Donation of C$2m to the the Canadian Business History Association

21 07 2021
AS: I’m pleased to announce a major investment in the field of business history.

WILSON FOUNDATION COMMITS $2 MILLION TO THE CBHA/ACHA   The study of business history in Canada has received a $2 million endowment from The Wilson Foundation of Oakville, Ontario. The endowment will support the Canadian Business History Association’s (CBHA/ACHA) mandate of encouraging the study of the country’s commercial history. The first $1 million of the endowment is immediate while the second $1 million will be triggered by matching donations.

“We are delighted that the Wilson Foundation has chosen to support the study of business history in Canada in such a generous manner.  Now, more than ever, studying business’s past can better inform the leaders and decision-makers of today and tomorrow, something that the Wilson Foundation recognizes, and we thank them for their support” said the CBHA’s Board Chair, Professor Dimitry Anastakis of the University of Toronto and the Rotman School of Management.
The Wilson Foundation’s endowment will allow the CBHA/ACHA to sustain its operations, expand its outreach, and launch new projects aimed at connecting Canadian students, scholars, archivists, business leaders, and the public with their business history, an essential element to how we understand Canada in an increasingly globalized world.  Projects supported by the Endowment will include financial support for students, expanded online and in-person events such as the CBHA/ACHA Talks and conferences, the digitization of important historical documents, and the creation of an online biographical inventory of Canadian business leaders. 

Created in 2015, the CBHA/ACHA brings together academics from a wide range of disciplines, archivists, and business leaders in the common pursuit of advancing the study and understanding of business history in Canada and operates through the Rotman School of Management at the University of Toronto. 

British Universities and Transatlantic Slavery: the University of Glasgow Case

13 07 2021

Stephen Mullen of the University of Glasgow has published an important new peer-reviewed paper on that university’s historical ties to the slave trade.

Here is the abstract:

On 16 September 2018, the University of Glasgow released the report ‘Slavery, Abolition and the University of Glasgow’. This acknowledged that slave-owners, merchants and planters with connections to New World slavery – and their descendants – donated capital between 1697 and 1937 that influenced the development of the institution. In producing this report, the institution became the first British university to declare historical income derived from transatlantic slavery. In response, a nine-point programme reported as reparative justice was launched, the first British university to launch a project on such a scale. This article traces both the methodological approach undertaken in the study and the historical evidence related to the University of Glasgow. This provides insights into the process of collecting and analysing the evidence on which the report and strategy was based. Current understandings about British universities and transatlantic slavery are shaped by the institutional relationship with owners of enslaved people. This article underlines the importance of merchant capital – in this case, mainly via West India commerce – to the development of one institution.

I really liked how this paper was very transparent about authorial motivation, data, and analytical methods. I read the paper with great interest because I’m currently doing research on how older profit-seeking companies that profited from trans-Atlantic slavery, such as the Society of Lloyd’s,  are now responding to accusations that their current wealth was built on a foundation of slavery.  Stephen Mullen’s excellent paper raises almost as a many questions as answers, so let me suggest that researchers now switch their focus from what slave-owners did for the University of Glasgow to what, if anything, the University of Glasgow did for the institution of slavery in return.

We know that universities in the antebellum American south produced sophisticated intellectual defences of slavery that had the aura of academic credibility because they were written by professors. That these professors engaged in this type of legitimation work is not terribly surprising, as in many societies, one of the functions of universities is try to justify the existing social order and to reproduced inequality. Now in the period in question, Glasgow’s Adam Smith wrote against slavery (some of his empirical claims about the motives of slave-owners were just plain wrong, but his ideas clearly exerted a considerable influenced over abolitionists). I’m wondering, however, about other Glasgow academics who wrote about slavery and who worked at this university at the time it was bringing in donations from slave-owners. What role, if any, did the people on the University of Glasgow payroll play in justifying slavery at time when that institution’s legitimacy was being questions?  Historical research on that issue can, in my view, shed light on the more general and present-day issue of the role of universities is legitimating unjust institutions. I would note here the Adam Smith’s Wealth of Nations was written and published after he left academic employment, although Smith did critique slavery in an undergraduate lecture he delivered in 1763.

Mullen’s finding that the University of Glasgow accepted donations from slavery isn’t terribly surprising. After all, we all know that universities have, for centuries, taken money from pretty much anyone who has money to give and wishes to buy some social status and perhaps launder their reputation: Oxford colleges took money from feudal lords and bloodthirsty monarchs and in return helped to legitimate existing social hierarchies, most notoriously during the English Civil War, Oxford gave both practical and moral support to the Royalist side. Universities today take money from Middle Eastern arms merchants, Russian oligarchs with ties to Putin,  and Chinese firms with close ties to the PLA. They will take money from anyone provided law and public opinion will tolerate it. (The financial ties between Oxford and the Chinese government have recently been criticized by both left-wing and conservative newspapers in the UK,  which makes me thing that Oxford may need to return  to the money it recently got from Tencent). The willingness of penny-grubbing academics take money from bad dudes isn’t terribly surprising to anyone who knows academics. The focus of historical researchers, I think, should be more on understanding how universities help to legitimate oppression and inequality in the present.    

