Gustav Schmoller - Part I

Gustav Schmoller (1838-1917) was Professor at the University of Berlin and the leader of what was known as the 'younger' or 'late' Historical School of German economists. As such he was one of the principal figures in the Methodenstreit. His book The Mercantile System and its Historical Significance (1884; tr. 1897; reprint 1989) seeks to explain the transition in central Europe from the town economies of the late Middle Ages to the national economies of the nineteenth century, with special reference to mercantilism and its role in this transformation. His approach is principally an historical institutionalist one:

What I have in mind,is the connection between economic life and the essential, controlling organs of social and political life, - the dependence of the main economic institutions of any period upon the nature of the political body or bodies most important at the time.

In every phase of economic development, a guiding and controlling part belongs to some one or other political organ of the life of the race or nation... ...It may or may not coincide substantially with the contemporary organisation of the state or of national, intellectual, or religious life; nevertheless it rules economic life as well as political, determines its structure and institutions, and furnishes, as it were, the centre of gravity of the whole mass of social-economic arrangements. Of course it is not the only factor that enters into the explanation of economic evolution; but it appears to me the fullest in meaning, and the one which exercises the most penetrating influence upon the various forms of economic organisation that have made their appearance in history. (pp2-3)

It seems here that Schmoller is singling out the constitutional and legal institutions as the primary determinant of the form of economic life. He goes on to elaborate a bit on the relationship between political order and economic order:

Within the village, the town, the territory, and the state, the individual and the family have retained their independent and significant position; division of labour, improvement of the currency, technical advance, have each pursued their course; the formation of social classes has gone on in particular directions; and yet economic conditions have, throughout, received their peculiar stamp from the prevalence at each period of a village economy, a town economy, a territorial economy, or a national economy; from the splitting asunder of the people into a number of village- and town-economies loosely held together, or from the rise of territorial or national bodies which have taken up into themselves and brought under their control the earlier economic organs. Political organisms and economic organisms are by no means necessarily conterminous; and yet the great and brilliant achievements of history, both political and economic, are wont to be accomplished at times when economic organisation has rested on the same foundations as political power and order. (p3)

The tool of dialectic is obviously in the back of his mind here, contrasting the political and economic 'organisms' and the relationship between economic progress and their mutual compatibility (ala later economists such as Max Weber, Douglass North, etc).

The Chronicle of Higher Education has quite an even-minded piece on the Post-Autistic Economics movement here.

Werner Sombart in his classic essay Why is there no Socialism in the United States? considers the propensity for American culture to value quantity (more particularly size) over quality. He traces this to the rational acquisitive spirit of capitalism, and notes:

Some people have wanted to explain this "craze for size", which is so characteristic of modern Americans, by means of the sheer size of their country, but why then to the Chinese... ...not have the same characteristic? Why did the Red Indians not have it, even though they lived on the same vast continent?... ...wherever ideas of size develop among such primitive peoples... ...[t]hey are based on the endlessness of the starry sky, on the boundlessness of the steppe, and what distinguishes them is precisely the fact that they cannot be quantified. The estimation of size in terms of numbers has been able to take root in man's heart only through the medium of money as employed by capitalism (not through money itself, as Simmel erroneously believes.) (p276)

Sombart also pulls a few figures out to emphasise the dominance of capitalism in the American psyche:

Capitalism presses forward remorselessly, even when its path is strewn with corpses...[The] extent of railway accidents in the United States are merely symbolic of this...from 1898 to 1900... ...[on the railways] one finds that accidents happened in America at a rate of 3.4 per hundred kilometers, as opposed to 0.86 in Austria, and that they happened at a rate of 19 per million passengers in America, compared with one of 0.99 per million passengers in Austria... ...While in Germany we see public indignation when a colliery shuts down one mine or another, year in and year out the management of the American trust determines with great equanimity which enterprises are to be worked and which are to be left idle. (pp265-267)

