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Paradigm Shift in Economics and Management by Gilbert Lenssen

Notes on the Methodological, historical, cultural and ontological aspects of the transformation of economic thought.

Introduction

I. Methodological Critique

  1. The process of established scientific theory is multi-dimensional: empirical, hermeneutical, historical / dialectical and pragmatic modes need integration.
  2. The models of Action Research and Cybernetics II provide opportunities to overcome the curse of the reductionist separation of thinking / doing, object / subject and mind / matter.
  3. The dramatic loss of practical relevance of management and organisational theory gives ample space to gurus, pseudo scientific approaches, and fashions-of-the-day: business re-engineering, lean management, new age economics. Their message that complex problems need simple answers: the opposite from what is really required.
  4. Rationality is insufficient for understanding the complexity of the post-modern age. Power, play, creativity, cultural assertivity are just a few phenomena which cannot be understood from the conventional rationality paradigm.
  5. The new "terrain vague" between science and ethics (Guillet) requires an inquisitive, non-dogmatic curiosity which is not aimed at reducing uncertainty and establishing predictability. Quite the contrary.
  6. Intellectual pursuit in the domain between (Lyotard)
    • output / performance orientation
    • artistic : philosophical activity
    • orientation to universal values
    is a highly paradoxical process which requires multiple loop reflection and action (to paraphrase Argyris).

II. Historical Critique

  1. The mechanistic scientific paradigm is ahistorical. This is partly a reaction against the idealistic dialectical historical school. On the other hand, it illustrates the euphoria of linear progress of the sciences to gradually overcome all mystical, irrational beliefs and conquer and submit all domains of reality to scientific discipline.
  2. Economics as a discipline is just over two centuries old and business economics has only existed as a discipline for less than a century. Their development has not been linear. Themes and hypotheses are recurring albeit in different settings. Economic systems are themselves non-linear and cannot be captured in concepts of rational behaviour in a mechanical linear world of equilibrium.
  3. Adam Smith is regularly invoked by those who subscribe to the concept that the operation of a market economy is incompatible with collective responsibility. They often quote from the "Wealth of Nations" but have probably never read Smith's "Theory of Moral Sentiments".
  4. Ignorance of economic models and experiments like Silvio Gesell's have led to uncritical acceptance of established concepts of policy, eg. interest rates as necessary tools to ascertain capital productivity.
  5. Genuine interest in Islamic traditions in economic thought would have contributed equally to this insight. (Baeck) In fact, the islamic tradition is part of the Mediterranean tradition. Based on the legacy of Aristotles, Hellenism, Seneca, Jewish and Scholastic thinkers and Islamic scholars, the Mediterranean school came to very advanced levels of economic wisdom, i.e. in the school of Cordoba at a time when Northern Europe was still in the late dark ages. Moors like Ibn Rosjd as well as Jews like Mosje ben Maimoen took part in this truly pluralistic and tolerant school in Cordoba.
  6. The Atlantic tradition of economics which started to replace the dominance of the Mediterranean economic thought in the 15 / 16 th century was uplifted by the movement of the Enlightenment. This movement, however, lost its sublime aura when aesthetics, respect for the laws of nature, historical awareness and ethical standards were pushed to the background. The vision of the Enlightenment became hostage to positivism and reductionism which fixated Western man away from the morally good to the world of material goods as the sole source of purpose and meaning.
  7. The Atlantic tradition helped establish the industrial system which is not sustainable on a global level. This requires a radical overhaul of the paradigms of the industrial age. Interest in the relevance of e.g. the Mediterranean tradition, is not necessarily regressive but can inspire the search for the new paradigms for society and the economy.
  8. The question remains how the growing uneasiness with rationalist thought at the end of this century can prevent us from typical fin-de-sciecle escapades into idealistic projections and instead inspire reflective practitioners to adopt creative action models of the pragmatic tradition.

III. Paradigmatic Critique against the background of the developments in the natural sciences (based on Franz Moser's extensive work).

  1. Since the beginning of century physics, biology and mathematics have revolutionised themselves and gradually abandoned the Newtonian world view. The mainstream of social sciences seem still to be mesmerised by this world view.
  2. The natural sciences have long left the position of critical realism and have moved to a constructivist approach to reality. So far only psychology has followed this shift. The revolution in physics - quantum mechanics poses the question of how real is reality (EPR paradox, Schroedinger).
  3. The revolution in biology - the new paradigm of self-organisation poses the question of what life is and how does it develop (Prigogine, Maturana, Sheldrake) in a way closely linked to the vitalist approach of Bergsson.
  4. The question of consciousness and the role of information in evolution was posed by the work of the paleontologist Teilhard de Chardin. The revolution in psychology establishes the new paradigm of consciousness and confirms the dimensions of spacelessness and timelessness (synchronicity) which were experimentally proven by the physicist Alain Aspect. Its application in a kinetic management model is only in its very early stages.
  5. Chaos theory stresses the non-linear development of systems. Its application to economic systems as chaotic information eco-systems is not readily accepted in mainstream economics. If at all in macro-economics, but certainly not in management theory.
  6. The multidisciplinary dialogue with the natural sciences poses questions of methodology and transfer of hypotheses to the field of social sciences. Nevertheless, the fascination of economic science with Newtonian physics earlier this century should as a position that the modern natural sciences have long left lead at least to a critical interest in the developments of physics, biology and other disciplines.
  7. Out of this critical dialogue emerges a world view of risk, uncertainty, unpredictability, self responsibility, and energy and information as the driving factors of evolutionary learning. Their implications for economics and management could be most substantial.

IV. Cultural Critique

  1. Culture has been ignored largely in economic theory, but it never stopped playing an important role in society, in the economy and in management. The fact that we come to realise this is partly a reaction against the dominance of neo-classical supply economics of the eighties.
  2. However, the increasing role of values in economic thinking is also a result of the growing interdependencies and complexities in perceived social and economic realities. However, traditional clusters of values and norms have become obsolete with the end of global ideologies. Ethical selection criteria are increasingly unclear. At the same time the perceived need for value orientation is growing. This leads to an eclectic range of reactions to the resulting feeling of uncertainty.
  3. The process of aesthetics can support the exploration of this field of uncertainty. This however assumes that the search for ultimate truth and stability which is engrained in economic theory is abandoned.
  4. Management theory is heavily influence by American cultural a prioria. Management cultures in Europe are vastly diverse and present a richness in perspective, depth, historical dimensions and problem solving capabilities. They add also more complexity and interdependency.
  5. The multicultural business organisations of Europe could contribute substantially to newly emerging societal paradigms.
  6. Cultural diversity could be the platform for regional economic development based on subsidiarity and sustainability and replace the paradigms of globalism and top-down steering.

Conclusion

Epistemological questions are giving way to fundamental ontological questions on the purpose and role of economics in a world of increasing risk and insecurity faced with the crisis of meaning. This provides enormous opportunities for rejuvenation and regaining of credibility within an interdisciplinary approach.

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