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Introduction To Management Rafiyat Husnain s3400025 Tutor: Bernadette Hosking

How has Capitalism affected the growth of management as a profession in the postindustrial societies of Western Europe and the USA? Discuss its relevance and sustainability today. Management is a theory that can be dated back to various ancient and pre-industrial civilisations in history when monarchs governed societies. In the nineteenth century, classical economists and innovators like Adam Smith and Matthew Boulton provided the world with a greater insight into the technical and productive aspects of management. As management concepts evolved over the centuries, capitalism became essential to the success and behaviour of managers in the postindustrial world, particularly in Western Europe and the United States of America. When understanding capitalism it is essential to consider its definition, regardless of how widely interpreted the concept may be. Critics around the world define capitalism differently according to different theories and historical backgrounds. However, when capitalism is linked to management theories, it sublimes to an economic and political system whereby trade and markets in a nation are dominated and controlled by private owners and businesses (Hart, 1999). The corporate mechanism under which capitalism functions needs to be examined in order to understand the various decisions managers make to maximize a firm's wellbeing without harming its stakeholders including the society and the environment in general. As Adam Smith mentions in the Wealth Of Nations, economic individualism is the obvious and simple system of natural liberty (Hessen, 2008). This is synonymous to the idea of capitalism. However, to what extent this liberty holds valid while abiding by ethical obligations and sustainability is a question that needs to be discussed. Thus, considering the post-industrial economies of Western Europe and the USA, the benefits and ills of capitalism when studying the evolution of management will be critically examined and analysed in this essay. The growth of capitalism is closely linked to the growth of management as a profession. While in certain cases it is emphasized that capitalism has been advantageous for managers, it can also be argued that it has hindered the success of several managers and firms, especially in rapidly growing economies such as in post-industrialised Western Europe. The beginning of capitalism in Western Europe mainly arised from the opposition and conflict between the proletariat and the bourgeoisie. In early 19th century England, the typical form of capitalism was the textile factories in which women and children were hired to work for extraordinarily long hours with mediocre wages. Critics such as Richard Oastler condemned the managers, who at that period in time were the owners of the mills, calling them ruthless exploiters and emphasizing on the extreme work conditions although this was not particularly unheard of before then (Hessen, 2008). From 1963, the revolutionary expansion of industries and income levels resulted in a massive acceleration of productivity and growth in the respective economies. Also, several countries in the region became increasingly attractive to foreign investors and consumers for exporting goods into their own nations from Western Europe. This worked in favour of the working class as labourers demanded increases in wage rates and strengthened labour unions. However, the bourgeoisie reacted by implementing collective contracts to prevent the labourers from taking advantage of economic situations. This clear divide between the two social classes whereby the ultimate control and power was imposed by the bourgeoise class illustrates the revolution of the capitalist rule in Western Europe (Gaido, Walters, 2005). As the various economies continued to prosper under capitalism and major corporations and monopolies dominated the states, the working class were diverted from their original motives of rebelling against the capitalist forces as they began to experience the benefits it brought about in addition to a greater standard of living, thus increasing their own motivation to work harder and strive for success under the supervision of their managers. According to marxist philosopher Herbert Marcuse, the real evil of capitalism is prosperity, because it seduces workers away from their historic missionthe revolutionary overthrow of capitalismby supplying them with cars and household appliances, otherwise

