Biographies of Six Foundational Organizational Theorists

Adam Smith and the Foundations of Free-Market Economics

Born on June 5, 1723, in Kirkcaldy, Scotland, Adam Smith's father died before his birth, and he survived being briefly kidnapped by gypsies at the age of four to become one of the most prominent and influential economic theorists in history — known today as the "Father of Economics" (Rae, 2009). Although his contributions were numerous, Smith is most famous as the author of An Inquiry into the Nature and Causes of the Wealth of Nations (1776), which maintained that a laissez-faire approach to commerce was in everyone's best interests, and that the extent to which governments intervened was the extent to which the numerous benefits of free trade were diminished (Butler, 2019).

Smith did not conceptualize international commerce as a zero-sum enterprise but rather as an opportunity for all stakeholders to benefit. According to one of Smith's biographers, "Because trade benefits both sides, it increases our prosperity just as surely as do agriculture or manufacture [and] a nation's wealth is not the quantity of gold and silver in its vaults, but the total of its production and commerce" (Butler, 2019, para. 3). It was also Smith's now-famous view that marketplace forces would invariably sort out which activities were profitable and therefore worth pursuing, while simultaneously weeding out those that were not — guided by the influence of an "invisible hand." As Butler reports, Smith believed that "Freedom and self-interest need not produce chaos, but — as if guided by an 'invisible hand' — order and concord [and] as people struck bargains with each other, the nation's resources would be drawn automatically to the ends and purposes that people valued most highly" (2019, para. 6).

The fundamental economic principles set forth in Smith's Wealth of Nations were not only highly influential among his contemporaries but remain salient today. As Butler notes, "Even today the common sense of free trade is accepted worldwide, whatever the practical difficulties of achieving it" (2019, para. 5). Indeed, while the "practical difficulties" of conducting modern international trade extend to many factors that Smith could not have envisioned, his basic economic tenets remain relevant despite the profound changes that have taken place in the global marketplace over the intervening three centuries. As Butler concludes, "Smith had a radical, fresh understanding of how human societies actually work. He realized that social harmony would emerge naturally as human beings struggled to find ways to live and work with each other" (2019, para. 7). This also means that Smith's contributions drew on empirical observations about how the real world operated, rather than on abstract theorizing.

Karl Marx and the Conflict of Capital and Labor

Born on May 5, 1818, in Trier, Germany, Karl Marx was a friend and collaborator of other influential economists of the era, including Friedrich Engels (Mihalache, 2015). Together with Engels, Marx co-authored the enormously influential Communist Manifesto in 1848, which was prefaced with the prescient warning that "A specter is haunting Europe — the specter of Communism" and concluded with a call to action for the "Working men of all countries [to] unite!" (as cited in Mihalache, 2015, para. 6). These two formative statements would become a clarion call for working people around the world in the years that followed. Given their highly controversial nature, it is little wonder that Marx has attracted both admirers and detractors. As one biographer notes, "Much of Marx's comprehensive view is wrong, in some cases catastrophically wrong. But the 'redeemable parts' of Marx show some profound insights into the problems of capitalism in democratic states" (Munger, 2020, p. 509).

It is important to note that Marx built significantly on the earlier work of other influential theorists. According to one biographer, "Picking up where Kant and Hegel left off, Marx reformulates the theory-praxis problem in a revolutionary way. For him, change is no longer introduced by dogmatic assumptions; rather, it is through the critique of the old that the new becomes possible" (Mihalache, 2015, para. 7). In other words, Marx held that it is essential to continuously question the status quo and its antecedents in order to identify social, political, and economic constraints and opportunities.

Although the conflict of capital and labor explicated in the Communist Manifesto has been interpreted in different ways over the years, most authorities agree that the main thrust of Marx's economic principles concerns the fundamental struggle between social classes — a struggle that tends to make the rich even richer while keeping the downtrodden masses in place. In this regard, Munger (2020) advises that the key point made by the Communist Manifesto is that "the motor animating historical change is class struggle" and that "two large-scale social phenomena condition class struggle: institutions and ideologies" (p. 510). The institutions to which Marx refers are not necessarily physical entities but are comprised of both formal and informal rules — typically politically based — that serve as the framework generating class-based struggles. Ideologies, conversely, represent the shared consciousness and accepted norms that serve as the rationale for institutionally generated class conflict (Munger, 2020). One of the key insights to emerge from a close reading of the Communist Manifesto is therefore the manner in which the capitalist system's commodification process operated to place workers at a continuous disadvantage by separating them from the full benefits of their labor (Munger, 2020).

Max Weber and Rational Bureaucracy

The historical record indicates that the origins of the term "red tape" date back at least two centuries, but the inefficiencies that characterize many bureaucracies today suggest that far more needs to be done to realize the full range of advantages that the bureaucratic model can provide when properly implemented, administered, and overseen — as advocated by Max Weber, who based many of his concepts on the work of Adam Smith (Max Weber and the idea of bureaucracy, 2021).

The research also makes it clear that Weber would firmly object to the types of nepotism that have periodically run rampant in government and organizational leadership. Weiss (1983) notes that "Weber argued for the maximization of organizational efficiency as a consequence of legitimate, rationally-based authority [and] had little regard for favoritism based on status (especially family connections) and hiring of personal friends and saw bureaucratic organizations as correcting such practices" (p. 242). Furthermore, it is especially noteworthy that Weber's series of essays during the period from 1905 through 1920 was based primarily on his views about the manner in which human societies tend to marginalize some demographic segments at the expense of others — mirroring debates advanced by other early economic and political theorists of the era. As Weiss (1983) points out, "The central purpose in Weber's essays on bureaucracy was not to provide advice to managers. Rather, he wished to address a long-standing theoretical debate carried on by Rousseau, Hegel, and Marx concerning the basic nature of domination in society" (p. 242).

From Weber's perspective, the "basic nature of domination in society" was one of the major downsides of bureaucracies, and bureaucracies required several attributes in order to actually effect domination over others in a social context. Weiss (1983) advises that "Domination requires, in addition to an administrative staff, a perceived consistency with widely held values, which he called legitimation [and] presented three modes by which a system of domination might stake a claim to legitimacy: the now-familiar categorization of traditional, charismatic, and rational-legal authority" (p. 243). Building on Marx's analysis of how workers were systematically disassociated from the means of production and the fruits of their labor, Weber maintained that these processes were part of a broader process he termed rationalization — an outcome he considered essential for modern societies seeking to avoid the dominating effects of bureaucracies. As Weiss (1983) concludes, "Weber's writing on bureaucracy is understood most appropriately as an examination of the characteristics of a system of domination (a central requisite of which is an administrative staff) employing rational-legal legitimation" (p. 244).