ABSTRACT

With his famous ideal type of bureaucratic organization, Max Weber is widely recognized as the iconic founding father of organization theory. He embedded it in his threefold typology of legitimate rule. Beyond this classic theme, I argue that Weber is referring to different types of organization. Some of these have not been discussed in depth yet. In particular, his processual, action-oriented concept of organization has been lost in translation. By drawing on this concept, I develop a nuanced typology of organizational concepts, which are present in Weber's work. I situate this typology in his understanding of rulership and illustrate its value for analysing alternative organizational forms. The case of a neighbourhood house offering integration courses demonstrates that bureaucratic organization sometimes becomes relevant only in constellations with other types of organization, such as democratic self-organization. I conclude by pointing out that such a nuanced typology is important for reviving Weber's agenda of explaining institutionalized pathways in the continuous transformation of the recent economy and society.

7.1 INTRODUCTION

Although Max Weber knew about the contingencies in institutionalized forms of capitalist production, consumption, and distribution (see Maurer in this volume), he always asked which forms prevailed in practice and why these prevailed, while others did not. Practically relevant and often unquestioned relations of Herrschaft (rule or rulership) in everyday life provide the basis for large parts of his answer. Prevailing economic forms need a collective effort to stabilize. In practice, they need organization. This puts the problem of organization at the core of Weberian thought on economy and society.

Weber is widely recognized as the iconic founding father of modern organization theory (Blau & Scott 1962 ) when considering his concept of bureaucracy. Moving beyond this well- known theme, I argue for the analytical value of a general and processual understanding of organization, rising from a distinct set of interconnected actions present in Weber's writings. He pointed out that organization is more than merely organizing actors, in the sense of connecting or coordinating them (see for example the influential definition of Hernes 2014). I use “organization” here according to a largely underexplored, processual definition. Organization refers to “the continuing action it takes to assure the execution and enforcement of orders” (Weber 2019: 402) leading to obedience, to some degree, of this order by an identifiable group of persons.

ABSTRACT

This chapter emphasizes that Weber's interest in theory formation in the social sciences runs through his entire work as a common thread. It is shown how Weber developed a new, alternative step-by-step way of explaining the social world, which not only allowed him to gain new insights into social forms but also offered a new perspective on the economy, most of all on modern capitalism. The chapter outlines the central elements of Weber's sociology and how a deeper analysis of central institutions of modern capitalism can be elaborated in this framework. In light of this, the recurrent question of whether Weber is an economist or a sociologist is rephrased to ask whether today we could read Max Weber as a forerunner to economic sociology.

The question has repeatedly been asked as to whether Weber could or even should be classified as an economist or as a sociologist (Swedberg 1998: 173; see also Tribe in this volume). The question has provoked a lengthy debate, but one that has not led to any definitive conclusion. If we take a step back and ask in what respect was Weber an economist and why he transitioned to being a sociologist late in his career, we can obtain new insights. When dealing with Weber's thoughts about the economy, this question gains even more relevance, because it requires asking how Weber himself dealt with this tension and why it is an integral part of his concerns about methodology and of explanation in the social sciences. This chapter shows how economics and sociology find themselves connected in Weber's work and how this helped Max Weber solve some classical issues and can bring economic phenomena into today's sociology. Thus, the chapter dissolves the alleged dichotomy by exploring why he moved towards sociology in his methodological writings and how this inspired the outline of his sociology as part of an explanatory social science programme aiming for a deeper analysis of economic topics, especially that of modern capitalism. As a result, we may better understand why Weber late in his life saw himself as a sociologist, and why we would benefit from reading him as a sociologist intent on economic issues.

INTRODUCTION

For someone always seeming to doubt his own originality, Lionel Robbins had a considerable effect on economists’ professional self-image (Backhouse & Medema 2009b: 810). The very first paragraph of his autobiography asks his reader to think of him merely as someone who repeatedly found himself in the right place at the right time to comment on what others were doing to reshape economic thought (Robbins 1971: 11). The Preface to the first edition of his most famous work, An Essay on the Nature and Significance of Economic Science, strikes the same tone. It positions him as simply rendering increasingly legible analytical themes that were the creation of other, more visionary economists (Robbins 1932: xlii). This chapter focuses primarily on Robbins's definition of economics as the study of choice under conditions of scarcity, because it provides another important turning point in the prehistory of economics imperialism. Even in relation to his most celebrated achievement, though, Robbins said that he was merely doing other people's intellectual bidding for them, in particular that of the English marginalist pathfinders, Stanley Jevons and Philip Wicksteed (Robbins 1984 [1935]: 22). At most, he allowed himself credit for seeing more clearly than anyone else what united the otherwise disparate advances of those he considered to have reworked Jevonian and Wicksteedian insights most effectively. He always held the promise of scientific unification in exceptionally high regard.

