Thursday 31 May 2018

Virtue-signalling versus corporate income: How system selection makes modern management indifferent to profits

Why do modern managers engage in 'virtue signalling' at the expense of income and profits?

This can be understood in terms of system-adaptive short-termist selfishness...  

Edited from Charlton BG, Andras P. What is management and what do managers do? A systems theory account. Philosophy of Management. 2003; 3: 1-15.

Understanding the functionality of management, or any other complex system, is best approached by considering the factors that lead to the evolution of complex systems. Complex systems cannot arise in a single step by pure chance but are built-up incrementally and elaborated from simpler systems. 

Complex management systems are therefore a consequence of selection processes, and the functionality of the system will depend on its history of selection. 

For example, a management system may be a product of the selection of organisations by interaction with their economic market environments. The nature of the management system affects the nature of the organisation, and the organisation interacts with an environment in which economics is the major selection pressure. The major determinant of managerial replication is then the economic viability of the organisation. 

On the other hand, the main environmental selection pressure on organisations may be political rather than economic. This often applies in the ‘public sector’ and nationalised industries. The main interaction of public sector organisations is with government and the public administration bureaucracy, and this shapes their functionality. 

Organisations that disobey or antagonise the state apparatus will decline or disappear over time, while those that remain are those that have been relatively better at satisfying the demands of the state. 

In a long-lasting centralised command economic system such as the former-USSR, the survival and growth of organisations was often more dependent upon political factors than economic efficiency. The function of management in this context was related to political goals - for instance maintenance of good relations with The Party, full-employment, and political discipline. 

The point is that both a market-place and command economy management system may be equally functional in the sense that both may be equally-well adapted to their environments. However, they may have adapted to radically different environments. It is the history of environmental interaction that accounts for different function of management systems. 

The Soviet Union management of a car factory was presumably economically inefficient by comparison with a Japanese manufacturer - but likewise a Japanese-style organisation with Japanese-style management could not have survived in the political environment of the USSR. 


The same mechanism applies to senior executive managers at the level who make major decisions - and who, in the modern West, engage in virtue-signalling at the cost of corporate income and profits. Senior executive managers are - in effect - not part-of the corporation system, but are each individually A System, a unit of selection.

(i.e. The corporation is selected by the system it operates in; and so are senior executive managers.)

The background context in the modern West is of institutions that have been subjected to fifty years of increasingly severe selection pressure from the leftist socio-political system. The larger the organisation, the more dominant is socio-political selection; hence their massive expenditure on PR propaganda, lobbying, funding parties and media, and deniably-bribing decision makers (e.g. by massive 'consultancy' and 'lecture' fees).

Beyond this, no large modern organisation is autonomous but all large organisations are linked by the unified bureaucracy, which includes - by a vast and intricately interconnected web of laws and regulations - political and governmental systems and also (via regulation, taxes and subsidies) private corporations, media, health services, education, police and military, major churches... everything.

And increasingly this vast and intricately interconnected web of laws and regulations is multi-national, tending towards being global... A unified global bureaucracy.  

The unified bureaucracy is the origin and basis of political correctness or New Leftism - which is social not economic. Indeed, political correctness just-is the inner rules and system workings of the unified bureaucracy.

(The unified bureaucracy has properties which I described for the mass media in a book called Addicted to Distraction.)

Each individual senior executive manager's behaviour in any specific organisations has been selected-for by an environment which favours what-it-takes to progress the career of a senior executive manager. Rising managers typically move between corporations after making some qualitative change that conforms to the favoured dominant within-bureaucracy selection pressure.

Within-bureaucracy selection of senior executive managers is a very different thing from the usual assumption that strategic decisions are determined by between-corporation selection by 'the market'; i.e. by the economic-success of the institution being-managed. In the modern West, the market is itself embedded-in and controlled-by 'the unified bureaucracy'.

Modern executive managers of large corporations are therefore not really signalling their 'virtue' when pursuing a politically correct agenda - they are instead demonstrating their compliance with the unified bureaucracy and its internal system procedures. By conforming their (temporarily inhabited) organisation to the dominant selection pressure - by restructuring an individual corporation to the unified bureaucracy - senior executive managers reveal they have been selected-by a system that is not economic but socio-political.

Executive behaviour is not related to the specific corporation or organisation which currently but temporarily happens to employ them, but to each managers future personal career within the unified bureaucracy.

Thus executive managers, senior decision-makers in general, use their companies to enhance their careers... As do most people with most organisation. But for senior decision-makers the system of selection is the unified bureaucracy.

So do politicians who routinely act to destroy their specifically-political careers (and, if leaders, act to damage their political parties) by what appears to be virtue-signalling - but which is system-adaptive behaviour.

We can see that individuals in senior government positions routinely leave behind the wreckage of a specifically-political career, and failure of the political parties they have 'led'; and move on to occupy higher positions within the unified global bureaucracy. And this applies equally to senior executive managers in all the other major social institutions.

Political correctness in leaders has been competitively selected-for by a politically correct world (a politically correct system); and selection causes adaptation.

If you follow-up the careers of the individual managers responsible for making politically-correct decisions that have lost their companies large sums of money - I think you will discover that they, personally, have usually done very well out of it.

In a nutshell: Management is parasitic; but senior executive managers are fuel-injected, turbocharged parasites... on steroids.


Chiu ChunLing said...

It's important to note how the ability of parasites to migrate to new hosts is crucial to the development of super-parasites, those which compromise the health of the host so badly as to render it incapable of continuing to sustain them.

This is also a factor in disease epidemiology. So there can be useful parallels.

The point is that long term loyalty and contribution to a given socio-economic entity is a traditional (anti-cosmopolitan) virtue which takes a number of names, depending on the type and scale of socio-economic entity. We laud the idea of a family-run business because it has the implication of permanent allegiance rather than because we think that people working for other businesses don't have or value families (well, maybe we don't always think that they do, though). Patriotism used to be an important element in selecting people for national office, lifelong participation in a given religious community used to be an important criteria for leading a church, a long position in the stocks of a company used to be an important factor in being allowed to make crucial decisions about corporate goals and methods.

These "hidebound" ideas of restricting influence to those who had a natural correlated interest really did help to prevent parasitic behavior. One thinks of the mytochondria of modern eukaryotes. They are symbiotic precisely because they cannot simply migrate to a new cell if their current cell dies. Conversely, viral bodies hijack and eventually destroy a cell because they can go out and infect others.

Bruce Charlton said...

@CCL - Good points.