History matters

Three months ago I took up a post as a research assistant in a business school. Nothing unusual—despite the fact of my uncommon academic background in this field of research. I am a historian who specialised in medieval times by writing my thesis about sociocultural dimensions of eating in and out in late medieval towns. As my new job was repeatedly subject to discussions among friends with academic or non-academic background, I carry out in this blog how a historian could contribute to the business research.

First of all, business is all but a main subject of today's historiography. The already ten year old lamentation of the German business historian Hartmut Berghoff who stated a de-economisation of the recent historiography was met with almost no responses. As an illustration you can look at the recent list of the 24 (!) introductory seminars at the history department of my home university: Neither attracts the freshmen with a catchphrase which is in any relation to "economy". Topics like the history of human bodies appear to be more in vogue—is it surprising that nobody apart of us historians is knowing what we are actually doing?

Instead of regretting the loss of any influence of a historian's voice on public debates, I demand that historiography should inquire the past with questions relevant to today's problems. From my point of view, I am convinced that no topic has such a demand of reflections as e.g. the apparently irresistible marketization of all spheres of our lives. But what could a historian contribute to such a discussion?

Ironically, straight the specific culture-based perspective which can be trained by studying such topics like the history of the transformation of the perception of human bodies. As long as the mainstream economics are regarding the economy as a separated "realm" in which rules and dynamics are considered like physical principles that tries to make our actions ex ante predictable like the falling of an apple from a tree due to the force of gravity; that long voices other than economists' are needed on the topic of economy.

In contrast to a purely economic approach, a historian's perspective embeds the economy in its sociocultural environment. Institutions as e.g. markets can be deciphered as social constructions and are persistently subject to change; their rules are characterised by mostly unrecognized norms and conventions. Regarding the behaviour of human beings on markets, you can go so far that a postulated rationality of human behaviour itself is a socially constructed concept which was invented by scholars during the times of Enlightenment.

That even mainstream economists turn away from the axiom of rational behaviour by reason of its limited empirical explanatory power is no surprise from a culturalistic point of view: The rational mode of thinking is only one empowering concept among others which all influence the behaviour of business men.

In this respect, however, I understand the work of scholars as contributors to the design of the concepts and institutions of our lives. The question in the middle for business researcher has to be: What is a “good” firm? As a historian I have not only some knowledge about the path dependencies of all conditions but also the consciousness about its alterability. I am happy to help working on it.

The "Yes" to the fat cat initiative and the destruction of the social contract in Switzerland

 

Switzerland was for once progressive: it said yes to the so called fat cat initiative (“Abzocker-Initiative”) which gives shareholders more binding say over company executive compensation. The day after the vote media around the world reported about the decision in the tiny country. This shows that the verdict of Swiss voters hit the nerve of an issue of global interest.

Before the ballot economic-liberal commentators of the country described the fat cat initiative as a danger for the Swiss social contract between citizens and elite which consists of a highly liberal economic regulation. They acknowledged that the dismantling of the contract had begun when the economic elite started to pay exorbitant compensations to managerial top-shots which legitimised this with a hint to realities of the global economy. They also understood that such and similar behaviour (e.g. high risk strategies of banks) completely ignored the deeply anchored culture of egalitarianism and disliking pomposity in Switzerland.

 

Despite this, the elite omitted to approach the issues appropriately. In approvals to proposals like the fat cat initiative these commentators see the price the elite now have to pay for its ignorance: a further dismantling of the social contract in the form of more economic regulation. This probably all is true. But beyond this, citizens seem to have realised that the time has come to go new ways. The worldwide interest in the yes to the initiative supports this: it shows that the issue of the behaviour of detached economic elite is not a specific Swiss concern. And the yes indeed was not primarily a yes to strengthen shareholders’ rights but a yes to stop the detached behaviour of the elite.

 

It is key that the elite realises that it can hold no longer on obsolete practices and to preserve the “ancient régime” if it wants to retain the social contract providing liberal economic conditions. Only if the elite are willing to understand moderation and the role of companies primarily to serve the society not as a local competitive disadvantage but as a global necessity the specific Swiss social contract without much regulation can be renewed.

Besides all this it would be negligent not to consider shortly the fact that the fat cat initiative reinforces the rights of shareholders. But even if one considers the enforcement of these rights as appropriate, the question about the interests of the other stakeholders stays largely unanswered by the initiative. Indeed, the initiative requires pension funds to vote in the interest of their insurants. But this alone is insufficient. Shareholders, of course, are also stakeholders. But they have specific interests and are a part of the economic elite (at least the larger ones). Switzerland has to go further down the road and the elite have to participate if it wants that the reforms do not come exclusively in the form of new regulations. Because the time is ripe for corrective measures reforms will come anyway, in either form (regulative or liberal). And because the issue is global in nature also the other countries are under pressure to reform.

 

Claude Meier