Why we need to wake up to how many commonsense management ideas are nothing of the kind

In the first part of this series, I explored the “Practical Men” who opposed the ideas of the great British economist Lord Keynes. Their economic dogmas — not unfamiliar today — included the beliefs that reducing wages would cut unemployment and all the economic ills of the country could be cured by chopping government spending.

In a strange reversal of the ideas of Adam Smith, they claimed that because everyone pursues their selfish interests, the common good will result—which is the opposite of what Smith thought.

Their modern descendants, the Practical Men and Women who run today’s organizations, have absorbed this distorted ideology and created the idea of Economic Individualism — that Keynes described as:

. . . the astounding belief that the wickedest of men will do the wickedest of things for the greatest good of everyone.

The gravest error of Economic Individualism is the idea that people work solely for money (selfish economic interest again), and that decisions about taking or leaving jobs are therefore purely financial ones.

The practical impact of Economic Individualism

Missing from all of this, of course, is any recognition of what the effects on the average employee — the one producing the wealth of the company — might actually be.

This was not an accidental or even a heartless omission, but an ideological one: the defunct economists simply didn’t take human beings into account in their theories at all. Human beings were assumed to have no interests but money—no loyalties, no aspirations to status, and no personal lives at all. And so, in the English-speaking world and increasingly elsewhere, companies have been converted into money-generating machines which compete with each other to cut costs and so boost profits, until all possible savings have been made, and the bits are then sold off.

Such a company acts as if it hates its employees and despises its customers: the first exist only to be reduced, the second only to be cheated. Employees have literally no function except to be as few and as cheap as possible—indeed, the ideal company would have no employees at all; just a management team and a sophisticated computer program that took money in, skimmed some off, and sent it out again.

This sounds insane, and in some ways it is: think of the manager basking in praise and counting his bonus after closing the R & D division on which the company’s future depends. But in fact this kind of behavior is perfectly logical if you realize (which most people don’t) that it’s entirely based on the logical implementation of an ideology derived from defunct economists.

Why does this thinking still remain?

It�€™s a reasonable question, then, why people believe such rubbish. After all, not just personal experience, but also generations of empirical studies, show that people work mostly for non-financial reasons, that money is a poor motivator, and that introducing new financial incentives into an organization is usually the best way to destroy it. What’s going on here?

One answer is to do with intellectual laziness. Keynes was up against the mentality that assumed that if there’s a budget deficit you should cut spending. This is the kind of common-sense, largely thoughtless conclusion that people come to naturally, like the idea that heavier objects fall faster than light ones. How many remember the famous pictures of Apollo astronauts dropping a feather and a wrench, which fell at the same speed, and the shock they felt then?

Similarly, the idea that money motivates people is just, well, intuitive, and easy. It makes management simple. It appeals to our inbuilt assumptions and prejudices.

But there’s another element as well. Ideas — and here perhaps Keynes was wrong — are not always powerful in themselves. It depends who takes them up, since nothing is more influential than an idea whose time the powerful decide has come.

The fact is that the money hypothesis, as part of the Hidden Hand fantasy, is only powerful because it’s been accepted and promulgated by those who benefit from it.

There’s nothing mysterious or conspiratorial about this. Powerful interest groups have been able to dictate which ideas are influential since the days of the Ten Commandments, if not before. The reality is that, if the works of Milton Friedman had been evaluated on their merits, the books would have remained on the shelf sandwiched between the reptile fantasies of David Icke and the likes of the Da Vinci Code. But once powerful and greedy intelligences realized how useful they could be, the rest is the history of the past twenty-five years. It has always been thus.

Does that mean there is no hope?

Not necessarily. One Buddhist idea I’m quite fond of (if I can switch intellectual disciplines violently for a moment) is Samsara, which refers, among other things, to the suffering we experience because we do not perceive the world as it really is, but through patters imposed upon us by others.

The Buddha, we recall, was literally “The Man Who Awoke.” We don’t have to be Buddhists necessarily, but we do need to wake up—to see clearly how much of what we think is common sense and accumulated experience was just handed down from some defunct economist while we slept. Only then can we begin to do something about it.

An Englishman now resident in Europe, John Fletcher has had a long career in the public sector in several countries. He has spent a good deal of time in working environments outside the Anglo-Saxon world, and has written and lectured on organizational issues.

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