area “Roles of managers” was the topic of our research conducted in 2018 in order to identify the importance of the roles of a manager at different stages of the Life Cycle of Organizations in the context of the development of views on this subject area. The research results are presented in article [3]. In addition, “Leadership Roles” were the topic of two conferences on HMT&B at the FE Moscow State University (in 2018 and 2019), the materials of which are presented in papers [1, 143]. Test Questions 1. Give a description of the provisions and experiments of scientific management of the early twentieth century. 2. What is the meaning of the principles of effective management of H. Emerson? 3. Expand the contents of the production management features according to H. Fayol’s works. 4. What are the terms of the School of Human Relations of M. Follett, E. Mayo, F. Roethlisberger? What are the reasons for increasing attention to “human relations” in management? 5. How was the Hawthorne experiment organized and what were the main results? 6. Describe the links of the School of Human Relations and modern theories of motivation. 7. What is C. Barnard’s merit in the development of management thought? 8. What are the main provisions of the systemic approach in management? 9. Give a description of the main achievements of the School of Social Systems in the development of management thought. 10. What was the cause and content of the New School of Management? 11. What are the reasons for the emergence of the situational approach in management? 12. What are the reasons and factors of the emergence of new schools during the first 70 years of the twentieth century? 13. What are the factors for changing views on the roles of managers in twentieth century management concepts? 14. What are the similarities and differences between the schools of the twentieth century and the previous nineteenth century concepts?

References

519

References 1. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU (1996–2019 gg.) M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www. econ.msu.ru/science/conferences/mciumb/ 2. ZHurnaly Akademii menedzhmenta – AOM-SSHA. www.aom.org 3. Marshev Vadim I, Otaboev ZHamol B (2019) Razmyshleniya o rolyah menedzherov: proshloe i nastoyashchee. ZH-l «Upravlencheskie nauki», tom 9, №2, ss. 94–106 4. Tejlor F. 1.Upravlenie predpriyatiem. M., 1903; 2.Principy nauchnogo upravleniya. M.,1911; 3.Administrativno-tekhnicheskaya organizaciya promyshlennyh predpriyatij. SPb, 1912; 4. Nauchnye osnovy organizacii promyshlennyh predpriyatij. SPb, 1912 5. Fajol A (1924) Obshchee i promyshlennoe upravlenie. L.-M 6. Follett MP (1909) The Speaker of the House of Representatives. Longmans, New York 7. Follett MP (1942) Dynamic administration: the collected papers of Mary Parker Follett. Harper & Brothers, New York 8. Mayo GE (1933) The human problems of an industrial civilization. Harvard, Cambridge, MA 9. Mayo GE (1945) The social problems of an industrial civilization, New York 10. Mayo GE (1947) The political problem of industrial civilization. Harvard University 11. Roethlisberger FJ, Dickson WJ (1939) Management and the worker: an account of a research program conducted by the Western Electric Company, Hawthorne works, Chicago. Harvard University Press, Cambridge, MA 12. Roethlisberger FJ (1941) Management and morale. Cambridge 13. Roethlisberger FJ (1968) Man in organization. Belknap Press of Harvard University Press, Cambridge, MA 14. Jeff M, Zoller Y (2019) Illuminating the principles of the Social Exchange Theory with Hawthorne studies. J Manag Hist 25(1):47–66 15. Drucker PF (1954) The practice of management. New York 16. Selznick P (1957) Leadership in administration, Evanston 17. Newman WH (1956) Administrative action, Englewood Cliffs, NJ 18. Symonds CN The institute of management sciences: progress report. Manag Sci 1957, 3(2) 19. Koontz H (1961) The management theory jungle. J Acad Manag 4(3) 20. Odiorne GS (1966) The management theory jungle and the existential manager. J Acad Manag 9(2) 21. Mockler RJ (1971) Situational theory of management. Harv Bus Rev 49(3) 22. Verner Z (1930) Sovremennyj kapitalizm (v 3-h tt)./ Perevod s nemeckogo pod obshchej redakciej V.A. Bazarova. Tom tretij. Hozyajstvennaya zhizn' v epohu kapita- lizma. Vtoroj polutom. Perevod St. Vol'skogo i B.YA. ZHuhoveckogo. Moskva – Leningrad 23. Maslou AG (2001) Motivaciya i lichnost'. Evraziya, Sankt-Peterburg, 425s 24. Platon (1968–1973) Sobranie sochinenij v 3-h t. (v 4-h knigah.). Gosudarstvo//v 10-i knigah/ T. 3. Kniga II/ M.: Mysl' 25. Alderfer CP (1972) Existence, relatedness, and growth; human needs in organizational settings. Free Press, New York 26. McClelland DC (1961) The Achieving Society, D. Van Nostrand 27. McClelland DC (1978) Managing motivation to expand human freedom. Am Psychologist 33 (3):201–210 28. McClelland DC (1975) Power: the inner experience. Irvington Publishers, New York 29. Herzberg F, Mausner B, Snyderman BB (1957) Job attitudes: review of research and opinion 30. Herzberg F, Mausner B, Snyderman BB (1959) The motivation to work, 2nd edn. Wiley, New York 31. Herzberg F (1964) The motivation-hygiene concept and problems of manpower. Personnel Admin 27:3–7 32. Herzberg F (1968) One more time: how do you motivate employees? Harv Bus Rev 46 (1):53–62

520

6 Western Schools of Management of the Twentieth Century

33. Luthans F (2002) Positive organizational behavior: developing and managing psychological strengths. Acad Manag Exec 16(1):57–72 34. Vroom VH (1964) Work and motivation. Wiley, New York 35. Vroom VH (1965) Motivation in management. Am Found Manag Res 36. Vroom VH, MacCrimmon KR (1968) Towards a stochastic model of managerial careers. Admin Sci Quart 13(1):26–46 37. Vroom VH, Deci EL (1970) Management and motivation. Penguin, Baltimore 38. Vroom VH (1988) New leadership: managing participation in organizations. Prentice Hall, New York 39. Adams JS (1963) Toward an understanding of equity. J Abnormal Soc Psychol 40. Skinner BF (1938) Behavior of organisms: an experimental analysis. Appleton-Century, New York 41. Skinner BF (1953) Science and human behavior. Macmillan, New York 42. Skinner BF (1974) About behaviorism. Knopf, New York 43. Laughlin JL (1887) The elements of political economy. D. Appleton and company, New York, 363 p. https://ia800301.us.archive.org/34/items/elementsofpoliti03laug/ elementsofpoliti03laug.pdf (date of the application: 28.08.2019) 44. Carlson S (1951) Executive behavior: a study of the work load and the working methods of Managing Director. Arno Press, Stockholm 45. Guest RH (1956) Of time and the foreman. Personnel (32) 46. Ponder QD (1957) The effective manufacturing foreman. In: Young E (ed) Industrial Relations Research Association. Proceedings of the Tenth Annual Meeting, Madison, WI 47. Rosemary S, Roy L (1958) The boss: the life and times of the British Businessman. Phoenix House, London 48. Stewart R (1967) Managers and their job. Macmillan, London 49. Mintzberg H (1973) The nature of managerial work. Harper & Row, New York 50. Katz RL (1974) Skills of an effective administrator. Harv Bus Rev 52(5) 51. Robbins Stephen P (1979) Organizational behavior: concepts and controversies. Prentice-Hall, NJ 52. Alexander LD (1979) The effect level in the hierarchy and functional area have on the extent Mintzberg’s roles are required by managerial jobs. Acad Manag Proc 1 53. Paolillo GL (1981) Role profiles for managers at different hierarchical levels. Academy of Management 54. McCall MW, Segrist CA (1980) Pursuit of the manager’s job: building on Mintzberg. Technical Report. Center for Creative Leadership 55. Allan P (1981) Managers at work: a large-scale study of the managerial job in New York City Government. Acad Manag J 24 56. Lance K, Howard A (1983) Mintzberg was right! A replication and extension of the nature of managerial work. Manag Sci 29(8) 57. Pavett Cynthia M, Lau Alan W (1983) Managerial work: the influence of hierarchical level and functional specialty. Acad Manag J 26:1 58. Fred L, Dianne W, Stuart R (1993) What do Russian managers really do? An observational study with comparison to U.S. managers. J Int Bus Stud 24(4) 59. Emerson H (1909) Efficiency as a basis for operation and wages. Engineering Magazine, New York. 180p 60. Emerson H (1912) The twelve principles of efficiency. The Engineering Magazine, New York 61. Emerson H (1913) Colonel Schoonmaker and the Pittsburgh and Lake Erie Railroad 62. Cooke ML (1910) Academic and Industrial Efficiency; a report to the Carnegie foundation for the advancement of teaching. New York City 63. Cooke ML (1918) Our cities awake. Doubleday, New York 64. Gantt HL (1910) Work, wages, and profits: their influence on the cost of living. Engineering Magazine Company, New York 65. Gantt HL (1908) Training workmen in habits of industry and coöperation

References

521

66. Gantt HL (1919) Organizing for work. Harcourt, Brace, and Howe, New York 67. Polakov W (1921) Man and his affairs from the engineering point of view. Williams, Baltimore 68. Polakov W (1921) Mastering power production: the industrial, economic and social problems involved and their solution. Engineering Magazine Company, New York. 554p 69. Walter P (1931) The Gantt Chart in Russia. Am Machinist 75:261–264 70. Wren D (1980) Scientific management in the U.S.S.R., with particular reference to the Contribution of Walter N. Polakov. Acad Manag Rev 5(1):1–11 71. Clark W, Tipper H, Roe JW, Polakov WN (1921) Foremanship: materials and their handling. Association Press. https://ia802605.us.archive.org/9/items/foremanshipstand00youn/ foremanshipstand00youn.pdf 72. Wren DA (2015) Implementing the Gantt chart in Europe and Britain: the contributions of Wallace Clark. J Manag Hist 21(3):309–327 73. Clark WH (1922) The Gantt Chart; a working tool of management. Ronald Press, New York 74. Uollas K (1931) Grafiki Ganta. Uchet i planirovanie raboty (per. s angl. Z.Papernova s predisloviem V.Polyakova), Izd. 5-e. Tekhnika upravleniya, Moskva-Leningrad 75. Alford LP (1912, April 4) Scientific management in use. Am Machinist, N36, p. 550 76. Alford LP, Church AH (1912, May 30) Principles of management. Am Machinist, N36, pp. 857–862 77. Alford LP (1934) Henry Laurence Gantt: leader in industry. Harper & Brothers, New York 78. Clark HW (1925) Shop office and forms: their design and use 79. Clark H (1926) Wallace The foreman and his job 80. Smiddy H (1958) Wallace Clark’s contribution to international management. Adv Manag J 23:17–26 81. Gilbreth FB (1911) Motion study: a method for increasing the efficiency of the workman. D. Van Nostrand Company 82. Gilbreth LM (1914) The psychology of management: the function of the mind in determining, teaching and installing methods of least waste. Sturgis and Walton, New York 83. Gilbreth FB, Gilbreth LM (1916) Fatigue study, the elimination of Humanity’s greatest unnecessary waste: a first step in motion study. Sturgis & Walton 84. Gilbreth FB, Gilbreth LM (1917) Applied motion study: a collection of papers on the efficient method to industrial preparedness. Sturgis & Walton Company 85. Nelson D (1992) Scientific management since Taylor. Ohio State University Press. 249 s 86. Kelly FC (1920, December) The man of “The One Best Way”: how Frank Gilbreth studies men and their ways. Popular Sci 87. Perkins JS (1997, Summer) Frank B. Gilbreth’s Research: the quest of the one best way. Newsletter of the Gilbreth Network, 1(2) 88. Gilbreth FB Jr, Gilbreth EM (1948) Cheaper by the dozen 89. Lancaster J (2006) Making time: Lillian Moller Gilbreth. A life beyond “Cheaper by the dozen”. Northeastern 90. Gilbreth L (1925) The quest of the one best way: a sketch of the life of Frank Bunker Gilbreth. Society of Women Engineers. 64 s 91. Barnard C (1938) The functions of the executive, Cambridge, MA 92. Barnard C (1948) Organization and management. selected papers, Cambridge, MA 93. Petersen E, Plowman EC (1953) Business organization and management, 3rd edn. R.D. Irwin. 634p 94. Simon HA (1947) Administrative behavior. New York 95. March JG, Simon HA (1958) Organizations. Wiley, New York 96. Simon HA (1960) The new science of management decision. New York 97. Miller DC, Form WF (1958) Industrial sociology. New York 98. Learned P, Ulrich DN, Booz DR (1951) Executive action, Boston 99. Etzioni A (1964) Modern organizations. New York 100. Rubenstein N, Naberstroh SI (1960) Some theories of organization, Homewood, IL

522

6 Western Schools of Management of the Twentieth Century

101. von Bertalanffy L (1968) General system theory. NU 102. Rudwick VN (1969) Systems analysis for effective planning: principles and cases, New York 103. Cleland D, King W (1968) Systems analysis and project management, New York 104. Andchoven A (1970) National Journal 2(19) 105. Weidenbaum ML (1960) Planning-programming-budgeting system: selected case materials, Washington 106. (1968) Planning-programming-budgeting summary and recommendations. US Research and Development Corp 107. Roberts EB (1964) The dynamics of research and development, New York 108. Forrester JW (1969) A deeper knowledge of social system. Technol Rev 71(6) 109. Forrester D (1971) Osnovy kibernetiki predpriyatiya (industrial'naya dinamika). M. 110. Lombard DFF (1971) Relativism in organization. Harv Bus Rev 2 111. Lawrence PR, Lorsch JW (1969) Organization and environment, Homewood, IL 112. Fiedler FE (1967) A theory of leadership effectiveness. New York 113. Whyte WF (1969) Organizational behavior: theory and application, Homewood, IL 114. Miller DW, Starr MK (1970) Executive decisions and operations research, Englewood Cliffs, NJ 115. George CS (1972) The history of management thought, 2nd edn. Prentice-Hall, New Jersey 116. Gvishiani DM (1972) Organizaciya i upravlenie. (Vtoroe dopolnennoe izdanie). Nauka, M. 117. Chandler AD Jr (1962) Strategy and structure: chapters in the history of the American Industrial Enterprise. MIT Press 118. Chandler Alfred D Jr (1977) The visible hand: the managerial revolution in American business. Harvard University Press 119. Chandler AD (1992) What is a firm?: a historical perspective. Eur Econ Rev 36(2):483–492 120. Pollard SS (1965) The genesis of modern management: a study of the industrial revolution in Great Britain. Harvard University Press, Cambridge 121. Dunkan DU (1996) Osnovopolagayushchie idei v menedzhmente. Delo, M. 122. Person HS (ed) (1929) Scientific management in American industry. Harper&Bros, New York 123. Devinat P (1927) Scientific management in Europe. International Labor Office, Geneva 124. Ingham JN (1983) Biographical dictionary of American business leaders. Greenwood Publishing Group, vol 1, 2026p 125. Lenin VI (1962) Polnoe sobranie sochinenij v 55 tomah, 5-e izd. M.: Politliteratura 126. Witzel M (2012) A history of management thought. Routledge, London 127. Wren DA, Bedeian AG (2018) The evolution of management thought, 7th edn. Wiley, New York 128. Bedeian A (2018) Management Laureates (in 6 volumes). Taylor & Francis 129. Kunc G, O’Donnel S (1981) Upravlenie: sistemnyj i situacionnyj analiz upravlencheskih funkcij. V 2 t. - M.: Progress 130. Bradley B (2018) Work, wealth and postmodernism: the intellectual conflict at the heart of business endeavour. Palgrave Macmillan 131. Marshev VI (1985) O metodologicheskih problemah nauki upravleniya obshchestvennym proizvodstvom. Izvestiya AN SSSR, Seriya ekonomicheskaya 5:3–16 132. Marshev VI (2005) Istoriya upravlencheskoj mysli. M., INFRA-M 133. Marshev VI (1991) Istoriya Upravlencheskoj mysli. V sb. Upravlenie obshchestvennym proizvodstvom. M. MGU, 84–100 134. Journal of Management History. https://ores.su/ru/journals/journal-of-management-history 135. Journal of Management and Organizational History. https://ores.su/en/journals/managementand-organizational-history 136. Journal of Business History. https://www.researchgate.net/journal/0007-6791_Business_ History 137. O Polyakove VN. https://www.facebook.com/osovskiy/posts/10204206426819021 138. Porter LW, Lawler EE (1968) Managerial attitudes and performance. Irwin-Dorsey, Homewood, IL

References

523

139. Edwin L (1968) Toward a theory of task motivation and incentives. Organ Behav Perform May:157–189 140. McGregor DM (1960) Human side of enterprise. McGraw-Hill, New York 141. Giddens E (1999) Sociologiya / Per. s angl.; nauch. red.V.A.YAdov. M.: Editorial URSS 142. Luthans F, Hodgetts RM, Rosenkrantz S (1988) Real Managers. Ballinger Publishing Company, Cambridge, MA. 192p 143. Marshev Vadim I Roli menedzherov: ot Ahtoya do Mincberga i dalee. /XIX Mezhdunarodnaya konferenciya. Istoriya upravlencheskoj mysli i biznesa. «Upravlencheskij trud i roli menedzherov: proshloe, nastoyashchee, budushchee». Materialy konferencii./ Pod nauchn.red. V.I.Marsheva. M.: EF MGU, 2018, ss. 182–196, ISBN: 978-5-906783-65-3, Elektronnaya versiya: https://www.econ.msu.ru/sys/raw.php?o¼52075&p¼attachment

Chapter 7

Development of the Scientific Basis of Management in the USSR and in Russia in Twentieth Century

Abstract This chapter is devoted to the history of Soviet management thought, from the work of the promoters of Taylor’s “Scientific management” and H. Fayol’s Administrative School of Management to the original work of Soviet academics and practitioners of management on issues of effective management of the planned socialist economy before 1990. The sources were the works of researchers of this period—Russian and foreign scientists, the works of statesmen, as well as the materials of the HMT&B and AOM conferences, the work of the Leningrad School of Management, headed by professors Yuri Lavrikov and Eduard Koritsky. Particular attention in this chapter is paid to the formation and development of the Soviet scientific school of management, headed since the 1960s by Moscow State University professor Gavriil Popov, to a comparative analysis of the works of representatives of this school, as creators of the original concept of “Management as a system” and the original substantiation of “Management as a science.”

7.1

The Formation of Soviet Management Thought in the 1917–1930s

The Russian Revolution of 1917 had the same effect as virtually all previous revolutions in other countries. It led to the destruction of one management system and the approval of a new, so-called socialist production management system. The models of Socialist Utopians had already tried on several occasions at small facilities—individual enterprises, associations, and cities. But in this case, it is one of the largest states in the world, where one system had been changed for another overnight. This required the leaders of the new young socialist republic to operationally organize, first of all, applied research on the adaptation of old but useful means of management and the development of new and effective means of management.1 1 The sources of this chapter were the original works of the mentioned authors (and those indicated in the Reference List), scientific articles, monographs and textbooks of representatives of the scientific school G.Kh. Popov (EF MSU), materials of the collection “What to read on the scientific organization of labor” (1925) [1], fundamental research that was carried out by the Leningrad

© Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_7

525

526

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Vladimir Lenin on the Management of Socialist Production The main contribution to the development of management ideas and to the organization of research on the problems of managing socialist production was made by Vladimir I. Lenin (1870–1924). By continuing the study of the pre-revolutionary period (referred to in paragraph 5.7 of the Textbook) and taking into account the specific situation and new challenges, he developed new principles of management, new functions of the Soviet State authority and its bodies. In his work he sought to justify the “creative, active, constructive role of state power and the management system in building a socialist society.” As we seen, the objective is not very different from the management model of the police state. The environment had changed and therefore the means had changed, but the essence of supremacy of state power remained. It was power and authority that Lenin put forward as factors which, with socialist property, would be the organizer of socialist construction: “The one takes the top, who possesses the highest technique, organization, discipline, and best machinery” [10, Т.36, с.116]. Being very familiarity with F. Taylor’s works and understanding the “urgency of the moment,” V. Lenin was the initiator of the largest single-nation experiment—in the history of management thought on a single application question, but of paramount importance—the “scientific organization of labor”—SOL (or “Taylorism” in the socialist republic). If you follow the changes in Lenin’s views and assessments of Taylor’s system, made before and after the revolution, they could serve not only as an example of scientific synthesis and assessment of the level of managerial thought at a particular historical stage, but also as a useful lesson in the methodology of any historical and scientific study. Even the short quotes of Lenin, given by us in clause 5.7 and shown below, particularly demonstrate the development of the views of the same researcher of the same subject of research—management system, when the conclusions are largely, if not all, determined by the objective state and assessment of the relevant historical context—the political and socio-economic situation within the country, the country’s external political and socio-economic environment, the specifics of the management object—“socialist social production” and, of course, taking into account the personal experience and knowledge acquired by the researcher. In paragraph 5.7. of the textbook, we quoted sharply negative assessments by V. Lenin of the “scientific nature” of Taylor’s management system, expressed by Lenin in the pre-revolutionary period in articles of 1913 [10, T. 23, pp. 18–19] and 1914 [10, T.24, p. 371]. But already in 1918 (the year after the revolution!) in the work “The next tasks of the Soviet government” Lenin recommended to identify the rational elements contained in the Taylor system and to use them creatively in Soviet Russia, to

school of historians of Soviet management thought, headed by Professor Yuri A. Lavrikov and Eduard B. Koritsky [2–5], [6], materials from previous editions of the author’s textbook [7] and his article [8], as well as the proceedings of International conferences on the History of Management Thought and Business organized at the Lomonosov Moscow State University [9].

7.1 The Formation of Soviet Management Thought in the 1917–1930s

527

connect them “. . . with the reduction of working hours, with the use of new methods of production and organization of labor without any harm to the labor force of the working population” [10, vol. 36, p. 141]. He wrote: “The largest capitalism has created a system of labor organization which, when population masses are exploited, was the most evil form of enslavement and wringing extra labor, forces, blood and nerves by a minority of the working class, but which at the same time is the last word of the scientific organization of production to be adopted by the Socialist Soviet Republic, which should be reworked by it for the implementation of our accounting and control over production, on the one hand, and then productivity gains, on the other hand. . . To learn to work—the Soviet government should put this task before the people in its entirety. Capitalism’s final word in this regard—the Taylor system, like all the successes of capitalism—combines the refined brutality of bourgeois exploitation and a number of the richest scientific achievements in the field of analysis of mechanical movements during labor, expulsion of unnecessary and uncomfortable movements, development of correct methods of work, introduction of better systems of accounting and control, etc. The Soviet republic must by all means borrow everything valuable from the achievements of science and technology in this field. The feasibility of socialism will be determined precisely by our successes in connecting the Soviet government and the Soviet organization of management with the latest progress of capitalism. It is necessary to create in Russia the study and teaching of the Taylor system, systematic testing and adaptation of it” [10, Vol. 36, pp. 189–190]. Lenin considered the science of management as a system of sciences, emphasizing the art of management, which, as we know, had always been the subject of research and discussion scientists of ancient times and modernity. Speaking on March 15, 1920 at the third All-Russian Congress of Water Transport Workers, Lenin said: “Let me dwell on the issue that the communist party and trade unions are now most interested in, and which, undoubtedly, is being vigorously debated by you—on the issue of industry management” (emphasized by us—M.V.) [10, Vol.40, p. 213]. And further: “. . .we must raise the question of collegiality of management with positive concrete data. . .And I hope that the vast majority of those present, familiar with management in practice, will understand that we should not limit ourselves to the general raising of the question, but should turn into serious business people who eliminate the boards and govern without them. Any management work requires special properties. One can be the strongest revolutionary and agitator and a completely unfit administrator. But the one who observes practical life and has basic life experience knows that to manage, you need to be competent (emphasized by us—M.V.), you need to know fully and accurately all the conditions of production, you need to know the technique of this production at its modern height, you need to have a well-known scientific education. These are the conditions which we have to satisfy in any way” [10, Vol.40, p. 215]. V. Lenin expressed a number of principle attitudes about management systems and personnel management of public production. Dealing with the concept of undivided authority in the management of socialist enterprises, Lenin, giving a

528

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

speech at the meeting of the Communist faction of the All-Union Central Council of Trade Unions (VTsSPS) on March 15, 1920 (on the same day when there was a congress of water transport workers!), said: “collegiality should be taken with an iron fist. We have 4 systems written—accept these 4 systems. . . Due to the fact that the undisputed type of management of Soviet enterprises has not yet developed, on the way to complete unity of command the application of different combinations in industrial management was allowed, namely: (1) At the head of the enterprise is an administrative director from among workers; and under him, as a technical assistant—a specialist, an engineer. (2) At the head of the enterprise is an engineering specialist, who is the actual head of the enterprise, and under him—a commissioner from among the workers, with broad rights and an obligation to get to the core of all sides of the business. (3) At the head of the enterprise is a specialist director, with one or two assistant communists, with the right and obligation to penetrate all branches of factory management, but without the right to suspend the instructions of the director. (4) At the head are small, amicable teamed-up boards with a chairman responsible for all management work as a whole. Such a form of organization of industrial management was adopted at the IX Congress of the RCP (b) in March– April 1920” [10, Vol. 40, p. 223, pp. 394–395]. Many comments were made by him on management staff. He repeatedly stressed that “all of the management work requires special characteristics.” His managerial requirements and staffing principles had formed the basis of the personnel management system of socialist social production. Lenin justified the idea of improvement, as a special function of management, the idea of creating a special management improvement body, the idea of a special type of management improvement worker. He often gave performances with articles and speeches on the constant improvement of the competence of the heads and specialists of public authorities (the “state apparatus”), and above all, the Peasant and worker inspection (Rabkrin), as the main state body of public production management of the young Soviet republic. V. Lenin wrote: “It would be best to rely on the fact that we know at least something, or on the fact that we have any significant number of elements to build a really new apparatus that really deserves the name of socialist, soviet, etc.. . . What elements do we have to create this apparatus? Only two. First, workers passionate about fighting for socialism. These elements are not enlightened enough. They’d like to give us a better apparatus. But they don’t know how to do it. They can’t do that. They have so far not developed in themselves such a development, the kind of culture that is necessary for this. And for this purpose it is culture. . . Secondly, elements of knowledge, education, training, which we have too ridiculously few compared to all other states (emphasized by us—M.V.). . . We need, by all means, to set ourselves a task for the renewal of our state apparatus: firstly to learn, secondly to learn, and thirdly to learn and then verify that for us science does not remain a dead letter or a fashionable phrase (highlighted by us—M.V.), so that science actually goes into flesh and blood, turns into a composite element of life quite and in a rather real way. . . Conclusions from the above-said: we must make Rabkrin, as an instrument of improvement of our apparatus, a truly exemplary institution. . . It is necessary to take it as a rule: it is

7.1 The Formation of Soviet Management Thought in the 1917–1930s

529

better in 2 years or even in 3 years than to hastily, without any hope of obtaining solid human material. . . Those officials whom we will decide, by exception, to employ at Rabkrin immediately should satisfy the following conditions: firstly, they should be recommended by several communists; secondly, they must stand the test of knowledge of our state apparatus; thirdly, they must stand the test of knowledge of the basics of the theory on the issue of our state apparatus, on knowledge of the basics of the science of management (emphasis added by us—M.V.), office, etc.; Fourthly, they should work with the members of the Central Control Commission and with their secretariat so that we can vouch for the work of this entire apparatus as a whole.” [10, Vol.45, pp. 390—394] V. Lenin not only formulated, but also put into practice such as the Military communism and the New Economic Policy (NEP). At their base in the 1920s, the basic concepts of management—organizational, administrative, and economic— emerged. The first relates to the names of J.V. Stalin and his group, L.B. Kameneev and G. Zinoviev and their like-minded groups, as well as L.D. Trotsky and his group. The second concept is related to the name N.I. Bukharin and his group. The theoretical directions of the “working opposition” and the “democratic centralism” were special. Democratic centralism in the context of the goods/ money relationship under socialism is inextricably linked to economic calculation, as discussed in resolution of the XI All-Russian Conference of the RCP (b) (1921): “The business calculation should be the basis for the running of all public industry.” If the national economic approach is one of the reserves and benefits of Socialist planning management, the other reserve was seen in the opportunity to rely on the initiative of all workers, their energy and activity. To this end, a different form of the initiative and energy of the workers, Socialist competition, was proposed in lieu of disappeared competition to stimulate the activity of every member of society, every part of the socialist economy. “Not only does socialism not extinguish competition, but, on the contrary, it for the first time creates the possibility to apply it really broadly, indeed at a massive size, to draw a true majority of workers into the arena of such work where they can manifest themselves, develop their abilities, and discover the talents, of which in the nation there is an untouched stream” [10, Т.35, p. 195]. And if, “in capitalism, it was a private business of a single capitalist, a landlord, a fist, then, under Soviet rule, it is not a private matter, but a major state affair,” Lenin wrote [10, Т.36, p. 191]. He called for “engaging the masses of workers and conscious peasants with a great program for 10–20 years” [10, Т.40, p. 63]. Both economic accounting and competition must be linked to personal interest, moral and material. During the debate on trade unions in 1921, V. I. Lenin criticized the idea of Trotsky “shock in production—equalization in consumption” when he wrote: “This is absolutely wrong. . . If I am so preferred that I will receive an eighth of bread, I thank you for such preference. Preference for shock is also preference for consumption. Without it success is a dream, a cloud, and we are after all materialists” [10, Т.42, с.212]. Emphasizing the role of competition, material and moral

530

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

stimulation as engines of economic progress, the need for and the role of the liability system were emphasized: “Economic management is such a complex area that workers should have the right to make decisions in specific situations. But if workers have the possibility to choose solutions, they must be held accountable for their actions” [10, Т.54, 150]. As a result of intense ideological struggle of the two various concepts, the administrative concept of Stalin and his companions prevailed. In the interest of the development of Stalin’s concept of management, a lot was done by F.E. Dzerzhinsky, V.V. Kuybyshev and G.K. Ordzhonikidze. For instance, Dzerzhinsky constantly devoted a lot of attention to the development of management organization issues and to its improvement. Kuybyshev and Ordzhonikidze led the theoretical development and implementation of the results of management improvement studies. A statesman, diplomat, journalist, the organizer of the League “Scientific Organization of Labor (SOL)” P.M. Kerzhentsev (1881–1940) and the talented scientist A.K. Gastev (1882–1938) actively developed the concept of organizational management. Kerzhencev’s first major work, “Principles of Organization” was published in 1922 [11]. The book’s publication was viewed as the first Soviet textbook in the area of organization. Lenin praised the book very positively. In his work “Better Less, But Better,” with regard to this book, Lenin wrote: “To announce a competition now for the production of two or more textbooks on the organization of labor and especially management labor (highlighted by us—V.M.). . . You can take Kerzhencev’s recent book as basis” [10, v. 45, p. 395]. In addition to this monograph, Kerzhencev published two other major works in 1923, “SOL—Scientific Organization of Labor and Party tasks” [12] and “Wrestling for Time” [13], and two guidance manuals for young organizers, “Organizer’s manual” [14] and “Organize yourself” [15]. An important merit of Kerzhencev in the development of the management theory was the emphasis of the organization as a whole as the object of research. He studied the organization, as an object, independently of the area—production or nonproduction—it operates in. On the basis of this approach, he developed the principles of an Organization, explored the organization’s goals and objectives, types and forms of organizations, issues of institutional connection and organizational methods. The main element of an organization, according to Kerzhencev, is the human factor. A major contribution to the development of the management theory in the 1920s was made by the studies of the Central Institute of Labor (CIL), led by A. Gastev. CIL was the first institute in World history to study the problems of labor organization and management. About Bogdanov A.A. In the 1920s, the issues of sciences that form the theoretical basis of organizational management were actively developed. Since the textbook deals with the management of any organizations, as objects of management, we must take into account the achievements in the development of organizational sciences, in the development of the theory of organization. In particular, the doctor, organizer and director of the Blood Transfusion Institute (1926–1928),

7.1 The Formation of Soviet Management Thought in the 1917–1930s

531

philosopher and economist and doctor Alexander A.Bogdanov-Malinovsky (1873–1928), author of the world famous treatise “Tectology. Universal Organization Science” [16]. Designed by A.A. Bogdanov the general theory of the organization was the precursor of modern cybernetics and the general theory of systems. After the completion of his political career, the doctor made his scientific discoveries, having received a medical education and medical experience, in 1926 A.A. Bogdanov founded and headed the Institute of Blood Transfusion until 1928. And in this field of scientific activity, Bogdanov was famous for promoting his own theory of rejuvenation through blood transfusion. He wrote: “There is every reason to believe that young blood, with its materials taken from young tissues, can help an aging body in its struggle along the lines along which it is already defeated, that is, along which it “Getting old.”” [17] Unfortunately, in 1928, the next (eleventh) transfusion ended tragically: during the eleventh exchange transfusion with a young student, rejection and death occurred. The student survived. In the treatise “Tectology. Universal Organization Science” the first edition of which was published in 1912, and the expanded edition in 1922 [16], Bogdanov wrote. “We will call Universal Organization Science as Tectology.” In translation from Greek, this means “the doctrine of construction.” “Construction” is synonymous with the modern notion of “organization.” In the foreword to the first part of his major work, he wrote: “The experienced years—years of great disorganization, as well as the great organizational attempts—have created an urgent need throughout the world for the scientific raising of the issues of organization. . . All human activity is objectively organizing or disorganizing” [16 , p. 29]. Bogdanov’s Tectology is a general theory of organization and disorganization, a science on the universal types and patterns of structural transformation of any system. The basic idea of tectology is to equate the organization of systems at various levels from a microworld to biological and social systems. A. Bogdanov constantly argued the objectivity of people creating various kinds of social organizations and the corresponding universality of the organizational science developed by him. So in the article “What is Organizational Science” in his collection of articles “Essays on Organizational Science” (1919), he wrote: “In the whole struggle of mankind with the elements, its task is power over nature. Power—the attitude of the organizer to the organized. Humanity acquires, conquers it; this means that it organizes the world step by step—it organizes for itself, in its own interests. Such is the meaning and content of his centuries-old work. Nature resists him, spontaneously, blindly, with the terrible power of her dark, chaotic, but countless and endless army of elements. To defeat her, mankind must organize itself into a powerful army. And it has been organized over a number of centuries, forming labor collectives, from the small tribal communities of the primitive era to the modern collaboration of hundreds of millions of people, they are still unconscious, but quite real” [17, №7, p. 1]. Bogdanov was one of the pioneers in the use of mathematical techniques in the analysis of organization and management. In particular, he developed the law of the smallest forces (“the speed of the squadron is determined by the speed of the slowest

532

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

moving ship”), which is the basis of the so-called network planning, managerial methods of and queuing theory methods. In order to describe the important operating patterns of organizations, Bogdanov introduced and defined a number of new scientific terms: dynamic equilibrium, progressive and conservative selection, regulator, and biregulator. Progressive selection, which is at the basis of a system’s emergence, growth, and development, includes mechanisms for positive and negative selection. In the case of positive selection, there is an increase in the heterogeneity of the components and in the number of internal links within the system, thus increasing its complexity and the degree of autonomy of its parts. A. Bogdanov’s suggestion of a positive selection as a means of enhancing the autonomy and functional integrity of the organization prejudges the modern ideas of multipurpose and multifunctional work based on multi-purpose technologies. These principles underlie the concept of an autonomous interdisciplinary working group, the system unit of a new type of enterprise; successful formation of such units is one of the most important results of reengineering. Positive selection usually improves not only the organization’s efficiency (e.g., average productivity) but also its volatility. Therefore, measures are necessary that weaken its operation and are covered by the term “negative selection.” Negative selection improves order and homogeneity and the level of centralization and coordination of individual actions increases. Negative selection not only improves the structural integrity and resilience of the system but also reduces its functional efficiency. The orientation of selection, on which the emergence of forms of organization depends, is relatively stable in the unchanged environment; Conversely, in a rapidly changing environment, the selection process is in one direction or another. Modern examples of positive selection are the standardization and clustering of individual enterprises. Examples of negative selection in the context of the “development, focused on satisfaction of customer needs to the fullest extent” (such as, for instance, “Design for quality” or “Design for manufacturing”), is the reduction of the number of parts, simplification of their connections and assembly procedures. It is evident that structural selection mechanisms are closely linked to the definition of a rational measure of decentralization—the centralization of the system. Centralization speeds up adaptation and makes it easier to specialize in system elements. But as centralization progresses, it is increasingly difficult to improve technology and innovate. Therefore, some level of decentralization must be established to ensure greater security of the system (autonomy contributes to survival) and the possibility of productive development of individual links ‘initiative. At the same time, opposite trends should be initiated and supported in relation to the classical principle of specialization, namely, the idea of multi-functionality, reintegration processes, and the rotation of individual functions at enterprises. These ideas of A. Bogdanov on the effective relationship between decentralization and centralization, specialization and reintegration at organizations surpassed their time for 70–80 years.

7.1 The Formation of Soviet Management Thought in the 1917–1930s

533

A. Bogdanov’s name is also related to the purposeful development of organizational structures based on prediction of future directions of their development and, above all, development in crisis situations. His concept of “collective structure,” which facilitates the blurring of facets between managers and employees, could be considered a direct precursor to post-Taylor organizations. In his works, A. Bogdanov clearly articulated the principles of autonomous behavior and came close to the ideas of the modern autopoiesis theory and the closed circular organization of processes. Thus, the notion of autonomy is closely related to cycle, recursion and regeneration. An autonomous system is operationally closed if its organization is characterized by processes that recursively depend on each other and form a stable unit in the area of homeostasis [16, 17]. The preservation and development of the integrity and identity of the system are ensured in autopoietic processes of self-production, when the homeostatic system, under external disturbances, continually replaces its own components. In other words, an autopoietic organization means the formation of a self-replicating network and self-regulatory processes. The most heterogeneous phenomena are combined by common structural links, based on the unity and objectivity of the laws of the organization of the objects. This allowed Bogdanov to formulate the task and how to solve it. “The task of tectology is to systematize organizational experience; it is clear that this science is empirical and, in its conclusions, should go by means of induction” [16]. As a result of continuous interaction, three types of complexes (systems) are formed that Bogdanov distinguished by the degree of their organization–organized, disorganized, and neutral. Bogdanov believed that disorganization was a private case of organization (the upper limit of organization and the lower limit of disorganization being nonexistent). Organizational forms struggle around the world and the more organized forms become victorious (whether it is economics, politics, culture, or ideology). This is because an organizational system is always larger than the sum of its constituent elements, and a disorganizational system is always less than the sum of its parts. Therefore, the main task of tectology is to better organize things (technology), people (economics) and ideas [16]. Bogdanov was one of the first in the world to introduce the notion of systematicness, indicating that the organization is a whole, which is larger than the sum of its parts. The idea of structural sustainability of the system and its conditions was developed by him. In the system itself, he was one of the first to see two types of patterns: a) the forming, that is, the patterns of development leading to a system switch to another quality; b) regulatory, that is, patterns of operation, that contribute to stabilizing the current quality of the system [16]. Bogdanov also introduced a number of interesting concepts that characterize the stages of development of different systems. For example, the term “complexia” is used by him to refer to a situation where the system is a purely mechanical grouping of elements that have not yet begun interoperating processes. This is distinctive for

534

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

cases when, say, an entrepreneur begins to create an organization (hires staff, buys machinery, premises, etc.), but the organization is not yet functioning. The term “conjugation” (according to Bogdanov) means a stage of development of the system, when cooperation between individual elements of the system begins (for example, employees have established formal and informal relationships). The term “ingression” expresses the transition of the system to a new quality (e.g., increased cohesion, mutual understanding, good team-work), and the notion of “disingression,” on the contrary, means the process of the system’s degradation, its disintegration as a cohesive grouping. Bogdanov is credited with the development of personal tectology—the science of organization of personal activity. Bogdanov considered consciousness and selfawareness, the desired identity of consciousness and existence, action, and existence as the starting point of such organization. Self-awareness is the starting point, originally, the basic principle of management, the implementation of which involves self-knowledge, self-education, and self-regulation. Of many forms Bogdanov highlights tectologic consciousness and selfawareness, reflecting organizational connections, organizational principles, and functions. Every person, according to Bogdanov, has his own small and imperfect, spontaneously built tectology. In practice and thinking, he operates tectologically, unsuspecting it himself, just as an inhabitant, looking at the clock, sets an astronomical value beyond his knowledge and intent. But Bogdanov did not regard this ordinary tectology as simply individual. A person acquires it from the social environment through communication with other people. From this communication, Bogdanov considered, he forms the greatest share of his experience, and especially of his organization, the proportion is so large that his personal contribution compared to this value represents an immeasurably small value, which is also a dependent one. The Development of SOL and the Emergence of the SOML Movement in Soviet Russia Scientists and researchers of the 1920s, A.K.Gastev, P.M. Kerzhencev, I.M. Burdyjansky, N.A. Vitke, E.C. Drezen, F.R. Dunaevsky, N.M. Ermansky, E.F. Rozmirovich, made significant contributions to the development of various theoretical and applied management issues. It is these “party summoned” scientists who engaged in research on the issues of specific sciences on the organization, in particular specific objectives of the “Scientific Organization of Labor” (SOL), on the basis of which both management issues, in general, and the Scientific Organization of Managerial Labor were developed” (SOML), in particular, took an active part in the leadership and in the work of special scientific organizations for the study of NOTs created in the first years of Soviet power. The epigraph to this part of Chap. 7 could be taken from the words of the famous Soviet poet Vladimir Mayakovsky from his poem “Load on the top of my head”: “I painted myself for a year, at least put NOT in work! Where are you, Gastev with Kerzhentsev?”

7.1 The Formation of Soviet Management Thought in the 1917–1930s

535

There are at least two reasons that explain the rapid development of research and the successful results on the issues of SOL. First, the sharp urgency of addressing the problems of minimizing labor costs throughout the country. In these years of harsh “military communism” there was no room for theoretical and methodological studies, because the very time of experiencing the aftermath of the civil War, the extreme economic devastation, the low literacy of the labor force, had pushed public opinion towards finding the means to quickly resolve purely practical solutions. That’s why they were engaged to adapt F. Taylor’s idea of timing and standardization of labor processes and optimizing the organization of jobs. And secondly, this direction of research had already been “on the move,” since Taylorism in Russia was fashionable, studied and applied since the early twentieth century, only now the study of Taylor’s Paradigm received a socially-political order. The above assessments of Taylorism, made in their time by Lenin, were also appreciated. Today, as we already know, they had become not as abusive, as recommendatory. In general, both situation and luck contributed to the scientific direction. In the early years of the Soviet rule, own managerial experience had already been accumulated, many facts of the application of management theories had been collected, the results of research on SOL had been published, and new issues had arisen in the organization of public production. These reasons and the public interest led to the need for a collective exchange of views. And already in 1921, the first Russian Initiative Conference on the Scientific Organization of Labor and Production was convened in Moscow. In the journal “Labor Organization,” published in those years, the evaluation of the Conference was “the first, both in Russia and throughout the world, experience of extensive debate on labor issues” [18]. In fact, Russia had had such an experience, both in the substance of most of the issues discussed at the Convention, and in the form, of which we have written in Chap. 5. But part of both issues and results were, of course, specific to this kind of meetings and most importantly, for the specific historical stage of development of Russia.2 In the 1920s, there was considerable development of the planning theory as the main lever of managing the Socialist Republic. An outstanding theorist of socioeconomic forecasting and planning was N.D. Kondratiev (1887–1937), the author of the economic cycles he identified, called the “long waves of Kondratiev.” Actively developed issues of the economic mechanism of production management. As opposed to the organizational school, the theorists of economic management developed concepts of finance, money and prices, as key management tools. A number of concepts of cooperative forms of production organization had been developed.

2 Which again confirms the truth of our formula: “New” is a new combination of “Old” in “New conditions”.

536

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

The most striking figure among theorists of economic methods of management was Nikolay Ivanovich Bukharin (1888–1938)3 [8, 19, 20]. Bukharin presented his politico-economic and “military-communist” views, as well as a detailed statement of the doctrine of planned economy as a “social and technical task” in the treatise “Economy of the Transition Period” (1920). He wrote that it was necessary to abandon the thought that the progress of productive forces as a prerequisite for the existence of a new social system would begin immediately after the proletarian coup. Unlike capitalism, the process of creation of which was spontaneous, “socialism,” Bukharin emphasized, “will have to be built. . . Available material and personal resources are just the starting point of development.. Therefore, the transformation of capitalism into socialism must be done through a ‘military-proletarian dictatorship’.” After analyzing the causes of the failures of military communism, N.I. Bukharin became an active supporter of new economic policies as well. Special attention is drawn by his books and articles on the role of cooperation, on democratism and humanism of socialism, on the combination of personal and public interests, cooperative and individual activities, on the use of economic calculation, commodity and monetary relations, the need to combat bureaucracy, the forms and methods of communist upbringing of workers, etc. [20] In January 1929 N.I. Bukharin was elected a full member of the USSR Academy of Sciences in Socio-Economic Sciences, in 1930 he was elected chairman of the Commission on the History of Knowledge (CHK) of the USSR Academy of Sciences, and 1932 appointed director of the Institute of the History of Science and Technology of the Academy of Sciences of the USSR, founded on the basis of CHK, which ceased to exist in 1938.4 Historically, the first major Soviet school of management was the “Scientific Organization of Labor” (SOL). In order to eliminate ambiguity in the meaning of words, the authors of the monograph “Scientific Management. Russian history” [4] begin with the term “scientific management.” In the early years, scientific management had several interpretations. Taylor gave it the name “Science Management,” and this was translated into Russian as the “scientific governance.” The popularizer and interpreter of Taylor’s principles, the French scientist Le Chatelier translated the title into French as a “scientific organization of labor.” In Germany, the new area of science quickly spread under the name of “rationalization.” In Russia, all these symbols have often been used as synonyms, and the development of scientific management had long gone under the flag of “SOL.” The distinction of scientific management and SOL itself had taken place much later. In the1920s (and some time further in the 1930s), several dozen specially created scientific institutes and laboratories were engaged in SOL issues in the young Soviet republic. The largest of institutions—the Central Labor Institute (CIT, director A.K. Gastev), State Institute of Management Techniques under the People’s

3 From 1907 to 1911 N. I. Bukharin studied at the Economic Department of the Faculty of Law of the Moscow University. 4 In 1938 N.I. Bukharin was also accused of “Trotskyism” and executed.

7.1 The Formation of Soviet Management Thought in the 1917–1930s

537

Commissariat of the Peasants’ Inspectorate (SIMT, director E.F. Rozmirovich), Taganrog Institute of Organization of Production (TIOP, directorP.M. Yesmansky), Kazan Institute of Scientific Organization of Labor (KISOT, director I.M. Burdyansky), All-Ukrainian Institute of Labor (AUIL, Director F.R. Dunaevsky). The main tasks of the institutes were, firstly, to study the issues of organization of work and management and to develop generalized theoretic provisions, to create systematized concepts in the field of management. Secondly, to combine academic research of institutes with practical work, creating rationalization centers in institutes for this purpose. Thirdly, the institutes provide training for management personnel and specialists in the field of SOL.5 It was about these three tasks that Professor Gavriil Kh. Popov later wrote in his treatise “Problems of Management Theory” (1974): “The process of creating and developing control theory is one. Therefore, the greatest effect will be achieved when three simultaneously solved problems are inextricably and constantly merged: rationalization of management, training of managers and formation of a theory. This is the triune formula for the formation of management theory” [21, pp. 256–257]. But perhaps it was more original to create in various organizations and institutions and at many Soviet enterprises special experimental stations, rationalizing offices, consulting bureaus (org-bureau) and laboratories (known as CIL orgastations) to carry out specific studies at institutions and with specific enterprises (“nature-experiments”) on the issues of improving management processes and production activities, and most importantly, on the implementation of rationalization processes in the field of management and production and appropriate training of personnel at specific enterprises. Many of the experiments were carried out long before similar Hawthorne experiments by E. Mayo and F. Roethlisberger—the creators of the school of human relations. Along with organizational forms in these years, the ideas of management were promoted in special periodical publications—in the journals “Organization of Labor” (began to be published in 1921), “Enterprise,” “Engineering labor,” “Ways of rationalization,” etc. During the First World War and “military communism,” the scientific principles of labor organization could not be widely disseminated, they were used in truncated form and only at individual military production enterprises. At the end of the civil War, with the transition in 1921 to the “New Economic Policy” (NEP), the movement for the scientific organization of labor and management rapidly intensified. The first All-Russian initiative Conference on the Scientific Organization for Labor and Production, convened under the auspices of the People’s Commissariat of Railways (PCR) on the initiative of L.D. Trotsky and started operations on January 20, 1921, gave a strong impetus to the establishment process of domestic scientific management. Although it was organized by the Commissariat of Communications, the issues discussed at the conference went far beyond the scope of the transport issue. This is illustrated, for example, by reports by A. Bogdanov (who

5 According to the People’s Commissariat of the Peasants’ Inspectorate, in 1923 58 special scientific and educational institutions of SOL were established in the country.

538

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

opened the Conference with the report on the topic “Organizational Science and Economic Planning” [18, Issue I, pp. 8–12]), V. Behterev, O. Ermansky, M. FalknerSmith, S. Strumilin, G. Chelpanov, and others, which raised theoretical issues such as the organization of labor at the societal level, business continuity, physiology and psychology of work, attitudes towards Taylorism. Their decisions required a new organization of labor and management, replacing the totalitarian system of “military communism,” with the need for methodological generalizations arising. The conference attracted 313 participants and some 100 guests who worked in the following five sections: 1. 2. 3. 4. 5.

organization of works in mechanical production, railway workshops in particular, organization of works in rail transport, organization of management and its parts, reflexology of labor, activities to integrate work on the scientific organization of labor and their practical implementation.

The All-Russian forum found significant differences in the theoretical interpretations of SOL and management. The main issues that were the most controversial were the attitude towards Western concepts of management, particularly Taylorism, and the development of a methodologically correct approach to SOL. During the discussion on the first issue, two directly opposed schools formed: Taylorists and Antitaylorists. The first (I. Kannegisser, N. Gredeskul, and others were inclined to equate Taylorism with the scientific organization of labor and management, arguing that the teachings of Taylor are not only fundamentally undeniable but also universal, that is, almost entirely acceptable in any socioeconomic context. The second (especially O. Ermansky) strongly objected to the thesis of the political-ideological neutrality of Taylorizm and drew attention to the inadmissibility of its identification with the “Scientific Organization of Labor,” noting the focus of Taylor’s doctrine on the maximum, beyond human capacity, intensification of labor, which was incompatible with the values of the new regime established in Russia. Besides, the Conference showed a sufficient understanding among its participants of the complexity, multidimensionality of the concept of scientific organization of labor and management, by highlighting “not only the economic and technical side but also socio-economic and psycho-physiological,” This interpretation of the issue laid the basis for an integrated approach to management issues analysis. It was not coincidental that the Conference was attended by representatives of a variety of specialties: technicians, engineers, economists, psychologists, physiologists, doctors, etc. The general resolution of the conference defined SOL as follows: “The Scientific Organization of Labor is due to be understood as the organization based on a careful examination of the production process, with all the conditions and factors accompanying it. The main method is to measure real time, material, and mechanical work expenditure, analyze all the data received, and synthesize the slender, most profitable production plan” [18].

7.1 The Formation of Soviet Management Thought in the 1917–1930s

539

However, the subsequent adoption of the resolution that SOL is based on the findings of psychophysiology, reflexology and hygiene relating to the processes of human labor and fatiguability, what ostensibly allows for the fulfillment not only of the requirements of “economizing production,” but also of the interests of workers, is clearly one of unilateralism, because it ignores the economic, social, political and other aspects of the problem and thus runs counter to the integrated approach, the ideas of which the conference resolution had laid down. Critical issues raised at the forum included the need to prepare and introduce subjects on the scientific organization of labor and production management in the curricula of the educational institutions, the establishment of ad hoc bodies for the implementation of SOL into life, etc. Appearing the first, both in Russia and throughout the world, experience of a broad discussion of labor issues, the Conference was an outstanding event in the history of the formation of domestic management. It is after the first conference that a broad front, under the banner of SOL, does research on all organizational and management issues begin; A short-lived but bright period of approval and rapid development of management in Russia, which came to an end with the completion of NEP. In this period, around scientists like A. Gastev, N. Vitke, F. Dunaevsky, P. Esmansky, E. Rozmirovich, and many others, the first management schools are formed. It should not be forgotten that the process of establishing and developing domestic scientific management had taken place in a difficult historical context. In the recovery and then reconstructive periods, with a severe shortage of resources from science, it was primarily necessary to develop a purely practical indication of how to plan production, stimulate labor, work with the least time, material and monetary expenditure. The attention of scientists was focused on such private issues, such as rational organization of the workplace, improvement of management structures, streamlining of the business processes, the creation of simple and low-cost forms of accounting and reporting, monitoring of tasks, etc. Many of the works were focused on the study of selected functions and methods of economic management. However, it would be misleading to believe that there were no theoretical and methodological studies in the hard 1920s. A hot debate took place on such issues as the definition of “management,” the possibility and need for special management science, its subject, method and development paths. Thus, in the view of most Russian scientists, the management of production cannot be interpreted solely as an art, but should not be seen as lacking any general principles and causal links. Management should become both an independent science, an area of well-defined scientific assumptions and conclusions. It is important to emphasize that the pioneers of scientific management in Russia, without denying a certain role of intuition and individual qualities of the organizers in management, without negating the importance of art, gave priority to the study and use of management patterns and principles that objectively reflect the needs of production. “Knowledge and experience in the area of labor management,—V. Podgaetsky noted,—are amenable to a certain system, so it is possible and necessary to consider the scientific organization of labor a special science” [22]. And the more

540

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

systematized the management experience, the more the laws and the principles of management are identified and studied, the fuller and faster it will turn from an art that is confined to only a few individuals to the science that many businessmen can and should learn. But that does not mean the disappearance of the art of management, the ability to translate scientific generalizations into practice. The question of the existence of sustainable patterns in the organization and management of people’s activities and the need for their detection and formulation has been raised by many domestic researchers. Thus, M. Yakovlev, in highlighting the issues of organizing the national economy as a whole in a special group of knowledge, and having raised the issue of the possibility of existence in the science system of a science of production management, attempted to identify the subject of the latter, under which the scientist implied the laws of the business apparatus. Management study, V. Podgaetsky had no doubt, “should lead to the creation of certain rules and laws of management science” [22]. Earlier, this idea was expressed by L. Zhdanov [23]. In other words, as early as the 1920s, Russian scientists presented issues of the subject of the science of labor organization and production management. A number of judgments were made by Russian management scientists about the method of management science of obvious interest. The method of any science, as is well known, is designed to develop a set of methods and techniques for exploring and synthesizing the phenomena and processes of actual knowledge in this industry. As the authors of the 1920s emphasized, the method of development always goes hand in hand with the development of the science itself, promotes its momentum and grows stronger in its achievements. “In medicine, for example,—wrote M. Vasiliev, one powerful tool is widely used, without which there would not have been many, most important achievements,—the clinical method of recognizing disease. In economic life, too, there is often a need for a “clinical method,” and the works that are performed on it are fully titled to the adjective “scientific,” to the right to be referred to as “scientific organization”” [24]. In the case of the science of management in Soviet literature of those years, the following methods and techniques for the study of organizational and management processes were formulated: 1. the principle of systematic observation of events occurring in management, 2. the principle of emphasizing certain objects of the totality of phenomena, their isolation, decomposition, and description (method of analysis), 3. the principle of connection of individual links of the studied process to the “centripetal whole” (synthesis method); 4. the principle of measurement of observed events (in time and space), 5. the principle of experimentation and, in particular, testing of practice [18, 23]. The latter principle was given an exceptional role, even though its application was the main engine of management science. It is also important to note that the management science was imagined by Russian scientists to be intersectoral, applicable to all spheres of life in equal measure. This approach had created a framework for the search for basic patterns and principles of

7.1 The Formation of Soviet Management Thought in the 1917–1930s

541

management, common to the various stages and links of the national economy and other spheres of application of people’s physical and intellectual abilities. Thus, the development of scientific management in Russia from its earliest stages was carried out in the organic unity of applied and theoretical studies. And scientists of the 1920s were able to identify a sustainable relationship between the degree of theoretical and methodological development and the level of specific applied research. They pointed out that the lack of attention to, or neglect of, methodology issues was inevitably detrimental not only to the development of management science, but also, ultimately, to slowing down the pace of improvement in practical management, which in that case would lose its theoretical foundation. But, without denying the importance of both applied and theoretical research, domestic scientists highlighted key points differently, with the intensity of the debate reaching the highest level. The need was arising to hold a Second Union-wide conference that would draw the line under these discussions and define the main line for the further development of organizational and managerial science. There was a particularly passionate debate between the so-called “platform of 17,” reflecting the positions of P. Kerzhencev, I. Burdyansky, M. Rudakov, and other prominent personalities of the SOL movement in the country, and the “group of four,” who upheld the views of the science school of the Central Institute of Labor, headed by A. Gastev. The representatives of the “platform of 17” advocated the need for broad theoretical generalizations in the area of SOL and management, for the national economic approach to organizational problems, for the wide involvement of masses in work according to SOL through various grass-roots cells, circles and societies. Supporters of A. Gastev cautioned against the dangers of excessive theorizing and suggested that practical issues should be addressed primarily, recommending the initiation of all work on the scientific organization of labor and management from the definition of the weakest parts, with the streamlining of the individual’s labor, and the rationalization of labor operations. Significant disputes were also on the crucial methodological issue of the definition of SOL. According to V. Kuybyshev’s Testimony, the main initiator and organizer of the Second conference, there were about 20 of these definitions. He said: “With the term SOL itself there are real misadventures. Some recognize this term, others do not. This juggling of the word SOL creates a frightening picture” [25]. By carefully analyzing both platforms, V. Kuybyshev concluded that the differences between them were not so irreconcilable. This was supposed to be demonstrated by next conference [26]. The Second conference on SOL began work in Moscow on March 10, 1924. The most numerous in terms of reports of the seven of its sections was the Management section. A great deal of attention was devoted to methods of rationalizing the state apparatus, business, reporting, office equipment and other practical issues. The slogan under which the conference was held is highly denominated: “Because of life, for life, not torn away from life!” The resolution of this representative forum stated: “The attempts to interpret SOL as a coherent system of labor organization must be categorically rejected. This interpretation, based on the incorrect, unmarxist notion of the possibility of creating

542

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

a perfect system of labor organization in a speculative way, is almost completely sterile and leads only to idle conversations and harmful theorizing. SOL needs to be understood as a process of introducing into the existing labor organization the improvements in the overall productivity of labor, achieved by science and practice” [27]. Clearly, this definition of SOL was understood to be primarily a rationalization activity in the field of labor organization and management. There is no doubt that such an approach vilipends the significance of the methodological developments that had for some reason been named not only “speculative” but also “unmarxist.” Today, the “grave” accusation against the theorists of the SOL is even amusing, because it is well known that the “perfect system” of organizing the future of society was created by C. Marx precisely in a “speculative” way. At the same time, while criticizing the Second conference’s definition, the specific nature of its modern business phase should be borne in mind. The interpretation of SOL proposed by the Conference was not only and not even so much a fingerprint of V. Kuybyshev’s personal beliefs, the party official and statesman, who is difficult to suspect in inclination for research, in-office research work, as in a particular historical time period, dictating the primary solution to practical problems. The recovery of the national economy required huge sums of money, which needed to be urgently found within the country without banking on external assistance and credit. In this regard, the focus was on cost-cutting and austerity, the main method of sustaining which could only be continuous rationalization of labor, production, and management. This is what the concept of the second Conference was based on, the essence of which was set out by V. Kuybyshev: “More faith in the business we’re starting here, more practicality, more healthy knack of reality, less torn from life theorizing” [26]. In accordance with the developed line, the Conference put forward the main tasks in the area of SOL: 1. processing and exchange of experience with Western theorists and practitioners, 2. linking research to the needs of production, 3. establishment of close links between SOL institutions and laboratories and their specialization, 4. experimental study of work in production and management as well as of individual labor processes, 5. organization of training for coaches capable of introducing best working practices, 6. Introduction to work and learning at all levels and in all types of schools the principles of SOL [27]. After the Second conference, applied research begins to dominate the theoretical and methodological. This was accurately marked by A. Goltsman: “The debate on the desirability of labor sciences is gradually being transferred to the study of its basic principles. This is already a step forward” [28]. The foregoing did not at all mean that the methodological studies had been discontinued. It’s just that their share in the overall organizational and management issues had been relatively reduced.