Robbins has been taken at his word by other economists, as he is today best remembered as the foremost theoretical synthesizer of his day. More attention was being paid in the 1930s than previously to trying to bridge the gap in Anglophone economics between the English marginalists and Carl Menger's Austrian followers (Vaughn 1994: 14). Robbins was well placed to succeed in this venture, being fluent in German and therefore able to read for himself countless works that were yet to be translated into English (O’Brien 1990: 162). He also used his position as Head of the Department of Economics to bring to the London School of Economics Austrian economists he had previously befriended during his visits to Vienna (Robbins 1971: 91).

MULTIPLE MEANINGS OF RIGOUR AND PRECISION

At heart, the debate about economics imperialism might not have moved on very far from when Ralph Souter (1993b: 94) first introduced the notion into social science (see Chapter 1). This was in the 1930s. He argued that rigour and precision looked very different from beyond a mathematical mindset than from within it. They remain prized assets in economics imperialists’ rhetorical armoury but in the absence of Souter's reflections on the many meanings they might acquire. Explanation through mathematical analogy within the model will certainly bring additional rigour and precision to understandings of that world, but this should not be confused with saying that the world beyond the model is now fully understood. The system of equations will reveal mathematical solutions to what, in essence, are merely mathematical problems. Inductive inference to the world beyond the model involves a leap of faith that even the most aggressive selling of economics imperialism does nothing to overcome. The colonists purport to operate somewhere between the world within substitute models and actual day-to-day experiences, connecting the two in a causal explanation. Yet these are distinct ontological realms that respond to different standards of rigour and precision. Souter recognized this 90 years ago, but the long-forgotten nature of his work shows that his warnings went unheeded.

Souter (1933a: 377–8) had shown that the economists of his day were left with a choice of entering one of two strictly parallel domains: Lionel Robbins's new one or Alfred Marshall's old one. Robbins's is where economics imperialists continue to be positioned today, with rigour and precision being defined in relation to the logically sound specification of the world within the model. Marshall's attracts the critics of economics imperialism, because its definitions of rigour and precision are linked to how well the world within the model captures the characteristics of the empirical realities it is asked to imitate. In modern-day philosophical terms, two different representational relationships between model and target are being invoked: “standing for” the real world in the former, “making present” the real world in the latter, or representing versus re-presenting (Prendergast 2000: 5). Mathematical analogy can replace observational content in Robbins's model worlds and still be epistemically reasonable, but not in Marshall’s.

INTRODUCTION

Sitting in a refreshment room at Berlin railway station in 1891, the 29-year-old David Hilbert uttered one of the most memorable lines in the whole history of mathematics. He had been attending the annual meeting of the German Mathematical Society in Halle, and he was waiting with some fellow conference attendees for his connecting train back to Konigsberg. The friends were reflecting on what they believed to have been the most important talk they had heard at the conference. Hermann Wiener had delivered a provocative lecture in which he outlined the need for more rigorous underpinnings to the theory of geometry. Very few people still took Euclid's Elements, written in the third century BCE, as a repository of literal truths, but the primitive elements of geometry had remained largely unchanged since that time (Henderson 2013: 101). “Man mu. jederzeit an Stelle von ‘Punkte, Geraden, Ebenen’ ‘Tische, Stuhle, Bierseidel’ sagen konnen”, Hilbert suddenly interjected into the conversation (Blumenthal 1935: 402–03). This starkly revealing sentence is usually translated into English as: “You can say at any time ‘tables, chairs, beer mugs’ instead of ‘points, straight lines, planes’”.

