BUSINESS CIVILISATION FROM POSTMODERNISM TO NEOFEUDALISM

 

Gabriel Donleavy, 1995

 

ABSTRACT

The purpose of this paper is to present parallels between the eclipse of the grand narrative of ancient Rome by the deconstructive barbarian post classicists and the eclipse of the grand narrative of the modernist Rationality project in its managerial form by deconstructive iconoclastic postmodernists: but to do so in such a way as to raise the question whether a new grand narrative could emerge from the ruins of Modernity that echoes the emergence of the feudal grand narrative from the ruins of Rome.

 

 

 

INTRODUCTION

Even the most casual surf through management abstract databases throws up numerous attempts to articulate and communicate post-modern perspectives on organisations. The most frequently occurring theses seem to be the following.

1.The modernist organisation was/is a bureaucracy whose characteristics of hierarchical structure, extreme division of labour and oligopoly are becoming outdated in the age of niche markets, lateral structures and globalisation (Firat et al 1994). Economics itself, the dominant conceptual framework of the business school is modernist, rational prescriptive, and unable to explain or predict real economic events as a result. When a theoretician tries to expand traditional paradigms, he is simply marginalised (see for example, the inattention given to Vaga's (1989) Coherent Market Hypothesis, a serious and convincing replacement for the modernist white elephant dogma called the Efficient Market Hypothesis).

2. The post-modern perspective foregrounds semiotic discourses, the maintenance of capitalism through the hegemony of manipulated hyper-realities where every Forest Gump of a consumer can shake hands with dead Presidents and the privileged analytical tool is deconstruction of the text of any managerial or analytical claim especially the modernistic claims of empirical quantitative research to be the best discourse about reality.

3. The post-modern perspective denies primacy to any one mode of representing reality but rather tends to deconstruct the act of representation itself. The influence of IT is argued to operationalize hyper-realities, to eclipse hierarchy by networked laterality and to democratise organizational communication and decision-making and to render the boundary-skin of the corporation porous to outside influences and inside leaks to an unprecedented degree.

4. Postmodern management is related to administrative and manufacturing flexibility "but this flexibility does not necessarily mean more individual empowerment and self-control. Surveillance, for example, did not die because organizations got flatter and flexible; rather, surveillance with computers, videos, and electronic sensors made many layers of middle management unnecessary in this postmodern world." (Clegg, in Boje 1993:192)

5. The postmodern detachment of signifier from signified has its counterpart in the decay of shares into counters. The Foucauldian convergence of power with knowledge is operationalized by IT turning knowledge into databases, so knowledge ceases to be known but instead is consumed. Knowledge not swept is marginalized. Benetton (per Clegg 1990) exemplifies advertising in a postmodern style, commodifying the harsh reality from which it selects its images to hyper-realise its own logo. It is distinctive in its combination of IT at its core, franchising of retailers who may only stock Benetton goods, and supplied through some 200 small subcontractors of varying degrees of independence. Finally no production is for stock but only in response to retailers' orders.

Moreover, Benetton is postmodern in its organizational boundaries. "Is Benetton perhaps better thought of less as an organization per se and rather more as an organized network of market relations premised on complex forms of contracting made possible by advances in microelectronics technology?" (Clegg 1990:121)

 

 

THE EAST IS READ

It is not uncommon in managerial literature, modernist and postmodernist, to find East Asian corporate forms and rituals posited as containing worthwhile examples for the rest of the world. The family firm as the scaffolding of trust building is often the focus of such work. In East Asia, the rise of genuine imitations exemplifies Baudrillard's simulacra whose signification value interacts with the signification value of the costly originals. So, a Hong Kong fake Rolex is worth more than a Thai fake Rolex in mid 1995, and both are both more than Taiwanese copy Swatches. The appreciation of a good copy has sustained the market for pirated software and cloned hardware

throughout the East, where few buyers see why they should assist Microsoft's monopolistic ambitions and many distributors say off the record that piracy whets the buyers' appetite for the "real" thing when they can later afford it.