7.1 The Formation of Soviet Management Thought in the 1917–1930s

543

And, as if in a way that reinforces the observed trend in the development of domestic thought, by emphasizing it, a change of name takes place: The SOL movement is increasingly referred to as rationalization, and the terms “SOL,” “management,” “scientific management,” while still being used, are increasingly being replaced by the word “rationalization,” used as their synonym. The scope, scale and systematic approach to the organization of SOL in the Soviet Republic was admired by foreign experts who visited Russia in those years and who sincerely said that in Western Europe there is no example of this kind of combination of research and teaching institutions, which in the 1920s were Soviet SOL institutes and laboratories and CIL orgastations. And, of course, the quantity of research and experiments contributed to obtaining a number of original scientific results, largely anticipating the now propagandized discoveries in the field of management. Let us dwell on some achievements of Soviet specialists in solving methodological problems of science of management in the 1920s. Undoubtedly, the leader of the national science of management and SOL in the 1920s was founder of CIL Alexey.K.Gastev (A. Gastev was also a poet, the author of several collections of poems. In August 1920, A. Gastev created the Central Institute of Labor, which afterwards he called his “last work of art, scientific construction and the highest artistic legend”). A. Gastev’s main merit in the development of managerial ideas is the development of theoretical and experimental ideas of a new science—social engineering (“social engineerism”), which combined the methods of natural sciences, sociology, psychology, pedagogy, and biology. A. Gastev and his colleagues in CIL called their original concept of scientific organization of labor and production management, based on social engineering, the technobiosocial concept of labor installations. The CIL concept included three interrelated blocks: 1. the theory of labor movements in the production processes and organization of the workplace; 2. the methodology of rational industrial training; 3. the theory of management processes. A. Gastev did not conceal his “Pro-Taylor” position in assessing the diligence and passion for work of any employee, believing that the worker never works at full capacity. This prerequisite together with the aim of increasing the intensity and productivity of labor is what gave rise to the need to study the physical and mental capabilities of the human body and further use of research results. At the same time A. Gastev proposed to abandon “deep knowledge” of the essence of labor, and to investigate only the “worker’s reaction” in the framework of specific production operations, and he saw the task of SOL as a whole to be maximum activation of the person, combined with preserving strength and health of workers, rational use of their energy. Solving the problem of “how to develop in each employee a constant internal need for continuous improvement of his work, how to “magnetize” him via methods of scientific work and management,” the CIL team developed a special method of production training, which became the basis of the social CIL concept. The essence

544

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

of the technique is an accelerated method of teaching with the strictest dosage of knowledge. The development of a methodology for rapid and mass training in labor techniques and operations was carried out in a comprehensive manner, accompanied by laboratory studies and experiments in biomechanics, energy, psycho-technics, etc. The technique allowed 3–6 months to prepare a highly-skilled worker, for which it took 3–4 years at special schools. Implementation of the methodology was carried out through the CIL orgastations established in 1921 at the Centrosoyuz, at the “Iskromet” and “Electrosila” factories, in 1922 at textile enterprises of the Trekhgornaya workhouses, at the Orekhovo-Zuyevsky Trust, at the BogorodskoShchelkovsky Trust, at JSC “Khlebo product,” at the “Gudok” newspaper, in the cash offices of the department of Sotsstrakh, etc. As for the study of the production management processes, the methodology of A. Gastev was based on the division of the topic of research into two subject areas. A. Gastev divided production management into two types—management of things and management of people. Thus, it was argued that both types have common features: “The worker who manages the machine is the director of the enterprise, which is known by the name of the machine (machine tools).” This approach leads “to the highest degree of the democratic idea of organization, when regarding every worker, even every laborer, we consider him as the famous “director”; dealing with a particular enterprise. We put a decisive end to the division into so-called executive and managerial personnel. We say that these are only functions that are often completely inseparable even at the most automatic work, and at the very lowest classes we can determine where exactly the worker acts with his; “directorial,” with his “managerial functions,”—wrote A. Gastev in an article published in 1924 in the journal “Organization of Labor.” Based on this idea, A. Gastev approached the solution of management problems from the point of view of the workplace, spreading the obtained conclusions on the management of the enterprise, the industry, the people’s economy and even the state: “The one who knows how to carefully design his workplace, dividing it into a rack, grip, precision in the distribution of motion, accuracy in the arrangement of material, the one who will take the exam within this working area, will also brilliantly pass the exam on the management of the workshop, on the management of the plant, and, dare I say, on the management of the state” [29]. A. Gastev tried to confirm the legitimacy of this approach with the cyclic set of functions revealed by him, allegedly invariant both when performing work at the machine, and in management of a plant as a whole. The composition and sequence of functions, according to A. Gastev, are as follows: “Calculation— installation—processing—control—accounting—analysis—systematics; calculation—installation. . .”” [29]. In order to correct the study of the multifaceted phenomenon and process “organization of work and management” A. Gastev proposed to allocate in the subject of research and study the aspects characterizing it—technical, psychophysiological, pedagogical, and economic. And finally, A. Gastev formulated and made an attempt to investigate several still relevant methodological problems of management science. Among them—development of strict scientific definitions of notions and categories characterizing the

7.1 The Formation of Soviet Management Thought in the 1917–1930s

545

organization of production processes; development and classification of laws and regularities studied by the science of organization of production. In connection with the last problem in the treatise “How to Work” [30] A. Gastev proposed to divide all such laws into two groups—analytical (“organizational trends for splitting the production process into delineated acts”) and synthetic (“trends in direct connection and complex composition of acts in organizational units”). Assessing the contribution of A. Gastev and CIT in the development of management thought, it can be argued that this group of researchers for the first time proposed an integrated approach to the development of management theory, formulated key directions of research on management issues, proposed and implemented in practice original solutions of some issues of the organization of production. Moreover, not only CIL, but many so called “orga-stations” at the enterprises were engaged in research of management problems. Here are some of the research topics of the orgastations: 1. Research of the technique of administrative and economic apparatus, the system of works of the institution and its components. 2. Clarification of changes that can increase the productivity of the apparatus. 3. Establishment of the shortest administrative and economic actions and orders. The results of the research of one of the orgastations were set fourth in articles of the CIL employee Efim D. Salomonovich [31, 32]. The article “The experience of photographing the working day of the administrator” provides five groups of activities of the administrator during the working day: 1. 2. 3. 4. 5.

reading letters and telegrams; telephone conversations; dictation of orders; signing on documents; reception of employees and visitors.

“The prevailing percentage of time,—it is said in the article, falls on the reception of employees, which occurs continuously all day. . .—75% of the total working day of the administrator” [31]. Researchers draw conclusions about the need to regulate the time of reports and receptions, unloading the executive’s workload with assistants, establishing precise regulation of duties and rights of each employee. One of the founders of SOL in Russia is Osip A. Ermansky (1866—1941), author of popular articles on Taylorism and SOL [33], author of treatises “Scientific Organization of Labor and Taylor’s System” [34], “Theory and Practice of Rationalization” [35]. He is known in the world of domestic science of management as the developer of the concept of “physiological optimum,” which became the basis of rational organization of all labor, including managerial. O. Ermansky wrote that for the emergence of a scientific and organized enterprise in society there should be objective reasons and prerequisites, among which—a high level of maturity of technical and economic conditions and the development of large machinery production, the need for organizing and rationalizing scientific methods and a level of development of scientific thought (first of all economic, technical, as well as psychophysiology of labor). He defined “rational organization” as the theory of

546

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

the best, optimal use of all types of energy and all factors of production, the subject (and result) of which are three basic principles (laws): 1. the principle of positive selection (the work performed and the corresponding work tools); 2. the law of the organizational sum (which is greater than the arithmetic sum of the constituent forces); 3. the principle of physiological optimum [35]. If the first two principles were the developments of statements by A.A. Bogdanova, I.M. Burdyansky, other Russian and foreign scientists, known before O. Erman, the term and principle “physiological optimum” were discovered by O. Ermansky. He believed that the main elements in any production activity are not time (“speed,” “intensity”) and space (“length of the route”) of the work performed, but the energy consumption of all production factors (E) and the useful result achieved at this energy consumption (R). He wrote that it is not possible to consider such organization of work as the most rational, at which the maximum value of R is obtained, but it is achieved at the cost of a huge amount of energy. Similarly, it is not possible to consider even minimum energy consumption as a criterion of rationality, because in this case, the result achieved may be negligible. As a criterion of rationality of the organization of work, O. Ermansky offers the coefficient of rationality, expressed as the ratio R to E, which should be optimized when planning work. The principle of optimum itself, according to Ermansky, is defined as follows: obtaining of a possibly larger useful result per unit cost or use of possibly lesser energy per unit of achieved result should always be in the field of view of the organizers of production. And in order to achieve the maximum ratio of costs and results, in-depth knowledge of the regularities of production processes, knowledge of the features and peculiarities of both personal and substantial factors of production are required. The energetic principle of optimum, wrote O. Ermansky in the article “Theory and practice of rationalization” [35], is the main and universal law of rational organization operating “both in the field of conscious action of people and in the field of natural processes, especially organic” [34]. Proceeding from this, Ermansky was intolerable to other approaches in the substantiation of SOL. In particular, he sharply opposed A. Gastev’s idea of “narrow base,” calling his platform primitive. He also criticized the social-psychological approach to management which arose then in the works of N.A. Vitke and his associates (J.S. Ulitsky, R.S. Maisels, S.D. Strelbitsky, G.A. Nefedov et al.). In the first half of the 1920s, the works of Nikolay A. Vitke on the issues of “human relations in management,” became widespread among proponents of SOL, overtaking similar developments of American scientists M. Follett, E. Mayo, F. Roethlisberger, which were discussed in Chap. 6 of the tutorial. N. Vitke’s articles on social and management issues had been published since 1922, and the main work “Organization of labor and industrial development (essay on sociology of scientific organization of labor and management)” was published in 1925 [36]. By this time a sufficient number of works claiming “the fundamental foundations of SOL” had already been accumulated, which caused criticism of the developed scientific and

7.1 The Formation of Soviet Management Thought in the 1917–1930s

547

practical literature of the situation on the part of representatives of the social direction. One of them—Rafail S. Meisels—in his work “Structure of institutions and record keeping” (1924) figuratively described the almost trodden field of SOL definitions: “This word (“SOL”—M.V.) broadly marches through our institutions and receives a different content in each of them, a different suit. In one of them, it is presented as a deep elder dressed in the cloak of a medieval alchemist, with a magic stone in his hands, the touch of which turns all objects into gold; in the other, it is takes the form of a frivolous and naughty Mercury, who at any moment will not refrain from stealing gold sheep from under the very nose of Jupiter; in the third, it is drawn in the form of a prominent scientist; who thinks, creates, creates, but has nothing to do with the practical work of institutions” [37]. According to representatives of the social school of management, in the research of the scientific organization of work and management of industrial systems, two subject areas should be clearly distinguished. The first of them is the relationship of an individual worker with the material factors of production arising in the production process. The practical purpose of such research is the rationalization of the labor process or the scientific organization of work, which is in essence SOL. The second subject area is the emerging relationship between two or more people involved in the production process. The applied purpose of these studies is to rationalize the interactions between man and man in production activities. This is the sphere of another science—scientific management organization (SMO), or scientific management. Supporters of the Vitke’s School dealt with problems of the second kind, believing that management, in general, and the organizational factor, in particular, will be increasingly important in the progressive development of production. Meisels himself wrote: “If the XIX century quite deservedly received the name of the century of steam and electricity, then the XX century will be the century of rational organization” [37]. According to Vitke, the cradle of SOL is the industrialization of society and the concentration of production. On a large number of examples, Vitke showed how concentration in developed capitalistic countries led to “the separation of management from ownership, the depersonalization of capital and the mighty centralization of enterprise management. . . Management becomes a kind of profession of special hired people (emphasized added by us—M.V.)” [36]. Moreover, “the larger and more internally complex the organization, the more certain the managerial function becomes independent and professionally implementable. This is the profession of the organizer and the administer [36]. At the same time, Vitke notes that “the organizational revolution of our days is not limited to the organizational and technical area, but also captures the area of socio-organizational. It extends its influence not only in relation of subject to subject and person to subject, but also in relation of people to each other in the production process of the enterprise. . . It masters human relationships in the process of production, rebuilds the individualistauthoritarian management system on a fundamentally different system of collectivelabor cooperation and to engage simultaneously in special and planned work on cultivating the spirit of a hive, the active interest of each working group and the

548

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

entire working team in successful performance of their task.” Vitke noted: “An employee of an organization should feel satisfaction with his work. Therefore: • he must understand its social meaning; • he must have a good command of the machinery; • he should be given quite feasible and at the same time not too simple tasks. Satisfaction is given by a sense of self strength in overcoming resistance” [36]. Vitke fundamentally distinguished organizational and administrative activities at enterprises. He wrote: “In every organization it is necessary to distinguish two circles of phenomena: its internal organization and external relations. At the same time, it is obvious that the internal organization serves the purposes of external relations. . . This creates a division of leadership. One type of guide comes from the analysis of changes in the general environment. Another type of management, subordinate to the first, cares about the state of the organization, its best construction and action and drives it in motion accordingly with the received tasks. The first supreme type of leadership deals with constantly changing and extremely complex phenomena of the multiform, formidable external environment (emphasized by us—M.V.). Here is the least possible accurate and long, methodical calculation and strict planning. Here much depends on the speed of decision and happy intuition. The second type of leadership—administrative-internal-organizational—deals with comparatively confined and stable phenomena, with a constant complex of facts and data, so it can and should put its work on the basis of a solid calculation, accurate knowledge, a clear plan of action.” Vitke designated these actions of two types of leadership as strategy (policy) and tactics (administration). The essence of organizational and administrative work is the creation in the organization of an atmosphere of friendly collective cooperation (“the spirit of a hive”). Vitke wrote: “Management consists in a suitable combination of human wills (by no means intellects) and through them through various tools to achieve certain goals specific to this organization . . . . First of all, we must abandon the crude objectivity of thinking,” and just as a product is not a piece of cloth, but a certain attitude, and management is not just documents, archives, accounting systems, references, etc., but above all “certain a system of social and labor relations, and then a pile of objects” [36, p. 14]. Vitke analyzed the 5 functions of administration already known to us (according to A.Fayol’s administrative school) and made the following conclusions. Two functions—foresight and control—relate to the planned management of the operational process of the enterprise. Three other functions—organization, management and coordination—“are directed towards the social organization of the enterprise and deal with the collective labor apparatus” [36]. According to Vitke, the construction of an effective social organization is one of the most important tasks of SOL and SOM: “The scientific organization of labor and management is an aspiration to compose a special system of knowledge, to develop a special technique of organizational and administrative activities, that is, a certain system of rules giving the greatest result at known, in advance calculated conditions. Scientific organization of labor and management develops its technique, relying on a number of theoretical

7.1 The Formation of Soviet Management Thought in the 1917–1930s

549

Table 7.1 Phases and main functions of the organizational process (by F. Dunaevsky) Key phases of the organizational process 1. The fixing phase (initiation)—Flowing from the first plan of the organization to getting to real formation of the organization’s apparatus II. The stage of the organization (ordination)— Flowing from the very beginning of the formation of the organization to the start of its current activities

III. The administrative (administration) phase—Proceeding in the established apparatus and on the defined course, as the current management of all activities of the organization

Relevant functions 1. Setting the task of the organization 2. Defining ways to resolve the task 3. Enforceability 4. Determination of the composition of required activities 5. Determination of the composition of performers 6. Providing incentives to performers 7. Establishment of the basis of the orders 8. Definition of the content of orders 9. Enforcement of orders

Compiled by the author based on the materials of work [38]

sciences. It seeks to turn into a new and holistic system of knowledge about rational construction and management of labor collectives of industrial society” [36]. A number of methodological problems were developed by Kharkiv School of SOL headed by its leader—Fedor R. Dunaevsky (1887—1960), who owns the words: “The use of frightening methods is a symptom of the manager’s physical weakness, his “administrative rickety.”” F. Dunaevsky is known as the author of the concept of complex integrity of the organization, described in his main work “Complexity in the organization. Prerequisites of rational organization” (1928). The essence of the concept was reduced to the need to determine the entire “composition of organizational functions forming an organizational whole” [38]. And since, he wrote, “an exhaustive solution to such a problem can not be given now under the current state of the science of organization,” Dunaevsky formulated the main objectives of his scientific treatise as follows: to develop main categories of organizational functions, to give their detailed specific content and on this basis to reveal the social essence of rationalization of the organization. The composition of the organizational whole in the form of classification of the main organizational functions according to Dunaevsky is presented in Table 7.1. Dunaevski chose “the main phases of the organizational process” as a feature of classification, which allowed him to distinguish three groups of phases and corresponding groups of functions in each phase of the organizational process. Another achievement of F.R. Dunaevsky in the development of views on management was the concept of “administrative capacity” developed by him, by which he understood the ability to directly supervise a certain number of persons. To solve the problem of growth of the so-called “intermediate link” of executives and control bodies arising from the increase of the “managed population,” Dunaevsky proposed two measures:

550

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

– firstly, working with personnel—careful selection of personnel, special training, personnel planning, staff stimulation, etc.; – secondly, expansion of the boundaries of the “administrative capacity” by means of management technique, transfer of routine, mechanical work to machines, automation of management. F.R. Dunaevsky is one of the first in Soviet Russia to call for the formation of a special science of organization and management, or organizational technology, which should be based on two bases—a rational system of accounting and the theory of distribution. It should be noted that he did not overestimate the role of the technical aspect in management, which is also not able to cope with the problem of the “intermediate link” alone. Machines are just “electric laborers thinking”, which in no way destroy the needs of a person. They “free the brain from the hard work, transferring it to the automaton, but demand the work of the manager from the brain,” being an “intellectual amplifier” and expanding the “administrative capacity.”6 In 1925, the first machine-counting station in the USSR was created at the AUIL, used (for scientific economic and economic calculations) at the “Hammer and Sickle” Hammer Plant of Kharkov Agricultural Engineering. For the first time in the USSR, a “Standard Costing” production accounting system was proposed and tested in practice. Effective psychological testing techniques have been created that measure intellectual abilities and determine a person’s professional aptitudes. As you can see, the assessments and specific results of F. Dunaevsky and his colleagues in automation of management and the corresponding proposals for its implementation in the management of social objects have far outstripped the ideas of automation of technological process management (ATPM), enterprise management (AEM), digitalization of production and other processes, development and the introduction of artificial intelligence (AI), which became popular in the second half of the twentieth century—the beginning of the twenty-first century.

7.2

Soviet Management Thought in the 1930–1950s

In the 1930s, studies of general management theory were also folded up in a centralized manner, just as they were unfolded in a centralized manner in the 1920s, “in connection with the completion of the forming of an administrativecommand system of management.” At the same time, these years are characterized by the development of proactive and planned studies on specific sciences on the fundamentals of management, which were carried out in the early 1930s in separate functions of management, in particular finance, supply, accounting, and the economic zoning of the country. 6 Dunaevsky F. On industrialization in managerial work. Production, labor, management, 1925, 4 (6), P.64.

7.2 Soviet Management Thought in the 1930–1950s

551

This is how the overall situation in the 30–50s in the national management thought was assessed by Professor Edward B. Koritsky: “The heyday of domestic management science, which fell on the 1920s, gave way to the stage of its deep decline in the 1930–1950s. Acquaintance with the very impoverished literature of this time allows us to state an absolutely indisputable fact: the previous variety of methodological approaches to the analysis of organizational and managerial problems was irretrievably lost, all the currents and scientific schools considered above were defeated, and the best domestic scientists were accused of “wrecking” and repressed. As a result, over the indicated three decades, our managerial thought has yielded practically nothing significant from what could enrich the theory and practice of management” [5, pp. 140–141]. At the same time, in many industries the development of individual management sciences had no longer provided the needs of practice. The need to restructure the administrative system required a qualitatively new level of scientific basis for management, development of management theory as an essential part of the scientific basis of management. The theory of the management of public production and learning discipline occurred in the 60–70s. These years had seen a departure from the principles of NEP, while with the administrative-command system and authoritarian centralism were reinforcing their positions. As a result, the scientific organization of management became increasingly unnecessary and was soon rejected by the administrative system as a “bourgeois fiction.” Already in the second half of the 1920s, the “Time” League was liquidated, and in the 1930s all scientific rationalization bodies in the departments and enterprises headed by WPI itself were abolished, pilot stations and ORGA stations, institutes and laboratories that were famous for their achievements in SOL and management throughout the world are being closed, and discussions in State plan, the Academy of Sciences, etc. are abolished. In all this, the administrative system sees a lethal threat to its very existence, because it is essentially a antagonistic to science. The main rate is placed on the “strong” leader, who is the sole manager of the region entrusted to him, and does, at times, blindly perform all the directives of the Center. And yet, even in this bleak time for the scientific organization of the labor force, it had not been possible to eradicate its “shoots” completely. The industrialization of the country, which triggered the radical restructuring of the nation’s economy and brought heavy industry to the fore, required a new generation of scientists to concentrate their research in the area of production in that particular industry. Thus, in 1931, the Central Research Institute for Production and Management of the Narkomtyazhprom Industry (CRO) was established, which launched research on mass and production issues, scheduling operational management, plant planning, in particular the development of the techpromfinplan, and a number of other problems. Such studies were carried out during this period not only in the walls of the CIO, but also in the prevailing network of sectoral project and technology institutes, in a number of universities in Moscow and Leningrad, in the Industrial Academy for the training of top commanders and some other organizations.

552

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

In 1937, one of the first Soviet production organization textbooks—“Organization of production in Mechanical engineering” [39], was published in the USSR, focusing on the organization of production in only one industry. Further successes of research on the organization of production in other industries led to the development and publication in 1950 of an interdisciplinary manual on industrial production— "Organization and planning of a socialist industrial enterprise,” the author of which was Solomon E. Kamenicer [40]. Scientific research in the institutional and managerial sphere had acquired new features in those years. This is, first of all, the strictly sectoral nature of the studies that had replaced the intersectoral one. In addition, the application aspect of research had grown dramatically, and the theoretical dimension had almost disappeared. The latter continued to smolder, perhaps only in the walls of CRO. Members of this Institute B. Kacenbogen, C. Kornicky, N. Levinson, and others formulated a fundamentally new general-purpose concept that could be termed “organizationally-productive.” The appearance of another terminology within it also draws attention. Terms such as “SOL,” “management,” “rationalization” had been replaced by the notion of “organization of production,” which, according to new researchers, had successfully replaced all others. Perhaps the disappearance of “old” categories is due primarily to the fact that the scientific concepts of the 1920s were irreversibly discredited in the eyes of the new generation. The authors of the 1930s considered the subject of production organization theory to be “the direct process of production in its entirety, encompassing both the joint operation of the means of production and the very process of labor and the cooperation of the bearers of its production subjects—workers” [1]. The content of this science, in their view, covered three broad issues: 1. labor organization issues; 2. issues in the organization of cooperation of the means of production; 3. issues of manufacturing management. This grouping was also common to many of the representatives of scientific management of the 1920s, in particular for I. Burdyansky, P. Kerzhencev, and others. But unlike predecessors, CRO staff believed that the organization of the production did not have its own patterns, was based on scientific knowledge, firstly, the objective laws that governed public production (laws of the economy) and, secondly, of the laws of natural sciences that technology attached to production. As B. Kacebogen wrote: “The science of production organization is thus a technoeconomic discipline, integrating economic sciences and technology of various kinds. In addition, the Theory of the Organization, by conviction of the “last of the Mohicans” of scientific management in Russia, cannot ignore the laws of psychophysiology of labor, as well as the data of legal subjects of economic and labor law” [1]. As we seen, the theory of organization is still broadly interpreted as a science that includes both issues of SOL, and actual organization of production and management issues. The allocation of these three areas to independent scientific knowledge will occur at a later stage. In this chain, it is doubtful whether it is legitimate to negate

7.2 Soviet Management Thought in the 1930–1950s

553

own patterns of organization and management theory, for in such a case the very need for a separate science will be questioned. At the same time, the “organizational-production” interpretation had its own strong side. It made clear and explicit the dependence of the organizational and managerial sphere on objective economic laws, which scientific management, if it wanted to be effective, simply could not ignore. Hence the need to examine the mechanism for the operation of these laws and to take into account the information obtained by theory in the practice of economic management. However, the administrative system which proclaimed its unbridled dominance did not avail itself of this idea. On the contrary, the environment in which only the natural laws of economic life can operate had been subjected to violent changes. This “dwelling” environment of economic laws is, as known, the market. Restored in the era of new economic policy, although not fully, it is now, together with the new economic policy itself, rapidly destroyed. With the elimination of real market relations, the laws of demand and supply as well as pricing ceased to operate, and therefore business accounting, based on them, which became increasingly far from the market and treated as a “planning, centralized economy,” as “the primary lever for scheduling,” as “a way to implement planned installations,” degenerated. The thesis raised in literature by Nikolay Voznesensky, which the Soviet economy “does not have any natural development laws” and “motion is defined by the people themselves (the working class under the management of the party),” received increasingly broad circulation. It is clear that such an approach actually confirmed subjectivism and total arbitrariness in the organization and management of the national economy, providing at the same time a “theoretical justification” for the existence of an administrative system. The latter, however, has been steadily and permanently strengthening its directional-planning beginning, moving towards direct distribution of material and technical and financial resources among enterprises, to centralized resolution of rationing, pricing, and credit issues. “The economy,” Ber D.Brutskus wrote in this connection, “was finally built non-inductively, feeling for the needs of the population at the market, and measuring their intensity in freely fluctuating prices and, a priori, based on statistically sound plans” [1]. The only gap remaining in the Soviet planned economy up to 1930—commercial credit, which enabled businesses to sell each other goods on credit terms and to issue promissory notes—was “bribed” by the credit system reform of January 31, 1930, which abolished the latest attributes of the market economy and constituted the “full and final” victory of the administrative command system. In the difficult years of the Great Patriotic War and the first post-war five-year plan, the position of planning and administrative centralism was further strengthened. Managerial thought in this difficult period of the country’s life “continued to work” in the area of operational management, planning and accounting for production. An event of this time was the publication of the already mentioned first textbook on the organization and planning of an industrial enterprise, written by the renowned economist and manager, S. Kamenicer [40]. By the late 1950s and early 1960s, the situation in the area of organizational and management research changed markedly for the better. The crisis of scientific

554

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

management of the 1930–1950 was replaced by a revival and then a recovery in the 1960s. The reasons for the sharp increase in the attention to management are primarily related to the quantitative and qualitative complexity of the national economy, which was based on a multisectoral industry. The high bar was achieved by domestic science, the achievements of which had been recognized throughout the world. The social and political atmosphere had also changed: the period of extreme Stalin’s repressions was replaced by Khrushchev’s “Thaw,” which revived the conditions for scientific search and discussion. Increased production, the number of business connections, the diversity of resolution of economic tasks objectively led to the complexity of the management process and required new approaches to management systems, and the emerging democratization emancipated intellectual activity of scientists who had come to an absolutely true conclusion that the potential for traditional forms of management had been exhausted. The post-war years and the 1950s are characteristic of history of management thought (HMT), primarily by active development of the specific problems of the management of the country’s economy, which was heavily destroyed in the war. These are the issues of forming organizational structures of the central state bodies for management of the reconstruction of the national economy, the establishment of a new system of planning management, the creation of sectoral and regional ministries, committees, the formulation of master plans and strategies for the development of essential sectors of the restored economy. In this context, the issues of self-management and democratic forms of worker participation in economic management were developed, together with financial discipline and self-management, personnel issues (selection, arrangement, reserve, rotation, stimulation, training, evaluation), a combination of centralization and decentralization, delegation of authority, etc. Unfortunately, because of its speed, many management changes had to be carried out on the basis not of an experiment or a well-developed scientific base, but rather an empirical way of “trial and error,” which often led to inefficient solutions. In particular, attempts to establish “superministries” in line with the law “On the Transformation of ministries” were unsuccessful (March, 1953). Under this Act, a number of sectoral ministries had been merged into inter-sectoral complexes. Very soon, they proved to be unviable because of their cumbersome and inflexible nature. In this regard, a number of management decisions had been made to transform these complexes, reduce the number of units in them and, ultimately, simplify organizational structures. This search for effective organizational forms culminated in the adoption in 1957 of a law, according to which virtually all nationwide and unionrepublican ministries were abolished. The management of the national economy moved to the basis of the territorial principle. In each major administrative region, a “Council of the National Economy” (Sovnarhoz) was established, with the functions of planning, operational management, and control. This was a landmark development in the development of management thought. In the world history of management, this type of experiment is rare. In the history of the young socialist state, such an experiment had been conducted for the second time. This time the experiment was longer than in the 1920s, until, in 1965, the

7.2 Soviet Management Thought in the 1930–1950s

555

territorial-based management system was again transformed into a ministerial (industry) system. Both systems have positive and negative sides. Thus, the industry system had made very efficient use of resources from the point of view of the sector’s interests. However, it quickly led to the depletion of regional stocks, to the depletion of natural resources, which is not optimal from the point of view of the national economy as a whole, to the siting and solution of many tasks (e.g., transport), to environmental pollution at regions, and in the end, to the fall of economic indicators. In turn, the territorial approach, promptly, rationally and efficiently developing the local management system led to the creation of duplicative systems of management, the emergence of “states in the state” and, in the end, again, to the fall of national performance indicators. As always, the real solution was somewhere between the extremes, and the essence of it was likely to be a conscious shift of the regime of management of the nation’s economy from one principle of management to another after a certain number of years. Empirically, this period had been established within 7–9 years. However, real experiments had not gone unnoticed for management science, and a new “management boom” begins in the late 1950s and early 1960s. The approaches of the 1920s—organizationally cybernetic, technical, praxeological, functional and other, are being revived and rapidly refined. And it is very important to note that many of these approaches detach into independent science. Thus, for instance, the science of cybernetics arose, or rather, was reanimated (after A. Bogdanov), ascertaining general laws of management at different levels of hierarchy and in various spheres—from technical objects to socio-economic systems and living organisms. For the representatives of this science, management is “the choice of the desired course of the process, control over the process and impact on a system that provides the desired course of progress.” New independent sciences, such as operations research, praxeology, organization theory and others, had also emerged. The widespread infiltration of mathematical methods had led to the emergence of a fundamentally new theory—the optimum planning of the nation’s economy, a major contribution to which was made by L. Kantorovich, L. Lurie, V. Novozhilov, V. Nemchinov and others. At the same time, a number of scientists raised the question of the need to develop an independent economic management science, different not only from cybernetics, political economy, praxeology, etc., but also from related sciences, SOL-like and scientific organization of production. But if such a science is needed, what part of the management should it take on itself, without deforming the subjects of other sciences (political economy, sociology, law and others), what is its own subject and what is the content? This is the main methodological question, the answer to which domestic management thought of the 1960s had been intensely searching for. It must be said that the opinions of the proponents of the new science differed considerably. Some scientists had made an organizational-cybernetic interpretation of the content of the management theory, often replacing the latter with cybernetics and organization theory. The author of the Textbook considers the most important reason

556

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

for such confusion—the ambiguity of the meaning of the term “organization,” at least in Russian. Namely, an organization: • is a phenomenon or object (for example, “a group of people united by a common goal”), • it is a process (of ordering, “organizing”), • it is a characteristic of an object (state of order, orderliness of the system, etc.).7 It should be noted that at the same time, scientists tried to “dissolve” the Theory of organization and the Theory of management at the subject level. So, the representative of the cybernetic approach to organization and management (or the “cybernetic school of management”) V.P. Bogolepov singled out two approaches to understanding the essence and content of “Theory of organization.” The first approach, following A. A. Bogdanov, considers the theory of organization as a general organizational science, the object of which is all systems, processes and phenomena of a material, social or theoretical nature; subject—organizational relations, phenomena and processes wherever they occur, both in nature and in society. The second approach is based on the notion that the organizational issues are the prerogative of only social systems. In this case, the object of organization theory is social organizations, or rather, social systems; subject—organizational relationships between people about joint activities. As for management, representatives of this school considered management as an impact on an object (in both approaches), chosen from a variety of possible impacts on the basis of the information available for this, improving the functioning or development of this object. And the structure of management theory, according to V. Bogolepov, should include the following sections: 1. General management theory, that is, management automation theory. 2. Theory of information (which should consider both the substance of the information and all work on it—both in analysis of the situation and in preparation of decisions, and management of their implementation). 3. Actions research theory, or operations (decision preparation methodology), both generic and in relation to private areas of use. 4. Algorithm theory (or, with a slightly different meaning, logic-mathematical modeling theory) that applies in part to preparation, in part to the implementation of decisions. 5. The theory of technical management tools, including computational machines [41 , p. 42]. 6. The mixture of object-subject areas and the meanings of the term “organization” continued, which is obvious from the following quotation of V. Bogolepov: “Organization is not and cannot be part of management, but in all cases This “confusion” of the meaning of the term “organization” is objectively caused by the ambiguity of the term “organization” in Russian. This does not occur in English, since there are two different terms “organization” (in statics, as a phenomenon) and “organizing” (in dynamics, as a process).

7

7.2 Soviet Management Thought in the 1930–1950s

557

management is part of the general organization: more precisely, management is subject to the organizational factor” [41 , p. 49]. Such an interpretation of the content of the science (theory) of management has not been universally recognized, especially if one recognizes the subject of management science is “managerial relations,” which are difficult to observe, analyze, measure and, accordingly, change (that is, purposefully change the object of management). Despite the undeniable importance of cybernetics, it is not a science of management of social objects because it does not study the socio-economic, political, legal, demographic, ethical and other aspects of management.8 Cybernetics, as already mentioned, consider only in the general patterns of management processes, both in inanimate nature (technical systems) and in biological and social systems, regardless of their content. Since management in this system is one of its traits, aspects, it can only be understood on the basis and in the process of knowledge of the system as a whole, revealing the objective laws of its functioning and development. The technical and cybernetic approach is extremely important but not sufficient. It became increasingly evident that success in equipping management bodies with a powerful tools, such as the Automated Enterprise Management System (AEMS) depends not only on the level of development of mathematics, physics and mechanics, but also, to a great extent, on the level of socio-economic, legal, demographic and other basic research. In addition to the organizational and technical concepts of management theory, other interpretations had gained popularity in the 1960s, the analysis of which will be given in the next paragraph. Major theoretical developments in the late 1950s and early 1960s began focusing on improving management practices, organizational structures and, in general, systems for managing the national economy based on the achievements of related sciences. The All-Union scientific and practical discussion of the early 1950s on the fundamentals of Political Economy of socialism, the development of pricing principles in the 1960–70, material and moral incentives issues, new planning methods (including development of a well-known methodology—the System of Optimal Functioning of the Economy or SOFE, based on the use of computers taking into account the state system of collecting and processing information), research findings in a number of other sectoral sciences (economic cybernetics, psychology, sociology, public law, etc.) had contributed to the development of the management science itself. However, it was still an unsolved key (as we now know, from the 5000

8

The words of the English famous English physicist William Thomson, Lord Kelvin (1824–1907) confirming the complexity of the subject of the science of managing social objects are very instructive: “If you can measure what you are talking about and express it in numbers, you know something about it; but if you cannot measure it, if you cannot express it in numbers, your knowledge is scarce and unsatisfactory; this may be the beginning of cognition, but hardly in your thoughts you have advanced to the stage of scientific knowledge, no matter what the subject is” (emphasized by us - M.V.).

558

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

millennium B.C.) pragmatic in its nature question: “How to improve efficiency and achieve effectiveness in the management of the economy? Is there a universal systematic way to do this, or do we need to design methods and other parts of the management system in every particular historical period?” On the solution of these issues depended, first of all, the theoretically grounded choice of a certain system of economic management in each specific historical period of the country’s economic development. Obviously, this problem could not be solved without relying on a complex and systematic approach, since the object of the study—“the System of Management of the National Economy” differed precisely by those two most essential characteristics—complexity and consistency. We will conclude this paragraph by repeating our words about the specifics of “management as a science,” which we wrote about in Chap. 1. The uniqueness of the specific historical period, the specificity of the region and organizations in this region, the specificity and uniqueness of the members of these organizations substantiate and confirm the idiographic nature of management as a science that does not pretend to invariance of its statements, conclusions, “patterns.” This “Management as a science” differs from nomographic sciences (such as physics, chemistry, biology, and others), many (but not all) statements of which do not depend on time, place or observer (researcher).

7.3

Gavriil Kh. Popov and the Development of Soviet Management Thought in the 1960–1970s

An analysis of the works of Soviet authors reveals that one of the problems that they were occupied by during this period was to develop a common methodological position. And if there was no discrepancy in the subject matter, because they were interested only in management, in the interpretation part of the object, there were different points of view. This was determined both by scientific interests and the scientific platform of the authors. Below we will give the views of a prominent Soviet scientist, Professor Gavriil Kharitonovich Popov on the trends in the development of Soviet management thought of this period, published in his world famous monograph “Problems of Management Theory” (1974) [21]. In addition to this treatise, the materials from previous editions of the author’s textbook [7] and also materials cited authors listed in the List of references will be used. According to G.H. Popov, during the studied period, there were at least three best known object approaches to the interpretation of management studies. The first group of scientists, especially economists, felt that only the socialist industry itself should be analyzed. In one of the known textbooks by O.V. Kozlova and I.N. Kuznetsova, “Scientific Foundations of Production Management” (1970), production management was defined as “a deliberate influence on the communities of people to organize and coordinate their activities in the production process.” [42]. In the view of the authors, it is only in the context of socialist production that the

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

559

purpose of production management can be formulated, the structure of economic authorities and other elements of the economic entity’s management system can be defined. The second group of scientists, led by jurists, believed that it was not possible to consider economic bodies in isolation from other bodies of the socialist State. A renowned scientist, A.E. Lunev, wrote in 1966: “It should be noted that The improper, unilateral, with respect to economics only, understanding of management science should be noted” [43], another jurist Professor Y. A. Tikhomirov indicated: “The bifurcation of State bodies and the limitation of economic management means underestimating management as a suspension category.” [44]. Professor M.I. Piskotin made a more specific proposal, considering that in all areas of public management, there are commonalities, which are the main features, and the objects of management introduce only features that must, of course, be taken into account [45]. Professor C.A. Yampolskaya held the same position, arguing that “only on the basis of analysis of public management can the forms and methods of economic management, culture, healthcare, public education, household services, etc., etc. be improved.” [46]. As we see, this group considered it important to take into account in the studies the traits of the state form, that is, the traits of the subject of management, while at the same time characterizing management as a multifaceted organizational activity of the State through its bodies. At the same time, statements can be found in scientific literature, including those of lawyers, which show the lack of a purely state approach to production management. Thus, S. S. Alexeev writes: “A number of public relations cannot be the subject of legal regulation because this conduct of people does not permit external control and cannot be secured (called) by specific legal means” [47, 48], Y. M. Kozlov notes: “There are cases in which a number of functions are carried out in parallel by both public authorities and public organizations.” [49, 138]. V. V. Laptev also notes “the exaggeration by some legal scientists of general concepts such as public management and a public management body, forgetting the significant differences between management in its own sense and economic management” [50, 171]. Proponents of the third approach propose to analyze management in the socialist society as a whole. This approach conquered both the limited approach from the positions of one object of production, and the limited approach of one entity—the state. We already know that in 1921 the final document of the First conference on SOL stated that the object of management analysis should be all areas of productive and unproductive life. In the treatise on “Scientific Management of Society” (1968) V. G. Afanasyev writes that “in a cohesive social organism, such as a socialist society, there is no and can be no solution to any single sphere of public life which, to a greater or lesser extent, would not affect all its other spheres. . . Management is a property intrinsic to society.” [51, 52]. The approach from the perspective of society as a whole enabled addressing a number of important management issues. At the same time, the approach to management issues from a societal perspective raised serious objections. Perhaps the most important objection is that such science, will either not isolate itself from

560

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

scientific communism, or its recommendations will be so general that they are not sufficient for neither management of the State or for the management of production. “There is some immense science of sciences that is overburdened with tasks to do all things, ranging from the management of social transformations, the building of socialism and communism to the creation of a science-based information system” [51, 171]. As in Western HMT of the twentieth century (more precisely in the United States), the USSR began to give voice to the need to unite efforts to produce at least a common methodological view, taking into account the pros and cons of each of the three approaches. In all differences, an analysis of these approaches by professor G.H. Popov, revealed a number of general points: “Firstly, each approach, based on its own concept, provides valuable material related to management. For example, the analysis of socialist production makes it possible to formulate an important provision on economic methods of influence. Analysis of public management reveals a number of principles for building a management apparatus. Analysis of the management of society makes it possible to understand the place and role of public management among the other entities of management. Secondly, each approach, by making serious arguments in favor of its method and by making serious accusations against the competitor in the same way, leads to unconvincing evidence in favor of its exclusivity. The phrases on the only true, only possible, best approach usually remain mere phrases. Thirdly, practice had shown that only the use of the achievements of all approaches makes it possible to describe in any detail the particular process of management. Of course, depending on the task at hand, some leading approach may be identified. In one case, this is an analysis of management from the perspective of the subject, in another—analysis of management from the perspective of society, etc. But there is always a need for a certain combination of all approaches. On the basis of all this, it would probably be correct to say that all three approaches to analysis of management issues are legitimate and interrelated. . . It is necessary to reject not one or another approach, but its claims for exclusivity, monopoly. It is on the basis of such claims that there are difficulties in analysis, inadequate conclusions arise, and important features drop out of the field. Of course, this triple approach inevitably entails some overlapping of issues. But ultimately, the analysis of management issues in socialism wins.” [21, pp. 72–84]. As we seen from the analysis, the problem of determining the approach “depending on the stated objective” in one or another particular case remained. With regard to the management of production, there was no doubt as to the leading role of the economy. The words of V. Lenin were reaffirmed as follows: “Production of direct material means to life, and thus every stage of the economic development of a people or an era, forms the basis from which State institutions, legal views, art and even religious views of these people are developed, and from which they must therefore be explained, not the other way around.” [10]. The authors of the work of this era talked about the same. For instance, there are words in the literature of jurists that “economic factors have a decisive influence on the system and organization of management.” Philosophers said the same thing: “Since production, the economy constitute the material basis of society, economic decisions are the basis for solving

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

561

socio-political and ideological objectives, and the management of the economy as the key to the managing social and spiritual processes.” [7]. At the same time, scientists did not take the leading role of management processes in relation to other forms of management as a dogma. Realizing that management in different spheres of society also has a reverse effect on the traits and characteristics of the management of the economy. For example, there is no doubt about the business management theory developed by H. Fayol, the principles of management in the Army (the headquarters system) and the State apparatus (the principle of unity of stewardship) [53]. Therefore, the thesis of a leading role of management in the economy was not an argument for that only economic management analysis is of scientific interest. Another reason for the development of a common position was that a large part of misunderstandings in the scientific discussion on management issues was related to the unclear definition of the approach to the object, that is, the differences started at the axiomatic level. And although scientists used the same words-functions, methods, managing bodies, etc.—they placed different meanings on them. As a result, most of the scientists recognized the socialist economy as the object, without refusing to interact with specialists from other fields of science. However, the definition of the object led to an order in the understanding of the term management of socialist production, since by the 1960s it had been present in many sciences as part of the studies and had naturally acquired a consistent and specific interpretation. Economists, philosophers, lawyers, sociologists, cybernetics, and psychologists had been investigating this type of management in their work. The various interpretations of a complex and multifaceted phenomenon, such as the management of socialist production, had been quite numerous and had to be brought to order, contradictions and commonality of positions had to be revealed. Analysis of the works allowed researchers to identify the following interpretations of the management of socialist production: 1. interpretation of management as a system of aspects: economic, organizational and technical, psychological, political, etc.; 2. interpretation of the management of socialist production as a system of indicators, shared with other forms of management and unique to this type of management; 3. interpretation of management as a set of its elements; 4. a complex, systematic interpretation of management. In addition, each of the above-mentioned interpretations was also distinguished by the level of the research object, the level of production management. The authors examined issues in management of the entire national economy, the management of some or other economic systems (industry, territory, etc.), the management of the production organization (the site, the shop floor, the enterprise, the union). Here’s a brief characteristic of interpretations, following the position of G.H. Popov: Interpretation one. This group may include concepts in which management is confined to one of its aspects (parties) or is seen as a set of multiple aspects. Confirmation of the sustainability of such views was exemplified by the allocation

562

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

of sections at the First Union-wide Conference on Scientific Organization of Industry Management, held in 1966. In particular, such sections had been identified: economic problems of management; organizational problems of management; legal problems of management. Under this approach, management was divided into subsystems, and the world-wide classification of sciences served as the basis for separation. A positive aspect of the approach was the relative ease with which it could be implemented in relevant scientific research. The approach as if calls for the representatives of various disciplines to collect material relating to management in their area and to present it for review. It is obvious that, at a certain stage of development of management studies, only such an approach is possible. But the disadvantages are also obvious. This is not so much an analytical approach as it is a property survey. With a fairly full appearance of different sciences, the picture of management would become polychromic. But it is also clear that, by collecting management material from different disciplines, some aspects had fallen, and there had been an uneven development of management issues in the sciences. And again, specific examples. At the second Management conference in 1972 there was no longer a legal section, but a social management section of management was created. And psychologists were not fortunate, neither in 1966 nor in 1972, because their section was never organized. The question of detailing the aspects themselves was another problem of a faceted approach. Thus, the economic dimension can be broken down into political and specifically economic, and the specifically economic aspect can be divided into sectoral studies, etc. Differentiation the sciences themselves and their internal detalization had gone very far, with each of the sciences having something to say about management. But the more fragmented the dimensions, the more diverse and unmonolithic the overall picture of management. Interpretation two. Another view on the management of Socialist production was expressed in the works that attempted to portray management as an autonomous phenomenon by highlighting some of the features and traits. For instance, cybernetics examine the traits of all types of management: in inanimate nature, in organisms, in society. Praxeologists study the characteristics of any human activity. There are economists who write about the characteristics of this type of management because production is it’s object. The work of some lawyers is also built around the same plan. They understand that legal problems in management are a too isolated part, and they want to talk about the legal elements that exist in each particular production management problem. Undoubtedly, a step forward in this direction was the idea that the indicators of management could be divided into two groups: general and specific. Specific relate to only this particular type of management, and general—to multiple types of management. At first, only universal, cybernetic signs were understood to be general. But it is also clear that there are several groups of general features for different classes and subclasses of management. For instance, all kinds of production management in different formations have not only fundamental differences, but some commonalities. If all the signs of management interpretation were correctly

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

563

identified as a combination of general and specific features, it was a step forward compared to the aspect characteristic. Interpretation three. A large material on management was contained in the works dedicated to its individual elements: functions, methods, constituent parts, and issues. Thus, a lot of work had analyzed features such as accounting, planning, control, motivation, and operational guidance. The authors of these works judged from the idea that management consisted of a set of functions. The second version of this kind of interpretations of management is the analysis of the constituent parts of management: personnel, machinery, and management bodies. The third option for management’s elemental characteristics is to analyze individual problems: the possibilities of applying economic and mathematical methods, the introduction of new technology, responsibility, combating bureaucracy, democratization, etc. For example, at the Second Union-wide Management conference, two sections had already been identified in the Elemental principle: the personnel management and organization section and the technical progress management section. The undoubted merit of the elemental interpretations of management is that the analysis is based not on aspects, nor even on indicators, but on specific management issues. At the same time, many representatives of the elemental approach, after choosing an element of analysis, often examined some aspects rather than the element as a whole. For example, in the study of the planning function only economic or legal planning issues were considered and, for instance, social issues were not addressed. Another, already inherently insurmountable limitation of the elemental approach, is its lack of systematicness. It is always very easy to prove the importance of analyzing an element, but it is difficult to make a deep analysis of it because the element is taken in separation from management in general, and its position in the general system is unclear. This means that valuable ideas, such as the improvement of accounting or the introduction of computers, are not implemented because other elements of management (the existence of which had either not been taken into account or had not even been suspected of existing), are opposed. That is why the elemental approach, while enriching management analysis, could not, therefore, give the full characteristics of management. Interpretation four. The shortcomings of the interpretations of production management that had been considered had led to the idea of a comprehensive interpretation. The introduction of this interpretation was the main outcome of the studies of the 1970s. The complexity was that it was recognized that it was necessary to analyze all aspects and all the signs of management. The integrated approach relied on the idea that there was a hierarchy in aspects: the leading role is economic, and it defines legal and, in turn, has a reverse effect, etc. The comprehensiveness of the analysis suggests that the general and specific features are unequal, that is, the lead value belongs to specific characteristics. The interaction of aspects and the interplay of features results in the emergence in real management of new qualities that cannot be found in the analysis of individual aspects or of individual features.

