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Economics and Technik

from Robert Locke

Dave Taylor in a comment about David Ruccio’s post on this blog, April 26, 2016, “Minimum-wage machine,” talks about “Kuhn’s distinction between ‘revolutionary’ and ‘normal’ scientists, which I [Taylor] have consistently interpreted as (in Britain, anyway) a more familiar distinction between “fundamental” and “applied” science.” This distinction, as the late Ian Glover observes, is familiar “in Anglophone countries, [where] two “cultures, the arts and sciences are recognized.” In the science culture engineering is placed in an inferior place; UK scientists look down on engineering as a subject for the less brilliant and gifted.

Glover went on to note that in [Germany] rather than two cultures there are three: “ Kunst (like the arts), Wissenschaft (similar to science) and Technik (the many engineering and other making and doing subjects, representing practical know how  (Können),” but including scientific knowledge (Wissen).  Glover, I. (2013). “Bleak House: Pessimism about Management, Responsibility, and Society in the Early Twenty-First Century. Work. Employment, and Society, April. 1-10. 

The German engineering society [Verein Deutscher Ingenieure (VDI)] operating since 1856 within this third culture has consistently pitched a large tent, including in its membership craftsmen, machinists, Grad-Ing, Dipl-Ing, and Dr-Ing. If distinguishable from each other in the social hierarchy, they stood and stand as equal participants through their skills and knowledge, all carrying out the tasks of German engineering within the realm of Technik, provided, of course, that they know their job (i.e. have Fachkompetenz) and are able to perform in the firm by being both leistungsfähig and leistungsfertig (fähig=capable of doing a specialist job, educated for it, fertig=ready to do the specific job assigned).

Technik is not new to economics.  It was integral to economic thinking in Germany and America over a hundred years ago. Eric Schatzberg points out how In Germany the idea of Technik [the combination of Können (practical skills and industrial arts) and Wissen (knowledge)] was the essence of engineering, but that the Germans who proselytized the idea were often historical economists (e.g., Gustav Schmoller and Werner Sombart).   Moreover, the Americans involved in the transfer of the concept of Technik to America were institutional economists, primus among whom stood Edwin R. A. Seligman and Thorstein Veblen.  Schatzberg, E. (2006). “Technik comes to America: Changing Meanings of Technology before 1930.” Technology and Culture July Vol 47, 486-512.

Two points can be made about economics considered within the environment of Technik as opposed to that of neoclassical economics that took over the subject Post WWII within the dominant Anglophone two culture environment.

1. Whereas the former had ethical content the latter has none.  Thorstein Veblen in an appraisal of German Technik noted that it produced a set of socially beneficial tendencies and a set of parasitical forces. Among the beneficial tendencies he counted “workmanship, industry, the machine process, and technological progress.” (Schatzberg, 499) On the parasitic side he listed “predation, business enterprise, absentee ownership, and other pecuniary institutions.” (499). In The Theory of the Leisure Class: An Economic Study of Institutions (1899), he laid out a social critique of conspicuous consumption, as a function of social class and of consumerism, derived from the social stratification of people and the division of labor, and in The Higher Learning in America: A Memorandum on the Conduct of Universities by Business Men (1918), a critique of the deleterious effects that the creations of business schools would have on educational values, which have proved to be accurate, sociological predictions of the economic structure of our industrial civilization.

Schatzberg observed that the institutionalist Seligman, who defined economics as the study “of the social conditions necessary for the sustenance of life,” (498) opened thereby the discipline to the ethics of social criticism.

2. The second point is about elitism, which is much more pronounced within the two culture environment of neoclassical economics today, than in third culture Germany, inheritors of Technik.  There is no need to point out the institutional elitism in economic education in Anglophone countries.  It is expressed in the students’ desire to attend top rated schools, in a culture that readily devises these ratings, in placement of their graduates in top jobs, in the active promotion of MBA education by elite business schools in branches founded abroad, in the top schools provision of post experience executive courses for corporate managers, etc – all of which has been described in an abundant literature fostered by an aggressive proselytizing elite school establishment.

Much less is known in Anglophone countries about the German alternative where Technik spawns education in economics that is non-elitist in character.  Accordingly, students do not scrutinize lists of top rated German schools because the subject studied not fame of place matters; they go to the excellent universities in the regions where they live. Nor do the educational institutions pretend like top rated schools in Anglophonia to preside over the development of economics as an educational driver in the economy, because the educational driver is in society not elite schools.

Arnd Huchzermeier, who worked as a consultant in both Germany and America, emphasized this in an interview in which he evaluated the usefulness in management problem-solving of educational institutions in Germany and in the US.  He stated, with particular reference to US business schools and German faculties of business economics, that the latter do not possess the concentrated knowledge and skill of top American business schools (German BWL professors are weaker in mathematics).   Consequently, their professors are usually less capable of translating business problems into formal systems – not nearly as capable at least as professors in the premier US business schools.  But this comparative deficiency is not very significant because German professors of business economics are not involved in solving business problems but in the teaching of an academic discipline.

Huchzermeier notes that within German academia plenty of people have the requisite skills and knowledge needed to translate actual business problems into formal systems; they are just not concentrated in faculties of business economics as much as they are dispersed throughout German universities in various departments and institutes.  When brought together from these various places, the scientists form teams that are quite as capable as professors in American business schools of formalizing business problems.

Many of them in fact do just that every day.   The difference between the Germans and the Americans in this respect is not in knowledge but in knowledge management.  The firm, more than academia, is the activating agent that pulls together the requisite skills and knowledge in Germany, and Huchzermeier claims that the German way of concentrating and exploiting academic knowledge is very effective. (Locke Interview, Koblenz, 20 July 1994)

The firm’s role in activating education in economics is paramount.  Firms spend money on in house training of their employees; they and professional and trade associations play an important role in post-experience education, in nonacademic originated groups like the Wuppertal Kreise and the Baden-Baden Gespraech for top managers.  In a German firm it is not your diploma from a famous school that lands you a job but what you studied, or the diploma that determines subsequent promotion but your Fachkompetenz and your performance (Leistung).  Many people with subuniversity diplomas (Fachhochschulen) rise to the top in big firms.

Whereas the elitism of economic education in Anglophone countries with a two culture educational inheritance promotes managerialism, the social pull on education extant in Germany promotes a respect for craftsmanship and insistence on Fachkompetenz through qualifications that result in flatter hierarchies in organizations wherein decision-making responsibilities are assumed by workers and lower management rather than denied to them by a top management educated in famous schools, imbued with a two culture educational ethic, who devise the management systems, top down, through which organizations function.

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