All Edge: Inside the New Workplace Networks

All Edge: Inside the New Workplace Networks

Available for preorder via Amazon

Work is changing. Speed and flexibility are more in demand than ever before thanks to an accelerating knowledge economy and sophisticated communication networks. These changes have forced a mass rethinking of the way we coordinate, collaborate, and communicate. Instead of projects coming to established teams, teams are increasingly converging around projects. These “all-edge adhocracies” are highly collaborative and mostly temporary, their edge coming from the ability to form links both inside and outside an organization. These nimble groups come together around a specific task, recruiting personnel, assigning roles, and establishing objectives. When the work is done they disband their members and take their skills to the next project.

In Blog

Reading :: Joseph A. Schumpeter

Posted by: on Sep 29, 2015 | No Comments

Joseph A. Schumpeter
By Richard Swedberg

Joseph Schumpeter infamously declared that “Early in life I had three ambitions: to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna. Well, in one of those goals I have failed” (p.3). As the quote suggests, Schumpeter was quite boastful of all three capacities.

He was perhaps justified in at least one of them; let’s focus on it, although this biography adequately covers his other two pursuits. At 28, he published his second book, (the German version of ) The Theory of Economic Development, in which he attempted to analyze the economic process through not just economics but also the other social sciences. It is in this book that he first developed the figure of the heroic, charismatic entrepreneur (evidently influenced by Weber’s charismatic leader): a figure that innovates by creating new combinations, but does not invent per se (pp.34-35). Eight years later, he became the Austrian finance minister. (He was fired after seven months because he kept trying to undermine the socialist government) (p.60). Schumpeter has been considered Weber’s greatest successor as economic sociologist, as well as a close compatriot of the great sociologist (Ch.5). Indeed, Schumpeter excelled at sociological approaches to economics, and was quite poor at mathematics, even though he tirelessly promoted mathematical approaches to economics.

In 1932, after being turned down repeatedly for a position at the University of Berlin, Schumpeter settled for a position at Harvard—just in time to avoid the Nazi takeover (Ch.6). There, he ignored the fact that his students called him “Schumpy” behind his back, and he attempted (unsuccessfully) to attract graduate students to his seminars in mathematical economics. (Undergraduates were beneath his notice, and he wondered aloud whether they were really necessary.) Meanwhile, he worked tirelessly on his enormous two-volume book on business cycles, which was poorly received. His follow-up, a little popular book called Capitalism, Socialism, and Democracy, was quite well received and is now considered his masterpiece, although he thought it far less serious and consequential than Business Cycles.

“Schumpeter was the only economist of any stature in the United States who took Marxism seriously,” Swedberg adds, and his project was similar to Marx’s: both understood economic evolution as a process generated by the economic system (p.153). Schumpeter’s approach, of course, was Weberian: it understood that the economy and social structure could influence each other (p.155). Although Schumpeter respected Marx as a sociologist, however, he noted several problems with Marx’s economics: the labor theory of value was “dead and buried.” He took a similarly dim view of Marx’s doctrine of surplus value. Marx had no theory of business cycles. Yet he appreciated Marx’s achievement in “developing a purely economic theory of change” (p.155).

There is much more in this book on Schumpeter’s upbringing and values, his achievements and failures, and of course his adventures as a horseman and a lover. If you’re interested in this fascinating economist, I encourage you to read the biography.

In Blog

Reading :: The Culture of Entrepreneurship

Posted by: on Sep 29, 2015 | No Comments

The Culture of Entrepreneurship
Edited by Brigitte Berger

This collection is the product of a 1990 conference by the same name, supported by the Institute for the Study of Economic Culture. It “explores the cultural dimensions of modern entrepreneurship” through contributions by “economists, anthropologists, sociologists, political scientists, and management experts” (p.1). Let’s dip into two of these contributions.

In Ch.3, “The discovery and interpretation of profit opportunities: Culture and the Kirznerian entrepreneur,” Don Lavoie argues that we need a theory of entrepreneurship that “should help us identify the conditions—economic, political, legal, and cultural—that enhance decentralized developmental processes” (p.33). Unfortunately, on the one hand, entrepreneurship is typically treated in terms of individual psychology, not culture (p.34); on the other hand, anthropologists understand culture, but have focused on “statics rather than dynamics” (p.35). “In other words, the study of the relationship between culture and entrepreneurship demands working with both meaning and economic change, whereas the way disciplinary divisions have evolved, few researchers are capable of handling both categories together” (p.35). Similarly, Lavoie argues, “economists have failed to leave room for meaning and have not done well with change either”—especially the radical change that is associated with entrepreneurship (p.35).