564

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Basically, the ideas of an integrated approach are correct and had been a step forward in the development of management concepts. But, on the other hand, the integrated approach was still abstract. Even if we take all aspects and all the traits of management into account, we still remain in the realm of high-order abstraction. Therefore, as a stage of theoretical analysis, an integrated approach is very important, especially for the development of a methodology for analyzing management issues. But it is not sufficient to reveal the full picture of the studied phenomenon of management of socialist production. A comprehensive approach must be complemented by systematicness. The systematic approach seeks to present all elements and issues of management as a coherent whole. Though the notion of the system of management was interpreted by different writers differently, all of them had one common idea: it is necessary to transfer from analysis of individual elements to analysis of the overall management system. The systematic approach does not belittle the importance of further research in the area of management functions or of specific management issues. On the contrary, the development of the concept of a system of management of socialist production provides a truly sound theoretical basis for the study of the elements of the system. The idea of a systemic approach is also that the whole (in this case, the management of socialist public production) has signs and laws that the constituent elements of this whole did not have. The logical conclusion of a systemic and integrated approach, therefore, is the predicament of presence in management of not only economic, legal, organizational, etc. aspects, not just of a general and specific character, not only of the principles inherent to the separate functions of management, but also of new, specific traits of management as a whole. There remained a consensus on the level of production itself. There were many varieties of an integrated, systemic approach. For instance, local research in which an isolated enterprise, industry or territorial area was studied. Even if the research on these objects was carried out in an integrated and systematic manner, it was essentially incomplete. The fact is that, in a socialist society, all the local economic systems did not act in isolation, but as part of an entire national economy. It was only from the perspective of the national economy that the issues of management of an industry or enterprise, republic or territorial complex could be truly understood. Therefore, in recognition of the need for and the legality of a comprehensive, systematic analysis of individual local business systems, the problems of managing all public production in general were at the forefront. After all, the comprehensive and systematic interpretation of management of all socialist public production was recognized as a general methodological interpretation of the subject and object of production management studies. In fact, various authors had seldom adhered to one of the four approaches mentioned. However, the classification of Professor G.H. Popov made it possible to organize, at an abstract level, the accumulated extensive material and to systematize the existing interpretations of management. Following his logic, we shall describe detailed characteristics of the various interpretations and related scientific works.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

565

An aspect characteristic of socialist production management. Different types of aspects had been highlighted by various scientists adhering explicitly or implicitly to a faceted approach. Usually the leading place was diverged to economic problems of management. Sometimes the political economy aspects of economic problems were highlighted. The allocation of economic problems of management enabled considering planning, finance, and economic calculations. Social and psychological aspects of management had been marked as the next most important and popular. There are many fruitful results in the analysis of psychological problems of management or of its social problems. At times, social and political issues of production management had been highlighted within the social dimension, specifically the sociological aspects of management, issues of party management of the economy. Organizational issues in management are often highlighted. Special attention was paid to managing bodies of the national economy. Unlike research in nineteenth century, the legal aspects or legal problems in management of socialist production (except in the case of public law issues) were less often highlighted and investigated. This can be explained either by a decline in the level of legal knowledge (which is unlikely) or by the existing ideological taboo to carry out such research (which is more likely). Economic aspects of management. First of all, these studies clearly differentiate political and specifically economic aspects of management. Soviet scientists attached the greatest importance to scientific results in the field of economic research on public production management issues. In their view, political economy, by revealing the nature of industrial relations, of economic laws, their establishment and development, having demonstrated the role of sustainable development and the basic economic law, revealed an objective basis for the management of socialist production. This was the broadest course of research, within which several varieties were made. The first part of the researchers connected production management to the main production relationship of socialist industry—the property relationship. The second group of researchers placed special emphasis on the mechanisms for the use of objective economic laws of socialism. The third group highlighted and examined the role of the law of progressive, proportionate development, the role of sustainability as the main basis for the management of socialist production. The fourth group examined economic interests of the citizens of the socialist society. Finally, there was a fifth group of studies in which management relations were recognized as part of the industrial relationship, and consequently all attention focused on determining the place of management among other industrial relations. Noting the exceptional role of political and economic aspects of the management of socialist production, Popov argued with some of its interpreters. He wrote: “A number of authors, having learned from student years categories such as production relationship, law, etc., imagine that these categories act as such on the surface. Thus, A. S. Petrov responded to the question: “Does the director manage machines, equipment, and buildings?” as follows: “Of course not. As for the director, he manages. . . production relationships.”“These authors forget, writes Popov, that C. Marx needed an enormous power of theoretical abstraction to reveal industrial

566

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

relationship behind specific phenomena. This has not been achieved by the most outstanding scientists of the classical bourgeois political economy” [21, c.85]. But the discovery made by C. Marx has not changed the fact that at the surface of society, both before Marx and now, industrial relations are not clean and untainted. In this case, science would not be needed. Attempts to shift production relations into the world around us lead to attempts to solve specific problems of the economy, based only on the laws of industrial relations. Real grains require real millstones built, of course, on the basis of abstract knowledge of grain, stone, etc. Trying to get flour from an abstract mill gives rise to failures in practice. Attempts to update the role and meaning of political economy, to make it constructive, contradict its object and, indeed, discredit the true meaning of this science. You cannot minimize the role of abstraction, but you cannot turn it into a category with which, as the mathematical analyst, professor of MSU, S.A. Yanovskaya joked, Political economy textbook authors shake hands in the street. One sociologist even said about the attempts to populate the particular world with abstractions: “If I meet the general will, walking on the street, how can I recognize it?” There are no net industrial relations in the practice of housekeeping. They are a cognitive product that results from the abstracting activity of the minds of theoreticians. This does not cancel their objectivity or their materiality. Renowned in the world of Soviet scientists as an economist and jurist, V.P. Shkredov in his work “On delimiting the subject of political economy and production management theory” writes: “As an indispensable part of the system of social relations of production, management as such has its own specific distinctness, distinguishing it from the actual material industrial relations that make up the subject of political economy. . .” The direct relationship between managers, on the one hand, and performers, on the other, does not represent either the process of production, nor the distribution process, nor the process of product exchange. As such, they are characterized by the will of one to the will of others. This is, therefore, the willful public attitude in the process of production and reproduction. . . Management relations in general, and in some of their manifestations, have special content that characterizes precisely the consciously-willed aspect of people’s production activities. This set of relationships constitutes its own subject of the special science (theory) of management and is reflected in the relevant system of categories: business information, plan, functions of management, methods of impact, monitoring of performance, etc.” [54, pp. 58–63]. Along with the political economy approach within “economic research” there was a second approach—specifically economic. Based on political economy categories, proponents of this approach have tried to give a concrete picture of the economy. Economic relations and business connections therefore emerge in the economy instead of production relations. Both equipment and personnel were included in production. In a specific economic relation, as one of the ideologues of this approach, professor S. E. Kamenicer underlined, It is no longer one or another production relationship that manifests itself, but all their totality: “No single phenomenon in the economy may be linked to the operation of any economic law taken

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

567

in isolation. Only a combination of laws determines the essence of every phenomenon in the economic life of the country.” [37, 55]. But even in the specific economic direction of the interpretation of management, it will not be sufficient to validate the production management findings, for, as was written by P. Bruyne, “Economic conditions are seldom the only source of data on which decisions are taken, because the technical or social aspects of problems have no less influence on these decisions.” Therefore, as was alleged in the monograph on “Organization and Management (issues of theory and practice)” [39, 56], “even the most complete inventory of the scattered language related to various compartments of economic science does not give us a substantive idea of the real-life processes of the enterprise as a management object. We are not sufficiently studying the enterprise as a whole, as the unity of economic, technical and socio-political properties” [26, 41]. That is why attempts had been made to include legal, social, and other aspects in the characteristics of public production. Legal aspect of management. A specific economic (business) relationship between individuals is a willful expression of objective industrial relationship of a given society. The recognition of the field in specific economic relations does not mean that they are losing material nature. “Specific economic acts,” the jurist S.N. Bratus wrote, “are willful, but not ideological.” He echoed by the lawyer S.S. Alexeev: “The authors who deny the willful nature of specific economic relations, do not notice the extent of the difficulties they face in subsequent defending of their positions in a consistent manner. They have to declare the production of each individual relationship on monetary calculations, insurance transactions, employment contracts, pension benefits, research, etc.” [48, 57]. A wide range of property, labor, land, and financial relationships on the surface of production is included in the willful moment. This enables taking a proper approach to the legal aspect of socialist production and to overcome the existing legal nihilism of some economists. In analyzing the legal aspect of management, it is possible to identify both the characteristics of any public-legal approach and the specific features of a public-legal approach to the management of socialism. “Any society,” Y. A. Tikhomirov wrote, “means organization, discipline, power. The founders of Marxism-Leninism distinguished power in the broad sociological aspect, peculiar to any society and political power.” [25, 44]. The legal aspect also included “sectoral” varieties. However, most of the works were on research on the public-law aspect of management. Aristotle wrote about three systems of bodies: legislative assembly, government, and judicial authorities. The bourgeoisie made a slogan of dividing authorities into special bodies independent of each other. And the lawyers of the Russian emperor attacked this principle as irrational, breeding inconsistency, and defended the rational connection of power in the hands of the absolute monarch, who promulgates, governs, and judges. All public managements are characterized by publicity, territorial organization, primary authority (power of the class) and its secondarity (authority of State bodies), sovereignty and unity of authority, its indefiniteness, the division of power into socio-political and administrative, the legal framework, and others.

568

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

On the one hand, it was logical for the jurists to point out the additional and specific possibilities that the state form would give to management. But, on the other hand, they attributed to the government the traits that are essentially inherent to any social management, and thus overemphasized public management and its legal form. The idea of the limited dignity of the state form of management in society, as we recall from Chap. 5, was one of the theoretical concepts of the liberal bourgeoisie in its struggle to limit state interference in economic and social life. Marx had shown that it is not so much a matter of whether the State intervenes actively or not in economic life, but rather in limited public management itself. There was a debate among the legal profession about the meaning applicable to the term public management. Some identified it with the work of the state executive bodies. A broader interpretation links public management with the activities of all bodies of State (representative, executive, law enforcement), but refers only executive, legal and supervision activity to it. There are even broader concepts under which public management encompasses all bodies of the State and all types of their activities. A particularly fruitful approach was the broadest possible way to expand management traits. The socialist state, while retaining some traits of every state, has only its own unique characteristics. “Therefore, an analysis of the legal aspect of management, primarily, in Popov’s view, should have touched upon precisely these traits specific to the socialist state and, consequently, to the management of production under socialism to the extent that it acquires a public-legal form. Public authorities are the link in the political management system of the socialist society, where the policy of the party is transformed into state policy and becomes binding on all citizens.” [21, pp. 90–91]. The question of specific features of public management under socialism, for instance, were put forward by A. I. Lepeshkin in the textbook “Course of Soviet State Law” (1961), highlighting the specific characteristics of the socialist state. Generalizing experience of the Soviet state and other socialist states, scientists had attempted to identify the specificities of the causes of Socialist public management, the specificity of the state that had become the owner of the vast majority of the means of production, the prevalence of economic and organizational tasks over force, the particular nature of the State, expressing the interests of the majority of the people and which have gradually become nationwide. In the Socialist Public management, a new character is acquired by right that expresses the interests of all the people and a legal regulation that is based not so much on coercion as on the moral authority of the law, the conviction and conscience of the citizens. “Coercion as such has not disappeared, but has ceased to be the principal method and is more often merely a potential opportunity.” [58, p. 66]. There are no special local government bodies in the socialist state and there are no bodies representing central authority locally. Socialist public management is characterized by supremacy, autonomy, sovereignty, and indefiniteness. At the same time, the powers of each body are strictly limited by the law, the legal rules. The socialist state combines direct democracy with the representative character of the government. The socialist public management enshrines in law the special role of the working-class party.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

569

An important issue of the legal aspect of management was the problem of the system of government bodies. In the Soviet state, the concepts of law and management are of special significance, reflecting, on the basis of unity of power, the specificity of the division of management labor Prior to 1936, the legislative and executive activities were not clearly separated, and joint decrees of the All-Russian Central Executive Committee and the Council of People’s Commissars were frequently issued. The Constitution of 1936 strictly differentiated bodies: the authorities, governing bodies, the court and the prosecutor’s office. But the name “governing bodies” somehow opposed power and authority, and it gave grounds for the view that management was limited to executing activities. Even a five-year plan is beyond management, as it is accepted as a law. It is much more accurate to speak of representative, executive and judicial-control bodies of public management. In a methodical way, it is important to note that sometimes the features of the legal aspect include the features of the economic dimension or the traits inherent to all processes of management under socialism. For instance, democratic centralism is inherent to the management of the socialist state, but democratic centralism is not a feature of public management alone. At times, the specific features of the socialist state had been characterized by any legal aspect of management. For instance, lawyers had allocated such forms of control: material-and-technical operations, organizational arrangements, civil-law transactions, state coercion measures, acts of government. Without referring to the correctness and logic of the list, we must note that we have before us the typical problems of any public management, and not the problem of historically defined, socialist public management. Or let’s take the economic role of the State. A certain economic role is inherent to any state. The specificity of a socialist state is not the existence or even the extent of this function alone. In the modern state-monopolistic capitalism, the extent of state participation in the economy is sometimes considerable. The specificity is, as V. I. Lenin pointed out, that economic and organizing activity had become the main function of the socialist state. The same applies to the issue of public participation. The public participates in the affairs of any democratically organized bourgeois republic. The real characteristics of socialist public management are participation of all workers and the nature of their participation. Various legal studies explore different aspects of the legal aspect of management. “So it would be more correct,” as professor M.I. Piskotin wrote—“to highlight a new science—the science of Public management that will unite these studies, would study public management in a comprehensive manner” [45]. But even if a new science were to emerge, it was likely, Popov concludes, would also not cover all the problems of the legal aspect of the management of socialist production, and in order to fully disclose that aspect, it would be necessary to involve material from various legal disciplines in future. Other Aspects of Management In addition to legal, significant emphasis was placed on social and psychological aspects of the management of socialist public production. “The need to examine in

570

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

depth the multiple factors of the socio-psychological micro-climate of enterprises, human research in the workplace is invaluable for the rational organization of the entire system of management of socialist production,”—was mentioned in the monograph “Scientific organization of managerial work” [59, 638]. At western schools, during the same period, there were many studies of the psychological issues of production within the framework of the theory of small groups, the family, training group, brigade, and the community of the institution. At the same time, it is known that in the pre-war and post-war years the USSR struggled with “psychologizing”. Professor B.D. Parygin in the treatise, “Social Psychology as a Science,” commenting on this period, noted that “protests against psychologizing often obscured a simplistic view of the progress and patterns of the historical process. So far there are reasons to fear something else—vulgarization of the theory of historical materialism, in the spirit of pure economic determinism, when the issues of spiritual life are not addressed, especially the various mental movements of social groups, classes, nations and peoples, changing attitudes, interests, beliefs, customs and traditions of people in the past. . . As a result, the picture of the historical process schematized, depreciated, as it did not reflect the spirit of the times, and instead the living persons, bearers of social functions were portrayed. And ignoring the mental content of the individual turns it into a personalized social function, a unit, a cog and other parts of the faceless social mechanism.” [60, 61]. B.D. Parygin highlights four aspects of public psychology: 1. Collection of components of collective psychology: attitudes, collective will, public opinion, tradition, group relationships. 2. Psychological features of large social groups (peoples, nations and classes), occupational groups (production teams, scientific groups, communities of artists, division of institution, etc.), age groups and other small groups (family, relatives, neighbors, buddies, etc.) 3. Psychological aspects of different spheres of public life: material production, welfare, policy, etc. 4. Social and psychological facets of various forms of public consciousness (psychology of law and morality, psychology of religion, psychological aspects of science, etc.) [60]. Limitation of the Aspect Approach The approach to the characteristics of social production management in terms of its various aspects enabled revealing a number of significant signs of management. At the same time, in Popov’s view, it has a limited character. First of all, the very interpretations, for example, of the legal aspect of management are very different. Some specialists had actually narrowed this to economic law, others—to administrative law, and others had tried to single out something broader than a particular type of right. Similarly, positions on economic issues of management or on the socio-psychological dimension differ significantly. These kind of differences could be accepted because they are the inevitable companion of the developing section of science. Grindedness and sustainability indicate that the research phase of

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

571

development in a given section of science has already passed and has begun its training and methodological improvement. The role of certain aspects of management is sometimes misinterpreted. For example, the role of psychological problems is exaggerated (or minimized). Sometimes some aspects are ignored altogether. But this kind of limitation can also be overcome. There’s another problem. Much of what is described under the guise of, for example, economic issues of management, is mentioned in economic law. But this duplication of aspect approaches is also not embarrassing. Some overlap is inevitable, especially at the crossroads of sciences. But limitations are inherent to the aspect approach, which flow from its essence and which it cannot overcome. Firstly, aspects of management are some kind of abstractions. In fact, there are no separate economic issues of management and separate legal issues. It is only theoretically possible to divide these parties into a single phenomenon of management, in practice, however, they are merged. Of course, there are sometimes practical issues of a purely legal content. And then the aspect approach starts to directly help practice. But the vast majority of practical problems of management—whether it is setting the goal of management or the establishment of a management body—are complex. Therefore, the study of management in terms of a set of aspects will always remain somewhat detached from reality. The aspect approach will probably never overcome this limitation. Secondly, even if all aspects of management are taken into account, their interaction remains a problem. However, the problem of synthesis was not addressed by any of the representative who studied the management aspects of that period. This problem was beyond the limits of interests and opportunities of both the legal, psychological, and other aspects. Ignoring the problem of interaction of aspects is the logical consequence of decomposition of complex management phenomena to abstract aspects. And finally, thirdly, in a faceted approach it is always difficult to distinguish between psychology and the psychological aspect of management, the law and the legal aspect of management. Therefore, purely legal or purely political-economic material often constitutes the main part of the work on the relevant aspects of management, and management issues themselves are a kind of appendage. Instead of exploring the political-economic aspects of management, the author, through every subsequent page of the text, was concerned with some traditional problem of political economy itself. It can be concluded from all of the above stated that it is possible to allocate different aspects of management, and perhaps the analysis of each aspect is of great independent importance. However, as management researchers P. Rivette and R. Ackoff wrote: “It would be a great mistake to treat individual branches of science as different aspects of reality. In other words, we proceed from the assumption that nature is organized in the same way as universities. Nothing is farther from the truth. For example, we speak of physical, chemical, medical and biological issues, consider psychological, social, political and economic issues, as if the issues that the world puts forward can be categorized in the same way as established scientific

572

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

disciplines. But, in fact, there are simply issues, and the various adjectives describe only a different approach to their study.” [62, p. 40]. General and Specific Features of the Management of Socialist Production Representatives of this approach attempted to overcome the limitations of the aspect approach and to present management as a set of common and specific features. According to a known management classification of types of management, the authors assumed that management in socialist production had common features: – – – – –

with all other forms of management—in nature, in technology and in society; with all the types of management in which a person acts as a subject; with all forms of management in human communities; with all forms of management in society; with all types of production management (in different formations).

However, the main thing, as Popov pointed out, is the specific features of management that reflect the essence of the socialist way of production. Three groups of such features can be observed. Firstly, since production is a part of society, the traits of management in a socialist society must also take place in the management of socialist production. Secondly, since in the management of production under socialism, the principal subject is the state, the traits of socialist public management are necessary in the performance of production management. Thirdly, the management of production under socialism reflects the fundamental features and peculiarities of the object of socialist production management. In connection to greater interest in methodological issues, Popov further briefly describes the characteristics of each group of traits rather than the works of the authors of ideas. Management Features that Reflect the Economic Basis Under Socialism, planning management is for the first time becoming a major part of the economic mechanism, a decisive factor for economic development. With regard to the specific features of the Socialist planning management, Popov, firstly stressed the importance of the level of development of the productive forces, the degree of development of the social form of labor and the necessary minimum. The degree of cooperation is the next important factor. The third factor, public property, has decisive influence on the traits of socialist production management, i.e. the fact that all the economy is concentrated in the hands of one owner. This creates an objective possibility and the need for centralized management of all public production. Of course, first of all, there is a need to identify the characteristics of the management of socialist production that stem from the existence of common property, and then those that flow from the extent of the actual cooperative work within it. Perhaps the first group of features may be named holder’s management, and the second group could be called management of the cooperative. In a socialist society, under conditions and on the basis of public property, management of production transcends enterprises and associations, covering industries, territorial complexes,

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

573

and all public production. This transformation of the social framework and extent of management will inevitably lead to its qualitative changes. Management of the socialist economy had goals that arised from the Basic Law of Socialism. The reference here was to the classics of socialist theories. Thus, during the preparation of the first program of the socialist party, G. V. Plekhanov defined the purpose of socialist production as meeting the needs of the entire society and of its individual members, which is very similar to the language of the rulers of the first state policies. V. I. Lenin argued that the goal was to ensure the full well-being and free development of all members of society. Nevertheless, Soviet economists continued to engage in robust discussions on the goal of socialist production. Academician A. M. Rumyantsev wrote: “if capitalism needs a worker, then socialism needs an identity.” Professor V. N. Cherkovec in the work “On methodological principles of political economy as a scientific system” (1965) wrote: “It seems to us that it would be theoretically wrong to treat socialist production as the production of a surplus product, to declare surplus product the purpose of a socialist production, even if it were to be clarified that it belonged to society.” [63]. Another subject of discussion is the main attribute or basic trait of the socialist economy. Here scientists were unanimous in acknowledging the primacy of sustainability throughout the entire country. Sustainability and awareness are inherent in the function of management, and in this sense, although in a peculiar way, they are inherent, as C. Marx noted, to all kinds of cooperation and management. The fundamental difference between socialist management and other forms of production management is that it has become an indication of all social production. This enabled the socialist society to develop and implement not only plans for enterprises or associations, but also national economic plans. The most important indication of national economic sustainability is centralism. It is it that gives priority to the national economic approach and most fully reflects the new nature of production management under socialism. Management under socialism is characterized not only by centralism but also democratism, as discussed in paragraph 8.1. Management expresses the interests of all workers, consciously and systematically organizing production and public life. Democratism also manifests itself in a certain decentralization of economic decisionmaking between the various levels of the socialist economy within the framework and on the basis of the national economic plan: “Centralism, understood in a truly democratic sense,” as Lenin wrote, “implies, an opportunity for full and unhindered development not only of local peculiarities, but also of local make, local initiative, diversity of ways, techniques and means of movement towards a common goal, created by history for the first time.” [10, Т.36, 152]. Another group of issues in the management of socialist production was concentrated around the question of the economic mechanism. Some were talking about the commercial nature of the socialist economy, others—about non-commercial, the third—on commercial and non-commercial at the same time. The latter concept, in terms of the analysis of management issues, could be acceptable, as long as we acknowledge the leading role of a non-commercial, sustainable approach, abandoning futile attempts to construct an eternal model of socialism, to accept the

574

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

dialectic point of view of development. Then it will be clear that in twentieth century the management mechanism was developed from more product to less commercial. This process actually occurs even in capitalism, where the area of market and competition is declining. It would be odd if public property did not facilitate or promote a process that, even under private ownership, makes it’s way, giving birth to various kinds of dirigism, programming, prediction, etc. Public property does not tolerate and is not indifferent to the market, but, by virtue of domestic laws, it seeks to push it out as a foreign body, to outlive, to overcome. But the conclusion on the presence of a trend is primarily a theory. And in specific periods, and this too was brightly demonstrated by NEP, returns may be relevant, derogation especially if, for example, the automobile industry in the socialist country is less cooperative than the plants of the Ford Foundation, or if there is an excessive limitation on the scope of the law of value due to objective conditions. While agreeing with the opponents of commerce and on the ultimate development perspective, Popov noted that for the Soviet country, forced for the sake of industrialization and most rapid post-war rebuilding of heavy industries to significantly limit goods mechanisms, a certain expansion of the scope of goods and cost instruments is sometimes relevant. In this way, it is better to provide testing of the efficiency criteria of previous decisions on the structure of the economy, the size of the enterprise. Under such conditions, it is possible to create a more reasonable basis for the formation of associations from plants that are close to each other, not by virtue of the subordination of a single executive, but of actual cooperation. This barometer could be further validated by the consistency and suitability of some economic managers; to inculcate those who are insufficiently impacted by morally factors, to better encourage those who are capable of taking initiative. But it would be a profound fallacy to put the need for virtue and, on the basis of the current need to expand the scope of value rudders, to put forward theories on true socialism, ostensibly possible only as a market economy. Under specific circumstances, another way may be imperative (and this today is illustrated by some countries)—limiting the market mechanisms that had begun to pressure public property itself, emasculating it into a piece of paper, a slogan, a sign. This is a summary of the analysis of general features and traits inherent in the management of socialist production. Let’s go to the characteristics of traits of socialist society management. Back in the 20s, E. F. Rozmirovich developed a scheme that characterized all management in a socialist society. She considered that the socialist society was manageable (as opposed to predominantly spontaneous prior social formations) and her management scheme included accounting, planning and organization. A. K. Gastev, in formulating the management scheme, relied on the analysis of the workplace. But under a working place, he understood any place in the factory, in the institution, and so on. A. K. Gastev’s scheme included calculation, installation, processing and control. Y. O. Lyubovich rightly notes that Gastev’s micromodel and Rozmirovich’ macromodel reveal a significant commonality and are based on the same principle, and are about the traits of management in a socialist society.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

575

It is in the analysis of the traits of socialist society management that, above all, a feature such as controllability manifests itself. Unlike the previous socio-economic formations, the socialist society is a consciously managed, coherent system. One of the most important aspects of the management of society under Socialism is the role of political factors and the considerable weight of political organization and political methods of management. The subjects of management under socialism are the party, the State, social organizations, every worker. Economists consider the party to be a principle of economic management, lawyers—the principle of public management. According to Popov, the party spliced two points in its activities: management of other organizations, primarily the State, and direct participation in management. But in both cases, the party works through people, through party members. The specificity of the role of the party is the impact through the staff selection and placement mechanism of the various bodies of management. The specificity of the role of the party is particularly focus on functions such as the development of a program of activities, goals, systems of methods used. The party makes extensive use of propaganda and agitation. The specific role of the party is also that its activities do not merge with those of other bodies, allowing it to exercise control. At the same time, “the policy of the party” writes V. G. Afanasyev, “does not exhaust all the contents of management. It provides a general direction, defines the social orientation of management, sets common goals, objectives, points to general means, principles to meet these challenges.” [51, 176]. The nature of the management of a socialist society corresponds to special forms of unity of command and collegiality, a special system of moving forward executives. In the management of a socialist society, the methods of upbringing, agitation, propaganda, and persuasion have a special place. The role of control in socialist management is extremely great. Among the special features of the management of a socialist society is democratic centralism. An important aspect is the analysis of social and psychological issues in the management of a socialist society. The process of management under socialism permeates collectivism and internationalism, patriotism, and humanism. There is a need to identify a system of social ideals, the place of skills and habits, the role of morality, public opinion, collective and mass attitudes, and mass interests. All these phenomena, on the one hand, have some influence on management processes, define a number of their traits and, on the other hand, are themselves subject to managerial impacts. The problem of the place and role of the main subject of management is of paramount importance for the analysis of management under socialism: the person, member of society, every human being. It should be noted that researchers did not always clearly distinguish the signs of management of socialist production arising from the nature of the industrial relations and the signs arising from the whole relationship of a socialist society. For example, a party is rather a trait of all management under socialism. The planned nature is also a trait of all management under socialism. Democratic centralism is inherent in certain forms to both production and all the socialist society. In view of the fact that the management of socialist proceedings is largely a function of the socialist state, it is legitimate to consider the characteristics of management related to the state form of management. But in the management of

576

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

socialist production, party management of the economy, the management of cooperative organizations and the activities of the public are prominent have a big place. It would therefore be wrong to equate the management of socialist production with the State management of socialist production. The latter is the most important part of the former. However, among lawyers, there was a view that all the management of socialist production is state-owned, since the party administers the economy through the state, the public needs state regulations, and so forth. However, according to Popov, “not only in communism, but already under socialism, a significant part of the issues of management had bypassed the state form.” This is not only a matter of so-called illegal activities which are not regulated by the State and the law. The fact is that the party administers the economy not only through public authorities, but also directly. For example, it sets the objectives of management by adopting the fiveyear plans at the congresses. The party directs collective farms, often also directly. And the role of the public cannot be narrowed down to action on the authority of State bodies. It is quite right that the decisive part of the management of socialist production is exercised through the state. But it is also clear that the state is still one of the subjects of management.” Therefore, Popov considered the indicators of State management not in the section on indicators of management, but in the section on aspects of the management of socialist production. The Traits of Control in any Production Apart from specific features, the management of socialist production has traits common to other forms of management, such as certain traits inherent in the process of management in any production. Production management had evolved in the past through the allocation of general production operations as a special activity: from the management of the temple economy in ancient Egypt or Athens ergasterion, to the management of all transport, from F.W. Taylor’s economic man W. D. M. Keynes ‘national economy multipliers and accelerators, from Ford’s technicism to E. Mayo’s psychological experiments [6, 9, 21]. Production management is based on cooperative work. But the cooperation itself is defined not only by division of labor but also by the size of property. Labor cooperation grows a property framework needs to be harmonized, but this harmonization is achieved through a natural regulator—the market, acting as the antithesis of production management. And, on the other hand, the extent of ownership may increase the scale of real cooperative production. This had many times been the case in the period of feudal conquests or the accidental unification in the hands of a capitalist of completely heterogeneous enterprises. Thus, a combination of conditions is necessary in order for production to be managed. In all production there must be continuity that transfers it into reproduction. In all production, it is necessary to separate the newly created product into consumed and accumulative parts, and reimbursement of expendable inputs is necessary. Any production is divided into production itself, exchange, distribution, and consumption. Any production has a certain territorial and sectoral structure, and is subject to the processes of specialization, technological progress and so forth. Even the

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

577

purpose of public production, as A. M. Rumyantsev notes, “Is at its foundation. . . based on the essence of human labor as such”. All these traits are objective, and production control must follow the laws of the managed object. Management differentiation is influenced by the need to take into account the process of production, supply, marketing, etc. itself, the material side of production and workers, individual factors or parameters of production: product quality, cost, etc. The analysis enables identifying the place of management among other types of work in production and to demonstrate the socially necessary and effective nature of managerial work. Traits that Are Inherent in all Types of Management Are there commonalities for all kinds of management in nature, society, technology? Cybernetics gives a positive and even categorical answer to this question. Thus, American scientists P. Ryvett and F. Ackoff wrote: “You can effectively manage when the decisions of managers are based on a solid scientific foundation. In our opinion, the cornerstone of this foundation is cybernetics—the general theory of management” [62, p. 5]. They are echoed by the Russian scientist A.I.Berg: “Cybernetics summarizes the patterns of management processes taking place in wildlife, in human society, in industry” [16, 61]. As part of cybernetics V. P. Bogolepov recommends highlighting general management theory, information theory, action or operation research theory, algorithm theory, technology management means theory, including computers [39, 41]. An analysis of the works of various authors shows that a specific list of cybernetic features of management is highly dependent on the area in which the author works. Some of them feel the influence of technology, others—of biology, others—of economy. Perhaps most comprehensively these features are disclosed by the authors of cybernetic philosophical work [64, 65]. Thus, the following points are cited as signs of any management in cybernetic work: the presence of a system; causal relationships of elements within the system; the presence of a management and managed systems; the dynamic nature of the system; the presence of a control parameter; the system’s amplifier, its ability to undergo major changes from small impacts; storage, transmission and conversion of information; feedback; focus, the existence of a goal in any management; antientropy of management. It is obvious that each of these traits is inherent in any management. For example, no control is possible without a goal. For instance, trying to include optimality in general management features is incorrect because optimality is only an ideal that is unique to a group of management processes. Cybernetic traits can be combined into two groups: inherent in the form and structure of control (static traits) systematicness, determinism, control parameter, and so forth; inherent to the content of control (dynamic features) feedback, targeting, and so forth [39, 41]. But cybernetics as science does not cover all the common features of the management processes. Common traits of management are revealed by other sciences. Thus, system theory also enabled identifying some common features of management. And neither management nor the organization exist on their own, writes A. S. Petrov. They are of a subordination nature and operate within the limits of some third category. The system is such a category. The system is characterized

578

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

by integrity (the properties of a whole are more than the sum of the properties that constitute the whole element), composition, structure, relationship to the external environment, and so forth [66]. A number of common features of management are identified by the organization’s theory. “The organization is not and cannot be a part of management, and in all cases management is part of a general organization: more specifically, management is accountable to the organizational factor,” writes V. P. Bogolepov. V. I. Tereshchenko is also of almost the same view: “An organization means the structure within which separate activities are carried out. Management is a set of coordinated activities aimed at achieving a certain goal. An organization is a kind of anatomy of an enterprise, management is its physiology. If you will, an organization is the static of business, management is its dynamics.” [67]. An organizational approach reveals a number of important points. It must be borne in mind, of course, that management itself has a certain structure, and, along with organization and management, we can talk about organizing management and even managing the organization. Among the common traits of management, of particular interest are some of the signs of management in biological systems. Thus, the higher nerve centers do not receive detailed information, but merely summarized information on the activities of individual parts of the body, while at the same time sufficient to coordinate all of the organs. Individual organs, the circulatory system, kidneys, etc., work with a high degree of automatism. But the central nervous system interferes with their work, although this intervention, except in the case of emergencies, is not of a detailed nature. It proceeds most often or through the reconfiguration of subordinate systems, without substituting their functions, or by interfering in the activities of that organ through other organs. For example, the rate of heartbeat is changed not by order from the brain, but through a local catalytic system. Traits that Are Inherent in Management Processes with Human Participation Another group of signs is a general indication of all activities involving human participation. A systematic attempt to study the laws of human activity had also been undertaken by Tadeus Kotarbinsky in the cycle of works devoted to praxeology [68]. As President of the Academy of Sciences of the Polish People’s Republic, Kotarbinsky had a rich field for organization activity and testing his ideas. Praxeological ideas had occurred to many scientists. In 1926, E. Slutsky published an article in Kiev, “An annex to the problem of building formal praxeological principles of economics”. A very large number of praxeological provisions are contained by SOL theorists: Soviet (for example, in the mentioned works of A.) K. Gastev “How to Work” and P. M. Kerzhencev “Organize yourself”) and foreign (Taylor, Emerson, etc.). These are the traits of any management that is carried out by man. The first indication of these types of management is thinking. It enables creating process information models, plan activities. The activities fall into three links: the plan in mind is a real process—monitoring the compliance of the outcome with the plan. A person perceives the world and studies the equivalence of knowledge and the world.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

579

He person, next, is free to act and can choose actions. A person motivates his or her actions by various causes, real and fictional, biological, and social, based on knowledge that is relevant to reality, or resulting from misconceptions. T. Kotarbinsky considered the development of rules of effective activity a special task of praxeology, regardless of the nature of the activity, irrespective even of whether the activity was mental or physical [68]. In praxeology concepts such as action, purpose, the tools of achievement of the goal, the method, product, the committer (the author of the action), the impulse and arbitrary impulse, and so forth are studied. It examines the adaptation of means to the goal, the objectives of product improvement, and the criteria for effective action. For example, goals are differentiated by time, by number of subjects (individual, group, general), by value scale (primary purpose and by-products), and so on. Praxeological evaluations relate to the evaluation of the product, the evaluation of action, assessment of the committer In product evaluations precision, clarity, cleanliness, and speed are highlighted. Purity is included as a kind of cost-effectiveness. It is a kind of purity, defined as the ratio of the value of the product to the possible losses. In action evaluations, rationality (physical and methodological), caution, courage and risk are identified. Courage, for instance, is in turn divided into elements, including energy, which also has options, such as initiative, intensity, endurance, etc. There is also a system of evaluations from the point of view of the committer, that is, the person acting: entrepreneurial, hardworking, resilient, experienced. The evaluation “experienced” includes such gradation: connoisseur, master, grandmaster. Praxeology formulates rules of good work: directives for dominating action, action preparation, action instrumentalization, etc. Praxeology is only one aspect of the analysis of the commonalities of all human activities. Another source could be, for example, engineering psychology or labor psychology. In any case, there is no doubt that it is possible to generalize, on the basis of the various sciences, the traits inherent in all human activity regarded as management. The findings of this approach will be as useful as the conclusions of cybernetics. An analysis of the general human traits as such and an analysis of the general features of management with human participation as part of the process of perceiving a particular type of management. This analysis has nothing to do with the subjectivist perceptions that the defining forces of a social and historical process (and hence the behavior of people) are feelings, passion, and the desires of individual individuals. The role played by common indications of work can be judged by having seen at least some of A. K. Gastev’s rules, which are essentially praxeological. Rule one. “Before you get to work, you need to think it through, so that your mind bears a definite model of the completed job and the entire order of work strategies. If you can’t think it through completely, think of the major milestones and the first parts of the work need to be thought of thoroughly.” Rule two. “If the work doesn’t go as well, then do not overreact, but it’s better to take a break, to think and start once more, again, quietly: even slow down deliberately to withstand oneself.” [30].

580

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Traits of all Kinds of Management in people’s Communities A large group of common features appears when both the managing and managed systems consist of consciously functioning elements. That’s probably why Y. O. Lyubovich believed that it was only with regard to communities that we could start talking about management at all.Unfortunately, it is only in recent years that special attempts have been made to analyze the traits of management in human communities. It is only natural that this attempt was made by scientists associated with the school of praxeology. Primarily, we should name the major monograph by Professor of the University of Warsaw, director of the Praxeology Institute of the Polish Academy of Sciences, Ian Zelenevsky, “Organization of human communities (introduction to organization and Leadership Theory)” [69]. Two important steps must be identified in the analysis of the traits of team management. The first is analysis of management carried out by one person in the community. The second is management analysis, when the administering system is already represented by the group of persons. When the object of management consists of people who are conscientious and free to choose, a question naturally arises: what is the result of the relationship of power and obedience? They are a product of collective connections (an orchestra needs a conductor). The analysis reveals issues of authority, authority, stages of decision-making, etc. Human activity, which has been the subject of an analysis of labor as an integral combination of the plan in the person’s mind and the actions of his hands, now as if fall into two parts: one of them becomes a managerial function and the other is that of a subordinate. This is where, for the first time, the three stages of the management process in time can be defined: 1. Preliminary management, 2. Operational management, 3. Control. Preliminary management includes the development of a management goal, forecasting (preconceptions of development results, accomplished under the influence of existing factors) and planning (a system of measures needed to overcome the deviation of the forecasted outcome from the target we are interested in). Operational management includes activities to implement these measures. It can be subdivided into an organizing (creating the right structure from the necessary resources), ordinance, command (motivation) in the context of the structure created and coordination of the management process. Control includes the collection of data on the operational management process, an analysis of the results achieved (feedback), and adjustment of the management process. It is important to note that Control is the starting point of the new management cycle. The creation of a system of control, consisting of a hierarchy of people, enables allocating and investigating the number of levels of control (authorities), the entitlement of individual management stages to certain individuals or even bodies.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

581

Executives of various ranks emerge, and there are senior executives who center the resolution of principle matters in their hands. A new function, the supervisory function, combining the critical areas of all other management functions, emerges. A supervisor in a developed hierarchy is no longer busy with any of the management functions. For this he has both planners and forecasters, controllers, and organizers at his disposal. The main task of the supervisor is the management process as a whole: coordination of the various functions, their alignment and harmonization, selection of the managers of the relevant services and organization of the hierarchy of the management system as a whole. In general, this kind of managerial activity, exempt from separate management functions, was called the administration by H. Fayol [53], and leadership (or guidance) by Popov. When analyzing the hierarchy of the managing system, there are issues of transferring responsibility to lower levels of the hierarchy, issues of centralizing and decentralizing the decision making process and the organization of management itself. Hierarchies are divided by organization type into linear, HQ, functional, and so on. It is in the analysis of the management system, which is made up of people, that analysis of managerial techniques can be provided. Emphasizing the need for and the usefulness of a general analysis of management processes in human communities, Popov notes that “for many bourgeois schools it is traditional to consider the traits of management at this particular level, abstracting from class and other social problems, attempting, in judgments of power, authority, motives, formal and informal organization, to ruin the general issues of any particular management: who manages, in whose interests, on the basis of which specific relationship, etc. For petty-bourgeois theorists, it is the level of management in the community that serves as the base of all kinds of theories about bureaucratism altogether, the absolute incompatibility of the individual and management, conformism as such. Therefore, it is incorrect the attempt to absolutize the findings gained in supervision analysis altogether. But at the same time it enables outlining a number of points that are important for the understanding of management in a particular form, including socialist production.” [21, 52, 70]. The traits of managing any society. Among the communities, society, production, and the state are of particular importance for research. Under certain circumstances, some of these functions go to the state. However, both prior to the state and, of course, after its demise, the whole range of management processes in society has common features. One problem is analysis of power, no longer merely in a community, but power as part of any society. It is important to examine the problem of singling out the category of persons exercising the functions of management in society, the force of power in society and the nature of power in society. An analysis of the characteristics that are common in the management of socialist production with other forms of management enables deeper disclosure of the nature of this type of management. Thus, Professor Popov had considered one of the characteristics of the management of socialist public production. This characteristic is that the management of socialist proceedings highlights the general and specific features and discloses the content of each group of characteristics, both specific and general. The main

582

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

disadvantage of this characteristic is that management would be as if disbanded into groups of traits. But the picture of real management cannot be obtained by laying together mechanically separate indications, because in real management all the traits inherent in the management of socialist production do not simply coexist with each other. They are intertwined in different ways, interact and influence. The synthesis of all these sections of control is not only the sum of the groups of traits described but also provides qualitatively new features. Therefore, the characterization of management by reason, even if the role of common features is not exaggerated and the leading role of specific features is emphasized, is incomplete. This is, as is said in mathematics, a necessary, but not yet sufficient, part of the analysis of the issues of managing socialist production. The Functional Character of Management The selection and analysis of various functions in management was an important milestone in HMT, as we wrote in Chap. 6. In fact, it is from the functional analysis of management carried out by F. W. Taylor and A. Fayol, that various kinds of science management concepts begin. Of course, it is quite inappropriate for the beginning of scientific analysis of management to be linked to the deepening of research on its organizational and technical aspects, but the important role of the functional approach itself is undeniable. The main feature of the functional interpretation of management is that control is treated as a set of functions. Fayol wrote that management, as a combination of certain organizational, economic, technical, and technological functions, addresses the full range of tasks on the provision of the production process [53]. The interpretation of the concept of the function of management had varied from one Soviet author to another. In the aforementioned textbook by O.V. Kozlova and I.N. Kuznetsov the management function is defined as “a branch of work that represents a set of decisions, actions, or processes, united by the commonality of the object and the tasks to be performed to manage production” [42, p. 62]. B.V. Smirnov writes that the functions of management should be understood as an objectively necessary type of work to assimilate the information for working out decisions that define the purpose of activity within the community. The first and second definition rightly emphasizes that the function is a branch of work, a type of activity. But the first definition incorrectly links this branch to a task solution (there are functions that do not directly address management tasks, such as accounting), and the second overemphasizes the information rather than the informative side of management. According to Kh. Popov, the functions of management are, firstly, part of managerial activity. Secondly, it is a segregated part of managerial activity. But to narrow the function down only to the division of labor in management would be wrong. Not every division of labor in management means the allocation of the functions of management. For instance, selecting a typewriter operation does not mean the appearance of a management function, but only creates a new area (element) of work.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

583

Which division of labor leads to the emergence of management functions? It is likely one with which a relatively separate area is allocated to such a specialization. The base of this autonomy can be either structural parts of the object of management or related groups of management tasks (this is stressed by O.V. Kozlova and I. N. Kuznetsov). But there may be other grounds, such as various subjects of management or different stages of managerial activity (information gathering, analysis, etc.) [42]. Thus, the management function is a special type of managerial activity, a product of the division of labor and specialization in management, an area of management distinguished by relative autonomy. In literature, management functions are sometimes equated with management tasks. The task of management is a subjectively understandable objective goal of management. In this approach, the interpretation of the functions of management becomes subjective. The goals of management do require a set of management functions, but this set also depends on other factors. Sometimes, management functions are equated with the functions of government bodies or with the functions of a management staff. In fact, it is the functions of management that provide the basis for the understanding of both functions of the bodies and the functions of employees, and should therefore be considered on their own. The interpretation of management as a combination of functions enabled successfully solving many problems. The management process was divided into parts. Initially H. Fayol, as we already know, identified administrative functions in terms of sequencing the deployment of management processes within time: foresight, organization, ordinance, harmonization, control. The list is then specified: the goal phase was brought out, as well as the motivation (activation) function [53, 71]. The idea that management needed to be divided into parts made it possible to introduce specialization in management. And specialization in management, as in production, greatly enhances efficiency. This was discussed by Adam Smith, Charles Babbage, and others. Specialization enabled paying attention to functions such as planning, identifying promising goals that have typically been overtaken by management turnover and lost among operational problems. The particular importance of the functional approach was that attention was drawn to the preparation of management, to the preliminary stages of production management. Specialization made it possible to identify and effectively organize areas such as staff selection, accounting, control, etc. As a result of the functional approach, the content of many managerial activity areas had been developed in depth. For example, the role of the motivation function had been emphasized. The function of stewardship, command, achieves its goals to a much more complete and deeper extent, if the orders issued are either in the best interests of the performers from the start, or include elements designed to create and develop such an interest. Motivation (inducement to work) not only deepens the force of the order but often replaces the order. In the case of strong motivation, it is not possible to give specific orders for some time because it is certain that the subordinate in this situation will act in the right direction.

584

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

But the most important effect of the functional interpretation of management was that objective reasons were obtained for the construction of the production management bodies, both collectively and individually. The functional approach resulted in the development of basic types of management structures—linear, functional, mixed structures of all kinds. On that basis, the scope of the rights and responsibilities of the bodies, their internal structure, the rights, and responsibilities of their units were clearly defined. This in turn made it possible to define the profile of the workers needed, to formulate requirements for their knowledge, skills, and personal qualities. Without functional analysis, it would never have been possible to build the complex organization that production management represents. At the same time, the functional approach faced a number of challenges. Functional analysis initially had little interest in the content of managerial activity and its object. As we have seen in Chap. 6, the purely organizational interpretations of the functions of management had been criticized even in Western literature in the polemics of the School of Human Relations with classical organizational theory [72]. This had forced the proponents of the functional approach to attract material that reflects the content of management as well as the features of the object. However, even now the interpretation of individual functions of management often suffer from a non-integrated approach. Thus, for example, planning theorists are not sufficiently interested in legal issues, and in the interpretation of motivation, they are too passionate in psychologism. In the first instance, attempts were made to reflect the features of the object of management using similar functions. This resulted in failure. Therefore, attempts to introduce management-related issues into functional analysis ended up with the beginning of allocating new functions. The functions of managing supply, finance, quality, socialist competition, rationing, technical control, etc. emerged. The number of functions had grown rapidly and the ratio of functions had been very confusing. The purpose of the allocation of functions was to highlight the relatively selfcontained areas of management. And it turns out that the planning function, for instance, invades the area of the supply management function, and the socialist competition control function intersects with all functions. The orderliness, which was institutionalized as a management step, was lost, and the rationale for establishing managing structures became being. The functional approach, even with the proper interpretation of the functions themselves, tends towards the so-called functionality. The essence of this phenomenon is that individual functions begin to live their own lives. Isolation becomes autonomy, and the objectives of a particular function begin to be perceived as selfcontained. No longer is accounting there to maintain management, it is management that is obliged to adapt to accounting requirements. Some functional areas, even unnecessary from the business perspective, are seeking to defend their right to exist, are doing business, sometimes useless and sometimes simply harmful to the success of management. The functions seek to secure more appropriations, personnel. What is achieved they try to spend completely, in order for future appropriations not to be cut. As a result, there is a constant trend towards growth of functions.

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

585

The functional approach had not been able to explain many of the management phenomena. Even in the interpretation of a function such as planning, contradictions were found. On the one hand, planning had been interpreted as a stage, a management phase followed by the goals function and (in a typical interpretation), the previous functions of the Organization and ordinance. But in the nearest consideration, it turned out that the implementation of that function required knowledge not only of the problems of management goals but also of methods, personnel, bodies, and motives. You have to plan the entire control system, all its elements. This mean that when expanding the planning function (in a consistent approach), all of management has to be uncovered. But then this function covers all management and disappears as a special stage. One can only argue about which term to retain. There had been attempts to narrow the interpretation of planning (for example, as a phase in the management system), but this approach confused the interpretation of other functions, as the planning phase of the management system itself had dropped out of the planning area. The problem of classifying the functions of management was the most difficult and insoluble for the proponents of a functional approach to management. For example, the most commonly used classification of functions in the Soviet Research Institute Manual of Labor (1966) was provided with overall direction and functional guidance. As part of the functional manual, for example, the function of labor organization and wages is identified as special. At the same time, the function of material and technical provision is highlighted. Not to mention that material and technical provision is not a management function, but one of the functions of production (it is possible to assign a supply management function to management), it remains unclear where labor organization and the salaries of the employees are to be included: in the supply management function or in the organization of labor and salary functions. And most importantly, why it is included in both blocks. Both options are illogical. Either there is supply management without a labor organization, or there is a function of labor organization from which, for some reason, organization of workers ‘labor is excluded. In order to create a logical classification of the functions of management, it was necessary to look at the totality of management functions from the side. But before that, management was divided into functions, and there was no such “out-offunction” observation post in division. It is simply not possible to classify all functions from accounting or planning positions. It was contradictive. Either management is the sum of functions, but from which positions do you define these functions? Or there is such a position, but then there must be some area in management that stands over the functions. As a result of the functional approach to management, a number of training courses and sciences had emerged: planning, statistics, accounting, etc. But a management tutorial, which would be a collection of chapters on all functions, was never written in those years because it was not possible to create a satisfactory and consistent classification of functions. Thus, Popov concludes, “a functional approach that had made significant progress in understanding some of the serious issues of management, had generally not

586

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

been able to become a theory that explains entirely the management of production under socialism” [21, 73]. An Elemental (or Elementary) Characteristic of Management The variety and kind of detail of the functional approach is the elemental interpretation of management. In this case, management is interpreted not as a combination of functions, but as a combination of various elements: personnel, bodies, equipment, documents, etc. Individual stages of the management process (decision, inspection, etc.) and individual management events (bureaucracy, for example) may act as elements. It happens that a single-aspect characteristic of an element is given (for example, only economic or psychological). But a lot of work is devoted to comprehensive description and analysis of the management system elements. It is not possible to provide any complete list of elements since different authors divide the management differently into some pieces or other. The positive importance of the elemental approach to management is that the focus is on some or other specific management issues. As a result of this approach, interesting work had emerged, detailing various issues. Attention is being given to the study of the problems of liability, which highlight the extent to which the executant of the orders of the superior is responsible for the actions. Usually, notes Ian Zelensky, receiving an order from the top never exonerates a subordinate if his actions are incorrect. On the other hand, obeying orders from the top does not mean that the subordinate is not worthy of the award. However, the studies often contain irrationality. If the results showed that the order was unsuccessful, attempts are made to exonerate the executant, to remove the guilt. And at the same time, if the order was correct, the same theorist would be inclined to raise the executant’s shield (although, from this point of view, there is a need to attribute both success and miscalculations to the author of the order). Most appropriate, in Popov’s view, is to consider the degree of responsibility in the failure and the degree of merit of success commensurable: “In our view, responsibility and encouragement must always be placed on both the leaders and the executants. Only in this way will the executants with initiative perform the correct (in his opinion) order and resist with all might what he considers wrong in the order” [21, 74]. The elemental approach enabled analyzing many other phenomena of management—style of work, authority, workflow, punishment, democratization, etc. But at the same time, the elemental approach, to an even greater than functional extent, suffers from incompleteness, unsystematicness, incline towards details and, in particular, fascination with parts of the whole, eventually “behind trees the forest disappears”. Even with a comprehensive approach to the characteristics of some or other elements, it is very difficult to describe these elements in a more or less complete manner. Typically, an element is in many dynamic and functional relationships with other elements, and its isolated consideration is inevitably far removed from reality. For example, in order to truly understand whether a manager is bad or good, it is necessary to know the subordinates he has to work with. In addition, it is necessary to know what the chiefs of the supervisor are like, what the extent of the

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

587

rights of the body under his management is, etc. The analysis captures all the new problems, demonstrating the insufficiency of the elemental approach. So, in this part of the chapter, we reviewed the multifactor evaluations of professor Kh. Popov and other Soviet scientists of the basic concepts of management: – – – –

management as a combination of aspects, management as a set of common and specific features, management as a set of functions, management as a set of elements.

