Lessons from the financial preparations in the lead-up to the first world war

16 07 2014

by Harold James, 9 July 2014

Abstract: The 1907 panic affected the world, demonstrating the fragility of the international financial system. This column discusses the steps the US and Germany took in fortifying their financial systems following 1907. There is a link between the financial crisis and the escalation of diplomatic relations that led to war in 1914. And this link has implications for today as the world is recovering from the 2008 crisis.

Read the full article here.

The Historical Consciousness of the Academic Literature on Commons-based Peer Production

16 07 2014



As readers of this blog will know, I’m interested in constitutive historicism (i.e., the ways in competing perceptions of history structure decision-making in the present). There is a large body of literature that examines how historical facts, historical factoids, historical analogies, and historical meta-narratives shape the thinking of people in different domains, such as the making of US foreign policy (see book cover below).


One of my current research projects examines the use of historical analogy by people involved in particular type of technology-based start-up. As I’ve read through the academic literature on open innovation and commons-based peer production (think of Linux and also Wikipedia), I’ve been struck by how frequently academics use ideas about different types of history (e.g., world history, US history, the history of technology, business history) to understand the new part of the economy.


Consider Yochai Benkler’s seminal 2002 article  “Coase’s Penguin, or, Linux and” The Nature of the Firm“.” Yale Law Journal (2002): 369-446. Benkler argues that we have entered a new era in the history of innovation in which the old model, whereby innovation was done in-house by for-profit corporations, is becoming obsolete.  In the following paragraph, which references key personalities in post-war US history, Benkler makes this point.

Imagine that back in the days when what was good for GM was good for the
country an advisory committee of economists had recommended to the President of
the United States that the federal government should support the efforts of volunteer
communities to design and build their own cars, either for sale or for free distribution
to automobile drivers. The committee members would probably have been locked up
in a psychiatric ward—if Senator McCarthy or the House Un-American Activities
Committee did not get them first. Yet, in September of 2000, something like this in
fact happened. The President’s Information Technology Advisory Committee
recommended that the federal government back open source software as a strategic
national choice to sustain the U.S. lead in critical software development.


One of the interesting things about this paragraph is that Benkler, who is originally from Israel, assumes a fair amount of knowledge about US history on the part of the readers of the Yale Law Review. Although he does not feel the need to refer to him by name, Benkler alludes to General Motors CEO Charles Erwin Wilson in his first paragraph. In the 1950s and the 1960s, a statement attributed to Wilson “what’s good for General Motors is good for the United States” went viral and became part of the consciousness of many Americans. Today, many Americans believe that some General Motors executive once uttered these words back during the Cold War. This factoid shapes how they thing about the world. Of course, Wilson never actually said the exact words that have been attributed to him, but for the purposes of Benkler’s argument, the important thing is most readers of the Yale Law Review probably think that some suit from GM said it.

If you want more information about what Wilson actually said and did, including the major cuts to spending on defence contracts he made after 1953, you may wish to check out William M. McClenahan Jr and William H. Becker. Eisenhower and the Cold War Economy. JHU Press, 2011, especially pages 21, 48.

Becker, Eisenhower and the Cold War




I’m not saying that the overall argument of Benkler’s article is wrong.  I’m certainly not saying that Benkler (see below) deliberately set out to impart inaccurate historical information to his readers. I’m certain that Benkler, like most educated Americans, believes in the accuracy of the mythical Wilson quote.  I’m more interested in the fact that he and many other people use the familiar world of history to try to understand the brave new world of open source software.





Mark Casson’s The Entrepreneur at 30

16 07 2014


I find that I’m citing Mark Casson with increasing frequency, so I thought I would re-post Peter Klein’s interesting blog post about Casson’s ideas.

Someone once said to me that Casson would have received the Nobel Prize already if he were American. I don’t know if that’s true, but he is certainly a major figure in a number of fields.

Originally posted on Organizations and Markets:

| Peter Klein |

2012 marked the 30th anniversary of Mark Casson’s classic work The Entrepreneur: An Economic Theory. Casson was one of the first economists since Frank Knight to elaborate on the role that uncertainty and judgment play in entrepreneurial decisions. Casson’s book offers not only a critique of the theories of competition and the firm offered in neoclassical microeconomics, but also a positive theory of the entrepreneur as a judgmental decision-maker under uncertainty. Casson’s work had a strong influence on the Foss-Klein approach to entrepreneurship, as well as Dick’s work on the theory of the firm.

Sharon Alvarez, Andrew Godley, and Mike Wright have written a nice tribute to The Entrepreneur in the latest edition of the Strategic Entrepreneurship Journal.

Mark Casson’s The Entrepreneur: An Economic Theory (1982) has become one of the most influential books in the field of entrepreneurship. For the first time, this article outlines…

View original 205 more words

Constitutive Historicism versus Corporate Social Memory Studies

15 07 2014

Wadhwani and Jones (2014) have recently outlined a research agenda of ‘constitutive historicism’ for scholars of business and management.  ‘Constitutive historicism’ involves investigation how economic actors’ perceptions of their own place in historical time shape their strategies. As Wadhwani and Jones note that ‘two entrepreneurs presented with a similar objective situation may interpret them in very different ways based on their historical understanding of the ways events have unfolded and the possible directions they may take in the future.’