But where Sombart excels is in discussing the social structures that make it possible:

...the American social structure... ...no longer contains any feature of non-capitalistic origin... ...[and] the entire lifestyle of the people [has] increasingly adopted a manner suited to capitalism. Today the United States is already - and I repeat, despite its youth - a country of cities, or more exactly, a country of large cities... ...First, the proportion of the population of the United States living in large cities of over 100,000 inhabitants is already greater today than anywhere else in the world, with the exception of England... ...Second, the shifting of the population to the cities is taking place at a rapid pace; between 1890 and 1900 the urban portion of the population rose from 29.2 to 41.2 percent... ...Third, the low total number [,41.2 percent compared with Germany's 54.3 percent,] is explained by the numerical domination of the South, where there are relatively few towns... ...However, when I say that the United States is a land of cities, I mean it in a deeper and inner sense that particularly expresses why I am relating urbanism and capitalism. I mean it in the sense of a type of settlement that differs from spontaneous growth, rests on a purely rational basis, is defined from purely quantitative perspective... ...The [European city] has mostly grown spontaneously, and yet is basically only an enlarged village... ...if in old Europe the city takes after the countryside (or rather has done till now)... ...in the United States, on the contrary, the flat countryside is basically only an urban settlement that lacks cities... ...Nor, for that matter, does the United States lack the feature that has always been conspicious in the structure of a society resting on capitalistic foundations - namely, the tremendous contrasts between wealth and poverty. (pp 269-271)

Sombart produces the statistic that 1 percent of families (125,000 of them) held 54.8 percent of total private wealth in 1890, and contrasts this with the 50 percent of families that were without property. He draws comparisons between the merchandise offered for sale at Tiffany's in New York and its Paris and London branches (an interesting approach for determining relative wealth), and notes that:

The managers of the New York head office told me that most of the merchandise they offer for sale in New York comes from Europe, where it is made especially for Tiffany's of New York. However, it is completely out of the question that a store in Europe - even Tiffany's own branches in Paris and London - would stock merchandise at prices such as it would fetch in new York... ...On the other hand, the misery of the slums in the large American cities finds its real equal only in the East end of London... ...In Manhattan... ...in the notably prosperous year of 1903, 60,463 families (14 percent of the total) were evicted from their homes. (p273)

These extremities of wealth seem to be a growing area of interest, as evidenced for example by Paul Krugman's NY Times columns (his For Richer piece on October 20 2002 is quite good). For another take on just what poverty means I suggest George Orwell's novel Keep the Aspidistra Flying. Sombart provides more controversy with his definition of what drives the proletariat:

...in order to get a true conception of the proletariat we must give up the idea of a ragged crowd. Indeed, the life of the proletarian is not always intolerable. Absolute distress is in no way a special characteristic of the class, though, to be sure, there are within it innumerable instances of want. But few proletarians are as badly off as the Russian peasant... [who does not] belong to the proletariat. Many a wage-earner, even in Europe, earns more than a University teacher... ...[When] we see the proletariat moving in order to emancipate itself... ...accompanied by feelings of hate, envy, or revolt, the cause of all this cannot be actual want. It is probably much more the contrast which the worker observes between his own hard lot and the wealth of many who belong to the class of capitalistic employers... ...This contrast is daily brought to his notice not only when he sees how lavishly wealth demeans itself (the serf in the Middle Ages saw that too), but chiefly because he sees it created afresh daily, because the owners rise to power before his very eyes.

Thus, too Sombart it is not just envy, but more the origins of the changes in wealth that drives the concern at inequality. That's it on Sombart for a while - I intend blogging on Gustav Schmoller next.

I watched Casablanca on my laptop's DVD yesterday and it really struck home to me what an incredible actress Ingrid Bergman was - no current actress comes close for range and subtlety of expression in their acting. Bogart has his moments but I'd say there are current actors that are just as capable. Bizarre fact - the plane in the background at the end is a cutout and the mechanics working around it are midgets!

