The Condition of Postmodernity

Changes in cultures may seem to be abrupt, but the underlying social process seldom experiences the changes, argued David Harvey, a Marxist Sociologist as well as a geographer, in his book “The Condition of Postmodernity”, a book on the shift from modernity to postmodernity.

What is postmodernity

Harvey uses architectures, arts, media and so on as examples to describe the general concept of postmodernity. He concludes that postmodernity is represented by its fragmentary, ephemeral and chaotic characteristics. The table below shows the comparisons between modernity and postmodernity (detailed in the table of page 340).

Modernity	Postmodernity
Economics of scale	Economics of scope
Hierarchy	Anarchy
Homogeneity	Diversity
Detail division of labor	Socialdivision of labor
Monopoly capital	Entrepreneurialism
State power	Financial power
Trade unions	Individualism
Ethics	Aesthetics
God the Father	The Holy Ghost
Materiality	Immateriality
Blue collar	White collar
Semantics	Rhetoric
Centralization	Decentralization
Operational management	Strategic management
Narrative	Image
Utopia	Heterotopias
Function	Fiction
Becoming	Being
Epistemology	Ontology
State interventionism	Laissez-faire

For instance, a typical modern building is somewhat simple, valuing its function. On the other hands, a typical postmodern building is somewhat chaotic. An office building of postmodernity may have forests in its mezzanine floor, which represent a fictional space.

Take another example. Art of modernity is somewhat simple. For instance, the arts born during the civil revolution represented very simple enlightenment agenda. Art of postmodernity, on the other hand, is more chaotic. As a typical postmodern art, Harvey cited an advertisement of Citizen (watch), in which a naked woman wears only a watch. He says that this advertisement engages directly with the postmodernist techniques of superimposition of ontologically different worlds that bear no necessary relation to each other. (page 64)

Underlying substructure of postmodernity

Harvey uses the concept of substructure-superstructure relation proposed by Karl Marx, arguing that there only was the change in production style during the shift from modernity to postmodernity.

Substructure of modernity is organized capitalism, best typified by Fordism mass production. Concentrated and centralized production, large commercial and monopoly capital, state powers, expansion of economic empires and the others represent this capitalism. Harvey argues that modernity is the response to this production relation.

Postmodernity is not the mutant, Harvey argues. The shift from modernity to postmodernity merely represents a change in the production relation in the society, to which superstructure corresponds. The “Disorganized capitalism” is represented by de-concentration of corporate power, internationalization of capital, decline in state power, outright decline of class-based politics and institutions and so on (the contrast between organized and disorganized capitalism is shown in page 175).

The technology advancement also had significant influence on the production relations, through “compressing the time and space”. Harvey argues that time-space compression is the conspicuous characteristic of postmodernity. For instance, the development of aviation industry made the world smaller, enabling the globalized production relations. The progress of information technology brought about just-in-time production. Using the words more familiar to us, we can say that the globalization and worldwide collaboration brought about the mixture of different cultures, spontaneous activity of people around the world, and so on.

Thus Harvey argues as follows in the beginning of this book. 

“There has been a sea-change in cultural as well as in political-economic practices since around 1972.

  This sea-change is bound up with the emergence of new dominant ways in which we experience space and time.

  While simultaneity in the shifting dimensions of time and space is no proof of necessary or causal connection, strong a priori grounds can be adduced for the proposition that there is some kind of necessary relation between the rise of postmodernist cultural forms, the emergence of more flexible modes of capital accumulation, and a new round of ‘time-space compression’ in the organization of capitalism.

  But these changes, when set against the basic rules of capitalistic accumulation, appear more as shifts in surface appearance rather than as signs of the emergence of some entirely new postcapitalist or even postindustrial society.”

Consequences of postmodernity

Harvey argues that the time and space cannot be free from social affairs. They always express some kind of class or other social content, and are more often than not the focus of intense social struggle. In the developed capitalism, the time and space are more tightly connected with money.  For instance, in the postmodernity, people may seem to enjoy more liquid labor market, but that phenomenon is the reflection that time is more closely connected to capitalism. This new production relation could be the bedrock of Lassies-faire and “self-responsibility”, the shift that Harvey issued an warnings.

Remarks

Though some arguments are not logically clear to me, it is valuable to see postmodernity from the perspective of historical materialism.

The book shows us how to predict what will come next. 21th century will mark the full-fledged globalization and information technology advancement, which are changing our production relations and thus lead to the corresponding cultural changes, some of which are already in progress. 

