Vincent Geloso on Werner Troesken’s The Pox of Liberty

19 04 2020

The economic historian Vincent Geloso has published an excellent blog post on the EHS website in which he draws on the late Werner Troesken’s The Pox of Liberty:  How the Constitution Left Americans Rich, Free, and Prone to Infection to help us to think about the trade-offs we will collectively need to make in making policy decisions about how we quickly we lift the COVID lockdowns.

Speaking of historical research that is relevant to our current policy trade-offs, I would like to bring the attention of my readers to a series of papers in which the medical historian Howard Markel and colleagues attempted to assess the impact of the different policies that US cities adopted to fight the 1918-19 Spanish flu epidemic. The lesson I took away from these papers is that the policy of locking down early and hard is probably the best course of action from both a public health and economic point of view. In other words, if we want to minimise both the number of people who die or are permanently disabled by the virus and the overall economic impact, stringent lockdowns would seem to be the way to go.


Markel, Howard, Harvey B. Lipman, J. Alexander Navarro, Alexandra Sloan, Joseph R. Michalsen, Alexandra Minna Stern, and Martin S. Cetron. “Nonpharmaceutical interventions implemented by US cities during the 1918-1919 influenza pandemic.” Jama 298, no. 6 (2007): 644-654.


Essay Contest: What Lessons Can History Provide to Companies and Managers Currently Coping with the Impact of COVID-19?

30 03 2020
Centers for Disease Control and Prevention Alissa Eckert, MS; Dan Higgins, MAMS

Centers for Disease Control and Prevention Alissa Eckert, MS; Dan Higgins, MAMS Pubic Domain Image

AS: I am very pleased to announce the launch of a fast-reaction essay contest that is designed to repurpose existing historical knowledge for the use of the managers who are currently grappling with the impact of COVID-19. The essays are due on 21 April. Special thanks to the team in Frankfurt who created the IT infrastructure for the contest, to the donors on two continents who supplied the prizes, and the members of our distinguished Scientific Committee.

Full details of the contest can be found on the contest website.


Essay Contest Question

During crises, managers have special responsibilities to stakeholders. COVID-19 is clearly a major crisis. What lessons for today’s managers can we learn from studying how managers in the past responded to previous crises such as epidemics and pandemics as well as wars and natural disasters?

Contest Rules

  1. DEADLINE: All essays must be received by Tuesday 21 April by 11pm EST (New York time). The essays must be submitted before the deadline to
  1. TERMS:
  1. Participants are free to base their essays on either primary sources, secondary sources, or a mixture of the two but they must not break local self-isolation/social distancing guidelines in the course of preparing their essays.  No going to the library!!
  2. By submitting your essay, you declare that you are the author, is based on accurate historical data, and that you give us your consent to publish the essay.
  1. FORMAT:
    1. Essays must be fully referenced according according to a single consistent format such as APA or Chicago footnotes and should be between 4 and 5 pages (double spaced, Times New Roman, 12 point font) not including list of references at the end.
    2. We encourage authors to hyperlink to cited sources whenever possible.
    3. Each essay must begin with a one-paragraph practitioner summary that gives clear advice to managers.
    4. All submitted essays must be in English.
    5. Essays can summarise your own previously published research, and can draw on the existing secondary literature, or can be based on primary source you start doing now.
  2. ADJUDICATION: The submissions will be judged by jurors drawn from the Contest’s Scientific Committee, comprised of distinguished business historians who have relevant expertise and who have, in the past, made historical research findings relevant to managers (see below for the list of potential jurors.) The Committee’s findings will be final.
  3. PRIZES: The prize for the best essay is $500 U.S. The prize for the second best essay is £200.
  4. CRITERIA: In judging the essays, we will give equal weighting to two criteria: the utility of managers of the recommendations you provide based on your historical research and the reliability of your historical research findings. Your conclusions about what worked for managers in the past will be more convincing to the jury if they are based on solid historical research and analysis rather than a  cursory review of a couple of sources.





The Prize for the best essay of 500USD has been generously donated by Professor Dimitry Anastakis, L.R. Wilson/R.J. Currie Chair in Canadian Business History at the Rotman School and the Department of History at the University of Toronto.

The Prize for the second-best essay of 200GBP has been generously provided by Dr Nicholas Wong, of Newcastle Business School, Northumbria University.

