ADAM SMITH AND THE ROLE OF THE METAPHOR OF AN INVISIBLE HAND

Daniel Klein and Brandon Lucas's ‘In a Word or Two, Placed in the Middle: The Invisible Hand in Smith's Tomes’, following a vague hint by Peter Minowitz (2004) , offers original physical evidence that Smith ‘deliberately placed the phrase “led by an invisible hand”– at the physical centre of both his masterworks’. Further, it suggests that the invisible‐hand paragraphs are a response to Rousseau (1755 ); and that in ‘numerous and rich ways’, centrality holds ‘special and positive significance in Smith's thought’. This paper acknowledges the physical centrality of the invisible‐hand metaphor, but questions whether centrality alone gives weight to wider claims that the ‘invisible hand’ was Smith's ‘central idea’. It draws upon Smith's Rhetoric Lectures (1763), and argues that the invisible‐hand paragraphs in The Theory of Moral Sentiments and Wealth of Nations identify the actual objects of the invisible‐hand metaphor. This paper insists that Adam Smith is the most reliable source for revealing what he meant. In contrast, most modern attributions of special meaning to Adam Smith's use of the metaphor ignore Smith's teaching on the use of metaphors and, instead, make numerous, and often mutually exclusive, claims that Smith had a ‘doctrine’ of ‘an invisible‐hand’.     

ON THE DELIBERATE CENTRALITY OF AN INVISIBLE HAND: REPLY TO GAVIN KENNEDY,RYAN HANLEY AND CRAIG SMITH

We previously showed that ‘led by an invisible hand’ was physically central in original editions of The Theory of Moral Sentiments and The Wealth of Nations. We suggested that Adam Smith did that deliberately. Three authors commented on our paper, Gavin Kennedy, Ryan Hanley and Craig Smith. In this article we reply to their comments.     

LIBERTY BETWEEN THE LINES IN A STATIST AND MODERNIST AGE: UNFOLDING THE ADAM SMITH IN FRIEDRICH HAYEK

This article interprets F. A. Hayek as having been constrained by the statism and modernism of his times, and as writing in a way that obscured some of his central ideas. I suggest that between the lines we can see a focus on liberty understood hardily as others not messing with one's stuff– even though Hayek in The Constitution of Liberty defined liberty in ways that tended to obscure this hardy definition, and Hayek often used code words like ‘competition,’‘the market,’ and ‘spontaneous’ where ‘liberty’ or ‘freedom’ would have been plainer, albeit more offensive to the culture. Seeing the hardy definition of liberty between the lines in Hayek enables us to see his focus on the liberty principle and his case for a presumption of liberty. Such a reading of Hayek, I suggest, is true to Adam Smith, who expounded a central message that by and large the liberty principle holds, and that it deserves the presumption in our culture and politics.     

SIR WALDRON SMITHERS AND THE MUDDLE OF THE TORY MIDDLE

Waldron Smithers was highly critical of Attlee's post‐war Labour government and placed much weight on Hayek having dedicated The Road to Serfdom to ‘the Socialists of all parties’. Accordingly, Smithers was assiduous in combating what he saw as a dangerous turn towards middle‐way policy within his own party in the late 1940s.     

Making the ‘Invisible’ Visible: Redevelopment‐induced Displacement of Migrants in Shenzhen,China

Gentrification in China is intertwined with urban redevelopment, which causes the large‐scale displacement of rural–urban migrants from ‘villages in the city’ (ViCs). Because of the informality of ViCs, migrant renters have very insecure tenancy and during redevelopment they are treated as a negligible (‘invisible’) social group. As they are very difficult to locate after displacement, they are also literally invisible to researchers. To make the invisible visible, this study traced a sample of displaced migrants from Huangbeiling village in Shenzhen. The focus was on the displacement process and on identifying the consequences for the displaced. We found various forms of displacement during the redevelopment process. Nearby ViCs were prioritized by displaced migrants to minimize as much utility loss as possible. However, they generally suffer from decreased proximity, increased living costs, and the loss of social networks and job opportunities. Remarkably, some choose to return to the gentrifying village, enduring displacement in situ caused by increasing rents, drastic physical neighbourhood changes and declining liveability, in exchange for retaining their original social and economic networks. Large‐scale urban redevelopment is causing the rapid shrinkage of informal housing. Recognizing and addressing the housing needs of this impoverished social group is a matter of urgency.     