Much of the fascination with the East is traceable to an uncritical awe at the spectacle of rapid economic growth there which is apt to be seen as reflecting greater thrift, greater industriousness and greater efficiency. The myth of greater efficiency is deconstructed neatly by Stanford economist Krugman (1994) who shows higher Eastern output figures have been closely matched by higher inputs so there has been no raising of any aggregate input-output ratios - only a purely capacity effect. This applies not only to the little dragons; Taiwan, Korea, Singapore, Hong Kong and now South East China too but also to the exemplar of them all, Japan. After the War, Japan dismantled its zaibatsu and replaced them with keiretsu, enterprise groups blessed by the MITI officials.

In Japan "the enterprise groups dominate whole areas of employment through a vast number of subcontract firms. Although formally independent these are highly structured and semi-formalized and enjoy ongoing relations with the big name and enterprise core companies. Effectively, in Muto's (1986:135) phrase, they are 'vassals' of the big companies. In turn, many of the subcontracting firms themselves rely on work subcontracted out to smaller subcontractors who in turn subcontract to female domestic outworkers who work on piece-wage rates far removed from those of the enterprise union members." (Clegg 1990:147). I want to suggest that such vassalage prefigures one possible outcome of postmodern changes in business structures and that corporate vassalage of the Japanese type will be echoed in certain respects by personal vassalage within the firm. This key term, vassalage, can only be appreciated by a minimum consumption of data about its original medieval meaning; and I essay that task in a few paragraphs' time.

 

 

AFTER POSTMODERNISM

Since managing by numbers collapses time frames so as to render long term investment valueless, in conglomerates, individual businesses are reduced to bargaining chips, quickly acquired and shed. 'A 'successful' American manager doesn't plant or harvest,' Thurow (1984:23 comments, 'he is simply a Viking raider." Managing by numbers is a Taylorist sourced badge of that part of modernist managerialism now often called Fordism. In post Fordism, numbers seem to play a greater rather than a lesser role, as the attempt is made to emulate the Japanese with just-in-time inventory control, quality improvement programmes and an extension of scorekeeping into such new areas as not for profit performance indicators. In capital markets the securitization of loans and the widespread use and abuse of derivatives has made stock funded organizations susceptible to raids in the West while in the East family and enterprise group clusters have so far deferred the Viking raid experience. However when the families quarrel and family management succession fails, raids do occur (in Hong Kong, Evergo Holdings under the Lau brothers is a prime exemplar of a group that got big by raiding). In Britain the 1995 AGM of British Gas, a privatised utility, made history when its shareholders voted no confidence in its Board in general and its overpaid CEO in particular. The modernist assumption of the primacy and stability of the Board of a listed company is being displaced by a postmodern mix of governance styles and of differentially located sources of corporate power. After postmodernism, some ways of networking and bonding may well be seen to have greater survival than others

In the opinion of one pair of commentators on postmodernism, "the only cure for postmodernism is the incurable illness of romanticism" (Appignanesi and Garratt 1995:173). Neo-romanticism is exemplified in Sabel (1982:220) who foresaw high tech cottage industry facilitated by new technologies fostered by local state initiatives with Benetton's Emilia-Romagna network as the paradigm case. What is missing from that view is the combination of ritual and vassalage that makes both for charisma and for socio-economic stability, both being qualities any future reaction against postmodern instability and depersonalisation are arguably likely to privilege. If this occurs, then a re-creation of some key features of medieval feudalism becomes a likely process. Some of those features are already in place as will be argued next.

 

 

THE FEUDAL PARADIGM

Feudalism is one of those terms like postmodernism that in some mouths means an epoch and its episteme, but in other mouths means a pattern of organization and communication and power relations. Brown (1974:1086) surveys the use of the term feudalism finds it to be applied heterogeneously and inconsistently between historians and recommends teaching students to use the term "only with specific reference to fiefs."

In any system that can meaningfully be termed feudal; "public authority has become a private possession. Everyone expects the possessor of a 'court' to make a profit out of it and everyone knows that the eldest son of the court-holder will inherit this profitable right, whatever his qualifications for the work. On the other hand, any important accumulation of private property almost inevitably becomes burdened with public duties. The possessor of a great estate must defend it, police it, maintain roads and bridges and hold a court for his tenants. Thus lordship has both economic and political aspects; it is less than sovereignty, but more than private property." [Strayer 1952:17].

 

 

FEUDAL SOCIETY: SOME PRE REQUISITES?