interpreted as tools of enslavement. (Marcuse, 1969). Although this made the work of managers more convenient for a while as their workers began to cooperate, it was only shortlived as new problems arose with new changes in the economies which were still continually growing. In the United States of America, on the other hand, capitalism has been a mixed element of political power and market competition. From 1865 to 1920, the American economy developed vigorously, transitioning from agriculture as its main productive industry to manufacturing (Weinberg, 2003). Upon the turn of the 19th century, as businesses and industries expanded unequivocally throughout the nation, the USA altered into the world's most efficient economic system as the industrial revolution driven by technology, immigration and fierce competition brought about the rise of capitalism in ways previously imagined by classical economists like Adam Smith. According to Smith, People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.. This appropriately summed up the level of competition in markets as firms continually fought to dominate the industries. Also, as consumption hit high levels, the immediate reaction of firms was to increase prices. Unfortunately, this led to an unprecedented income gap in the nation, the spread between the rich and the poor becoming so great that protecting individual capital was the government's main function (Weinberg, 2003). Unfortunately, instituting the government interfered with the pure capitalist rule of the markets and managers were directly affected as the economic decisions they made for their individual companies were crucial to driving market forces while having to conform to public policies laid out by the authorities. However, this interference was inevitable as letting the nation be driven solely by the free market, or as Adam Smith stated, the invisible hand, would bring about chaos in management decisions due to conflict with employees and the potential to affect the society's wellbeing. Lawrence Friedman wrote, "A plan of government is a plan for distribution of the power and wealth of a society.". Moreover, the mixed economy in the USA was largely dependent and driven by corporations and monopolistic competition, without which the post-industrialised era would hinder the ultimate growth and development of the nation. As Meyer Weinberg mentions in his book, A Short History of American Capitalism, Both American industrialization and capitalism were crucially dependent upon the corporate form of organization. (Weinberg, 2003), and this corporate form of organization was dependent on the efficiency and capability of its management. Therefore, in the post-industrial economies of Western Europe and the USA, firms functioned more effectively to maximize profits and dominate industries which made management more essential to the success of these businesses than ever before. In making decisions to lead and guide their companies, managers have continuously been required to utilize their expertise to their utmost potential, considering all the different factors that affected their firm's productivity, and thus stay on par with the furiously revolving economies. As capitalism brought about large corporations and hundreds of investors who invested their funds into a single corporation by trusting the competency of the management to ensure the corporation's success, the role of managers became systematic and solely concerned with the internal operations of the business. This stood in line with Fedrerick Winslow Taylor's notion of scientific management. According to Taylor, In the past the man has been first; in the future the system must be first., and thus organizations divided work segments according to what would achieve the maximum efficiency in assigned tasks. However, this was not the end of changes in management styles across the nations. The evolution of management has undergone several stages in history, transforming the role of managers rapidly over the years from enterepreneurs managing their own businesses and controlling their own funds and production to bureaucrats who depended upon hierarchy in the organization to fulfill responsibilities and control their employees, the approach taken by the German sociologist, Max Weber (Bosman, 2009). Nevertheless, capitalism has remained the main driving force affecting the strategies and direction