Lavoie argues that “culture has everything to do with” the entrepreneurship process; entrepreneurship “fundamentally consists in interpreting and influencing culture” (p.36). So: what are some of the main elements needed by a theory of entrepreneurship as a cultural process? Lavoie identifies two underdefined terms: “discovery” (that is, radical change; “genuine novelty and creativity”) and “interpretation” (that is, finding opportunities via “a discerning of the intersubjective meaning of a qualitative situation”) (p.36). In sum, “What is needed is a theory of entrepreneurial change that makes it intelligible without reducing it to a predetermined mechanism” (p.37).

The Austrian school (von Mises, Hayek), Lavoie argues, has come the closest to such a theory (p.37). And of these, Lavoie recommends Israel Kirzner most highly (p.37). Kirzner argued that it was a mistake to treat entrepreneurship like any other scarce resource; rather, he suggested that we should consider “entrepreneurial alertness,” in which the entrepreneur has deployed a “choice framework” or “conditions in which the decentralized, entrepreneurial process can be expected to flourish” (p.40).

Yet, Lavoie argues, Kirzner still sees entrepreneurial alertness as raw discovery of what’s already there; Lavoie argues instead that opportunities are interpreted (p.44). After discussing von Mises and Hayek, Lavoie proposes to build a theory of entrepreneurship instead on Gadamer.

In Chapter 10, “The rocky road: Entrepreneurship in the Soviet Union, 1986-1989,” Walter D. Connor discusses the then-new market liberalization in the USSR. (As he notes at the end of the chapter, between the time he wrote it and the time the book was published, the USSR began the crisis that would lead to its collapse.) Connor notes that “the last time a high level of private enterprise was tolerated in the Soviet Union” had been during “Lenin’s New Economic Policy (NEP) of 1921-1928” (p.198), which was ended by Stalin shortly after Lenin gave up the ghost. To the Soviets of the mid-80s, “the ‘NEPmen’ were exploiters and speculators who unjustly enriched themselves and were thus justly banned as the country embarked on the ‘building of socialism’ under Stalin” (p.198). The intervening years, especially under Brezhnev,

produced in most of the Soviet population a mind-set, which in two senses has complicated perestroika and the place of cooperative entrepreneurship within it. The first evokes a rather deep, if general, egalitarian reaction, intolerant of people within one’s range of vision doing significantly better than oneself. The second reflects an incomprehension of the market, the dynamics of supply and demand, and how these will naturally—in the absence of state control or intervention—play out. (p.199)

When Gorbachev liberalized the economy, workers, who were disconnected from the market, did not understand entrepreneurship and saw it as utterly unfair. Why could someone who made bra fasteners make 100 rubles in a day, when a tractor driver with a broken tractor could only make 2-3 rubles a day? The tractor driver, Connor adds, was paid by the furrow, not for producing something demanded by others. But he expected recompense for the effort, not the usefulness of his products (p.199). This system encouraged both dependence and sloppy work (p.200). It also encouraged envy. One sociologist interviewed a woman who disapproved of her neighbor, who sold spring vegetables on the side; the woman said, “‘I don’t want to live like her; I want her to live like me'” (p.201).

According to Connor, “the Eastern Orthodox moral and ethical tradition,” which did not emphasize individual conscience, also played its part. “Methodical work, well done, as its own reward—in a sense, the Protestant ethic—did not figure so prominently in this culture as in others farther west”; thus “few, under such a regime, could develop the internal controls that are so essential to the entrepreneur’s organization of effort” (p.203).

In the final two pages, Connor notes the Soviet crisis, which would eventually lead to its collapse. “The people of the USSR … are living in a period of uncertain transition” (p.209).

Although the other chapters are worthwhile, I found these two to be the most interesting. If you’re interested in understanding entrepreneurship from a cultural perspective, take a look.

In Blog

Reading :: The Wealth of Nations

Posted by: on Sep 22, 2015 | No Comments

An Inquiry into the Nature and Causes of the Wealth of Nations
By Adam Smith

The above link is (perhaps ironically) to the free Kindle version of Adam Smith’s classic. Unfortunately, Smith can’t catch a break. Marx ridiculed him for his comparatively thin insights. Schumpeter did the same. If he can’t get respect from the socialists or the capitalists, where is he going to get it?

But of course being cited itself is a form of respect. And anyone who seeks to understand capitalism eventually has to cite Adam Smith, whose 1776 treatise systematically examined the market economy in Industrial England. Smith systematically examines the division of labor in industrial work (“not originally the effect of any human wisdom”); legitimizes the motive of gain as driving the economy (“We address ourselves, not to their humanity, but to their self-love”); recognizes the market as a self-organizing system; takes labor as “the only universal, as well as the only accurate, measure of value” (cf. Marx); and describes the law of supply and demand. He argues that the division of labor is a hallmark of developed societies and less known in primitive ones (cf. Engels but also Durkheim). He theorizes wealth and the role of governments in developing it, including the impact of taxes. And he backs up his points with extensive (and sometimes mind-numbing) statistics.