For anyone putting together predictions of the future I recommend Werner Sombart's essay The Economic Life of the Future. In it he starts out by stating:

It can be said with some assurance of a good number of opinions regarding the future development of economic life: that they are wrong.

1. All those opinions are mistaken which predict the future supremacy of one economic system. That would contradict both all current experience and the very nature of economic development. We observe that in the course of history, the number of economic modes prevalent at one time always increases. Economic life develops ever more richly... ...And unquestionably all these economic types will now exist side by side in the economic life of the future: (1) capitalism; (2) cooperatives; (3) public ownership; (4) sustenance economy; (5) handicrafts; (6) farming economy. They will transform themselves inwardly. They will alter their relative proportions. But they will be there;...
   


2. All those opinions are mistaken which expect a violent upset of the existing economic constitution and a sudden change of the bases of economic life. This opinion too misjudges the nature of economic development, which always proceeds in the form of a gradual, "organic" reshaping of existing conditions... ...Forcible interventions may well destroy, but they build nothing... ...If further proof were necessary, the course of economic development in Soviet Russia has produced it.
   


3. All those opinions are mistaken which count on a speedy regression of economic life back towards precapitalist economic modes. Such a regression will not occur because the interests are too powerful in the conservation of an economy built on the achievements of modern technology: The necessity of nourishing a certain mass of people!... ...Delight in technology! (pp248-249; original emphasis)

His comment on Soviet Russia could equally apply to post-Soviet Russia. Likewise if one looks back on the development of the internet it becomes more and more apparent that its development was, to use Sombart's terminology, organic.

Sombart also discusses whether it will ever be necessary to move to a more primitive economy because of a decline in resources for technical development. He addresses in particular the coal, iron and petroleum reserves of the world, but discounts the significance of their depletion based on the potential for hydro-electric development and harnessing the power of tides and the sun's rays (which he considers to be the power of the future).

Sombart is indeed a wonderful guide to how much history repeats itself. Does the following, from his essay The Influence of Technical Inventions, ring any bells?

In many cases the enterprise owes its origin to the younger and more sanguine brother of the capitalist spirit - speculation. Hence, we may say that technical improvements are often responsible for speculative activity. Look at the history of the last few centuries and you will find that in the wake of epoch-making inventions, or in a period when inventions were particularly numerous, speculation became exceedingly active. Take the case of that wonderful age towards the end of the seventeenth century... ...when speculation was for the first time at fever heat. But technical inventiions were also very numerous; and indeed it was no less an age of projecting than one of inventing. Inventions were just beginning to appear, and therefore even those of minor importance were able to produce speculation on a large scale. Later on... ...technical improvements became so commonplace that only the very important ones had sufficient magnetic power to call forth new enterprises. But their effects were all the more powerful. I need only mention by way of illustration two remarkable periods of speculation in the nineteenth century, one... ...in connection with railways, and the other... ...when there were numerous inventions for utilizing electricity. (p232)

This is probably the only instance where I have seen an economist directly stating that technological change causes stock market manias. Sounds very plausible in the wake of the 1990s.

Back to Werner Sombart, this time his essay The Emergence of Fashion. It is basically a case study of how fashions are propagated in women's clothing around 1900. Sombart's focus is, naturally, on fashion in the city and how the city influences such demand (see previous post on his work on luxury). He points to changes in living arrangements arising from the move to the city:

A large impact on the kind of demand required came obviously from the common rental housing expanding. It created modern mobility and with it a declined desire for long-lasting, permanent, solid furniture. The fact that these are almost fully "mobile"... ...whereas previously [such items] were fixed permanently in the house, thus creating a tendency to design the goods to be lightweight and not to be everlasting... ...It seems to be almost unbelievable when one reads about the extent of restlessness of the population. In the city of Breslau, with a population of 400,000 (1899) a total of 194,602 people moved [note: registered arrivals and departures (not including travellers) are listed by Sombart as being 60,283 and 54,231, respectively]... ...the new generation lacks sentimental and emotional feelings of the past. Times are tougher and consequently such a relationship between the individual and the daily personal belongings has been stripped of its emotional and romantic charm... ...Change has turned from an individual into a social factor winning the far reaching importance gained today. (pp212-213)

