Toward a History of Management Thought Charles Howell SyracuseUniversity The historyof managementthought suffers from a constricteddefinition of its subject.Constituent fields (marketing) and cognate fields (economics and law) areoften neglected in studiesof the subject.The term"thought" tends to be equated to knowledge,and thus given a positivistcast, or describedin instrumentalterms andthereby reduced to a generalizedform of practice.The historyof management thought,in short,invites more expansive treatment than it hashitherto received. Thispaper explores the potential benefits of an enlargeddefinition. The paperfocuses on two economists,Edwin Gay of Harvardand Richard Ely of the University of Wisconsin,who influencedthe developmentof managementthought, and whosecareers illuminate aspects of it that havebeen neglectedin previoushistories. Both are associated with institutionsthat promoted scholarship,education, and public discourse about business and its socialfunction-- institutionswhose role in shapingmanagement thought has received little attention. Both showeda keeninterest in the role of the statein economiclife. Their advocacy of regulatoryand fiscal policies suggests that ideas about techniques of managing grewup alongsideideas about political and social life, andthat in any satisfactory accountof managementthought these two strandsmust be interwoven.Both played a role in the professionalizationof economicsin the early twentiethcentury: their contributionto managementthought highlights interconnections between the two fieldsthat have yet to be explored. Gay and Ely are not the most prominentfigures of their era, either in managementeducation or in anyof theother fields with whichthey are associated. Their intellectualcommitments, however, are representativeof thoseof manyof theircolleagues, and the themesof their work pointtoward an enlargedhistory of managementthought and a more nuancedaccount of how ideas about the administrationof businesshave influenced politics and social life. Gay, Ely, and the Influence of the German Historical School The backgroundsof both Gay and Ely point to an influenceon the developmentof managementthought that has not been studied in depth.Economists by profession,both Gay andEly did graduatework in Germanyand were attracted to HistoricalEconomics, which offered a methodand philosophyvery different from the neoclassicalapproach then gaining ground in the United States.Members of theHistorical School--Schmoller, Sombart, and Weber amongothers--criticized the classicalsystem for overdependenceon deductivereasoning and urged an inductiveapproach in the studyof economicforces. Historical economists also BUSINESSAND ECONOMIC HISTORY, Volumetwenty-four, no. 1, Fall 1995. Copyright¸1995 by theBusiness History Conference. ISSN 0849-6825. 41 42 promotedstate interventionin economicaffairs and regardedthe principle of laissez-faireas a veiled expressionof the self-interestof business.The German economists'interest in the social effectsof businessand in inductiveinquiry mergedin thefamous series of statisticalcompilations published by the Verein for Sozialpolitik--anassociation of scholarscommitted to social reform and to the provisionof a factualfoundation for publicpolicy. As Jonesand Monieson point out in their studyof early marketingthought, studentsof the German historicaleconomists included many future leadersof Americaneconomics: besides Gay andEly, theseinclude Frank Taussig at Harvard, HenryC. Adamsof Michigan,John Bates Clark andE.R.A. Seligmanof Columbia, andEmory Johnson, Joseph Johnson, Roland Faulkner, Simon Patten, and Edward Jonesat the WhartonSchool [10, p. 14; 14, p. 104]. Many of the German-trained economistsalso played importantroles in the evolutionof managementas an academicdiscipline. In the caseof Ely andGay, the mostimportant influence of the Historical School appearsto have been its stimulusto inductive work. Ely strongly emphasizedempirical study of economicphenomena both at JohnsHopkins, where he taughtafter returning from Germany,and at the Universityof Wisconsin,where he spentmost of the rest of his career.Ely encouragedstudents to look to local economicconditions for thesisand paper topics; studentwork on marketing institutionsand the economics of publicutilities foreshadowed the developmentof severalareas of appliedeconomics [19, p. 25; 14, p. 104].Jones and Monieson note thatEly believedthe empirical and practical emphasis of hisGerman training were essentialnot just for the studyof economicsbut alsofor businesseducation. They point out that SamuelSparling, an early studentof Ely's who went on to teach publicadministration and to writean earlytextbook on business,"viewed marketing as part of the scienceof businessthat wouldbe developedby usingan