From what sort of society does some kind of feudalism evolve? Daniel Bell draws a picture, thus. "The foundation of any liberal society is the willingness of all groups to compromise private ends for the public interest. The loss of civitas means either that interests become so polarized, and passions so inflamed, that terrorism and group fighting ensues, and political anomia prevails; or that every public exchange becomes a cynical deal in which the most powerful segments benefit at the expense of the weak." (Bell 1976:245)

'Some people today write about post-industrial society: the nearer prospect, I fear, is the emergence of a post-society industry. In fact, to a much greater extent than is now imagined, liberal society has already disappeared. Those who persist in framing political and economic discussions in terms of defending and preserving it, in fact, directly contribute to the sterility of intellectual and political activity today.'(McDermott 1991:13)

 

 

THE ORIGINAL FEUDALISM SUMMARIZED

The original feudalism slowly arose in Europe after the barbarian dismemberment of the Roman Empire when Germanic tribes overran Europe. Various explanations of the rise of feudalism in Europe are available. For example, Tainter (1986) argues Rome was one of a series of societies that collapsed under the weight of their increasingly complex organization. On the other hand, Chris Wickham (1984) attributes the rise of feudalism to the eclipse of the burdensome but ineffective Roman tax collection system by the advancing barbarians' preference for rent over tax. Roman freemen sold land to patrons then rented it back in return for protection. By Charlemagne's time, office and power meant land Vassalage, the principal relationship in feudalism, meant holding estates in return for service, usually military service. The fief was land plus peasants to work it; land on which the vassal was immune from law so was ruler of it in all respects. To become a vassal a man had to appear before his lord of the manor (his 'demesne' lord), put his hands inside the lord's by way of homage and swear faith against all men to his lord by way of fealty. An edict of Charlemagne in the ninth century justified desertion by a vassal if his lord failed to protect him when able to do so, when the lord ravished his wife, when the lord attacked him with drawn sword, when the lord plotted against his life or the lord sought to reduce him to servitude. A faithless lord [or vassal] was thus a felon. Fiefs were eventually hereditary but the successor had to swear fealty for his title to be secure. Vassalage was always personal and was mostly restricted to fighting men. Similarly only one possessed of a cheval (horse) could display chivalry in its initial meaning. Noble boys started as pages, at around 14 became squires, and then graduated by means of the "accolade" to knighthood at around 21. The accolade was often accompanied by the formula 'sois preux' (be one who displays prowess), a combination of skill and bravery and loyalty to lord and his own plighted troth (Stephenson Š1942). The troth was the origin both of the modern word 'truth' and the medieval idea of faithfulness to one's word (Way 1986). It was a quite central idea in feudal Europe that a promise was unbreakable.

 

 

THE OFFICE AS A FIEF

Vassalage was, in some senses, the medieval equivalent of employment. The vassal employee paid homage to his lord in a ritual act promising aid and obedience in exchange for protection, succour and the fief itself which came to be conveyed in a ritual called investiture, immediately following the homage. The vassal held his fief only so long as he served his lord, and could be ejected on failure to do so. Since homage and fealty obligations were personal, the lord of a lord (i e the suzerain) was owed nothing by the vassals of the intermediate lord(i.e. the demesne lord) (Ganshof 1952:88). A fief was granted against an obligation to serve, often in a specialized way with skilled military, managerial or clerical labour. In this it was unlike the villein tenement (aka serfdom) which was granted in return for unskilled labour obligations usually associated with work in the fields. Their lord could sell serfs to other lords together with their holdings (Hyams 1980:6-14). Serfs were not allowed to alienate their own land without the permission of the lord of their manor (Hyams 1980:43)