of management in organizations. At the same time, it has greatly contributed to the enrichment and innovation of industries as it encouraged creativity and competition which in turn raised the standards of management efficiency requirements and qualifications. Management as a profession has been largely questioned over the past several decades, and unfortunately, the questions are still ongoing today. Abiding by ethical principles when making decisions and leading a corporation has always been a challenge for managers because of the various trade-offs they incur from doing so. However, it is a serious requirement from the society's perspective and their expectations in managers. Capitalism has brought about great advances in the post-industrial world, expanding and transforming societies and industries rapidly. Max Weber believed that the rise of capitalism is interlinked to the process of rationalization, explaining that people do things just to attain the most efficient way of achieving their goals and their actions are based upon calculations and rational principles instead of emotions and selflessness. According to him, bureaucracy gave rise to managerial control in the workplace as established rules and hierarchy prevented informality and chaos among employees. This form of management was less concerned with ethics and morals and more inclined towards technicality and authoritative power. According to economist Karl Marx, as the capitalist rule extends throughout modern societies and industrialization triumphs, nations move closer to social conflict, fragmentation and destruction. Marx believed that capitalists, with their inherent obsession for surplus and accumulating profits, allocate tasks to workers to the extent that it becomes serious exploitation of their potential. He stated, Modern industry has converted the little workshop of the patriarchal master into the great factory of the industrial capitalist. Masses of labourers, crowded into the factory, are organized like soldiers. As privates of the industrial army they are placed under the command of a perfect hierarchy of officers [managers] and sergeants [supervisors]. (Marx, K. and Engels, F., 1848/1967). Also, Marx raised the concern of the alienation of workers which stultifies the uniqueness and creativity of individuals, all because of capitalism. He emphasized, Owing to the extensive use of machinery and to division of labour, the work of proletarians has lost all individual character, and consequently, all charm for the workman. He becomes an appendage of the machine, and it is only the most simple, most monotonous, and most easily acquired knack, that is required of him.(Marx, K. and Engels, F., 1848/1967). These concerns raised by Marx were not redundant as managers have constantly led their corporations in an attempt to succeed in the greatest way possible, accomplish the highest profits in the industry and gain the largest market power. However, in doing so, while these capitalist economies have grown over the years, they have neglected the extent to which their workers have been utilized, and in many cases, were only concerned about their own personal benefits (Bonner, 2012). This neglect has not only been internal, as firms have utilized consumers as well by hiking up prices to unjustified levels to maximize their profits. An example of this is mentioned by the Washington Post blogger Ezra Klein, Unlike other countries, sellers of healthcare services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States - the pharmaceuticals industry and the medical device industry - sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability. (Buell, 2013). Although managers today are constantly in search of new strategies to overcome challenges and take advantage of opportunities in the industry by directing their employees on a regular basis, there are still several ethical issues in workplaces that remain unsettled. A few of these issues were brought up by Adam Smith early in history, including exhausting the energy and souls of workers, unjustified price adjustment processes in markets, exacerbating the gap between the rich and the poor by prioritizing the rich and distinguishing between ownership and control of corporations as the scale and capital requirements of these businesses expanded (Wilson, 1989). In a world where capitalism has constantly grown, developed and evolved over the several decades

and centuries of history, managers, regardless of the industry in which they operate, have had to deal with numerous changes and concerns which have obligated them to readjust their decision making processes. In today's modern economic period, corporations in Western Europe and the USA are expanding their operations and shifting their manufacturing bases to other countries simply because they are able to minimize production costs greatly in other nations and the level of pollution they are allowed to emit through production is much greater in these other nations, letting them operate without being as concerned about compliance and corporate environmentalism as they would have been in Western Europe or the USA (Wolff, 2013). As businesses have expanded and the production of goods and services have been prioritized according to the growth in profitability and corporate reputation, the one thing that has been increasingly neglected is the impact their activities have had upon the environment and the unprecedented challenges that have surfaced upon the planet because of the lack of responsibility enacted towards it by all these capitalist corporations. Disastrous consequences such as climate change, scarcity of water and poverty are all matters of major concern in today's world. Although corporate environmentalism requires a more committed approach to business that many corporations are not willing to undergo, it does attain a lot of long-term benefits for the company. By integrating environmental concerns into business decisions, companies are able to gain the support of the society and consumers in general which in turn gives them the competitive advantage in the industry. According to a report by Generation Investment Management LLP, As companies undergo the transformation to becoming more sustainable through these stages, it usually becomes evident within the company that sustainability does not involve a trade-off between profitability and improving the environment and society. Rather, it can in fact improve operations and inspire innovation. (GIM, 2012). While governments and environmental activists can help to reduce all the problems to a certain extent, the actual sustainability of capitalism and the most practical measures needed to control these issues permanently must ultimately be incorporated by managers in businesses in the various industries that build up an economy. After all, managers are leaders of corporations, which are, in large, leaders of capitalist nations and post-industrial economies. According to former British politician Christopher Huhne, It is business that can exercise the fastest degree of change by seeing the opportunity rather than the threat. (Huhne, 2008). Thus, even though it may be a huge challenge for managers in firms to include socially and environmentally responsible measures in their decision making processes, doing so entitles their companies to massive profits in the long run, both economic and environmental, which is advantageous for the growth of these companies in a capitalist economy.

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