The analysis showed the positive and negative aspects of all interpretations. In such situations, as has already been noted, there is an inherent desire and need for a theory that attempts to synthesize the positive elements of its predecessor and eliminates their weaknesses. Such a theory was the integrated, systemic concept of management, which is discussed in the next section. Comprehensive Characterization of the Management of Socialist Production Imagine that a new industrial ministry is being formed. These activities should also take into account the characteristics of management in a socialist society (e.g., democratic centralism), the managerial traits in communities (e.g. the requirements of the quorum), the cybernetic traits and others inherent in the management of socialist public proceedings. In the process of work the legal, social, and psychological aspects will have to be dealt with, the problems of individual management functions, the characteristics of industrial management. In other words, a solution to a specific management problem requires an integrated approach. V.G. Afanasyev in the treatise “Scientific Management of Society” (1968) wrote: “An integrated approach can take into account the totality of factors that affect the course of public processes, determine the place and value of each in the public system, highlight the major challenges, the resolution of which can successfully solve all the diversity of management tasks.” [51, 73]. Some specialists, while agreeing with the idea of an integrated approach to the management of a socialist society, tend to deny such an approach when it comes to the management of socialist production. G. Popov wrote: “In the meantime, the basic social relation in the management of Socialist production—“worker-director”—may contain an economic, ideological, and even a national dimension. Those who wanted to limit the management of production to the economy were trying to divide it as submarine compartments. These vigilant watchmen are capable of letting only production, as a last resort, economic relations, pass the plant’s checkpoint, and to take legal relationship on a tram the two blocks to the premises of the executive committee or trade union council. They have Human Resources operating with legal relationship, and the labor department with economic. Nothing is more vulgar than such a scheme” [21, 141–142]. The need for a comprehensive treatment of the management of social production under socialism has been consistently emphasized by one of the oldest Soviet theorists of management, professor Y. O. Lyubovich: “A systematic study of their

588

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

sociological and psychological aspects should be considered as a major focus of theoretical scientific work on the organization of production.” S.E. Kamenicer proceeded from the idea of an integral characteristic of management when he formulated the thesis that “Organizational, educational and economic management methods are used in business management practices” [53, 55]. “It should be borne in mind that in the management of production there is a great variety of relationships that cannot be studied on the basis of economic laws alone. This is, on the one hand, political, class relationship, on the other, the relationship with some employees belonging to the management apparatus and other workers in direct employment. These are the relationships between people, different by sex, age, intellect, etc.”, wrote Leningrad scientists A.A. Godunov and B.V. Smirnov [62, 75]. Thus, the integrated concept of management of public production brings to the fore specific phenomena of the management process. And it treats these phenomena as a unity, a complex of various sides, and different aspects. In some cases, economic relations are primarily behind management, in others—psychological relationships, etc. But more often, in specific management phenomena, there is a combination (based on the ultimate role of industrial relations) of some or other combinations of different aspects, or even a set of all of them. The need to approach socialist production as a complex social phenomenon was clearly demonstrated by the forward-looking plans—the GOELRO plan, the subsequent five-year plans. Planning for socialist production has always sought to implement an integrated approach to management and has been struggling with “technicism” and “economism” trends, has always been aimed at developing social problems related to improving the standard of living of the soviet people. Economic management practices should take into account all aspects—technical, organizational, economic, socio-political, psychological, and other. Management as a Unity of Common and Specific Features In the previous section, different groups of traits were described—general in the management of socialist production with other forms of management, both specific and unique to it. The characteristics of the management of socialist production should include the totality of the results obtained from the analysis of each group of characteristics. For example, in considering the motivation of the executive of a socialist enterprise, it is inevitable that we should identify the common motives behind any human activity, the motives of any management in the community, the motives of human activity in the area of production, then uncover specific motives of the individual in a socialist society, and then the motives of the workers in socialist production. But the sum of these motives is still insufficient. We need to examine how common and specific motivations, such as, for example, of an executive, interact, interrelate, are synthesized. Besides, management of socialist production also has such a trait, characteristic of any community management, as exclusion—alienation from the object of management, exclusion from the executant. Of course, this trait in a socialist society is

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

589

fundamentally different in social content from the alienation inherent in the management of other formations. Management in socialist production is not simply a mechanism for the use of objective laws. The law is also being used by the executant, for example, a worker. Management in socialist production too is activity aimed at organizing the process of using objective laws by the executants, that is, a kind of second floor, an add-in over the process of using laws. But it is important to note that all the signs inherent in the management of socialist production do not simply coexist with each other. They are intertwined in different ways, interact and influence. The synthesis of all these sections of control is not only the sum of the groups of traits described but also provides qualitatively new features. For example, if you analyze how the production management traits are intertwined with general management traits, you can identify a set of features that are sometimes defined as economic cybernetics, that is, general features of cybernetics in a particular area—production management. It is also possible to identify how in socialist production management the traits of management in a socialist society are intertwined with management traits in communities. The first group of synthetic indicators for the management of socialist production arises and can be identified in the analysis of the intersection of the characteristics inherent in particular groups of common traits, which different types of management have. The second group of synthetic features of the management of socialist production arises in the interaction of general and specific traits. The third group of indicators for the management of socialist production is only in cooperation with the specific features of the management of socialist production.The problem of synthesizing different features is very vivid in the analysis of the combination and interaction in the management of socialist production of economic-related characteristics and of the characteristics related to the fact that the main subject of management under socialism is the state. [21, 145–146]. This problem is presented in V.P. Shkredov’s work “Economics and Law”. Shkredov requires a differentiation in specific acts of management of what flows from their state nature and what has come from the needs of the economy [76]. An analysis of the interaction of these two groups of characteristics in the management of socialist production is one of the most important issues of management research. “The need to analyze the problems of synthesis, public and economic, in the management of the socialist economy, will become even more evident when we draw on the practice of the bourgeois state’s intervention in economic life. The bourgeois state had always played a certain economic role, at least as a protector of trade routes and private property. But the modern bourgeois state, in Popov’s opinion, in an attempt to somewhat lessen the objective need for the socialist communalization of the means of production, had long been intensely erasing the distinction between public management and business management, that is, the management of social, public and business management, and economic. The bourgeois state increasingly rejects the classical principle of free competition, replacing it with prescriptions of Keynesian sense. So, when the question arises whether, for example, the United States Government’s activities in the area of management

590

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

science, from our position, the issue is very simple: taking an approach from the point of view of the State, its activities, like other types of state activity, are clearly management. If approached from the point of view of the management object, the Government’s activities are management only in part of the institutions of science that are owned by the state, and for the rest of the areas of science this activity is typical intervention of the bourgeois state.” [21, 147–148]. Management as the Unity of all Functions In considering the functional approach to management, it has already been shown that the main difficulties in this approach are related to the lack of an integral characterization of the totality of the functions of management. Besides, it is difficult to reflect in the content of the functions the fact that the object of management is production, and not merely production, but socialist production. The solution to the first problem and the attempt to address the entire range of the functions of management necessarily involve the need to provide management with a special kind of function, which is designed to unify, coordinate, integrate all other functions into a single whole. The need for such a function had already been understood by H. Fayol. But Fayol’s integrative function is allocated to combine all of the production functions. He correctly considered management as such a function. However, while he felt that management itself needed a function that combines its sections (planning, accounting, etc.) in a whole, he did not provide that function. G. Popov, as we have already noted, introduces such an integrating function in management and calls it supervision. Supervision is designed to integrate a cohesive ensemble and planning, organization, and motivation. It is to overcome the imbalance between the individual functions of management. In practice, functions of supervision sometimes include private functions, such as monitoring or setting targets. But theoretically, the function of supervision is precisely the function of synthesis, integration. The supervision function is sort of the brain of the entire management or its central nervous system. Therefore, all other functions may be called private functions. Sometimes the leadership function is equated with a coordination function. Indeed, the guide includes the coordination of other functions, but it is broader, as it implies more than coordination and not only coordination but, above all, the integration of all special functions into a single whole. It should be noted that the integration issue also occurs when implementing individual management functions (for example, between elements of the planning function). But the supervision inside the planning or accounting function has a kind of a more general phenomenon of supervision in the system of all management functions. Thus, the integrated management approach, as the unity of all functions, had made it possible to highlight the new management function in management characterization—the supervision function. Another novelty detected in the integral approach is the management improvement function. The more complex a system of management functions, the more differentiated it is, the greater the need for management to continually improve both within each special function and especially

7.3 Gavriil Kh. Popov and the Development of Soviet Management Thought in the. . .

591

in the cross-functional section. The complexity of this task has led to an increasingly detaching function of management improvement, which is being allocated to a separate area. And finally, another consequence of the integral approach is the ability to construct a generic model of the classification of management functions. The existing classifications had not avoided contradictions. For example, in O.V. Kozlova’s and I. N. Kuznetsov’s textbook, several different classifications of the functions of management are given, but the list of functions for the selection of personnel is followed by supply, as if supply management lacks staff selection. Workflow management is also outlined as a separate management function along with planning, although it is clear that planning is not possible without workflow management. The main reason for the difficulties in creating these classifications is that attempts are made to build a single dimensional, linear classification (based on one sign). In fact, the division of labor in management and the allocation of functions is influenced by different causes, and different functions intersect with each other in different ways. It must be assumed that all classifications of functions are abstractions, and in real division of labor and its specialization, there are areas of work isolated due to the operation of several causes at the same time. Such an area in different classifications would therefore take on different places. For example, the supply planning function is based on two reasons for specialization—the division of management activities into phases based on time factor (planning, accounting, etc.) and separating the management of the production stages (actual production, supply, marketing, etc.). In general terms, these principles of classification of functions can be distinguished: – the main managerial, when functions are allocated in terms of the time factor, as stages of the management process. Here preliminary management (purpose, forecasting, planning), operational management (organization, coordination, ordinance, motivation), and control (accounting, analysis and adjustment) are distinguished; – productive, in accordance with which features that reflect the peculiarities of the object of management are highlighted. For example, functions of production stage management are highlighted (production, supply, finance, sales) or level management functions (site, shop, factory, etc.); – specific managerial, when, for instance, functions are highlighted, such as functions performed by different production subjects (State bodies, party bodies, social organizations), or functions of personnel management in the management system, wages, etc.; – technologically managerial, in accordance with which the functions of gathering information, analysis, decision making, etc. are identified. We have noted several basic principles of classification. Thus, the same volume of management activity is considered from different perspectives. The multiplicity of possible principles for classifying management functions reflects the multiplicity of factors influencing the management specialization processes. Prior to G. Popov

592

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

similar classifications had been offered by other Soviet scientists, for example, I. I. Sigov, V.I. Oligin-Nesterov, G. E. Slezinger. But they too did not escape contradictions because of the linearity of the approach, as opposed to G. Popov’s “multi— dimensional approach.” Each of the principles of division of labor in management is some sort of theoretical abstraction. In fact, there is no separate planning function or supply management function. The segregated management activity area is at the same time a result of several principles of division of labor. For example, the material and technical provision planning function at an enterprise is the result of the interaction of the three principles of division of labor in management. Firstly, vertical (enterprise), secondly, time (planning) and, thirdly, stage of production (supply). The renowned specialist in management, L. A. Allen criticized H. Fayol precisely because the latter’s functions, associated with management, are detached, isolated from the functions associated with the object of management. Allen emphasized that the stages of management observed by Fayol (foresight, organization, etc.) refer to each management function associated with the object (i.e., financial management, quality management, and sales management). If we try to reflect the idea of a multidimensional classification model of functions formally, the total number of functions will be the same as all items from each class. And the wording of the function might be as follows: “The function, which is that the ministry (administrative body) on the scale of an industry (the level of management) defines the goals (administrative function) in the area of capital investment (financial activity) for the improvement of the skills of businessmen (part of the internal environment of the organization).” Or “The function is that the ministry, on the scale of an industry, plans funds to upgrade the skills of businessmen.” In the model, these two functions will only be different in one feature. Thus, the integrated management approach, as the unity of all functions, provides a number of valuable insights: about the function of supervision, the model of management functions, and the management improvement function. Other consequences are possible. But it is generally clear that an integrated approach made it possible to move forward in the analysis of management issues much further than the analysis of individual functions or aspects of management enabled. Systemic Characteristic of the Management of Socialist Production In considering the elemental concept of management, it has already been noted that the characteristic of an element can be integrated, taking into account the interplay of its different aspects, a combination of common and specific features. In such a case, one issue remains unresolved: how should elements be linked to the system, how to constitute an overall picture of management from the characteristics of individual elements? To get this picture, it is necessary to describe the management system in static and the management system in dynamics. These two systems combine the various elements that characterize management. The management system comes before us as a system of managing bodies. Behind authorities stand the subjects of management—the state, public organizations, the party. The bodies themselves are

7.4 Developing of Management Issues in the USSR in the 1960–1980s

593

composed of two main elements—personnel and equipment (buildings, machinery, media, etc.). Management as a process may be represented as separate stages: development of management goals, choice of management methods, organization of plan development and its implementation, etc. But in order for this process to be successful, the issue of objectives, principles, methods, and functions of management needs to be addressed in a preliminary manner. It is, so to speak, a general description of the management mechanism. And, finally, it is useful to identify, from the management system functioning process, work that is aimed at improving the managing system itself to improve its functioning. It is a question of outlining the stage of rationalization of the management system itself, the stage of its improvement, its reorganization, and its development. In general, it can be said that the epicenters around which the issues of the management of socialist production are grouped are: theoretical provisions on the management mechanism; the management system in static; the management system in dynamics; improvement of the management system. The management aspects discussed above, the general and specific features of management, functions and elements of management are covered by the proposed grouping of sections. It is distinctive of the complex management concept to, firstly, assimilate everything valuable that had been given by previous research, secondly, that it enables moving forward in the analysis of problems in managing socialist production, more specifically, only the complex and systematic approach gives a basis for a more thorough analysis of management issues. This approach also had different positions of scientists. Thus, if G.H. Popov’s interpretation emphasized the real phenomenon of management, in the integrated approach of O. A. Deineko and D. M. Crook, emphasis is placed on management relations. While agreeing on the need for a comprehensive analysis of management relations, it is important to note that relationships are something that is behind specific management phenomena, that is, they are secondary to activities. They should be investigated, but the main problem is to explain and transform specific phenomena—bodies, personnel, processes, etc.

7.4

Developing of Management Issues in the USSR in the 1960–1980s

The sources of this paragraph of Chap. 7 were the original works of the authors mentioned (and indicated in the Reference List), proceedings of all-Union conferences on management, scientific articles, monographs and textbooks of representatives of the scientific school G.Kh. Popov (FE MSU) [7, 58, 77–82], as well as proceedings of the International conferences on the History of Management Thought and Business [9].

594

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

The First (1968) and the Second (1972) Union wide Scientific and technical conferences on the scientific organization of industry management issues made a major contribution to the development of organizational and managerial issues. In an extensive report by Y. Lyubovich presented at the first Conference, the problems of defining management, the subject of management science, its contents and main sections were analyzed from an integrated approach perspective. Participants of the Second conference unanimously agreed that a comprehensive management theory, that discovers and expresses its own laws that are not part of any existing science, should be prominent in examining production management processes. It is also significant that management itself was not confined to the framework of any aspect, but was defined as an integrated phenomenon, representing the unity of sociopolitical processes and organizational and technical factors. Such a definition should be seen as a certain outcome of the previous path pursued by the domestic economic management theory. The specificity of the integrated science of management is that it does not “detach” any aspects of management, but examines the patterns of organization and functioning of the management system as a whole, a pattern of complex, multidimensional management activities. Working with other sciences, it carries out its own integrated approach to the study of real management practices. In the 1960–1970s, the USSR witnessed an active formation of the integrated Science of socialist public production management, as a result of numerous studies carried out by various scientific groups, as well as of economic management reforms in the 1960s. With regard to reform, it should be noted that the economic reform of the 1960swas intended as an integrated exercise. Three main elements can be distinguished: 1. rebuilding the sectoral management structure on a new basis; 2. a sharp expansion of economic self-sufficiency and enterprise initiatives by activating market relations and a reducing the number of centrally approved indicators; 3. introduction of economic methods of management, particularly full economic calculation, increasing the economic interest of labor communities and individual workers in effective labor and increasing their accountability for the results. Ideologists of reform defended the advantages of economic management over administrative methods. “Administrative management,—wrote one of the reformers, professor Y. Kronrod,—often does not consider the controversy between the social and collective, collective and personal interests, obliges the enterprise, contrary to its interests, to engage in activities that are necessary for society, and the employee—to perform activity necessary for the enterprise, regardless of whether it is in his personal interest. In many cases, these tasks are either not performed at all, or their implementation has very little effect, since only administrative levers are applied instead of economic prompting. The economic methods of management are different. They are intended to make full use of the interests and incentives, to take into account and resolve conflicts of interest through the system of economic instruments such as price, profit, material rewards, etc.” [83].

7.4 Developing of Management Issues in the USSR in the 1960–1980s

595

Similar ideas were developed by V. Belkin and V.V. Ivanter, who pointed out that economic methods, unlike administrative instructions, create the possibility of so-called self-regulation (named “notorious” by opponents), improvement of the economy, correction of erroneous decisions. Consistent proponents of reform had called for a more full use of competitive market relations in economic management and had linked the latter to serious shortcomings, ignoring the validity of the law of value. From this perspective the works of G.S. Lisichkin [57], B.V. N.Y. Petrakov [84], and others, which justified the thesis that the law of value was an important regulator of public production under socialism, are indicative. Explaining the chronic imbalances in the national economy, G. Lisichkin pointed to two main reasons for their vitality. Firstly, the impossibility of timely transfusion of funds from one industry to another, from one enterprise to another, and secondly, the lack of an objective criterion, that would enable automatic opening of a valve here and there, to release surplus funds, directing them where they can be used more efficiently. The inability to automatically transfer the means of production from some industries, demand for the products of which had suddenly fallen, to others, where the gap between demand and supply had suddenly deepened, is costly, according to the author, to the national economy. The solution was seen in the need for an automatic regulator, which should be the law of value in the form of the price of production. That meant, according to G. Lisichkin, recognition of the greatest, maximum profit, as the most important criterion and indicator of efficiency of production, although under Socialism, the author cautiously qualified, the desire for a maximum rate of return is not as universal as in capitalism [57]. It is generally acknowledged that the reform of the 1960s noticeably revived the economic growth rate in the eighth five-year plan, but the effect of the events was very short-lived. Indeed, by the end of the 1960s, a fundamental departure from the main ideas of reform was evident. Its proponents had never been able to complement the market economy with change in the ownership of the means of production and the forms of centralized economic management. As O. Latsis rightly pointed out, the interests of enterprise were still largely ignored, despite the talk of “increased interest.” The bet, as before, had been not to reshape the interests of enterprises in a new way, but to make them more credible in spite of their interests. It was still believed that the only adequate voice of the general public interest was the national economic plan developed by the center, which enterprises, “without thinking,” were obligated to fulfill and, depending on the accomplishment of which their activities were evaluated and stimulated. There was absolutely no consumer in this management scheme, whose requests were on the sidelines of the reform mechanism. By excluding the consumer from management, the reform created favorable conditions for the atrophy of the principle of material interest of producers in the final result of labor. The conceptual imperfection of the reform eventually led to ideologists soon being compelled to clear the battlefield under the friendly pressure of successive representatives of the socialist doctrine, who would “not compromise Great principles.” In science, perceptions, genealogically related to the views of the scientists of

596

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

the 1930–1950s, prevailed, cautioning against the danger of weakening centralism and undermining socialism. Naturally, such rapidly progressing in the 1970s interpretations laid the foundation for the rapid restoration of the traditional administrative system of management. “It was through the management of the entire national economy,—wrote, for instance, D. Valovoy and G. Lapshina—that it is possible to best reconcile personal, collective and public interests and overcome the inantagonistic contradictions that exist between them.” [85, p. 87]. The reformatory views and intentions of “commoditors” were strongly criticized in the works of A.V. Bachurin, A. M. Yeremin, N.A. Moiseenko, M.V. Popov and many other authors. The essence of the scientific direction they had developed was that there is a need for a continuous build-up of a planned centralized beginning in the management of the economy. This was essentially a paradigm in the management science of the 1970s and the first half of the 1980s. While advocating the incompatibility of the market and socialism, proponents of this paradigm linked all the shortcomings of economic practices to the underdevelopment of “directly public relations,” with inadequately implemented centralism. The concept of production management, which focused on the advantage of industrial relations over managerial, in the sense that “managerial relations are part of production,” naturally prevailed. This was also facilitated by the fact that management theorists themselves could not defend their autonomy. As life had shown, it is precisely those studies that persevered, not only in the management of actual activity but also in the management relations that had risen in relation to this activity. Proponents of the “relationship” study were well aware that management relations are much more difficult to study than activities, primarily because of their practical immeasurable nature. In fact, there are still no satisfactory scientific results in carrying out real experiments to measure changes in management relations at any level of management and/or the object of management. On this premise, the concepts of motivation, organizational conduct, organizational culture, organizational development, many practical recommendations for conflict resolution, leadership behavior, change management and others are built (rather unsustainable in terms of validity and verification). However, this is a progressive direction, as evidenced by the results of research on narrower elemental and problem-related topics—motivation (process theory), leadership (situational models), structures (external environment) and others. A further attempt to develop management’s interpretation was taken by the staff of the Scientific Center for Management Issues of the Faculty of Economics at MSU, headed by professor G. Popov, and as a result, a comprehensive description of production management was proposed, the essence of which was the following main provisions and conclusions: – management should be seen as a unity of all aspects: economic, social, organizational, etc.; in doing so, there will be new traits that are inherent in this unity, as a whole; – management should be seen as a unity of common and specific features, which would reveal new synthetic signs of management;

7.4 Developing of Management Issues in the USSR in the 1960–1980s

597

– management should be seen as a system of all functions and elements in the interaction, allowing it to be disclosed both as a system and as a process. A means of addressing the scientific challenges that had been identified were, firstly, a system of knowledge of creative activities, such as the management of social facilities; and secondly, the system of knowledge of production management—the methodological framework, specific science of the elements of management, the theory and art of supervision. As a result, the main result of this approach was one of the first full formulations of the subject and method of the science (theory) of management. As noted in clause 7.3, the subject of the science of management, was considered to be the patterns of public production management as a holistic, integrated and specific social phenomenon and process, that is, as a real practical activity and managerial relations arising between the participants in this activity [77]. The difficulties in developing management science ensued, first and foremost from the uniqueness of the subject of study—it is not material goods, that are relatively easy to measure, but rather managerial relations and creative generalizations, ideas, concepts, information that takes the most common form of management decisions, that are observed. The final results of public production do not coincide with the time and space at which these decisions are made. In this way, many difficulties have been created in the measurement and effective evaluation of the performance of managerial bodies. The specificity of the subject also required specific methods of study. Along with the logic-historical method of research that contributes to the development of the leadership theory itself, a method of analyzing specific cases, as a tool for the study of the art of management and creative aspects of management, as well as methods of simulation and game modeling (including business games both as research methods and as teaching methods [86]).was also proposed. And in conclusion, scientists and teachers of the Center for Management Problems of the Faculty of Economics of Moscow State University (including the Department of Management) in the late 1970s—early 1980s proposed the content of the Management Theory (MT) as a system consisting of two parts, and the idea of Management as a System. The reasoning of the “two terms” of the MT was as follows: “Due to the presence of two types of patterns in management: patterns-principles and patterns-specific recommendations, within the framework of management theory, within the framework of a general subject and method, two independent parts are distinguished. The first is called the Guidance Theory. She studies and reveals the principles of management: systemic and local. The second is called the Theory of Management Art, or, in short, the Art of Management. She uses a sample approach (method), she makes recommendations for specific situations . . . Guidance theory includes the following four sections: management mechanism, management structure, management process, and management improvement. Their content is determined by the object management . . .

598

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Table 7.2 Management of the organization as a System (MS) Management mechanism General principles of management Management functions Management objectives

Management structure General structure of management

Management Process (Characteristics) Content characteristics,

Management bodies Management personnel

Organizational characteristics, Technological characteristics

Management methods

Technical means of management

Management improvement Economics of management

Efficiency of rationalization Research of management problems and development of proposals Training of economic personnel Rationalization of management

Compiled by the author based on the materials of works [77, Second edir., pp. 14–17, 27, 189]

The Theory of management art as a part of management theory is based on an sample” [100, second edition, p. 27]. The elementary representation of the “Guidance theory” and the characteristics of the elements of this Theory were also reflected in the presentation “Management as a System” (see Table 7.2). In general, these provisions were more of a plan for the development of management science than real scientific discoveries in this area. Obviously, the theory of management could not be created without the participation of real executives in its creation, and in those years there was no “mechanism to bind executives and scientists together. As main forms of contact between scientists and managers, two were suggested rationalizations or experiments in management (including management consulting) and executive training. Both forms had become actively embedded in management practices. Management skills had been established, faculties of “production organizers” had been set up in various universities in the country, industry Institutes of Professional Development (IPD) had been established, etc. At the same time training and sectoral institutions started to carry out large-scale economic contracts (consulting projects) with the country’s enterprises on management improvement issues, using throughout their research domestic and foreign achievements in management science and management advice, while at the same time contributing to the further development of management science. In the 1970–80s, many creative scientific groups were created that chose the development of the science of management of public production as the subject of their scientific interests—these are the Center and laboratories of management issues at the Faculty of Economics, Lomonosov Moscow State University, S. Ordzhonikidze Moscow Institute of Engineering and Economics Institute, G.W. Plekhanov Moscow Institute of National Economy, N.A. Voznesensky Leningrad Financial and Economic Institute, academic and sectoral research institutes and others. These laboratories had begun extensive, multidimensional work to collect

7.4 Developing of Management Issues in the USSR in the 1960–1980s

599

and systematize accumulated results in the world science of management, to build up information provision of management specialists, to develop and implement research plans in management, to introduce management consulting into the implementation of economic contracts. There had been a reprinting and publication of domestic and translated foreign literature on management theory and practice, and a managerial column appeared at many economic, legal, sociological and other periodic publications, the VINITI monthly abstract collection “Management organization” began to be published, special compilations in the AS USSR series “The Results of science” (with the same name “Management organization”), became a very popular “ECO” magazine, etc. It was during these years that the works of M. Kerzhencev and A.K. Gastev were reprinted; the monograph, “Scientific Organization of Labor and Management” (1966) [32], was issued; famous works of V.I.Tereshchenko “Organization and Management” (1965) [67] and “Course for Senior Management Staff” (1970) [87] were translated from English; the works of S.E. Kamenicer “Basics of Industrial Production Management” [55], L.N. Kachalina “Scientific organization of managerial work—organizational design” [88], the works of R.A. Belousov [89], D.M. Gvishiani “Organization and Management” [72], D.M. Berkovich [90], A.G. Aganbegyan [91]; collective monographs and textbooks “Methods of managing socialist production (edited by G.Kh. Popov)” [92], “Management bodies of socialist social production (edited by G.Kh. Popov)” [93], “Functions and structure of governing bodies, their improvement (edited by G.Kh. Popov)” [79], “Personnel of management of socialist social production (edited by G.. Kh. Popov)” [94], “Management of socialist production: Issues of Theory and Practice” [95], “The scientific basis for the management of Socialist production” (edited by D.M. Kruk) [96], “Theory of the management of Socialist production” (edited by O.V. Kozlova) [97], “Organizing of Public Production Management” (edited by G.Kh. Popov, G.A. Javadov, first edition in 1979; edited by G.Kh. Popov and Yu.I. Krasnopoyas second edition in 1984) [77] and many others were published. Essentially, in the mentioned works, especially in the monographs and textbooks of the Department of Management of the EF of Moscow State University [21, 58, 77–81, 92–94], all elements the above-mentioned representations of the Theory of Social Production Management and Management as a System were disclosed in detail: • • • •

principles, functions, objectives, and methods of management; organizational structures, managers, bodies and techniques of management; management process; management improvement.

And it’s quite natural that in the period under review, research results began to appear at the Department of Management of the EF of the MSU on the systematization of the knowledge and experience gained by mankind in managing various kinds of social objects, more precisely, work on historical and managerial topics in the form of defense of candidate and doctoral dissertations, publication of articles and monographs.

600

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Among them are the definitions of new scientific directions introduced by the author of this textbook—the History of Management and the History of Management Thought [81], the publication in 1987 of the author’s textbook History of Managerial Thought [7], and the defense in 1988 of the first two doctoral dissertations in our country: on History management9 and the History of managerial thought [82]. These publications served as the most important argument for introducing the two mentioned historical and managerial areas of research into the list of scientific areas in the specialty VAK-08.00.05 “Economics and National Economy Management,” Research Area “10. Management,”10 and the discipline “History of Managerial Thought” is among the compulsory disciplines of study in the direction of Management in economic universities of the USSR, and then post-Soviet Russia. And since 1996, regular international conferences on the History of Management Thought and Business have begun at Moscow State University [9], which will be discussed in more detail in sect. 7.5. And again, we repeat that originality and fundamental difference between our proposed classification and the former known is, as we wrote, the presence in the third block of two historical and managerial sections, which we consider the foundations of the science of management. For the first time such an idea of the scientific foundations of management, along with the definitions of the History of Management and the History of Management Thought, as sciences, was published in the abstract of our doctoral dissertation in 1987 [82, p. 13]. Along with scientific and publishing activity in the 1980s, the number of activities of a scientific and organizational nature increased noticeably. During these years, the USSR held regular international and union-wide, republican, inter-sectoral and sectoral conferences, symposia, seminars and other forums, which gathered renowned scientists and management specialists, business practitioners, educators and young professionals from all over the world at their meetings. The most important events were the Union-wide conferences on the theme “Issues of the scientific organization of the socialist Industry,” which concluded with the publication of recommendations to central managing bodies on critical areas of improvement in the management of the national economy in general and its individual industries, based on the integrated and systematic approach to management mentioned above. Together with the development of common management issues, a number of scientists continued to examine functional, elemental and aspect management issues, which were greatly facilitated by previous studies. In other words, the inventory and the creative work had not been conducted in vain, and one of its results had been the development of individual management issues. Among them, we believe that the Vikhansky O.S. on the topic “The content and logic of development of public production management systems” (1988). 10 Directions: 10.24. History of management thought. The emergence and development of views on management within individual scientific schools. 10.25. Historical development of management systems. 9

7.4 Developing of Management Issues in the USSR in the 1960–1980s

601

most interesting for the history of thought were the developments of those years in the areas of management, management functions and structures, management personnel, SOML, management processes and improved management. Of course, the most pressing debates were among specialist-scientists on the rationale for economic methods of management. The methodological basis, and at the same time the subject of discussion, was the interpretation of objective economic laws that are the basis of economic methods. And since the latter were the subject of political economy, the divergence or similarity of the views of the managers coincided depending on their school of political economics, their interpretation of production, in general, and economic, in particular, relations on management of socialist production, the treatment of cost instruments—price, credit, financing, etc. Most stable and reasoned was the view expressed in the work of MSU scientistmanagers, representatives of the Center for Management Problems, Faculty of Economics, Moscow State University who used the results of the colleagues of “neighboring” departments in their development and, above all, the development of the scientific departments of political economy and industrial economics of the FE MSU. In the works of the “managers,” for example, in the monograph on “Methods of management of socialist production,” the structure of industrial relations was seen as the unity of three groups of relations—firstly, directly social, orderly relationships, secondly, commercially equivalent-paid relations and, thirdly, indirect commodity relations. This framework enabled moving from the disclosure of three types of relations to the interpretation and concretization of appropriate the three groups of economic methods—methods of sustainable management, the planned-cost methods and the methods of indirect influence, respectively [92]. The most important overall economic characteristic of each of the three sets of methods was economic calculation, based on the conscious use of the entire system of economic laws, the anticipation of the economic impact of management decisions, the material interest and the liability of managers for the consequences of the decisions made. Economic calculation was disclosed in two forms—in the form of direct economic calculation based on the mentioned first group of relations and economic calculation based on two other groups of relationships. At the same time, there was a steady trend in society towards the strengthening and expansion of selfsustaining relations. The practical use of economic methods was, in turn, offered in various kinds of indicators of qualitative economic performance—efficiency in the management of production at different levels of the national economy. Among the indicators were directive, calculative and internal (own); natural and monetary; equivalent and non-equivalent and other indicators and instruments. The figures were disclosed in their content and varied according to the levels of management. Mention should also be made of the concept of management improvement and development that had evolved over the years, stationed on the so-called Triune approach—scientific research in the field of management; rationalization (experiments) of all elements of the management system; preparation of new management staff to work in a changing and modified environment. This approach has proven to

602

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

be quite modern and relevant even today, especially as it relates to the conduct of personnel work. The results of the research were reflected in party and government documents, which in turn served as a springboard for the further development of scientific thought. Thus, among the “Main areas of the development of the national economy for the 1976–1980” were the following: improved planning, management and economic incentives, and the organizational structure of management. And at the April (1985) Plenary of the Central Committee of the Communist Party of the Soviet Union, it was pointed out that it was necessary to adapt the forms of economic activity to the current conditions and needs and that more specific areas of improvement and restructuring of the management system were envisaged. These directions provided the Soviet science of management with the regular tasks of its organization in the direction of interdisciplinary research on relevant issues, the mobility of scientific personnel, the flexibility of the structures of scientific institutions and development. The most recent example of social participation in the development of science illustrates the third level of the subject area in HMT, as discussed in the first chapter of this textbook. Since the early 1980s, in management theory, there had been a gradual accumulation of understanding of the need for a new, steep dismantling of the existing administrative command system. In the works of the economists of that are, the theoretical basis for the reform had essentially been based on the need for radical shifts in relation to centralized management and economic freedom of production links, in the establishment of a new measure of a combination of plans and marketbased methods, anticipating a significant increase in the autonomy of the core link in the economy and a sharp increase in the level of its responsibility for the final results of production activities. In other words, these works formulated the famous concept of “fundamental restructuring” of the economic management system. However, the new system was intended within the existing regime, to which it had to give greater stability and dynamism, consolidate its foundations, strengthen its order and organized nature. But all the efforts on “fundamental restructuring” of management, which preserved the central plan, with merely an intention to give it a “new look,” and the state form of ownership remaining almost the same, and most of the other fundamental social values did not recover the nation’s economy. It became clear that the reform of the existing system is doomed to fail. And then, in 1986–1989, the question was raised in literature: is it basically possible to have a new system of management within the existing model of socialism, the internal logic of which inevitably leads to an impasse in society? During this period, the country was absorbed by publications by L. Abalkin, P. Bunich, G. Popov, N. Shmelev, and many others, who had openly and keenly raised the above-mentioned question. The great majority of publications had not yet questioned the soundness of the socialist idea, but had already referred to the crisis of its existing option, the incompatibility of the market system and the plan, the need for a historic reincarnation of the socialist idea in the first place. The events of 1991 brought clarity to the confrontational situation and, in fact, marked the end

7.5 Development of Views on Management in Russia since 1990

603

of the socialist stage of development and, at the same time, the end of another stage of the evolution of management thought. In short, it can be argued that the development of views on the management of socialist production, which had been taking place in all previous years, served as a basis for the revolutionary restructuring of both political and economic management system of our country in the early 1990s.

7.5

Development of Views on Management in Russia since 1990

Perestroika in the early 1990s led to the destruction of the decades-old system of centralized management, experimenting with various forms of “democratic” management. Thus, cost accounting in the form of a lease was replaced by a cooperative form of management. The system of joint ventures had flourished, served as a kind of bridge between the Soviet system of centralized management and state-of-the-art foreign decentralized systems. The various forms of ownership developed had evolved into a variety of forms and methods of management. Issues of management functions, structures and processes remain relevant, as they have been many years ago, but now in terms of the restructuring of organizational management in the light of the transition to a market economy; staffing issues and among them issues of motivation and incentives, training and, most of all, rapid retraining of staff to work in an entirely new environment. New management paradigms—strategic management and scenario approach in management; organizational culture and institutional development; restructuring and reengineering, benchmarking and change management, learning organizations and situational leadership—are becoming more and more relevant in the research of management. In 1990 and later years as a result of numerous studies by representatives of the Department of Management of the Organization of the Faculty of Economics of Lomonosov Moscow State University and their Russian and foreign colleagues, various forms of presentation of research results (in the form of publication of articles, monographs, textbooks, organization of discussions, seminars, conferences, etc.), approbation of ideas in consulting projects of the author of the textbook, his students and colleagues in the department (see [52, 70, 86, 98–105]), naturally, there have been changes in the views of Russian researchers on Management of an Organization. First of all, we note that the results of historical and managerial research that began at Moscow State University in the late 1980s and accumulated since the 1990s. publications on the History of Management and the History of Management, became the reason that the scientific foundations of management were revised, to which the historiography of historical and managerial research was added, the subject area and examples of which were discussed in sections 1.4. and 1.5. of the

604

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

Table 7.3 Classification of the Scientific basis of Management of an Organization 1. Fundamental (methodological) science Philosophy Economic theory History Geography Axiology Praxeology Teleology Theology Sociology Psychology Political science Demography, Social psychology And others.

2. Applied Sciences Planning Statistics Finance Accounting Law Management psychology Management sociology Operation research Cybernetics Informatics, And others.

3. General Theoretical and Historical Managerial sciences 3.1. Science of Management of an Organization 3.1.1. Guidance theory 3.1.2. Theory of management art 3.2. History of management 3.3. History of management thought 3.4. Historiography of historical and managerial research

Сompiled by the author of the textbook

textbook. In this regard, Table 1.2, given in sect. 1.4. of the textbook, was supplemented by the Historiography (see Table 7.3). The originality and fundamental difference of the classification proposed by us from the previously known ones is the reasonable appearance of the presence in the third block of Table 7.3. three historical and managerial sections, which we consider the foundations of the Science of Management and which were discussed in Chap. 1. One of the significant changes in the views of Russian scientists on governance in post-reform Russia of the twentieth century is the renewal and expansion of the concept of “Management as a System” (or “Management System”), which was discussed in detail in paragraphs. 7.3. and 7.4. and which is presented above in the form of Table 7.2. The first modified model of the Management System was proposed in 1995 by Oleg S. Vikhansky and Alexander I. Naumov, employees of the Department of Management of the Faculty of Economics, Moscow State University, who in their textbook “Management” proposed to consider Management as a developing system consisting of three subsystems with a corresponding set of elements (Table 7.4): 1. Structural and functional subsystem. 2. Informational and behavioral subsystem. 3. Subsystem of self-development of the system (see Table 7.4). As the authors write: “The first subsystem is what was previously considered to be the actual Management System. This is the set of management bodies, divisions and performers performing the functions assigned to them and solving the tasks assigned to them, as well as the set of methods by which managerial influence is carried out” [106, p. 22].

7.5 Development of Views on Management in Russia since 1990

605

Table 7.4 Management as a developing system 1. Structural and functional subsystem 1.1.The set of management bodies and divisions 1.2. The set of performers 1.3 the set of management methods

2. Information and behavioral subsystem 2.1. Management ideology and value orientation of the management system 2.2 interests and behavioral standards of participants in the process of management activities 2.3.Information and information support of communications in the control system

3. Subsystem of selfdevelopment 3.1 orientation of the system to continuous self-improvement and development 3.2. Development of the management system

Source: Vikhansky O.S., Naumov A.I [106, pp. 22–26]

It seems that in disclosing the contents of the first subsystem, the authors had in mind only the idea of Management in statics or only the Mechanism and Structure of Management blocks, reflected in Table 7.2. The second subsystem in Table 7.4. let’s draw the attention of the readers of the textbook to point 2.1. “Management ideology and value orientation,” which the authors defined as follows: “The ideology of management, based on the values and principles shared by the top management of the company, denotes a special area of strategic choice as a situational factor influencing the design process of the organization (along with the area related to the type consumer, and the area of sales markets and territorial location of production)” [106]. The term “ideology of management” is found in the works of other Russian authors. So Yuri D. Krasovsky uses the term ideology of management to denote a kind of integral conceptual view of the construction and organization of management [104]. Victor M. Shepel defines the “ideology of management” as “a clear and transparent system of ideas, concepts, judgments about the meaning of management activity, about the principles, forms and methods of its civilized implementation, without any significant contradictions.” [105, pp. 7–8]. It is the ideology of management, more precisely “the meaning and ideology of management,” that was the next significant update of the representation of Management as a System, which took place in 2000 in three directions. First, in 2000, we completed a study, as a result of which the importance of the “meaning” and “ideology” of management, as superstructure elements of the system, essentially as elements of the metasystem of management, was proved [99]. The logic of reasoning and substantiation of the superstructural nature of the “sense and ideology of management” is as follows. The beginning of any governing influence on an organization is the formation of some image or idea of this organization and how to manage it. This image, endowed with a certain meaning and destination (or mission of the organization), is formed initially in the mind of the leader on the basis of his own picture of the world. It is these “beginnings” that were

606

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

indicated in the definition of the term “Management” given in clause 1.2. First Chapter of the textbook. At this stage, the leader creates some ideal reality in order to translate this ideal into reality in the course of his managerial activity. The primary structural element of the translation of ideal reality into organizational reality is the idea, as the most accessible form of transferring the meaning and destination of the organization for use and perception. Management ideology is a system of management ideas, interdependent in terms of content and forms of manifestation, characterized by a single content and functional orientation at a certain point. Management ideology is universal, it consists of a limited number of elements (ideas) and reflects the content aspect of ideology in the organization. It should be noted that managerial ideology is the first or basic level of implementation of ideas in an organization, generating subsequent levels of the hierarchy of ideologies, in which each subsequent type (level) of ideology includes all the previous types: – organizational ideology, as various forms of presentation of ideas in the organizational environment (verbal formulations, texts, sounds, colors, stereotypes, rituals, etc.). If the management ideology is universal, then the organizational ideology is unique. It exists only in a particular organization, it can include a different number of elements and reflects the formal-representative aspect of the ideology in the organization. – the ideology of the organization (firm, company, etc.), as a system of managerial and organizational ideologies in unity with the ideological structure of the organization (personnel, relations between people, technical means, objectives, functions, principles, methods of management); – the ideological system of the organization (firm, company, etc.), as the ideology of the organization in the process. Three stages of this process: origin of ideas, presentation of ideas (implementation, actualization, and implementation of ideas in the organization), feedback. The end of this hierarchical representation of the structure of types of ideologies in the organization is the Ideology of Management, as a meaningful and functional unity of the ideological system of the organization with all possible external conditions (macro- and micro-environment), directly affecting the formation and maintenance of this system in the organization [107, p. 85–95]. As a consequence of the obtained results of the revised research carried out, firstly, the element “Meaning and Ideology of Management” was added to the schematic representation “Management as a System” (MS). Secondly, each element of the MS is now “accompanied” by a key meaningful question to which this element answers (which is displayed in the schematic representation of the system). Finally, the system elements were restructured based on their rating. This primarily applies to the Management Personnel element, the importance of which was discussed in Chap. 1. It is especially important, in our opinion, in Development of Management, as a synonym for “change,” to start with the constant Development of

7.5 Development of Views on Management in Russia since 1990

607

Table 7.5 Management of the organization as a system (MS) General characteristics of the Management System or Management mechanism 1. Meaning and ideology of management (what is the idea and meaning of M?) 2. Management objectives (what to manage for?) 3. Management functions (what to do?) 4. Management methods (by means of what?) 5.Principles of management (manage based on what?)

MS in statics

MS in dynamics

Management structure 1.Management personnel (who manages?)

Management Process (MP) (Characteristics) 1. Process content (what is done in the process?)

Development of management 1. Developmentmanagement personnel

2.Organisational structures (how to allocate personnel and resources?) 3. Management bodies (“who” manages?) 4.Management technique (by means of what?)

2. Process organization (who carries out the process?) 3. Process technology (how is the MP implemented?)

2.Formulation of development scenarios And management strategies 3.Economics and efficiency of strategic changes in the organization 4. Effectiveness of changes in the organization

5. Implementing the change

Сompiled by the author of the textbook

Managers, thereby forming a unique potential for the organization, and then to carry out the next steps of Development—to form possible scenarios of development and strategies for achieving Management objectives; evaluate their effectiveness and efficiency; carry out the actual change and continuously monitor its implementation. As a result, the scheme of the “Management as a system” model, previously presented in the form of Table 7.2, was modified by us (see Table 7.5.). All previous considerations about Management as a System and the uniqueness of a specific historical period (that is, situationality) once again confirm our hypothesis about the idiographic nature of management science. This stage in the development of managerial thought can be called a system-situational approach to management, which was used in the 1970s. G. Kunz and S. O'Donnell, but only at the level of analysis of management functions. 11

11 See H.Koontz, C.O’Donnell. Management: A System and Contingency Analysis of Managerial Functons. McGraw-Hill Book Company, 1976.

608

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

To illustrate the results achieved in the development of the topic “Management as a System,” we will provide examples of detailed representation and characteristics of some of the listed elements of this system—Meaning and Ideology of Management, Management Objectives, Management Functions, Management methods, Management Principles and Management Personnel (as “Management as a System” subsystems). The Meaning and Ideology of Management of Organization (MIMO) as a multilevel hierarchical system were presented above. Organization Management Objectives (OMO). Each organization, by definition, has an objective (OrO), as the desired state of the organization. Usually, the OrO is one or two (for example, the purpose of Lomonosov MSU is “To enter the top five universities in the world”). Unlike the objectives of the organization, OMO are the desired states of the functionals of the organization12 that ensure the achievement of OrO, and/or the process of achieving OrO by various means and/or actions. For the organization, it is the purpose of managing its elements (i.e., people), functionals and intra-organizational processes taking into account aspects—political, legal, economic, social, demographic, environmental, etc. OMO perform three key roles: 1. Organizing (in the functional sense), 2. Motivating, 3. Controlling Plenty of GOM are classified: 1. By Life Levels 1.1. Objectives of operational functioning 1.2. Improvement goals 1.3. Development goals 2. By criteria—in relation to the main indicators of the organization’s activity. 3. By Time 3.1. Long-term (3 years or more) 3.2. Short-term (1 year to 3 years) 3.3. Current (1 month to 1 year) 3.4. Operating (up to 1 month) 4. On aspects: 4.1. Economic 4.2 Social 4.3 Scientific and technical 4.4 Production 4.5 Commercial

12

That list of 42 functionals of an Organization is shown in Table 1. Chap. 1 of the textbook.

7.5 Development of Views on Management in Russia since 1990

609

4.6 International 4.7 Military, etc. Management functions (10 subject management functions that constantly give rise to the management cycle of the organization): 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Goal setting Forecasting Planning Organizing Motivation Coordinating Give orders Accounting Analysis Control (essentially the cycle is closed because there is a need for a new “Goal setting” or to confirm the maintenance of the original Goal)

Management Methods There are 3 sets of methods at the level of the Organization as a whole: 1. By content 2. By direction—“Subject¼ > Object” 3. By organizational form Elements and Characteristics of Management Methods: I. By content: 1. 2. 3. 4.

Economic Organizational and administrative Socio-psychological Legal, etc. II. By direction: 2.1. By level of exposure 2.2. By subject of impact 2.3. By object of impact III. By organizational form: 3.1. Type of exposure 3.2. Nature of exposure 3.3. Method of exposure 3.4. Time Characteristics

Management Principles There are just two paired system management principles: 1. Centralization vs. Decentralization. 2. Territorial Approach vs. Industry Approach.

610

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

The result of systemic management (or impact on the management object) is the “optimal” combination of the fraction of the principle attribute under specific conditions. “Optimality” depends on the criterion for selecting an attribute (or “representative”) in each pair of principles for each particular organization in every specific historical moment. Management Personnel The staff of organizations (companies) is divided into three groups: Managers/ Specialists/ Production personnel. In turn, Managers of organizations are divided into three levels (links): higher (top), middle, lower level and two categories: linear and functional managers. Elements of the “management personnel” subsystem: 1. Content of Managers’ Works (Linear/Functional). 2. HR strategy. 3. Executive models. 4. Selection and placement of managers. 5. Number of management staff. 6. Number of managers by subsystems (functionals). 7. Specific weight of managers and performers (specialists and production staff). 8. The level of management staffing. 9. Personal and business qualities of managers (including the following competencies: knowledge, skills and know-how). 10. Selection and advanced training of managers. 11. Management personnel remuneration system. 12. Level of labor discipline, working conditions. 13. Compliance of managers with their positions. 14. Management personnel turnover. 15. Evaluation of executives. 16. Development of management personnel. 17. Succession of managers. In addition to the identified reasons for the emergence and development of views on the ideology of management [99], in research with his students in the 2000s. we were able to identify the reasons for the development of views in some subject and object areas of management, such as organizational culture [70], changes in organizations [52], family business management [100], team building [101], knowledge management [102], business ethics and management [103], strategies and scenario approach [98, 108], training of management personnel [86], the role of managers [73], digitalization of management [74]. At the beginning of the twenty-first century, management began to undergo a significant transformation in connection with the entry into a new technological order and the digital economy. The main reason for this transformation was a different reality and fundamental changes in the world, which has become global, complex and non-linear, super-fast and very unstable, diverse, transparent, uncertain, unpredictable (like the Black Swan), filled with various threats, including

7.5 Development of Views on Management in Russia since 1990

611

COVID-19. To use Gary Hamel’s words, “change has changed,” there has been a demand for “different”—new technologies, products and services, needs and consumers, new workers, organizations, business models, and so on. As a result, the management also became different, but at the same time it preserved the legacy of the management schools of the nineteenth and twentieth centuries as a “frame,” bringing in a lot of new things. Different researchers have differently named this new management—“genome M2.0” (G. Hamel), radical (St. Denning), agile (M3.0—J. Apello), irregular (E. Savelyonok, [99]). But the essence is about the same for everyone—old baggage—principles, methods, management technologies, etc.—either they are insufficient and work poorly in new conditions, or they generally become irrelevant, and sometimes harmful, leading to new “diseases of organizations.” Dmitry V. Kuzin’s treatise “Other” management or Metaphysics of modern management [109] was devoted to the substantiation of management transformation, in which the author tried not only to substantiate this evolution and cite the points of view of many famous authors in the world but also hinted at a new management revolution, putting in the center of attention, in addition to traditional issues of studying management, also issues of meanings, values, culture, spirituality, etc. It also proposed a research conceptual model REVOLUTION, where each letter corresponds to concepts that are widely discussed in the modern scientific community: • • • • • • • • • •

Reality Efficiency Values Obligations Leadership Uncertainty Trust Irrationality Organizations Needs

These ideas were supplemented and developed by D. Kuzin in his later work [110], in which the author emphasized the need to form a new managerial thinking to overcome the conflict of paradigms. So, the problem field of the ideology of modern management, shifts in the field of understanding a person in the management system, in organizations and processes, in the context of digital transformation, in the existence of business in modern society were identified. Finally, we reiterate that a significant contribution to the development of views on management was made by the participants of international conferences on the History of Management Thought and Business at the Faculty of Economics of Lomonosov Moscow State University, which began in 1996 and in which Russian and foreign scientists, practicing managers, consultants, students, graduate students and teachers of management and related disciplines have always participated and are participating. Traditionally, three-day conferences on IUMB are held according to

612

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

the scenarios “yesterday, today, tomorrow” or “past, present, future,” and the subject of reports and discussion is management thought. Since then, 20 conferences have been held on the following topics: “Development of Management Concepts” (1996), “Enterprise Restructuring in Transitional Economy: Theory and Practice” (1998), “Government and Business” (2000), “Development of Personnel Management” (2001), “Problems of Measurement in the Management” (2002, 2003), “Scientific Managerial Concepts vs. Real Management” (2004, 2005), “The Russian Model of Management: Past, Present and Future” (2008), “National Models of Management” (2009), “Business Models: Yesterday, Today and Tomorrow” (2010), “Social Responsibility of Business and Management Ethics” (2011), “Business and Management Ethics: Comparative Analyses of National Models” (2012), “From Stratagems to Strategies, From Strategic Planning to Strategic Thinking and Enlightenment” (2013), “Problems of training managers: yesterday-today-tomorrow” (2014), “National Models of Training Managers” (2015), “Scenario-Based Management and Leaderships” (2016), “Scenario-Based Management: origins, problems, solutions” (2017), “Managerial work and the role of managers: past, present, future” (2018), “Management and the Roles of Managers: yesterday, today, tomorrow” (2019). As already mentioned, the proceedings of the HMT&B conferences have been published and are available for consultation [9]. Some results of conference participants in the development of management thought will be presented in Chap. 8. Test Questions 1. What is the content of the general organizational science of A. Bogdanov? 2. Give a brief description of the basic provisions of the school of SOL and management. 3. What was the content of the scientific School of IMT? 4. Describe the sociology of scientific organization of labor and N. A. Vitke’s School of management. 5. What are the ideas for improving the efficiency of the Organization and labor in the work of A. Gastev and his followers at CIL? 6. Describe the experience of organizational stations ‘work at Soviet enterprises. 7. Give a description of P. Kerzhencev’s organization principles. 8. What was common in the theories of the management of the work of Soviet authors and the Western schools of scientific management? What was the difference? 9. Expand the content of aspect, functional, elemental and complex management issues research. What do they have in common? What is the difference? 10. What is the content and the difference in the approaches of the scientific schools of G.H. Popov and O.V. Kozlova? 11. What are the main factors that caused the change in the views of Soviet authors on the management of social objects in the 1960–1980s? 12. Give the characteristics of the development of management thought in Russia in the 1990–2000s.

References

613

References 1. CHto chitat' po nauchnoj organizacii truda/I.N. YAnzhul, E.G.Liberman; [predisl. F.R. Dunaevskogo]—[Har’kov] : Proletarij, 1925.—224 s. //Okolo 700 nazvanij:. http:// books.e-heritage.ru/book/10071145 2. Lavrikov YUA, Korickij EB (1989) Razvitie teorii upravleniya socialisticheskim proizvodstvom. L. 3. U istokov NOT: Zabytye diskussii i nerealizovannye idei (sost. Korickij E.B.). L. (1990). 4. Korickij E, Nincieva G, Shetov V (1999) Nauchnyj menedzhment. Rossijskaya istoriya, SPb, Piter 5. Korickij EB (2005) Razvitie nauki o menedzhmente v Rossii v 1900–1950-e gg. Rossijskij zhurnal menedzhmenta. Tom 3, № 1, ss. 127–144. 6. Korickij EB, Lavrikov YUA, Omarov AM (1990) Sovetskaya upravlencheskaya mysl’ 20-h godov. Kratkij imennoj spravochnik. M, Ekonomika 7. Marshev VI (1987) Istoriya upravlencheskoj mysli. Uchebnoe posobie, M., MGIAI, 1987, 238s; Istoriya upravlencheskoj mysli. Uchebnik, M.: INFRA-M, 2005 g., 731 s. 8. Marshev VI (2019) Formation of management thought in Russia and early USSR from the 1800s to the 1920s: Heroes and their creations. Journal of Management History, V. 25, № 3, pp. 285–303. 9. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU ((pod nauchnoj red. V.I.Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www.econ.msu.ru/science/conferences/mciumb/ 10. Lenin VI (1962) Polnoe sobranie sochinenij v 55 tomah, 5-e izd. M.: Politliteratura. 11. Kerzhencev PM (1922) Principy organizacii. Petrograd, GosIzdat 12. Kerzhencev PM (1923) NOT. Nauchnaya organizaciya truda i zadachi partii. M.-Petrograd, GosIzdat. 13. Kerzhencev PM (1924) Bor’ba za vremya. M.: Krasnaya nov’. 14. Kerzhencev PM (1923) Pamyatka organizatora. M.: Krasnaya nov’. 15. Kerzhencev PM (1925) Organizuj samogo sebya. M.: Molodaya gvardiya, (ili Stepnye prostory, № 7). 16. Bogdanov AA (1922) Tektologiya. Vseobshchaya organizacionnaya nauka. Berlin —SanktPeterburg. 17. Bogdanov AA (1919-1921) Sbornik statej «Ocherki organizacionnoj nauki». ZHurnal «Proletarskaya kul’tura», № 7–20. 18. Trudy Pervoj Vserossijskoj iniciativnoj konferencii po nauchnoj organizacii truda i proizvodstva. 20–27 yanvarya 1921 g. V 6 vypuskah. M. (1921). 19. Buharin NI (1918) Mirovoe hozyajstvo i imperializm (2-e izdanie). Peterburg. 20. Buharin NI (1920) Ekonomika perekhodnogo perioda. 21. Popov GH (1974) Problemy teorii upravleniya. M. 22. Podgaeckij V (1925) CHto takoe nauchnaya organizaciya truda (NOT). Har’kov. 23. Zhdanov L (1922) Pyat’ osnovnyh principov upravleniya // Hozyajstvennyj raschet. K voprosam metodologii promyshlennoj raboty v sovremennyh usloviyah. Taganrog. 24. Vasil’ev MI (1924). O primenenii NOT//Predpriyatie. 1924. №1. 25. Dobrovol’skij A, Sokolov N. (1925) Osnovy issledovatel’sko-racionalizatorskogo metoda// NOT i hozyajstvo. №13-14. 26. Kujbyshev VV (1924) Zadachi CKK i RKI (lekcii, chitannye v universitete im. YA. M. Sverdlova v 1924 g.). M. 27. Byulleten’ Vtoroj Vsesoyuznoj konferencii po NOT 15 marta 1924 goda. M. (1924). 28. Gol’cman A (1925) Reorganizaciya cheloveka. L. 29. Gastev AK (1921) Nashi zadachi. ZH-l Organizaciya truda, M. 30. Gastev AK (1921) Kak nado rabotat. M. 31. Salomonovich ED (1924) Opyt fotoØgrafii rabochego dnya administratora. M.

614

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

32. Salomonovich ED (1924) CHto takoe nauchnaya organizaciya truda?//Podrobnyj konspekt lekcii s 40 diapozitivami//Kul'totd. VCSPS. - Moskva: B. izd. (tip. CIT). 33. Ermanskij OA (1918) Sistema Tejlora. CHto nesyot ona rabochemu klassu i vsemu chelovechestvu. S ukazatelem literatury na russkom i inostrannyh yazykah. Petrograd— Moskva. 34. Ermanskij OA (1922) Nauchnaya organizaciya truda i sistema Tejlora. M. 35. Ermanskij OA (1928) Teoriya i praktika racionalizacii. M. 36. Vitke NA (1925) Organizaciya truda i industrial'noe razvitie (Ocherk po sociologii nauchnoj organizacii truda i upravleniya). M. 37. Majz’el’s RS (1924) Struktura uchrezhdenij i organizaciya deloproizvodstva.- Moskva: Izd-vo VSNH, 189s. 38. Dunaevskij FR (1928) KompleksØnost’ v organizacii. Predposylki racional’noj organizacii. V sb: Trudy Vseukrainskogo instituta truda.. Vyp. 2. Har’kov, ss. 3–92. 39. Organizaciya proizvodstva v mashinostroenii. M. (1937). 40. Kamenicer SE (1950) Organizaciya i planirovanie socialisticheskogo promyshlennogo predpriyatiya. M. 41. Organizaciya i upravlenie (voprosy teorii i praktiki)//Pod red. A.I. Berga. M., Nauka, (1968). 42. Kozlova OV, Kuznecov IN (1970) Nauchnye osnovy upravleniya proizvodstvom. M. 43. Nauchnye osnovy gosudarstvennogo upravleniya v SSSR./Pod red. Luneva A.E., Piskotina M. I., YAmpol’skoj C.A.-M., Nauka, (1968). 44. Tihomirov YU. (1968) A. Vlast’ i upravlenie v socialisticheskom obshchestve. M.: YUridicheskaya literatura. 45. Piskotin MI (1966) Pravovye problemy nauki upravleniya. M. YUridicheskaya literatura. 46. YAmpol’skaya CA (1966) Nekotorye cherty metoda nauki upravleniya.- Pravovedenie, №3. 47. Petrakov N (1966). Nekotorye aspekty diskussii ob ekonomicheskih metodah hozyajstvovaniya. M. Ekonomika. 48. Alekseev SS (1966). Mehanizm pravovogo regulirovaniya v sotsialisticheskom gosudarstve. M.: YUridicheskaya literatura. 49. Kozlov YU (1966) M. Sootnoshenie gosudarstvennogo i obschestvennogo upravleniya v SSSR. M.: YUridicheskaya literatura. 50. Problemy nauchnoj organizacii upravleniya socialisticheskoj promyshlennost’yu. M., Ekonomika, (1968). 51. Afanas’ev VG (1968) Nauchnoe upravlenie obshchestvom. M. Politizdat. 52. Podvojskaya NG (2009) Razvitie vzglyadov na upravlenie izmeneniyami v organizacii. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU.’ 53. Fajol A (1924) Obshchee i promyshlennoe upravlenie. M.-L, Kniga 54. SHkredov VP (1972) O razgranichenii predmeta politicheskoj ekonomii i teorii upravleniya proizvodstvom.// V sb. «Organizaciya upravleniya». M., Ekonomika, g., ss. 58–63. 55. Kamenicer SE (1971) Osnovy upravleniya promyshlennym proizvodstvom. M., Mysl’. 56. Bryujn P. (1968) Podgotovka kadrov dlya upravleniya predpriyatiyami. M., Progress. 57. Lisichkin GS (1966) Plan i rynok. M.: Ekonomika, 96 s. 58. Tekhnika upravleniya (pod red. G.H.Popova). M., MGU, (1968). 59. Nauchnaya organizaciya upravlencheskogo truda. Pod red. Rzheznichka I.M. M., Progress, (1968). 60. Parygin BD (1967) Social’naya psihologiya kak nauka. L. Lenizdat. 61. Kibernetika, myshlenie, zhizn’./Pod red. A.I. Berga i dr. M.: Mysl’, (1964). 62. Rajvett P (1966) Akoff R. Mir, Issledovanie operacij. M 63. CHerkovec VN (1965) Planomernost’ socialisticheskogo proizvodstva. M. Ekonomika. 64. Novik IB (1963) Kibernetika, filosofskie i sociologicheskie problemy. M.: Gospolitizdat 65. Bokarev VA (1966) Ob”em i soderzhanie ponyatiya «upravlenie». – «Voprosy filosofii», №11. 66. Petrov AS (1966) Ekonomicheskie osnovy upravleniya proizvodstvom. M. Mysl’.

