Ernest Dale says that presidents, faced with the need to balance alternatives who act in a way to optimize the return for the different forces making up the field, find that they are unable to act at all. He is right in saying this since he is talking about the president-as-person, not the president-as-role. Dale is also right when he says that it is not surprising to see that many presidents find the only way out is to act irrationally, and this irrationality eventually pervades the entire organization.
The point of view we have developed so far assists in reconciling the various conflicting points of view of management theories. First, there is a divergence of opinion about which of the three primary elements is pre-eminent. Professor Dale’s view, which is the one held, or at least expressed, by most businessmen and business theorists, is that the primary task of a company is to make a profit for the shareholders. Peter Drucker’s viewpoint is different:For him the primary task of a company is to produce a product and fulfill a particular role in society. Just as Dale feels that the objective of providing a return on investment is an ethical obligation, Drucker feels that the objective of serving society through the market is also an ethical obligation. Drucker also tends to dismiss or play down the importance of the employees’ needs and wants. “The large business organization does not exist for the sake of the employees. Its results lie outside and are only tangentially affected by employee approval, consent and attitude.”
For Galbraith, on the contrary, the company exists for the employees; that is, the technostructure: “. . . the association of men of diverse technical knowledge, experience, or other talent which modern industrial technology and planning require. It extends from the leadership of the modern enterprise down to just short of the labor force.” No doubt there would be a sufficient number of union leaders who would want to know why Galbraith stops “just short of the labor force.” Galbraith does not believe the company is ethically obliged to serve the market or the shareholder.
March 17th, 2020 ~ These observations are just as poignant today. Who has the power and leverage? It depends on the market, product, location and so on. Getting an idea of how past economists viewed things is important. One of the areas sorely lacking in capitalism today is how big companies are. The idea that monopolies are taking place in the current market are very much overdue. Income inequality is ridiculously off the charts high. It makes people jealous and bitter. It reminds me of what the Dalai Lama says about cars. When someone is your area gets a fancy car compared to what everyone else has, it makes people jealous. We are so beyond that. It is multiple cars and huge fortunes. They say CEO’s of these large corporations are sociopaths. How can they tolerate making so much more money than the employees that often do the hard labor; much of this labor is oversees where they don’t “see” it.