The distinction between serfdom and vassalage compares to the modern distinction between wages and salaries. Eventually a detailed covenant elaborated the ceremony of homage and investiture. The serf was a free man with recourse to the assize courts except in relation to his lord whose word and court were unappealable. In modern parlance, the serf could not take the boss to court for mistreatment short of murder. The serf was thus more like the modern unlawfully employed and exploited illegal immigrant labour than like the more usual kind of wage earning worker. The free vassal was more like the modern office worker with the office being remarkably similar to a fief. Like a fief, an office is a piece of real estate to which duties of service attach. Like a fief, an office can be removed from the occupier on demand by the boss, with no recourse whatever by the tenant to the courts. In this respect medieval tenants were better off, as they had available the writ of novel disseisin at the assizes where their claim to have been wrongfully dispossessed by the demesne lord would be heard. The lord would usually argue that dispossession was imposed for failure to perform the services implicit or explicit in the fief. The courts would decide on the evidence, and evidence was even more crucial then than now. The modern employee has the possibility of bringing an action for wrongful dismissal altogether but not for wrongful dispossession of an office. There is no right in any law to occupy specific office space as an employee, but it is natural and observable that occupation thereof is in the gift of the boss of the manor and that his disposition judgments will reflect a combination of seniority, function and the extent to which the vassal is in favour. It is almost universally observed that personal status in a firm is associated with office size and comfort; and this association is the essence of fiefdom.

 

 

STATE AS CHURCH: FIRM AS MANOR

A crucial element in the transformation of the Roman system into the wholly different medieval feudal system was the influence of the new religion of Christianity, which at first undermined the old order and later provided the spirit and shaped the institutional forms of the new order. (Heilbroner 1976:94/5) As for the importance of the Church and religion in feudalism, this should be understood as essentially a means of bringing order and peace to a society of warriors (Foss1975). Around 989 a council of bishops at Charroux began to impose the churchís limit on violence, anathematising anyone who stole from churches or peasants or struck an unarmed cleric. The synod of Le Puy in 990 extended the Church's protection to merchants, their mills and vines. This was the beginning of the Pax Dei (Peace of God) which by 1041 extended to forbidding fighting on holy days. On 27 November 1095 Pope Urban II bitterly condemned the depredations of the gangster knights throughout Europe and promised them eternal damnation unless they threw the Turks out of Jerusalem. By the mid 13th century the ceremony of conferring knighthood exhorted the knight to defend widows and orphans against the cruelty of heretics and infidels. Thus had the church transformed a simple rite of passage into a sacrament and general pillage into a crusade. The quick success of the First Crusade in capturing Jerusalem in July ž1099 seemed to confirm the divine blessing on western knighthood. The Templars, constituted in 1128 were the extreme example of the union of arms and across, approved explicitly by no less a figure than St Bernard who, in "De laudibus novae militiae", said Templars committed not homicide but "malicide".These days, private battles mean business battles and battlefields mean markets. Raids mean hostile takeovers and white knights mean white knights.