References

615

67. Tereshchenko VI (1965) Organizaciya i upravlenie. Opyt SSHA. M. 68. Kotarbinskij T (1963) Izbrannye proizvedeniya. M, Inostr. lit-ra. 69. Zelenevskij YA (1971) Organizaciya trudovyh kollektivov. Vvedenie v teoriyu organizacii i upravleniya. M, Progress 70. Bogatyrev MR (2004) Organizacionnaya kul’tura: sushchnost’ i rol’ v sisteme upravleniya. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V. I.). M.: EF MGU. 71. Dzhavadov GA (1970) Reforma i upravlenie promyshlennost’yu. M., Ekonomika. 72. Gvishiani DM (1972) Organizaciya i upravlenie. M., Nauka. 73. Marshev VI, Otaboev ZH. (2019) B. Razmyshleniya o rolyah menedzherov: proshloe i nastoyashchee. ZHurnal Upravlencheskie nauki, Tom 9, №2, ss. 94-106. 74. Kornyshev VA (2020). Cifrovizaciya upravleniya social’nymi ob"ektami: dualizm innovacionnogo i tradicionnogo menedzhmenta. Magisterskaya dissertaciya (nauchnyj rukovoditel’ professor Marshev V.I.), M.: EF MGU g. 75. Godunov AA Smirnov BV (1968) K. Marks i teoriya upravleniya proizvodstvom. - Vestnik Leningradskogo universiteta (ekonomika-filosofiya-pravo), №17. 76. SHkredov VP (1967) Ekonomika i pravo. M. Ekonomika. 77. Organizaciya upravlenie obshchestvennym proizvodstvom (1-e izdanie pod red G.H. Popova, G.A.Dzhavadova). M., MGU, 1979 g., (2-e izdanie pod redakciej G.H. Popova, YU.I. Krasnopoyasa), M., MGU, (1984). 78. Sovershenstvovanie sistemy vnutrifirmennogo upravleniya (pod red. G.H.Popova). M., MGU, (1972). 79. Funkcii i struktura organov upravleniya, ih sovershenstvovanie (pod red. G.H.Popova). M., MGU, (1973). 80. Organizaciya processov upravleniya (pod red. G.H.Popova). M., Ekonomika, (1975). 81. Marshev VI (1985) O metodologicheskih problemah nauki upravleniya obshchestvennym proizvodstvom. Izvestiya AN SSSR, Seriya ekonomicheskaya, № 5, ss. 3-16. 82. Marshev VI (1987) Razvitie vzglyadov na upravlenie hozyajstvom Rossii (1861-1900 gg.). Avtoreferat dissertacii na soiskanie uchenoj stepeni doktora ekonomicheskih nauk. Moskva, MGU imeni M.V.Lomonosova. 83. Kronrod YAA (1960) Den’gi v socialisticheskom obshchestve. Ocherki teorii. 2-e izd. M. 84. Petrakov NYA (1970) Upravlenie ekonomikoj i ekonomicheskie interesy. Novyj mir, №8. 85. Valovoj DV (1972) Lapshina G.E. Socializm i tovarnye otnosheniya. – M. 86. Marshev VI, Lukash EN (1991) Metody aktivnogo obucheniya upravleniyu. M.: Moskovskij universitet. 87. Tereshchenko VI (1970) Kurs dlya vysshego upravlencheskogo personala. M., Ekonomika. 88. Kachalina LN (1971) Nauchnaya organizaciya upravlencheskogo truda orgproektirovanie. M., Ekonomika. 89. Belousov RA (1971) Rost ekonomicheskogo potenciala. M., Ekonomika. 90. Berkovich DM (1973) Formirovanie nauki upravleniya proizvodstvom. M. 91. Aganbegyan AG (1978) Upravlenie socialisticheskim predpriyatiem. M. Ekonomika 92. Metody upravleniya socialisticheskim obshchestvennym proizvodstvom (pod red. G.H. Popova). M., Ekonomika, (1969). 93. Organy upravleniya socialisticheskim obshchestvennym proizvodstvom (pod red. G.H. Popova). M., Ekonomika, (1972). 94. Kadry upravleniya socialisticheskim obshchestvennym proizvodstvom (pod red. G.H. Popova). M., Ekonomika, (1974). 95. Upravlenie socialisticheskim proizvodstvom: Voprosy teorii i praktiki (pod red. V.G. Afanas’eva, D.M. Gvishiani, V.N. Lisicina, G.H.Popova). M., Ekonomika, (1974). 96. Kruk DM (1974) Razvitie teorii i praktiki upravleniya proizvodstvom v SSSR. M. 97. Teoriya upravleniya socialisticheskim proizvodstvom (pod red.O.V.Kozlovoj). M., Ekonomika, (1979).

616

7 Development of the Scientific Basis of Management in the USSR and in Russia in. . .

98. Marshev VI, Ajvazyan ZS (1996) O «strategii vyzhivaniya» rossijskih predpriyatij v perekhodnyj period. Dialog-MGU, Moskva 99. Savelyonok EA (2000) Ideologiya upravleniya v organizacii: struktura i process. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU. 100. Vasil’ev MV (2012) Razvitie vzglyadov na upravlenie semejnymi kompaniyami. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU. 101. Pasholok NA (2012) Ocenka upravlencheskih komand (kriticheskij analiz koncepcij i metodik). Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU. 102. Suslov DS (2013). Upravlenie znaniyami na raznyh etapah zhiznennogo cikla organizacii. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V. I.). M.: EF MGU. 103. Ivashchenko GG (2014). Razvitie vzglyadov na etiku biznesa v poreformennoj Rossii HKH veka. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU. 104. Krasovskij YU. (2007) D. Sociokul’turnye osnovy upravleniyabiznes-organizaciyami. M.: YUNITI-DANA.- 391.s.’ 105. SHepel' VM (2000) CHelovekoved’cheskaya uompetentnost' menedzhera. Upravlencheskaya antropo’logiya. M.: Dom pedagogiki 544 s. 106. Vihanskij OS, Naumov AI (1995) Menedzhment. Uchebnik. M.: Izd-vo Moskovskogo universiteta, 416 c. 107. Savelyonok EA (2015) Ideologiya upravleniya. M.: MAKS-Press, 128 s. 108. Arhipov IS, Marshev VI (2019) Razvitie vzglyadov na scenarnyj menedzhment. XX mezhdunarodnaya konferenciya po Istorii upravlencheskoj mysli i biznesa. «Menedzhment i roli menedzherov: vchera, segodnya, zavtra»: Materialy konferencii 28-30 iyunya 2019 g. / pod nauchnoj redakciej V.I. Marsheva. - Moskva, Ekonomicheskij fakul’tet MGU imeni M.V. Lomonosova, g., ss. 22-28. 109. Kuzin DV (2014) «Drugoj» menedzhment. Metafizika sovremennogo upravleniya. M.: Izd-vo Mezhdunarodnogo universiteta v Moskve, 311 s. 110. Kuzin DV (2020) Sovremennye koncepcii menedzhmenta: sdvig paradigm. M.: Knorus, 341 s.

Additional Literature Abalkin LI (1971) Ekonomicheskie zakony socializma. M., Nauka. Adamecki K (1972) O nauke organizacii. M. Bokarev VA (1966) Ob”yom i soderzhanie ponyatiya “upravlenie”. M. ZH-l “Voprosy filosofii”, № 11. Dejneko OA (1967) Nauka upravleniya v SSSR. M. Ekonomika. Dejneko OA (1970) Metodologicheskie problemy nauki upravleniya proizvodstvom. M., Nauka. Dobrovol’skij A, Sokolov N (1925) Metod issledovatel'sko-racionalizatorskoj raboty//NOT i’ hozyajstvo. № 8. Eremin AN (1971) Socialisticheskaya sobstvennost’ i upravlenie ekonomikoj. M, Znanie. Gastev AK (1966) Nauchnaya organizaciya truda i upravleniya. M. Kasickij IYA (1948) Organizaciya upravleniya socialisticheskoj promyshlennost’yu. M. VPSH. Kruk DM (1972) Upravlenie obshchestvennym proizvodstvom pri socializme. M., Ekonomika. Lepeshkin AI (1961) Kurs sovetskogo gosudarstvennogo prava. T. 1, M., YUrizdat.

References

617

Mil’ner BZ, Evenko LI, Rapoport VS (1983) Sistemnyj podhod k organizacii upravleniya. M. S. 54–61. Nauchnaya’ organizaciya truda dvadcatyh godov: Sbornik dokumentov i materialov. Kazan’, (1965). Nauchnye osnovy upravleniya socialisticheskim proizvodstvom (pod red. D.M.Kruka). M., Ekonomika, (1978). Oligin-Nesterov VI (1971) Ispol’zovanie ekonomicheskih zakonov socializma i upravlenie proizvodstvom. M., Mysl’. Osnovy upravleniya promyshlennym proizvodstvom. M., Mysl’, (1971). Rumyancev AF (1951) Organizaciya upravleniya promyshlennost’yu SSSR. M. VPSH. Rumyancev AM (1966) Ekonomicheskaya nauka i upravlenie narodnym hozyajstvom. //ZH-l “Kommunist”, №1, ss. 46-52. Sigov II (1970) Soderzhanie upravleniya proizvodstvom i zadachi ego sovershenstvovaniya v SSSR na sovremennom etape. L, LIEI. Slezinger GE (1967) Trud v upravlenii proizvodstvom. M, Ekonomika. Strel’bickij S (1923) Administrator: Etyud iz nauchnyh problem truda. Har’kov. Terekhov R (1928). Racionalizaciya promyshlennosti i upravleniya. Har’kov. Upravlenie socialisticheskoj ekonomikoj (pod red. V.A.Protopopova), M., Moskovskij rabochij, (1975). Vidmer RF (1980) Management Science in the USSR: The Role of "Americanizers". International Studies Quarterly 24(3):392–414 Vsemirnaya istoriya ekonomicheskoj mysli. V 6 tt. M, Mysl’, (1987–1997). YAkovlev MI (1921) Problema administrirovaniya hozyajstvennyh organov. M. YAmpol’skaya CA (1965) Redakcionnaya stat’ya k knige E.Staros’cyak “Elementy nauki upravleniya” M. Progress

Chapter 8

Actual Problems and Concepts of Management

Abstract In the previous chapters of the textbook, the material was mainly presented “in the language” of two different parameters (or coordinates): either a time period (with a quantum from 1 year to a millennium), or regions of the world. This chapter speaks in terms of “current managerial problems” that have an ancient history but still remain relevant in the countries of the world. Naturally, in the process of the problem statement, one had to refer to both time and regions, but already as parameters of secondary importance. The materials of this chapter reflect the development of management thought in solving topical management problems in areas such as Organizational Culture, Leadership, Management Ethics, and Digitalization of Management.

Instead of an Introduction The characteristics of the materials of the previous chapters of the textbook were mainly two different parameters (or coordinates): either a time period (with a quantum from 1 year to a millennium), or regions of the world. The exception was clause 1.6., which briefly outlines the concepts and models of management and their authors, representing simultaneously different historical periods and different regions. In the final chapter of the textbook, we use the third parameter—the relevance of management problems, more precisely, the development of views on the development of topical, in our opinion, problems of management of organization will be presented. That is why in this chapter we will refer to both the first and the second parameters. In other words, in the same paragraph authors of management ideas from different times and regions will be mentioned, and they will be united by views on the same topical management problem, and the presentation of materials in most paragraphs will end with the latest developments of the corresponding problem.1

1 In other words, the subject of the history of management thought (HMT) will be studied in two planes: synchronic (consideration of the established system of knowledge about management at a certain time) and diachronic (consideration of the system of knowledge about management in its dynamic aspect of formation).

© Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1_8

619

620

8 Actual Problems and Concepts of Management

We note right away that the selected problems have existed since ancient times and still remain relevant and unresolved, most likely because they are generated by two, at least, objective reasons—specific historical factors and the dynamic characteristics of the organization (or its life as an object). Problems remain unresolved in the sense that their solutions proposed by researchers are constantly changing, refined, and even refuted. Sometimes even voices are heard: “Management is dead!.” This is how Peter Drucker argued, Henry Mintzberg often puts it, and a rather “fresh” article by Gianpiero Petrilleri in the Harvard Business Review-Russia “Our Management is dying, but this is good” [1]. G. Petrilleri began his article with a rhetorical question: “Why don’t new management theories appear?.”2 Our answers to the question of G. Petrilleri sound like this: “Maybe that’s why new theories of management do not appear, because, by analogy with organizations, there are “life cycles of theories of managing organizations.”3 Problems (or questions) in the management of organizations at all times have arisen, arise and will arise the same, but the answers to them have always been, are and will be different!” There is nothing surprising in this, since, first, there are words and there is a sense of words, which allows you to quickly detect differences even in the interpretations of the subject term—“management,”4 and secondly, we are talking about applied science. More precisely, it is in this that the applied aspect of management science manifests itself, to some extent justifying its idiographic or lack of universality (law-like, absolutization, invariance, etc. attributes) of the statements of management researchers. A similar ideography is inherent in the History of Management Thought as a science, which we wrote about in Chap. 1 and is detailed in the article by Schmidt Vivien A. “History of Science and its Implications for Management and its History” [2]. At the same time, we have already noted in Chap. 1 a unique feature of management as an activity—the property of constant reproduction at all times of the life of human organizations, which favorably distinguishes management theorists from representatives of other social and natural sciences, even from astronomers who are many thousands of years old and who have the opportunity to observe and explore the stars of the solar (and now, another) galaxy. I just want to appeal to the theorists of management: “observe, analyze, systematize, identify patterns, create the science of management, etc.!” 2

https://hbr-russia.ru/biznes-i-obshchestvo/uroki-stoikosti-2020/834024, 6 July 2020, Gianpiero Petrilleri. 3 It is this sense of the subject of the HMT that we reflected in its definition in the First Chapter of the Textbook. 4 Most often, in response to the question “What do you understand by management?” the answer is: “Planning, coordination, control (and 2–3 more functions) of management.” This understanding of “management”, obviously, was largely automated, digitized and even robotized, etc. science has learned to “measure” the content and algorithms of these functions, the need for a human manager has disappeared, and therefore such “management” has died. We mean by management a different activity, namely the one that is described in detail in Chap. 7 as “systemic and complex activity”, and the corresponding science, which studies the hard-to-measure “management relations” arising in the process of carrying out these activities.

8.1 Organizational Culture: Measurement, Change, and Management

621

The sources of this chapter have provided a variety of materials including proceedings of international conferences of the HMT&B at the MSU [3], international annual AOM meetings, articles by HBR, AOM, MH, Russian Journal of Management, Management Sciences (Russia) and other journals, monographs, and articles of the authors listed in the Reference List. Among them are the following works: “Classics of Management. Encyclopedia” (2001) [4], Duncan W. D. “Founding Ideas in Management” (1996) [5], Joseph and Jimmie Boyett “Guide to the Realm of Wisdom: The Best Ideas of the Masters of Management” (2001) [6], Vivien A Schmidt. “History of Science and its Implications for Management and its History” (2016) [2], Nassim Taleb “The pathology of our time—the loss of contact with reality” (2017) [7], Witzel Morgen “A History of Leadership” (2019) [8], Agrawal A. et al., “Artificial Intelligence at the Service of Business. How Machine Prediction Helps Decision Making” (2019) [9], and Omar Solinger et al., The Emergence of Moral Leadership (2020) [10]. It also uses the results of research and consulting projects of the author of the textbook (incl. [11]), as well as the results of joint research author with postgraduates and students of the FE MSU, including the dissertations of Evgeny Savelenok’s thesis on the topic “Ideology of management in the organization: structure and process” [12], Marat Bogatyrev on the topic “Organizational culture: essence and role in the management system” [13], Gleb Ivashchenko on the topic “Development of views on business ethics in post-reform Russia of the twentieth century” [14], Vladislav Kornyshev on the topic “Digitalization of the management of social objects” [15] and research by student Vladimir Chernykh on the topic “Ethics in Management” [16, 17].

8.1

Organizational Culture: Measurement, Change, and Management

The relevance and popularity of organizational culture management is growing by the day. The reason for this phenomenon and process can be expressed in the words of a well-known specialist, Edgar Schein, in “The Corporate Culture Survival Guide” (1999): “Culture, in general, is very important because it tends to have a latent, influential, and often unconscious combination of forces that defines our individual and collective behavior, influences our perception of reality, the nature of thinking and value. Organizational culture, in particular, is important because the elements of culture define strategy, objectives and models of the activities of any company” [18, p. 6] The leaders of the organizations, still, like their ancestors from ancient kingdoms, in search for means to improve the efficiency of their organizations, have become increasingly aware that it is organizational culture that is such a means, that the effect of any change in the organization is first and foremost dictated by the level of organizational culture, and hence the success or failure of those changes. At the

622

8 Actual Problems and Concepts of Management

same time, practitioners and even theoreticians quickly realized that corporate or organizational culture, as an informal entity of the organization, was a very complex phenomenon and process in terms of analysis, diagnosis, evaluation and change. It is on these issues that the views and opinions of modern researchers in this section are presented. Attributes and Elements of the Corporate Culture and Their Characteristics The origins of such a phenomenon as corporate culture lie in the very nature of the organization, as the organization is by definition a multidimensional combination of its various elements and functional areas, as well as the formal rules and informal values that form the basis of a corporate culture The movement towards an informal approach to corporate management today is manifest in many different ways. For example, articles on organizational culture issues have recently been published, not only in specialized management (like “Organization Science”), but also in economic industry journals. Entire scientific directions are being formed that study certain cultural manifestations, such as organizational demography, industrial and organizational psychology, and others. All kinds of publications aimed at developing an effective interaction between the individual and the community are increasingly being presented to a broad audience of readers. One of the pioneers in this area was Dale Carnegie with his “How To Win Friends” bestseller. In the well-known work of Stephen Covey, “The 7 Habits of Highly Effective People” (1989) [19], the issue of corporate culture is presented in the form of “paradigm” and “vision.” Cultural and psychological aspects are increasingly being investigated when a staff member is employed, and at minimum, companies settle with testing the individual for psychological compatibility with the community. However, the special tools of assessment, such as the Meyers-Briggs Type Indicator, are becoming more popular and accessible. The phenomenon of crisis management, and the often associated “head-hunting” process (“hunting down” companies for specific high-class professionals), a phenomenon such as the key role of one or another person in the company’s history—all this also underscores the importance of an informal cultural basis for the effective existence of a company. In this regard, lists of leaders who have managed to make significant changes in the organizational culture of the companies they manage are published. The first such list was published by professors J. Kotter and J. Heskett in the book “Corporate Culture and Performance” (1992). Over the past decade, there has been a consistent shift in the management of the organization into the area of personnel management and the many aspects involved in this process. As a result, modern companies have a much more pronounced social orientation than even a decade ago. The daily practices of companies began to include the provision of a social package, activities aimed at improving informal corporate of communication (so-called team-building), managers are increasingly focusing on the ergonomics of the working place and office versions of the Chinese concept of harmony with the surrounding environment, “Feng shui,” etc.

8.1 Organizational Culture: Measurement, Change, and Management

623

As a reflection of the above-mentioned trends, it is increasingly possible to see proposals in the sphere of management of corporate culture and its elements by both universal and specialized consulting and training companies. In the same direction, academic and business education is developing: specialized courses on corporate culture have been firmly entrenched in the programs of Western and Russian universities and business schools. As a result of intangibility and difficulties in perceiving corporate culture, researchers often use analogies with physical bodies. For example, formal organizational structures are compared with solid and liquid physical bodies, even if they are transparent but still visible and tangible. And corporate culture is associated with intangible materials, such as gaseous substances. Similarly, organizational culture is often likened to a peculiar kind of “glue,” fastening elements of an organization, or to current, compressed air, other substances that allow a particular organization to be a full-fledged working system. Articles emerged in which corporate culture is considered in terms of the epidemiological approach and whose proponents claim that certain cultural paradigms are transmitted from one member of the organization to another like a virus. At the same time, with a targeted “launch” of the virus into the management system, the “immune system” is often triggered, after which introduction of “suppressing measures” is necessary to suppress resistance and spread the “paradigm virus.” In the early stages of the development of organizational culture concepts, managers of companies, among other things, wondered why organizational activity performance approaches, that had worked at certain enterprises in some countries, work in a completely different scenario at other enterprises, or in another national environment? The phenomenon of quality circles is often cited as an example of the “non-universality” of national management technologies, which were the secret of success at Japanese corporations, but were completely inapplicable in the same form at American companies. They were actually effective in the American business environment, but in a completely different, modified form, as L. Jewell wrote in the monograph “Contemporary Industrial/Organizational Psychology” (2001) [20]. These and other issues have generated many studies in the area of the “national” component of organizational culture. Let’s consider the basic attributes of the term “corporate culture.” The most popular definition is a combination of beliefs, values, ethics, order and atmosphere in the organization, tacit values, norms, and behavioral patterns that become the natural order of the organization’s activity and within the organization. The culture of a particular organization is often expressed in one phrase, “so it is here.” The difficulty of defining the characteristic attributes of culture stems from the fact that “culture is not just a climate, domination, politics, but all of this together and even more,” as The Chartered Management Institute Dictionary of Business and Management (2003) says [21]. Although the concepts of organizational culture began to be actively developed in the late 1970s, the origins of this phenomenon can be seen in the work of the representatives of the School of Human Relations. As we already know from the materials in Chap. 6, M. Follett, E. Mayo, F. Roethlisberger and their followers

624

8 Actual Problems and Concepts of Management

considered the informal, intangible, interpersonal and moral foundations of cooperation to be more important than formal and tangible foundations. Their ideas and thoughts were supported by the development of sociological and anthropological cultural theories associated with groups and societies, such as the work of Max Weber. Over time, the focus of the theory shifted to more measurable aspects of organizational culture, such as the level of delegation of authority and power distance in a national environment, the involvement of individuals in decision-making. Increased interest in corporate culture research led to the publication of a number of monographs on the subject in the early 1980s. It was then that the work of the “classics” of corporate culture—Geert Hofstede, William Ouchi, Edgar Schein, Tom Peters, Robert Waterman, Terrence Deal, Allan Kennedy—underlined the relevance of the issue and the need to explore the intangible elements of corporate culture (see [18, 22–31]). Further research focused on the influence of culture on the organization’s activities and how the company’s culture is created, maintained and changed. At the same time, organizational culture was increasingly seen as a natural, independent phenomenon, and was increasingly perceived as a managed and variable asset and a competitive advantage factor. Geert Hofstede, one of the founders of theoretical research in the field of corporate culture analysis, gave the following interpretation of culture: “Culture consists of patterns, explicit and implicit, of and for behavior acquired and transmitted by symbols, constituting the distinctive achievements of human groups, including their embodiment in artifacts; the essential core of culture consists of traditional (i.e. historically derived and selected) ideas and especially their attached values” (2001) [22]. One of the most renowned experts of the modern organization’s culture theory, Edgar Schein, in his main work, “Organizational Culture and Leadership” (2002), provides the following formal definition of culture: “The culture of a group can now be defined as a pattern of shared basic assumptions that was learned by a group as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems” [32]. This definition is perceived as optimal by modern researchers. The classification of elements of the corporate culture is based on different characteristics and usually depends on the goals of a particular study. The “reactive” part of the organization’s culture, that is, the part of it which is relatively static, is usually divided into elements according to the origins and forms of appearance of organizational culture. The “proactive” elements of culture are its bearers—individuals, groups, and subgroups of individuals. The sources of corporate culture include various national, industrial, functional and institutional factors. The theory of influence on corporate culture by national factors, peculiar to different countries, has been widely disseminated, not least because of the apparent differences between the cultures of companies in different countries and the existence of a phenomenon of cross-cultural conflict. In the works of G. Hofstede (2001) [22] and R. Lewis (2001) [33] emphasis is placed on the

8.1 Organizational Culture: Measurement, Change, and Management

625

influence of national customs, upbringing, etiquette, and other constituents, inherent in the national community on organizational culture, which in turn is a collective programming of individual and group behavior. National features such as the postulates on which the education, health, social or market structure of the economy are built also have a significant impact on the formation of specific types of organizational cultures within national communities. Industry and project properties are also seen as influencing the cultural basis of an organization. The so-called industrial-functional component determines the success of certain management models in some sectors of the economy and their “failures” in others. Sometimes as illustration of the effects of these factors even the validity of certain project organizations in military operations and programs of national importance are provided. The influence of the state and the regulatory institutions on the culture of the organization is an institutional factor. Examples of different organizational cultures in companies from Western and Eastern Germany, North and South Korea, and Islamic countries with a Western and radical regime of power, show that the national factor can manifest itself in different ways, depending on the institutional framework on which society is built—such as economic, political, and religious systems, the nature of the relationship between the contact audiences and the level of transaction costs acceptable to the society. Also, institutional factors that define corporate culture include the history of the country, the community, the organization, that describe the stages of the organization’s life cycle and give a certain “direction” to organizational culture. E. Schein, describing the levels of organizational culture in the mentioned work, highlights the three main groups of elements in which it manifests itself: artifacts— visible organizational structures and processes, declared values—strategies, goals, philosophies (so-called proclaimed foundations) and basic concepts—subconscious, persuasions which appear as something self-evident, peculiarities of perceptions, thoughts and feelings of the members of the organization (primary source of values and actions). As for the forms of corporate culture, researchers identify categories such as common sense, tradition, perception of reality, time and space, and form of leadership in the organization. Since both sources and forms of corporate culture are directly interlinked in the process of reproduction of culture, those and other elements that make up the diversity of organizational culture are most often considered together. For example, Terrence Deal and Alan Kennedy in “Corporate Cultures” (2000) qualify the business environment, values, heroes, rites and rituals, and also the system of cultural communication as the main elements of culture. As most structured integrated approaches to the description of the elements of corporate culture, G. Hofstede’s “onion” cultural chart and Jerry Johnson’s “cultural web” model (see Fig. 8.1) can be made out. In general, these universal approaches are characterized by the principle of existence of an unchanged “nucleus”—the essence of the organization and the various manifestations of that entity, which are also a property of the given organization.

626

8 Actual Problems and Concepts of Management

Fig. 8.1 The elements of organizational culture (Sources: Hofstede [22] and Johnson [26]) Table 8.1 The elements of corporate culture External survival factors Vision, mission, goals Strategies, systems, processes Measurement: definition of errors and deviations and adjustment Internal integration factors Common ideology, meaning, language and concepts Soul, values, habits, rituals, norms Group boundaries and distinctness Nature of power and relationships Distribution of rewards and privileges Deeper assumptions Human relationship to nature The nature of truth and reality Nature of mankind Nature of human relations The nature of time and space Source: compiled by the author based on materials from [12, 13]

In the work “The Corporate Culture Survival Guide” [18] E. Schein has given the whole variety of elements of the organization’s informal basis, including both sources and forms of culture manifestation, as slightly edited by the authors of the study [12, 13] and presented in Table 8.1 As already mentioned, proactive holders of the organizational culture are separate individuals as well as the community or formal organization of individuals. The resultant of cultural diversity of a number of individuals in the group constitutes the culture of the group (often reinforced or undermined by certain factors). The individual nature of subcultures is maintained and manifested in the fact that

8.1 Organizational Culture: Measurement, Change, and Management

627

individual proactive elements may act as “catalysts” to certain organizational processes, while other members of the organization will play the role of “retarders.” As will further be shown, research and capability of managing the entire diversity of attributes and elements of organizational culture are carried out in two main directions—the influence of the elements of corporate culture on organizational effectiveness and the study of the interaction between cultures. Popular Models for Measuring and Managing the Organization’s Culture The modern organizational culture management algorithm was described in detail by Hofstede in “Culture and Organizations” (1997). The main stages of this process, according to Hofstede, are: 1. 2. 3. 4. 5. 6. 7.

Diagnostics of corporate culture. Implementation of strategic choice. Establishment of a network of loyal “agents” in the organization. Design of necessary structural changes. Development of necessary changes in organizational processes. Revision of HR policy. Subsequent monitoring of the development of organizational culture [27].

Many researchers emphasize the two-way nature of the management of a company’s culture. On the one hand, there is a need for a certain “vision from above,” manifested in the declaration of abstract and elevated ideals to lift enthusiasm in the acceptance of introduced values and beliefs. On the other hand, a great deal of attention is devoted to the details of real life in the organization with the goal of objective and stable understanding of the company’s management, which is actually happening. This, in turn, makes it possible to obtain feedback quickly as organizational culture is managed in a step-by-step manner. E. Schein formulated the mechanisms for changing culture in accordance with the organization’s stages of development, which have a cumulative property, that is, each subsequent stage is followed by all the previous mechanisms and new ones are added (see Table. 8.2). The technology of effective management is based on identifying sets of optimal combinations of organizational culture that are effective in a given situation and “measuring” the impact of these elements on the company’s activities. According to the logic of the measurement process, a scale (i.e., many alternatives) is developed in each of the models, with respect to which assessment is subsequently made, and then the measurement mechanism (i.e., how the existing situation is assigned to an alternative) is determined. Ancillary scales are often developed (e.g., value-based), and then, in a specific system of “bindings” of certain values to a particular type of culture, identification of a characteristic cultural basis is made. In turn, the view of organizational culture “from the outside” has evolved in the theories of intercultural interaction. As a common characteristic of all models, it can be distinguished that almost all of them are either derived from empirical studies or subsequently tested for practical applicability. In any case, using the methods and technologies available to each

628

8 Actual Problems and Concepts of Management

Table 8.2 Mechanisms for cultural change at different stages of the company’s life cycle Stage of the organization’s development Foundation, early growth, development Average age

Maturity and decline

Modification mechanisms 1. Incremental changes through general and private evolution 2. Change via intercorporate therapy 3. Change through the promotion of hybrid cultures 4. Change through systematic recharge from selected subcultures 5. Planned change by implementing organization development projects and creating parallel learning systems 6. Thaw and change due to the technological factor. 7. Change through introduction of “people from the outside” 8. Thaw through scandals and dispel of myths 9. Managing through conversion 10. Change by imposing beliefs 11. Destruction and rebirth

Source: Schein E.H. [32]

manager (questionnaires, a detailed description of the calculation system, a ranking of the results with predetermined recommendations), these models can be effectively used in practice. Let’s review the most commonly known models for diagnosing and managing corporate culture. Schein’s model advocates a situational approach, which assumes that the diagnosis of culture is unique in each case. According to Schein, the process of internal decryption of cultural perceptions by company specialists, with the aim of managing them includes the following stages: 1. Obtaining the approval of company management; 2. Holding a large group meeting: (a) (b) (c) (d)

a short lecture on cultural issues, identification of artifacts, identification of proclaimed values, primary definition of collective basic perceptions;

3. Identification of positive and negative cultural influences in subgroups; 4. Report on basic perceptions and joint analysis [32]. In “The Corporate Culture Survival Guide,” Schein provides a somewhat simplified culture identification technology, based on the prerequisite of implementing the following procedures by management itself: 1. The definition of a “business problem” that should be influenced by culture; 2. Analysis of the three levels of corporate culture in this key (artifacts, proclaimed values, and basic perceptions); 3. Identification of artifacts; 4. Defining the values of the organization; 5. Comparing values and artifacts and search for “failures” and deviations; 6. Repeating the process with other subgroups; 7. Estimating base perceptions.

8.1 Organizational Culture: Measurement, Change, and Management

629

In analyzing the models of other writers, Schein notes that they are “just, but dangerously limited.” As an example, Schein mentions the Goffee-Jones “solidaritycommunication” models [26] and Cameron-Quinn’s model of competing values [28], which, like many other models focused on individual elements or aspects of corporate culture, “ignore other elements of culture that are much deeper and cannot even be seen.” At the same time, Schein recognizes that such models can be used to explore selected aspects of corporate culture and their impact on organizational effectiveness [18]. J. Kotter and J. Heskett, having surveyed over 200 companies from different industries, have concluded that the impact of corporate culture on the efficiency of the organization should be assessed, primarily, in terms of its impact on the decisionmaking process by company staff. The initially controversial obtained results of the hypothesis of a strong influence of culture on the efficiency of the company (indicators, such as the growth of market turnover, revenue growth, investment profitability), Kotter and Heskett explained the “one-dimensionalness” of the approach and the need for a more thorough multidimensional analysis. In this respect, essential characteristics, which had also been given special attention in the studies of Kotter and Heskett, were factors such as the extent to which a particular culture has influenced the interests of clients, employees, shareholders in the company, and how culture influences the leadership capacity of company management and is related to its market and technological environment. It is noteworthy that the authors of the study discovered the dependence of the views of company’s employees on the effectiveness of the organizational culture on the success of its activities, specifically, in those organizations where the situation in recent years of monitoring has improved, staff members have recognized that an adequate culture has helped to increase efficiency more than it has had a negative impact. In cases where the company’s situation deteriorated, the organization’s staff members unanimously agreed that it was non-optimal corporate culture that had been the main factor in reducing efficiency [34]. Kim Cameron and Robert Quinn developed a special tool for evaluating organizational culture—OCAI (Organizational Culture Assessment Instrument), based on the so-called structure of two competing pairs of values: outward orientation of the company against internal orientation, and flexibility in action versus stability and control. This technique is described in their known work “Diagnosing and Changing Organizational Culture” (2001) [28]. It involves the use of an extended questionnaire consisting of six questions. Each question has four alternative responses (A, B, C and D), among which 100 points should be distributed, depending on the degree of applicability of each of the responses to the organization. Two originally identical questionnaires, which describe the current situation and the preferred position of the company (e.g., in 5 years), are filled in. The questions included in the questionnaire cover the following six areas: • characteristics of management, • leadership in the organization, • personnel management,

630

8 Actual Problems and Concepts of Management

• the foundation of the organization’s existence, • strategic orientation, • success criteria. The questions are initially arranged in such a way that the final number of points can be judged by the type of organizational culture. Preliminary scientists, by two pairs of competing values, identified two-dimensional space from four types of corporate cultures: • • • •

Hierarchical culture, Market-oriented culture, “Clan” culture of a family type, Adhocratic culture.

Next, according to Cameron and Quinn, the average number of points for A, B, C and D should be calculated (for A, this is the sum of all the answer points for questions A, divided by six, etc. for other categories), both for the current organizational culture and for the option preferred in the long-term. By displaying the number of points in each of the categories, you can diagnose the corporate culture, and when adding the results to that profile (having coordinated the relevant quadrants), you can determine the dominant form of corporate culture of the investigated organization. An example of the survey results is shown in Fig. 8.2. Cameron and Quinn note that organizations have a completely different “cultural profile” depending on the industry, stage of the life cycle, and other determinants of culture. Because the model enables defining the current and desired state of the organizational culture at the same time, there is a possibility to consciously influence certain cultural elements to change the company’s informal base in the preferred direction (to the “ideal” profile). In order to identify the most effective tools for managing culture to achieve the optimum state, Cameron and Quinn propose a profile for each of the six areas previously described (from which they were compiled). According to the authors of the OCAI method, each of these six factors may be attributed to the “four cultures” profile separately in order to make a demonstrable assessment of the impact of one or another factor on the culture of the organization. In the 7S model developed in the early 1980s, Tom Peters and Robert Waterman, at the time consultants at McKinsey & Co., developed an extended approach to the organization’s elemental nature. The model was named after the first letters “S” of the English names of the seven main elements of the Organization: strategy, structure, systems or formal and informal procedures, skills, staff, style, shared values. Peters and Waterman divided the seven elements constituting the organization into “hard” and “soft” (see Fig. 8.3). To “hard” elements, the authors of the theory referred strategy, structure and systems used in the company. These elements are both tangible and relatively easy to define, and can be found in corporate plans, strategic programs, organizational charts and other documents. The remaining “4S,” the four elements characterized by the researchers as “soft,” are difficult to define,

8.1 Organizational Culture: Measurement, Change, and Management

631

Flexibility and discretion Clan

Adhocracy

60

60

Internal focus and Integration

50 40

40 30

30 20

A D

20 10

10

10

10

20

B C 20 30

30

40

40

50

50

External focus and differentiation

50

60

60

Hierarchy

Market

Stability and control Fig. 8.2 Example of survey results for Cameron-Quinn Model (Source: compiled by the author of [13])

Structures

Strategy

Systems Shared Values

Skills

Style

Staff

Fig. 8.3 Peters-Waterman’s 7 s model (Source: Peters T., Waterman R. [30])

632

8 Actual Problems and Concepts of Management

and it is these elements, according to Peters and Waterman, that are the key components of corporate culture. Peters and Waterman emphasize that truly effective organizations achieve harmony between these seven elements. Thus, they say that the management of the organization’s culture needs to be determined by determining the optimum combinations between these seven factors—that is how the space of alternatives is defined (i.e., the factors themselves and the diversity of their possible conditions). According to the model, organizational culture is managed by defining the current state of each element, comparing it to an ideal position, and taking acknowledged steps to achieve an optimal combination. The researchers note that changing one element of the organization will necessarily affect the other elements. For example, changing the HR system will define a new management style and thereby cause changes in the company’s structures, processes, and core competencies. Using this toolkit, Peters and Waterman studied the practice of 43 effectively functioning companies and sought to find out why they were successful during a 20-year period. The results were presented in the renowned work “In Search of Excellence” (1982) [30]. Having analyzed the characteristics common to “successful” organizations, they found that there were eight success factors inherent to effective companies: 1. 2. 3. 4. 5. 6. 7. 8.

A bias for action; Close to the customer; Autonomy and entrepreneurship; Productivity through people; Hands-on, value-driven; Stick to the knitting; Simple form, lean staff; Simultaneous loose-tight properties.

Peters and Waterman concluded that if the organizational culture was built on the listed principles, the company was expected to succeed in a manner similar to that of the sample companies studied. The authors of the study note that in the process of change, many organizations focus on “hard” elements—strategies, structures and systems—their position on soft elements is implicitly expressed and is not a conscious object of management. Peters and Waterman emphasize that the most successful companies work diligently on “soft” elements, as these elements of the organization can speed up or neutralize the process of introducing change (new structures and strategies are difficult to build on inadequate values and competencies). Critics of this model noted that the companies considered in Peters and Waterman’s studies as “successful” experienced considerable difficulties later (the most striking example is IBM). The counter-arguments suggest that the researchers concentrated only on positive points in the activities of the selected companies, and the subjective approach, without representative statistical justification, is not entirely correct. Active focus on the success of a company at the expense of respecting the individual’s personal culture caused strong criticism by Peter Drucker, who called

8.1 Organizational Culture: Measurement, Change, and Management

633

Fig. 8.4 The DealKennedy model (Source: Deal and Kennedy [25])

Peters and Waterman’s book, “In Search of Excellence” [30], which was regarded by many specialists as the most popular publication in management, a “book for kids.” However, there is now agreement among scientists and practitioners that the theory of Peters and Waterman acquires a slightly different meaning: modern companies should be guided by the factors listed as a necessary, but not sufficient condition for the success of the organization. The “7S” model proposed by the researchers is generally perceived as a valuable tool for the process of change in the organization and its directed development. T. Deal and A. Kennedy, in “Corporate Cultures” (2000), selected two characteristics of the decision-making process for the classification of organizational cultures—the degree of risk associated with the company/group and the speed of feedback (or output in the form of results and rewards), reflecting the success of the company and its staff in decisions and action strategies. On the basis of this and the survey of several hundred corporations and the business environment in which they operate, the authors proposed a classification of four empirical types of cultures (see Fig. 8.4). In each type of culture, Deal and Kennedy highlight relevant core values, the so-called heroes (the most prominent representatives and distributors), customs and rituals (what one or another type manifests itself in), strengths and weaknesses (in particular situations or sectors of the economy). A brief description of each type of organizational culture in the Deal-Kennedy model is given below. The Tough-guy, macho culture is characterized by a conscious adoption of high risk and quick feedback from typical representatives—athletes, members of the power structures, doctors (especially surgeons). The work hard/play hard culture involves concentrating on the amount of work done and creating a special interest for it through innovative approaches. Considerable attention is paid to the time spent on staff leisure. The most striking examples of organizations with such cultures are restaurant networks and high-tech companies. The bet-your-company culture is extremely risky in choosing strategic alternatives, but the organization’s community

634

8 Actual Problems and Concepts of Management

aims to achieve a long-term goal by any means. Typical examples are oil and aerospace companies. Finally, the process culture is characterized by a relatively comfortable and secure environment that is most adequate for the routine activities of insurance companies and banks, public authorities, as well as enterprises of particularly regulated industries (e.g., pharmaceuticals). Deal and Kennedy note that, if the processes drift out of control, the culture becomes “bureaucratic” (it is in the negative sense of the term). The researchers believe that the organization’s awareness of the cultural framework under which the whole group operates, as well as some of its elements, allows for a significant increase in individual and organizational efficiency. By their expression, “a strong culture enables people to feel better about what they do, so they are more likely to work harder.” Deal and Kennedy emphasize the need for a flexible approach to determining the optimal state and management of corporate culture for one or another organization—the choice depends on the state of the competitive environment at a particular time. The authors of the model also note that a large organization is a combination of these types of cultures, which is due to the complexity of the internal and external environment of such companies. The renowned corporate culture consultant, Daniel Denison, based on a 15-year period of observation of the culture of over 1000 successful and “problem” companies of various sizes, industries, ages and stages of the life cycle, and having studied the views of 40,000 representatives of these and other companies, created one of the most representative theories of corporate culture analysis in terms of organizational effectiveness. The characteristics of the model were published in the article “Five Conditions for High Performance Cultures” (1998). In his research, Denison used the same scale of competing values that was applied in the Cameron-Quinn model (see Fig. 8.5.) Denison relates the four fields defined by the two-dimensional model of competing values with four manifestations of corporate culture: mission, consistency, involvement, adaptability. According to the model’s author, each of these elements has an impact on organizational effectiveness. The manifestation of culture as a mission is based on the fact that a common sense of vision, purpose and strategy can stimulate the movement of members towards common goals. The element of consistency is that the common vision, beliefs and group values of the organization’s participants encourage internal coherence and strengthen the value and sense of cultural identification of the company’s employees. Involvement contributes to the development of a spirit of responsibility and ownership and, as a result, commitment and loyalty towards the organization. Finally, adaptability through norms and beliefs improves the ability of the organization to receive, interpret and translate signals from the external environment into in-house and behavioral changes, which in turn ensures the survival, development, and growth of the organization For the purposes of the study, Denison highlights the following performance indicators: 1. profitability (return on invested capital, impact on the value of the company’s

8.1 Organizational Culture: Measurement, Change, and Management

635

Fig. 8.5 The Denison model (Source: Denison Consulting Website—https://denisonconsulting. com/)

2. 3. 4. 5. 6.

assets), the level and rate of sales growth, market share, novelty of the product, quality, employee satisfaction.

In terms of efficiency, Denison assumes that the “mission” and “consistency” pair determines the profitability of the investment, the profitability of the sales and the profitability of assets, the combination of “adaptability” and “involvement” influences the novelty of the product, “involvement” and “consistency”—the quality, profitability and satisfaction of the company’s employees-and finally, “adaptability” and “mission” influence the company’s market share and the rate of sales growth.

636

8 Actual Problems and Concepts of Management

Fig. 8.6 Goffee-Jones and Charles Handy Models (Source: Goffee and Jones [36] and Handy [37])

In turn, in order to better analyze the impact of specific cultural factors on efficiency, as well as to eliminate autocorrelation, Denison divides each of the four fields listed into three elements (indices), which enabled him to provide a total of 12 “cultural manifestation” indices. He introduced the term in his earlier work with A. Mishra “Toward a Theory of Organizational Culture and Effectiveness” [35]. The procedure of cultural analysis begins with a survey of the company’s employees and members of its surroundings. Respondents provide answers on a five-point scale to 60 questions (5 questions for the identification of each of the 12 indices). Then for each question, after which for each index the arithmetic mean value is calculated. According to Denison’s technology, the average value obtained for each index is opposed to standards—similar indices of other companies contained in a special database, rolling throughout the period of observation (the base currently has information on over 500 companies of different profile—large and small, concentrated in production, services, retail, finance, high technology, non-profit and government organizations). As a result, the so-called percentile index is determined, which enables judging the significance of one or another factor as part of a company’s organizational culture. For example, a percentile indicator of 78 for the “strategic intentions” index (see Fig. 8.5) suggests that in this organization strategic intentions define the corporate culture, strengthen market positions and financial indicators more than in 78% of similar companies. In addition to percentile, there is the term “quartile,” which represents 25%-, 50%-, 75%- and 100% point of each index. In addition, the Denison model, adapted to practice, enables effective identification of the strengths and weaknesses of a particular organizational culture. In recent years, a number of theories and models for diagnosing and managing the corporate culture of an enterprise have emerged, reflecting those or other elements of culture and organizational performance indicators. Among them is the Goffee-Jones “communication-solidarity” model [36] and the theory of the “culture of Greek Gods” by Charles Handy [37] (see Fig. 8.6); Vijay Sathe’s “seven-process” theory,

8.1 Organizational Culture: Measurement, Change, and Management

637

through which culture influences organizational activities—cooperation between individuals and parts of the organization, decision-making, control, communication, loyalty of the organization, perception of organizational environment, justification of behavior; Talcott Parsons’s AGIL model, which allows for the definition of the dominant culture in the organization, depending on the extent to which culture assumes that the author has a social system. As a result, there are adopted, dedicated, integrated, and dormant organizations. The model’s acronym is derived from the names of culture characteristics: adaptation, goal-setting, integration, latency [38]. Michael Treacy and Fred Wiersema explored the issue of choosing the best type of corporate culture of a modern market-oriented organization. They emphasize the interdependence of the organization’s culture, as an external shell, from the model of behavior in the market, chosen by management and “preached” by employees, which is one of the three possible alternatives: operational excellence, product leadership, customer intimacy [39]. Models of Intercultural Interaction Concurrently with the above-mentioned developments in diagnostics and management of corporate culture, models of intercultural interaction have been actively developed and widely disseminated because of the mainstreaming of international concerns, overcoming of communication barriers and cross-cultural contradictions, and the neutralization of the negative effects of largescale mergers and acquisitions. On the one hand, researchers try to examine key characteristics that sufficiently define national management models in one or another country (or at least describe the space of such characteristics), on the other hand, many experts offer, based on years of experience, a variety of practical guidelines for overcoming the negative manifestations of cultural conflict and achieving common understanding. It is evident that countries with different national cultures are likely to have different approaches to the notion of effectiveness. For example, in Japan, corporate culture has to promote marketing efficiency, and the United States is promoting quantitative methods to measure the effectiveness of corporate culture (cost approach, financial performance per unit of time), for Scandinavian countries, the highest priority is the social orientation of the organization’s culture, in the same countries that have experienced or are in the process of large-scale nationalization or privatization (e.g., France, Russia, China), the criterion of the effectiveness of culture is the degree of survival and effectiveness of long-term development. The French researcher, Andrew Lauren, having studied the philosophy and behavior of managers in nine countries in Western Europe, the United States, Japan and Indonesia, revealed the presence of a clear influence of the national factor on the behavior and attitudes of managers. In general, Lauren was able to test the hypothesis of 60 production problems of different nature, examining the nature of the respondents’ attitude to the allegations (hypotheses). Hofstede built the basic provisions of his theory on empirical data from 116,000 questionnaires sent to IBM offices in 40 countries. As a result of response processing and the examination of hypotheses, Hofstede identified 5 basic factors that could be used to classify the infinite diversity of national cultures: power distance, uncertainty

638

8 Actual Problems and Concepts of Management High-context culture: A phrase has multiple meanings; Unclear organizational structure

Malaysia

Japan

India

Singapore

Low-context culture: What is said reflects what is meant; Clear organizational structure

Russia

Germany

UK

Fig. 8.7 Hayashi’s model of high-context and low-context cultures (Source: Hayashi [41])

avoidance, individualism/collectivism, femininity/masculinity, long-term/short-term orientation. The latter factor is also known as the “Confucian dynamism”—it explains the extent to which the individual is committed to moral principles. The representativeness of the empirical evidence and the author’s persuasive arguments made the model of the national culture of the organization very popular. At the same time, critics of the theory point out that the Hofstede does not fully take into account the fact that national cultures are largely heterogeneous (e.g., the Canadian provinces of Quebec and Alberta are inhabited by “different Canadians”). The studies of Charles Hampden-Turner and Fons Trompenaars are also related to theories that are study inter-cultural interaction. For 20 years, the scientists collected information from 15,000 respondents (managers) in 28 countries around the world. As a result, they succeeded in identifying six culture-defining “value dimensions”: universalism-specialization, concentration-dispersion, individualismcommunity, internal orientation-outward orientation, status attainmentpredetermined status, sequence of events over time-synchronization of events over time [40]. In his studies, W. Ouchi described the “Z” type organization, an effective version of the culture of the American Business organization that combines the advantages of Japanese and traditional American business cultures. In doing so, Ouchi used seven of the most important to compare and build an optimum version of cultural variables, such as the nature of recruitment, performance measurement, career motion, control system, decision-making model, liability object, interest towards the human. Koichiro Hayashi explored the communicative manifestation of different business cultures, leading to the introduction of the notions of high-context and low-context types of organizations, depending on the culture of communication prevailing in one or another country (see Fig. 8.7.)

8.1 Organizational Culture: Measurement, Change, and Management

639

Henry Lane and Joseph Di Stefano’s model for definition of the impact of the national on organizational culture describes six key variables that define a specific type of culture: the character of man’s relationship to nature, time orientation, faith in human nature, orientation to activity, form of human relations, the role of the individual in society. Richard Lewis in his popular book “Business Cultures in International Business” (2001) classifies varieties of national cultures according to the attitude to time use and the dominant ways of obtaining information, and, as a result, highlights linearactive (e.g., Anglo-Saxon countries), multi-active (European cultures), and reactive cultures (cultures of Asian countries). Based on its extensive experience in observing the cultural diversity of numerous countries, Lewis empirically attributed some countries to their cultural types. New Trends in Theory and Practice The pressing nature of organizational culture management stimulates the practical application of popular theoretical models. The proven efficacy of the models and the algorithms that are not complex in operation help company management achieve tangible results. The relevance and usefulness of theories in practice are confirmed by the fact that almost all of the major developers of theoretical models in the field of identification and management of organizational culture have produced special publications aimed at broad-based professionals, procedures written in simple language and using the same assumptions as in theoretical models in due course. Today, we have published manuals or “practical” works on corporate cultures of E. Schein, G. Hofstede, T. Deal and A. Kennedy, R. Waterman, H. Mintzberg, and other authors. The universality and self-sufficiency of individual chapters of practical publications are an interesting feature, in contrast to the rigid logic of theoretical content. At the same time, universal and specialized consulting companies are increasingly implementing projects to diagnose and manage elements of corporate culture. At the same time, consultants use both specific theoretical models (e.g., Denison Consulting and Copernicus Consulting, which use Denison’s model), and independently developed and patented technologies, such as Cultural Due Diligence, Cultural Health Index, Cultural Orientations Indicator. The high demand for practical technologies in this area is fastened by the fact that organizations are gradually moving (or, at least try to move) from formally structured companies to edhocratic-type structures, the main coordinating mechanism of which is mutual harmonization, and which can take whatever form desired to effectively address emerging issues and take advantage of unique opportunities. In recent years, organizations have emerged that encourage out-of-box thinking, encourage part-time employment, and in fact are characterized as “managed chaos” or “a set of projects under a specific brand with a professional customer relationship” [42]. Along with the theoretical development of the problems of the general theory of culture [43] (as the basis of corporate culture), and the development of issues of the organizational ideology and ideology of management in organizations [12] (as a key element of organizational culture), and also development issues of the essence of

640

8 Actual Problems and Concepts of Management

organizational culture [13], the development of methods and technologies for measuring national cultures continued. This was especially reflected in the development of management thought in the field of business internationalization management. Models and technologies have appeared that make it possible to measure national and cultural aspects in order to minimize the risk of globalization of your business [44, 45]. Along with the theoretical development of the problems of the general theory of culture [43], as the basis of corporate culture, with the development of problems of the ideology of the organization [12], as a key element of organizational culture, and problems of managing organizational culture [13], the development of methods and technologies for measuring national cultures continued. This was especially reflected in the development of management thought in the field of business internationalization management. There are methods and models that allow you to measure national and cultural aspects in order to minimize the risk of globalization of your business [44, 45]. One of these models is the CAGE-model [45], which contains a number of characteristics of national cultures that are proposed for their assessment. Thus, it can be concluded that the importance of organizational culture, as an informal basis of an organization, designed to guide this positive “creative chaos” in a certain direction, will increase over time. And this, naturally, will attract researchers of organizational culture, which, in turn, will be a factor in the further development of management thought.

