George Lodge was a Professor at Harvard Business School until his retirement in 1997. He also served in the Federal government under Presidents Eisenhower and Kennedy, and was at one time a Republican candidate as Senator from Massachusetts in 1962,. (Click here for more biographical information)
In his book The American Disease, Lodge argues that in a number of areas American practice has greatly departed from American "individualist" ideology. This has happened because practical adaptation to changing conditions has required a series of shifts in government policies and in the relation between government and business.
For example, according to traditional individualist ideology, large corporations like Chrysler and General Motors are "private property," whose owners are legally entitled do with them whatever they want. But what corporations do has such a great impact on the lives of the general public, and on the national economy, that we no longer really treat corporations as private property, and do not allow owners and managers to treat them as private property.
But we have made this and other shifts in our actual practice, without a corresponding shift in our ideology. Lodge calls this an "ideology gap," and argues that it is the source of many problems in public life. Lodge's use of the term "ideology" is similar to my use of the term "frame." Many problems arise because Americans' ideological frame, their sense of the way things are supposed to be, is so often at odds with our actual practice. Americans' instinct is to try to make actual practice conform more closely to their individualist ideological frame. Lodge argues that this does not happen, and in fact should not happen, because individualist ideology is in so many cases unsuited to actual conditions. It would be better, he argues, to consciously change our ideological frame itself.
Lodge uses the modern philosophical term "Communitarianism" to describe the ideology he recommends as an alternative to "Individualism." The Communitarianism he describes is in many respects similar to classical Confucianism.
The bottom line: Much of the actual practice in modern US government and business organizations is already in line with the Confucian frame. Many of our actual practices which depart from modern Western individualist ideology, would be supported by Confucian ideology. In many respects, adopting a "Confucian" frame in the US today would not require great changes in our actual practice. It would rather allow us to more fully accept our actual practices, and help us to deal rationally with them.
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How the ideology gap happens.
(What Lodge calls an "ideology gap" is what I call, "comparing ideals to actualities." Lodge focuses on the way in which the actualities of American politics have departed from deeply held American ideals. Americans committed to Western individualistic ideals tend to see this departure as a bad thing, and instinctively think that the solution to our problems is to bring actual practice more in line with our ideals. Lodge thinks, on the contrary, that many of these practices are actually good, and the solution is to change our ideals to bring them more in line with the practices which we have found practically useful. In some ways, adopting Confucian ideals would be in line with what Lodge recommends -- Confucian ideals would legitimate many of our actual practices which seem illegitimate if judged in the light of traditional Western individualist ideals. ML
I open with an excerpt from Lodge's book that makes his main point in a generalized way, which he describes as a gap that develops between Ideology and actual practice. In excerpts later to come, Lodge describes the specific character of traditional American Ideology, deriving from John Locke. ML.
During [an initial] time period... institutional practice conforms to the prevailing ideology, and after that, it departs: changes in the real world compel the institutions to behave differently than they did. [So at a later] time... institutional practice is very different from what the ideology presumed: the old hymns are being sung, but they are not being practiced. There is a gap... which may be called a "legitimacy gap." There is an ideological schizophrenia: the new practice brings forth a new ideology to justify itself, but loyalty to the old ways discourages its articulation. As the legitimacy gap widens, two conflicting pressures converge on managers: one seeks to force errant institutions back into conformity with the [old] ideology; the other argues for a more forceful and articulate expression of the new ideology, which is the only means of legitimizing what is actually occurring...
During the last eighty years, and particularly in the 1960's and 1970s, the real world in America has forced upon institutions a variety of changes that demand an ideological transformation. Understandably, leaders have been reluctant to make this ongoing transformation explicit, because the traditional ideology has great appeal.
Our current posture, then, has both advantages and disadvantages. On the plus side, we are recognizing-- if only implicitly-- the need for change. On the other hand, we are still dragging our feet... The consequences are unfortunate: further delay in recognizing the ideological implications of what we are doing merely makes the task of transition more difficult, the related costs higher, and the final outcome less certain.