Some Reflection on Recent Events in Canada

5 07 2021

Part of my research in about the uses of the past, about how companies and other organizations use their histories. A sub-set of that strand of my research is about how organizations respond they have been accused of having committed truly horrible human rights abuses in the past. I also published a paper in Journal of Business Ethics on how executives of the Hudson’s Bay Company, which was founded in the seventeenth century to trade with Indigenous people in present-day Canada, has responded in recent decades to the accusations from Indigenous activists that the original source of the firm’s wealth was the systematic exploitation of Indigenous people. I’ve also published on the political economy of Confederation, the process by which the Canadian state was formed in the 1860s. The cover of a book on the subject that I published is above. I’ve also acted as an expert witness in a Canadian constitutional court case that turned on the interpretation of the Canadian constitution of 1867. My published work on this subject has been characterised, I think, by nuance and a balanced treatment of historical figures as well as the application of a theoretical lens that is critical of the empire-building, illiberal, dirigiste, mercantilist and social-engineering ideas of many of the creators of the Canadian federal state.

I’ve therefore followed with interest the recent controversies in Canada over the legacies of the residential schools for Indigenous children that the Canadian federal government created after the 1860s. In recent months, the graves of children who died of diseases while attending these schools have been identified (the fact that several thousand of these children died while at these schools was previously known, part of the agreed statement of facts produced by the Truth and Reconciliation Commission, and discussed in books published by Canadian university presses). The discovery of the graves led to protests, arson attacks against Roman Catholic churches, the toppling  of statues of Queen Victoria and Queen Elizabeth II, and, in many communities, the cancellation of Canada Day, a national holiday on 1 July that marks Confederation. I’ve been asked what I think about this issue so I am sharing some very preliminary observations here. I’ve organised my thoughts under four headings. 

Departure from What the Standard Model Would Predict

There is a large body of social-scientific research on demands for historical apologies by the governments of liberal democracies. Essentially, this literature contains a large number of case studies of incidents in which activists in a nation accuse the government of having been involved in some horrible human rights abuse in the past. The accusation could relate to, say, the French government’s actions in Algeria before independence, what Britain did in Kenya during the Mau Mau uprising, or the historical mistreatment of African-Americans in the US context. Now reading a bunch of studies from different liberal-democratic countries leads one to discern the pattern that I call the Standard Model.

 The Standard Model goes like this: a group, usually on the left of the political spectrum, makes a public claim that the national government was involved in a horrible human rights abuse in the past. They demand an apology, perhaps with money attached, and symbolic action such as the renaming of streets, the removal of statues, and the cancellation of a national holiday (Bastille Day, Australia Day, whatever). Now the Standard Model predicts that any given individual’s response to these accusation will be largely determined with great accuracy simply by determining where the person is on the country’s left-right political spectrum. If they are a supporter of the main centre-right political party (say the Conservatives in Canada or the UK or the Republicans in the US or France), they will typically say “Well, what happened then wasn’t very good and was clearly wrong. However, we shouldn’t dwell on it too much. The minority group that is complaining about this historical injustice should focus more on making money in the present day”.

In other words, the centre-right person tends to minimize or downplay the present-day significance of the historical injustice. In contrast, supporters of left-wing political parties tend to have the opposite view and they tend to maximize the significance of the historical misdeed. As you go to the extreme left of the spectrum, you get people expressing this sort of sentiment: “What our country did is horrible. We were basically as bad, if not worse, than the Nazis and the minority group that was victimized back then now needs lots of help from us. Our country and other Western countries are in no position to lecture [insert name of authoritarian regime here] about human rights. We should discontinue our national holiday and tear down the statues etc linked to the bad guys responsible for the historical human rights abuses.” We see this pattern here in Britain, in the US, in France, and so forth.

Based on the polling data and academic studies from various countries I’ve seen, the Standard Model usually has pretty strong predictive accuracy (0.8 or 0.7 or something in that range). However, when I look at the terms of debate in Canada right now about residential schools, I get the impression that the relationship between one’s position on the left-right political spectrum and position on historic crimes is broken, or at least, weaker than it is in the other cases covered by the Standard Model. First, which of Canada’s two official languages one speaks seems to predict how you view the historical issue of residential schools: I’ve sampled the debate in  the French-speaking province of Quebec on this issue people there tend to frame this story less about racial issues and more within a narrative about the Roman Catholic church’s history of human rights abuses around the world. Second, in the English-speaking parts of Canada, one’s prior attitude towards the Roman Catholic church, which is still largely independent of one’s position on the left-right political spectrum, appears to be driving attitudes towards this issue. People who never liked the Catholic church, either because they were left-wing feminists or hardcore Protestant evangelicals or  centrist followers of the New Atheism of Richard Dawkins, have worked the newly revealed evidence of abuse in Catholic schools into their existing narratives. Such people maximize the historical injustice now being discussed, even if they are politically conservative. Needless to see, we’ve seen a festival of confirmation bias on all sides that is going to be depressing to any social scientist.  The situation is very awkward for the governing Liberal Party, a traditionally centrist party that has recently lurched to the left, because historically there was a statistically significant linkage between being at least nominally Roman Catholic and voting for that party.