8.2

Leadership Concepts: From Leadership Qualities to Learning and Service

From the previous chapters of the textbook, we already know that “Leadership,” as the relationship between the leader and his followers (and/or a manifestation of the influence of the leader on his followers), is one of the issues that is important for any civilization, therefore the concept of “leadership” has always attracted and today also attracts a lot of attention of theorists and practitioners of management. So, in Chap. 2, we characterized the views of the ancient Chinese thinker Han Fei-tzu (288–233 BC) on the “art of management” in the context of managing a leader of his staff and cited his statements about 8 principles of leader behavior as the basis of quality “art of personnel management.” The study of the historical and scientific inheritance of Han Fei-tzu (with the aim of turning it into a historical and administrative heritage) continues in our time. So, in 2018, at the 78th AOM Annual Meeting in Chicago, a Chinese researcher Melody P.M.Chong made a presentation on Han Fei-tzu’s views on leadership on the topic “Organizational Political Tactics: Hanfei’s Legalist Doctrines of Leadership” [46]. The article describes 10 political leadership tactics according to Han Fei-tzu, which we will present for comparison with 8 principles of leader behavior in one Table (see Table 8.3):

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

641

Table 8.3 List of behavioral principles and tactics of the manager according to Han Fei-tzu № 1 2 3 4 5 6 7 8 9 10

Principles of executive behavior Do not cede power to others Get people to follow each other’s moods Be secretive, don’t expose yourself Consider all people bad Do not reckon with any moral values Encourage a policy of stupefying the people Be unyielding and strict in punishments; in rewards—moderation and caution Be indiscriminate when necessary – –

Political tactics leadership Certain punishment Surveillance Giving an award Pseudo-consultation Stratification Manipulating information “Reversal” of words Strategic persuasion Inaction Centralization

Source: compiled by the author

As you can see from the above list of 10 leadership tactics, they largely intersect in meaning with the 8 principles of the “art of management” of Han Fei-tzu, clarifying and supplementing them. Let’s move on to developing views on leadership. Many leadership studies have focused on the preparation and formation of leaders and quite objectively, in the beginning, the attention of researchers was directed to a relatively small number of great people, who live in any society, work at any organization and appear to possess certain traits that are not universally and not equally common. So, the theories of leadership qualities emerged. Around the middle of the twentieth century, research on leadership was faced with insurmountable challenges, when a character traits-based approach aimed at identifying the personal qualities of outstanding leaders was fruitless. In this case, too many exceptions to almost every character trait had to be dealt with. Dialectics took over, and the focus was shifted to the behavior of a leader, which meant a keen interest in what is meant by the notion of “leadership,” methods of supervision, inherent to it, the leader’s perceptions of the followers etc. These facts illustrate the first and second subject levels of the HMT—the filiations of ideas and relationships in the scientific community. Eventually, many now believe that the elusive cipher for leadership predictions should be sought not just in the qualities and behavior of a leader, but in accordance with the leader’s response and the situation he faced. In most modern leadership studies, a situational approach to leadership prevails. But at all times there was a general question—could leadership be taught. In this section, we will attempt to describe the major milestones in the development of leadership views. Theories of Leadership Qualities or the Art of Leadership The first systematic studies on the subject of leadership were aimed at identifying the characteristic traits of outstanding leaders. That’s not surprising. We all havе some point admired the achievements of great people. History is rich with examples of the lives of

642

8 Actual Problems and Concepts of Management

individuals who achieved greatness. But it has been a long time before researchers turned to the search for signs that would suggest how separate individuals achieving greatness. An example of this situation is the view that American researcher, Ordway Tead, was one of the first to put forward. O. Tead (1891–1973) was born in Massachusetts. He intended to become a priest, but was disappointed by excessive hypocrisy that was common in the religious environment of the time, and instead chose a businessman’s career. He held many posts and worked even as a management consultant before finding a suitable position in 1920, when he was hired by “McGraw-Hill Books” to the Business Publications Department. For 5 years, he had been editor of the Social Science and Economics Book Department of the “Harper & Brothers” publishing house. His official position provided the base and the audience for the development and dissemination of his business, economic and social ideas. Already in the first book “Instincts in Industry” (1918), O.Tead presented for consideration some of the most important instincts, including leadership, which in his view were inherent to all human beings. The subject of leadership is continued in the work “Human Nature and Management” (1929) but summarized in the treatise “The Art of Leadership” (1935) [47]. He defined leadership as “influencing people for joint achievement of some goal, which they consider desirable.” Tead believed that most people wanted to belong to some goal-oriented group, such as a business company, a church, a synagogue, or a social organization. As only a few are destined to be leaders, most people want to be led and feel satisfied as being driven. As a rule, only a few prove themselves to be leaders, and it is these individuals who represented a particular interest for researchers. People can be guided in many ways. It is possible to use advice, and such advice is indeed an effective tool for establishing good relationships. Sometimes leaders intimidate, but reassurance or encouraging conversations are more likely to succeed. Tead considers the benefit of convincing and reasonable logical arguments. In any case, it was the occasional hint of the situational nature of leadership that was the most remarkable moment in its work. Despite the fact that Tead focused primarily on the personal qualities of the leader, he was already aware that leaders use the “logic of events” in cases where the time was right to put their influence into action. Sometimes prudent leaders themselves create problematic situations to which they can react in a special way. Perhaps that is why those leaders, who had set themselves worthy and challenging goals and then reacted accordingly, are remembered. Goals that strengthen the authority of the leader must be clearly defined and attractive. These should be goals with which the enthusiastically driven workers identify themselves. “The Law of situations,” referred to in Chap. 6, as considered by M.Follett, suggests that the situation is set and the leader responds to it in a certain way. Tead defended a similar point of view, but went in a different direction, pointing to the fact that the situation could be generated by an experienced leader. What is necessary to be a leader? Like most authors who had written earlier on leadership, contrary to the “logic of events” and the “law of situations,” Tead was

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

643

convinced that successful leaders had certain and clearly identifiable traits. As the most important of these, he included the following: 1. Physical and emotional endurance. Leadership is hard work, so the leader must have stamina far above the average. 2. Understanding the purpose of the organization and direction of its activities. The leader should have goals and inspire others to achieve them. 3. Enthusiasm. Good leaders are often considered “obsessed.” Their enthusiasm is somehow transformed into dominance and influence. 4. Friendliness and affection. Tead thought it was worse for a leader when he is feared, than when he is loved. Leaders need to be sympathized by the driven, if they want to impact the driven. 5. Integrity. In accordance with his principles, Tead believed that leaders should be trustworthy. Workers want the leaders to be decisive and credible. In turn, the subordinates must be sure that the case is in safe hands. Leaders must react to wrong decisions and overcome the temptation to blame others for their mistakes. Good leaders must be sufficiently communicative, have a sense of humor, and perhaps most importantly, be good educators. Ultimately, the leader is the only teacher that many staff members have ever had. How Leaders Lead An effective leader brings his expectations to subordinates and determines the boundaries of their freedom of action. As we mentioned earlier, Tead was an idealist, but he knew human nature and was realistic in considering it. He even admits that power has a corrupting effect and can cause vanity. A cursory glance at history confirms this conclusion, and we must be particularly cautious of the risks associated with leadership. For instance, Tead knew that leaders often sought to be exalted than most others. Sometimes leaders defend their own path, they insist on their own way, even if others do not agree with them. Often they identify themselves fully with their goals, then any dissent is perceived as treason. In one of the most profound remarks about leadership, Tead argues that “good leadership depends on good followers. The leader points the way, whereas his followers must decide how good that path is.” This statement can be considered profound at least because this is the first time that there is a hint of one of the ideas of management theories, which was developed much later. It was that leadership is not only driven by the personality characteristics of the leader, but also leadership behavior. Departure from the Leader’s Personal Qualities Theory The list of core characteristics of the leader proved to be excessively long, and the contradictory conclusions resulting from the set of qualities could not be reconciled. Disappointment led some researchers to simply deny any connection between characteristic qualities of personality and leadership. Other authors continued their research in this direction, and some were confident that, while personality has some relevance to leadership,

644

8 Actual Problems and Concepts of Management

this relationship is more complex than originally imagined. The area of research was expanded to find other factors that would make it possible to escape the predicament. As we move along this path, the complexity of the problem of leadership started to manifest itself. It was becoming increasingly clear that the personality of the leader, the style of leadership and the general situation were the determinants of effective leadership. One of the first to plunge into the study of leadership styles was the famous psychologist and sociologist Kurt Lewin (1890–1947). Having emigrated to the United States in 1933, in 1945 K. Levin founded the Group Dynamics Research Center at the Massachusetts Institute of Technology, whose purpose was to study the phenomenon of leadership. The main result of the study of this center was the identification of three styles of leadership: authoritarian (or directive), democratic (or collegial) and conniving (or liberal) [48]. The originality of K. Levin’s scientific approach to identifying leadership styles was in the clearly expressed two axioms of the study of leadership. First, he and his colleagues focused on changes in the behavior of an individual in a group, more precisely, on group dynamics, based on the obvious hypothesis that “it is easier to change individuals gathered in a group than to change each of them individually.” Second, he focused on studying of the individual’s behavior in relation to the environment (both within the group and the group with the external environment),5 and not on the individual’s past personal experience (as in the studies of O. Tead), thereby anticipating even the concept of a situational approach in leadership. This axiomatics became a turning point in the development of psychological science, which is why K. Levin is rightfully considered one of the founding fathers of social psychology. His application of the principles of Gestalt psychology, understanding the influence of situational factors and work in the field of group dynamics have significantly influenced the approach of modern psychologists to the study of group behavior. The leadership styles identified by K. Levin gave impetus to further research in this area. So in 1945 at the University of Ohio launched extremely important ad-hoc leadership research led by Ralph Stogdill. According to historians of sociological thought, the origins of these studies go back to the program for the study of professions, funded by the US Department of Labor and the Commission on the employment of military personnel, which was implemented back in 1934, which makes it possible to evaluate the initiation, organization and results of these scientific studies as explicit manifestation of the third level of the subject area of historical and scientific research—“history of science-society relations” (see Chap. 1). R. Stogdill (1904–1978) made a brilliant career as a teacher in “science of management and psychology” at Ohio University, where he defended his doctoral thesis. He cooperated with the Bureau of Youth Studies and also served as a civil servant at the American Coast Guard. In 1946, he became assistant manager of leadership studies at the University of Ohio. He is the author of numerous books and 5 In Chap. 1, we similarly defined the “business environment of the organization” as “the algebraic sum of the internal and external environment of the organization”.

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

645

articles on leadership and remains a recognized authority that made a significant contribution to the field of science. The research in Ohio was important for several reasons. Many believe that these studies substantially supplemented the technique of studying leadership, which before the 1950s was considered traditional, even when the theory of personal qualities dominated. However, in 1948, R. Stogdill compared more than 120 studies of “leader traits” and came to the conclusion that there was no serious scientific evidence to suggest that people with some special character traits or a specific set of these traits become leaders. Stogdill changed the tradition of “leader traits” by thoroughly studying the research on leadership, and in the work “Historical trends in leadership theories and studies” (1974) [49], summarizing the research experience, revealed the secret of its substantive innovation: “while some characteristic traits are common to all leaders, leadership is better considered in interaction of many independent variables, that are in a state of motion and change.” This argument in Stogdill’s experiments was sufficient to change the earlier prevailing views on leadership and to view leadership as vigorous activity. Priority had been given to studying the conduct of the leader rather than his personal qualities. The research performed in Ohio is best known for the identification of two factors or dimensions of leadership: attention to subordinates and introduction into the structure. Attention includes support for subordinates, friendliness, and recognition of each individual’s contribution towards the achievement of the common goal; introduction to the structure (or ordination) is more concerned with the aspects of orientation on the task at stake, such as management, performance assessment, and scheduling. Unlike later theorists, researchers from Ohio did not imagine these dimensions as conflicting or exclusive. Effective leaders can in fact be at a high level in both dimensions. Rather, attention and structure were thought to be more complementary than conflicting aspects in the behavior of the leader. But even despite complementarity, that had evolved into more recent methodological approaches, for instance, the known model of Blake and Mouton (1964), research on leader behavior, as well as forms of leadership, had begun to draw together, at least indirectly, on the basis of convergence of mutually exclusive assumptions about leadership and its styles. Assumptions About Leadership and Its Styles While attention to the subordinates and introduction to the structure in the studies held in Ohio were found to be parallel, many of the subsequent management developments had begun to compare the mutually exclusive leadership styles. Perhaps the dichotomy between task focus and staffing, autocracy and democracy, etc., was used for the convenience of theoretical speculation, which made it easier for managers to highlight different types of leadership behavior. Or perhaps researchers who proposed to choose from mutually exclusive styles really felt that the variety of styles can ensure a high degree of efficiency in management. In any case, this dichotomy became firmly established in the literature on management. Let’s consider, for instance, the dichotomy we face when examining the leader’s assumptions about subordinates. It was conveniently put together by Douglas

646

8 Actual Problems and Concepts of Management

McGregor in his treatise “The Human Side of Enterprise” (1960) [50], who believed that managers’ behavior less than three decades ago put them in a “face to the past and back to the future” position. In their actions they proceeded from the assumptions about staff members that might have been correct in relation to the past, but certainly did not adequately reflect the current situation. Douglas McGregor (1906–1964) was born in Detroit, Michigan. He defended his doctoral thesis at Harvard in 1935 and was also employed there until he moved to the industrial relations sector at the Massachusetts Institute of Technology (MIT) in 1937. He was later the leader of the sector. From 1948 until 1954 he was president of Antioch College, then returned to MIT and worked here as an industrial management professor until his death in 1964. D. McGregor proposed the best-known dichotomy of management: theory X and theory Y. McGregor called theory X the “traditional view on management and control.” According to this view, the leader makes the following assumptions about personnel that are under his authority: 1. Every normal person is not willing to work and seeks to evade work as much as possible. 2. Because people are not inclined to work, they should be forced, controlled, directed and threatened with punishment if they do not make sufficient efforts to achieve the goals set by the organization. 3. Every normal person prefers to be managed, he wants to avoid responsibility and is relatively unambitious. Most people want personal tranquility. However, the leader, who had acquired theory Y, which McGregor recommends as a means of “integrating individual and group objectives,” proceeds from other assumptions about his subordinates: 1. The expenditure of physical and spiritual forces at work is as natural as in a game or at rest. 2. The threat of punishment or external control is not the only means of encouraging the achievement of goals set by the organization. People have the capacity to manage themselves and to control themselves in the pursuit of the goals to which they are committed. 3. Commitment to goals is a function of remuneration associated to the achievement of these goals. 4. A normal person placed in the appropriate conditions not only takes responsibility, but also seeks it. 5. Creativity, a rich imagination, ingenuity, and creativity in solving organizational problems are often found in people. 6. In a modern industrial society, the intellectual potential of a normal human being is rarely used in its entirety [50]. The assumptions of the leader are important because, according to MacGregor, what a person believes to be the truth encourages him to act accordingly. This behavior, in turn, encourages others to act as they are expected to. This is how people create (produce, generate) self-fulfilling prophecies (which in modern

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

647

research are called the vision that is being implemented). If the leader concedes that his followers are lazy, irresponsible, and must be forced to work hard, it is likely that a system of rewards and assessment will be established to ensure conditions under which the driven will behave similarly. Clear rules and regulations will be developed, managers will control not only performance but also quality as required by the leader. Workers will quickly adapt to the new system and, ultimately, behave accordingly, as predicted by Theory X. However, if the subordinates are expected to be sufficiently responsible and mature, a system of rewards and evaluation will be developed to encourage them to act deliberately and responsibly. This will provide opportunities for professional and personal growth, control will be loosened, and workers will be more productive. McGregor was criticized for having represented a leader solely in the categories of the theory X or Y, whereas in fact the driven have certain characteristics that are described simultaneously in both theories. In fact, McGregor was certainly aware of the danger of thinking in the categories of these two extremes and pointed out from the start that leaders should consider the need for selective adaptation of assumptions. The degree of control exercised by the leader or manager should be adapted selectively to the level of maturity or dependency of the driven. Immature and dependent employees need more strict control. Probably most of the assumptions that make up theory X is more fit for them. Mature and independent subordinates do not need such strict control, and in first place they include the assumptions of theory Y. There are more reasons to criticize MacGregor for the fact that his so-called theory was not really a theory and was based on expectations rather than on evidence of the real world. The treatise “The Human Side of Enterprise” is a classic work in the considered area of study, not because of scientific feasibility, but because of the clarity of the composition and the focus on the “easy,” albeit important, section of management -the assumptions of the leader in relation to his subordinates actually determine his behavior. Like the legendary Greek sculptor Pygmalion, managers often “mould” the type of the employee’s behavior they face. In any case, the conviction that managers ‘assumptions represent the sole and primary source of our knowledge of the laziness and irresponsibility of the staff cannot be reaffirmed intuitively, and the idea has not been sufficiently explored to recognize these indisputable generalizations. Until his death in 1964, McGregor worked on Theory Z, in which he tried to connect the needs and aspirations of the corporation and the individual. This unfinished work was continued by William Ouchi, who took it as the title of his treatise “Theory Z: How American Management Can Meet the Japanese Challenge” (1981), where he tried to formulate the lessons of Japanese management. Ouchi’s Z organization theory focuses on lifelong employment for workers, concern for workers including their social lives, consensus decisions, slow career progression, excellent communication, company dedication, and active concern for high achievement quality. The importance of management assumptions has led managers and management authors to consider carefully the relative merits of different leadership and

648

8 Actual Problems and Concepts of Management

management styles. Soon the fundamental issue in leadership research would become the following: what does it mean to supervise in the best way or what does good management mean? Likert’s Four Models of Organizations Many researchers focused on styles in leadership because resorting to leaders ‘behavior immediately aroused interest in this important issue. One example of this research direction is the work of Rensis Likert “New Patterns of Management” (1961). Likert reconstitutes the types (classes) of problems that have to be dealt with if thinking about appropriate and inappropriate leadership styles, and it is based on more numerous and more reliable data than most other research in this area. Rensis Likert (1903–1981) was born in Cheyenne, Wyoming. He received his doctorate from Columbia University, worked at the University of New York and the research bureau of a life insurance company before becoming director of the Institute of Social Studies at the University of Michigan. There are many management ideas in his book, but two of them are of particular importance to managers. First, the most effective managerial leaders are those who perform the bridging function between the highest and lowest levels of the organization. In other words, the leader acting as a “link” informs his staff about the intentions of top managers, and top management about what is happening among employees. Secondly, Likert proposed his famous principle of maintaining relations, which proclaimed: leaders should ensure maximum probability that all actions within a particular organization are seen as complementary and are aimed at building and maintaining the personal dignity and value of staff. In another one of his works, “Human Organization” (1967) Likert compared various types of organizations, based on the types of management style adopted. Among the factors he used to classify different organizations were the nature of motivational incentives, the nature of communication processes, decision-making, the setting of goals and priorities, and control. As a result, he identified four types of organizations: 1. Organizations of the first type. Or, according to Likert, an exploitative and authoritarian organization. In such organizations, managers and leaders do not trust their subordinates. Motivation is based on fear, threats, and casual rewards. The flow of information goes from top to bottom, and the scant information that comes up tends to be inaccurate and distorted. Targets are imposed from above, where all important decisions are made. 2. Organizations of the second type. It’s the benevolent and authoritarian type of organizations. Leaders and their subordinates demonstrate a “masterworker” relationship. To a greater extent than in the first type of organization, subordinates are dedicated to the affairs of the organization. Here there is a more advanced system of rewards, better organized upwards information flow. The relationship of leaders and subordinates may be called paternalistic.

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

649

3. Organizations of the third type. Likert called this system the advisory form of organization, as here leaders still exercise full control, but they seek advice from their employees before making a final decision. Messages to the top are cautious and unfrank, there is no free transfer of information. 4. Organizations of the fourth type. Likert defined this type of organization as based on participation where leaders trust subordinates and are convinced that their personnel are working responsibly to achieve the goals set by the organization. Messages are clearly established, and the information flow is vertical and horizontal. Goals are formulated on the principle of complicity by people, who are directly involved in the practical solution of tasks. Most leaders create organizational structures of the second or third type, since the use of a structure of the fourth type, which Likert recommended as the preferred one, requires significant changes in the philosophy of leadership. Besides, there should be no expectation of instantaneous change. When new programs are adopted by large organizations with an extensive structure, the manager must consider that it will take at least a year before employees could feel the reality of the change, but more time will be needed to produce tangible results, noted Likert. It is probably due to this that attempts to create an organization of the fourth type is sometimes unsuccessful, because it requires time. In making the changes necessary for the introduction of a participatory system, it is difficult to maintain the trust and enthusiasm of senior management for a long period of time. Nevertheless, the results of the studies presented by Likert indicate that the time and energy spent on the transition of an organization from type 1 or type 2 to type 4 is fully justified. Ultimately, it can be noted that Likert’s ideas are consistent with McGregor’s ideas. Both authors argue that the climate created by management in the organization has an impact on the performance of staff. They also recognized that situational variables could radically influence the behavior of the leader, and they felt that greater attention to the human factor would lead to a higher level of individual and organizational productivity. In the 1970s, the “logic of events” and the “law of the situation” became much more important as factors of effective leadership. Theory of Leadership Effectiveness Not everyone will agree that the individual leadership style will be able to manifest itself in the most effective form of organizational behavior. Despite this, Fred Fiedler was the first to combine the two mentioned arguments and substantiated them with scientific research. He is rightfully regarded as the founder of situational leadership theories Fred Fiedler (1922–2017) was born in Vienna, Austria. He received a PhD in psychology at the University of Chicago in 1949. From 1951 to 1969, he worked at the Illinois State University, where he published his most significant book “A Theory of Leadership Effectiveness” (1967) [51]. The book contained the results of extensive research and eventually had a significant impact on managerial perceptions of leadership. From 1969 to 1992, F. Fiedler was a professor of psychology at the University of Washington.

650

8 Actual Problems and Concepts of Management

By developing his views on effective leadership depending on conditions, Fiedler first described the situations in which different groups of people find themselves, he used the following three criteria: 1. The power of the leader as a result of his official position. The leader’s relationship with the members of the group is largely determined by the authority he exercises over his subordinates. 2. Nature of the task. Jobs within an organization can be structured and unstructured. A structured task describes activities step by step, it is easily predictable, and in many cases it can be preprogrammed in advance. Unstructured knowledge cannot be programmed. The work of leaders of groups with structured tasks is easier, and does not require the power that arises from the official position, because largely it is determined by working place service instructions. 3. The “leader-subordinate” relationship. The relationship between leaders and subordinates “represents, in our view, the most significant and only element that defines the influence of a leader in a small group.” If leaders are deeply respected by subordinates, there is no need for a high office position to force subordinates to work actively [51]. On the basis of these three aspects, Fiedler classified the situations faced by the leader, depending on their degree of their favorability and unfavorability. Considering the three introduced measurement criteria—the position, task structure, and the “leader-subordinate” relationship—in all sorts of combinations, he received 8 separate combinations, or 8 octant. Octant 1 means the most favorable situation in which a leader finds himself: the official position guarantees strong power, a wellstructured task, the “leader-subordinate” relationship is positive. One example is a popular platoon commander in the Army. Octant 8 is least favorable: the leader’s official power is weak, the task is not structured, and the “leader-subordinate” relationship is negative. An example of this is an unpopular project manager who has complex technical problems with a team of engineers. Question of Style To determine the most effective leadership style for each of the mentioned Octant, Fiedler classified leader-group executives based on their behavior towards the “Least Preferred Staff (LPS)”. Without entering into countless details, LPS points were credited to the leader, depending on how he reacted to the staff member who was least willing to work. If the leader highly evaluated the work of his LPS, it meant that he did not give any special meaning to personal qualities and considered the staff member to be decent, intelligent, hardworking and competent, despite his reluctance to work with him. A leader who is able to separate the personal qualities of a person from his or her work and is satisfied by managing to create and maintain a normal relationship with the staff is a human relations-focused leader. Leaders who perceive LPS as negative by tying a staff member’s low productivity to undesirable traits are not rated high. Such a manager is most satisfied with the job done and is therefore defined as a task-oriented leader.

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

651

In developing these provisions, Fiedler studied many groups, starting with student groups -future civilian engineers and up to the crew of bombers. The results obtained indicate a significant relationship between the leader’s personality and the situation which he finds himself in. For each situation, a particular style of leadership is required, so the scientific direction that Fiedler founded received the term of situational leadership theory. The main result of Fiedler’s research was that leaders propelled by the idea of accomplishing a task, in general, achieve better results, and in extremely favorable situations where they have power by virtue of a strong duty position, tasks are well structured and a good “leader-subordinate” relationship is established, even in extremely unfavorable situations. On the contrary, leaders motivated by forming relationships usually get the best results in intermediate or moderately favorable (unfavorable) situations. He described these original findings in the article “Contingency model- new directions in leadership” (1974). Development of the Situational Approach in Leadership Fiedler’s studies in the framework of the situational approach had been developed in various ways and yielded fairly interesting theoretical results. Developments at the interface between leadership concepts and decision-making processes were one of the first to emerge. In 1973, Victor Vroom and Phillip Yetton’s monograph “Leadership and decisionmaking” was introduced, in which, within the model they proposed, the authors interpreted the role of leader as a function of monitoring the process in which decisions were taken in the part of the organization for which that leader was responsible. This model is an important contribution since it illustrates how effective different leadership and problem-solving styles, such as autocratic, advisory or group work-based, are. Moreover, this approach enables concluding that an effective leader can and should demonstrate a variety of leadership and problem-solving styles, depending on the type of problems and the specific timing of their occurrence. In solving some problems, such as when the time factor is irrelevant and their successful implementation is not dependent on the approval or disapproval of subordinates, the leader may be more autocratic. In other situations, an advisory and group-oriented approach would rather be needed. The challenges the leader faces are to find the style that would be most effective in dealing with a particular problem. In Victor Vroom and Arthur Jago’s article “Decision-making as a social process: normative and descriptive models of leader behavior” (1974) the authors attempted to expand earlier achieved results by developing a training program for leadership. As these authors assume, the defining qualification indicator of any leader is the ability to reconcile his behavior with the exigencies of the situation. A significant aspect of such adaptability is the ability to choose the appropriate decision-making process for each issue. In this sense, Vroom’s approach resembles the situational point of view of Fiedler, although it requires good individual adaptability and is only applicable to explaining the leader’s behavior in various decision-making processes. Another direction for the development of Fiedler ideas is the “path-goal” theory. The author of this theory, Robert House noted in his article “A path-goal theory of leadership effectiveness” (1971) [52] as the most important outcome of their study of

652

8 Actual Problems and Concepts of Management

the influence of the leader’s actions on the perception by subordinates of the goals of their work, personal goals and ways to achieve these goals. The “path-goal” theory is largely based on a known procedural theory of motivation, the “expectations theory.” Thus, the authors’ idea of the correlation and dependency of the leader’s effectiveness on the ability to reward (to the extent of his abilities) subordinates and to distribute remuneration depending on the performance of different tasks or the achievement of specific goals, is consistent with the conclusions of the “expectations theory.” Within the “path-goal” theory, the behavior of the leader is accepted by the subordinate if it leads to direct satisfaction of certain needs immediately or in the expected future. Thus, the behavior of the leader will be motivated in the eyes of the subordinates, if he links the satisfaction of their requests with performance and improves the external environment conditions for the subordinates, providing them with the support and material rewards needed to improve productivity. From a practice point of view, the “path-goal” theory offers several provisions that leaders may be guided by in their various actions that encourage higher productivity of subordinates: 1. Leaders can increase motivation by identifying and stimulating the subordinates’ needs for high-performance, that they can control. They can discuss with their subordinates potential career growth and earnings for those who perform special tasks. 2. Leaders can effectively increase motivation by paying rewards to those members of the group who achieve high productivity. 3. Leaders can facilitate the achievement of the goals set, by instructing and advising. Leaders who take on mentoring functions can, for instance, increase the motivation of the subordinates by assisting them, by providing wise advice or sharing experience, to achieve personal goals and the goals of the organization. 4. Leaders can increase motivation by formulating clear goals and expectations for subordinates. This is particularly true where there is uncertainty about the tasks of the staff. In this case, leaders can clearly identify expectations and indicate the most effective ways to achieve the goal. 5. Leaders can improve motivation by removing barriers to achievement. Nothing is more useful for highly motivated subordinates than leaders who help them achieve their goals [52]. So, we’ve been acquainted with some of the already classical leadership theories. From a comparison of points of view, it became clear that the subject of leadership proved to be more complex than the majority of researchers thought, and that this topic has for decades occupied many great minds in the field of management. It is safe to say that few managers agree today with an overly simplistic view that leaders have specific personal qualities or react appropriately in the most unique situations. On the contrary, most researchers are now occupied searching for reliable characteristics that would make it possible to predict the distinctive characteristics of leadership abilities.

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

653

The basic installation of modern leadership researchers sounds like this: “The presence of followers is the only thing that clearly distinguishes leaders from non-leaders.” Leaders are followed by their own admirers. Non-leaders do not have them. And no one becomes a leader until he finds followers. One of the preachers of the idea of priority of followers in leadership, Warren Blank, in his treatise “The Nine Natural Laws of Leadership” (1995) writes: “Followers are the element that underlies leadership, the presence of which to all and in all situations gives the right to be considered a leader. Lincoln, Lenin, King, Perrault, Ash and Wachner... became leaders when they found followers. Followers are allies who represent the obligatory downside of a coin, called leadership” [53, p. 11]. The idea that leaders have followers, and non-leaders do not, is obvious. However, the deep, hitherto hidden sense, determined by the change of a modern approach to the issue of leadership, is not so obvious. As soon as the researcher ceases to view the “leader-followers” relationship as something trivial, but makes that relationship central to understanding the phenomenon of leadership, he takes on new opportunities for a deeper knowledge of this phenomenon. Concentrating on “leader-followers” relations rather than personal traits, behavior or habits of leaders, the researcher begins to see both personality traits and leadership in a new light, that enable revealing new patterns of leadership, such as, for instance, mentioned Warren Blank, who, in the work of “The Nine Natural Laws of Leadership” (1995), formulated such leadership laws: Nine Natural Laws of Leadership by Warren Blank 1. 2. 3. 4. 5. 6. 7. 8. 9.

A leader has allied followers willing to follow him Leadership is a sphere of interaction Leadership takes place as an event Leaders have influence beyond formal authority Leaders operate outside of formal procedures Leadership involves risk and uncertainty The initiatives taken by leaders are not supported by everyone Leadership is a product of consciousness, ability to process information Leadership is a spontaneous phenomenon. Leaders and followers process information within their own subjective, internal assessments [53, p. 10]. The following is a brief description of the first three laws.

Blank’s First Law: The Leader Has Allied Followers Willing to Follow Him The first natural law states: the leader must have followers. Blank attempted to explain the hidden meaning of this simple assertion with simple words: “Most people who are aspiring to leadership initially ask themselves the wrong questions. “How do I manage?” or “What do I have to do to become a leader?” reveal the erroneous belief that leadership is assembled from part-elements. The right questions are as follows: “How do you get others to follow me?,” “What are the needs of others?” and “How do you find allies?” [53, p. 33].

654

8 Actual Problems and Concepts of Management

The author of the popular book “Jesus CEO: Using Ancient Wisdom for Visionary Leadership” (1995) Laurie Beth Jones formulates the same message as follows: “Leaders who intend to do something worthy must enlist the support of others. I notice that too many managers have subordinate employees who work formally because they are in the state but are not emotionally involved in the task... To engage others means the following: before you disappeared in clouds of smoke, leaving everyone behind you, you ensured the “loyalty” of all your staff to you and each other. Jesus constantly checked his disciples when he asked them: “Are you with me?”—and expected an answer” [37, 54]. Blank’s Second Law: Leadership Is a Sphere of Interaction The second law derives from the first. Since leaders need followers, leadership is not about the individual. To a sufficient extent leadership is the product of the relationship between the leader and the followers. Blank speaks of this relationship as an “indivisible integrity, reminiscent of a dance that reflects the interaction of the leader and the followers.” Blank adds that “leadership is better understood as a sphere of interaction. Leadership is not as personal as it is an interpersonal phenomenon. It is not a strong mind that made Jack Welch a leader. It is the people who followed him that made him a leader. Leadership at Microsoft corporation is not generated by the creative genius Bill Gates, but by a community or link that exists between Gates and his staff” [53, 55]. Thus, the main challenge for all leaders is to build a strong business relationship with other people. Blank cites Jesse Jackson’s remark that “leaders do not choose the sides as much as they bring them together” [53, 55]. Consequently, “leaders who are keenly receptive to the environment are continually forming bridges and creating areas of interaction to make others more susceptible to the initiatives of such executives” [32, 53]. Blank’s Third Law: Leadership Takes Place as an Event It is known that human relations are not eternal. Therefore, if leadership is an attitude, leaders cannot always remain in front—people who leaders today may lose their position tomorrow. But we do not expect leaders to do so. When most of us think about leadership, we tend to see it as a long process in which leaders lead, followers follow them, and the whole process continues and continues while the leader lives or chooses to exercise leadership. Blank states that this is not really the case: “Leadership takes place as an event or a phenomenon that has a beginning and an end.” The areas of interaction between the leader and the followers emerge, reach maturity and end. These areas come alive whenever a leader and a follower meet, that is, they occur as discrete interactions... If the leader commits multiple public acts—leadership events, his position may seem continuous. However, most of the events confirming the fact of leadership are short. These events take place as discrete short interactions between the leader and followers under special circumstances” [26, 53]. In other words, the life journey of leaders can be like the movement of a surfer on waves. Lee Iacocca was able to become president and leader of Ford, and was then dismissed and managed to revive as a leader at Chrysler. Steve Jobs was successful

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

655

Table 8.4 Differences between managers and supervising leaders Managers Channel business in the right direction Are interested in performance Administer Support the normal order Focus on systems and structure Rely on control Organize and recruit staff Emphasize the importance of tactics, structures, systems See the short-term perspective Ask the questions “what?” and “how?” Accept the status quo Focus on the present Summarize Elaborate on the order, stages, and timelines for completion Seek predictability and order Avoid risks Encourage staff to meet standards Use a formal, service position to influence a subordinate Require subordination from others Act within the framework of the organization’s rules, regulations, strategies, procedures Have a specific position

Supervising leaders Do the right thing Are interested in effectiveness Implement innovations Develop the organization Focus on people Rely on trust Get people working on a common task together Emphasize the importance of philosophy, fundamental values, common goals See the long-term perspective Ask the questions, “why?” and “who?” Challenge the status quo Focused on the future Look forward, beyond the horizon Develop concepts and strategies Seek change Take risks Inspire people to bring about change Use personal influence Encourage others to follow them Act outside the framework of the organization’s rules, regulations, strategies, procedures Take the lead

Source: [6, p. 25]

at Apple Company and failed at NeXT. Blank explains: “Leadership is best understood as a discrete reality. The sphere of interaction exists only as long as leaders have followers. There are gaps between the events in which leadership is embodied, such as those that exist between movie frames or between letters in words such as L | E | A | D | E | R | S | H | I | P” [12, 53]. The role and responsibilities of a leader. One way to explain what leaders do or what leaders should do is to compare the roles, duties, habits and actions of a regular manager with the roles, duties, habits and actions of a person serving a great purpose, virtual, immersed in his dreams and vision, charismatic, group-focused, emitting energy, postheroic, engendered by the new science of supervision. Table 8.4 provides such a comparison, composed by the authors of the treatise “The Guru Guide: The Best Ideas of the Management Thinkers” [6] on the basis of the work of many leadership and supervision experts. Another way to differentiate between supervising leaders and managers is to compare the vocabulary used by supervising leaders with the vocabulary of traditionally thinking managers. Leaders more often use such expressions:

656

8 Actual Problems and Concepts of Management

• Leadership requires love • The best leaders are servants • You lead by giving yourself to others. It seems strange to say that leadership requires love, or that leaders must be servants and givers, these assertions reflect the perceptions of many modern leadership researchers of what demands are made on leaders today. It is clear that these demands are significantly different from the expectations that leaders have had in the recent past. Researchers believe that a modern leader must act in a different rhythm, have a different mindset, focus otherwise on daily management tasks, and build other relationships with subordinates, customers, and shareholders. To a lesser extent, modern researchers emphasize the personal characteristics and actions of managers which were once considered important, but attach particular importance to other roles and responsibilities. In general, theoreticians highlight three fundamental shifts that occurred in the duties and responsibilities of managers: (1) from developing strategies to vision (visioneering), (2) from the role of commander to the role of a storyteller, and (3) from the role of architect of systems to the role of a change conductor and servant to other people. Each of these changes represents an important shift in the behavior of the leader. Let’s briefly outline the views of leadership theorists on these changes, using the materials of the treatise “The Guru Guide: The Best Ideas of the Management Thinkers” [6] The First Change in the Leader’s Role: From Developing Strategies to Visioneering At least since the 1920s, senior managers devoted much of their time and attention to the development and implementation of company strategies. In one of the articles published in 1994 in Harvard Business Review, Christopher Bartlett of Harvard University and Sumantra Ghoshal from the London Business School noted that “from the days of Alfred Sloan to Lee Iacocca a powerful, even heroic image of a manager of the highest rank as a strategist is enshrined in the history of business and folklore” [56, 57]. In the past, senior managers that followed such traditions “studied business synergy, balanced strategic investment portfolios” and sought to “formulate strategic intentions.” The development of strategies has long been considered a key function of management, but it is not a function that researchers believe modern leaders should spend time on. Scientists believe that modern leaders should concentrate their efforts on developing a forward-looking vision of their organizations rather than on enterprise strategy planning. As our experts claim, the problem is not that strategies have ceased to be necessary, but that policies alone are not enough. “Traditionally— Bartlett and Ghoshal explain—senior managers trying to engage employees intellectually, through the logic of persuasion used in strategic analysis.” But with clinical precision and precision, the contractual relationship does not inspire people for extraordinary efforts and a strong commitment that is necessary for continued efficiency gains” [16, 56]. Strategies do not ensure the involvement of people. Workers do not have a strong emotional commitment to strategies. Strategies answer the “What?” (and “How?”) question, but not the “Why?” (and “Who?”) question,

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

657

and knowing the answer to question “Why?” is more important. As Bartlett and Ghoshal, as well as many other researchers state, managers have to go beyond the “What?”. question to create “organizations with which people can identify themselves, belonging to whom they can be proud of and to which they are willing to be loyal. In other words, top managers should turn employees into committed members of the goal-oriented organization” [16, 56]. Karl Albrecht formulates the need for vision as follows: “In many ways the crisis in business today is a crisis of meaning. People aren’t sure of themselves because they no longer understand the why behind the what. They no longer have the sense that things are well defined and that hard work will lead to success. More and more people have feelings of doubt and uncertainty about the future of their organizations, And consequently about their own careers and futures. More and more organizations and their people are in a crisis of meaning. Those who would aspire to leadership roles in this new environment must not underestimate the depth of this human need for meaning. It is a most fundamental human craving, an appetite that will not go away” [58, 59]. Researchers rightly believe that vision is more than a battle cry, motivating staff to fight in a fierce competition for the growth of market share or to double their profits over the last year. Vision by nature is more emotional than rational. In short, it is something that touches not only the mind, but also the heart. As Karl Albrecht says, “Vision is an image of what the people of the enterprise aspire for it to be or become. The vision provides a starting point for future orientation. It provides an answer to the question of how we want to be seen by people whose opinions are important to us. A vision statement implies the presence of a noble goal and high values, something deemed particularly worthy” [59, 60]. Another American researcher Burt Nanus describes vision as “a realistic, credible, appealing image of the future of your organization, as an idea with such energy, that it, in essence, draws the future nearer in leaps, giving life to skills, talents, and resources that are necessary for the coming of the desired future, and as a guiding star for all who need to understand what the organization should be and where it should go” [21, 61]. The author of the book “Charismatic leadership” Jay Conger characterizes vision as the virtual image of a desired future state, an ideal or far-reaching dream. Warren Blank likens it “a unique, integrated lens with a high angle of capture and a great approximation, allowing people to look into the future and to reach the possibilities that the great canvas of the future holds.” [53, 62]. And Margaret Wheatley in her book “Leadership and the New Science” compares vision with a “force field that permeates the organization like a wave of energy.” She writes that “all employees facing this force field are affected. Such contacts with the field form the behavior of employees and align it with the goals of the organization” [63, 64]. Specific vision statements for various companies can be found on the websites of these companies. The Second Change in the Leader’s Role: From Commander to the Storyteller The second change in the role of leadership is derived from the first. Visionary leaders (dreamer-visionaries) should behave differently than

658

8 Actual Problems and Concepts of Management

leaders-strategists. If strategists may require and command, visionaries should encourage and enthrall. The second change in the role of leadership implies that leaders must stop commanding and learn to be skilled storytellers. The term storyteller is probably associated with the images of ancient prophets or kind grandparents who weave the lace of wondrous and fascinating stories. This kind of occupation is not very suitable for a leader, but it is precisely the task that many modern researchers advise modern leaders to perform. The greatest proponent of the concept of a leader as a narrator is the psychologist Howard Gardner. In book “ The Leading Minds” (1995), Gardner argues that “effective communication of a story is a key—perhaps the key—to leadership” [65, 66]. Having studied known historical leaders, Gardner discovers that: many of them had a storytelling skill at an early age. “Many others have made the art of an amusing narrative, whether in the form of convincing public speeches or wellprepared written documents, one of the main goals” [42, 65]. The ability to narrate, says Gardner, is “a fundamental part of a leader’s calling” and is a special skill [47, 65]. Developing the ability to tell bright, diverse stories was the second major change in leadership behavior. The Third Change in the Role of the Leader: From System Architect to Change Officer and Servant to People The third change in the role of the leader is also due to both the first and the second. If a vision is well known, is widely accepted, if it is vigorously implemented, there is no reason to report it. People don’t need leaders to make them do what they already do. The new leadership is linked to change, and in this regard, it is very different from what it was earlier. In the history of management activity, top managers of States and organizations have developed systems to define, measure and manage the behavior of middle-and lower-level managers and production workers. These systems were designed to create structures in which men and women would act as prescribed by the organization, the company, and the firm. The idea was to ensure stability, consistency and predictability. C. Bartlett and S. Ghoshal describe the traditional organization as follows: “From the top of the hierarchical structure, the executive beholds the order, symmetry, and uniformity, the accurate decomposition of tasks and responsibilities of the company into constituent parts. Low-level managers regarded with reverence the falange of controllers, satisfying whose requirements consumed most of the energy and time of the lower-ranking managers. The result, in the words of one of the top managers and president of General Electric Jack Welch, was an organization, turned face to top management and back to the consumers” [64, p. 88]. In this structure, information and capital flows should be at the highest level, where executives make decisions, allocate resources, set priorities, define responsibilities, provide jobs and control resource management. Senior managers are the only real entrepreneurs. Ideas generated at the bottom of such a structure are subject to detailed documentation and study and rarely overcome these bureaucratic obstacles. The entire system is “managed vertically... is oriented towards financial performance and is based on authority” [64, p. 88].

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

659

In the opinion of scientists, the problem with such systems is that the resources of companies are fragmented, vertical channels of communication are created, isolating units of one company from each other and preventing them from joining forces. In general, such a construction of a company makes it less than the sum of its constituents. People are consumed solely by the consistency of orders transmission and accomplishment of tasks provided by the staffing table. Bartlett and Ghoshal write: “The system that ensures conformity by ensuring task definition, measurement and control also inhibits creativity and initiative. Stripped of individuality, people often engaged in the very behaviors that the system had been designed to control. At best, the resulting organizational culture grew passive; with a feeling of detachment and maliciousness, employees implemented corporate-led initiatives that they knew would fail. At worst, the tightly controlled environment triggered antagonism and even subversion; people deep in the organization found ways to undermine the system that constrained them” [67, 68]. Today, researchers say, this type of system leads to disaster. For example, James Champy, who came along with Michael Hammer as a pioneer of the movement for reengineering business processes at organizations, in his book, “Reengineering of Management: The Mandate for New Leadership” (1995), writes: “In the stormy sea we now float in you must have a culture that encourages qualities like relentless pursuit (by force equal to the action of our clients), bottomless resources of imagination (to create needs among our customers, the existence of which they, perhaps, do not know of) and both smooth teamwork and individual autonomy (necessary to meet the demanding standards of clients). You cannot have a culture of subordination to the chain of command and the requirements of the staffing table. This culture just doesn’t work nowadays. Markets will punish you for your commitment” [69, 70]. Learning by Doing or Teaching Leadership? Another issue that we’re going to discuss on the topic of leadership is: “Can leadership be learnt?” In most scientific works, the answer is: “It is possible to learning leadership”. And Peter Drucker candidly stated that “Leadership cannot be taught and learned/some elements of leadership can be learned.” After all, nearly three quarters of American companies send their staff to executive training courses every year. Psychologists and anthropologists film future leaders in action, conduct surveys and interviews of people working with future leaders, members of their reference groups, their supervisors, and give those who seek to be leaders the appropriate recommendations. Real men do rock climbing and have difficulty living in the wilderness under the guidance of personal development specialists. They help future leaders “go beyond their abilities” to develop their passion for leadership. Virtually all business schools offer management training courses that include the theory of leadership. Theorists also preach their own leadership choices, and many even have their own schools. All of this confirms the idea that management, supervision, and leadership can be taught. You can quickly and easily master techniques, skills, and communication methods. You can learn theories, strategies, and tactics of leadership—all that are taught in short courses and weeks of seminars.

660

8 Actual Problems and Concepts of Management

On the other hand, it is also obvious that it is not easy to acquire or develop feelings, intuition, emotions, discernment, desire, caring, empathy, euphoria, that is, the passion inherent in leaders, and indeed the passion for leadership, which is what makes people the chiefs of others. The wisdom that can be learned in short-term leadership courses will help the course attendee become a better leader, but will not make him a leader if he is not. So, how do you become a real leader who has all the feelings, intuition, aspirations, and other qualities that distinguish him from one who had gone through very good training of an ordinary leader? The following are the three main conclusions of leadership theorists in this regard. Genetics and Early Childhood The majority of scientists believe that two circumstances contribute to leadership capacity: good innate aptitudes, both mental and physical, and the experience of early childhood, “that lights the fire of leadership in the heart.” There is still a broad and lively debate about what genetic traits, apart from intellect and physical energy, have an impact on leadership potential. Some experts believe that the leadership gene is embedded in DNA, others reject that opinion. We note that the importance of early childhood experiences is less controversial. Education Guru researchers believe that in order to learn leadership, it is necessary to have a proper education. Please note: researchers speak of education, not vocational or specialized training. This is an important distinction because, as is noted in the book “Management of the Absurd: Paradoxes in Leadership” by psychologist Richard Farson: “Learning by doing, as we know, leads to the development of skills and techniques. Education on the other hand, leads not to technique but to information and knowledge, which in the right hands can lead to understanding, even to wisdom. And wisdom leads to humility, compassion, and respect—qualities that are fundamental to effective leadership. Training makes people more alike. Education, because it involves an examination of one’s personal experience in the light of an encounter with great ideas, tends to make people different from each other. So, the first benefit of education is that the manager becomes unique, independent, the genuine article” [71]. Life Experience Third, management theorists insist that any manager needs to gain leadership experience at the beginning of his career. Such experience is important for the leader’s development of many skills and approaches, as it teaches people that leadership is a difficult venture and that managers have the opportunity to make changes in their organizations. Conclusion The development of views on leadership revealed both systemic concepts and elemental and aspect concepts of leadership. In short, the list of systemic leadership concepts that have developed sequentially (sometimes overlapping in time) looks like this:

8.2 Leadership Concepts: From Leadership Qualities to Learning and Service

661

1. The theory of the Great Man. (Author—Thomas Carlyle, Time—1840s. The main idea: “Leadership is an innate human trait,” given from God! The weakness of the concept—there is no scientific confirmation of this theory). 2. Theory of leadership traits (Ordway Teed, 1920–1930s. Weakness—contradictory qualities of “leaders”). 3. The theory of leadership behavior (Kurt Levin, 1930s; Ralph Stogdill, 1940–1970s. “Weakness”—different behavior of the same leader in the same situation, “unpredictable behavior”). 4. Theory of leadership style (Kurt Levin, 1930s; Robert Blake and Jane Mouton, 1960–80s, various forms of leadership behavior). 5. Situational Leadership (Fred Fiedler, Hersey Blanchard, 1970–1990s, Leadership Is Determined by the Environment). In “the intervals” between the named “systemic” concepts, various elemental and/or aspect concepts of leadership have been developed and continue to be developed: autocratic leadership, consultative leadership, ethical leadership concepts, leadership of cognitive resources, leadership “engine,” charismatic leadership, lateral leadership, distributed leadership, relational leadership theory, theory of followership, motivational leadership, adaptive leadership, moral leadership, etc. For the most part, the concepts have arisen, modified and disappeared as a result of their inconsistency or the manifestation of a paradigmatic anomaly, “unable to answer” the emerging questions of the real management of social objects. The characteristics of most of the listed leadership concepts are given in [5, 6, 10, 47– 54, 56, 59–61, 63–66, 72–76] and in the proceedings of the 17th HMT&B conference at the MSU “Scenario management and Leadership” (2016) [3]. Perhaps only the first concept—“leadership is an innate human trait,” reflecting the relationship “Leader and Followers,” is the most stable in its manifestations, although it does not find scientific substantiation. Its “only” practical confirmation is still objectively existing billions of Followers among Leaders who have long since passed away. Besides the works of Han Fei Zu and other thinkers and rulers of the ancient world mentioned in the second chapter of the tutorial, the concept of the relationship of “The Leader” and “Followers” (often in images of the “Public,” “Crowds”) developed in the writings of researchers, such as English historian and philosopher Thomas Carlyle (1795–1881) “On Heroes, Hero-Worship, and The Heroic in History” (1841) [77], French historian, psychologist and sociologist Gustave Le Bon (1841–1931) “The Crowd: A Study of the Popular Mind” (1871) [78] and French criminologist and sociologist Gabriel Tarde (1843–1904) “The Public and the Crowd” (1899) [79]. In the twentieth century, the preference for “followers” was clearly given by the aforementioned Blank Warren Blanc [53]. Among modern works emphasis on “followers” was rather completely reflected in the articles of Andrey L. Zamulin “A New View on Followers of the Leader: Theory and Practice” (2009) [80], Elena B. Petrushikhina “To the issue of the theory of following” [70, 81], in Morgen Witzel’s treatise “History of Leadership” (2019) [8, Part 2, “Slave of God”].

662

8 Actual Problems and Concepts of Management

If “Leadership” is seen as the relationship of two subjects, the “Leader” and “Followers”, then sooner or later the concept of cognition should have appeared in this couple of subjects, more of the essence of “Followers”, not only and not so much attention is to be paid to the Leader (to identify his qualities, to study his behavior in various situations, and accordingly, teach different kinds of interpretations of Leadership, etc.). However, speaking of leadership in the management of a social organization, it is still necessary to keep in mind the essence of the term “management of organization”, which has a number of attributes, including above all—“purposeful” (See Chap. 1). The scientific-practical question then sounds as follows: “Could it be that the Head of the organization (formally calls himself a “Leader”, but honestly admits that he is an “unsuccessful Leader”), should start forming “Followers” to achieve the purposes of the organization?”. Note that the purpose of any organization implies the solution of such a task: “What makes the Head of the organization and the Leader effective?” Researchers of the “crowd” subject area, relating to sciences such as psychology, sociology, politics, and now management, do not hide a pragmatic interest in studying and the development of “crowd” theories, stating that the “crowd” phenomenon is the key to success in many areas of activity. By studying the “crowd” phenomenon, it will be possible to form public opinion, opinion of buyers of the organization’s products, opinion of employees of the organization, influence the preferences of employees, and will also allow to properly handle the “crowd”: to direct it in the right direction, to deviate from the wrong direction, to inspire useful ideas and to change its mood, as well as to anticipate its actions. As the famous Russian sociologist Pitirim Sorokin wrote, referring to the works of G. Lebon and G. Tarde, “the life of a man among large clusters of people proceeds according to special laws; it is necessary to know these laws and treat the “available mass”, the crowd with knowledge of the deed and befitting care” [57, p. 67].

8.3

The Ethics of Business and Management

The concept “ethics” comes from the ancient Greek “ethos.” It is believed that the term “ethics” was first introduced by Aristotle, who understood ethics as wisdom of life, “practical” knowledge about the nature of happiness and ways to achieve it. Later, when Cicero translated Aristotle’s works into Latin, he used the Latin word mores (hence morals) for “ethics.” The Russian word for Aristotle’s “ethos” is “нравственность.” In other words, the notions of being ethical, virtuous and moral are identical in their fundamental meaning. Many researchers, referring to Aristotle’s observation from “Nikomach’s Ethics,” that the good, considered from the point of view of promptness, will be different in different domains and sciences—in the warfare, medicine, sports, etc., are coming to conclusions, which at first sight seem paradoxical. On the one hand, there are many cases, when entrepreneurs, bankers, journalists, deputies and other professional groups were trying to comprehend the ethical canons of their business behavior, to

8.3 The Ethics of Business and Management

663

compose their respective Codes of ethics. In their attempts, they seem to have done without certified specialists in ethics, which means that the ethical life goes on without any direct participation of the “science of ethics” [82, pp. 5–6]. On the other hand, philosophers recognize the ethical criticism in the sense that the morals do not speak about what they seem to be speaking, that the unconditionally categorical character of its demands cannot be in any way justified, it “hangs in the air”—and yet, “the morals in all its illusority and groundless categoricality are still there. Ethical criticism of morals does not eliminate the morals, just as the heliocentric astronomy did not eliminate the illusion that it the Sun, which goes around the Earth. Morals continue to function in all their “falseness,” “estrangement,” “hypocrisy,” etc., just as they functioned before the ethical denouncements. . . Like modern desk calendars, which, as though out of spite to Kopernik, every day state the time of “sunrise and sunset,” people in their everyday lives (especially parents, teachers, rulers and other high-ranking persons). . . continue to preach morals” [82, pp. 8–9]. We could go on intriguing the reader with the ideas of experts in ethics in general and in applied ethics in particular—like Machiavelli’s inference that “one cannot be a good ruler without simultaneously being a moral criminal” or Adam Smith’s assertion that the market leads to the wealth of nations through economic agents’ pursuance of their own profit rather than through their altruism. Or Marx and Engels’ words about “the bourgeois class, who drowned the sacred awe of religious ecstasy, knight’s enthusiasm and philistine sentimentality in the ice-cold water of egoistic calculation” [82, p. 12]. However, we will formulate the “modern” questions of the famous Russian specialist in general ethics Abdusalam A. Huseynov, for their further study in the context of business ethics and managerial ethics: “Does the social (human) reality, the comprehension of which was the classical image of morals, still exist? In other words, is it possible that the classical ethics of our talks, papers and testbooks is relevant no longer?... Has not the time come for us to look more critically at the heritage of the classical philosophy and to question the definition of morals as unselfishness, unconditional obligation, universally significant requirements, etc.? Can we do just that without giving up the idea of morals and without substitution of the game of life with its glass beads imitation?” [82, p. 15]. Let’s introduce some definitions that are most up-to-date in the scientific community and that we will need in the future. Value orientation is a subjective perception of values. It is the value orientation of an individual, which determines his social attitudes and social significance of particular objects. The formulation of a certain value orientation must include the object and a value judgment about this object; the addition of a concrete positive or negative (“not do”) action transforms it into a social attitude [16]. Morals are sets of value orientations and social attitudes, which allow to judge any decision-making process in terms of its possible harmful or beneficial effects on the third parties [16, 83]. Ethics are either a set of norms and principles of behavior of an individual or a group of individuals, used in a given epoch and social environment, which shape

664

8 Actual Problems and Concepts of Management

people’s ideas of acceptable and unacceptable behavior or the study of morals and proper morality (virtue) with the aim of teaching people to be good and righteous. Ethics in the proper sense of the word is the Doctrine about how to act, how to behave, how to live and for what to live. Professional ethics is a particular application of the general moral principles to a certain professional occupation, which determines the specificity of ethical norms and rules of behavior, for example, the ethics of a doctor, ethics of a judge or lawyer, the ethics of a seller, ethics of a researcher or teacher, the ethics of a manager. Professional ethics is characterized by two main features. First, it establishes the relevant profession as the norm-setting ethical authority. Second, it describes those exemptions (deviations) from the general moral principles that are dictated by the logic of this particular profession. Within a concrete professional context, such exemptions are not seen as deviations, but as adequate expression of the spirit of these general principles.6 Applied ethics is a set of principles, norms, and rules based on the normative ethics that perform the practical function of teaching people to behave appropriately in particular spheres of activity and in concrete situations. Unlike professional ethics, the applied ethics is concerned with moral issues of general significance (rather than with professional behavior) and considers particular moral situations (not norms). Examples of such issues are capital punishment, euthanasia, transplant surgery, chemical weapons production, sales of weapons, etc. Examples of applied ethics: the ethics of bio-medical science (or bio-ethic), ecological ethics, ethics of law, ethics of science, economic ethics (or entrepreneurial ethics), business ethics, management ethics. The differences between applied ethics and professional ethics become obvious when we consider the example of medical activity and bio-ethics, which are the most ancient and developed phenomena in this category. Professional medical ethics aims to identify exceptions to the general morals, determined by the specific character of the profession and justified within its context. At the same time, medical ethics proceeds from the assumption that adequate behavior in medicine can only be ethical. Bio-ethics differs from it in the sense that it eliminates the specifics of the situation around illness in order to prove the necessity and possibility for an individual of retaining his ethical autonomy even in extreme cases, in which bio-ethics is interested par excellence. Medical activity as seen from the point of view of bio-ethics is not confined to corporate and professional issues, but is considered within the broad context of economic and social relations including direct social responsibility of the state to its citizens [84, 151–152]. Political ethics determines acceptable forms of fight for power and use of power. It is within the domain of political ethics where discussions are held about goalsetting, about possible and acceptable impacts, etc.

6

Hence the medical activity is not only an intermediate link between the general morals on the one hand and a doctor’s decisions and actions on the other; it becomes a source of “professional” morals as they are reflected in the professional “medical” ethics.

8.3 The Ethics of Business and Management

665

In order to introduce the concept “the ethics of economic activity” we will need object-related and core definitions. Business (economic activity) is understood as the process of carrying out by an individual of the dealing, which involves a transaction made with another individual on certain conditions and the totality of corresponding relations. The definitions of the terms “organization” and “management of the organization” are given in Chap. 1. Business ethics (or ethics of economic activity) determines the very foundations of any economic system: what form of ownership must exist in society, how people can and ought to earn their bread and living, what are the priorities in the production of goods, what kind of goods allocation is to be considered fair, etc. Management ethics poses to itself one general question: how to take and implement ethical decisions in the process of running economic activity or an organization? [16]. The role of modern institutions of religion in the formation and development of managerial thought in the subject area “ethics of business and management” should be especially emphasized. As an example, let us give a brief description of “The Code of Moral Principles and Rules in Economic Activity,” which was adopted at the eighth World Russian People’s Council, held in Moscow in February 2004. The Code of Moral Principles and Rules in Economic Activity “This set of moral principles and rules is proposed for voluntary acceptance by the heads of enterprises and commercial structures, entrepreneurs and their communities, employees, trade unions and all other participants in economic processes, including state bodies and public associations involved in economic activity... The moral principles and rules formulated below are based on the ten commandments given by God, as well as on the experience of their assimilation by Christianity and other religions traditionally practiced in Russia. However, these principles and rules should not be taken as a literal interpretation of the biblical text. Rather, we are talking about provisions derived from God’s commandments in their broad understanding, as well as from centuries of religious and moral heritage, including Russian. The set of moral principles and rules describes the ideal model of economic activity, which does not exist now, but for the embodiment of which we can and should strive in everyday life. Perhaps reality will not be in line with this document for a long time. But it is impossible to say in advance that the purpose of following it is unattainable, for in pursuit of a pure conscience and decent life, man with the help of God can go through paths as hard as he pleases, even if the matter concerns such a difficult sphere of human existence as economics” [85]. The basis of the “Code” is the following “Commandments of the business man”: The Commandments of the Business Man “Commandment 1. Without forgetting about the daily bread, one must remember the spiritual meaning of life. Not forgetting personal good, one must take care of the good of one’s neighbor, the good of society and Fatherhood. Commandment 2. Wealth is not an end goal in itself, it should serve to create a decent life of man and people.

