Bright Lights in Edinburgh

9 07 2019

Edinburgh was one of the centres of the Enlightenment. Last week, it was a hive of intellectual activity as thinkers from the world descended to the city for two important scholarly events.



At the start of the week (1-2 July), Adam Smith’s Edinburgh house, Panmure, which now belongs to the University of Edinburgh business school, was the venue for an important interdisciplinary conference on “The New Enlightenment: Reshaping Capitalism and the Global Order in an Neo Mercantilist World.” The organizers of this conference, who include the great business thinker David Teece hope that this conference will  bring together action-oriented scholars, policy makers, and practitioners. The distinguished scholars who spoke at the conference include the management academics Jay Barney and Peter G. Klein, the economist Jon Kay, and such historians at Harold James,  Barry Eichengreen, and Niall Ferguson as well as some very distinguished practitioners and financial journalists.  The call to arms (theoretical document) describing the goals of the conference is available here.

Steve Denning, a business journalist who attended the conference,  has written a lengthy piece in Forbes that effectively summarises what was said at Panmure House.  You can read it here. One of the major themes of the conference was the problems with shareholder value ideology. As Denning wrote in Forbes,


Perhaps the most striking news from the conference was the emerging consensus that maximizing shareholder value is a thoroughly bad idea. If no remedial action is taken, the economic, social and political consequences are likely to be dire. We know, Professor Jay Barney said in the closing session, how to fix this set of problems. The question is, do we have the political will?

While participants recognized that generating long-term shareholder value is obviously vital, they also noted the noxious consequences of the pervasive goal of public corporations in maximizing shareholder value as reflected in the current stock price, which include excessive attention to short-term outputs, value extraction over value creation, pervasive self-dealing by executives, mistreatment of employees, growing income and wealth inequality, and the self-defeating nature of the very objective itself. In effect, the goal of maximizing shareholder value has ended up destroying shareholder value, as Professor William Lazonick explained here.

It should be stressed that the people who attended this conference were, by no stretch of the imagination, capitalism-hating Marxists.  At the conference, “there was widespread agreement that market-based solutions are almost always preferable to centralized planning.” Many of the people at the conference have been profoundly influenced by Hayek’s critique of central planning, and Adam Smith’s criticisms of the “men of system” of his own era. The Panmure House Declaration that emerged out of the conference makes it clear that the delegates at the conference believe that some form of capitalism is really the only viable social order. However, it was also clear that people at the conference were searching for a position that synthesises belief in markets with an awareness of the baneful effects of shareholder value ideology and some of the people associated with the term “neoliberalism”, a word that was used correctly and carefully by some conference attendees. In words that echoed ideas that thinkers like Adolph Berle articulated during the Cold War, historian Niall Ferguson of Hoover Institution, argued that the distinction between socialism and capitalism has become a false dichotomy.

The Panmure House Declaration, which was signed by more than 80 academics, is an important statement because it shows that it is possible to be a strong supporter of the principle that markets should be used as a coordinating device while also opposing the doctrine of shareholder primacy. Until now, the prevailing view, which has never been explicitly articulated but which is nevertheless widespread, is that the opposition to shareholder primacy is logically consistent with hostility to markets and that belief in shareholder primacy is the natural partner of belief in the superiority of markets over states. The Panmure House Declaration shows that these ideas don’t need to go with each other.


Later that week, the annual conference of the European Group for Organizational Studies (EGOS) took place in Edinburgh. I was part of sub-theme 30, which was devoted to historical organization studies. The track organizers were Roy Suddaby, Mairi Maclean, and Charles Harvey. I though the sub-theme was truly excellent and featured both high-quality papers and superb levels of rigorous feedback and commentary. EGOS, as always, provided excellent entertainment during the networking events (live music and drinks).

The papers presented to my track at EGOS dealt with issues of tremendous social importance. They included studies of entrepreneurship among Indigenous Canadians, religion and institutional change, and business as a force for peace. My favourite paper was actually “Rhetorical history and the competitive advantage of the Edinburgh fund management cluster” by John Millar, a PhD student.

I must close, however, on a critical note. EGOS has some rhetoric about gender, diversity, and inclusion. However, it must go beyond that and take active measures to help EGOSians who have childcare duties, a group that is overwhelmingly female. Other academics conferences support such parents by arranging for childcare on-site (at the expense of each parent) and by setting aside rooms where breastfeeding mothers can express breast milk for later use. Conference childcare is important to the increasing number of academic couples, especially those who attend the same conference. EGOS should reinforce its feminist credentials by, at the very least, setting aside places for expressing. I understand that partnering with local organizations to run a daycare centre might be complicated, but this option should be investigated.



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