Small Is Beautiful: A Study of Economics as if People Mattered (30 page)

answers: 'Because I couldn't make ends meet on three shifts' wages.'

everybody is stunned and feels check-mated.

Intellectual confusion exacts its price. We preach the virtues of hard work and restraint while painting utopian pictures of unlimited consumption without either work or restraint. We complain when an appeal for greater effort meets with the ungracious reply: 'I couldn't care less.' while promoting dreams about automation to do away with manual work, and about the computer relieving men from the burden of using their brains.

A recent Reith lecturer announced that when a minority will be 'able to feed, maintain, and supply the majority, it makes no sense to keep in the production stream those who have no desire to be in it'. Many have no desire to be in it, because their work does not interest them, providing them with neither challenge nor satisfaction, and has no other merit in their eyes than that it leads to a pay-packet at the end of the week. If our intellectual leaders treat work as nothing but a necessary evil soon to be abolished as far as the majority is concerned, the urge to minimise it right away is hardly a surprising reaction, and the problem of motivation becomes insoluble.

However that may be, the health of a large organisation depends to an extraordinary extent on its ability to do justice to the Principle of Motivation.

Any organisational structure that is conceived without regard to this fundamental truth is unlikely to succeed.

My fifth, and last, principle is
The Principle of the Middle Axiom.
Top management in a large organisation inevitably occupies a very difficult position. It carries responsibility for everything that happens, or fails to happen, throughout the organisation, although it is far removed from the actual scene of events. It can deal with many well-established functions by means of directives, rules and regulations. But what about new developments, new creative ideas? What about progress, the entrepreneurial activity par excellence?

We come back to our starting point: all real human problems arise from the antinomy of order and freedom, Antinomy means a contradiction between two laws; a conflict of authority: opposition between laws or principles that appear to be founded equally in reason.

Excellent! This is real life, full of antinomies and bigger than logic.

Without order, planning, predictability, central control, accountancy, instructions to the underlines, obedience, discipline - without these, nothing fruitful can happen, because everything disintegrates. And yet - without the magnanimity of disorder, the happy abandon, the entrepreneurship venturing into the unknown and incalculable, without the risk and the gamble, the creative imagination rushing in where bureaucratic angels fear to tread -

without this, life is a mockery and a disgrace.

The centre can easily look after order; it is not so easy to look after freedom and creativity. The centre has the power to establish order, but no amount of power evokes the creative contribution How, then, can top management at the centre work for progress and innovation? Assuming that it knows what ought to be done: how can the management get it done throughout the organisation? This is where the Principle of the Middle Axiom comes in.

An axiom is a self-evident truth which is assented to as soon as enunciated.

The centre can enunciate the truth it has discovered - that this or that is 'the right thing to do'. Some years ago, the most important truth to be enunciated by the National Coal Board was concentration of output, that is, to concentrate coal-getting on fewer coal faces, with a higher output from each.

Everybody, of course, immediately assented to it, but, not surprisingly, very little happened.

A change of this kind requires a lot of work, a lot of new thinking and planning at every colliery, with many natural obstacles and difficulties to be overcome. How is the centre, the National Board in this case, to speed the change-over? It can, of course, preach the new doctrine. But what is the use, if everybody agrees anyhow? Preaching from the centre maintains the freedom and responsibility of the lower formations, but it incurs the valid criticism that 'they only talk and do not do anything'. Alternatively, the centre can issue instructions, but, being remote from the actual scene of operations, tile central management incur the valid criticism that 'it attempts to run the industry iron, Headquarters', sacrificing the need for freedom to the need for order and losing the creative participation of the people at the lower formulations - the very people who are most closely in touch with the actual job Neither the soft method of government by exhortation nor the tough method of government by instruction meets the requirements of the case. What is required is something in between a middle axiom, an order from above which is yet not quite an

When it decided to concentrate output, the National Coal Board laid down certain minimum standards for opening up new coalfaces, with the proviso that if any Area found it necessary to open a coalface that would fall short of these standards, a record of the decision should be entered into a book specially provided for the purpose, and this record should contain answers to three questions:

Why can this particular coalface not be laid out in such a way that the required minimum size is attained?

Why does this particular bit of coal have to be worked at all?

What is the approximate profitability of the coalface as planned?

This was a true and effective way of applying the Principle of the Middle Axiom and it had an almost magical effect. Concentration of output really got going, with excellent results for the industry as a whole. The centre had found a way of going far beyond mere exhortation, yet without in any way diminishing the freedom and responsibility of the lower formations.

Another middle axiom can be found in the device of
Impact Statistics.

Normally, statistics are collected for the benefit of the collector, who needs -

or thinks he needs - certain quantitative information. Impact statistics have a different purpose, namely to make the supplier of the statistic, a responsible person at the lower formation, aware of certain facts which he might otherwise over- look. This device has been successfully used in the coal industry, particularly in the field of safety.

Discovering a middle axiom is always a considerable achievement. To preach is easy so also is issuing instructions. But it is difficult indeed fur top management to carry through its creative ideas without impairing the freedom and responsibility of the lower formations.

I have expounded five principles which i believe to be relevant to a theory of large-scale organisation, and have given a more or less intriguing name to each of them. What is the use of all this? Is it merely an intellectual game?

Some readers will no doubt think so. Others - and they are the ones for whom this chapter has been written - might say: 'You are putting into words what I have been trying to do for years.' Excellent! Many of us have been struggling for years with the problems presented by large-scale organisation, problems which are becoming ever more acute. To struggle more successfully. we need a theory, built up from principles. But from where do the principles come? They come from observation and practical understanding.

