Capitalism, Models Of

It is a recurrent feature of organization studies to seek to place organizations in their environment, or more precisely, to explore how and why they adapt or transact. Among the most popular variants are locating organizations in their product markets (contingency theory) and exploring their embeddedness in different institutional settings (societal effects and other institutionalist theories).

This entry considers whether capitalism as an environment makes a difference and if so, in what ways. One thing should be clear from the outset: It is a contentious issue. There is a long history of claims that capitalism has been transcended or superseded and therefore that organizations can and must behave in very different ways. A prominent example is Peter Drucker's concept of postcapitalism and postcapitalist organizations. This was in fact an early variant of what is now called a knowledge economy thesis whose central claim is that the traditional factors of production—land, labor, and capital—are becoming obsolete and that the only critical source of competitiveness and innovation is knowledge.

Skeptics and critics of such ideas emphasize the continuing constraints of capitalist political economy on the functioning of organizations and particularly the nature of work and employment relations. Such constraints can be conceptualized as universal or [Page 143]contingent. Universal constraints refer to the effects of the structural properties of capitalism in general on business organizations in particular. In contemporary organizational analysis, such theorizing would be associated with Marxist-influenced perspectives such as labor process theory. For example, it posits the existence of a control imperative. As market mechanisms alone cannot regulate the labor process, systems of management are utilized to reduce the gap between labor purchased and its profitable potential. We will return to these issues in the next section.

With respect to contingent constraints, other radical theorists are likely to accept the dominance of private ownership and markets and their general impacts on organizations, but argue that some form of paradigm break has taken place. At one level, such arguments might be articulated in terms of a periodization such as advanced or late capitalism. Alternatively, one finds more specific conceptualization such as flexible capitalism, post-Fordism, or informational capitalism. A related focus is on varieties of capitalism—Anglo-Saxon versus Rhineland and East Asian models.

This entry will expand and comment on the above forms of argument about capitalism, its various forms and imputed influences on organizations. We begin with issues concerning its universal characteristics and whether they are still typical of contemporary societies.

At the core of Marx's and Weber's writings was a sociology of capitalism that differs less than is commonly assumed. Capital, used by merchants in trade and invested in the hope of greater returns, had been around a long time, but in premodern times was not the basis of economic life. For Marx, capitalism emerged as a system (or mode of production) with the generalized production of commodities based on wage labor and generalized competition between privately owned firms as the driving force of accumulation. Strictly speaking, this is a description of a type of economy rather than a society. But under capitalism, the individual and society (including the state) are gradually subordinated to the market, and accumulation becomes the dominant principle of societal organization. In contrast, Weber regarded capitalism as an expression of a wider modernity in which all aspects of social life are subject to rationalization. However, capitalistic enterprise, with its unprecedented calculation of economic activity (including the management of labor), was the template for rationalization. In addition, the actual description of capitalism was familiar: generalized profit-seeking and private property, wage labor, and the expropriation of workers from the means of production.

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