Many thanks to the leadership and IT staff Gesellschaft für Unternehmensgeschichte for hosting the website associated with this conference.


Other Notes


All essays deemed by this jury to be of sufficient quality will be published online at under a Creative Commons 4.0 licence. The essays will contain a disclaimer saying they have not gone through peer review and should not be construed as investment advice for individuals.

Essays must be signed with the real names of the author or authors.

The contest organisers reserve the right to lightly edit essays for style and English expression prior to their publication on the website. We do not expect contestants who are not native speakers to submit essays that are linguistically perfect in all respects, especially are you are working under a tight deadline. However, we do not have the resources to engage in extensive editing so please ensure your writing is reasonably clear before you submit.

The contest is open to everyone: academics, students (graduate, MBA, undergraduates), practitioners, independent scholars.


Source: “Longer-Run Economic Consequences of Pandemics” San Francisco Fed Working Paper (2020)

We define history as the study of episodes in the past. You are free, therefore, to distil lessons for today’s managers from relatively recent historical events (such as the SARS outbreak, the 2011 earthquake the disrupted supply chains in Japan) as well as more distant ones, such as Hong Kong Flu in 1968, Asian Flu pandemic in 1957, and the Spanish Flu in 1918. If you can derive lessons for today’s managers from even earlier epidemics, such the cholera epidemics of the nineteenth century or even the Black Death, go for it.  However, we expect that the findings presented in the essays will be derived from the systemic study of historical sources rather than personal recollections. An executive’s recollection of how he or she dealt with the impact of SARS on a supply chain would not, in our view, be considered truly historical and would be unlikely to win the prize. However, we would encourage managers who have such experience to share advice with other managers in other online forums. Similarly, while we would encourage managers in China who successful coped with the local peak of the epidemic at the start of the 2020 to share advice with their counterparts in other countries, our essay contest is not the forum to do so as the managerial experience being shared is not historical.

In judging the essays, we will give equal weighting to two criteria: the utility of managers of the recommendations you provide based on your historical research and the reliability of your historical research findings. Your conclusions about what worked for managers in the past will be more convincing to the jury if they are based on solid historical research and analysis rather than a very limited and cursory review of a couple of primary sources.  The jury’s understanding of what constitutes reliable sources of historical information will likely be informed by some of the principles outlined in Lipartito (2014).

Lipartito, K. (2014). Historical sources and data. In Bucheli, M., & Wadhwani, R. D. (Eds.). (2014). Organizations in time: History, theory, methods. Oxford University Press. pages 284-304.

Scientific Committee:

Alfred Reckendrees, Copenhagen Business School

Andrea H. Schneider-Braunberger, Gesellschaft für Unternehmensgeschichte GUG e.V., Frankfurt-am-Main

Aparajith Ramnath, Amrut Mody School of Management, Ahmedabad University

Catherine Casson, University of Manchester

Charles Harvey, Newcastle University Business School

Chris McKenna, Saïd Business School and Brasenose College, Oxford

Dimitry Anastakis, Wilson-Currie Chair in Business History, University of Toronto

Greig Mordue, ArcelorMittal Chair in Advanced Manufacturing Policy, McMaster University

Hubert Bonin, Université de Bordeaux

Jan Ottosson, Professor of Economic History Uppsala University

John Wilson, Newcastle Business School

Kenneth Lipartito,  Florida International University

Laurence B. Mussio, PhD, SIERC, Inc.; Co-Founder, Long Run Initiative (LRI).

Ludovic Cailluet, EDHEC Business School, Paris and Lille

Marcelo Bucheli, Gies College of Business, University of Illinois at Urbana-Champaign

Nicholas Wong, Newcastle Business School

Peter Miskell, Henley Business School

Pierre-Yves Donzé, Osaka University, Graduate School of Economics

Rika Fujioka, Faculty of Commerce, Kansai University

Robert E. Wright, Rudy and Marilyn Nef Family Chair of Political Economy at Augustana University

Rowena Olegario, Oxford Centre for Global History

Tom Buckley, University of Sheffield Management School


Longer-run Economic Consequences of Pandemics

30 03 2020

Our colleagues who work in the field of economic history have started to publish research that applies historical data in trying to think about the likely macro-economic impact of coronavirus (see paper details below). Historically-informed finance practitioners such as the excellent Jamie Catherwood (aka Investor Amnesia) have also been using the past as a guide. I see all of these efforts as entirely complementary to the ongoing efforts of business historians around the world to study how firms responded to similar pandemics in the past and thus provide actionable advice to managers who are currently trying to cope with the crisis.