ADAM SMITH: REVOLUTIONARY FOR THE THIRD MILLENNIUM?1

Adam Smith challenged the then prevailing belief in mercantilist control. He presented a picture of an ‘… orderly yet self‐adjusting, dynamic economic system in which rising production, employment, investment and trade were linked spontaneously together by voluntary exchange …’ Present‐day governments and anti‐globalisation protesters could learn a great deal from his writings.     

Economic Outlook 1991–1995: The London Business School with Gower Publishing: Forecast Release: THE CHANCELLOR'S ECONOMIC ADVICE

Within the last month the Chancellor has made two important speeches on macroeconomic policy. The first, to Surrey businessmen in June, pledged the UK to the French route to a ‘virtuous circle of low inflation, rising competitiveness and increasing market share’; the second, in July to the European Policy Forum, vigorously defended his present policy against the alternatives, which he dismissed as ‘illusory or destined to fail’, of devaluation or cutting interest rates. On both occasions Mr. Lamont placed the permanent conquest of inflation at the centre of his policy, arguing that holding sterling at its present central parity of DM 2.95 is the only way to achieve this objective. In his view the consequence of any of the alternative proposals would be ‘either higher interest rates, higher inflation, or most likely both’. In this Forecast Release we consider these claims and the economic advice on which it is based. On the latter we would surmise that the thrust of the advice which Mr. Lamont is receiving is that he has the opportunity to deliver a sustainably low inflation rate and that this requires a stable pound within the ERM. The alternatives involve a sterling devaluation which, no matter how obtained, would obstruct the goal of permanently low inflation in return for only transient benefits on output and unemployment. But the price of defeating inflation has been high and is not yet fully paid. Moreover the goalposts have been moved: to reach the French position on competitiveness, which underpins their gains in market share and which has taken the best part of a deeade to achieve, requires a still better inflation performance on the part of the UK and while this is being achieved, adjustment costs will persist. It is partly in defence of his own policies and partly in an attempt to moderate the already-high adjustment costs that Mr. Lamont has adopted a more combative stance. His advice is that to compete with Europe, we cannot award ourselves pay increases far in excess of European levels, indeed we need a period of below-average pay rises.     

IDENTITARIAN MOVEMENTS IN THE TOURISTIC CITY: The Marketing of Hate in Verona

Verona is known as the touristic city of Romeo and Juliet, but its position as a strategic node in the rising identitarian movement goes unnoticed to the thousands of tourists visiting the city every day. This article articulates the historical centre of Verona as a public space in which far-right and populist right groups seek to construct an exclusionary territorial identity that draws on white supremacy, northern pride and Catholic fundamentalism, which manifest themselves in practices of bordering and territorialization. I argue that the city's perfectly preserved heritage and its assumed authenticity are not only utilized to construct the ideal protagonists of city life, but also that such territorial themes of defending the ‘native homeland’ and its traditions are marketed to the outside world by constructing a ‘model’ city for a growing transnational movement. In this study, which is based on ethnographic fieldwork, archival research and in-depth interviews, I investigate the mechanisms through which certain historical centres are showcased to build an identitarian network through everyday practices of boundary-drawing and the marketing of a territorial anti-modernist nostalgia.     

A STRATEGIC PERSPECTIVE OF BANK FINANCIAL CONGLOMERATES IN LONDON AFTER THE CRASH

The deregulation of financial markets has led to severe challenges for bank management and banking strategy. Investment banking is a sector that has experienced important and well-publicized changes. London's celebrated ‘Big Bang’ helped to stimulate new banking strategies that were characterized by the formation of so-called ‘bank financial conglomerates’. The October 1987 stock market crash, however, has precipitated strategic and organizational crises for many of these banks active in securities business and capital market products. This article re-examines investment banking strategies in London and some of the lessons associated with the crash experiences.     