A novel entitled "Black Easter" by James Blish draws to its conclusion with Satan having replaced God and finding that he has to do the job of running the universe in very much the same way as God had done. The decline of the church in the West has been paralleled by a rise in State responsibility for regulation of the relationship between people and corporations involving criteria of equity, contractual freedom, good faith and honesty. This emerging role of the State received an important boost in mid century with the New Deal, with Keynesianism, and with the phenomenon of Nazism and Stalinism persuading a large number of people that the State was very much a moral force for good or evil, with secular ideology filling the gap left by ecclesiastical theology (but not doing so adequately). Since the Second World War, the dominant world conflict of economic ideologies resembled the post-medieval conflict between Catholicism and Protestantism; but as the Cold war waned and finally faded away so the tensions between the West and Islam grew more pronounced in an ironic echo of the medieval Crusades. At the same time, human rights became a more central political concern in much of the world. Indeed it is arguable that as the "Peace of God" was to the Church900 years ago, so human rights are now both to much of the modern Church and to the secular successors of the Church's authority in the West. The chief behavior modifying instrument of such authority is the law. When the law has to deal with the managerial behavior of the modern company, it is as reluctant to interfere with business decisions as the old royal courts (especially the assizes) were to interfere with what they might have characterized as proper manorial decisions. The duties of directors in British Commonwealth company law critically focus on the notion of acting in good faith in the interests of the company. In the leading case on the matter in the Commonwealth, an important perspective was expressed by Lord Greene in Re Smith and Fawcett Ltd ([1942] Ch 304 CA) thus; "They [the directors] must exercise their discretion bona fide in what they consider - not what a court may consider - to be in the interests of the company." Nonetheless the courts limit the directors' discretion by the test of the interest of shareholders generally, which tends to mean maximizing profits within a reasonable period. (Eg Parke v Daily News [1962] Ch 927). When a director uses the company to benefit third parties, the courts will punish this as a breach of the duty of loyalty even though the company is unharmed by it (Regal (Hastings) Ltd v Gulliver [1967] 2 AC ž134). As regards the standard of care required of directors, the courts take the view that those who appoint the board must bear the consequences oftheir foolishness (Re City Equitable Fire Insurance Ltd [1925] 1 Ch Š407). A recent American judgment was that directors were distinguishable from trustees in that directors were appointed to take and manage risks and that imposition of liability for mistakes would hamper that role (Dynamics Corp of America v CTS Corp [1986] 794 F 2d 250/256). In contested takeovers the directors are obliged to accept the highest offer, and here the courts will review ordinary business judgment, per Lawton L J in Heron International Ltd v Lord Grade [1983] BCLC 244(CA). In the US this is known as the Revlon principle after the objective test of care whether the highest offer was recommended or notin Revlon Inc v Macandrews and Forbes Holdings Inc. However, in England, Hoffmann J in ReWelfab Engineers Ltd (1990) BCC 600, held that it was not a breach ofdirectors' duty to accept other than the highest of three very closely similar offers in order to secure the workforce's future employment. The law steers clear then, of interfering with business judgments of directors so long as they act in the interests of their company, and this will usually be presumed. Thus the Board of a company is like a medieval chief vassal who has de facto immunity from interference by the law on his own manor, so long as he is a faithful vassal. A whole literature of scholarship, that of agency theory, has gown up to examine the economic pressures on the board shareholders relationship that might make the board act in something less than the shareholders' best interests. However, the law does not requiredirectors to act in the shareholders' best interests other than in takeover situations: only that they do not try and benefit outsiders at the expense of the company - a much less onerous burden. Stock options, lavish treatment of leading non executiveshareholders and the maintenance of dividend levels are among the several mechanisms commonly observed to build mutual confidence between boards and shareholders. These things exemplify the creation of trust by institutional mechanisms; and it is to the creation of trust that we turn next.

 

 

 

TRUST CREATION

The notion of trust is central to all economic exchange. Implicit within exchange is a set of common expectations that define appropriate and inappropriate behaviors. These common expectations exist prior to contracting; they provide the necessary background conditions that allow individuals to come together and barter or contract. (Neu 1991).

Zucker (1986) identifies 3 different modes of trust production, as follows:-

1. Process based, where trust is built on experience of transacting between the parties which builds reputation that goes outside the parties themselves.

2. Characteristic based, where trust is evoked by membership of a class, club, race, profession, school, family, clan or just appearance.

3. Institution based, where trust is tied to formal structures such as contracts, professional certification, use of neutral intermediaries and subjection to effective regulatory structures. Zucker argues that in the American industrial revolution of the last century, process based trust was disrupted by high rates of corporate birth and death, rapid increase in human population diversity of cultures of origin arising from massive immigration, and by industrialization itself. Institution based trust became necessary once there was significant social or geographic distance between transacting groups, and the bureaucratic form of organization is argued to be one of the most important of such mechanisms. Zucker posits that institutional mechanisms insure organizations against inability to rely on process based trust. "Managers insure the workers against shirking, unions and other employee organizations insure wage earners against owner opportunism, stock markets insure investors against fraud and misrepresentation, professionalization is designed to insure that the training is adequate to the task, regulations insure the parties to a transaction that is regulated against the use of a different set of rules. This kind of insurance' forms the basis of transactions when trust needs to be recreated." (Zucker 1986:101). Thus, the process of industrialization involves a process of replacing process based trust by institution-based trust. This applies a fortiori to export led development and to the process of trade globalisation, since these things involve dealing with strangers in foreign countries. What is left unsaid here is the possibility that, as process based mechanisms shrink and institutional based mechanisms expand, character based trust may expand temporarily to fill the gap between the other two mechanisms. This might help explain the rapid rise of racism in newly marketizing East Europe, Russia and China. When you no longer rely on old Party friends and cannot yet believe that contracts guarantee performance, it must be tempting to input some minimum degree of trust in racial kinship.