This last idea of change being individually driven in traditional societies but socially driven in modern society is quite fascinating. It implies that traditional norms/customs which embedded constancy of experience restrained the scope of change for the individual, thereby forcing change to be generated as a definite individual act. In contrast, modern society's norms/customs embed a spirit of change which thereby forces change on the individual through the social generation of change. If we can trace the emergence in modern society of a new fashion to an act by an individual, this does not imply that the fashion was solely generated by that individual. If such an act occured in the traditional society referred to above no such fashion would consequently emerge - because it lacks the social forces to generate such a change.

Sombart also points to the "inbreeding" inherent in the creation of each seasons fashions, as each season feeds on the fashions of the season before - not to mention requiring "...an unlimited array of ready-made articles [such as buttons and buckles, feathers and flowers, laces and frills] which are already a common supply by the time they reach the couturier, which, therefore, already must be established as being fashionable." (p219, original emphasis) The conclusions that Sombart reaches are that "A determining fact drawn from the study of the processes of fashion creation is the observation that consumer participation remains restricted to a minimum... [and] ...fashion is the favored child of capitalism. It stems from the latter's inner characteristics and expresses its uniqueness unlike any other phenomenon of our social life in our time." (p221 and 225) This observation of the restriction of consumer participation in the creation of their own rapid changes in demand seems to run somewhat counter to the 'conspicious consumption' ideas of Thorstein Veblen (and his intellectual heir JK Galbraith).

Actually, the bits I enjoy most about my work are the conversations at morning and afternoon tea, and the odd bit of politics.

Of late I have been thinking about whether I should quit my current job. This isn't just a post-holiday blues, it dates back to after I finished my varsity exams in November last year (I was studying as a full-time equivalent student extramurally last year as well as working full-time - though I did get a day off a week for study in the second half of the year). I've been programming J2EE SOAP web services since September last year (the rest of the year I was doing a mix of javascript, Excel VB macros, COBOL and creating/delivering Unisys COBOL dump-reading courses) and I've now lost all desire to be a programmer. Part of the problem is that I've plateaued in terms of salary and there are no new challenges in the offing to compensate. The other part is that programming was never my calling, it was just something I was good at - my interests mostly lie elsewhere. Somehow or other, I keep coming back to economics (in its wider pre-WWII sense) and I would like to give academia a proper shot. My options seem to be to:

1. Talk my manager into allowing me to switch to a reduced hours three/four day week to concentrate on my studies; or


2. Take six months leave without pay from early-May to early-November to study; or


3. Quit and move to a cheaper town to study full-time (my savings plus student loan would probably cover me for three to five years, depending on how frugal I was); or


4. Find a young lady to support me.

What is the substantive difference between J2EE and .NET? This is something I've been looking into of late just to satisfy myself. The conclusion I've come to is that J2EE attempts to implement a number of patterns as templates for the applications programmer using the architecture - notably Enterprise JavaBeans in their different flavours - and .NET doesn't. From browsing the MSDN website I have been unable to unearth anything comparable in .NET - the Microsoft approach, ironically, seems to be that such patterns should be purely a matter of choice and up to the applications programmer to implement themselves in their entirety. In this sense, the Java community seems to be endorsing certain patterns as mature enough to be an industry standard - certainly, the word 'pattern' is much much more in evidence at java.sun.com than at msdn.microsoft.com. From an applications programmer's point of view this is a significant difference - the J2EE solution provides a common language for thinking about major design elements that does not appear to be present in .NET. Note, I could be wrong - it could just be that the marketing department at Microsoft has had too big an influence on the information that is publicly available on .NET, and that .NET really does have 'built-in' patterns - I just can't find any evidence.