666

8 Actual Problems and Concepts of Management

Commandment 3. The culture of business relations, loyalty to this word helps both the person and the economy to become better. Commandment 4. Man is not a “constantly working mechanism.” He needs time for rest, spiritual life, creative development. Commandment 5. The state, society and business should jointly take care of the decent life of workers, especially those who cannot afford their bread. Commandment 6. Work should not kill or cripple a person. Commandment 7. Political power and economic power must be divided. Business involvement in politics, its impact on public opinion can only be transparent and open. Commandment 8. By appropriating someone else’s property, neglecting common property, not recompiling the worker for his labor, deceiving one’s partner, the person transgresses the moral law, harms society and himself. Commandment 9. In competition you cannot use lies and insults, exploit vice and instincts. Commandment 10. The institution of property, the right to own and dispose of property must be respected. It is immoral to envy the well-being of your neighbor, to encroach on his property... The state of the economy directly depends on the spiritual, moral state of the individual. Only a person with a good heart and a bright mind, spiritually mature, hard-working and responsible, will be able to provide for himself, benefiting his neighbors and his people. Let it be so in Russia, which has entered the XXI century” [85]. The problem of business ethics has always been among the urgent tasks of religious organizations in the formation of moral values of the individual. So, in November 2011, in Moscow, international symposium was held on the subject “Ethical aspects of banking and the social role of banks: experience of Russia and Italy.” Greeting its participants, the Patriarch of Moscow and all Russia Kirill emphasized that “Wealth should be a result of productive work, blessed by God and contributing to the fulfillment of His plan and His idea about the world. Economic activity can only be sustainable when capital is the equivalent of real values created by people. A most important guarantee and conditio sine qua non of success of a businessperson’s toils and their good reputation is the creating of morally healthy climate in business relationships and among employees, which is inconceivable without establishing high standards of professional ethics” [86]. The Origins and Sources of Ethics of Business and Management Let’s start with the statement that management ethics and business ethics as kinds of applied ethics are not only parts or sections of the general ethics as the study of ethics and morals. In the same, or, probably, greater degree they belong to management (governance) and business as special domains of human scientific and practical activity. While studying the literature relevant to the topic of this paragraph we were interested not in the examples of business and management ethics per se, but primarily their preceptorial, educational, and pedagogical character, which has

8.3 The Ethics of Business and Management

667

formed a kind of the permanent, eternal foundation, as well as basic elements, of our notions about people’s ethical and unethical behavior in their economic activity and in management of organizations as groups of individuals, and secondly, following the subject of HMT, identifying the causes of repetitions and differences of basic ideas for solving ethical problems in business and management. It is easy to see (or, after all, believe) that exactly as long as there has been management activity (as targeted impact of one entity on another), problems of interpretation of the ethical and non-ethical production of goods and services (e.g., in pharmacology with a focus on the result of production) what is related to the subject of business ethics, and ethical and non-ethical management of this kind of productions (with an emphasis on ethical or non-ethical behavior of the company managers) existed. As we have seen on the materials of the first chapters, we are talking about a multi-millennial history of management activity. And if so, in search of data carriers about the views of representatives of different eras (including ancient ones), peoples and regions of the world on the ethics of management the historian of management thought should be ready to search and to work with such data carriers that existed before the advent of writing (and this is, according to Mark Block, in the “craft of the historian” [87]). In other words, ideas and thoughts for the purpose of survival, human reproduction in the era of lack of writing could and did be transmitted through ancestral memory only orally, from mouth to mouth, reaching our times in the form of myths of ancient peoples, in legends, stories, sayings, proverbs, fairy-tales In my HMT classes, I often formulate the following homework—“Give sayings and proverbs in different languages that have the same meaning.” In response, I get amazing answers claiming to be social laws, like the results of centuries-old observations and as independent claims of the representatives of peoples that had not had any form of communication—trade routes, common language, wars, common “state” borders, etc. For example, compare: “By the lips of the baby the truth doest speak” (Russian saying) and “Children and...(fools) tell the truth” (English saying). Let’s talk about fairy tales just below.7 With the advent of writing these ideas came to be written down, acquiring the significance of written sources of management thought, which assisted in performing many functions common to all mankind, including educational and pedagogic ones. The system of writing, used by peoples who inhabited the Ancient Egypt, the basins of Nile, Tiger and Efra, the ancient states of Mesopotamia and later spread beyond Schumer, Akkad and Babylon, came to be called cuneiform. Mastering this system of writing was a difficult, demanding enterprise, it took long years. Besides, it was only possible for the select few, because they were initiated into understanding the signs as symbols. Only children of priests, grandees, top managers, major officials, and high-rank courtiers had access to this kind of learning. There were special schools, the so-called houses for the learning of writing, middle-class people

7

This and other homeworks are provided in the Test Questions and Annex 1.

668

8 Actual Problems and Concepts of Management

were dreaming of getting there: ability to read and write meant a brilliant career of a government official. In the ancient time officials tended to have an excellent upbringing and education. Schools were established at temples and palaces, since literate people were required for temples’ economic activity and for governmental departments. Appropriate and decent behavior was a sign of belonging to the elite and the learners, who dealt with related problems, devoted a lot of time to religious and ethical studies. Along with the issues of general state governance (optimum organization and security of state and society, rational economic activity, preventing discontent and social tension, jurisprudence) they discussed the questions of the ethics of behavior in the presence of the wisest people, in the family, with subordinates and superiors. Among the most important sources reflecting the subject matter of the “Management Ethics” I would specially point out various treatises of the Ancient East literature: teachings, instructions, recommendations, quotes from speeches of ancient rulers, in which authors stated their ideas about the business and personality qualities their heirs were to possess in order to manage successfully the regal, templar and grandees’ property, to rule states, nomes, cities, polices, and countries. It is important that teachings and instructions of the ancient rulers, as we have already learned from the previous chapters, were treated as divine guidance, since the supreme rulers of archaic states (pharaohs, tsars, bogdyhans, emperors, etc.) and were presented by myths and perceived by people either as gods’ vicegerents on the Earth, or as prophets expressing gods’ will. This “proximity to gods” of the supreme rulers explains why the Ancient East literature had such a pronounced statenormative and regulating character, why the world is seen by the written sources from these rulers’ standpoint. Hence their instructive, dogmatic and at the same time didactic character. The very titles of the treatises are most revealing: “The Teaching of Ptachotep”(XXV B. C.), “The Teaching of Achtoy the Tsar of Geracleopol to his son Merikara”(XXI B.C.), “The Teaching of Achtoy, son of Duauf, to his son Piopi” (XXI B.C.), “the Teaching of Pharaoh Anemehmet I” (XX B.C.), Laws of Hammurapy (XVIII BC). The later treatises: “the Teachings of Ani” (XI B.C.), “The Teaching of Amenemope” (X-VIII B.C.), “Household” by Xenophon (IV B. C.), as well as known in Russia since XI A.D. teachings “from father to son”, for example, “Teaching” by Vladimir Monomah (XII A.D.), “Domostroy” by Silvestr (XVI A.D.) offer not only advice on how to manage a household, but also rules of everyday morals and traditional ethics. Here are some of the ethical guidelines from The Teaching of Achtoy the Tsar of Geracleopol: “Do not ruin the man who meets the regulations. . . Do not be irate, beautiful is the goodwill, increasing the longevity of your monuments by the (people’s) love to you. . . Revere your grandees, bestow wellbeing on your people. . . Enrich your grandees and they will comply with your laws. The rich in his own household is never biased or unfair, the owner of property is never dishonest. He, who has not, cannot speak as is proper; saying ‘Oh, if I had. . .’, he is not straight because he is jealous of the one who has wealth. . . Say maat in your estate, and grandees will venerate you. . . Do not treat differently the son of a noble and the son of a commoner; bring closer to you the man who has done work with his hands and

8.3 The Ethics of Business and Management

669

every craft will be accomplished. . .for the power of the (regal) ruler. . . Be merciful to the one who asks for help, satisfy his needs, use the sealed (sacrificial stocks), there is no piety hiding (in inaction). It is good to do for the future”8 [88, pp. 17–19]. In “The Teaching of Amenemope” it is written: “Do not strive for gains to satisfy your wants. If you obtained your riches through plunder, they will not stay a night with you; at dawn they are already outside your home, their place can be seen, but they are not there. . . they have grown wings like geese and flown into the sky”9 [89, p. 318]. When talking about sources from Ancient Egypt we should point out their generally known influence on the Bible: historians have revealed many cases of such impact. Thus, for instance, the Bible’s story about the Jews’ exodus from Egypt includes the following episode: Moses “divided” the waters of the Red Sea and led all the Jews, who walked on the dry land—the bottom of the sea—from one shore to the other. In the Ancient Egyptian papyrus “Madam Westcar,” named after its first owner, or in “The Stories of the Sons of Hufu” (the ruler of the IV dynasty, XXV B. C.) an Egyptian priest (magician Geadgeamananh) also “divides” the waters of a pond, to get a hairgrip, which had previously fallen in that pond. The Bible’s book “Solomons’s parables” is similar to the above-mentioned Egyptian teaching in style and structure. Thus, in the already quoted “Teachings of Amenemope” we read: “Lend me your years and listen (to the words) I have said, turn your heart to the understanding of them.” In “Solomon’s parables”: “Incline thy ear, listen to my words and turn your heart to the understanding of them.” Obviously, this similarity is not accidental and the Egyptian text is the primary source. It can well be supposed that the teaching texts form Ancient Egypt were largely the basis of canonical statements (e.g., the now accepted religious commandments), which express universal norms of morals and ethics. Another source of norms and fundamentals of ethical economic activity was the laws made by ancient rulers, of which the best-known and most popular are the laws of Mesopotamian tsars Ur-Nammu (XXII B.C.) and Hammurapy (XVIII B.C.), Middle Assyrian and Hettian laws (XVIII–XV B.C.) [90], each containing several hundred clauses. Most of them were concerned with theft, stealing and corresponding punishments. But there is also clause of a different nature, for example, the following, tenth clause from the Hettian laws: “If someone causes harm to another and maketh him ill, (then) he must look after him. He must send a man to the house of the injured, who must work there instead of him until the injured recovers. And when he recovers, the guilty must give him 6 sickles10 of silver and he also must pay the fee to the doctor” [88, pp. 330–331].

The word “maat” means truth and fair customs to be followed by the tsar and people. It was generally believed that such customs, established by the god-creator, determine the existence of the world. 9 “The Teaching of Amenemope”, addressed to his son, dates to the era of the New Kingdom of Egypt (eleventh century. B.C.). It was written by the ancient Egyptian sage, who had broad powers to manage the state affairs of Egypt [89]. 10 1 cycle (Mesopotamian measure of weight) was equal to 8.4 g. 8

670

8 Actual Problems and Concepts of Management

Despite the abundance of norm-establishing documents intended to fight theft and state funds embezzlement, these processes expanded in ancient states on a massive scale and increasingly engendered new strict measures to fight them. A vivid example of such a normative document is “The Decree of Horemheba,” prepared by the pharaoh Horemheb (ex-commander of Egyptian army), who was reigning the Ancient Egypt (1337–1306 B.C.) soon after the short rule of the religious reformer Ikhnaton.11 At that time Egypt was in dire need of a strong and also wise leader, since after the reform the country was undergoing dramatic changes in the effects of the centrifugal forces: many Palestinian, Phoenician and Syrian princes, the rulers of their respective nomes of the Egyptian state, who had previously been obedient to the Egyptian tsar, started to behave independently and ignore his orders, which resulted in actual disintegration of the great empire. In Horemheb’s view, one of the reasons why it happened was the growing abuse of power and extortion practices of officials; hence the adoption of the Decree. Circulated in all nomes, the tsar’s decree stated severe penalties against bribery and embezzlement by government officials: “[Appointment of judges]. . .short-spoken, well-behaved, able to judge, listening to the Tsar’s speech and to the laws of the Court of Justice. I appointed them to be judges in Egypt. . . I instructed them on the right path and directed them to the truth. My teaching for them: do not hobnob with others, do not take a bribe from another. . . It is most unseemly when one of you hobnobs with others! Is it good for you to do injustice against the righteous?.. As for the duty paid in silver. . . my majesty say it must be abolished12 in order to prevent collecting the duty in the form of any objects from officials of the Courts in Upper and Lower Egypt. As for any local prince or priest, about whom it will be heard that he is sitting to do injustice against the righteous, this will be imputed to him as a crime, which deserves death” (allocated by us—V.M.) [88, p. 126]. On the whole the rulers in Ancient Egypt were “generous” in terms of capital punishment as a means to punish the state officials’ immoral or unethical behavior. As Herodotus wrote, “Amasis13 issued the following resolution to Egyptians: every Egyptian was to annually declare his income to the local governor. Those who failed to do this and declare any legal kinds of income were liable to death penalty.” Thousands of years later the norms condemning unethical economic activities, similar to those of the Ancient Egypt, appeared in the teachings of the Russian rulers to their heirs and in the Russian legal documents—in the “Russian Truth,” in Codes of Law, judicial charters of vicegerent governance, land and rural charters (gubnye and zemskye gramoty), etc. Here are, for example, some of the instructions of Vladimir Monomakh (1053–1125) to his children in the treatise “Teachings”: “Do not compete with the

11

Tsar Ikhnaton (“pleasing to Aton”) was against worshiping the multitude of gods (the total number sometimes included 1000) and announced Aton—“The God of the solar disk”—as the supreme and singular god of all Egypt. 12 Literally: give back against her. 13 Or Yahmes II—the ancient Egyptian pharaoh who ruled in the period 570–526. BC.

8.3 The Ethics of Business and Management

671

evil, do not envy those who violate justice, for the evil shall be destroyed, and those obedient to the Lord shall possess the land.” And a little more: “And there will be no sinner: look at his place, and you will not find him. But the meek will inherit the land, and many will enjoy the world. The sinful shall abuse the righteous, and will grind his teeth at him; and the Lord will make fun of him, for He sees that his day will come. The sinners have extracted weapons, draw their bow, to pierce the beggar and the wretched, to immolate those right at their heart. Their weapons will pierce their hearts, and their bows will be crushed. It is better for the righteous to have less than for abundant wealth to go to the sinful. For the power of the sinners will be crushed, but the Lord strengthens the righteous. For the sinners will perish; and the righteous will be spared and endowed... Refrain from evil, do good, find peace and drive away evil, and live forever” [91]. Almost in every act of local government of the twenty fifth- to twenty seventhcentury Russian centralized state one can find clauses prohibiting accepting “posuly” (bribes) and punishing the bribe-takers. For example, clause 1 of the Sudebnik (Code of Law) 1497 (passed by Ivan III) demands: “pronounce judgment to boyary and okolnytchiye. . . and bribes must not be taken by boyary and okolnitchiye and diaky from those who complain and request judgment” [92, V.2, p. 54]. Sudebnik of 1550 (passed by Ivan IV) for the first time in Russia outlines corpus delicti for bribe-takers (e.g., unlawful ruling by the court resulting from taking a bribe) and measures of punishing the judges in the form of material and criminal liability (article 3). By Clause, a dyak, who, having being bribed, executed a fake court record or incorrectly wrote down the testimony of the parties or witnesses, was to pay half of the claimed amount and “be thrown into gaol.” For the same offence a podyatchy was to be “executed by merchant execution, be beaten with whips”(article 5) [92, V.2, p. 9]. By gubnyie and zemskye charters, bribery was punished more severely. Thus, according to clause 13 of Medynsky gubnoi nakaz, if “starosta and tselovalnik start taking bribes in cases of robbery and theft and in tat’s affairs,14 then, by the order from the Tsar and the Great Prince,15 that starosta and that tselovalnik are to be in execution16 and for sale17” [92, V.2, p. 222]. In the context of the topic of business ethics it may be worthwhile to consider the “innocent” ancient folk tales, including the Russian ones, which have been passed on from generation to generation. Many of them effectively illustrate elements of business ethics in decision making in the course of economic activity based on agreements. We offer two examples. The first is the Russian folk tale “Pravda i Krivda”18 (“Truth and Falsehood”), in which Krivda-Falsehood attains great success (compared to his brother, Pravda-Truth) in economic activity due to unfair practices.

14

Theft Cases. Ivan IV the Terrible. 16 The death penalty. 17 Fine in favor of the Great Prince. 18 This folk tale is in essence the Russian variant of the Ancient Egyptian tale “Story about Truth and Falsehood”. 15

672

8 Actual Problems and Concepts of Management

He also tries to persuade his brother that one cannot live according to the principles of fairness. In the same tale there are victims of “fair practices” (an old dog, a horse, and a feeble old man) and demons celebrating the victory of unfair economic behavior. Despite the healing of Pravda’s eyes and his subsequent economic success, the tale’s overabundant examples of “unfair practices” leave much greater impression on the young reader than Pravda’s survival and Krivda’s defeat and death. The other example is the Russian folk tale “Vershki i Koreshki” (Tops and Roots), where muzhik (peasant or plowman) and a bear together engage in economic activities, every time making a new agreement on how to divide the produce. In the first case, when wheat was sown, muzhik suggests the rule: “I take the tops and you take the roots” and wins. In the second case the bear insists on the opposite approach to the produce division and again loses (because this time they grew turnip). In both situations muzhik’s behavior is legally correct but unethical, since he started negotiation from the rule of division and not from the object of division. As in the first tale, economic unfairness triumphs here too. More than that, it triumphs without breaching the law. A child’s memory, having grasped the image, will carry through life, first, vivid examples of unfair practice and, second, rules of how to implement such unfair practice in order to beat the competitor. Another important document of the Russian ethical and management thinking is “The Domostroy” (literally: “house establishment”) written by Silvestr (about 1578) [93], and the main characteristics of which we have given in session 4.4. It is probably the first Russian book devoted entirely to private economic activity, rather than state governance. Before that, since eleventh century, books similar to Ancient Egyptian and other “Teachings” had been published, both original and in translation, but they were all socially biased. Their authors were not only child-loving fathers, and besides, a spiritual father (like Patriarch Gennady and his “Stoslov”), or rulers of the country (like Vladimir Monomach and his “Teaching”), military commanders (“Instruction from Father to Son” brought out in fourteenth century), or wise men (Egidy Kolonn and his Instruction for the son of the French king Philip III the Bold). Such people had the right to give instruction to others at the all-state or social level, although in fact each of the authors most often instructed the heirs in the rules of inheritance. One of such (before “Domostroy”) translated instructions addressing the ruler was the treatise of “Basil Greek Tsar” (late XV century). However, by the middle of the sixteenth century, when a serious experience in entrepreneurial activity had been accumulated, market relations had significantly developed (particularly in Novgorod and Pskov regions) and new social and economic relations had evolved, it became necessary to create similar “instructions” for the commoners. This is when “Domostroy” appeared, addressing middle-income city dwellers, merchants, estate-owners (“how to build estate”) and new state servants, who became quite numerous in Russia of that period. In style and language Domostroy is much more practical than all the previous instructions and teachings. In Silvestr’s edition it consists of three interconnected parts or “establishments”: “spiritual establishment” (religious instruction) [93,

8.3 The Ethics of Business and Management

673

articles 1–15]; “lay establishment” (about family relationships [93, articles 16–29] and “household establishment” (recommendation on economic activity [93, articles 30–63]. Besides, this edition also includes a special, extra article “Letter and Instruction from Father to Son,” which is the author’s digest of the whole book and at the same time his explanation of Domostroy principles, which is based on his personal experience and relates to everyday life situations [93, article 64]. According to the opinion of V.O. Klyuchevsky, the Ancient Russian word “stroi” (“establishment”) also had the meaning of “science.” It is then possible to say that Domostroy consists of three “sciences,” which gives us grounds for considering Domostroy to be the first attempt in Russia to create the science of household management. The first chapter of Silvestr’s treatise, “Instruction from father to son,” opens with the words: “I, the sinful (name) give my blessing to my son (name) and his wife and their children and their relations and I teach them and instruct and reason with them: to follow all Christian precepts and live with a clear conscience and in truth, doing the will of God following His commandments; to strengthen and steady himself in God’s fear and righteous living, teaching also the wife and children and relations and servants—not by force, or beating, or slavedom back-breaking—but like with children, so as they were always calm, and well-fed and dressed, and in warm house and always in order” [93, article 1]. These are followed by many useful recommendations against the background of ethical characteristics in the relationships between the head of household and their family and servants. That is what is going to happen to “those who live without calculating anything”: “Every man, rich and poor, big and small—must calculate and outline everything, based on the business and income, as well as property and possessions; a state official must calculate everything, based on the salary he receives from the tsar and income and estate. . . If somebody, without calculating or outlining his life and business and income, will look at others and start living beyond his means, borrowing or taking illegally, such honor will turn into great dishonor with shame and disgrace, and at a hard time no one will come to help him, and it is also a sin against God and a laugh from people; every man should avoid vanity and pride and sinful meetings, he should live according to his strength and ability and calculation, on legal income. For this kind of life is appropriate and pleasing to God and praised by people, and for oneself and the children safe and secure” [93, article 27]. Here is a precept that belongs to the domain of social responsibility: “. . .The master and the mistress always ought to be on the lookout and ask their servants and the weak and poor about their needs in food and drink and clothes and all necessities, about every their meagerness and scarcity, about their doings, and about all those needs, in which one can aid for the sake of God, as God will help, and wholeheartedly, like with their own children and kith and kin; but if man does not care about this and does not sympathize with those, let on him be anathema; he who with love and wholeheartedly cares and always does so, he will receive great blessing from the Lord and forgiveness of sins and eternal life will be bestowed on him” [93, article 51].

674

8 Actual Problems and Concepts of Management

The importance of the issue may justify the extensive quoting of the Domostroy, which is based on the orthodox ethics and aimed at maintaining stability and inherent integration in the family “business” unit. By and large, these recommendations are the religious basis of the Russian household. Since they were given before the split of the Russian Orthodox people into two groups, one may suppose that it was the Old Believers who more consistently maintained the traditions of the Orthodox ethic. At the very beginning this ethics was orientated to the sobornaya (“congregational”), rather than to the individual nature of human consciousness, to its collectivistic quality. It was collectivistic ethics, that is, the ethics of individuals united by collective moral values. This explains why in Domostroy the author often lists all the participants of the household, although he addresses his precepts and recommendations to the son. We have touched upon the Split and Old believers because in the latter we see that layer of society, which for several centuries has kept and developed the original traditions of the Orthodox economic and business ethics. This is evidenced by a number of sources that emphasize the significant role of the zealous Old believers in various industries of the Russian economy. In our opinion, a most profound and extensive research into Old believers’ economic and business ethics has been done by researchers of the nineteenth century [94–96], as well as treatises of modern scientists O.L. Shahnazarov [97] and V.V. Kerov [98]. The nineteenth-century researcher into the Old Belief P.I. Melnikov pointed out that in the late-eighteenth and early-nineteenth century Moscow Old-believer merchants “formed the centre of the Russian trade and industry” [96, p. 325]. A.P. Tshapov, one of the explorers of the subject, asserted that from the second half of the eighteenth century old believers “took over. . . many fields of trade and industry”; they came to own “trade and items of local industrial production,” which turned “Moscow and near-Moscow factories into schools and propagators” of the Old belief, just as factories in Ural, spinning mills in Gorbatov, wholesale trade companies in Nizhny Novgorod, ship enterprises on the Volga and Oka and many others [94, pp. 290, 292, etc.]. V.V. Andreev described the Old believers’ community as “industrial corporation,” “trading and industrial community,” “economic community” and maintained that in the first half of the nineteenth century “major Russian capital is predominately amassed in the hands of the followers of the Old Belief” [95, pp. 18, 127, 129, etc.]. At the turn of the twentieth century the contribution of Old believers to the development of the Russian industry was recognized even by statesmen. Thus, the Finance Minister I.A. Vyshnegradsky declared that the Old believers “in the Russian trade and factory business are a great power; they founded and developed our domestic factory production to perfection and thriving” [73, 97]. S. J. Vitte did not find it shameful to visit the Makariev-Nizhegorodsky fair, which was started by Old believers, in order to meet and “converse” with them [72, 97]. Russian professor Valery V. Kerov in his treatise “Behold a man and his work ...” (2004) [98], dedicated to the formation of the economic ethics of the Russian Old Believers, writes: “The Old Believer master felt himself not so much a private owner as a responsible authorized person before God and society, for your Cause, your

8.3 The Ethics of Business and Management

675

destiny, the destinies of other people and faith. The perception of the Cause as a personal Christian feat determined the zealous attitude of Old Believersentrepreneurs towards it. This concept oriented the Old Believers to modern entrepreneurship and, in interaction with other confessional and ethical components of the Old Belief, gave rise to a new business culture. Its most important components are not only personal honesty and conscientiousness, but also the need for organizational work of the owner, personal responsibility for the business of both the entrepreneur and his employees” [98]. Why now, in the present-day Russian economy, do we take such active interest in the Old believers’ ethical norms of economic and business activity (and even pose the question of their current applicability)? There are at least two reasons. First, even when it is done by legislation, direct introduction of the borrowed foreign models of business ethics in the Russian society, with its different social environment, does not yield good results. Second, Old believers’ work and trade ethics had been the basis of their communities’ successful business model for four centuries (including the first decades after 1917, due to the inertia of the Russian economy and individual mindsets of state economic policy decision makers). The enormous contribution of these communities to the national economy means that Old believers’ work and business ethics were a crucial factor of the country’s economic success. Descriptions of Old believers’ economic and business activity prove that their models are fully up-to-date business models causing admiration of specialists in business-modeling. The economic activity of an Old believer community was organized as follows: in the center was the communal “treasury”; it was surrounded by large and medium-sized businesses belonging to the members of the community; the next “circle” consisted of a multitude of small enterprises—suppliers, also owned by community members. In fact, the community “treasury” was a source of capital and performed the role of the Western two-tier system “money-lender—bank.” Later, due to the lack of funds and in order to spur economic activity, “Old believer banks began to appear, but they continued to carry out the specific, clearly defined function: credit organization of confessional character” [71, 97]. Communities exchanged information about local markets. “This enabled them to promptly assess the situation, formulate economic and business strategy, influence pricing, create production chains and introduce timely changes in these chains, coordinate supplies of inputs. Old believer producers could not go bust in competition with other Old-believers. There was no competition. On the contrary, factory-owners that achieved success and stability considered it to be their duty to assist their starting brothers with inputs and working capital at below-market rates, without requiring to pay interest, on long-term credit” [64, 97]. “Old believers could not sell or close down a factory without their community’s approval; the latter had the authority to pass it to other people when a merchant family degenerated and was no longer able to efficiently manage the property, which was seen as a source of social wealth” [69, 97]. In Old believer factory villages there appeared hospitals, workers’ clubs (alcoholfree taverns), schools, factory stores, libraries and sometimes factory theatres. At one of the factories of “Tovarischestvo Manufaktur A.J. Balina” in Vladimir region, in

676

8 Actual Problems and Concepts of Management

which 15,000 people worked in 1900, “there were separate hostels for single persons. For experienced workers there were 7–8 flat buildings. Accommodation was free. Those who wanted to build their own house could obtain interest-free loans to be repaid in several years. Medical treatment was also free. There was a stonebuilt hospital for 50 beds with separate departments for men and women, operation theatre, a surgery, pharmacy and maternity hospital. In the nearby wood a TB sanatorium was located. The disable and the old were supported by “Tovarischestvo,” there was a home for the old people. In the village there was a professional technical school with evening classes for the working youth. Teaching and library were free. By 1910 there was a People’s House with a theatre hall for professional and amateur artists. One percent of profits were deducted to the pension fund. The right to the pension was given to workers who had been employed at the plant for at least 25 years, as well as those who had lost their employability, widows with young children, childless widows and orphans. The pension was assigned at 25–50% of the average salary. Workers were given the opportunity to participate in the profits of the enterprise” [97, p. 64] (see also [99]). The representative of the Old believer family of Ruabushinsky Vladimir Ryabushinsky in his work “The Russian Master” gives many vivid examples that present the image of an Old believer merchant and point to those characteristics of the Old believer economic ethics, which show its difference from the Protestant ethics (despite their superficial similarity). In particular, Protestant theologians openly allowed bankers to charge interest on loans granted, although medieval Catholic Church considered it to be a grave sin and prohibited lending money on interest. Besides, he writes, “in Moscow merchant circle there was a special ranking of various kinds of economic activity. The most respected was involvement in industry: plant and factory owners occupied the highest place. They were followed by merchants. As for those doing commercial accounting, even without any hint at usury and at lowest possible interest, the attitude to them was not sincere: showing respect when meeting and contemptuously calling them “protsentschiki” (interestpickers) in their absence” [100, p. 3]. In the families of Old believers “charitable activity was developing: they built churches, schools, hospitals, homes for the old; money was spent on slavyanophil editions. At the same time, professional pride was fully maintained” [100, p. 5]. Most researchers into the Old believer entrepreneurship emphasize the role played by the principles and forms of organization of Old believer communities, where mutual help and mutual support was developing. Today B.P. Melichov, one of the leaders of the Russian kazatchestvo, (communities united by traditional values and lifestyle) has proposed a program of development of households and enterprises of the Russian kazatchestvo, which is similar to the Old believer business model [62, p. 7]. The relevance of the problems of ethics of management led to the holding of two international conferences on HMT&B in 2012 and 2013, at which representatives of different countries spoke and expressed points of view about the reasons for the development of ideas on the ethics of household keeping, ethics of management,

8.3 The Ethics of Business and Management

677

social integrity, etc. The proceedings of the conferences are published in Russian and English (see [3, 16, 101–103]). In addition, in 2014, we conducted a study of the development of views of Russian scientists and practitioners on professional ethics of management in postreform Russia of the twentieth century (from 1990 to 2010), that enabled systematizing the knowledge accumulated during the historical period under review, and most importantly—to identify factors of its development [14]. Between 1990 and 2010, about 100 monographic works and articles were published in Russia on the topic of “ethics of business and management.” The analysis of these works allowed to reveal a number of key factors of the development of business ethics and management, as a scientific and practical discipline, which in the early years of the market economy of Russia was formed in complex and contradictory socioeconomic conditions. Real management practice of participants of Russian business in those times was very often very distant from the generally accepted moral guidelines, which largely explains the concern of Russian scientists who attempted to draw the attention of the scientific community and the general public to the unsatisfactory state of the domestic ethics of business and management, both in general and to the lack of development of this topic in particular. We shall give a list of identified factors of business ethics and management development as the subject area of management science, and their brief characteristics: 1. Objective Factors—factors that are conditionally beyond scientific discipline. 1.1. Ideological factor—influence of the existing ideology on the formation of the scientific concept. The cardinal and abrupt change of the ideological course in Russia predetermined the specificity of the attributes of the ideological factor, which has had the greatest influence on the development of views of Russian researchers of business and management ethics. We have attributed this factor to the third subject level of research on the HMT (see Chap. 1). 1.2. The factor of paradigmal anomaly is the emergence in socio-economic reality of such phenomena (anomalies) that do not lend themselves to scientific explanation by methods of the existing paradigm. We have attributed this factor to the first subject level of research on the HMT (see Chap. 1). He had quite a big influence on the development of views of Russian researchers. 1.3. The communicative factor is the removal of restrictions on access to various sources of information that were inaccessible to most Russian researchers in the previous historical period. This factor has had a moderate influence on the development of views of Russian researchers. 1.4. Feedback factor—the possibility of researchers obtaining information about the reaction of society as a whole or of its individual groups to particular ideological and socioeconomic changes in society concerning the subject of study. This factor has had a moderate influence on the development of views of Russian researchers.

678

8 Actual Problems and Concepts of Management

2. Subjective factors—characterize the dependence of results on the personality of the scientist-researcher, and representatives of the scientific community and even on the change of value orientations of individual groups involved in complex processes that shape business ethics as a socioeconomic process and as a scientific theory. We have attributed these factors to the second subject level of research on the HMT (see Chap. 1). 2.1. The factor of actualized personal engagement—the direct interplay of the events described by the researcher in his work, and the researcher himself, often appearing a direct witness or participant of problems arising in society. This factor has had a great influence on the development of views of Russian researchers. 2.2. The factor of historical personal involvement is the mediated influence of those events, which the researcher describes in his work, on the formation of his scientific concept. This factor has had the least influence on the development of views of Russian researchers. One of the results of the conducted research is that the central part of the majority of publications of Russian researchers constituted core values and norms of business ethics and management, which, from the point of view of the authors, should be used and respected by managers and other business participants. Justification of the need to comply with these norms and values represents an important contribution of researchers to the change of economic ethics in post-reform Russia [14, pp. 19–20]. Conclusion There is a complex of objective reasons at the present stage of the development of society, giving rise to the need for research into the problems of business ethics and management. Chief among them is the ever-growing harm of unethical, dishonest business conduct and management, which manifests itself in the relationships of employees within companies, in relations with suppliers, consumers and other business partners.In addition, millennial problems remain relevant. Really, having read the results and conclusions of the study and various advice, instructions and teachings in the field of economic ethics, morals and morality, given in this paragraph, passed down for many millennia (!) by word of mouth, from generation to generation, after all, formed as clear, neat phrase-commandments, together with A.Huseynov, you cannot cease to wonder: “How can such a Code of Rules of “Ethical Business and Management” with a millennial history, which has often proved its efficiency, has not yet become a stable norm and/or value of each person individually and of all Humanity as a whole? What makes a person violate the precepts of their ancestors—their artificiality or ...?... Perhaps the explanation and the answer lies in the fact that each new generation has adapted these commandments to the corresponding “modern” conditions and stopped following them, being guided and at the same time justifying by the rule “new conditions—new behavior”? [26, 82]. Or is our formula confirmed again: “The New is a combination of the Old under New Conditions!” and the idiographic nature of this formula and Management as a Science?

8.4 Digitalization of Management: Nirvana or Nemesis?

8.4

679

Digitalization of Management: Nirvana or Nemesis?

Let’s begin this paragraph with reasoning about the “phenomenon of economic figure” in the management of economic organizations producing goods and services, and with the questions posed by researchers of economics. Modern “popular” discussions about the possibilities of digitalization of the economy and economic life (or “human life”) are exposed in their “popularity” to great doubt by economists, sending participants of the discussions and readers of the articles on digitalization of the economy into antiquity, in times when the number and value figure, as a measure of estimation of production, commodity and monetary and other relations of business participants at any level—from personal to state, in any industries and regions of the world. And “only now in the golden age of electronic and digital technologies, economic science boldly, if not frantically, talked about figures in the economy, putting forward the idea of a “digital economy”, however, not overly noticing the eternal digital fundamentalism for any of the historical economies. There is nothing new in terms of the existence of a figure in the area of economy, and if something new in this presence of the numbers suddenly appears, what exactly: what in essence and function kind of figure, whose figure, in what relation to cost and generally to economics, with what historical role?” [104, p. 5] And further: “The Economy is a digitized substantive something that digitates economic consciousness sitting in it, and also economically digitalizing everything non-economic around which falls into the zone of influence of value (money), turning it all into permanent (like gold and the very same labor) or as its temporary (like van Gogh’s painting at auction) affiliation. Here there is an effect of economization of existence, its transformation (partial) into a well-known, albeit variously interpreted, economies, and in our way—economic household. The value figure, expressed in various changing numbers and wandering through the space of the economy, is the own content of the economy, adequate to it corporeal, its irreplaceable virtual body. The digit (number) must be the same as the value, and the value must be the same as the number (digit). Economic (market-exchange and valuation) consciousness is what commits this joint procedure—through trial and error, repetition and correction, of course, public consciousness—noospheric, where there are and in which myriads of individual (personal, collective, mass) consciences are actively involved” [104, pp. 212–213]. In this context, today’s excessive infatuation with the digitalization of the management of the organization, as a new entity is indeed surprising, although we have noted more than once in the tutorial the many attempts to develop and implement new technologies that contribute to decision-making in the management of organizations, rationalization of the management of organizations, for example, C. Babbage’s developments in the nineteenth century, the PERT methodology of the 1950s, the Production Process Control Automation Program and even “Systems for Optimal Functioning of the Economy” in the second half of the twentieth century

680

8 Actual Problems and Concepts of Management

in the USSR. And in 2017, Russia adopted the National project “The Digital Economy” (implementation deadline—December 31, 2024), created special government bodies for the purpose of its implementation, a system for training specialists and managers is being formed with an emphasis on the formation of competencies in the field of digitalization of economic and management processes, etc. There are no denying achievements in the application of these concepts and methods (or Nirvana), but we must not forget the fundamental limitations of digitalization and automation of social objects and processes of management of these objects and even some negative consequences and aftereffects in their implementation (or Nemesis). That is why we called this paragraph of the tutorial,19 in which we will attempt to trace the processes of development of views on digitalization and robotization of management of social objects by publications of the past 10–15 years, highlighting the causes and factors of success and failure. And today in the Russian economy the national program (project) “Digital Economy” has been adopted, special public administration bodies for the purpose of its implementation have been created, a system of training specialists and managers with a focus on the formation of competencies in the field of digitalization of economic and managerial processes is being formed, etc. And why did we start the paragraph with the economy? Only because using the words and arguments of (us satisfying) Professor Yuri Osipov: “The best thing economic science was able to give is to speak and speak after the ancient Greeks that the economy—oikonomia—is a household keeping, and according to the dictionary of foreign words—management of a household without thinking about what kind of “household keeping” or some kind of “management of the household” (and what is then, in fact, the “household” itself, if here it is... not “economy”?!) is performed by the same industrialists, bankers, traders, corporations, states, international economic organizations, in general all kinds of economic actors, very far from, say, any “households” and their “keeping”, as well as certain “economies” with their “management”?” [104, pp. 9–10]. And also: “But the economy, with all its selfdetermination and ambition, does not exist by itself, but permeating the life of the person, or the economy of the person,20 defining him, managing him, but at the same time reckoning with him, adapting to him, absorbing him into itself informationally and energetically feeding from him. All functional (working) goodness of the economy derives from value, and all its value “corporeal” derives exactly from the life-government context in which the economy shall be and on which it greedily and quite successfully parasitizes” [104, p. 13]. To determine the role of AI in the digitalization processes of social object management, it is necessary first of all to understand how AI definitions relate

19 Following the example of the title of one of the reports at the AOM conference in August 2018: “Digital HRM: Nirvana or Nemesis?”. 20 The economy itself is not an economy at all, but a holistic life of a person, although the economy is an unconditional household, rising to a special life—through cost, for its sake and under its power aegis.

8.4 Digitalization of Management: Nirvana or Nemesis?

681

with management functions and other elements of management systems. According to S. Russell’s classification presented in the book “Artificial Intelligence: A Modern Approach,” definitions of artificial intelligence can be divided into two categories: in the first artificial intelligence is evaluated in terms of thought processes and ways of reasoning, and in the second, from the position of actions carried out by it [105, p. 65]. In addition, the scientist proposes for familiarization eight definitions of artificial intelligence, broken into four categories. From this work, we have selected four definitions in terms of using AI as a tool for digitalization of management of social objects that are of interest to us. In addition, we will provide several definitions of AI that IBM experts give in the AI for Everyone: Master the Basics course hosted on the educational platform edX: 1. “Automation of actions we associate with human thinking, that is, actions such as decision-making, problem-solving, learning...” [105, p. 65]; 2. “The study of such computations that allow you to feel, reason, act” [103, p. 65]; 3. “The art of creating machines that perform functions that require intellectuality when they are performed by humans” [105, p. 65]; 4. “The science of how to teach computers to do what humans currently outperform them in” [105, p. 65]; 5. “Teaching machines to learn, think and act like a person” [106]; 6. “Applying machines to solve problems in a reasonable way with the help of algorithms”[106]; 7. “Computer Sciences Section dealing with the Simulation of Sensible Behavior [106].” All these definitions somehow claim, among all else, that AI will be applicable in the management of social objects. Speaking about the development of views on the digitalization of the management of social objects, it is worth highlighting the works considering the automation of production. One of the first such works is C. Babbage’s treatise “On the Economy of Machines and Manufactures” mentioned in Chap. 3, which was published in 1832. The scientist himself is also known for being the author of the “analytical machine” project. His colleague Ada Lovelace (daughter of daughter of the famous English poet Lord Byron) was involved in the development of programs for C. Babbage’s computing machine, reflecting on the fact that in the future machines would be capable of writing music and playing intellectual games, like chess [105, p. 52]. The next important work on the principles of the organization of material production is A. Ure’s work “Philosophy of Production,” which he wrote in 1835. In it A. Ure continues C. Babbage’s ideas of specialization, urging the organizers of production to increase its mechanization and introduce self-functioning machines. Ideas closest to digitalizing in the early twentieth century were expressed by American engineering technologist Frederick Taylor. In his paper “Principles of Scientific Management,” he formulated a number of ideas on how companies could effectively combine labor and machine power. His ideas intersected with those of H. Gantt. In Gantt’s view, all risks and randomness should be eliminated in order to

682

8 Actual Problems and Concepts of Management

optimize management. The ideas of Frank and Lillian Gilbreth were also distinguished, according to which the task of management is to eliminate production losses and reduce the fatigue experienced by workers. It is also worth highlighting how the development of the views of domestic scientists on the digitalization of management took place. Here I would like to note the development of the first Soviet school of management—the scientific organization of labor (SOL). Many ideas of Taylorism have been reflected in the principles of SOL, as discussed in Chap. 7. Especially the ideas of F. R. Dunaevsky, among which were both the transfer of routine work to machines and automation of control. In the 50–60s, there was a “management boom” on the territory of the USSR, as a result of which the ideas of automated management systems (AMS) were developed. The ideas of automation are also evident in the methodology of SOEF. In the 1970s, attempts were made to establish systems for complete automation of production and enterprise management. Such systems include SWAS, proposed by academician V. M. Glushkov in the 1970s [107]. The famous Soviet mathematician and economist, winner of the Nobel Prize in Economics Leonid V. Kantorovich also proposed a certain mechanism that would align the interests of enterprises with national economic plans. However, in the course of these works a real system capable of making managerial decisions was not created. At their core, these were rather tools to ensure the collection and processing of the data needed to make decisions [107]. The works of the above-mentioned scientists and practitioners are mentioned in Chaps. 3, 6 and 7 of the textbook. Today, considering attempts to digitalize various types of production, one can draw a parallel with Taylor’s teachings. The market already has lamps adjusting the color temperature to the specific mode of operation, in order to make the biological clock think that the working day is in full swing. Amazon has registered patents for a bracelet indicating ways for employees to move efficiently through the warehouse using vibrations. IBM has applied for a patent for a system controlling employees with sensors. It is about pupil dilatation sensors and facial expression control to use this data together with information about the quality of sleep and schedule of meetings, to send a drone with a caffeinated drink. The company assumes that this way it will be able to get rid of coffee breaks and increase the working day [108]. Ideas of digitalization and Taylorism seem even closer to each other if you try to match them directly. Examples of some digital technologies that provide the ideas of Taylorism are presented in Table 8.5. There are also negative “coincidences” in the after effects of the implementation of the ideas of digitalization of the management of social facilities, and, above all, in the management of production processes. In all cases, there is a gradual exclusion of a human from the process under study (both as an object and as a subject of management), ethical problems and risks associated with the working environment arise. Mass substitutions of humans with robots, over-scripted operations will increase the number of strikes, which will entail interference in business by regulators. Automation is a great challenge for humanity, as it fundamentally changes the principles of how people are used to work. Every organization wishing to move to digital tools will face a difficult choice between reducing people’s impact on the

8.4 Digitalization of Management: Nirvana or Nemesis?

683

Table 8.5 Comparison of Taylorism ideas and digital technologies List of Taylorism ideas Empirical data collection Process analysis Efficiency and avoidance of unnecessary spending Neglect for tradition Mass production on a large scale Standardization of best practices

Example of digital technology with this functionality Video analytics Internet of things, video analytics ERP systems, CRM systems Analysis of corporate correspondence to improve communication Robotization of production in order to increase its volumes Using unified systems, e.g., 1C

Source: compiled by the author

workflow, preferring artificial intelligence or its use for the purpose of coordination of workers, as well as in the form of expert systems. The case with illustrations of AI implementation in customer service management in Walmart stores in 2019 is very instructive: “The employees of this “advanced” store complain that they constantly feel humiliated. The soulless robot knows and understands everything better than they do. If earlier each supermarket had a manager to whom you could go with questions, now all the main decisions are made by the system. If earlier each Walmart was slightly different in character from all the others, depending on the people who were in charge of it, now everyone who has such an AI platform works identically. “Soulless.” Firing or leaving, some joke, is like a promotion to customer. Man is needed only at the most primitive stages. And everyone understands this” [109]. And the choice, in this case, depends not only on the company itself, but also on the nature of the problems it tries to solve by introducing automation. Algorithms cannot be classified into bad and good; the success of digitalization depends too much on the scope in which it is applied, the degree of preparedness and willingness of people to change. For example, automating transactions and repetitive jobs (features that ATMs and mobile apps have taken over today) frees up people’s time for more interesting and meaningful tasks. If we are talking about complex solutions that require human qualities such as delicacy, understanding of emotional and external context, algorithms can be used to improve efficiency by optimizing their shared contribution rather than individual competencies. In other words, algorithms can be used not to control and monitor subordinates, but as a breakthrough stimulant in organizational structure and work culture. As the practice successfully applied by ING Bank can be given as an example of successful implementation of this idea. The company’s management, inspired by the examples of leading companies represented by Netflix, Google and Spotify, has engaged in reorganizing its traditional departments. The work was carried out in the departments of product management, marketing, the IT department, agile teams and divisions united by common tasks. Peter Jacobs, IT Director at ING and the creator of this transformation program, explained in his interview with Mike Walsh that in large companies there is a possibility that employees will lose the sense of meaning

684

8 Actual Problems and Concepts of Management

and purpose in case large projects are fragmented into small components. In other words, turning the workflow into a virtual pipeline reduces employee motivation, preventing feelings of responsibility and involvement in the common business of employees. In this case, on the contrary—there is a bias towards individual indicators [108]. There will soon be more possibilities to use algorithms to combine the competencies of different employees, ranging from virtual interactive whiteboards to complex personnel selection systems for a specific project. Cases of such use of algorithms already exist. In particular, Publicis, a marketing research company, already uses algorithms to coordinate and define tasks for a staff of 80,000 employees. Regardless of whether a new project is being worked on or under negotiation, the algorithm is engaged in the selection of personnel with the right competencies, be it managers, programmers or designers. Staff selection is done in such a way that their work together ensures the best outcome. Such technologies appear not only in marketing, but also in many other areas [108]. This kind of digitalization, implying the collaboration of algorithms and humans, enables creating a growth strategy without compromising the flexibility of the organization. Walmart is taking advantage of the opportunities of so-called ergonomics and hiring freelance employees, seeking to compete more effectively with Amazon. The famous Swedish company IKEA has acquired the platform of freelancers Task Rabbit to reduce the number of incorrect assemblies of its products. Today, the largest employers in the world are platforms: Uber, Yandex, Delivery Club, which help with short-term hiring of employees [108]. Unfortunately, these platforms are not without flaws and can be used for manipulation or malice. Planning systems are flawed and can create unfair working schedules. In terms of automated scheduling, it can be used effectively to manage the costs of companies. Depending on the volume of sales and seasonality, you can quickly manage staff. But such a system can also be configured so that the organization can avoid certain obligations. Thus, in the summer of 2013, Forever 21, a company selling clothing for teenagers, started using the Kronos platform to optimize the workforce. After 2 weeks, full-time staff received a notice of transfer to part-time employment. In addition, this communication was accompanied by news that their health insurance had been terminated in order to reduce costs. As a result, employees pressed charges against the company [108]. In his paper titled “Why algorithms can mess things up,” Mike Walsh suggests the “most honest” way to apply the HR platform. According to the author, it should cover the entire structure of the company, from junior positions to top management, and management should be carried out according to principles common to all. In 1971 American philosopher John Rose proposed a thought experiment called veil of ignorance. Rose created the theory, according to which, the best way of making important decisions is to extrapolate their effects on themselves without the possibility of to further influence them. Using algorithms in their activities, managers must follow this principle when developing personnel management systems [108].

8.4 Digitalization of Management: Nirvana or Nemesis?

685

Artificial intelligence and digital technologies offer many opportunities for more flexible and efficient organization of work. But in order to use these tools effectively, you need to understand how they affect subordinates. Nowadays, almost every company has faced automation in one form or another. From work computers that have become something of a routine to complex ERP systems that help ensure smooth and efficient operation of the organization. Today, companies are trying to improve their efficiency, while reducing costs, and against this background, one of the most discussed tools of digitalization in management is artificial intelligence. This is evidenced by multiple studies by well-known scientists, reports by consulting and analytical agencies, as well as by the best managers of modern times. In particular, Ajay Agrawal, Professor of Strategic Management and Entrepreneurship at the Munk Rotman School of Management at the University of Toronto devoted a book titled “Artificial Intelligence in the Service of Business” to the application of AI in business. In it, the scientist comprehensively describes all aspects of the application of artificial intelligence in management and outside the organization. According to the author, the main power of AI lies in the ability to give predictions that a person will be able to use in his activities. Agrawal offers two ways of interaction between man and machine: in the first case a person gets a machine forecast and compares it with his, and in the second case everything happens the other way around, for the purpose of implementing control over people’s activities [9, pp. 92–93]. Klaus SHvab—President of the World Economic Forum in Davos—in his treatise “The Fourth Industrial Revolution” (2019) considers digitalization and artificial intelligence as a factor in the Fourth Industrial Revolution. The economist describes the historical context and driving factors taking place in the world of change. In the third part of the book, K. Schwab covers the impact of digitalization on the economy, business, countries, society and the individual. According to the author, there is now a change in competition rules towards the fact that companies and countries should innovate in all areas rather than reduce costs [110, pp. 31–33]. The book also refers to the impact of automation processes on employment, study of the Oxford-Martin program, according to which much fewer new work positions are created during the fourth industrial revolution than during previous revolutions. In support of this data is given that only 0.5% of the population of the United States today are employed in areas that did not exist at the time of the beginning of the century [5, 110]. However, K. Schwab urges not to fall into panic, saying that in the process of digitalization existing occupations will also be changed so that in the process of human-machine interaction people will get more interesting and creativity-demanding tasks, while AI will take on routine work. At the end of the book, the author cites 21 profound changes that will indicate a breakthrough in AI and give each a comprehensive assessment. Special attention for managers deserves the issues of using big data in business, the participation of AI in the decision-making process as a member of the board of directors, as well as the influence of AI on workplaces for white collars. Discussion of aftereffects of digitalization gives rise to opposing opinions on whether to introduce these tools into human activities or not. Daniel Kahneman, a prominent American-Israeli psychologist, in his interview for HBR Russia in

686

8 Actual Problems and Concepts of Management

October 2019 described the advantages of algorithms over humans [111]. According to the scientist, “the human mind is prone to simplifications.” This is the fault of the concept of anchoring. The scientist describes it as fixated on information that has already come into our focus. The human mind does not want to look for new aspects and words. According to Kahneman, it is necessary to consider any project from beyond, not relying on one’s own experience, but doing it statistically. The problem is that human estimates carry a lot of “noise,” and second, the degree of distortion of information by this noise is not fully known to those people who end up responsible for decision-making. The advantage of algorithms is their freedom from noise. If you let the algorithm to solve the same problem repeatedly, then the answer will remain the same, while a person in a similar situation can change their answer. Today, algorithms are trusted to perform a larger number of tasks, and one of the reasons is the absence of errors peculiar to humans. A similar point of view is held by Yu. Bondar in his article “How Robotization Can Help Business” [111]. According to the author, when working with large volumes of data, the robot does everything faster and better than a person. It immediately sees the characteristics it was set in the algorithm, ignoring other information. In an article by Tew Bloommart and Stefan van den Bruck, “On the Cusp of the Singularity: How Management Will Change in the 21st Century” (2018) [112]. Thanks to this, managers will be able to spend more time solving problems. We need to think of AI as a technology that will aid in decision-making rather than doing it for managers. By shifting some of the administrative work to AI, managers will be able to develop their creative and social skills thanks to the freed-up time. That is, a person will be able to focus on work that only a person can do. According to Evgeniya Dvorskaya, CEO of the Sever.AI HR service, another advantage of using AI, for example, in personnel management, is that when using it, you can get a more objective assessment, since the research can be carried out in real time, unlike evaluations of specialists, which are of a retrospective nature [113]. But like any other technology, the application of artificial intelligence and other digital tools in management has its opponents, and they cite many other factors, in addition to the possible increase in unemployment. So, according to V. Solomatina—HR director at SAP CIS one of the main problems of using AI is that, for example, for correct operation of the algorithm, it is necessary to define its functionality in advance and structure information for everyone involved in working with this algorithm, which not all companies are doing today in attempts to implement new tools faster [114]. Vera Starodubtseva, head of the ACCA office in Russia, believes that there are a number of other problems [115]. In her opinion, not enough qualified specialists for a full-scale launch of AI on the market. Moreover, because of the novelty of technology, there is currently no unified view of what it represents. Also, one should not forget that for the functioning of many of the AI technologies, for example, machine learning, a large amount of data is required. Today, not every company has enough initial data for AI to work properly. Special attention should be paid to ethical issues of application of algorithms in the company’s activities. For example,

8.4 Digitalization of Management: Nirvana or Nemesis?

687

Table 8.6 Main arguments “for” and “against” the application of AI in management “For” AI in management AI is able to take on tasks the performance of which negatively affects humans Algorithms are able to increase the efficiency of joint work, by better recruitment of personnel Man can use AI predictions as background information With a properly configured algorithm, AI does the job faster, cheaper and better than a person AI takes over routine tasks, leaving people with jobs that require creativity Algorithms can be used to retest a person’s findings Algorithms are more impartial and not exposed to ‘noise’ AI can conduct real-time assessment, assessment made by humans is retrospective AI will give people the ability to spend more time developing themselves

“Against” AI in management Over-automation can lead to social unrest Algorithms can be negligently used by companies towards their employees People apply AI algorithms to reduce costs, not innovate For now, AI is not generating enough jobs to prevent unemployment if some occupations disappear For correct operation of algorithms, it is necessary to determine their functionality in advance Lack of AI specialists in labor market People don’t fully understand what AI is Many companies do not have enough data for AI algorithms to function normally Responsibility issues remain unresolved in case of AI errors

Source: Kornyshev [15]

the most pressing question is who will be liable in the event of a mistake. Would it be an AI developer or a manager (or specialist) making decisions based on his prediction? Based on the results of the study of the evolution of views on the digitalization of social object management by the author of this textbook and his student [15], we compiled a table of basic arguments “for” and “against” the application of artificial intelligence in management (results are presented in Table 8.6). We shall give a brief overview of some more works published in the 2000s, which, in our opinion, contributed to the development of managerial thought on the topic “digitalization of organization management.” Let’s start with Thomas Eric Norlander’s thesis “AI Surveying: Artificial Intelligence in Business” (2001) [117]. AI systems, according to the author, can surpass a person in performing certain operations, but, howbeit, they will not be able to replace a person completely because of their lack of emotions, creativity capabilities and other qualities that are unique to people. The author highlights such areas of control in which AI is effective: • General management of the company—AI carries out the function of control; • Management of individual functionalities: production, finance, HR. Riaz Ali should be considered among those doubting an unambiguous assessment of AI. In his dissertation, “Will Artificial Intelligence Systems Ever Surpass Human Intelligence?” (2016) [118] the author aims to study and critically evaluate the

688

8 Actual Problems and Concepts of Management

capabilities of AI, as well as its application in the future. The practical part of this work is based on the survey of 888 (!) experts. According to the results of the research R. Ali concludes that there is no single view of the capabilities of artificial intelligence. The author also highlights issues of ethics as one of the most significant challenges in the application of AI in social life. A. Johnsonbabu reasons about the influence of artificial intelligence on the work and role of a project manager in his article “Reinventing the role of Project manager in the Artificial intelligence era” (2017) [119]. The author highlights 9 areas of project management, which will be influenced by the implementation of smart systems: integration management, content, cost, time, risk, quality, stakeholders, human resources, communications and procurements. According to the researcher, AI will be used in the form of bots and specialized software that will help the project manager not to spend time on routine tasks and will provide the necessary decisionmaking information. The main drawback of this work, in our opinion, is that the author describes the possibilities, but at the same time absolutely does not consider the risks of AI. The author tries to talk about “redefining” the role, but any rethinking must also imply the presence of negative aspects. However, the work can be useful in terms of forming an understanding of the possibilities of AI application in management processes. In the above-mentioned article, “Problems and Prospects of Digital Management Development” (2018) Professor Viktor G. Antonov and Professor Mikhail V. Samosudov emphasize the problem of availability of primary data when transitioning to management digitization, where the lack of information in automated management systems, such as customer or employee behavior, creates the wrong base to make management decisions. And the main difficulty of complete automation of management processes is the need for human participation in them. In addition, the authors highlight the risks of dissipating attention and idealization of scenarios of AI introduction into the organization’s activities. The authors name simplification of work with information processes, possibilities of remote, and online interaction in real time ss prospects of management digitalization [107]. Anastasia V. Shevchenko, in the article “Digital Management” (2019), defines “digital management” as a “targeted influence carried out with the aid of information and communication technologies on the managed object in order to preserve its predetermined trajectory in a dynamic environment” [120]. According to A.V. Shevchenko, for automation of management it is necessary to ensure transparency of management processes. In addition, the computer must be given the boundaries of the process data deviations from the “norms” within which it will exercise managerial influence. As a result, the author comes to a conclusion about the possibility of creating an algorithm capable of performing part of managerial tasks in the fulfilment of the above-formulated conditions. It is worth mentioning the assessments of the consequences and aftereffects of the digitalization of social life of Professor Nassim Taleb, author of the world-famous treatises “Black Swan,” “Antifragile” and many others that have become popular works that illustrate the factors of uncertainty and unpredictability in the business environment. In 2017, in an interview with Russian television channel RBC, Nassim

8.4 Digitalization of Management: Nirvana or Nemesis?

689

Taleb outlined two main threats to humanity. The scientist attributed the risk of pandemics and neoluddism to them. In the same interview, the author of “Black Swan” called “loss of contact with reality the main pathology of our time” [7]. And on April 18, 2020, another interview of N. Taleb was published, in which he stated that at the beginning of the COVID-19 pandemic “we began to think about how to make the world less connected” [121]. In the interview of N. Taleb, in our opinion, one advantage and two possible after actions of digitalization of management of social objects are identified: 1. Digitalization can be used as a means of dealing with the consequences of pandemics, which is particularly relevant in the context of today’s realities; 2. Digitalization can cause loss of skills. 3. Digitalization may be a factor in the emergence of “neoluddism” Briefly about each above-mentioned thesis 1. Digitalization as a means of combating the consequences of epidemics. With regard to the benefits of digitalization, amid the development of the COVID-19 pandemic, most companies have moved to a remote mode of operation, and media reports have increasingly begun to appear that digitalization is able to mitigate the problems caused by the coronavirus. First of all, the upcoming decentralization of business is mentioned, in the future there will be more remote teams, which means that the way of managing these teams will change as well [122]. In particular, Gartner has developed a number of digital business recommendations that will be able to mitigate the effects of COVID-19 [123]. Among them are recommendations on the use of AI to manage social objects. First, it is proposed to use AI to implement basic customer service protocols. Second, it is recommended to carry out recruiting selection through AI algorithms. Transferring data authority to artificial intelligence, along with moving to a remote working format, will provide business sustainability during such a difficult period, analysts say. 2. Digitalization as a reason for losing skills. A negative aftereffect of digitalization of social object management is loss of skills by managers. The more tasks we trust to AI, the less we will involve a supervisor in management processes. At the same time, not having the opportunity and need to begin training of future managers with simple tasks that have been subjected to automation, awareness of managers decreases in the short-term, and in the long-term—the risk of lack of complexity of the skills of managers of the organization 3. Digitalization as a factor of emergence of neoluddism. Another negative consequence and aftereffect of digitization of production processes is the emerging “technological unemployment” caused by technological progress. The problem is also complex and requires answers to a number of questions: (a) How will people be managed, in the case of the transfer of data authority to AI? (b) How to manage a team composed of humans and robots competently?