McGill-Queen’s University Press

In 2008, the Canadian government offered an apology and compensation to the Indigenous individuals who suffered because of the residential school system. The government also funded Truth and Reconciliation Commission to  undertake extensive research into the residential schools and to produce an agreed statement of facts that could be basis of discussion about how to go forward. The many volumes of the TRC’s report were published by McGill-Queen’s University Press (full disclosure I’ve published with that press and happen to be an alumnus of one of the universities that owns it). Volume 4 of the report deals with the issue of how many children died while attending the residential schools, what we know about their remains, and what we know about what caused their deaths. This scholarly work, which was published in 2015, would allow interested readers to answer the following questions that have recently been the subject of intense and, sometimes ill-informed speculation, in Canada:

  1. How many children died while attending residential schools?
  2. How did this mortality rate change over time?
  3. How did the mortality vary between the residential schools run by the Catholic Church versus the Protestant-run schools?
  4. How did the mortality rate for these groups of children differ from that of otherwise similar children who lived with their parents and were educated at day schools or did not attend any school? What baseline child mortality rate should we use in determining whether the residential school system increased the mortality rate for Indigenous children?

All of my priors make we think that that a rigorous analysis would reveal that the residential school policy would have increased mortality relative to the counterfactual of allowing parents to educate their children as they saw fit. My priors and my knowledge of the enormous differences between nineteenth-century Protestantism and nineteenth-century Roman Catholicism also make me predict that the effect would be more pronounced for Catholic-run schools than Protestant-run ones. However, until I can see the work of the real experts, we can’t say for certain, let alone talk about effect size. One of the things the recent pandemic has taught all of us is to show greater humility in making causal claims linking particular government policies with changes in the mortality rate. That’s doubly true when we are talking about historical data with big gaps.

Anyway, all of this is to say that the research on the impact of the residential school project on Indigenous child mortality should, I think, be freely available to journalists and all others who want to base their opinions on the best available data and analysis. Unfortunately, both the relevant research and contact details of the academics who did it remain behind paywall which means that is hard for journalists in Canada’s woefully funded newsrooms to access. Volume 4 “Canada’s Residential Schools: Missing Children and Unmarked Burials” which was published by MQUP in December 2015 can be ordered here but is very expensive.  I would strongly encourage the Press to immediately release at least Volume 4 to everyone by putting its contents, including the description of the statistical methodology used online in open-access format. They could do so with a few key strokes!!!!

Recent Events Demonstrate the Need for Research Capacity Building in Canadian Universities

Canadian universities have become weak in the types of quantitative historical research methods that are necessary to investigate issues of this type.  They certainly have less capacity in this regard than do universities in this country. Quant historians such as George Emery, a historian whose research rigour was honoured with an award from a group of leading American economist, have retired and were replaced by scholars with different research capabilites. My impression that there will, after this month, be nobody in a Canadian university who does anthropometric history or the other types of history relevant to answering the questions identified above. Vincent Geloso, who works at a university in Ontario that used to be very strong in economic and demographic history, will soon be leaving for George Mason University’s famous econ department. In response to the recent debates about residential schools, Geloso has recently published some interesting insights into the political economy of settler-Indigenous relations in Canada that draws on his earlier peer-reviewed research in Public Choice. The core ideas he presents here, which involve applying concepts from public choice theory and constitutional political economy, are similar to those that I used in a paper that I wrote about 15 years ago but which never saw the light of day because of hostile peer reviewers. I’m glad that Vincent re-discovered these ideas independently and got them published as they can inform debate on how to go forward. I would add here that some of the research of Prof. Terry Anderson into Indigenous economies can also be of use in thinking about these issues.

The End of Canadian Originalism?

Canada Day holiday on 1 July marks the coming into force of the Canadian constitution of 1867. The holiday and the associated iconography implies that the politicians who created this constitution were heroes, or at least great statesmen whose memory should be honoured. Respecting the drafters of this constitution is thus congruent with the doctrine of constitutional interpretation known as originalism, which holds that in interpreting the meaning of the constitution’s text, judges should act effectively as agents on behalf of those who originally wrote it. Many countries with written constitutions have originalists (see here). There are smart Canadian lawyers and legal academics who are originalists (see here). They include Benjamin Oliphant and Leonid Sirota. Given that statutes of that 1867 constitution’s creators are now being dismantled, I suspect that originalism will die as a doctrine in Canada. When the creators of a document are regarded as evil, rather than imperfect, individuals it is almost impossible for people to continue to be seen as supporting a theory of constitutional interpretation that says that we must understand and defer to how those individuals intended the document to be understood. It fact, I suspect that it would be career harming for an academic working in a Canadian university to continue to be a Canadian originalist in the current context. The demise of Canadian originalism would probably be unfortunate because there are strong theoretical reasons for supporting at least some variant of originalism as William Baude argued in a recent conversation with Julia Galef.