Longer-Run Economic Consequences of Pandemics

Òscar Jordà, Federal Reserve Bank of San Francisco and University of California, Davis

Sanjay R. Singh, University of California, Davis

Alan M. Taylor, University of California, Davis

Federal Reserve Bank of San Francisco Working Paper2020-09

Paper Abstract:

How do major pandemics affect economic activity in the medium to longer term?
Is it consistent with what economic theory prescribes? Since these are rare events,
historical evidence over many centuries is required. We study rates of return on assets
using a dataset stretching back to the 14th century, focusing on 12 major pandemics
where more than 100,000 people died. In addition, we include major armed conflicts
resulting in a similarly large death toll. Significant macroeconomic after-effects of the
pandemics persist for about 40 years, with real rates of return substantially depressed.
In contrast, we find that wars have no such effect, indeed the opposite. This is consistent
with the destruction of capital that happens in wars, but not in pandemics. Using
more sparse data, we find real wages somewhat elevated following pandemics. The
findings are consistent with pandemics inducing labor scarcity and/or a shift to greater
precautionary savings.



Full paper available here.

Can We Blame Globalization For COVID-19?

24 03 2020


Many economic nationalists, right-wing populists, and other individuals who have long disliked globalization have jumped to the conclusion that globalization caused the crisis and/or is doomed by the crisis.  Some on the globalization-hostile part of the left have echoed this idea. (By globalization, everyone in this conversation appears to mean falling barriers to the movement of goods, capital, ideas, and crucially the movement of human beings). I’m very glad to see that there is now push back against this narrative (for valuable contributions to this debate see here, here, and here).


The University of Western Ontario economic historian Vincent Geloso has published an important blog post in which he draws on historical data about past pandemics (e.g., Spanish Flu in 1918, Asian Flu in 1957-8, Hong Kong flu in 1968) to argue persuasively that globalization (falling trade barriers, lots of people zooming around on long-haul flights) can’t be blamed for COVID-19.

Vincent identifies a number of causal mechanisms by which globalization reduces the likelihood and severity of epidemics. One of them is increasing living standards in the countries that have historically been the source of many zoonotic pathogens.


 In particularly poor countries, income gains brought by globalization translate as improvements in net nutrition which reduces vulnerability to a great range of diseases. Enrichment thanks to globalization can also enable investments in health products and services that were previously unavailable. As a result, the quality of care increases in a way that offsets some of the increased risks of contagion. 


I would take this argument further than Vincent has. Enrichment due to globalization has allowed people in developing countries such as China to distance themselves more from animals. Much more importantly, this enrichment means that brilliant young minds that previously would have been wasted on routine agricultural labour can be redirected into scientific research that can help all human beings to fight its common enemy, the COVID virus. As we speak, there are doctors and scientists in China working on COVID. I’m certain that if you looked at what their parents and grandparents were doing circa 1978, when China began to participate (once again) in globalization, few if any of them were doing any sort of creative work. Some of the best universities in China were founded in the Treaty Port period, when during the pre-1914 heyday of globalization.  Moreover, the technologies and social institutions associated with globalization (the internet, publishing scientific papers in English, and so forth) make it easier for scientists and medical professionals of different nationalities to exchange valuable knowledge.


Bottom line, we can’t blame globalization for this mess. I remain convinced that the world needs more globalization, not less.


Coronavirus: Driving Increased Demand for Financial Historical Knowledge?

2 03 2020

I’ve long suspected that investors draw on their stock of  historical information to try understand the present, especially during crises, when the risk and uncertainty are at elevated levels. During crises, many investors seem to conclude that the standard ways of valuing assets and making decisions don’t seem to be working that well. All it takes for the financial newspapers to be filled with historical contents about Tulipmania, 1929, Smoot-Hawley, deglobalization, and the origins of the First World War is some sort of “black-swan” event that upsets normal business conditions. Back during the Global Financial Crisis, my fellow business historians were excited when people in finance started paying more attention to business history in the search for guidance in uncertain times. Bloomberg established its short-lived Echoes column during that crisis to supply finance people with historical insight.