690

8 Actual Problems and Concepts of Management

(c) How to prepare staff to work with robots and AI algorithms? (d) How to act in case of a person being displaced by a machine? In the search for answers to these questions, one must take into account the scenario where discontent of subordinates cannot be smoothed by management methods, and training will be ineffective. Something similar had already arisen after the first industrial revolution, when the first luddites appeared. The trend of fight against sciences is well visible today in the countries of the Islamic world [121]. Another premise of neoluddism is the willingness of people to destroy technology if information is received about their threat, as evidenced by the recent burning of 5G towers, following media reports that they were causing the spread of the coronavirus.21 In May 2020, the wave of arson attacks reached Russia as well, according to activists, 5G is used “to irradiate and chip people.22” Recall that the Luddite movement, having originated in England in the early nineteenth century, caused contradictory assessments of this movement in all forms of its manifestation,23 and simultaneously contradictory assessments of measures to fight against luddites proposed by the Government of England (up to the Death Penalty Act). At the beginning of the nineteenth century in the House of Commons of England, few MPs objected to the new bill of death; but in the House of Lords Luddites suddenly found a passionate defender in the face of the aforementioned poet Lord Byron, who said in his famous speech to the House of Lords on 27 February 1812: “Are we aware of our obligations to a mob? It is the mob that labor in your fields and serve in your houses, that man your navy...Setting aside the palpable injustice and the certain inefficiency of the Bill, are there not capital punishments sufficient in your statutes?... But suppose it past; suppose one of these men, as I have seen them,—meagre with famine, sullen with despair—t dragged into court, to be tried for this new offence, by this new law; still, there are two things wanting to convict and condemn him; and these are, in my opinion,— Twelve Butchers for a Jury, and a Jefferies24 for a Judge!” [124]. A comparative analysis of published results of the performed research on digitalization of management of social objects allows us to formulate a general characteristic and evaluation of consequences and the aftereffects of the results of all

Coronavirus and 5G: attempt to set 20 cell towers on fire at Easter in Britain//Home—BBC News Russian Service/14.04.2020///URL: https://www.bbc.com/russian/news-52284859 (Date of reference: 25.04.2020). 22 In Russia, the first telephone tower was burnt down. People fear the introduction of 5G—Hi-Tech Mail.ru//High-tech news, reviews of smartphones, gadgets and household appliances—Hi-Tech Mail.ru/03.05.202020// URL: https://hi-tech.mail.ru/news/v_rossii_sojgli_pervuy_vishku/ (Date of reference: 04.05.2020). 23 For example, in a form such as sacked workers secretly gathering at night in small armed squads, breaking into a pre-planned factory, breaking or burning machine tools and disappearing instantly into the night. 24 Jeffreys, George (1640–1689) was a highly reactionary statesman of England, Lord Chancellor, ardent supporter of feudal monarchy, initiator of brutal persecution and executions. Personified judicial arbitrariness. 21

8.4 Digitalization of Management: Nirvana or Nemesis?

691

Table 8.7 Opportunities and negative aftereffects of AI application in the management of social objects Possibilities of AI application in social object management 1. AI will take on tasks whose execution negatively affects the person; 2. AI increases the efficiency of joint work through better recruitment of personnel; 3. AI predictions are good enough to be used as background information in decision-making; 4. With a properly configured algorithm, AI performs work faster, cheaper and better than a person; 5. AI takes on routine tasks, leaving people with jobs that require creativity; 6. AI will be used to recheck human findings; 7. AI is impartial and not exposed to “noises”; 8. The AI evaluation is more objective, as it is conducted in real time, and the evaluation made by humans is retrospective; 9. AI will give a person the opportunity to spend more time developing themselves; 10. The use of AI in management processes can reduce negative consequences cause by events such as the COVID-19 pandemic.

Negative aftereffects of AI application in the management of social objects 1. AI can become aggressive towards humans. 2. Organization of collection, storage and processing of information can become a significant problem for proper functioning of AI. 3. AI models may behave incorrectly due to content in training error data. 4. Providing AI to analyze human personal data is unethical. 5. Constant AI surveillance of a person in the workplace is unethical; 6. There is a risk of leaking personal data of employees when working with AI; 7. Employees may refuse to work with AI out of personal/ethical/religious beliefs; 8. The level of development of digital competencies of personnel can become a barrier to working with AI; 9. An AI-managed organization may cease innovation activity in case of clear AI adherence to ethical principles; 10. AI can make incorrect decisions due to data deficiency/falsification/fallacy. 11. Lack of understanding of how AI can carry out management activities. 12. Lack of understanding of how to manage a group made up of humans and robots. 13. The introduction of AI into management processes can cause managers to lose their management skills. 14. Adoption of AI could lead to higher unemployment. 15. The introduction of AI into management processes can cause neoluddism.

Source: Kornyshev V.A. [15]

industrial revolutions (and “technological ways” according to the terminology of academician S.Yu. Glazyev [125]) with the following words: industrial revolutions manifest themselves as cycles (“living” 4 stages of the life cycle: origination, growth, maturity, fading) that are initially preached as Nirvana (in terms of “facilitating and even replacing human labor” in organizations), and culminating each time with the manifestations of Nemesis (in the facts of detriment of needs and interests of man, turning an employee of the organization into a supporter of the “Kingdom of King Ludd”). This view of industrial revolutions and the interpretation of their consequences leads to awareness of human irreplaceability.

692

8 Actual Problems and Concepts of Management

Table 8.7 shows the possibilities of AI and negative aftereffects of AI in the management of social objects, identified by us as result of a comparative analysis of publications on the question on the topic of Sect. 8.4: “Nirvana or Nemesis”? [15]. As we can see, the negative aftereffects of digitalization of social objects management somewhat “exceed” the number of opportunities, which should and can become one of the reasons for continuing studies on the subject. And we shall complete the comparative analysis of the works on the topic of Sect. 8.4. with statements of two groups of modern researchers of digitalization of social objects management. The first group is the authors of the mentioned report at AOM-2018 (Chicago) “Digital HRM: Nirvana or Nemesis?”, who write, “In the “savvy new world” of digital human resources management, technology is often offered as a panacea to address all the issues and challenges associated with human management. To do more with less costs, firms incited by high promises from technology providers tend to invest heavily in Social, Mobile, Analytical and Cloud Technologies (SMAC), often at the expense of human assets, following a “tough approach” to talent management. The provision of HR services in this process has become increasingly depersonalized, with employees and customers often having to rely on stand-alone and “split” service options. And while in the short term this may lead to improved efficiency of HR services, in the long term the “efficiency” of HR may be “diluted” in terms of a systemic approach” [126]. The second group is the authors of the discussion at AOM-2019 (Boston) on the topic: “Exploring dark and unexposed sides of digitalization: How digital technologies challenge organizations and organizations” [127], which are expressed in the context of developing views on the assessment of digitization in organization management, dividing supporters and opponents of the digitalization of management. Some scholars applaud digitalization for its commercial and economic potential and ability to create effective ways of organizing works, develop new products and services, or turn to users, buyers, customers or the public at large and influence them [68, 128–131]. At the same time, critical research has shown that the same digital technologies can contribute to new forms of exploitation of “free” user labor [132, 133] by using “excess” resources and capabilities of individual citizens [134], encourage an illusory sense of resistance that counteracts genuine forms of resistance [135], and lead to the emergence of new conflicts in the workplace [136]. From this critical perspective, the proliferation of digital technologies is a threat to the individual rights of members of the organization and citizens. According to the researchers, in the macroeconomic context and in the future digital technologies increase the power and authority of some enterprises, in particular well-known Internet companies. Corporations such as Google, Facebook, Amazon or Uber use data and information resulting from a combination of digital technologies and everyday interactions with people to monitor, forecast and change people’s behavior to generate income and to strengthen their control over the market or for the benefit of other corporations [137–142]. From these positions, scholars

8.4 Digitalization of Management: Nirvana or Nemesis?

693

criticize the central role of surveillance in the business models of so-called platform capitalism25 [140–142]. It is possible, of course, not to pay attention to the negative aftereffects of digitalization in the management of social objects, justifying this process with the opening possibilities of optimization of the economy, minimization of costs, acceleration of communication processes in society, etc. But, according to Moscow State University professor Yu. Osipov, very soon an interesting time will come “when everything (literally everything!) will be a priori and continuously calculated, and God forbid anyone step aside from this total calculation: immediately not the “market” with its value competitive flows (will manifest itself), but the very calculated totalitarianism, from which there is nowhere to hide for anybody... Yes, there will be a calculating and deciding technotron center, collection and processing of total information will be carried out, technotronic solutions will be dispatched, there will be a universal reactivity environment, as managerial—and also digitized—participation of a residual—quite digitized—person will take place in the work of a giant technotronic machine managing everything and all... Hence the need for a steep optimization of existence, its ruthless rationalization and strict regulation, roughly the ones seen today in science, education, health care, and again banking—managerial-digital-calculative, when the manager is not a person at all, but only a kind of animated device built into a large calculating and deciding machine... The figure will overcome not the economy alone, it will bend all human existence to its will, including man himself” [104, pp. 217–221]. The words we formulated above and the given words of Professor Yuri Osipov call on management specialists to continue research on development of management thought in the social and scientific archival topic—“Digitalization of Management of Social Objects”! Test Questions 1. What are the similarities and differences in the policing model of the police state and the modern concepts of leadership? 2. What factors influenced the emergence of various leadership theories? 3. What gave rise to organizational culture theories? 4. What are the links between the School of Human Relations and the theories of organizational culture? 5. What are the modern approaches to solving the problem of measuring and changing organizational culture? 6. What is the commonality of the views on “knowledge” and “wisdom” of the thinkers of ancient China, Y. Krizhanich and modern knowledge management specialists? 7. What are the reasons for the emergence of instrumental management concepts? As defined by London School of Economics professor Guy Standing, “platform capitalism is the use of computer applications (sites, platforms) in order to establish labor relationship between the salaried worker and capitalist”.

25

694

8 Actual Problems and Concepts of Management

8. What do “T-shaped management” and knowledge management have in common? 9. What are your ideas about the organizations of the future and the relevant management paradigms? 10. Describe the cyclical nature of evolution of world management thought.

References 1. Dzhanp’ero Petril’eri (Gianpiero Petriglieri). Nash Menedzhment umiraet, no eto horosho. Harvard Business Review, Rossiya 6 iyulya 2020. https://hbr-russia.ru/biznes-i-obshchestvo/ uroki-stoikosti-2020/834024 2. Schmidt VA (2016) History of science and its implications for management and its history. AOM Proceedings, pp 141–146 3. Trudy mezhdunarodnyh konferencij po Istorii upravlencheskoj mysli i biznesa EF MGU (pod nauchnoj red. V.I. Marsheva). M.: Izd-vo MGU, 1996, 1998, 2000–2005, 2008–2019 gg. https://www.econ.msu.ru/science/conferences/mciumb/ 4. Klassiki Menedzhmenta (2001) Enciklopediya (pod red. Mal’kol’ma Uornera). SPb, Piter, 1168s 5. Dunkan UD (1996) Osnovopolagayushchie idei v menedzhmente. M. Delo 6. Bojett DG, Bojett DT (2001) Putevoditel’ po carstvu mudrosti: Luchshie idei masterov upravleniya. M.: Olimp-Biznes, 416s 7. Nassim Taleb. «Patologiya nashego vremeni — poterya kontakta s real’nost’yu». Svoe delo : RBK // Novosti dnya v Rossii i mire. https://www.rbc.ru/interview/own_business/16.11.2017/ 5a0c361d9a7947003e4aff7c?from=center_2 (date of the application: 10.10.2019) 8. Witzel M (2019) A history of leadership. Routledge, London, 358 p. https://www.routledge. com/A-History-of-Leadership/Witzel/p/book/9781138062061 9. Agraval A, Gans D, Goldfarb A (2019) Iskusstvennyj intellekt na sluzhbe biznesa. Kak mashinnoe prognozirovanie pomogaet prinimat’ resheniya. M: Mann, Ivanov i Ferber, 336c 10. Solinger ON, Jansen PGW, Cornelissen JP (2020) The emergence of moral leadership. Acad Manag Rev 45(3):504–527 11. Marshev VI Formation of management thought in Russia and early USSR from the 1800s to the 1920s: heroes and their creations, J Manag History, 2019 V 25, № 3, pp. 285–303. 12. Savelenok EA (2000) Ideologiya upravleniya v organizacii: struktura i process. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M: EF MGU 13. Bogatyrev MR (2005) Organizacionnaya kul’tura: sushchnost’ i rol’ v sisteme upravleniya. Dissertaciya na soiskanie uchenoj stepeni k.e.n. (nauchnyj rukovoditel’ professor Marshev V. I.). M.: EF MGU 14. Ivashchenko GG (2014) Razvitie vzglyadov na etiku biznesa v poreformennoj Rossii HKH veka. Avtoreferat dissertacii na soiskanie uch.st. k.e.n. (nauchnyj rukovoditel’ professor Marshev V.I.). M, EF MGU 15. Kornyshev VA. Cifrovizaciya upravleniya social’nymi ob”ektami: dualizm innovacionnogo i tradicionnogo menedzhmenta. Magisterskaya dissertaciya (nauchnyj ruk. prof. Marshev V.I.), M.: EF MGU, 2020 g. 16. Marshev V, Chernich V (2013). The term, subject levels and epistemological problems of Ethics in Management// Moscow, The Lomonosov MSU, Faculty of Economics, June 28–30, 2011: Conference Proceedings// Edited by Vadim I.Marshev. LMSU, Moscow, pp 129–135 17. Chernyh V (2010) Vzglyady na upravlenie kul’turoj v organizacii. Issledovatel’skaya rabota studenta EF MGU (nauchnyj rukovoditel’ professor Marshev V.I.). M.: EF MGU 18. Schein E (1999) The corporate culture survival guide. Wiley, Jossey-Bass

References

695

19. Covey SR (1989) Seven habits of the highly effective people. Simon & Shuster, New York 20. Dzhuell L (2001) Industrial’no-organizacionnaya psihologiya. SPb, Piter 21. The Chartered Management Institute Dictionary of Business and Management. London, Bloomsbury, 2003. 22. Hofstede GH (2001) Culture’s consequences: comparing values, behaviors, institutions and organizations across nations. Sage, Thousand Oaks, CA 23. Hofstede GJ, Pedersen PB (2002) Exploring culture: exercises, stories and synthetic cultures. Intercultural Press, Yarmouth 24. Deal TE, Kennedy AA (1982) Corporate cultures. The rites and rituals of corporate life. Perseus Publishing, Cambridge, MA, p 2000 25. Deal TE, Kennedy AA The new corporate cultures. Revitalizing the workplace after downsizing, mergers, and reengineering. Perseus Publishing, Cambridge, MA, p 2000 26. Johnson G (1992) Managing strategic change – strategy, culture and action. Long Range Plan 25(1) 27. Hofstede G (1997) Cultures and organizations. Software of the mind. McGraw-Hill, New York 28. Cameron KS, Quinn RE (1999) Diagnosing and changing organizational culture. AddisonWesley, New York 29. Waterman R Jr, Peters T, Philips JR (1980) Structure is not organisation. Bus Horiz 23:3 30. Peters T, Waterman R (1982) In search of excellence. Harpen & Row, New York 31. Waterman RH Jr (1993) Adhocracy. W. W. Norton & Company, New York 32. Shejn EH (2002) Organizacionnaya kul’tura i liderstvo. SPb, Piter 33. L’yuis RD (2001) Delovye kul’tury v mezhdunarodnom biznese. Ot stolknoveniya k vzaimoponimaniyu. Moskva, Delo 34. Kotter JP, Heskett JL (1992) Corporate culture and performance. The Free Press, New York 35. Denison DR, Mishra AK (1995) Toward a theory of organizational culture and effectiveness. Organ Sci 6(2):204–223 36. Goffee R, Jones G (1998) Character of a corporation. Harper Business, New York 37. Handy C (1995) Gods of management: the changing work of organizations. Oxford University Press, New York 38. Parsons T, Turner BS (1999) The Talcott parsons reader. Policy Press 39. Treacy M, Wiersema F (1995) The discipline of market leaders. HarperCollins, New York 40. Hampden-Turner C, Trompenaars F (2000) Building cross-cultural competence. Yale University Press 41. Hayashi K (1986) Cross-cultural interface management, Tokyo 42. Richard G (2006). Dusha organizacii: kak sozdat’ uspeshnuyu korporativnuyu kul’turu. M.: Dobraya kniga, 352s 43. Oganov AA, Hangel’dieva IG (2003) Teoriya kul’tury. M.: Fair-Press 44. Trompenaars F, Hamplden-Terner CH (2004) Nacional’no-kul’turnye razlichiya v kontekste global’nogo biznesa. Poppuri, Minsk 45. Gemavat Pankadzh (2013) Mir 3.0. Global’naya integraciya bez bar’erov. M.: Al’pina Pablisher, 413s 46. Chong MPM (2018) Organizational political tactics: Hanfei’s legalist doctrines of leadership. Submission #10496 for the 2018 AOM annual meeting, Chicago 47. Tead O (1935) The art of leadership. Whittlesey House, New York 48. Кurt Levin (2001) Dinamicheskaya psihologiya: Izbrannye trudy/Pod obshch. red. D. A. Leont’eva i E. YU. Patyaevoj/M.: Smysl 49. Stogdill RM (1974) Handbook of leadership: a survey of theory and research. Free Press, New York 50. McGregor D (1960) The human side of enterprise. McGraw-Hill, New York 51. Fiedler F (1967) A theory of leadership effectiveness. McGraw-Hill, New York 52. House RJ (1971) A path-goal theory of leadership effectiveness. Adm Sci Q 16(3):321–338 53. Blank W (1995) The nine natural laws of leadership. AMACOM, New York

696

8 Actual Problems and Concepts of Management

54. Jones LB. Jesus CEO: using ancient wisdom for visionary leadership // industry week, March 6, 1995 55. Mincberg G (2001) Struktura v kulake: sozdanie effektivnoj organizacii. SPb, Piter 56. Bartlett CA, Ghoshal S. Changing the role of top management: beyond strategy to purpose. Harvard Business Review, November–December 1994 57. Sorokin PA (1992) CHelovek. Civilizaciya. Obshchestvo. M.: Progress 58. Levering R (1988) A great place to work: what makes some employers so good. Random House, New York 59. Albrecht K (1994) The northbound train: finding the purpose, setting the direction, shaping the destiny of your organization. AMACOM, New York 60. Uhl-Bien M, Riggio RE, Lowe KB, Carsten MK (2014) Followership theory: a review and research agenda. Leadersh Q 25:83–104 61. Nanus B (1992) Visionary leadership: creating a compelling sense of direction for your organization. Jossey-Bass, San Francisco 62. Melihov VP. Pogovorim nemnogo ob ekonomike. Gazeta «Kazachij vzglyad», №5 (173), maj 2012 g. S.7 63. Wheatley MJ (1994) Leadership and new science: learning about organizations from an orderly universe. Berrett-Koehler, San Francisco 64. Bartlett CA, Ghoshal S. Changing the role of top management: beyond structure to process. Harvard Business Review, January–February, 1995 65. Gardner H (1995) Leading minds: an anatomy of leadership. Basic Books, New York 66. Ke de Vri M (2003) Mistika liderstva: Razvitie emocional’nogo intellekta. M.: Al’pina Pablisher, 311s 67. Bartlett CA, Ghoshal S. Changing the role of top management: beyond systems to people. Harvard Business Review, May–June, 1995. 68. Varian HR (2014) Big data: new tricks for econometrics. J Econ Perspect 28(2):3–28 69. Champy J (1995) Reengineering management: the mandate for new leadership. Harper Business, New York 70. Petrushihina EB (2018) K voprosu o vliyanii posledovatelej na liderstvo // Psihologiya v sisteme social’no-proizvodstvennyh otnoshenij : materialy Mezhdunarodnoj nauchnoprakticheskoj konferencii/Sibirskij gosudarstvennyj universitet nauki i tekhnologij imeni akademika M.F. Reshetneva. Krasnoyarsk, S. 100–105 71. Farson R (2001) Menedzhment absurda. Paradoksy liderstva. M.: Sofiya 72. Hiebert M, Bruce K (2001) The encyclopedia of leadership: a practical guide to popular leadership theories and techniques 73. Filonovich SR (2003) Teoriya liderstva v menedzhmente: istoriya i perspektivy. Rossijskij zhurnal menedzhmenta, №2, ss. 3–24 74. Uhl-Bien M (2006) Relational leadership theory: exploring the social processes of leadership and organizing. Leadersh Q 17(6):654–676 75. Witzel M (2018) The ethical leader. Bloomsbury, 229 p 76. Vihanskij OS, Mirakyan AG (2018) Novoe tysyacheletie: upravlencheskie anomalii i sovremennye koncepcii liderstva. Rossijskij Zhurnal Menedzhmenta T. 16(№ 1), S. 131–154. 77. Carlyle T (1841) On heroes, hero-worship, and the heroic in history. https://readli.net/onheroes-and-hero-worship-and-the-heroic-in-history/ 78. Le Bon G (1871) The crowd: a study of the popular mind. https://www.classicly.com/bib/i/? book=362.epub 79. Tard G (1899) Publika i tolpa (Per. F. Laternera). SPb, B-ka byvsh, Ivanova 80. Zamulin AL (2009) Novyj vzglyad na posledovatelej lidera: teoriya i praktika // Vestnik Sankt-Peterburgskogo universiteta. Seriya 8. Menedzhment № 3, S. 75–97 81. Petrushihina EB (2018) K voprosu o teorii sledovaniya: vozmozhno li liderstvo bez posledovatelej? // Vestnik Moskovskogo gosudarstvennogo oblastnogo universiteta (elektronnyj zhurnal). № 3. www.evestnik-mgou.ru

References

697

82. Gusejnov AA (2000) Etika i moral’ v sovremennom mire. Eticheskaya mysl’, M.: IF RAN, Vyp. 1, ss 4–15. https://iphras.ru/elib/EM1_1.html 83. Hogard Rasmus, Karter Zhaklin, Bryuerton Vins. Pochemu menedzhery zabyvayut o tom, chto oni lyudi? Harvard Business Review, Rossiya. 20 fevralya 2018 g. http://hbr-russia.ru/ liderstvo/lidery/p25561/ 84. Gusejnov AA (2004) Razmyshleniya o prikladnoj etike. Vedomosti Nauchnoissledovatel’skogo Instituta prikladnoj etiki. Vyp. 25: Professional’naya etika/Pod red. V.I. Bakshtanovskogo i N.N. Karnauhova. Tyumen’: NIIPE, S. 148–159. http://iphras.ru/uplfile/ ethics/RC/ed/kaunas/gus.html 85. VIII Vsemirnyj Russkij Narodnyj Sobor, 2004 g. Svod nravstvennyh principov i pravil v hozyajstvovanii. https://mospat.ru/archive/page/church-and-society/30427.html 86. http://www.cathmos.ru/content/ru/publication-2011-11-09-12-31-40.html 87. Blok M (1986) Apologiya istorii, ili Remeslo istorika. / Per. E. M. Lysenko. – 2-e izd., dop. – M.: Nauka 88. Istoriya Drevnego Vostoka (2002) Teksty i dokumenty, M.: Vysshaya shkola 89. Korostovcev MA (1976) Religiya Drevnego Egipta. Glava XXVI. «Egipet i Bibliya», M.: Nauka, 336c. (s. 318) 90. Seel R (2000) Culture and complexity: new insights on organizational change. Organ People 7 (2):2–9 91. Pouchenie Vladimira Monomaha (1997) Biblioteka literatury Drevnej Rusi/ RAN IRLI/ SPb, Nauka, Tom 1: XI–XII veka. https://l.120-bal.ru/literatura/36223/index.html 92. Rossijskoe zakonodatel’stvo X-XX vekov (v 9-i tomah) (1985) M.: Izd-vo «YUridicheskaya literatura», g., T.2 93. Domostroj (1994) S. Peterburg, Nauka, Sc. 221–263 94. Shchapov AP (1859) Russkij raskol staroobryadchestva, rassmatrivaemyj v svyazi s vnutrennim sostoyaniem rycskoj cerkvi i grazhdanstvennosti v XVIII veke i v pervoj polovine XIX, Kazan 95. Andreev VV (1870) Raskol i ego znachenie v narodnoj russkoj istorii. SPb 96. Mel’nikov PI (1898) Ocherki popovshchiny // On zhe. Poln. sobr. soch. SPB.-M., T. 13. CH. I 97. Shahnazarov OL (2004) Otnoshenie k sobstvennosti u staroobryadcev (do 1917 goda). Voprosy istorii, № 4, ss. 53–70 98. Kerov VV (2004) «Se chelovek i delo ego. . .»: Konfessional’no-eticheskie faktory staroobryadcheskogo predprinimatel’stva v Rossii, M.: Ekon-Inform, 658s https://ruvera.ru/ news/chelovek_i_delo 99. Pashkov YAM (1911) Kratkij istoricheskij ocherk [25-tiletnej deyatel’nosti Tovarishchestva manufaktur A.YA. Balina]/Moskva: tipo-lit. M.A. Mal’cova, 20s 100. Ryabushinskij VP (1998) Russkij hozyain (1-e izdanie v 1928 g., Parizh), M.: ACT, 45s 101. Marshev V (2013) The ethics of economic activity: sources and origins. XII international conference on history of management thought and business: “social responsibility of business and management ethics”; Moscow, The Lomonosov MSU, Faculty of Economics, June 28–30, 2011: Conference Proceedings// Edited by Vadim I. Marshev, LMSU, pp 112–129 102. Donaldson T (2013) Efficiency and ethics in business. XII international conference on history of management thought and business: “social responsibility of business and management ethics”; Moscow, The Lomonosov MSU, Faculty of Economics, June 28–30, 2011: Conference proceedings// Edited by Vadim I.Marshev. LMSU, Moscow, pp 51–52 103. Nichols P (2013) Codes of conduct as a substitute for generalized trust. XII international conference on history of management thought and business: “social responsibility of business and management ethics”; Moscow, The Lomonosov MSU, Faculty of Economics, June 28–30, 2011: Conference proceedings// Edited by Vadim I. Marshev. LMSU, Moscow, pp. 150–163. 104. Osipov YuM (2018) Ekonomika kak est’ (otkroveniya Zoila, ili Sudnyj den’ ekonomizma). Izd. 2-e. — M.; Tambov: Izdatel’skij dom TGU im. G.R. Derzhavina, 333 s 105. Rassel S (2006) Iskusstvennyj intellekt: sovremennyj podhod, 2-e izd.: Per. s angl. – M.: Izdatel’skij dom «Vil'yams»

698

8 Actual Problems and Concepts of Management

106. Course | AI0101EN | edX // edX | Free Online Courses by Harvard, MIT, & more URL: https:// courses.edx.org/courses/course-v1:IBM+AI0101EN+1T2020/course/ (date of the application 10.04.2020) 107. Antonov VG, Samosudov MV (2018) Problemy i perspektivy razvitiya cifrovogo menedzhmenta // ZHurnal E-Management. №2. https://cyberleninka.ru/article/n/problemy-iperspektivy-razvitiya-tsifrovogo-menedzhmenta (date of the application: 04.05.2020) 108. Uolsh Majk. Pochemu algoritmy mogut vse isportit’. Harvard Business Review, Rossiya, 11.07.2019. https://hbr-russia.ru/innovatsii/trendy/806392 (date of the application: 11.08.2019) 109. Drew Harwell. Kak avtomatizaciya razrushaet zhizn’ sotrudnikov Walmart. Pochtoy.com, 24.09.2019. https://habr.com/ru/company/pochtoy/blog/468693/ (date of the application: 11.03.2020) 110. Shvab K (2019) Chetvertaya promyshlennaya revolyuciya. M.: Eksmo 111. Kaneman Daniel’. Chelovecheskij razum sklonen k uproshcheniyam. Harvard Business Review, Rossiya, 01.10.2019. https://hbr-russia.ru/management/prinyatie-resheniy/810020 (date of the application: 03.10.2019) 112. Bondar’ YU. Kak robotizaciya mozhet pomoch’ biznesu. Harvard Business Review, Rossiya, 26.07.2019. https://hbr-russia.ru/innovatsii/trendy/807380 (date of the application: 03.10.2019) 113. T’yu Blummart, Stefan van den Bruk. Na poroge singulyarnosti: kak izmenitsya menedzhment v XXI veke. Harvard Business Review, Rossiya, 10.11.2018. https://hbr-russia.ru/innovatsii/ trendy/786061 (date of the application: 03.10.2019) 114. Dvorskaya E. Nenaprasnye slova: kak i zachem izuchat’ perepisku sotrudnikov s pomoshch’yu II. Harvard Business Review, Rossiya, 16.07.2019. https://hbr-russia.ru/ management/upravlenie-personalom/806686 (date of the application: 03.10.2019) 115. Solomatina V. Pochemu proryvnye tekhnologii ne vsegda pomogayut HR-menedzheram | Harvard Business Review, Rossiya, 06.09.2019. https://hbr-russia.ru/innovatsii/upravlenieinnovatsiyami/810701 (date of the application: 03.10.2019) 116. Starodubceva V. Nechelovecheskie sposobnosti: kak II menyaet finansovuyu otrasl’ | Harvard Business Review, Rossiya, 04.06.2019//. https://hbr-russia.ru/innovatsii/trendy/803328 (date of the application: 03.10.2019) 117. Tomas Eric Nordlander. AI surveying: artificial intelligence in business // ResearchGate. https://www.researchgate.net/publication/245235667 (date of the application: 10.11.2019) 118. Riaz Ali. Will artificial intelligence systems ever surpass human intelligence? // DSpace home. https://repository.cardiffmet.ac.uk/bitstream/handle/10369/8361/2282_Riaz_AliDissertation_ 108007_1888980232.pdf?sequence=1&isAllowed=y (date of the application: 10.11.2019). 119. Johnsonbabu A. Reinventing the role of Project manager in the Artificial intelligence era // Project Management National Conference, India, 15–17 September, 2017. https://www.pmi. org.in/conference2017/pdfs/papers-pdfs/theme-3-rapidly-changing-world/1-Reinventing-therole-of-Project-manager.pdf (date of the application: 12.12.2019) 120. SHevchenko A.V. Cifrovoj menedzhment // Skif. 2019. №9 (37). https://cyberleninka.ru/ article/n/tsifrovoy-menedzhment (date of the application: 16.04.2020). 121. «Avtor teorii «chernogo lebedya» sprognoziroval posledstviya COVID-19». // Novosti Mail. ru: Poslednie novosti Rossii i mira. 18.04.2020/. https://news.mail.ru/society/41440962/? frommail=1 (date of the application: 18.04.2020) 122. Stel’mah S. Covid-19 stanet prichinoj korennoj transformacii biznesa//itWeek, 23.03.2020/ https://www.itweek.ru/digitalization/article/detail.php?ID=211814 (date of the application: 23.03.2020) 123. Stel’mah S. Gartner: cifrovaya infrastruktura pomozhet smyagchit’ negativnoe vliyanie koronavirusa na biznes // itWeek, 16.03.2020. https://www.itweek.ru/digitalization/article/ detail.php?ID=211736 (date of the application: 16.03.2020) 124. Bajron, Dzhordzh Gordon. Rech’, proiznesennaya v Palate lordov Anglii 27 fevralya 1812 goda vo vremya obsuzhdeniya billya protiv razrushitelej stankov/. https://libcat.ru/knigi/proza/

References

699

klassicheskaya-proza/291115-dzhordzh-bajron-rech-proiznesennaya-v-palate-lordov-27fevralya-1812-goda-vo-vremya-obsuz.html#text 125. Glaz’ev SYu (1993) Teoriya dolgosrochnogo tekhniko-ekonomicheskogo razvitiya. M.: VlaDar, 310 s 126. AOM-2018/PDW Workshop: «Digital HRM: Nirvana or Nemesis?»/ Program Session: 391/ Submission: 11397/ Saturday, Aug 11, 2018. 127. АОМ-2019/PDW Workshop: “Exploring dark and unexpected sides of digitalization: How digital technologies challenge organizations and organizing” 128. Brynjolfsson E, McAfee A (2014) The second machine age: work, progress, and prosperity in a time of brilliant technologies. WW Norton & Company, New York 129. Yoo Y, Boland RJ, Lyytinen K, Majchzak A (2012) Organizing for innovation in the digitized world. Organ Sci 23(5):1398–1408 130. Mount M, Garcia Martinez M (2014) social media: a tool for open innovation. Calif Manag Rev 56(4):124–143 131. Constantiou ID, Kallinikos J (2015) New games, new rules: big data and the changing context of strategy. J Inf Technol 30(1):44–57 132. Fuchs C (2010) Labor in informational capitalism and on the internet. Inf Soc 26(3):179–196 133. Beverungen A, Böhm S, Land C (2015) Free labour, social media, management: challenging Marxist organization studies. Organ Stud 36(4):473–489 134. Ritzer G, Jurgenson N (2010) Production, consumption, prosumption. The nature of capitalism in the age of the digital prosumer. J Consum Cult 10(1):13–36 135. Ossewaarde M, Reijers W (2017) The illusion of the digital commons: ‘false consciousness’ in online alternative economies. Organization 24(5):609–628 136. Upchurch M, Grassman R (2016) Striking with social media: the contested (online) terrain of workplace conflict. Organization 23(5):639–656 137. Scherer AG, Rasche A, Palazzo G, Spicer A (2016) Managing for political corporate social responsibility: new challenges and directions for PCSR 2.0. J Manag Stud 53(3):273–298 138. Taplin J (2017) Move fast and break things: how facebook, google, and amazon cornered culture and undermined democracy. Little, Brown and Company, Boston, MA 139. Whelan G (2017) Bsorn political: a dispositive analysis of google and copyright. Bus Soc:1– 32 140. Lanier J (2013) Who owns the future? Simon and Schuster, New York 141. Richards NM (2013) The dangers of surveillance. Harv Law Rev 126:1934–1965 142. Zuboff S (2015) Big other: surveillance capitalism and the prospects of an information civilization. J Inf Technol 30(1):75–89

Additional Literature Carroll GR, Harrison JR (1998) Organizational demography and culture: insights from a formal model and simulation. Adm Sci Q 43:637–667 Gibson Dzh L, Ivancevich DM, Donelli DH (2000) Organizacii: povedenie, struktura, processy. M., Infra-M Handy C (2003) The handy guide to the gurus of management. BBC World Service Joyner J. Corporate culture defines success. Computing Canada May 18, 2001 Prewitt M. Corporate culture: MRG adopts bigger firms’ synergistic precepts. Nation’s Restaurant News, August 9, 1999

Annexes

Annex 1 List of Scientific Research Directions, Subjects of Course and Graduate Works, and Scientific Reports on History of Management Thought (HMT) 1. Methodological issues of HMT are subject areas, methods and organization of research, source study, identification and measurement of changes in subject areas, experiments in management, periodization, and detection of cycles in the development of views 2. Paradigm approach in HMT. Forms of manifestation and causes of paradigms. Foresight of new paradigms. 3. HMT—Nomographiv science vs. Idiographic science. 4. Issues of epistemology of HMT (including issues of organization of established procedures of collection, fixation, and storage of data on management activities—reforms, programs, transformations, experiments, etc. to assess activities before, during, and after the implementation of these activities and to compile a package of accompanying documents). 5. Historiographic issues in HMT studies (sources as management knowledge holders; periodic printing and literary read as a source of HMT; archives of factories, plants, ministries, and other organizations as sources of HMT; personal archives of entrepreneurs, heads of economies, statesmen, their memoirs, diaries, letters, etc., as sources of HMT; regulations, including Statutes on Industry, civil service, factory legislation, Regulations, and Rank sheets as sources of HMT; economic reform projects for the management of branches of the state economy, projects, and programs for the training of commercial and management personnel as sources of HMT). 6. Methodological issues of measurement in the management of an organization.

© Moscow State University Lomonosov 2021 V. I. Marshev, History of Management Thought, Contributions to Management Science, https://doi.org/10.1007/978-3-030-62337-1

701

702

Annexes

7. Scientific and technological communities and their activities in the development of management thought. 8. Development of views on management by the materials of cross-sectoral and sectoral conventions, conferences, and exhibitions. 9. Historiography of HMT: Objects, subject areas, subjects, and epistemology. 10. Management as a science and art: approaches and research results. 11. Management as an activity, managerial consulting, management training, and management thought: interrelatedness and interrelationship. 12. A multifactor logical and specific historical analysis of the emergence and development of systematic management concepts. 13. A comprehensive analysis of management reforms and related management ideas (in a specific historical period in a particular country). 14. The development of views on management of representatives of class groups, dimensions, parties, scientific, and other communities in a specific historical period, including comparison and/or comparative analysis in synchronous and diachronic regimes. 15. Comparative regional and interregional analysis of the development of managerial views (within countries, among countries). 16. Concepts of state management, public management, and scientific management: the common and differences, comparative analysis in synchronous and diachronic regimes. 17. Development of views on an organization. A comparative analysis of organizational theories. 18. Development of views on an organization’s images and metaphors. 19. Development of views on the life cycle of an organization. 20. Development of views on the nature and need for functional areas of an organization. 21. Development of specific management issues: 21.1. A faceted approach in developing management issues and relevant scientific schools of management (economic, psychological, sociological, organizational, legal, etc.) 21.2. Development of views on the elemental issues of managing an organization (functions, methods, principles, goals, structures, personnel, management techniques, etc.) 21.3. Develop views on the management of an organization’s functional areas (production management, marketing, finance, personnel, etc.) 21.4. Development of views from Ancient Chinese stratagems and long-term planning to strategic management and strategic entrepreneurship. 21.5. A process approach in management and related management concepts (for example, business processes, reengineering, etc.). 21.6. Concepts of organizational management processes (communication processes, decision-making processes, problem-solving processes, logistics). 21.7. Theoretical issues of a rational combination of centralized and local approaches, sectoral, and territorial approaches in the management of an economy.

Annexes

703

21.8. The concepts of state regulation of national economies and management of organizations: interrelationship and interrelatedness. 21.9. Development of the “man and organization” set of issues. 21.10. Work within an organization and management labor. Techniques for designing work. Specialization and division of management work. Methods of evaluating the effectiveness of management labor. 21.11. The role of managers: development of views. 21.12. Bureaucracy and bureaucratism in management: forms of manifestation; economic, social and economic, etc., reasons; opportunities and threats, implications, need, and regulatory capabilities. 21.13. Concepts of leadership, power, and authority in management. 21.14. Social responsibility in management: development of views. 21.15. Management ethics: development of views. 21.16. Conflicts and their management. Conflictology and scientific management. 21.17. Traditions in management: development of attitudes, inertia estimation. 21.18. Information and time in management: theoretical approaches and practical implementations. 21.19. Meaning, Ideology, Theology, and Management Culture: scientific schools, concepts, and development of attitudes. 21.20. Transformations at organizations and Change management at organizations. 21.21. Proverbs and sayings in different languages with the same meaning as sources of management thought. 21.22. National Management models: origin, comparative analysis. 22. Latest management concepts. 23. Organization of the future and new “paradigms” for the management of organizations.

Annex 2 Development of Views on Management or the Management Continuum

№. 1

Years (B.C.) 5000

Identity or ethnic group The Sumerians

2 3

4000 2700

The Egyptians The Egyptians

Principal contribution to HMT First recordings for economic control Maintaining cost and revenue accounting Planning, organization, and control Recognition of the need for integrity and/or fairness in management. Therapeutic interviews (manuals)

Core management system element Functions Functions Principles

(continued)

704

Annexes

№. 4 5 6

Years (B.C.) 2600 2000 1800

Identity or ethnic group The Egyptians The Egyptians The Hammurabi

7 8

1600 1491

The Egyptians The Hebrews

9

1100

10

600

The Chinese (Zhou) Nebuchadnezzar

11

540

Ancient China

12

500

Confucius

13

400

Socrates

14 15

400 400

Xenophon Cyrus

16

360

Shang Yang

17

350

Mencius

18

350

19 20

350 325

21 22

325 320

The ancient Greeks Plato Alexander the great (of Macedon) Kauṭilya (India) Sun-Tzu

Principal contribution to HMT Decentralization in management Written orders. Usage of advisory bodies Written evidence for verification Fixing a minimum wage Recognition that responsibility cannot be delegated Centralization in organization Notions of organization, scalar principle, principle of exclusion Recognition of the need for organization, planning, supervision, and control Production control Wage incentives 36 stratagems Family relations in state management Virtue is the basis of governance Paternalism in management Recognition of the universality of governance Recognition of management as a form of art Recognition of the need for human resources, for human relations. Usage of motion knowledge, of work organization schemes and material processing. Public management reforms Legal framework for public management reforms Collective responsibility Strategic management ideas Development of Confucianism Recognition of the need for systematization and standardization. Recognition of the principle of specialization Application of scientific methods. Usage of work methods and labor productivity The principle of specialization. Personnel management

The science and arts of state management. Recognition of the need for planning, leadership and organization.

Core management system element Principles Technique Techniques, staff

Principles Principles Functions Functions, staff Strategic management System principles methods System System Work, staff

System Law Strategic management System principles Methods

Methods Principles Staff

System Functions Principles (continued)

Annexes

705

№. 23

Years (B.C.) 220

Identity or ethnic group Han Fei-tzu

24

175

Cato

Principal contribution to HMT Objectives, principles and methods of management Legal framework for management Usage of “job instructions”

25

50

Varro

Usage of “job instructions”

1

Years (A.D.) 20

Person or group Jesus Christ

2

284

Diocletianus

Principal contribution to HMT Human relations The Golden rule Undivided authority Delegation of authority

3 4 5 6

900 1100 1340 1395

Al-Farabi Al-Ghazali N. Pacioli Francisco di Marco

Leader characteristics Manager characteristics Dual accounting Accounting

7

1410

Coranzo Brothers

8 9

1418 1436

Barbarigio Arsenal of Venice

10

1500

Thomas More

11

1525

Nicolò Machiavelli

12

1767

James Steuart

13

1776

Adam Smith

14

1785

Thomas Jefferson

15

1799

El Whitney

Usage of accounting journals and ledgers Business organization forms Cost accounting Usage of technical assembly lines Personnel management Standardization of parts Inventory control Cost control Specialization Formulated the drawbacks of weak management and leadership The principle of consent of the masses with the leader Relationship in the organization Leadership qualities Power source theory The value of automation Specialization of production workers concept of control Payback principle The concept of standardization in production Interchangeability of parts Scientific method of cost accounting Quality control Management norm

№

Core management system element System Power leadership Organizational structure, staff Organizational structure, staff

Core system element Functions Roles Organizational structure Staff Staff Technique Function Technique Function technique Content Functions, personnel, management techniques

Principles

System Principles Staff Staff Principles, staff, functions Standardization in production System

(continued)

706

Annexes

№ 16

Years (A.D.) 1800

17

1810

Robert Owen

18

1820

James Mill

19

1832

Charles Babbage

20

1835

Marshall Louglin et al.

21

1850

Mill et al.

22

1855

Henry Poor

23 24

1863 1856

Lorenz von Stein Daniel Craig McCallum

25

1871

William S. Jevons

26 27

1881 1886

Joseph Wharton Henry Metcalfe

28 29

1886 1900

Henry R. Towne Frederick W. Taylor

Person or group James Watt Matthew Bolton

Principal contribution to HMT Standardization of operations, specialization; methods of performing the work, planning function, progressive wage system, standardization of time and data, employee insurance, audit Staff are the basis of management and production Training of workers Social conditions for workers Analysis and synthesis of human motivation Scientific approach in management Specialization and division of managerial and productive labor Motivation and time-learning Cost accounting Recognition and discussion of the relative importance of the functions of management A limited amount of responsibility. Unity of the team. Labor and material control. Specialization—division of labor. Bonus payroll system Principles of organization Communication and information in management (for railways) Management doctrine Organizational structures of management application of a systematic approach to management Motivation. Study of the “fatigue” issue Founded the business school The art of management The science of management. Management science A scientific approach to management, application of a systematic approach. Personnel management, division of labor. The functionality of an organization. Cost structure. Investigation of management methods. Emphasis in management of experiments, standards, planning, control, and cooperation

Core system element System

Staff

Staff System Technique Staff

Functions

Function principles, staff

Functions, technology System System

Staff Staff System System System Staff Technique

(continued)

Annexes

707

№ 30 31

Years (A.D.) 1900 1901

Person or group Frank B. Gilbreth Henry L. Gantt

32

1910

Hugo Münsterberg

33

1910

Walter dill Scott

34

1910

35 36

1910 1911

Harrington Emerson Hugo Dahmer Harlow S. Person

37 38

1911 1915

John Duncan Horace Drury

39

1915

Robert F. Hoxie

40

1915

F.V. Harris

41

1915

Thomas Edison

42

1916

Henri Fayol

43

1916

Alexander Church

44 45

1916 1917

46 47 48

1917 1918 1918

A. K. Erland William H. Leffingwell Meyer Bloomfield Carl C. Parsons Ordway Tead

49

1919

Morris L. Cook

50

1923

Oliver Sheldon

Principal contribution to HMT Scientific research of motivation System of norms and bonuses, humanistic approach to workers, Gantt diagrams, responsibility of management for training workers Applying psychology in personnel work Usage of psychology in advertising and personnel work Effective engineering Principles of efficiency Basis of factory management Held the first scientific conference on management in the United States. Contributed to the academic recognition of scientific management A management training manual Criticism of scientific management—reaffirmation of initial ideas Criticism of scientific management—reaffirmation of initial ideas Economic model for equity participation in management Development and use of military games (in the management of naval battles) Administrative theory of management. Management functions. Principles of management. Justification of the need for management Functional concept of management systematization of management concepts Salary waiting (queuing) theory Applied scientific management Human resources management Applied scientific management Application of psychology in production Various applications of scientific management Development of management philosophy. Principles of management

Core system element Staff Staff

Staff Staff Management efficiency System Staff

Staff System System Effectiveness, motivation System

System Functions principles System

Motivation. Technology Staff Technology Staff Technology Principles

(continued)

708

Annexes

№ 51

Years (A.D.) 1924

Person or group Max Weber

52

1925

Ronald A. Fisher

53 54

1927 1928

Elton Mayo T.S. Fry

55

1930

Mary P. Follett

56

1931

James Mooney

57

1938

Chester I. Barnard

58

1938

59 60

1943 1947

P.M.S. Blackett et al. Lyndal Urwick Max Weber, Rensis Likert, Chris Argiris

61

1949

Norbert Wiener, Claude Shannon

62

1951

63

1955

64

1959

Frank Abrams, Benjamin M. Selekman Herbert Simon, Harold D. Leavitt, Robert Shleifer Edith Penrose

65

1960

Douglas McGregor

66

1965

Igor Ansoff

67

1967

Fred Fiedler

Principal contribution to HMT Theory of social and economic organization Statistics and probability theory in management The School of Human Relations The statistical basics of mass service theory (queuing theory) Motivation. Involvement of groups in resolution of management issues Recognition of universal principles of an organization Organization theory. Sociological aspects of management. Communication Action research Principles of management Social psychology and concepts of human relations in organization theory. The theory of open systems in organizations Highlighting an analysis of systems and information theories in management Attention to special management knowledge The role of human behavior in decision-making. Organizational behavior and psychology Firm growth theory The attitude of managers to their subordinates has a significant impact on their behavior and on the working climate of an organization. In theory “X”—approval of the supervisory manager’s priority, in theory “Y”— the principle of responsibility allocation Critique of long-term planning techniques. Strategic planning model. Strategic Management Model Development of leadership theories on the job-oriented and relationships

Core system element Organization Technology System Technology Functions, staff Principles System

Work, technology Principles System

System

System Staff System

Organization theory Organizational behavior

Strategic management

Leadership (continued)

Annexes

709

№ 68

Years (A.D.) 1967

69

1969

70

1975

William Ouchi, Oliver Williamson

71

1973

72

1974

Henry Mintzberg Peter Drucker

73

1975

Henry Mintzberg

74

1975

Gerald R. Salancik

75

1976

Rosemary Stewart

76

1980

Michael Porter

77

1980

78

1982

Jeffrey Pfeffer, Michael Crousier John Kotter, John Gabarro

79

1982

Terrence Deal, Allan Kennedy

80

1984

C. Belbin

81

1985

E. Shane

Organizational culture Leadership

82

1986

William Ouchi

Theory Z

83

1986

Michael hammer, James Champy

The concept of “reengineering a corporation”

Person or group J. Thompson, J. Galbraith, P. Lawrence, J. Lorsch, R. Mockler Carl Wake

Principal contribution to HMT Proved that there is no single best way to organize activities and undertook studies on the situational aspects of organizational development Studied organizations as interpreted systems Development of firm theory. Market imperfections—the reason for the existence of firms “Nature of managerial activity” Management theory and practice

Studied organizational structures from machine bureaucracy to “adhoc”-cracy Theory of power structures within and between organizations Alternatives and limitations of manager actions in a variety of situations and differences between different types of management tasks New ideas on competition strategy, competitive advantage, competitiveness Theory of power structures within and between organizations Study of the work of senior executives. Developed change management technologies The concept of corporate culture as a critical factor influencing organizational behavior and corporate development Manager teams

Core system element Situational approach in management

Organization theory Organizational behavior Manager roles System Leadership Staff Organizational structures Leadership Manager functions

Strategic management Leadership Manager functions Change management Corporate culture

System Staff System Organizational culture Organizational behavior Development of organizations (continued)

710

Annexes

№ 84

Years (A.D.) 1987

85

1990

86

1994

87

1995

88

1996

89

1996

R. Kaplan D. Norton

90

2001

Jim Collins

91

2001

92

2002

M. Maletz, N. Nohria C. Christensen

93

2003

S. Finkelstein

Identified the mistakes of the top managers of leading corporations

94

2004

Henry Mintzberg

Special training for managers

95

2004

Jack Trout

96

2006

R. Daft

97

2007

Fred Luthans et al.

Competitive advantage Marketing management Principles of management Organization theory Positive organizational behavior

98

2007

Taleb, Nassim

Theory of The Black Swan

2013 IX–XXI centuries

Pankaj Ghemavat

CAGE Model – Russian HMT (until 1917). – Soviet HMT. – Russian HMT (from the 1990s).

99 100

Person or group Skinner Burrhus Frederic G. Hamel, C. Prahalad Peter Senge Kim Cameron, Robert Quinn Garrett Morgan

Principal contribution to HMT Theory of operant behavior The concept of “core competencies” in strategic management (self) learning organizations Corporate culture diagnostics technologies System of organizational images and metaphors The concept of a “balanced scorecard” Characteristics of a successful “manager of the fifth-level” White Space Management Theory Managing innovation at companies

Core system element Organizational behavior Strategic management System Staff Corporate culture Organization theory Monitoring the implementation of strategies The image of a manager’s role Development of organizations Development of organizations System Strategic management Managers System Staff Strategic management Organization System Organizational behavior Management decision making Problem solving See this tutorial