An influential analysis of the economic reforms in China since 1978 highlights the important role played by culture and level of development in shaping transactional structures. One of the ways in which bureaucracy has failed there is in giving way to fiefs so that the distribution of impacted, uncodified information is skewed in favour of a very few opportunistic players. (Boisot and Child 1988). They define "fief" (op cit 508) as "small numbers, hierarchically organized through face to face and power relationships that often have to be charismatically legitimated - by such means as the laying on of hands, initiation rites, commendation ceremonies and the like". Like their idea of a bureaucracy, a fief is hierarchically co-ordinated; but a fief differs from a bureaucracy in being materially more concerned that its members share values and beliefs, in the personal rather than impersonal nature of relationships and by the lack of codification of information. They see the fief as the least efficient way of diffusing or codifying information. They are using the word 'fief' almost as a synonym for the word 'clique' rather than in a way that compares with the medieval fief. The fief as they see it has "a warm, involved' rationality of vaguely defined ethical principles applied particularistically." (op cit 522). They say China's mishandling of decentralization and delegation issues in its modernization have created new fiefs, and perhaps reinforced old ones in some places, in that country. If we allow that fiefs as cliques in China often facilitate the acquisition of private power intermixed with public office and occupation of buildings both commercial and residential, then we have made an important link between Boisot-Child fiefs and traditional fiefs. The very important implication of that is marketization of command economies involves a significant and possibly inevitable dose of neo feudalism. If that is to be true of China, it is pertinent to ask whether it was or is true of its neighbour, Japan.

 

 

NEO FEUDAL CHARACTERISTICS OF JAPANESE BUSINESS

The best-known techniques of Japanese management are just in time inventory control, total quality control and quality circles, lifetime employment expectations, singing the company song at morning rallies and respect for seniority. All these characteristics are trust-producing mechanisms that combine some institutional characteristics with some process based ones. They are essential features of Japanese as opposed to western capitalism. A recent series of experiments showed that Japanese managers see a work team is an environment in which information is shared in pursuit of improved performance, while Americans used groups to share responsibilities and reduce risks (Sullivan 1992)

In Kaoru Ishikawa's book What Is Total Quality? He states that the basic teachings of Christianity appear to say that man is by nature evil and that this teaching has cast a shadow over the Western nations' management philosophy. It suggests that people cannot be trusted (Stewart 1992)

Some of the distinctive features of Japanese capitalism may reflect an unbroken feudal tradition in some respects at least. In contrast to the view that, in Japan, capitalism destroyed feudalism and undermined the rule of the elite during the Tokugawa period, commercial wealth was the salvation of the lord and his retainers since samurai and merchants retained economic primacy and developed innovative institutions which increased their own profits while providing financial services which sheltered tenant residents from the almost severe market dislocations (Johnson 1983).

Even in the present, scandals in Japan have less severe consequences for their perpetrators than in the West. The recent Recruit scandal involving Japanís four largest securities brokers has exposed a system in which politicians, bureaucrats, big business, and sometimes even gangsters cooperate to keep the countryís economic engine primed. When the Japanese stock market crashed in Š1990, Nomura securities and its three main competitors covered the losses of their best clients and reported the payments as tax-deductible entertainment expenses. The payments broke few laws and shocked few Japanese, but the tax evasion attempts incurred the wrath of the powerful Finance Ministry, whose tax officials began talking publicly about widespread corruption. Nonetheless, the case of Yoshihisa Tabuchi, former president of Nomura Securities, exemplifies how Japan's disgraced business and political leaders can bounce back. Tabuchi resigned from Nomura after acknowledging that the company secretly compensated big clients for stock market losses. News reports charged that Nomura had financed some business enterprises with the Japanese mob. Tabuchi is not out of a job, however; he 6Š2 became Nomura's vice-chairman. (Rapoport 1991). This extra legal act of nurture could be viewed as an incident of modern vassalage. To put it another way, in order for us to say to you "we look after our people", first you have to become one of our people. And we have already seen how the enterprise groups themselves create vassal companies among their subcontractors. A sense of mutual obligation and public weal even extends to the Yakuza. Japanís biggest Yakuza crime syndicate has issued its own code of conduct. The 30,000 member Yamaguchi-gumi's code bans recruits from throwing cigarette buts on the ground, making grand entrances into hotels, trains or golf courses, or giving out business cards with the gang's symbol. A gang spokesperson explained, "The basic idea is not to inconvenience the public" (Kohut and Sweet 1994). We have seen how the lawless warriors of the first feudal age became chivalric knights under the influence of the Church. We may be about to see the decriminalisation of the old villains, the Yakuza in Japan, the IRA in England, as new demon cults arise to take their place and in so doing, make knights out of gangsters. It happened before.