By Mikael Häggström, M.D.- Author info- Reusing images – Own work, CC0,

In the last decade, I’ve developed my understanding of the literature in psychology and economics that helps us to understand when investors are most likely to have recourse to historical knowledge. A great starting point for thinking about this issue is Barry Eichengreen (2016)’s book-length study of how historical knowledge was used by central bankers during the Global Financial Crisis. Eichengreen grounds his study by the dual-process model of cognition that practitioners are most likely to associate with Danny Kahneman’s  scholarly papers and his best-selling departure lounge business book Thinking Fast and Slow. Kahneman’s research strongly suggests to me  that historical thinking is especially influential during crises rather than in normal conditions, when individuals make greater use of “System 2” thinking. Research by other psychologists future supports the idea that individuals would greater recourse to the cognitive tool of “historical analogy” during periods of uncertainty (see Chan and Paletz, 2019).

Right now, markets are in chaos as investors who have no specialized training in epidemiology are struggling to figure out how they should respond to coronavirus (see here, here, and here). Some observers have debated whether the SARS epidemic of early 2000s is a reliable guide for thinking about the likely impact of coronavirus on firms and markets. As Covid-19 began to disrupt global supply chains, many investors drew on an analogy with SARS to make sense of what was going to happen next. For examples of people using a historical analogy with SARS to try to think about the likely impact of coronavirus, see here, here, and here. Bank of America economist Ethan Harris has recently said that “unfortunately, the analogy doesn’t work.” Nicholas Colas of DataTrek Research opposed the use of the historical analogy, saying that it is “useless to compare how US/global equities fared under SARS in 2003 to the coronavirus today.” See here. One can totally understand why these observers are wary of using this historical analogy. Global supply chains have changed a lot since 2002, especially since China is a much more important economy today than it was at the time of SARS.


By russellstreet – 1918 Influenza Epidemic Site, CC BY-SA 2.0,

For a while, I’ve been following the excellent blog of Jamie Catherwood, a young finance practitioner who shares my conviction that historical knowledge, particularly the knowledge of the history of financial markets is potentially quite useful to investors.


Image from Jamie Catherwood’s Twitter Account


Catherwood’s day job is as as a  Client Portfolio Associate at O’Shaughnessy Asset Management, a long-equity investment firm in Connecticut. Catherwood’s blog, Investor Amnesia, appears to have something of a cult following in financial circles, as it is has inspired reader meet-ups in different North American cities (see list here). Anyway, in a blog post yesterday (1 March), Jamie wrote:

I can honestly say that since I started doing my financial history shtick online in June 2018,  I have never received so many questions and requests for historical context than I did with the coronavirus this week. It was this week that many Americans witnessed a previously distant and global problem become a serious concern at home as more cases of coronavirus in the United States were reported. In response, stocks tanked as investors panicked over how the global pandemic would impact markets and supply chains.


The blog post has lots of interesting information about historical pandemics, but to me the most interesting passage in it is the sentence that I have quoted above. Jamie’s observation is another data point that supports my theory that investors are more likely to reach for history when there is a war on.



Workshop on the History of Industrial Clusters in the UK

22 02 2020

Organizational History Network

The British Academy of Management Management and Business History SIG and the Henley Business School, University of Reading, Centre for International Business History, are running an event on ‘A History of Industrial Clusters: Knowledge, Innovation Systems and Sustainability in the UK’ .

This workshop brings together some of the leading researchers across the field of business and economic history showcasing the breadth and depth of current work. At its core are the themes of innovation, knowledge and sustainability and a framework developed by David Charles bringing these together. This will allow new questions to be asked and provide a historical dimension to regional economic development in the UK. The research presented will also offer some contemporary insights into policy-making and industrial strategy.

The core research output arising from the workshop will be a new edited collection on industrial clusters (under the same title as the workshop and edited by…

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Call for EBHA doctoral summer school

18 02 2020

Organizational History Network

At Business History, we are very proud to be one of the sponsors of this year’s EBHA doctoral summer school!

Keynote Speaker: Albert Carreras (Pompeu Fabra University).

Faculty Members: Adoración Álvaro Moya (CUNEF), Veronica Binda (Bocconi University), Andrea Colli (Bocconi University), Christina Lubinski (Copenhagen Business School) and Jari Ojala (University of Jyvaskyla).

Local organizers: Paloma Fernández and Miquel Gutiérrez (University of Barcelona).

