Capitalism by Kocka Jürgen;

Author:Kocka, Jürgen;
Language: eng
Format: epub, pdf
Publisher: Princeton University Press
Published: 2015-06-28T16:00:00+00:00

From Ownership to Managerial Capitalism

Analytically, the capital-labor relationship is central to all variants of industrial capitalism. Historically, it varies a great deal. One of the factors determining this was the profound gestalt switch that unfolded in the structure and strategies of enterprises in the last two hundred years.

A conceptual distinction needs to be made between capitalists and entrepreneurs. The capitalist provides capital and decides in principle about where and for what it is used, assumes the risk involved (in theory, at least), and pockets the profits that arise. The central responsibility of the entrepreneur is to manage the enterprise, to that end making decisions about the enterprise’s goals in detail, its position on the market, its internal structure, and also about how its workforce is employed.6

At the top of an enterprise in the first phase of industrialization, sometimes also called the Industrial Revolution, the roles of capitalist and entrepreneur were combined in one and the same person. He—it was usually a male person, but there were women as entrepreneurs, too—owned his enterprise and managed it. He raised capital, as a rule, from his own savings, through personal loans, more rarely by way of a bank credit, perhaps also through cooperation with a partner, and he was liable with his entire fortune. Even when the factory had become fully grown—for example, a mechanical spinning and weaving mill with one or two hundred workers—it usually remained a manageable enterprise constituted as a partnership, under the control of an owner-entrepreneur who frequently preferred seeing himself as “king of the castle” exercising sweeping authority. That the boss was simultaneously capitalist and entrepreneur had legitimating advantages for him. The entrepreneur’s claim to leadership could be justified by reference to the risk ultimately born by the capitalist, the claim to profits with reference to the work of the successful entrepreneur.

During the early phases of industrialization, entrepreneurs had close ties with their social milieu almost everywhere, above all through their families. Start-up capital was frequently raised within the circle of family and relatives. The history of the Rothschild international banking house; of the Siemens brothers’ close cooperation in establishing their enterprises in Berlin, London, and Petersburg; or of the role of the Brown family in the network of commercial enterprises in Great Britain and the United States (Liverpool, New York, Philadelphia, and Baltimore) illustrate, for the second third of the nineteenth century, how the cohesion of entrepreneurial families contributed to solving management problems, to creating cross-border business ties, and to networking with relevant social milieus. The family was thus both a precondition for and means to market success. Economic and cultural capital was passed on within the family: family firms often resulted from inheritance, which was also their goal. This expectation evidently motivated many owner-entrepreneurs to undertake investments that were future oriented. For the most part, these owner-entrepreneurs were energetic, coolly calculating persons ruthlessly pursuing advantage—typically men, rarely women—who knew how to outdo their competitors and exploit their workers. Yet their close family ties gave additional meaning,

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