Constitutive historicism includes, but is distinct from, the study of corporate social memory. Corporate social memory, which is an emerging area of research, involve the investigation of how social and organizational memory influences how (large) companies operate. Scholars have begun to look at how firms use their histories to defuse potential political threats (Kroeze, 2013), market their products (Foster et al., 2011), and motivate workers (Anteby and Molnár, 2012). Other organizational scholars have examined how the narratives that firms and other organizations create about their histories influence the behaviour of people within those firms (Linde, 2009). Corporate social memory scholars have recognized that history is a key strategic asset for firms.

This paper abstract describes a recent example of some excellent research on corporate social memory (Kroeze and Keulen, 2013)

 This article states that the distinctiveness of business history and its convincingness can be improved by the concept of invented tradition and narrative. After a theoretical overview it suggests that the narrative approach explains the way leaders operate in practice. It argues that with a narrative approach one sees that history is used by business leaders in four different ways: as a source to create traditions and symbols as means of communication, as a way to understand and strengthen the identity of the organisation, as means to create corporate memory and as a tool to connect past, present and future. The examples are taken from a Dutch oral history project on management behaviour at multinationals.


In corporate social memory studies, the firm is the basic unit of analysis.  Scholars of corporate social memory rely on primary sources created by firms such as websites, commissioned corporate historians, employee magazines, company art collections, company archives, interviews, and internal correspondence. The researchers’ reliance on such sources tends to bias corporate social memory studies towards the investigation of firms that are relatively large and well established, since small and new firms typically lack the institutions needed to manage their social memories. 

Unfortunately, a considerable volume of economic activity takes place outside of large firms and historical consciousness influences economic actors that do not happen to be employees of large companies. The corporate social memory approach cannot, therefore, help us to understand the thinking of the owners of small businesses, self-employed individuals, or members of loose networks. However, by changing the unit of analysis from the firm to the industrial cluster, the industry, or the professional community, we can investigate how ideas about history influence the thinking of participants in the economy.    

Constitutive historicism can involve the use of a wide range of primary sources, including published documents (such as books and newspaper articles), unpublished texts (e.g., email exchanges), and interviews.

Anteby, M., & Molnár, V. (2012). Collective memory meets organizational identity: remembering to forget in a firm’s rhetorical history. Academy of Management Journal55(3), 515-540.

Foster, W. M., Suddaby, R., Minkus, A., & Wiebe, E. (2011). History as social memory assets: The example of Tim Hortons. Management & Organizational History6(1), 101-120.

Kroeze, R. “The sources and narrative structure of organizational history. The corporate historical narrative of HSBC and Deutsche Bank on their websites” Paper Presented at EGOS, Montreal, 2013.

Kroeze, R., & Keulen, S. (2013). Leading a multinational is history in practice: The use of invented traditions and narratives at AkzoNobel, Shell, Philips and ABN AMRO. Business history55(8), 1265-1287.

Linde, C. (2009). Working the past: Narrative and institutional memory. Oxford University Press.



So what’s text analysis actually good for?

13 07 2014

If you asked me to identify the most important difference between social-scientific research circa 2004 and 2014, I would be tempted to point to the rise of quantitative discourse analysis. The quantity and quality of text analysis being done by social scientists has increased dramatically in the last decade. What this means is that getting a PhD in a field like history is now rather different than it was in 2000-5, when I did mine.  This video gives a sense of what cutting-edge historical research now looks like.

Now I have very mixed feelings about the rise of digital humanities. Some of the Digital Humanities projects I have seen tell us nothing new despite the use of the sexy new technologies. Such projects are a huge waste of time and money. Then there are the Digital Humanities projects that make a genuine but modest contribution to their fields. Some of the research done using the new techniques,  expands our understanding somewhat, but I don’t think that it will dramatically change our view of the subject.  

Then there is research with really revolutionary potential. Here’s an example of that. In modern societies, people tend to distinguish violent crimes from “mere” property crimes and demand much more severe penalties for the former. In backward societies such as Saudi Arabia, the priorities are reversed and there are severe penalties for the theft of even small amounts, while some forms of severe violence go unpunished. This raises the historical question of when exactly the modern Western distinction between violent and property crimes emerged and became widespread in Western societies. 

A new Digital Humanities project,  The civilizing process in London’s Old Bailey, answer this question.






The jury trial is a critical point where the state and its citizens come together to define the limits of acceptable behavior. Here we present a large-scale quantitative analysis of trial transcripts from the Old Bailey that reveal a major transition in the nature of this defining moment.

…we demonstrate the emergence of semantically distinct violent and nonviolent trial genres. We show that although in the late 18th century the semantic content of trials for violent offenses is functionally indistinguishable from that for nonviolent ones, a long-term, secular trend drives the system toward increasingly clear distinctions between violent and nonviolent acts.

…This work provides a new window onto the cultural and institutional changes that accompany the monopolization of violence by the state, described in qualitative historical analysis as the civilizing process.

new PNAS paper by Klingenstein, Hitchcock, and DeDeo.


H/T to Chris Blattman. 

Privatized Profits, Socialized Losses

12 07 2014

This great video illustrates the nature of crony capitalism and regulatory capture.


Best Pair of Sentences I Read Today

11 07 2014

That is, constitutive historicism helps us account for how entrepreneurs’ understanding of their own historical context shapes the nature of the opportunity they pursue (Gerschenkron, 1966Sabel and Zeitlin, 1997Popp and Holt, 2013). Two entrepreneurs presented with a similar objective situation may interpret them in very different ways based on their historical understanding (p.210) of the ways events have unfolded and the possible directions they may take in the future.


It’s from Wadhwani, R. D., & Jones, G. (2014). Schumpeter’s Plea: Historical Reasoning in Entrepreneurship Theory and Research. Organizations in time. History, theory, methods, 192-216.


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