The best formulation of the necessary interplay of theory and practice. that I know of, comes from Mao Tse-tung. Go to the practical people, he says, and learn from them: then synthesise their experience into principles and theories; and then return to the practical people and call upon them to put these principles and methods into practice so as to solve their problems and achieve freedom and happiness?

Seventeen

Socialism

Both theoretical considerations and practical experience have led me to the conclusion that socialism is of interest solely for its non- economic values and the possibility it creates for the overcoming of the religion of economics.

A society ruled primarily by the idolatry of
enrichissez-vous.
which celebrates millionaires as its culture heroes, can gain nothing from socialisation that could not also be gained without it.

It is not surprising, therefore, that many socialists in so-called advanced societies, who are themselves - whether they know it or not - devotees of the religion of economics, are today wondering whether nationalisation is not really beside the point. It causes a lot of trouble - so why bother with it? The extinction of private ownership, by itself, does not produce magnificent results: everything worth while has still to be worked for, devotedly and patiently, and the pursuit of financial viability, combined with the pursuit of higher social aims, produces many dilemmas, many seeming contradictions, and imposes extra heavy burdens on management.

If the purpose of nationalisation is primarily to achieve faster economic growth, higher efficiency, better planning, and so forth, there is bound to be disappointment. The idea of conducting the entire economy on the basis of private greed, as Marx well recognised, has shown an extraordinary power to transform the world,

The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations and has left no other nexus between man and man than naked self- interest….

'The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation.' (Communist Manifesto)

The strength of the idea of private enterprise lies in its terrifying simplicity. It suggests that the totality of life can be reduced to one aspect -

profits. The businessman, as a private individual, may still be interested in other aspects of life - perhaps even in goodness, truth and beauty - but as a businessman he concerns himself only with profits. In this respect, the idea of private enterprise fits exactly into the idea of The Market, which, in an earlier chapter, I called 'the institutionalisation of individualism and non-responsibility'. Equally, it fits perfectly into the modern trend towards total quantification at the expense of the appreciation of qualitative differences; for private enterprise is not concerned with what it produces but only with what it gains from production.

Everything becomes crystal clear after you have reduced reality to one -

one only - of its thousand aspects. You know what to do - whatever produces profits; you know what to avoid - whatever reduces them or makes a loss.

And there is at the same time a perfect measuring rod for the degree of success or failure. Let no one befog the issue by asking whether a particular action is conducive to the wealth and well-being of society, whether it leads to moral, aesthetic, or cultural enrichment. Simply find out whether it pays: simply investigate whether there is an alternative that pays better. If there is, choose the alternative.

It is no accident that successful businessmen are often astonishingly primitive; they live in a world made primitive by this process of reduction.

They fit into this simplified version of the world and are satisfied with it.

And when the real world occasionally makes its existence known and attempts to force upon their attention a different one of its facets, one not provided for in their philosophy, they tend to become quite helpless and confused. They feel exposed to incalculable dangers and 'unsound' forces and freely predict general disaster. As a result, their judgments on actions dictated by a more comprehensive outlook on the meaning and purpose of life are generally quite worthless. It is a foregone conclusion for them that a different scheme of things, a business, for instance, that is not based on private ownership, cannot possibly succeed. If it succeeds all the same, there must be a sinister explanation -'exploitation of the consumer, 'hidden subsidies', 'forced labour', 'monopoly', 'dumping, or some dark and dreadful accumulation of a debit account which the future will suddenly present, But this is a digression The point is that the real strength of the theory of private enterprise lies in this ruthless simplification, which fits so admirably also into the mental patterns created by the phenomenal successes of science. The strength of science, too, derives from a 'reduction' of reality to one or the other of its many aspects, primarily the reduction of quality to quantity. But just as the powerful concentration of nineteenth-century science on the mechanical aspects of reality had to be abandoned because there was too much of reality that simply did not fit, so the powerful concentration of business life on the aspect of 'profits' has had to be modified because it failed to do justice to the real needs of man. It was the historical achievement of socialists to push this development, with the result that the favourite phrase of the enlightened capitalist today is: 'We are all socialists now.

That is to say, the capitalist today wishes to deny that the one final aim of all his activities is profit. He says: 'Oh no, we do a lot for our employees which we do not really have to do, we try to preserve the beauty of the countryside; we engage may not pay off,' etc. etc. All these claims are very familiar; sometimes they are justified, sometimes not.

What concerns us here is this: private enterprise 'old style', let us say, goes simply for profits: it thereby achieves a most powerful simplification of objectives and gains a perfect measuring rod of success or failure. Private enterprise 'new style', on the other hand (let us assume), pursues a great variety of objectives; it tries to consider the whole fullness of life and not merely the money- making aspect; it therefore achieves no powerful simplification of objectives and possesses no reliable measuring rod of success or failure. If this is so, private enterprise 'new style', as organised in large joint stock companies, differs from public enterprise only in one respect; namely that it provides an unearned income to its shareholders.

Clearly, the protagonists of capitalism cannot have it both ways. They cannot sag 'We are all socialists now' and maintain at the same time that socialism cannot possibly work. If they themselves pursue objectives other thaI1 that of profit-making, then they cannot very well argue that it becomes impossible to administer the nation's means of production efficiently as soon as considerations other than those of profit making are allowed to enter. If they can manage without the crude yardstick of money-making, so can nationalised industry,