inductive, comparative,historical approach" [14, pp. 104-105]. Gay, too, lookedto the localeconomy for raw datafrom which to construct a theoryof business.Industrialists were invited to addressclasses, and field tripsto localfirms were organized. Gay helpedto foundthe Bureauof BusinessResearch, whichcollected statistics on businessoperations. The accountingpractices instituted by theBureau to ensureconsistent data proved so helpful that proprietors frequently adoptedthem as regular operating procedure. The Bureau'sresearch influenced not onlymanagement practice, but alsomanagement education through publication of its famousseries of casestudies, which form an importantpart of the pedagogyof managementdown to the presentday [6, pp. 216-220]. Thoughin principleempirical methods need not entail commitment to social action, both men were drawn inexorablytoward issuesof public policy and ultimatelyto advocacyof a larger role for governmentin economiclife. The HistoricalSchool had laid the intellectualgroundwork for thistransition, teaching that the idea of a custodialstate was a specificallyEnglish creation, a theoretical constructand representationof classinterest rather than a consequenceof the naturalorder discoverable through objective study. Once the conceptof limited governmenthad been called into question, governmentitself proved willing to supplyan alternativevision. While still in Germany. Ely was recruitedby United StatesAmbassador Andrew D. White, on leave from the presidencyof CornellUmversity, to conductstudies of the Berlin city administrationand the nationalizationof Prussianrailroads; Ely idealizedhis 43 subjectsto suchan extentthat White warnedagainst the "generalsurrender of individualism"that he fearedsuch an extensivebureaucracy might entail [19, p. 15]. Ely, however,was not deterredby the dangerof stateintervention. For him, the facts of economiclife were to be considered"in the contextof a plastichuman natureand an ethicalideal" [19, p. 25]. On returnto theUnited States, he advocated public ownership of natural monopolies,including railroads, purchaseby municipalitiesof unusedland to socializethe profitsof urbandevelopment, and public worksbureaus to ensurefull employment.Service on tax commissionsfor the Stateof Marylandand the City of Baltimoreallowed him to suggeststrategies for publicfinance that could ultimately be usedto fundsuch projects. He proposed that propertytaxes shouldbe allocatedexclusively to local governmentalunits, whichcould be expectedto assessproperty values more stringently; at statelevel, a graduatedincome tax wouldprovide a moreample and reliable stream of revenue. Suchproposals are significantnot becausethey were unusualat the time-- politiciansand economistsalike debatedsimilar measures--but rather because of Ely'sposition in thehistory of managementthought. Looking back to the originof managementas an academicdiscipline, historians will discoverin at leastone of the field's early strandsan overarchingethical commitmentand a zest for state interventionin economicaffairs quite different from the ethos implied by present-daydefinitions of managementor representedin recenthistorical accounts of its development.For Ely, the studyof businesswas first the studyof economic facts, construedto include businessstrategy, and second,the studyof the state actionthat those facts required. Modern organizational theory notwithstanding, the idea of managementthought as a setof decisiontools, applied in a dispassionate searchfor efficiency,represents a break from oneof the field'sfounding traditions. Gay, too,was sympathetic to thepopular social reforms of his day:as Dean of the Harvard Graduate School of BusinessAdministration, he collaborated with Henry Dennison,Chairman of the BostonChamber of Commerce,to form the Massachusettsbranch of theAmerican Association of LaborLaws, which promoted legislationagainst child labor and for a minimumwage and workers' compensation [9, pp. 89-90]. Gay's primary contributionto an American-stylesozialpolitik, however,lay in the introductionof statisticalmethods to governmentagencies. In World War I, he servedon variouseconomic planning and trade groups, adding his expertiseto that of GeorgeGoethals, Bernard Baruch, and HerbertHoover, and coordinatinghis effortswith thoseof otherbusiness faculty members, including A.E. Swansonof Northwestern,C.K. Leith of Wisconsin,Henry Hatfield of Berkeley,and Arch Shaw,Henry Dennison,and Melvin Copelandof Harvard[9, pp. 98, 110].Eventually Gay wasnamed by PresidentWilson to directthe Central Bureauof Planningand Statistics,which was to ensureinteragency coordination. After the war, Herbert Hoover, now Secretaryof Commerce,appointed Gay, WesleyMitchell, anda numberof othereconomists to his AdvisoryCommittee on Statistics,which