The 10th edition of the EBHA (European Business History Association) Summer School will take place at Barcelona, from Wednesday, July 8th to Friday, July 10th, 2020. The school, titled Challenges for Business History in a Changing World, aims to encourage a fresh and rigorous exchange of thoughts, ideas, and new research being done by doctoral students in early stages of their doctoral work, in fields closely related to Business History. It is organised jointly by the European Business History Association (EBHA) and the University of Barcelona…

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Will Brexit Increase or Decrease the Net Regulatory Burden on UK Firms? Please Bet Money On That Question

11 02 2020

Some of the people who have advocated for hard Brexit (i.e. a Brexit that sees the UK outside of the UK customs union and regulatory divergence) have argued that leaving the EU would reduce the costs of regulation faced by British firms, thereby increasing economic growth in Britain. Their argument goes like this: being in the EU forces a national government to impose lots of regulations on firms that are mandated by EU directives. Brexit means we will be exempt from future EU directives and will be able to repeal the most unnecessary of the existing one. Even if a hard (i.e. a Brexit that sees the UK outside of the UK customs union and regulatory divergence) led to a bit more paper at the Channel ports, the net effect of Brexit would be to reduce the overall burden of regulation on British firms.

Opponents of hard Brexit say the exact opposite. They tell a story about the importance of regulatory harmonisation and avoiding differences in regulations that can impede the flow of goods and create headaches for firms. The extra red tape associated with Brexit will, according to this crowd, more than outweigh the effects of repealing  a few annoying EU directives. An article published in Prospect magazine today made this argument in the course of attacking Boris Johnson’s plan for a hard Brexit: “The PM’s Brexit deal is the biggest one-off imposition of red tape a government has ever inflicted on business.”

Non-British observers who presumably don’t have a dog in UK political fights have said something similar. For instance, Scott Sumner, a US economist who follows UK political by reading the Financial Times, has arrived at similar conclusions. I’m inclined to give his opinion on this matter a fair bit of credence because he isn’t from the UK and has based on his analysis on articles in an expensive, paywall-protected newspaper, which means that he has invested his own money in data collection.
Both sides in this debate share the belief that unnecessary bureaucracy and regulation are a bad thing. Which one is right?

I’m a big believer in prediction markets because they are a tax on bullshit, to quote the words of the great economist Alex Tabarrok, who once wrote: Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge.

I’m thinking here of the the famous Simon–Ehrlich wager a ten-year bet made in 1980 that pitted overpopulation doomsayer Paul Ehrlich against Julian Simon. Simon won the famous bet and in 1990 Ehrlich mailed him a big cheque.

What I would like to see is someone come up with the metric for measuring the net effect of “red tape” on UK firms that will command the respect of both sides in the ongoing debate about hard Brexit’s likely effects. I suspect that the metric for measuring the costs of regulation will include elements of the World Bank’s (controversial but still useful) Ease of Doing Business ranking methodology and some measure of the total number of pages of regulations firms in the UK and the Republic of Ireland need to comply with. We would then create a bet contract that would, after vetting by lawyers, allow individuals on both sides of the debate about the regulator cost of Brexit to put their money where their mouths are and to invest serious resources in signalling to us that they are convinced they are correct and not just bullshitting.

The Long Now Foundation has expertise in constructing and managing these sorts of bets (seehere), so I propose they be entrusted with this important task. Their betting market place doesn’t yet feature any predictions related to the economic costs and benefits of Brexit, but they I have a UK-centric prediction there (a 31-year contract on the opinion that “Slaughterhouses will be banned in the United Kingdom by 2050.”)

Obviously for the bet to be really credible, its terms would have be enforceable by an English court, since most of the people pledging their assets in such a bet would likely be UK residents who hold their wealth in the UK.

The amount of money pledged by both sides on the bet I have described, along with the identities of the betters, would have tremendous informational value for us as citizens.

Should Someone Who Believes in Economic Laissez-Faire Also Believe in Shareholder Primacy?

29 01 2020

In recent weeks, I’ve observed a curious pattern in the debates in the academic world about corporate purpose: I’ve noticed that some libertarian authors assume that shareholder primacy is the position in the debate on corporate purpose that someone who believes in deregulation, a smaller state, etc should favour. In this blog post, I would like to question this unexamined assumption, doing so by drawing on my knowledge of the history of corporate governance (I’ve published a bit in this area and on the evolution of our ideas about corporate purpose).