Modern State-Building and the Rise of the Corporation by Taisu Zhang

5 07 2021

Andrew Smith: I’m sharing the details of interesting-sounding online seminar that sadly is in the middle of the night for us here in Europe.

Modern State-Building and the Rise of the Corporation by Taisu Zhang
Live on Zoom on Thurs, July 8, 2021
09:00 Hong Kong/Beijing/Singapore | 10:00 Tokyo | 11:00 Sydney
Wed, July 7 – 18:00 Los Angeles | 21:00 New York
Convert this into your local time

Register here.

The business corporation and the modern state both emerged very late in human history, but quickly became sociopolitically and economically prominent once they did emerge. Taisu Zhang and his co-author from Yale Law School focus on the genesis of the corporation to explore the links between these two institutions. Unlike preexisting theories that view the relationship between the two as a predominantly negative one—that the state’s primary role in the rise of the corporation was to credibly constrain its own use of coercive power—they argue that the state also positively contributed to the corporation’s emergence. In fact, the modern state’s positive contributions were so significant that they were likely indispensable: it is no coincidence that the business corporation did not become socioeconomically prominent until after the ascendancy of modern state building.

Taisu Zhang and his co-author first argue that there will be significant demand for the modern corporate form only after complex, long-duration business collaboration between strangers becomes economically prominent. They then argue that, within the context of trans-communal business relationships, the business corporation can only emerge with robust institutional support from a sufficiently modern state, in the form of legal enforcement, dispute resolution, and information sharing. In this Quantitative History Webinar, Taisu Zhang explores the argument that modern state building is necessary to the success of the modern corporation because the law that enables corporations requires uniform enforcement.

Taisu’s co-author: John Morley (Yale Law School)

Looking forward,
Quantitative History Webinar Series

Zhiwu Chen & Chicheng Ma

In Praise of the ABS Journal Rankings

28 06 2021

In Partial Praise of the ABS Journal Rankings

I recently attended an online conferences of UK management academics where there was a passionate discussion of the Academic Journal Guide, the rankings of management journals produced by the UK’s Chartered Association of Business Schools. This list has always been controversial, particularly whenever a journal is downgraded or upgraded. Similar passions are ignited by the equivalent journal rankings used in other countries, such as Australia’s Business School Deans List or the CNRS list in France. The stakes in the battles over which lists to use and if so how to use them are high because hiring and promotion in many UK business schools is largely a function of one’s ability to publish in whichever journals are highly ranked. The uses of journal rankings as  heuristic or quick proxy for research quality is almost necessary evil in the UK context because the job candidate process is a very short and low cost compared the expensive multi-day campus visits by which job candidates are screened in North American universities.

In recent years, some UK business schools have moved away from using journal ranking lists such as the AJG in the course of making decisions about hiring and promotion. The business school at a leading Welsh university, for instance, has gone so far as to prohibit all references to this or any other journal rankings, or even journal impact factors, in makings decisions about hiring and promotion. The British Academy of Management recently declared that it wants an end to the use of journal rankings. Some other business schools are moving in that direction, although I have been informed that there are now bitter, internecine struggles between different departments within at least on English business school over this issue. The move away from the use of journal rankings is driven, in part, by a growing belief on the part of some academics and some external knowledge stakeholders that the research published in some highly-ranked journals is low in quality. A few years ago, a retired management academic published a scathing article on this subject called “The Triumph of Nonsense in Management Studies”.  This Emperor-Has-No-Clothes article was read and discussed by some policymakers and doubtless has undermined the credibility of a few of the many journals reported in the list.

Another factor that is pushing UK business schools away from using journal lists is government policy, both in England and in the nations with devolved administrations.  The UK’s current Science Minister has heard about the use of journal ranking lists in various academic disciplines and has said that this practice does not promote the interests of taxpayers, British companies, students, and so forth. Speaking to University-Business UK in October 2020, Amanda Solloway spoke of the problems that come from the use of journal ranking lists:  “Researchers tell me they feel pressure to publish in particular venues in order to gain respect to their peers, which wrongly suggests that where you publish something is more important than what you say.” Solloway has ordered a “root-and-branch” review of how academic research in the UK is funded and measured so that it produces more benefits for UK firms and society as a whole. The international task force she has appointed is currently reviewing how the UK’s research funding and measurement system works. It is expected that it will recommend that it will recommend that it become much more like Research for Australia, the Australian government’s system for measuring and funding research, which has attempted to change the focus of academics away from just publishing papers for other academics and towards greater engagement with private industry. The replacement of the Research Excellence Framework with a sort of Research for Britain system would doubtless encourage more management schools to stop using journal lists, especially since some of the highly ranked journals publish research that would be, we would have to say, of zero potential relevance to any manager ever.

