Built by history

It’s appropriate that Martin Wolf’s criticism of proposals to introduce more market forces into higher education should appear the day after Man Utd’s abject defeat to Midtjylland. This is because football clubs and universities – and in fact big businesses – have something in common.

That something is the power of history. As Martin says, universities rely upon reputation, and reputation is built over time. Oxford is one of the world’s best universities not because it is remarkably well-managed, but because of its history.

Exactly the same is true for football clubs. Man Utd still get capacity crowds not because they are playing brilliant football – as their fans noted last night, they are not – but because they benefit from a loyalty built up over decades. People watch Man Utd not to savour the sublime talent of Marouane Fellaini or workrate of Memphis Depay but because they got hooked on Best-Law-Charlton-Scholes. Similarly, Oxford’s reputation owes far more to Evelyn Waugh than it does to its here today-gone tomorrow-forgotten the day after Vice Chancellor*.

What’s true of football clubs and universities is also true for big companies. If I ask you to picture, say, Ford or Coca-Cola, the image that comes to mind might well be one from decades ago.

What Edmund Burke said of society applies to organizations – at least those with big brands. They are “partnerships . . . not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”

And brands generate rents: if you spend £30,000 on a BMW you’re buying £20,000 worth of car and £10,000 worth of badge. I get paid for working at the IC but not for blogging because the IC has, over the years, built a monetizable brand. The Glasers take cash out of Man Utd thanks to a brand built by past players and managers. One of the strongest facts about CEO pay is that it is correlated with firm size (pdf), but that size is often a product not of the CEO’s own efforts but of historic growth. As Barack Obama said (in a different but applicable sense), “you didn’t build that.”

In all these cases, what’s going on is a form of exploitation. Bosses and workers today are making money not (just) from their own efforts, but from the work of their predecessors. They are not (just) value-adders but value-estractors.

Of course, this point generalizes. I owe my income not just to the IC’s history but to British history generally. I’m rich not because of my talents but because as Gary Lineker says I was fortunate enough to be born in this country rather than in one that hasn’t enjoyed three centuries of economic growth.

All this provides a justification for (globally) redistributive income taxes. But perhaps it justifies more than that. Seen from this Burkean perspective, bosses of great organizations – universities, businesses, whatever - are merely custodians of them. This makes it all the more necessary to restrain their power by more collective forms of leadership – a point which is all the more true because there are also other cases for restricting bosses’ control and empowering workers.

* I was going to say that its reputation is founded upon the calibre of its graduates, such as um, err -wait they’ll come to me.  

Comments

[Phil]

See also "Proof that universities are not businesses" here:
http://leiterreports.typepad.com/blog/2016/02/proofs-that-universities-are-not-businesses-look-who-the-richest-ones-are.html

[Luis Enrique]

I often think this about the concept of marginal productivity - not a very original thought! - that it is probably more often negative than appreciated. I imagine it's pretty easy to take the helm of an august institution and accelerate its depreciation.

[redpesto]

"Oxford is one of the world’s best universities not because it is remarkably well-managed, but because of its history."

One thing that occasional strikes me is how *in*flexible such universities are compared to 'younger' institutions (post-60s unis and the ex-polys). The formation of the 'Russell Group' wasn't such an 'Ivy League' of the best as an attempt to 'brand' a wannabe-cartel.

[Bob]

"In all these cases, what’s going on is a form of exploitation."

But depressing as it is, scapegoating vulnerable groups in necessary for human survival and arguably "moral":

https://originofspecious.wordpress.com/2016/02/17/hayek-was-wrong-because-girard-was-right/

"But the most historically common form of spontaneous order is that of a human community tacitly agreeing to vent all of its violent frustration upon a defenceless subgroup. Girard’s work consisted of exposing the secret violent origins of almost all human institutions. Our enthusiasm for our institutions must be brought face-to-face with their origins."

"If desire is, through the mechanism of mimesis, so inexorably geared towards violence, how has society survived at all? Certainly Hobbes’s theory of the transition from the state of nature into civil society does not provide an adequate reply; Spinoza gave powerful arguments against the idea that civil society brings an end to the violent condition of rivalry that defines the state of nature."

"Girard discovered the answer. Society has survived because it has developed a mechanism for concentrating violence on a limited number of victims. This he called the “scapegoating mechanism”. In fact the scapegoating mechanism exploits the very mimetic mechanisms that render it necessary for society’s survival. People who fall into violent, obsessive desire quickly lose their grip on reality. It is easy to convince them that the source of their frustration – their inability to satisfy their mimetic desires without running into violent conflict – is the fault of some group of scapegoats. It is important for the scapegoats to be a disenfranchised minority, so that the violence of society can be turned upon them without fear that they will be avenged. Here, again, Girard’s theory renders unsurprising that which economists and political scientists are at a loss to explain: for instance how the favoured ‘cure’ for economic depression is to visit structural violence upon low-paid immigrants, racial minorities, the homeless, the unemployed and the disabled."

Girard understood that, other than the desire for basic necessities, human desire is almost entirely mimetic. One person wants X because somebody else – a mimetic model – wants X. It is entirely irrelevant that there is as much and as good outside the scope of the model’s desire. What the desiring subject wants is what the model wants, not something else equivalent in terms of utility.

It is not hard to see that this leads inevitably to violence. Desires of different subjects are determined to fix upon the same rivalrous goods. Worse, there is a mechanism that exacerbates desires past the point where reasonable agreement remains an option. Your desire for X causes me to want X. My desire for X then leads you to want X even more. My desire is in turn strengthened, until the positive feedback mechanism brings both of our desires into the category of obsession: the greatest engine of unrestrained violence in human culture.

"The inevitable convergence of human desires on rivalrous goods explains the prevalence of what economists call ‘shortages’. Economists explain shortages by the failure of prices to adjust to the point where supply equals demand. But their explanations assume that human desires are fixed. Girard shows that, on the contrary, desires increase exponentially in intensity, until shortage is converted into violent, obsessive rivalry. "

[David]

Wow... a French philosopher predicted the origins of the Tory party.... is there is hope for harmony and understanding in the EU after all!

[Bob]

"Wow... a French philosopher predicted the origins of the Tory party.... is there is hope for harmony and understanding in the EU after all!"

To be clear, I am merely stating that view. I do not agree with it!