This is a short review because (a) I’m not an economist and (b) I’ve read and reviewed authors who responded to Smith’s ideas. But that doesn’t mean this is an unimportant book—it’s enormously influential and well worth reading. Or at least skimming.

In Blog

Reading :: Anti-Duehring

Posted by: on Sep 22, 2015 | No Comments

By Friedrich Engels

The link above goes (again) to the Kindle collection of works by Marx & Engels. But you can easily find Anti-Duehring by itself in both Kindle and print (sometimes listed as Anti-Dühring). This famous book, first published in 1878, is meant as a response to “Dr. Eugene Duehring, privat docent at Berlin University” (see translator’s introduction), who publicly announced that he had “converted” to socialism but described a socialism different from Marx and Engels’ vision. But Anti-Duehring has also been described as Engels’ major work on Marxist theory. It was deeply influential to the young A.R. Luria as he developed his ideas of a Marxist psychology. Its last chapter was republished with some modifications as the pamphlet Socialism: Utopian and Scientific.

It’s also hard to read. Not because it is especially challenging material—Engels didn’t write especially challenging books, in my opinion—but because the tone is unrelentingly polemic and sarcastic. It’s like reading a YouTube comments section.

It has often crossed my mind that the sneering, sniping style Engels uses here became the model for Lenin, who passed it on to Ilyenkov. (Stalin’s style was less sneering and more autocratic, perhaps reflecting the two men’s different political positions at the time they wrote their books.) I tend to read performative contempt as a compensation for weakness, so I had trouble evaluating the argument on its merits.

The argument itself, though, expands dialectic by applying it to the natural world and making it a natural law, just as Dialectics of Nature did. Engels argues, as Ilyenkov later did, that contradictions seem impossible in traditional logic because traditional logic doesn’t take change into account (Ch.7): “motion is just the continuous establishing and dissolving the contradiction” [sic]. It is this argument, more fully developed in Dialectics of Nature, and the companion argument that religion will die a natural death, more fully developed in The Origin of the Family, Private Property, and the State, that make Anti-Duehring an important book. But those other books spare you the constant invective. I suggest reading them first.

In Blog

(failure is like poison)

Posted by: on Sep 20, 2015 | No Comments

Here’s something I told my class the other day.

People don’t like failure. They see it as a bad thing. And it can be. It can be terrible. If you let it.

I think of failure as similar to ingesting poison. On the face of it, it seems like a catastrophically bad idea. And we desperately want to avoid it. Who in their right mind would willingly drink poison?

But, honestly, many of us do choose to drink poison. Alcohol is quite literally a poison. But many of us choose to drink it, and some even pay a great deal of money for the privilege. The important principle is not to drink too much of it.

Let’s extend this analogy a bit. Let’s suppose you buy a big bottle of vodka (I’m not advocating this, but for the sake of discussion, suppose you do this.) It’s late September. You decide that by the end of the year, you’re going to have finished the bottle.

You can handle this in at least two ways.

One way is to take a shot or two every evening. A shot or two of this poison won’t do much—it may warm you up, make you a little more relaxed and euphoric. It may actually help you in a social situation such as a party or karaoke. You probably won’t even have a hangover the next day.

Another way is to wait until New Year’s Eve—and drink the entire bottle. That will be a less pleasant experience, and you may not even survive it.

The first way represents small, recoverable errors. Low-stakes failures from which you have plenty of chance to recover.

The second way represents a big, single point of failure. It’s high-stakes, and you may have no way to recover from it.

Now apply this to the things you need to do. If you’re a student, that may mean drafting papers and projects. If you’re an academic, that may mean publishing so you can get tenure. If you’re an entrepreneur, it may mean developing your idea so it can find buyers.

In any of these cases, you should build in multiple points at which you can make small errors: low-stakes failures from which you have plenty of chance to recover. Take a couple of small shots every day. You might even look forward to these small failures, and they may make you feel more relaxed, euphoric, and sociable. Each small failure gives you feedback and helps you to better understand a path to success.

The fewer points of failure you have, the larger the dose of poison is, and the harder it will be to recover from it. And if you wait until the very end—you write the paper the night before it’s due, you keep putting finishing touches on that journal article, you wait until your innovation is perfect before you share it with the world—then you’re looking at a high-stakes situation with a high potential for failure and no margin to recover.

So: Get out there, fail early and often, but in small ways. Understand each failure as a piece of feedback that can help you succeed. Seek criticism and use it to strengthen what you do.

And that is what people mean when they say “fail faster.”