Aristocracy vs. Democracy

The continental European tradition of an organisation action is grounded on basic hypothesis of the specific role of a person or category, which is able and has right to organise: to rule, to govern, to lead. This assumption is special for the aristocratic vision and includes usually the fundamental assumptions:

ü this person or group possess the specific knowledge, historically passed on to the members of this groups (estate, class, category, family) by the intimate institutions (diploma of a school, studying with a famous teacher, etc.);

The HEC Paris (ecole des Hautes Etudes Commerciales) is the famous high school of business education, the graduates form their network according not only the HEC studying, but also their roots, the origins, the family.

ü they hold specific competencies, skills and personal features, as charisma, leadership, and so on, due to the experience of the authority of their ancestry

“the Kennedy clan, one of those families which in the United States epitomizes the political aristocracy”

Etschmayer P. Obama's 'Noble Blow' //

Nachrichten, Switzerland, 2008 Jan 28

ü they have right to govern due to their birth and their background and education.

8 USA Presidents were the Harvard University graduates.

Mark Zuckerberg and Bill Gates were Harvard students.

But this approach implies that the mass people are not involved in the governing, due to their lack of intellectual or educational ability.

The Democracy gives to everyone, who has a good solution, right to present and to discuss his/her version of decision. This tradition is based on the individualist culture of Anglo-Saxon world. As we can see in the reality, often the democratic form is substituted by the authority of several families and quarters, by the way, e.g., of the representative democracy instead of participative one.

"The hereditary branches of modern governments are the patrons of privilege and prerogative, and not of the natural rights of the people, whose oppressors they generally are."

Thomas Jefferson to George Washington, 1784.[4]

Basic Principles for social and economic organisation

Any social organisation as a structured group of individuals will require some essential principles to be respected.

Legitimacy

No decision is executed, if the person emitted the order is not perceived as a legitimate source of orders in the field.

Max Weber distinguishes 3 reasons for someone is legitimate (sources of legitimacy):

- tradition,

- law (rational-legal legitimacy),

- charisma, emotional influence, a type of magnetism.

The modern sociology adds the 4^th reason:

- tradition, history, practice, custom, habit, the continuity of processing

“We do like this, because it is the way our company has always been”.

- legal ground, written text, contract concluded

“I shell not do this work, because it does not included in my labour contract”.

- charisma, the personal feature, ability to lead, leadership as a quality of personality

“Our chief decides, what to do. We can’t bear the responsibility, he can”.

- expertise, competence.

“Let invite a specialist-consultant and let follow his/her indications”.

So, in organisation the employees will accomplish their work in required volume and of required quality only on condition that the order is emitted by the actor (person or unit) possessing either the legal authority to emit orders, or the sufficient experience and qualification, or the emotional pressure or attraction, or if “always it was running like this”. In any case, the command must be justified by any sort of legitimacy.

Consumer sovereignty argued the managers’ right to be obeyed – only the expertise to guess the needs of customers and to offer them what they need, only this personal competence is the key for authority prerogative on the glutted market today.

Equity

No decision is carried out, if it is perceived as not correct, true or fair.

The principles of equity, equality, justice and fairness in relationships between people are crucial in the management – if the matter is not the activity of slaves. The degree of freedom in the relationship “capital – labour”, also called ”industrial relations”, is to be discussed, it depends on multiple factors, including producing or service sector, mass or individual product, high level of technology or manual labour at assembly line, etc.

“The Homestead Strike (1892) between the Amalgamated Association of Iron and Steel Workers and the Carnegie Steel Company erupted over proactive attempts to break the trade union.

Henry Frick had been placed in charge of the Carnegie Steel Mills and was determined to get rid of the union. When the union asked for wage increases, Frick responded with wage decreases. The union went on strike.

An armed battle erupted between guards and workers ending in seven guards and 11 strikers killed”[5].

The equity theory in organisational science proposes that a person's motivation is based on what he or she considers to be fair when compared to others and to his/her efforts.

Fig. 1. Process of comparing inputs (efforts) and outputs (achievements and rewards)

Justice means that the actor’s efforts must be made up for, and the equity connotes, that the compensation is the same for all actors giving the same efforts.

The study of G. Johns[6] proved: when people saw both their commitment to the organisation and the organisation’s commitment to them as high, absenteeism is diminished.

In the same time, the organisation as a group striving a common goal, is interested to make up for results and not for efforts – and obviously, different actors achieve sometimes the same results with different efforts.

That is why the equity is a complicate principle of regulative mechanisms.

1.4. Organisation vs. Chaos – trust or contract

Organisation represents a way to fight against a chaos of free individuals. A. Smith talked about an “homo eoconomicus” only with clause of moral, religious and ethical limits. After A. Smith work, the classical and neo-classical economic school reduced this concept to the model of a free egoist economic agent of today, without past and future, without “Moral sentiment”[7].

Market as chaotic model of interactions today has got a lack of regulation, which leads to crisis as the 2008-2011 world financial collapse. So, the economic world should find a state close to equilibrium between huge centralised organisation (as administrative economy of the Soviet Union) and pure market.

Contract

The pure “rational economic egoist behaviour” is based on the negotiations between the actor and other members of society, to search a way to satisfy the interests and needs of the actor, within the limits of the interests and needs of others. Such negotiations lead to conclude contracts between the actors and others concerned.

This theoretical description fits the notion of market, where the information, negotiation, bargaining and service of arbitration are not free of charge. The transaction costs are related to the necessity of foundation for decisions (the first resource is the information on counteragents), of making decisions (including communication) and of control on the decisions’ implementation.

When the space crafts producer is seeking for materials, it evaluates not only the price offered by a company-supplier, but also its capacity to fulfil the order in time, in necessary volume and with the fixed level of quality (especially, for the conditions of aerospace), and with guarantee, that the company is able to produce the material at all.

Inside an organisational structure there is less costs to get information (from the running flows) or to assure the obligations’ fulfilment (due to the hierarchical duties).

Date: 2016-03-03; view: 795