While we await word of what the UK’s new research funding system looks like, the UK government has introduced a policy that is clearly incompatible with the use of journal ranking lists: in 2019, UKRI, which under the control of the Minister of Science, ordered all UK universities to both become signatories of the San Francisco Declaration on Research Assessment (DORA) and to take steps to ensure that all units within universities (departments, faculties, etc) were  compliant with the basic principle of DORA, which is that in evaluating the quality of a published research output (say a paper), judgements must be informed solely by a reading of the output rather than any knowledge of who published it.   My understanding is that there are now countless fights going on a various levels within universities across the country about how seriously departments and hiring committees should take the DORA principles to which all universities now pay lip service. I suspect that the model of academic behaviour introduced in Chapter 2 of Cracks in the Ivory Tower by Jason Brennan and Phillip Magness does a good job of explaining the patterns we can see in which academics support DORA implementation and which academics are against it.

Personally, I think that journal guides are likely to remain an important factor that influences hiring and promotion decisions in UK universities and UK business schools in particular. I generally use the theory of regulatory capture (Stigler, 1971) to understand how the UK’s REF system, which was originally developed with the laudable goal of increasing the taxpayer’s return on funding in academic research, works in practice. Perhaps I watched too many episodes of Yes Minister when I was growing up, but I suspect that the journal ranking lists will outlive the tenure in office of the UK’s current Science Minister. Moreover, I’m not 100% certain that getting rid of the use of journal rankings would make hiring and promotion decisions in a world in which the people making the hiring decisions are not forced to internalise the costs to the organisation of hiring people who aren’t very good at research. Right now, the busy people on hiring committees use journal rankings as a proxy for research quality. I think that if their use was banned, they would use some of other proxy for quickly judging research quality. The proxy measures they would likely use would be the prestige of applicants’ undergraduate universities, the prestige of their PhD institution, and, since we are in the UK, social class accent. Pretty soon, business schools would come to be staffed by Oxbridge graduates with Received Pronunciation accents. Right now, they are staffed more by people who are proficient at churning out papers that will be read by a handful of other academics. I’m not certain that change would be a net improvement for society.

If we assume that business schools will continue to use journal rankings lists in hiring and promotion decisions, then which list to use becomes an important question. I think that the ABS list should be used because it is the least problematic of the various lists that are available. Unlike the FT50 list of journals, which is produced by a few newspaper staffers through a very non-transparent process, the procedure by which this list is created is reasonably transparent. The names of the individuals who prepare each iteration of the ABS list are published, which is a very important accountability mechanism totally missing from the FT list. The subject experts whose (admittedly subjective) judgement calls determine the rankings of journals are diverse in nationality and their country of residence. Four work at at universities in Canada and two are in universities in the United States. My sense is that the 2021 version of the list displays much less home country bias than does the equivalent list used in Australia. (I’ve blogged in the past about the home country bias displayed in the Australian list).

 Moreover, at a time when the need for political viewpoint diversity in the humanities and the social sciences is increasingly recognized by academics of all ideological stripes, the Chartered Association of Business School should be commended for ensuring that the team that produces the AJG rankings is ideologically diverse and is composed just of your typical Guardian-reading UK academic. I see that the committee included Professor Eric Chang of Shanghai Jiao Tong University in mainland China and Professor Donald Siegel of Arizona State University. The latter is very conservative Republican who has been extremely critical of the lockdown measures most countries have used to control the spread of the virus, while Chang sits on Chinese government bodies (!!!).   I’m certainly no fan of either President Trump or the Chinese government but my confidence in this list is boosted by the fact that team that produced it so ideologically diverse and isn’t just composed of centre-left liberals who work in British and Canadian universities. We know that ideological diversity reduces the dangers of groupthink.

Baillie Gifford, The Thinking Man’s Investment Management Firm

23 06 2021

Baillie Gifford is a partner-owned, partner-managed investment management firm based in Edinburgh. It has a great track record of making smart long-term investments, having invested early in Amazon and Tencent. It also has a long-term orientation that means that knowledge of economic and technological history is relevant to its decision-making. One of my current research projects has given me tremendous respect for how this firm and others in Edinburgh uses history in making long-term investment decisions. Here is a key passage from the profile of Baillie Gifford in today’s FT.

“Actual investors think in decades. Not quarters.” Before the pandemic, this sign hung over the door to Baillie Gifford’s Edinburgh headquarters, where the atmosphere is closer to a library than an adrenalin-charged trading floor. Investors are more likely to be reading an academic paper or browsing a history book than screaming orders down the telephone.”

I’m looking forward to getting back to Edinburgh and meeting some of these individuals. I’m also looking forward to visiting the Library of Mistakes, which is located in the heart of Edinburgh’s financial district and is designed to promote knowledge of financial history.