Here is some context: in recent years, a debate about corporate purpose has raged. Is the purpose of a (business) corporation simply to maximize the profits that can be distributed back to the stockholders? Or should managers balance the interests of shareholders against those of other stakeholders, such as workers? The latter normative view, the stakeholder theory, was recently endorsed by the Business Roundtable, a group of US CEOs.


In a recent blog post, Alberto Mingardi, a libertarian academic in Italy, recently critiqued stakeholder theory on the grounds that it is (somehow) incompatible with limited government and free-markets. I know that Mingardi, who is an Assistant Professor in History of Political Thought at IULM University of Milan, is a smart guy. However, I would encourage him to rethink his assumption that stakeholder theory is incompatible with his political commitments. In fact, if you want to avoid a world in which the state subjects private firms to mass of bureaucratic regulations, you should probably want managers to absorb the norm that they should not maximize shareholders’ profits whenever it is legal to do so. If policymakers believe that managers will exploit every last opportunity to maximize profits for shareholders whenever doing so isn’t illegal, they are more likely to impose lots of regulations on companies than if they hear managers say that they will take the interests of non-shareholder stakeholders into account.

Mingardi wrote:

As [are] most libertarians, I’m not a fan of the word “stakeholder”. To my eyes, it seems to be a shortcut for a corporatist economy. By contrasting shareholders and stakeholders, some authors seem to point in the direction of a muddled kind of capitalism, one in which businesses – rather than caring for the interests of those who actually own them – are supposed to picture themselves as doing the interests of all people somewhat concerned with their activities. Sure enough, entrepreneurs need not a “social conscience” to care about their workers and their suppliers. Their self-interest would suffice: happy employees are likely to be more productive, and if you don’t treat your suppliers decently you do so at your own risk. But stakeholder capitalism, as it is somehow called, aims at being a capitalism in which profits are deemed to be a second-order concern. There are some activities in life that cannot be managed under the profit motive (I think of a large chunk of the nonprofit sector, that does indeed do valuable things), but in the case of businesses, the refusal of taking profits into consideration could easily become a cover-up for inefficiency – if not for a conflict of interest altogether.



In associating shareholder primacy with the free market and stakeholder theory with the opposite of the free market, Dr Mingardi appears to be overlooking the management research has demonstrated that entrepreneurs establish firms for a range of reasons. In some cases, perhaps a minority, the motivation is purely to maximize the ROI of the investors who put capital in the enterprise. In other cases, the founders of firms are trying to achieve a bunch of different objectives, such as the maximization of the owners’ socio-emotional wealth (SEW) or some other non-economic objective.  For many firms, especially family firms, the interests of the shareholder are not paramount. Consider the cases of Hobby Lobby, a Christian-run firm in the US that was savaged in the media because of company policies that many secular people regard as unacceptable.  Hobby Lobby clearly isn’t a firm that is managed so as to maximize shareholder value. I can think of other organizations that fall into our category of “for-profit company” and which do things that cost a lot of money but which reflect the values of the founders. The Body Shop, which is loved by some of my New Age, animal rights friends, is such a firm.


I would suggest that in a free country, the state should, in general, be neutral on issues of corporate purpose just as it is neutral on issues of religion or whether citizens keep kosher, eat vegan, or adopt some other type of values-based diet. We should accept that in large population of firms, some will indeed be managed according the principle of shareholder primacy but that there were will also be firms with a range of other goals as well. Some of these firms will behave in ways that appear to straddle the category between for-profit firm and charity and that’s ok too, since the Western distinction between firms and charitable foundations isn’t a naturally occurring one that we need to accept uncritically.

As long as firms aren’t defrauding investors or otherwise breaking the law, the government ought to be cool with firms having different views of corporate purpose. Let a thousand flowers bloom in terms of corporate purpose. Forcing organizations to select just one purpose (e.g. maximizing profits for the shareholders OR a charitable goal) from a very limited menu seems illiberal to me. I suppose the decision of policymakers in some US states to give their blessing to a new organizational firm, the B Corporation, is a move in the right direction, but we are still in a world in which the state forces organizations to make choices from a limited menu that is written by the state, for the most part. That’s why definitions of corporate purpose vary so dramatically from one jurisdiction to the next, even within Europe.