THE CONCEPT OF DECISION: A DECONSTRUCTIVE ANALYSIS*

Decision-making as a central concept in management and organization theory has had a colourful and controversial career spanning some 50 years. During this time its image and meaning has shifted substantially to the point where its explanatory value as an established conceptual category in management and organizational analysis has been questioned. In this article, I attempt a critical study of the concept of decision and try to show that the various attempts to replace it by other terms such as ‘action’, and ‘change’, overlook the ontological status of the decision-making process. I argue here that decision is better understood as a series of interlocking pre-definitive acts of punctuating the flow of human experiences in order to facilitate sense-making and to alleviate our Cartesian anxiety. Decisions are not so much about ‘choice’or ‘intentions’as about the primordial ‘will to order’whereby interlocking configurations of micro-incisions punctuating our phenomenal experiences contrive to construct and reinforce a stable but precarious version of reality. When viewed thus, decision-making takes on a very different meaning - one that accentuates the concrete everydayness of micro-decisional acts which re-enact the ongoing contestation between order and disorder, routinization and breakdown, organization and disorganization, chaos and cosmos. Such micro-decisional ontological acts are what produces and sustains a version of reality to which we then subsequently respond. It is this ‘becoming’theory of decision-making which is offered as an alternative to the ‘event’driven model of decisional theorizing.     

The contours of employee voice in SMEs: the importance of context

This article develops a context‐sensitive approach to analyse how and why voice operates in small‐ to medium‐sized enterprises (SMEs), an area that remains under‐theorised and under‐researched. By building on a priori frameworks with proven ability to unpack complexity and take account of the wider context of SMEs, this article explores how resources (human and social capital) and constraints (product market, labour market and strategic orientation) interact to shape voice practices. The article finds significant differences between ‘reported’ compared with ‘actual’ practices in situ, and identifies different types of firms (‘strategic market regulation’, ‘strategic market‐led’ and ‘non‐strategic market‐led’) along with the factors that influence the form and practice of voice. Overall, the article argues that researchers should further pursue research that appreciates the layered nature of ontology and the role played by firm context to explain complex organisational phenomena, if we are to advance our understanding of voice practices in SMEs and beyond.     

WICKEDNESS IN SOCIAL CHOICE

In an article from 1973, Rittel and Webber distinguished between ‘tame’ or ‘benign’ problems on the one hand and ‘wicked’ problems on the other. The authors argued that wicked problems occur in nearly all public policy issues. Since different groups adhere to different value-sets, solutions can only be expressed as better or worse. By no means can they be viewed as definitive or objective. In this paper we consider, from this very angle, the theory of social choice which is about the aggregation of individual preferences with the aim to derive a consistent social preference. We show that collective choice offers wicked problems of various types which differ in their degree of severity. We hereby concentrate on welfare functions and voting schemes of different kinds and discuss these in the light of various criteria such as Arrow's independence condition, Condorcet consistency, monotonicity, manipulability, and other properties.     

NATURAL LEARNING AND MANAGERIAL ACTION: A PHENOMENOLOGICAL STUDY IN THE FIELD SETTING

An approach to collecting data about managers’ experience of their work is described, involving having them ‘think aloud’ while doing their work, and ‘re-live’ episodes soon afterwards. Some of the epistemological and methodological issues relating to this research approach are discussed. Examples of data are given, and 37 episodes of managerial work are analyzed for evidence relating to the question of how managers learn naturally from everyday experience. The analysis suggests that the concept of levels of learning proposed by Bateson (1973) is useful. An initial categorization of processes of learning, arising from the data, are presented. Some evidence that the profounder forms of learning are incremental rather than sudden is presented, and the issue of the functionality of profounder versus more superficial forms of learning in relation to everyday managerial work is raised.     

‘High potential’ programs: Let's hear it for ‘B’ players

Organizations implement ‘high potential’ (HiPo) programs to identify, develop and retain their most talented employees (also known as ‘A’ players). However, there is still not much known on how these programs affect other employees (i.e., ‘B’ players) who are not included. Drawing on Bowen and Ostroff's (2004) framework on the strength of HRM system and attribution theory, we theoretically examine the impact of HiPo programs on ‘B’ players’ attitudes and behaviours. Specifically, we propose that ‘B’ players use various information and contextual cues to make attributions about these programs. We also propose that trust moderates the relationship between various meta-features of HiPo programs and ‘B’ players' perceptions about these programs. Further, we examine the role of an employee's motivation profile (i.e., achievement motivation and power motivation) in forming his/her attributions about these programs, which then affects his/her commitment and organizational citizenship behaviours. Future research directions and practical implications are presented.     