New Paper: Historical Narratives and the Defense of Stigmatized Industries

15 06 2021

I’m proud to announce the publication of our paper in Journal of Management Inquiry that explains how entrepreneurs in stigmatized industries can try to fight stigmatization.

Abstract: This study examines how managers and entrepreneurs in stigmatized industries use historical narratives to combat stigma. We examine two industries, the private military contractors (PMC) industry in the United States and the cannabis industry in Canada. In recent decades, the representatives of these industries have worked to reduce the level of stigmatization faced by the industries. We show that historical narratives were used rhetorically by the representatives of both industries. In both cases, these historical narratives were targeted at just one subset of the population. Our research contributes to debates about stigmatization in ideologically diverse societies, an important issue that have been overlooked by the existing literature on stigmatized industries, which tends to assume the existence of homogeneous audiences when researching the efforts of industry representatives to destigmatize their industries.

You can read the full paper here.

Why Individual Organizations Not The State Should Cover The Costs of Historic Crimes

10 06 2021

Vancouver Art Gallery community memorial to the 215 buried children discovered at Kamloops Residential School. The main memorial consists of 215 pairs of children’s shoes, along with various accessories including teddy bears, books, images, and flower Image Source.

In recent weeks, a sensational discovery on the grounds of a Canadian residential school has gathered international attention and has raised important questions about where the responsibility should be placed. From the late nineteenth century onwards, the Canadian government had a policy of requiring all Indigenous children to attend school. In Indigenous communities in which there wasn’t a European-style school, that meant that children were forcibly taken from their families and sent to boarding schools that were designed to Christianize the children and to assimilate them into Euro-Canadian culture. In many cases, these state-subsidized schools were run by churches, often the Roman Catholic Church. The Roman Catholic Church, which still has a privileged constitutional status in parts of Canada, enjoyed tremendous political power in Canada in the period in question due to the nature of the political settlement that produced the modern Canadian constitution in 1867.

 Regardless of whether the residential schools were managed by celibate Catholic clerics or by Protestants who were married family men, the entire system was deplorable. Even when the residential schools were well managed by the standards of the time (e.g., well ventilated, adequate food, no sexual abuse, etc) the residential school policy was a deeply illiberal one that is today universally condemned across the Canadian political spectrum. The residential schools policy can be condemned on multiple grounds. The policy violated a number of important principles, including Indigenous rights, parental autonomy, the departure from the principle that the state should be religiously neutral, etc etc. Moreover, the child mortality rate in these schools appears to have been far higher than the baseline rate that would have prevailed in Indigenous communities at that time. Simply put, by taking children away from their families and putting them in institutions, the policy reduced the proportion of Indigenous children who reached adulthood. Regardless of whether someone today regards the residential school policy through either a left-wing perspective or a politically conservative lens, the policy is indefensible. A number of years ago, the Canadian government formally apologized for the residential school policy in a highly public ceremony and offered compensation to those who were victimized by this policy. In connection with this apology, the Canadian government launched a Truth and Reconciliation Commission modelled on that once led by Desmond Tutu in South Africa. This commission heard testimony from many survivors. In an effort to reconstruct the facts of the case and to establish exactly what happened in the residential schools, the government commissioned extensive historical research, some of which was executed by people with PhDs and by respected historical consulting firms such as the excellent Public History Inc of Ottawa.

Apparently, the historical research undertaken using oral historical and archival research methods missed out of some of the horrors of the residential school programme. A few weeks ago, the First Nations government near Kamloops, British Columbia announced that archaeologists they had hired had discovered a large number of human remains in unmarked graves on the site of a residential schools. It is estimated that over 200 children were buried on the site, which strongly suggests that the managers of the school, who recorded far fewer than 200 child deaths in official documents, knew that the death rate was unacceptable high, even by the standards of the time, and tried to cover it up. The discovery has generated outpourings of grief in Canada from both Indigenous and non-Indigenous Canadians and has renewed discussions of abuses by other church-run organizations, such as the infamous Mount Cashel Orphanage in Newfoundland, and has raised profound questions about the relationship between church and state in that country. Canada’s monarch must, by law, be a Protestant, the Canadian Crown and the Catholic church have had an extremely cosy relationship since at least 1774, when a new constitutional order was granted to Canada.