It can be appreciated from these snippets that Japanese business society is one where the feudal values of fealty, the personal basis of obligations and the reluctance to allow public law into the private demesne all flourish. As Japanís multinationals acquire western business groups, the Japanese expatriate manager class starts to resemble the medieval Normans in their separation from the society of the acquirees and their attempts to mount Japanese business methods on the Anglo-Saxon vernacular. Yankee samurai are Americans who are employed by Japanese-owned firms in the US. Few Yankee Samurai expressed respect for the Japanese employees' strong work ethic and willingness to work long hours, while many expressed resentment. Yankee samurai are uncomfortable with Japanese coordinators,' often referred to as spies or shadows. Yankee Samurai believe that the personnel rotation policies of Japanese firms keep Japanese employees from really understanding Americans. Japanese management by consensus usually involves only the Japanese managers. Only the Japanese seem to enjoy lifetime employment, and the firm's mission is rarely communicated to the non-Japanese employees. (Laurie 1990). There is a strong parallel between these Americans under Japanese management and the British Anglo-Saxons of 900 years ago under the Norman Conquest, but it is one that can only be elaborated properly in a far longer work than this paper.

The Korean style of management is credited with much of the success of the country's business ventures. Known as K-type management, its distinguishing characteristics are summarized in Lee and Yoo (1987). Korea has the so far unique distinction of preserving the oath of fealty in its business practices, and of administering it annually. Thus, Korean business is even more feudal than the Japanese but scarcely less successful in conventional economically measured dimensions. We now discuss the opinion of some writersí non-organizational behavior that western corporations have reached a situation satisfying the preconditions for feudalism.

 

 

WESTERN CORPORATE FEUDALISM

Edward Mason [1959] was one of the first Americans to consider whether managers could any longer consider their responsibilities to be of a wholly private nature; America, he said, "is a society of large corporations. [Whose] management is in the hands of a few thousand men. Who selected these men, if not to rule over us, at least to exercise vast authority, and to whom are they responsible?" He thought administrative hierarchies had replaced the market as societyís basic distributive mechanism. When GE faced antitrust charges in the 30s, its chairman, attorney Owen Young, developed the defence that the modern firm had aggregated wealth to such an extent that it had acquired a public function limiting the owners' rights over that wealth; and that by divorcing control from ownership, the firm had given its own management an unprecedented degree of autonomy which carried with it the duty of care of any public trustee. He told Harvard business school class of Š1927 that they were public trustees who should be educated as such (Case and Case 1982)."To the business community and the solicitor, land and capital are equally investments, between which, since they possess the common characteristic of yielding income without labour, it is inequitable to discriminate. Though their significance as economic categories may be different, their effect as social institutions is the same. It is to separate property from creative activity, and to divide society into two classes, of which one has its primary interest in passive ownership, while the other is mainly dependent upon active work." (Tawny ž1921/1961:67). Actually, even as economic resources the resemblance between medieval land and modern capital may be less distant than we generally assume. Early medieval manorial evolution was not a single process of disintegration; great estates were formed and fragmented throughout the period, so resembling blocks of modern capital rather than the inalienable entailed estates of popular imagination. (Klingelhofer 1985) "Property is in its nature a kind of limited sovereignty..Property in things swells, in effect, into something which is sovereignty over persons.í The main objection to a large corporation,' writes Mr Justice Brandeis of the Supreme Court of the USA, is that it makes possible and in many cases makes inevitable - the exercise of industrial absolutism." (Tawney 1921/1961:77)

Increasingly as it enters the government businesses, the corporation is in the business of refashioning social, health, cultural, and other services not only as commercial products but also as products that reflect the corporationís own class, property, power, and value relations. All in all then, it is appropriate to view the modern corporation as a fabricator of social relationships, directly, indirectly, blindly, and by design, as the case may be (McDermott 1991:199) Even Foucaultís work is relevant because it suggests that all organisational forms are essentially alike, and, as individuals, we are all imprisoned

Within an organizational world. (Burrell 1988). Finally the cover of Newsweek at the time of writing around June 20, Š1995 asks "does government matter?" in an age where big business is global and makes all the resource allocation decisions that count. Even to ask the question at all seems no longer so strange as we pass along the postmodern travellator, perhaps to some kind of feudalism where all the power that counts is private and tied to fiefdom. These quotations suggest, even if they do not persuade, that the power and influence of modern companies shapes the societies in which they operate. To the extent that this is so, there is the feudal spectre of private power with public duties which the law may be loth to enforce. The relevance of this perspective to business ethics and corporate crime will be argued next.