Samuel Brittan has reviewed Amartya Sen's new book Rationality and Freedom (emphasis added by me):

The last three chapters of this book are a revised version of the Arrow Lectures he gave in 1995 and which have never previously been published. It is here that he divides the goals of public policy into two aspects. The first is what he calls "opportunities". This refers to the range of choices that people have and corresponds roughly to the traditional idea of economic welfare, but goes much beyond what is usually measured in estimates of Gross Domestic Product. The second aspect consists of what he calls "process" - matters such as the constitutional and legal system, which determine how decisions are taken and the scope for persdonal freedom.

Much of Sen's argument is a critique of other thinkers who put too much emphasis on process at the expense of opportunities. Such thinkers are what the vulgar have in mind when they talk about "market fundamentalists"; but if they knew what they were talking about they would direct their criticisms as Sen does, not towards politicians, but towards writers such as Nozick, Buchanan and Hayek. As Sen points out, it is absurd to judge a social system entirely by concepts such as freedom and the rule of law without any attention to welfare or the distribution of opportunities among citizens.

David Weinberger links to an interesting paper by the philosopher Richard Rorty which examines Harold Bloom's thesis (which is a great guide to a number of classics) that "The ultimate answer to the question ‘Why read?’ is that only deep, constant reading fully establishes and augments an autonomous self."(p195) in the context of his own philosophy:

Bloom’s thesis about how to attain this sort of autonomy chimes with my claim that the replacement of religion and philosophy by literature is a change for the better. We are both saying that the best way to achieve Heideggerian authenticity the best way, as Nietzsche said, "to become who you are" is not to ask "what is the truth?" but rather to ask "what sorts of people are there in the world, and how do they fare?"

Answers to this question are provided by novels like Steinbeck’s, Zola’s and Stowe’s novels that tell you about the wretchedly poor. They are also provided by novels like James’ and Proust’s that tell you about rich people expanding their horizons. Reading either sort of novel may help the reader to transcend the parents, teachers, customs, and institutions that have blinkered her imagination, and thereby permit her to achieve greater individuality and greater self-reliance.

Rorty follows with a discussion on how imaginative literature works as philosophy (with emphasis on the work of Proust and James) - I overused the word 'empathy' a bit lately, but Rorty seems to be claiming that the primary effect of the novel is to engender empathy for others, and hence produces the secondary effect of altering our real world interactions with others:

Our actions can be justified only when we are able to see how these actions look from the points of view of all those affected by them. Seen in this light, what novels do for us is to let us know how people quite unlike ourselves think of themselves, how they contrive to put actions that appall us in a good light, how they give their lives meaning. The problem of how to live our own lives then becomes a problem of how to balance our needs against theirs, and their self-descriptions against ours. To have a more educated, developed and sophisticated moral outlook is to be able to grasp more of these needs, and to understand more of these self-descriptions.

Of course, there is much much more to his arguments than this.

Snail Mail In 1830.

Yes, the term Snail Mail is quite a bit older than I thought - witness this quote from Werner Sombart's essay Travel in Germany in 1800 (essay first pub. in 1913; emphasis added):

...Ludwig Börne even wrote at the beginning of the third decade of the nineteenth century his standard "Contribution to the Natural History of the Mollusks and Testaceans" ["Beitrag zur Natur-geschichte der Mollusken und Testaceen"], "Monography of the German Snail Mail" ["Monographie der deutschen Postschnecke"], where he states:

On previous journeys I have had my best satirical ideas about postal carriages, but lost them all. My capacity of storing ideas is too small and not enough room is left to save thoughts which I do not immediately process and, by writing them down, apply.

He obviously needed a weblog!

This whole empathy thing has made me think of that type of woman who is not overly pretty in the Proustian sense (as in "let us leave the pretty girls for the men with no imagination"), and yet attracts men with ease purely through personality - the type of woman where other women say that they can't see what men see in her...

