Summarizing the Managerial Revolution
An AI generated primer for beginners in sane, sensible thought
by GPT-3 (AI generated essay)
The managerial revolution refers to the development of large, hierarchical organizations in the late 19th and early 20th centuries. These organizations were characterized by their division of labor and specialized management structures, and they were responsible for many of the technological and economic advancements of the time. This shift was characterized by the rise of the modern corporation and the adoption of scientific management techniques.
One of the key driving forces behind the managerial revolution was the increasing size and complexity of businesses. As companies grew larger and more diverse, it became necessary for them to develop new ways of organizing and managing their operations. This led to the emergence of new roles and responsibilities for managers, such as the development of specialized departments and the use of standardized processes and procedures.
Background
Before the managerial revolution, businesses were often run by owners who made all the decisions and bore all the risks. This was known as the “proprietary” system. These owners were typically individuals who had started their own businesses and were responsible for making all of the decisions related to the operation of their companies. The owner also handled everything from setting prices and hiring employees, to managing production and distributing goods.
However, as businesses grew in size and complexity, it became increasingly difficult for individuals to effectively manage all of the different aspects of the business. As companies grew larger and more diverse, they needed new ways of organizing and managing their operations. This led to the emergence of new roles and responsibilities for managers, such as the development of specialized departments and the use of standardized processes and procedures. Thus, a new class of professional managers emerged who were trained in the skills and knowledge needed to run large organizations effectively.
Another key factor in the managerial revolution was the rise of scientific management, a school of thought developed by Frederick Winslow Taylor. Taylor's ideas emphasized the importance of using scientific methods to analyze and improve work processes, and were instrumental in shaping the way that businesses were run. His approach to management focused on maximizing efficiency and productivity by breaking down tasks into smaller, more manageable components and using precise measurements to determine the best way to perform each task. Scientific management techniques included time-and-motion studies, which involved analyzing the movements of workers to identify ways to improve efficiency. They also included the use of incentive systems, such as piecework, to motivate workers to increase their output. These changes led to the emergence of new management theories and practices, such as Henri Fayol’s principles of management and the concept of the “administrative management” developed by Chester Barnard. These theories provided managers with a framework for organizing and managing a business, and helped to create a more professional and standardized approach to management.
The rise of the modern corporation brought about a new way of doing business. In the corporation, ownership is separated from management. Owners, or shareholders, provide the capital for the business and elect a board of directors to make decisions on their behalf. The board of directors then hires professional managers to run the day-to-day operations of the business. This separation of ownership and management allowed for the growth of large, complex businesses that were able to take on a wider range of activities and operate on a larger scale than was previously possible. It also allowed for the specialization of labor, with managers focusing on specific tasks and employees performing specific job functions.
The managerial revolution had a profound impact on the economy and society. The rise of the corporation and the adoption of scientific management techniques led to the growth of large-scale businesses and industries. This, in turn, led to increased economic growth and the creation of new jobs. However, the managerial revolution also had negative effects on society, which are worth considering.
Managed Atomization
As businesses grew in size and complexity, it became increasingly difficult for a small group of owners to manage all aspects of the business effectively. This led to the rise of professional managers who were trained in various business disciplines and could provide the expertise and leadership needed to run a large organization. The corporate form of business emerged as a result of this shift in focus to professional management. In a corporation, ownership is represented by shares of stock that can be bought and sold by investors. This allows for the separation of ownership and control, with the professional managers responsible for running the business on behalf of the shareholders. The corporate form of business also provides legal protections for owners and managers, allowing them to make decisions on behalf of the company without being held personally liable for the consequences. This allows for greater flexibility and risk-taking in decision making, which is essential for businesses operating in a complex and rapidly changing environment. Hence we saw that businesses shifted from being run by owners and entrepreneurs to being run by professional managers. This shift allowed businesses to become larger and more efficient, but it also had the effect of making it more difficult for small businesses to compete. Because professional managers were more skilled at running large organizations, they were able to use their expertise to outcompete smaller businesses. As a result, many small businesses were unable to survive in this new business environment, leading to the destruction of small businesses.
One of the most significant effects of the managerial revolution was the increased concentration of power. As corporations grew in size and influence, they began to dominate entire industries, leading to a lack of competition and a decrease in economic mobility. This concentration of power has allowed large corporations to wield an enormous amount of influence over the economy, leading to higher prices and lower wages for workers. A new class of managers and bureaucrats also emerged who were responsible for making decisions and directing activities for organization. These individuals were able to accumulate large amounts of wealth and influence, not necessarily economic but also social and cultural. The power and influence of the managerial class meant that they were able to disproportionately affect how society would run, while the majority of the population saw little benefit from growth. Worker autonomy also diminished as power and influence shifted from them. Before the managerial revolution, workers had a great deal of control over their work and could make decisions on their own. However, with the rise of the managerial class, workers lost much of this autonomy and were subject to the decisions of managers. This loss of autonomy led to a sense of powerlessness among workers and reduced their satisfaction with their jobs. This coincided with the rise of bureaucracy, often criticized for its inflexibility and lack of innovation.
Also worth noting is the increased emphasis on efficiency. While efficiency is important in any organization, the pursuit of efficiency can sometimes lead to negative consequences. For example, managers may prioritize efficiency over other values, such as quality or innovation. This can lead to a culture of short-term thinking, where managers focus on meeting immediate targets rather than considering the long-term implications of their decisions. These changes hurt the relationship between workers and managers. Before the managerial revolution, workers and managers were often from similar backgrounds, and had a relatively close relationships. However, with the rise of the managerial class, this relationship changed. Managers, who were often educated and from a different social class than the workers, had more power and control over the workers. Distrust between workers and managers widened, hurting morale and productivity.
Finally, the rise of the managerial class led to a lack of accountability and accountability in many organizations. Because these individuals held so much power, they were often able to act with impunity, making decisions that benefited themselves and their organizations at the expense of others. This lack of accountability contributed to corruption, corporate scandals, and abuses of power, which further eroded public trust in these organizations.
This essay was compiled from several requests to the GPT-3 chatbot. Learn more about the Managerial Revolution from this playlist. For information on why the managerial class hates the academe, read our Gentle Introduction to Pillar of Liberty.