Reference

David Harvey, “The Condition of Postmodernity”, Wiley-Blackwell, 1992/4/16

The Theory of Economic Development

Nowadays, most of people would agree that innovation is the key driver of economic growth. That idea, however, was not common 100 years ago, and it is remarkable that Joseph Schumpeter argued that innovation is the key factor of economic development and the driver of economic cycle in his book “The Theory of Economic Development” in 1911.

Circular Economic System

In analyzing economic development Schumpeter started with economic model. He thought economy as a circular system, and he argued that the way of economic investigation is to understand the causal relationship between the “unknown” economic phenomena and “known” external factors. According to Schumpeter, it is not the explanation if an economic phenomenon is explained by another economic phenomenon – as that is something like a tautology.

“When we succeed in finding a definite causal relation between two phenomena, our problem is solved if the one which plays the “causal” role is non-economic. … If, on the other hand, the causal factor is itself economic in nature, we must continue our explanatory efforts until we ground upon a non-economic bottom.” (page 5)

“The economic system will not change capriciously on its own initiative but will be at all times connected with the preceding state of affairs.” (page 9)

If we trace back production processes, we get to only two factors. One is human being, and another is nature (lands).

What is Economic Development?

According to Schumpeter, “development” has the following characteristic.

First, it comes from within the economic system and is not the result of changes of external inputs. Schumpeter strictly separated economic change due to external factors from that due to internal ones. He said: “By ‘Development’, we shall understand only such changes in economic life as are not forced upon it from without but arise by its own initiative, from within.” (page 63)

Thus economic development is accompanied by the changes in consumers’ wants, since they are the only those who bring about the change within the economic system. Schumpeter thought that the producer of new goods, or entrepreneur, initiate economic change, by educating consumers - “they (consumers) are taught to want new things, or things which differ in some respect or other from those which they have been in the habit of using.” (page 65)

Then how are the new goods created? Schumpeter argued that new goods are created through new combination, i.e. the way to combine materials and forces differently from what is done before. According to Schumpeter, there are five types of new combinations: (1) the introduction of a new good, (2) the introduction of a new method of production, (3) the opening of a new market, (4) the conquest of a new source of supply of raw materials or half-manufactured goods, and (5) the carrying out of the new organization of any industry. (page 66)

Second, development occurs disruptively, not smoothly. They cannot be understood by means of any analysis of the circular flow, although they are purely economic and although their explanation is obviously among the tasks of pure theory, Schumpeter argued.

Schumpeter said that entrepreneurs appear not continuously, because the appearance of one or a few entrepreneurs facilitates the appearance of others, and these others facilitates the appearance of more, in ever-increasing numbers (page 228), until entrepreneurial profits are eliminated. This proposition explains why we see boom and crisis. The advent of a number of entrepreneurs create new economic orders as well as booming periods, which inevitably brings about the crisis in the future by the force of equilibrium.

Third, it brings qualitative changes or “revolutions”, which fundamentally displace old equilibria and create radically new conditions and economic orders.

Schumpeter understood the economic development as a dynamic process, in which three corresponding opposites interact: “First, by the opposition of two real processes: the circular flow or the tendency towards equilibrium on the one hand, a change in the channels of economic routine or a spontaneous change in the economic data arising from within the system on the other. Secondly, by the opposition of two theoretical apparatuses: statistics and dynamics. Thirdly, by the opposition of two types of conduct, which, following reality, we can picture as two types of individuals: mere managers and entrepreneurs.” (page 83)

Will to innovate

Schumpeter said that to create new things is difficult because of three reasons.

First of all, it is impossible to survey exhaustively all the effects and counter-effects of the projected enterprise, as entrepreneurs by definition create things invisible at the beginning.

Thus Schumpeter pointed out the importance of intuition: “Here the success of everything depends upon intuition, the capacity of seeing things in a way which afterwards proves to be true, even though it cannot be established at the moment, and of grasping the essential fact, discarding the unessential, even though one can give no account of the principles by which this is done. Thorough preparatory work, and special knowledge, breadth of intellectual understanding, talent for logical analysis, may under certain circumstances be sources of failure.” (page 85)

Secondly, people tend to have conservative mindset, feeling reluctance to do something new even if the objective difficulties do not exist. “Thought turns again and again into the accustomed track even if it has become unsuitable and the more suitable innovation in itself presents no particular difficulties. The very nature of fixed habits of thinking, their energy-saving function, is founded upon the fact that they have become subconscious, that they yield their results automatically and are proof against criticism and even against contradiction by individual facts. “ (page 86)

Thirdly, the difficulty comes from the social environment against those who initiate something new. This is natural antagonism, as innovations often demolish the existing businesses or social apparatuses.