Such is the retrospective power that has been loaded onto Hilbert's comment that it sounds as though it belongs to an apocryphal story. However, the biographer in question, Otto Blumenthal, was one of Hilbert's closest collaborators. His account was seen by Hilbert before it was despatched for publication, presumably therefore with his blessing. There is still the chance he did not use these exact words and the standard English translation might add a more dramatic gloss to what was actually said. At this stage of his career, though, Hilbert certainly thought it should be possible to substitute any words drawn from a random letter generator for the well-known geometrical concepts of “points”, “lines” and “planes”, yet still leave intact the underlying logical structure through which he would henceforth seek to describe the relationship between points, lines and planes. I know of no contemporary economics imperialist who cites Hilbert's 1891 challenge to the need for confirmed empirical content within mathematical objects as direct inspiration for their activities.

INTRODUCTION

It is possible to think in a manner that has a clearly mathematical underlying rationale but without surrendering to overtly mathematical expression. However, this is not a path that economists, in general, chose to take. The previous chapter reviewed key developments in the process of argument through mathematical postulation, where mathematical relationships only have to be findable in principle. Mathematical truths could henceforth be asserted through proof-making without the need for external validation of the conditions under which such truths were likely to manifest themselves in practice. Even though this never became consensus metamathematical opinion in the manner of a Kuhnian paradigm, enough mathematical economists were convinced by this core ontological claim for it to have left a lasting mark on economic theory from the 1950s onwards. This chapter focuses on the parallel turn towards hypothetical mathematical modelling as a second means of translating mathematical instincts into direct mathematical expression, where this time we are more likely to be told that the relevant mathematical relationships have actually been found. The key factor here is the similarity between what is causing equilibrium in the model world and the closest corresponding causal mechanisms in the real world. What might be demonstrated as being true in the model is also on many occasions treated as being true of the world beyond, even if the explanation of why such resemblance holds is often somewhat sketchy. We are returned to the fundamental ontological difference between a model world that might be thought into existence in its own terms and what lies beyond these hypothetical relations in real-world economic experiences. The distinction between defined and described mathematical functions simmers away just below the surface.

The broader discussion about how realistic model-world relationships have to be receives precious little attention from economists, and the distinction between defined and described mathematical functions none at all. It is therefore unsurprising that the dividing line between mathematical postulation and hypothetical mathematical modelling has become increasingly fuzzy over time. Léon Walras's 1874 classic, Éléments d’Économie Politique Pure (usually translated into English as Elements of Pure Economics), was very clearly a theoretical exercise in mathematical postulation (Walras 1984/1954 [1874]).

THE REVOLUTIONARY INTENT IN ECONOMICS IMPERIALISM

This book is about methodological revolutionaries. It discusses a first group of people who changed fundamentally what economists accepted as good theoretical practice. I show how these intellectual pioneers reduced the most essential elements of economic theory to working through the logical implications of beginning with a market model and subjecting it to modes of mathematical reasoning. I also discuss a second group of people who changed equally fundamentally economists’ willingness to position their mathematical market models as the one true means of generating valid social explanations. I show how these later trailblazers made the case for an economics imperialism that displays little respect for the established domains of the individual social sciences. The earlier reconstitution of economic theory in ever more noticeably mathematical form can be thought of as the prehistory of today's increasingly prominent boundary-hopping activities. None of the former group ever made the case explicitly for economics imperialism, but without their theoretical innovations the scope for subsequent disciplinary transgressions would have been far more circumscribed. More than a century of deep methodological reflection within economics about how best to mathematize market models ultimately created the context for a debate about how far the resulting mathematical objects could be taken beyond economics.

These revolutionary activities have led to a situation in which all manner of non-market aspects of everyday life come to be treated for analytical purposes as if they are market phenomena. However, this requires not only a change of explanatory focus but also a reconceptualization of the social realities being studied (Kuorikoski & Lehtinen 2010: 357). The latter shift is clearly the more controversial, because it involves accepting that something is not as it is experienced in real life for the sake of methodological convenience. The use of market models to explain various aspects of social life amounts to more than mere deference to the most up-to-date techniques. It tells us how we must view what is of interest in the world, even if we struggle to be convinced that every element of our daily lives can be reduced to simple market calculations. Of the many resulting ironies, perhaps one stands out above all others.