 

 

MODERN BANALITIES

Reich (1987) argues that lack of trust within American business culture is robbing U.S. companies of the flexibility they need to remain competitive. Collective entrepreneurialism -an approach to capitalism in which distinctions between owners and workers are blurred- can create options for companies trying to adjust to economic change. Such a strategy, however, requires a level of trust few American companies can muster. Tacit understandings between employees and managers working together to weather economic hardships are often breached when they become inconvenient. Those who renege on informal agreements may overcome the damage done to their reputations, but those who were betrayed are never as trusting again. Precautions, rules, and codes proliferate as trust erodes, and commercial dealings become increasingly constrained by contractual stipulations. (Reich 1987).

Rothschild (1985) argues corporate crime is inherent in the free enterprise system. E. F. Hutton's check-kiting operations, Exxon's fraud, Eli Lilly's criminal negligence, as well as the Dalkon Shield and Ford Pinto, are to him only the tip of the iceberg. Greed, ambition, and the overriding preoccupation with profit account for much of the criminal activity, but other factors also come into play. Corporations are built on bureaucratic models. The diffusion of responsibility promotes a psychic isolation from the activities of the collective. Nobody in a hierarchy, from the president on down, is immune from pressure, and charges of wrongdoing shock officials, who think of themselves as moral individuals. (Rothschild 1985).

Some senior executives are so insulated from financial pressures that they do not realize the effect that their insistence on performance has on many employees. Organizations should not use profits or quotas as the primary basis for evaluation of workers, since this practice can lead workers to fall back on unethical methods of meeting goals. Instead, Hosmer recommends that organizations should put more emphasis on other indicators of performance, such as customer complaints and community attitudes. (Hosmer 1987). Any such move would be a move away from scientific Taylorist management towards the "warm rationality", as Boisot and Child (1988) put it, of fief based feudalism. More than half of the respondents to a survey by the magazine working woman believe that business ethics have deteriorated in the eighties. The majority of respondents said that they had witnessed such foul play as lying to employees, expense-account abuses, and in-office jockeying involving favouritism, nepotism, and the taking of credit for other people's work. Almost half have seen sexual and racial discrimination, and just under a third have witnessed lying to make a sale. Nearlypercent of the respondents who don't have a formal code of ethics at their workplace believe that instituting one would be helpful, although less than a third of them want the government to regulate ethics. (Sandroff 1990). This is the first survey I was able to find where an explicit link was made between reducing malpractice at work and the creation of a corporate "code", thus echoing the role the medieval church ascribed to the "code" of chivalry that it blessed as an instrument to achieve the "Peace of God."

 

 

 

CONCLUSION: A WEBERIAN PERSPECTIVE

Weber distinguished two types rationalities of institutions: formal and substantive. The difference between formal and substantial rationality is as follows Formal rationality is represented by quantitative calculation and accounting. It represents the extent to which provision for needs is, and can be, expressed in incalculable terms. Substantive rationality represents the degree to which supply of resources is shaped under some set qualitative criterion of values, such as ethical, political, utilitarian, hedonistic, feudal, egalitarian, or otherwise. Formal rationality concerns means and substantive rationality concerns ends. Weber describes modern organisations as systems based on formal rationality

With no inherent connection to specific substantive ends or outcomes, the modern corporation fits that characterization and is the one still central to economic theory and most management courses at most universities. The postmodern corporation, as it responds to pressures for socially responsible behavior and in some cases seeks to evade them, will move away from that characterization towards a substantive rationality whose value content would be reflected in its mission statement, code of conduct and leadership behavior internally. This paper has suggested some of the ways in which such a move recreates some of the ingredients, and several of the preconditions, of Feudalism.

 

 

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