On a completely different note, Sombart recounts the story of a certain Frenchman named Rochette (just prior to the Great War I believe) who floated a number of companies such that he

...issued altogether some 60 million francs' worth of shares, which by skilful manipulation rose to 200 millions, though a tenth of that figure was more nearly their true value... ...Most of [the investors] were ruined, their total losses amounting to more than 150 millions... ...Just to show how cunning he was in blinding his victims, it may be mentioned that he founded a large factory for utilizing a filament lamp patent. Everybody rushed to get shares... ...[the factory's] tall chimneys belched forth smoke day and night... ...In reality, however, there was only one solitary individual working in the building, and he was a stoker! Does not this story read like a report of doings in England in the 1720s? (pp77-78)

Some things never change. Witness this observation:

For all the processes in the mind of the employer (and indeed of modern man generally), if reduced of their simplest elements, show a kind of relapse into the days of childhood... ...[F]our ideals dominate [the child's] existence. They are-

a. Physical bigness, as seen in grown-ups and imagined in giants;
b. Quick movement - in running, bowling a hoop, riding on a roundabout;
c. Novelty - it changes its toys very quickly; it begins something and never completes it because another occupation attracts it; and
d. Sense of power - that is why it pulls out the legs of a fly, makes Towzer stand on his hind legs and beg nicely, and flies its kite as high as it can. (p82)

I think the last 5/6 years of my life could be typified as trying to rectify my lack of an education (and this despite having a Masters degree in economics - then again, perhaps its because of that). This has been brought home to me recently from reading the course materials for a paper I'm doing this year on Classical Sociological Theory. (The materials arrived incredibly early - in mid-January! The New Zealand academic year doesn't start until March.) What struck me most for this second-year paper is that in the first unit it discusses the concepts of ontology and epistemology. Now, in five years of studying economics I swear those two words never came up in lectures or course material. Yet the more I think about it the more I think they should discussed up front. Part of the issue here is that Sociology is seemingly taught in a comparative fashion - a pluralist approach seems to be taken with regard to teaching theory. This is in contrast to the monolithic approach to Economics teaching where the closest one gets to comparative teaching is with New Keynesian sticky price models.

Opposition to this is currently finding an outlet in the Post-Autistic Economics (PAE) movement started by French economics students who protested at the exclusion from teaching of economic theories outside the neoclassical mainstream. They received support in an open letter by Cambridge University economics students and a number of prominent economists from outside the mainstream. To the lay economist this would suggest an unsatisfied demand and hence a market failure. Why the market failure? There are a number of plausible reasons. It could be that curriculums tend to be sticky, as the costs of rewriting lecture notes or obtaining faculty with heterodox backgounds may be high, and it may be that those costs won't be borne unless the demand proves to be non-transient - after all the demand from students for pluralist teaching does not have a long history of being expressed in economics. It could be argued that there is an information asymmetry - that professors know better than there students what is worth teaching, and that there argument that the opportunity cost of teaching other theories (ie not teaching more of the mainstream) is too high. Perhaps, there is an interest group dynamic at work - professors have a vested interest in their areas of specialty, likewise the universities research funding may be biased towards mainstream theory and its applications because that is what the funders understand best. A further more compelling reason may be the supply of jobs for graduates. Economics departments measure their success not directly on the ability of their students to think coherently about economics, but on proxies for this. Key proxies are the ability of their graduates to get jobs with 'leading' economics departments or major national and international economic institutions (such as central banks and the IMF). Such organisations are staffed with previous graduates who, no doubt, consider what they were taught to be the way and so will recruit like-minded drones, I mean graduates. Likewise, the lesser schools tend to ape the curriculums of the leading universities in the hope of placing a graduate with such a school and hence lifting its reputation. In this sense there is a mismatch of expectations between students who have placed learning above vocation and professors who have reversed those priorities (perhaps this change in expectations of economics students is a pointer to the future of society?)