INTRODUCTION

The case for economics imperialism is a specific example of the broader argument for scientific unification. But it is not a matter of using similar means of observation and measurement to adjudicate on the similarity between the causal processes in operation. The explanation does not follow careful empirical investigation of the causes at work; rather, it comes first. Every social situation is reduced to an instrumentally rational individual ignoring conflicting social stimuli to always maximize their market gains, and an explanatory narrative is then built around those actions. Explanatory notions are thus allowed to overpower causal notions, and scientific unification very quickly becomes the search for new social situations to submit to a single structure of explanation (Kitcher 1989: 495). The boundary-hopping activities in which economics imperialists engage are one-way transgressions enacted via the imposition of mathematical market models (Nik-Khah & Van Horn 2015: 72).

These are circumstances in which no invitation to appropriate new subject matter is ever sought, and what might otherwise be a negotiated coming together instead gives way to the law of the jungle. Economics imperialists are easy to convince that their side will be the last one standing in any ensuing battle for supremacy (Van Bouwel 2011: 47). Listening only to them, the sense of an imminent takeover is never far away (Fine 2004: 121). Looking at the practice in social science journals, the same feeling can also quite easily take hold. It is one of the curiosities of economics imperialism that very few members of its club make the case explicitly for it. But for every economist who has spoken loudly in support of transgressive mathematical market models, there are many more who have followed their prescriptions but without the fanfare. Even if they are concerned not to openly ruffle feathers, they are equally intent on pushing the parameters of insisting on strict obedience to an abstract market logic.

The publication of this book represents the culmination of a very lengthy process. The underpinning research began as part of my ESRC Professorial Fellowship project, Rethinking the Market (grant number ES/K010697/1, 2013–19). I remain extremely grateful to the ESRC for providing the funding to allow me to think my way into a brand new project and for giving me the time to see this book through to its natural conclusion. This has enabled me to educate myself in a number of fields that previously I knew next to nothing about. In particular, I have spent many fascinating hours discovering new leads in the history of mathematics, the history of metamathematics, the history of science and the history of hypothetical scientific modelling, before then trying to work out how they should influence my understanding of economics imperialism. As a consequence, the scope of my argument has extended far beyond where I would have been able to locate it at the start of the process. The result, I hope, is a study that self-consciously operates in the interstitial spaces between different disciplines, different traditions of thought and different bodies of work. There would have been little point in labouring hard for a decade only to have ended up where the existing literature was already situated. The synthesis of various intellectual registers is a deliberate attempt to chart new ground.

It is not entirely straightforward to enter the debate about economics imperialism while avoiding the overtly partisan tone of the existing literature. Not all of it falls into the same trap, but typically analysis from first principles is forced to give way to judgemental assertions from those who never doubt that their position has been the right one all along. Respectful invitations to discuss issues that might always have the ability to polarize therefore often get drowned out by raised voices. My readers will ultimately decide whether I have managed to stay away from the tendencies I regret in the writing of others. Even having selected the title of False Prophets of Economics Imperialism might be seen by some as a provocation too far.

INTRODUCTION

Most proponents of economics imperialism show scant regard for trying to make their case historically. Declarative statements of the “it has long been known” variety serve their purpose much more effectively. Thus, if it has long been known that the most tractable models of human behaviour are based on maximizing principles, if it has long been known that the economic content of maximization revolves around individuals following their own rational self-interest, if it has long been known that mathematical expression brings extra precision to the economic content, and if it has long been known that good social science requires such precision, then this is often enough to negate the case against the imperialists. In a single step, it seems, the debate shifts from the nature of explanation in general to the assertion of explanatory unification through the use of mathematical market models. No concern is given for what type of unification is entailed, nor yet for what particular market models assume about the external reality that is actually unknown there. A rush to judgement ensures that the market world is always a credible world in Robert Sugden's (2000: 24, 2009a: 17) sense, thus licencing an inferential capacity that far exceeds what subject specialists can claim of their own work.

It appears to make no difference that these four “it has long been known” claims came to economics at different times, were hotly contested in methodological terms in their own day and have remained significant points of contestation. What counts is that they are widely considered to be true, beliefs that are embedded when learning how to think like an economist. Economic models are often constructed to test theoretical claims that are already assumed to hold (Ireland 2003: 1624; Winther 2006: 709; Knuuttila 2009: 76; see Chapter 3). This leaves unexplained, though, how such assumptions formed, especially in the face of historiographical evidence that the authors with whom they are most usually associated all seemed to harbour reservations about the advances with which they are now credited.