Overseas, the revelations out of Kamloops have renewed ongoing discussions about some of the equally terribly things the Catholic church did locally at roughly the same time. The residential school in Kamloops was run by the Oblates, who recruited teachers from Irish convents. The Kamloops mass grave story has resulted in many comparisons the infamous Bon Secours home for unwed mothers in Ireland. A few years ago, radar imaging discovered a mass grave of malnourished and maltreated children that the nuns had mistreated because they had been born out of wedlock and were thus morally tainted in their eyes. The remains of almost a thousand children were found buried under a septic tank, which further eroded the legitimacy of the Catholic Church in Ireland. These births and deaths were never registered with the civil authorities in Ireland, which is precisely the same modus operandi used in Kamloops. So the Kamloops revelations isn’t just a story about the residential schools or race relations.  For obvious political reasons, successive Canadian governments have tried to steer the conversation about residential schools away from comparisons between the Catholic, Anglican, United Church, and secular schools or between making comparisons between the residential schools run by the different orders of the Roman Catholic Church. (For roughly 80% of the last half century, Canada’s Prime Ministers have been Roman Catholic). The long-overdue discussion of that issue is now taking place.

Another discussion is whether additional compensation for the victims of the worst residential schools should come from the state (i.e., all taxpayers regardless of their religious commitments) or just from the incorporated organizations that managed the schools in question, or both but in a weighted fashion. This issue is one that should interest anyone in anywhere in the world who is interested in corporate responsibility or business ethics issues. [Full disclosure: I’ve published in Journal of Business Ethics twice. One of those articles was about the Hudson’s Bay Company’s present-day responsibility for its historic relationships with Indigenous peoples].

Pretty basic law and economics theory strongly suggests that, as a general rule, the onus to provide compensation for corporate misdeeds should be placed on the responsible organization rather than diffused widely across all of society. If our goal is to incentivize organizations to behave better in the future, we need to use this moment to make it clear that the burden of compensation must fall on the organization in question. When I drive too fast, I don’t share the costs of the speeding ticket with everyone on my street. If we shifted to a system whereby speeding ticket costs were shifted from individual drivers to street populations, average speeds and the highway death toll would go up. Allowing the   incorporated organization that ran the Kamloops school, which happens to be the Canadian subsidiary of the Missionary Oblates of Mary Immaculate, or indeed any other organization to say “society or the government made me do it” would set a dangerous precedent that would be observed by other non-profit and commercial organizations right now.

Ideally, we would also like to hold the individual natural persons who had decision-making power responsible as well, but since they are almost certainly deceased by this point, responsibility needs to go up one level to the corporation rather than being shared between the corporation and the individuals.  

In thinking about corporate responsibility for criminal actions that took place long ago, some people might be inclined to apply “statute of limitations” thinking and say that after so much time has elapsed, individuals and corporations should no longer be held accountable for misdeeds. When I say “held accountable” I am refer to both legally liability and to the informal norms that govern when we are expected to compensate others for our misdeeds, since both are potentially relevant here. I think that it would be a mistake to apply statute of limitations thinking or “time limits” thinking in this case. While there are good reasons for thinking that the existence of the statute of limitations rule produces positive social outcomes, there are strong justifications for the modification of that rule that says that the statute of limitations doesn’t apply in the case when the misdeed in question was very serious and has long-term implications. In laws of both England and Canada, the statute of limitation applies to small crimes not big crimes. It basically applies to shoplifting, not murder and that two-tier approach is probably the most efficient one with the right social outcomes.

 Similarly, the social norms that require people to compensate others for their misdeeds also distinguish between minor misdeeds, where claims for compensation must be presented immediately, and really serious misdeeds. I recall a case of a restaurant where it was revealed that the child of the owners had engaged in paedophilia on that property many decades earlier. (The individual malefactor was dead by the time of the revelations by the restaurant was still owned by relatives of the founder).  Although the owning family and the restaurant corporation escaped any legal liability for what the family member had done, social sanctioning kicked in and the business soon folded, despite desperate efforts to retain customers by slashing prices. As it was witnessed by so many organizations in the community, the the bankruptcy of that restaurant firm was, probably, a positive development because it reinforced the salutary norm that says that an organization will be punished for serious misdeeds no matter how long ago they took place. I would imagine that this example increased the incentives for family members to police the behaviour of family members. If we assume that managers care about both short-term and long-term reputational costs to firms, we want to make it very clear that the time limits/statute of limitations principle doesn’t not apply to the most serious corporate crimes.     

Bottom line, the organization that managed the school should be viewed by both policymakers and by ordinary people as primarily responsible for what happened in Kamloops. This organization should be subject to legal liability and informal social sanctioning similar to that applied to the aforementioned restaurant.  Perhaps the state could contribute to the costs of providing the additional compensation that is now being requested but only once the resources of the organization have been exhausted. Any other arrangement would be both unfair to Canadian taxpayers and likely to reduce the incentives of corporations to behave ethically. How the government acts now will change the incentive structure for many organizations.  I think that asking the Canadian taxpayers to cover these costs would be particularly unfair to those taxpayers who have abandoned the Catholic faith of their ancestors, whose ancestors arrived in Canada after the mandatory residential school programme ended, or whose ancestors at the time went on the record by challenging the idea that the production of Roman Catholicism is a legitimate public good that the state should be in the business of subsidizing. During the period in which this residential school was in operation there were many people who objected to any sort of state support for the Catholic Church. From the 1850s onwards most Canadian Protestants subscribed to the belief that the state should provide a level playing field for religions and that different denominations should compete on a free market basis, a doctrine called Free Trade in Religion or Voluntaryism. During the middle of the nineteenth century, there were eloquent proponents of this view in the Free Presbyterian Church and other denominations. Had that principle been applied consistently after the creation of the new Canadian constitution in 1867, social outcomes would have been superior, in my view.       