CONTRACTS,ENTREPRENEURS, MARKET CREATION AND JUDGEMENT: THE CONTEMPORARY MAINSTREAM THEORY OF THE FIRM IN PERSPECTIVE

This survey gives an overview of the theory of the firm as it is formulated within the contemporary ‘mainstream’ of economics. Two groupings of theories are briefly discussed: principal–agent and incomplete contract models. Next, three of the most recent contributions regarding firms are considered. The reference point approach is looked at first followed by a discussion of Spulber's book The Theory of the Firm. Last, we consider the entrepreneurial judgement perspective.     

Indigenous Cosmogony and Andean Architecture in El Alto,Bolivia

This essay applies Bourdieu's analysis of the formation of the ‘scholastic habitus’ in medieval times—elaborated in his 1967 afterword to his French translation of Erwin Panofsky's Gothic Architecture and Scholasticism—to the correspondence between indigenous mental categories and architectural innovation in the Bolivian ‘rebel city’ of El Alto. The principle of homology between mental categories and building layout (rooted in a shared habitus) can be used to interpret one of the most spectacular features of Bolivia's ‘emerging architectures’, known as chalets. The term chalet designates a hybrid structure consisting of a colorful and ornate penthouse and multi‐story dwelling erected on building rooftops. The chalets are architectural forms embedded within an economy of symbolic goods characterized by a ‘dual truth’: they are at once material and symbolic; they perform economic functions while seeking public visibility. The conspicuous lifestyle advertised by the construction of chalets can be understood by reference to the rising social power of the indigenous elites (cholos) dominating the thriving ‘ethnic economy’ of the city. The fraternities of El Alto emerge as the structural equivalent of the scholastic institution that Bourdieu associated with Gothic architecture: they are the site of production of a specific habitus, shared by native urban categories defined by similar residential locations, economic activities and forms of collective organization.     

THE MANAGEMENT OF MEANING IN THE POLISH CRISIS[1]

The concept of ‘organizational culture’ proves to be fruitless when applied to organizations in socialist economies. Instead, this paper focuses on a more general relationship between organizational life and the cultural context of organizing. Three examples illustrate the proposed approach. In the first, the Polish ‘propaganda of success’, used in the years 1970–80 by the ruling élite, is analyzed as a case of the use of ideology to manage the meaning shared by participants in economic life. In the second, the battle between the government and the Solidarity movement is interpreted as a battle over meanings. In both examples, the successful management of meaning demands the fit between ideology and national culture. The third example, contrasting Polish and American myths about the origins of organizational effectiveness, shows how everyday organizational life is embedded in the historical and cultural context of a given country. The paper ends with a proposal to concentrate further research efforts on the complex relationships between organizational control and culture.     

CAPITALISM,SOCIALISM AND CALCULATION

The merits and demerits of what we call ‘capitalism’ have been a source of much attention since Adam Smith wrote his seminal treatise on the salutary effects of free commerce and before. We consider the criticisms of the capitalist system as stated most prominently by Karl Marx, and we evaluate Marx's proposed solution to the evils of capitalism – specifically, socialism. We also explore the contributions of Ludwig von Mises and Friedrich Hayek to the debate about whether Marx's proposed alternative was really an alternative. Mises and Hayek provide powerful critiques of Marx's socialist vision by addressing the problem of economic calculation and the inability of central authorities to acquire knowledge diffused and distributed across an entire society. We question whether Marx offered a solution and then consider more recent attacks on capitalism and its alleged destruction of cultural capital. The theoretical contributions of Mises and Hayek are supported by recent empirical contributions suggesting that liberal political economy is robust.     

Managerial incentives and corporate control auctions

An analysis of the sequence of bidding in corporate control contests involving white knights reveals a category of white knights termed as ‘delayed bid’ white knights who make their bid after two consecutive hostile bids. The ‘immediate bid’ white knights make their bid in relative haste after the first hostile bid. Overpayments by white knights are much larger for the ‘immediate bid’ white knights. An analysis of the respective compensation packages shows that the managers of the ‘immediate bid’ white knights have a lower proportion of their income linked to stock value (relative to their annual cash income) compared to ‘delayed bid’ white knights and hostile bidders.