To my mind, the inertia of the mainstream economics profession can not be overcome in the near future, and hence the PAE movement is doomed to fail in the short term in its attempt to change the teaching of economics. This view is reinforced by the discussion in the PAE newsletter (now e-journal) which has degenerated into a discussion of "what should be kept from neoclassical economics". All is not lost however. Sociology has not abandoned the economic field altogether and some of the leading thinkers in economics a hundred years ago are now considered to be sociologists - such are the redefinitions of disciplinary boundaries. This, and the natural acceptance of pluralism in sociology, suggests that for those who wish to change economics to make it more pluralist the best strategy may be to take a leaf out of the book of economic imperialism (ala Hirshleifer) and promote the sociology of economic institutions as the 'post-autistic economics'.

Back to Sombart, this time his essay on Capitalism from the Encyclopedia of the Social Sciences (1930). In particular, I'm fascinated by Sombart's analysis of the role of the entrepreneur. What separates Sombart's analysis from the classic Schumpeterian analysis is that Sombart not only acknowledges but embraces the importance of the personality of the individual. To quote (pp23-24):

It would be erroneous to assume... ...that because of the dominance of the impersonal entity, the capitalistic enterprise, the personality of the capitalistic entrepreneur is submerged and reduced to insignificance. It is true that the prime mover in the economic process has now become the automatic, highly efficient contrivance... ...The individual, even the individual entrepreneur, inevitably becomes a part of it... ...Chance, individual and national differences are eliminated... ...Yet it must not be supposed that the importance of the human personality is debased in this mechanized world. On the contrary, the individual, if he happens to be outstanding, wields in the economic life of this period and influence far surpassing that of any other age... ...If the modern economic rationalism is like the mechanism of a clock, someone must be there to wind it up. If the capitalistic enterprise tends to become an ever larger and more complicated machine, still it does not dispense with the need for a human being to tend it; and the more complicated the machine, the more intelligent he must be... ...It is true, however, that the distribution of forces has changed; a central power station - the leading executive - has superseded, at least in the large business units, the great number of smaller ones.

He goes on to note that "...the Americans... ...display the keenest understanding of capitalism. They place a particularly high value upon personality in economic life..." He contrasts this with the Russians who he describes as bringing their economy to a standstill by banishing the entrepreneur. To my mind, whilst the above position of intelligence in the firm may have been true for the industrial organization in 1930, the contemporary knowledge organization relocates significant portions of that intelligence (if not all) to lower spheres in the organization. In this sense, the knowledge organization inverts the relation of mechanism to intelligence - the central executive becomes the mechanism. One could possibly say that the machine became so complicated that it became organic.

A key duality for Sombart is that between the irrationality of speculation and the rationality of calculation - both essential elements of what he terms pure capitalism. He characterizes the capitalistic spirit by the "...psychological strains of peculiar intensity born of the contradictions between irrationality and rationality, between the spirit of speculation and that of calculation, between the mentality of the daring entrepreneur and that of the hard-working, sedate bourgeois." For Sombart, the period following WWI was characterized by a relaxation of this strain as economic life became dominated by rationalism. The genuine intuitive, daring entrepreneur was being replaced by the rational, calculating entrepreneur building his business through utilising the increasing systematization of business knowledge (ie the rising business schools). Sombart's view was that:

When such practices are perfected and carried to their logical conclusion, the concern in which they are relied upon ceases to be capitalistic in spirit and resembles a public undertaking with a thoroughly systematized and externally regulated management.

