rethinking Jerry Davis
I’ve spent the past few days at the EGOS meetings in Rotterdam. If you’re not an organizational scholar, EGOS is the acronym for the European Group for Organizational Studies – an interdisciplinary network of organizational scholars from both sides of the ocean. The theme of this year’s meeting was about reimagining and rethinking organizations during unsettled times. Naturally, they asked Jerry Davis – who has done more reimagining and rethinking of organizational theory than most – to be the keynote speaker.
Jerry’s keynote was, as expected, a witty, concise, empirically-driven argument for why the corporation has ceased to be a major institution in society (the impromptu dancing was an unexpected delight). If you’re not familiar with his argument, you should really read his book, Managed by the Markets, a real page-turner that explains how the growth of financial markets accompanied the deterioration of the public corporation as a major employer and provider of public welfare in contemporary society. I’ve heard him give a version of this talk several times, and like every other time I left his talk feeling uncomfortable with some of his conclusions. Feeling uncomfortable is an understatement. I disagree with his conclusions. But I still think that Jerry has done an excellent job of marshaling data that can lead to a scarier and even more cynical conclusion than the one he claims.
Jerry’s evidence for the deterioration of the corporation as a major social institution has five major points. First, he shows that employment is no longer predominantly manufacturing-based. Given that major corporations were also the biggest providers of manufacturing employment, the transition of these jobs out of our communities has meant that the average Joe has fewer direct ties to big corporations than was true in the past. Interestingly, he also shows that the number of manufacturing jobs in China has declined too, and thus it is not merely a US phenomenon. Second, public ownership of corporations is no longer widely dispersed and has become increasingly concentrated in a few large shareholders, like the Blackstone Group. At the same time, as Mark Mizruchi has demonstrated, the old guard elites have become increasingly fragmented and there is less cohesion among the elite directorate than was true in the past. This means that there is also less agreement among the elite about the best way to use public corporations to serve public ends. Third (and this is really a product of the previous two), corporations have become less accountable to employees and have become more beholden to large shareholder blocs. As a result companies are less stable than ever before, constantly being subject to the threat of takeovers, restructuring, etc. Fourth, due to this instability, the corporation no longer has fixed boundaries. Corporations are capable restructuring quickly and often. And fifth, because of their lack of fixed boundaries, corporations have malleable existences, capable of shifting faces, dying and being reborn with new names and identities to continue their existence and purpose for wealth accumulation. In one of the great lines from his talk Jerry said, “Pop-up organizations don’t have to bear the costs of being a social institution.” Corporations have become employee-less (or nearly so) shells that move through supply chains, sucking value from local communities and then disappearing into the financial ether.
The big conclusion that Jerry draws from this is that corporations are no longer as important as they once were, and therefore organizational scholars ought to refocus our imagination on other types of organizations. The hope for the future, he argues, is to examine organizational innovations that put more power and control in the hands of communities and employees. For example, we ought to study new organizational forms, like crowdsourcing, Maker Faires, and wikis, if we want to develop a hopeful societal future.
I certainly don’t disagree with Jerry that there is value in studying new organizational forms that have the potential to transform communities. But I have problems with his more general conclusion. Jerry’s evidence about the transformation of the corporation is convincing, but I think we can arrive at completely different conclusions if we interpret the data differently. Here’s my take: the corporation has morphed into a super-actor that occupies a position of tremendous power and influence in today’s society, in part because it is less dependent on employees, communities, and the state. Its lack of dependence on real people means that most corporations are now less embedded than ever before but they still have needs for resources – including financial resources that have become concentrated in the hands of a small elite group of investors. So, the corporation is still a very real and important institution for the wealthy, and it is a social actor at the height of its power and influence due to its lack of accountability to local communities. As the state and community have waned in their ability to control the corporation, it has become the most influential actor in global politics.
In another way, Jerry’s findings are a vindication for the Marxists of the industrial relations school, like Braverman, who warned of the potential for technology to displace workers and make manufacturing jobs obsolete. This seems to be increasingly the case. But it’s not only manufacturing jobs that are at risk. Financial technology has made the old corporate form obsolete, replacing them with shape-shifting corporations that need only a few hundred people to steer the ship. We really do seem to live in a world of organizations imagined half a century ago by cynical neo-Marxists.
There are good reasons to distrust unbound, people-less, soulless corporations that have billions of dollars of market capital and no social mandate to use those dollars for public benefits. The accumulation of power and concentrated influence sounds to me like a dangerous organizational form that we, as organizational scholars, don’t fully understand yet. Rather than turning our attention away from the corporate actor, I think our attention needs to be focused on understanding the politics and power dynamics that shape its influence, and inasmuch as we offer prescriptions of our own, we ought to be thinking of ways to deal with the massive power imbalances it has created. Yes, there is also a need to study organizational forms that offer bottom-up solutions for building communities, but if this becomes our sole focus, we will have lost our ability to be critical of the corporation and of the power it exerts.