Thus, Schumpeter emphasized the importance of will to go through all the difficulties that entrepreneurs should endure. He argued that there are three wills that enable entrepreneurs to carry on.

(1) The dream and the will to found a private kingdom

(2) The will to conquer

(3) The joy of creating, getting things done, and exercising one’s energy and ingenuity

Remarks

What I learned the most in this book is that the good study comes out of solid framework. Innovation is often treated as something mystical, but Schumpeter explained the phenomena using certain framework (in his case, economic model). Although “the framework of innovation” sounds contradictory, as innovation is something that destroys the existing framework, we still need to stick to framework in the first place, to come up with something beyond the framework.  In other words, the framework ready to undergo dynamic change may be what is needed to get to brilliant idea.

Reference

Joseph A. Schumpeter, “The Theory of Economic Development”, Transaction Pub; Reprint edition, 1983/01

Organizations

Classical models of organizations perceived the members of the organizations to be “machines”. The models tended to ignore the wide range of roles which the participant simultaneously performs and could not effectively treat problems associated with the coordination of the roles. The new models were born in mid 20th century, paying attention to human motivation and diversity as the central issue for organizations. Simon and March introduced the concept of bounded rationality of individuals and developed the study of organizations in their book “Organizations”. In this book, an organization is systems of coordinated action among individuals and groups whose preferences, knowledges, interests or information differ.

The book coveres key topics about organizations, especially about survival of the organizations and decision-making. For survival of organizations, participation and leaving of the members and conversion from conflict into coordination are the keys. For better decision-making, managing organizational styles and decision-making process are the keys.

Participation and Leaving

Participation and leaving of members are key issues for survival of organizations. To analyze them, Simon and March introduced the concept of “Organization equilibrium”, which is the conditions of survival of an organization. The equilibrium means that the organizations succeed in arranging payments to its participants adequate to motivate their continued participation.

To explain the members’ participation into organizations, Simon and March introduced the “inducement-contribution” model, in which the members participate into the organization by considering the satisfaction from their participation and the visibility (not the real existence) of alternatives. Here, the satisfaction is difference between (1) the payments made by the organization to its participants (“inducement”) and (2) the payments made by the participants to their organization (“contribution”).

Conflict and Coordination

Organizational conflict makes its members face difficulty in making a choice or have choices that are mutually inconsistent to achieve every member’s preference. The conflict arises from incomparability of alternatives, the unacceptability of alternatives and uncertainty about the consequences of alternatives. Organizations strive to convert conflict among their members into coordination for joint survival of the organizations and the members.

To achieve the goal, organizations try to control over four key drivers to motivate their members:

(1) information: by processing and channeling it

(2) identities: by shaping common goals and loyalties of members

(3) story: by creating shared story

(4) incentives: by promoting appropriate behaviors

The problem is that the world is not in an ideal shape. There are uncertainty, ambiguity, limited cognitive & affective capabilities of human beings, complexities of balancing tradeoffs, and threats of competitors, the things that make it impossible for organizations to have perfect control over four key drivers. Thus, the organizations try to overcome the challenges by four ways:

(1) calculation, planning and analysis

(2) learning from experience

(3) creating and using systems of rules, procedures and interpretations

(4) weaving supportive cultures,  agreements, structures, and beliefs around their actives

Decision making

The final part of the book is devoted for static and dynamic decision-making. The former is mainly the issue of organizational style and the latter is of process management.

Key concept that March and Simon introduced here is the “bounded rationality” which means limited ability of cognitive powers of human beings. Due to the bounded rationality, rational behavior calls for simplified models that capture the main features of a problem without capturing all its complexities. The organizational style is made such that the style is consistent with bounded rationality. For instance:

(1) Optimizing is replaced by satisficing, i.e., the requirement that satisfactory levels of the criterion variables be attained

(2) Alternatives of action and consequences of action are discovered sequentially through search process

(3) Repertories of action programs are developed by organizations and individuals, and these serve as the alternatives of choice in recurrent situations

(4) Each specific action program deals with a restricted range of situations and a restricted range of consequences

(5) Each action program is capable of being executed in semi-independence of the others – they are only coupled together

The final chapter of the book is about problem solving and innovations. Planning is the key in process management, but perfect planning misses innovation, as it comes from outside elements. Thus organizations need to have scheme to bring about innovations.

Remarks

Although nothing is new in this book, it is notable that Simon and March treated the central issues in today’s management such as problem solving and innovation process and the relevant organizational style.

Reference

James G. March and Herbert A. Simon, “Organizations”, Wiley-Blackwell (second edition), 1993/5/17