In recent decades, the prevailing conception of corporate purpose, at least in the United States and some other English-speaking jurisdictions, has been the shareholder wealth maximization norm. There is a lot of evidence that managers see the maximizing shareholder value as the essential purpose of the company,  there are baneful consequences for workers, local community, and R&D spending. Even Jack Welch has called shareholder primacy the dumbest idea in the world. He’s no liberal.

It is not widely appreciated that the organs of the state, particularly, the SEC and the courts, have played a major role in promoting the idea that a manager’s core duty is to maximize the wealth of the stockholders.  This doctrine didn’t become dominant in the English-speaking countries naturally.  As Professor Stephen Bainbridge observes “The shareholder wealth maximization norm, pursuant to which directors are obliged to make a decision based solely on the basis of longterm shareholder gain. This principle is well-established in U.S. corporate law”

If you think that the government should be neutral on the question of corporate purpose, the fact the state in the US and other English-speaking countries are so biased towards the shareholder primacy norm is a problem.  Another problem I see with the existing law governing organizations is that they force organizations to make a hard choice between being in the non-profit category by incorporating as a non-profit or incorporating a profit-seeking company. The SEC, the IRS, etc they all operate on a black-and-white system of categories that doesn’t really accommodate intermediate forms with mixed corporate purposes. You are either in one category or another. I suppose the creation, with the approval of the state, of the Benefit Corporation is an improvement as it puts another choice on the menu of organizational forms, but ultimately the government is forcing organizations into categories. I think the consequences of that forcing, which now include shareholder primacy, can be pernicious.

For several generations, the US government has been telling US firms to maximize shareholder value.  One of the unintended consequences the creation of the SEC in the 1930s is that the Commission later began telling managers to put the interests of shareholders first.  Elizabeth Warren has recently proposed using the SEC to force US executives to abandon shareholder primacy. I would point out that the SEC played a crucial role in the revival of that doctrine in the 1970s and 1980s.

I’m reminded of the Simpsons episode in which alcohol is proclaimed to be “the cause of, and solution to, all of life’s problems.” My sense is that when future historians of corporate governance look back at the SEC’s role in changing how Americans conceptualize corporate purpose, they might come to similar conclusions.




Why Business and Economic Historians Should Present at the Academy of Management’s Management History Division

3 01 2020

Many of the people who follow my semi-regular blog self-identify as business historians or economic historians. A significant proportion of these individuals work in management schools. I would strongly encourage people who have traditionally presented at business history conferences to consider presenting at the 2020 Academy of Management conference, which will be held in the beautiful city of Vancouver in August. The Academy of Management has long had a Management History Division and there is currently a concerted effort underway to grow the Division and to make it the venue for the presentation of historical research of the highest calibre. This blog post is, therefore, a call for business historians, economic historians, historical EGOSians, and the other historical researchers to submit their papers to the MH division. You may send us your submissions through the AOM Submission Center until it closes on Tuesday, 14 January 2020 at 5:00 PM ET (NY Time). The Submission Center opens in early December 2019.

The Academy of Management procedure and terminology may seem a bit unusual to neophyte AoM attendees. If you have questions about such as matters as the difference between a PDW and a Symposium, feel free to contact either me or any other member of the MH executive. The key thing to know right now is that if you want to present a paper the AoM, you need to submit a fairly good, or at least complete draft of it, by the deadline for 14 August. Papers go through a peer review process before they are accepted or rejected.


Attending the Academy of Management is expensive, especially since it the arrival of 10,000 plus management academics in a city tends to push up the price of hotel rooms. However, I think that attending this conference would be worth it for many readers of this blog for the following reasons:


  • The AoM is a great opportunity of networking and professional advancement.
  • Attending the AoM gives historical researches a chance to learn from the editors of high-impact factor journals about their expectations.
  • The MH is methodologically diverse and includes papers that use a range of quantitative and qualitative methods. It is a broad church in terms of methodology.
  • The AoM is also characterised by a high degree of viewpoint diversity, which is the hallmark of a top-notch social scientific conference. You have Austrian economists who are hardcore libertarians. You have Marxists. You have everything in between. You have papers that are co-authored by teams of academics that are ideologically diverse. That diversity is a good sign.
  • The MH division and the AoM is very diverse in terms of nationality and about 40% of presenters are non-North American.