Business History Special Issue on Varieties of Capitalism

26 05 2021

The UK journal Business History recently published a special issue on Varieties of Capitalism. I’ve finally had a chance to take a close look at this really important special issue, which provides some desperately needed historical contextualisation for the Varieties of Capitalism literature. In reading it, I was reminded to two exchanges at conferences. First, I recall a seminar discussion at the BHC in Denver in which we got discussing the Varieties of Capitalism theory with Veronique Pouillard , Richard R. John  and others. We all agreed that the main variants of capitalism discussed by Hall and Soskice and their many followers are much newer than most researchers think. I also recall being at a conference mostly attended by political scientists, sociologists, etc where I astonished other attendees by repeating what Japanese business historians have told me, namely, that in the 1920s Japan was a Liberal Market Economy. That statement blew their minds as it challenged their assumption that national varieties of capitalism are deeply rooted in national political and cultural histories. Personally, I had never been much convinced by the theory that the variant of capitalism in place in a given country had much to do with what had happened many centuries ago as opposed to developments in since the Second Industrial Revolution.

Anyway, congratulations to the team that produced this Special Issue. The editors are Niall G. MacKenzie (Glasgow) ,Andrew Perchard (Newcastle Business School, Northumbria University), Christopher Miller (Glasgow) and Neil Forbes (Coventry). Article contributors were Martin Shanahan and Susanna Fellman, María Fernández-Moya and Núria Puig, and Zoi Pittaki, Pasi Nevalainen and Ville Yliasko, Martin Eriksson, Lena Andersson-Skog and Josefin Sabo, and Beatriz Rodriguez-Satizabal, Julie Bower, and Grietjie Verhoef.

Some Big Unanswered Questions in Business History

3 05 2021

The business historian Peter Scott published the following on social media

“I am interested in what the BH [business history] community considers the most important business/economic history questions that we haven’t yet answered. I am not talking about emerging areas/new perspectives, but important questions for which there are major data or methodological problems to providing answers. Any examples would be much appreciated.”

This is an excellent post, as it deals with empirical questions in BH for which we don’t yet have answers. It seems, to me at least, that following business-historical questions are the ones that most desperately needs answering:

  1. To what extent were decisions by British managers responsible for the slowdown in UK productivity growth relative to Germany and the United States that began in the late 1890s and which is visible in the data produced by Nick Crafts, Stephen Broadberry, etc? The Chandlerian explanation is that British firms were wedded to family capitalism longer than their German and American rivals. Alternative explanations include the hypothesis that the main culprit is educational malpractice:  British business families spent too much money educating their sons in Latin and not enough in chemistry and the other subjects associated with the Second Industrial Revolution. This question involves qualitative business historians using firm-level data in corporate archives to help to answer an empirical answer that our colleagues in the field of economic history cannot answer using their preferred research methods?
  2. To what extent was the achievement by 1950 of leadership positions in most industries by US firms a function of factors other than the favourable geographical position of the United States, which insulated American firms from the most devastating effects of the two world wars? In his rejoinder to the claims of Chandler, Les Hannah argued that the real reason US firms overtook British firms in technological prowess had nothing to do with the trends perceived by Chandler and everything to do with the fact the US, unlike the UK, wasn’t bombed and otherwise devastated during the world wars.
  3. How did decisions taken within British firms cause and respond to the putative Engels’s Pause of the nineteenth century? The Engels’s Pause was a period of about a generation in which working-class living standards stagnated even though GDP per capita and TFP continued to increase. There is intense interest today in this Pause because it appears to be similar to the experience of the United States since about 1980.
  4. Which firms took the lead in developing the global factories associated with the Global Value Chain Revolution of the 1980s and 1990s? Answering this question would involve using largely qualitative methods and firm-level data to deepen our understanding of the unbundling pattern that the economist Richard Baldwin identifies as the Global Value Chain Revolution?
  5. To what extent did managerial decisions contribute to the post-1973 growth slowdown in the United States? Explaining the growth slowdown is literally a trillion dollar question and any business historian who can make a credible contribution to the debate about what caused it and what can be done to solve it would, in my view, be well rewarded in professional terms.

Please note that I am aware that these questions have a very narrow North Atlantic economies comparative focus. I’m certain that business historians who formulated research questions about the so-called Great Divergence would also be doing very important work and would be justly rewarded by the academic labour market. Similarly, I’m aware that these questions all relate to the last 150 or so years and that research questions on older topics, such as the long-term roots of the British Industrial Revolution or the role of the Scientific Revolution in the Great Divergence would also be important.