INTRODUCTION

Judging by their actions, economists generally seemed happy to be taken to where Paul Samuelson wanted them to go. In the years between him starting his Harvard PhD in 1935 and receiving his Nobel Prize in 1970, the content of economics journals increasingly came to prioritize reasoning through mathematical objects (Backhouse 1998b: 86). However, Samuelson cannot claim sole credit for such a shift, despite his own history of mathematical economics repeatedly stressing the blank canvas he initially faced (Samuelson 1986: 797). This might have been true of his immediate environs in Cambridge, Massachusetts, but by no means elsewhere. The Cowles Commission was simultaneously bringing together a collection of mathematically minded scholars in Chicago, but outside the University's Economics Department where Samuelson had enjoyed a less than wholly fulfilling time as an undergraduate. All were influenced either through direct participation or inherited intellectual objectives by Karl Menger's Mathematical Colloquium in pre-war Vienna (Leonard 2010: 154).

While Samuelson was always both a willing and an effective advocate for economists with an interest in mathematizing their field, a significant proportion of the Cowlesmen were mathematicians first and foremost, who had merely happened upon economics as a convenient focus for their writings (Mirowski 2012a: 141). What looked like a significant advance in mathematization from Samuelson's perspective was often met with a shrug of indifference by the more mathematically sophisticated Cowlesmen. Samuelson might have been able to help them add more convincing economic narratives as counterparts to their mathematical reasoning, but that was all. From their perspective, he had produced a very basic mathematical framework for facilitating his economic arguments, whereas they were interested in determining the full logical implications of mathematical propositions, the economic relevance of which was at best of only secondary importance. The achievements that gave the Cowlesmen most satisfaction were consequently often fundamentally unreadable from a Samuelsonian perspective, so unforgiving were their mathematical demands on the reader. Samuelson, though, was reluctant to take his usurpation lying down. Looking back at the clash of styles in postwar mathematical economics, he used the 1983 Introduction to the enlarged version of Foundations to say, “More can be less.

INTRODUCTION

The 1970 Nobel laureate in Economics, Paul Samuelson, was a strong devotee of the so-called SMMS narrative of disciplinary development, whereby he sits at the apex of a lineage that passes uninterrupted through Adam Smith, John Stuart Mill and Alfred Marshall (Feiwel 1982: 3). A series of advances are posited through which the best bits of the preceding theory were preserved in successive conciliatory syntheses, shorn of their troublesome features. “The giant steps that have been made in this narrative are steps of codifications of the body of knowledge”, writes Till Duppe (2011: 41) of Samuelson's approach to the history of economic thought. “The disagreements economists had with their predecessors did not have to be argued, but simply vanished in their recodification.” Samuelson was only too happy to assume the role of recodifier-in-chief, because the only justification for studying what economists once did, he said, is to understand how they were now doing the same thing better. He described his own approach through the “good, if ugly title [of] … ‘Presentistic history’” (Samuelson 1991: 6), as well as through the potentially better if definitely even less appealing “Cliowhiggism” (Samuelson 1987: 56). “Inside every classical writer”, he argued, “there is a modern economist trying to get born” (Samuelson 1992: 5). From this perspective, the person responsible for the last recodification must necessarily be best placed to speak on behalf of the whole subject field, both now and for everyone from the past who has helped it get to its current position.

The text that allowed Samuelson (1983a: xxvi) to claim the status of disciplinary standard-setter was his 1947 Foundations of Economic Analysis. Others have hardly been less stinting in their praise for it. Foundations has been described by luminaries within the profession as “a remarkable performance” (Fischer 1987: 236), “the most important book in economics since the war” (Kenneth Boulding, cited in Lucas 2001: 7), the text that “really formed [the successor] generation of economists” (Robert Solow, cited in Breit & Hirsch 2009: 156).

In Chapter 2, we briefly discuss causes and consequences of inflation to lay the foundation for a detailed analysis of the relation between monetary policy and other policy fields