Thus, for Sombart, the period of true capitalism ended in 1914 and was followed by what he conceived as being late capitalism which must of necessity hold the seeds of a new economic system (and hence, Sombart displays his intellectual roots in Marxist thought). His idea of an economic system was "...a unitary mode of providing for material wants, animated by a definite spirit, regulated and organized according to a definite plan, and applying a definite technical knowledge... ...[The spirit of capitalism was] dominated by three ideas: acquisition, competition, and rationality." (p5-6) Acquisition was specifically in the form of money and constituted the purpose of economic life; the attitudes displayed in acquisition formed the idea of competition; and rationalism is adopted so as to further the focus on acquisition. In assessing whether we have moved beyond capitalism we need to address whether the spirit of our time is still dominated by those three ideas. Does the following sound familiar:

Not only does [acquisition] seize upon all phenomena within the economic realm, but it reaches over into other cultural fields and develops a tendency to proclaim the supremacy of business interests over all other values... ...Perfection of the business mechanism appears as the only goal worth striving for; the means become an end... ...The vague notion of progress comes to include only such developments as advances in technology, reductions in costs, increase in the briskness of trade, growth of wealth... ...Acquisition which is quantitatively and qualitatively absolute degenerates eventually into unscrupulousness and ruthlessness. (pp7-8)

Clarification of my last post:

Empathy is not mothering, nor patronising (in the same way that Halley's alpha-male isn't patting her on the head and saying "good giirrl"), but something that is more peer-to-peer (and no Napster jokes, please). Maybe that holds a clue - maybe its partly giving recognition (but of what?). Then again perhaps its because the alpha-male (female) is able to sincerely convey his (her) belief in the objects beauty (what?).

Actually, I'm beginning to wonder if Halley's cave man example isn't really an example of the alpha-female near the end. Though I do think empathy is the key - empathy being the identificatiion of oneself with another in order to fully comprehend the other, and in this case express that understanding. Obviously, the alpha-male can never exist in isolation.

Question: how does the 'dominant male' fit into all this? Is it attraction through power vs the contemporary alpha-males attraction through empathy, or is there something more to it that ties the two together?

Total bullshit may follow:

In her recent blogs Halley has been providing a commentary on the alpha-male and how to be one. Its made me think a bit about what constitutes an alpha-female. To my mind, an alpha-female is a goddess. Whereas a man believes in his own divinity an alpha-female is just straight out divine - there is no need for belief on her part. There is however something missing in that statement - her divinity is not atomic, it is directly proportional to the quantity/quality(?) of men in her ambit that worship her. That is, her divinity is a social construct. What is it that attracts men to worship her? I believe it is something akin to Halley's principle of telling them what they most want to hear (and no its not "Oh, you're so handsome/big/whatever") - namely empathy. I say something akin because Halley to my mind missed the key ingredient - sincerity. Yes, sincerity because an alpha-male - to use Halley's example - can get away with telling a woman that she is "such a pretty, pretty girl" (I actually find Halley's wording here somewhat of a struggle) because he says it with sincerity. This is also why so many men are to scared to try those tehniques. Why? Because insincerity is like fear - it can be smelt from significant distances. Back to empathy - what exactly do I mean? Good question...

Another quote from Benda, who wrote against: “the teaching that says that when a will is successful that fact alone gives it a moral value, whereas the will which fails is for that reason alone deserving of contempt.” Perhaps, those politicians who promote 'success stories' and laud 'entrepreneurs' should stop and think about this. Do we really have a 'tall poppy syndrome' in New Zealand? Or is it that we as a nation judge our successes not just on the outcomes but also how we got there? Perhaps this is why we have always celebrated our sportsmen and sportswomen - because they compete in a refereed environment our moral judgment is not threatened, whereas a good number of our large business 'successes' have lacked that transparency.

At Eric Raymond's blog there is an interesting link to a Roger Kimball essay discussing the 1927 article by Julian Benda "The Treason of the Intellectuals". Its a pity that article isn't on the web as Benda's take on nationalism sounds quite current. Quote: “Our age is indeed the age of the intellectual organization of political hatreds,” he wrote. “It will be one of its chief claims to notice in the moral history of humanity.”

For a provocative tilt at those who proclaim blogging is the new journalism check out this.