[Ideological] assumptions are an important feature of the current reality, rooted deep in the collective heart of the community. Some of these ideological touchstones are useful; others are less so. The characters portrayed by John Wayne are an interesting example, at once superficial and profound. Surely there is something glorious about Wayne's stock character, the lone gunman, who swaggers down the streets of Dodge City rooting out -- and shooting up -- sinners. Steeped as we are in our individualistic ideology, we respond instinctively to Wayne's example; we internalize it. But the same performance would take on a different cast in Times Square; a John Wayne would be likely to hit innocent bystanders in the course of the purification. Americans are fully aware of this incongruity, and yet we find it extremely difficult to control the use of guns. Foreigners examine our reality and find it difficult to comprehend: they see a deadly romance with weapons; they do not fully understand the power of traditional myths in contemporary America. These myths effectively retard institutional change, even as other patterns are demanding it.
Approaching the same phenomenon from another vantage point, let us examine briefly the effect of the real world on the Japanese ideology. A collection of small, infertile islands, with limited natural resources and a population of 120 million people, Japan is almost totally dependent on an often hostile world for its survival. As would be expected, Japan's ideology-- again, the framework of ideas that are used to make values explicit and to justify institutions-- is very different from that of nineteenth-century America, in which a sparse population was attempting to tame a wilderness of almost unlimited scope and resources. Without much exaggeration, we can trace many contemporary attitudes in Japan to limits imposed by the real world. Japanese attitudes about the role of government, the role of business, and the relationship between the two; the role of trade unions; and the means of self-fulfillment and self-respect for the individual in the family, the village, the firm, and the nation are very much rooted in that reality.
To argue, therefore, that the Japanese "cheat" in their competition with the West, that they violate the accepted rules of the game, is specious. It is far more productive to examine the rules in their context, and to extrapolate from that examination. How do the competitors' approaches to the game differ? If the world is likely to choose one approach over another -- and it will; it will adopt the more successful strategy -- then whose rules are likely to be picked? Ultimately, these questions require an inspection of ideology, because that is where the rules are rooted.
The traditional ideology of the United States is an individualistic one. It consists of five great ideas that first came to this country in the eighteenth century, having been postulated in seventeenth-century England by John Locke, among others. These ideas, as noted, found fertile ground in the vast, under-populated wilderness of America, and served the country well for the first century of its existence. It is important to understand how appropriate and useful these principles have been to America: although they have been buffeted and eroded throughout our history by communitarian practices-particularly in times of crisis
-- they continue to be remarkably resilient. They are, says Samuel Huntington, "at the very core of [our] national identity. Americans cannot abandon them without ceasing to be Americans in the most meaningful sense of the word."A review of the five great Lockean ideas provides a starting point for understanding the transformation we are now experiencing. Let us look at twentieth-century America through the eyes of John Locke.
1. INDIVIDUALISM. The community, as Locke would see it, is no more than the sum of the individuals within it. The values of self-fulfillment and self-respect are realized through an essentially lonely struggle. The fit survive; if you do not survive, it is because you are somehow unfit.
Some corollary principles:
a. Individuals are equal in the sense of deserving equal opportunity.
b. Although inherently separate, individuals are tied together by the notion of contract: as buyers and sellers, employers and employees, and
-- in earlier times-- husbands and wives. The contract, in its pure state, is individualistic; however, the contract became collectivized (and therefore corrupted) with the rise of the trade-union movement.Pure individualism, of course, has been augmented in the real world of American politics by interest-group pluralism. Individuals who have found themselves unable to reach the levers of power have banded together, and the direction of the community has been determined largely by the pressure of conflicting interest groups: sheepherders, ranchers, the railroads, environmentalists, black-power advocates, feminists, and so on.
2. PROPERTY RIGHTS. Property consists of one's body and one's estate, and property rights are the guarantor of individualism. Through this notion, the individual is protected against the predatory inclinations of the sovereign, and from it the corporation derives its right to exist, and its authority to act. By extension, the authority of managers is rooted in the property rights of the corporation's owners
-- that is, its shareholders.3. MARKETPLACE COMPETITION. The control of the uses of property is best left to proprietors (preferably of small firms) competing in an open marketplace to satisfy individual customer desires. Adam Smith's "invisible hand" assures that the good community results. (This idea has been explicit in traditional United States antitrust law and practice.)
4. THE LIMITED STATE. Government is a necessary evil. Its fundamental role is to protect property and enforce contracts. Smaller is better: government should be kept divided, checked, and balanced. It should not plan or act coherently, even if the result of not doing so is a fragmented instrument responsive only to crises and interest groups. "Because of the inherently antigovernment character of the American Creed," says Samuel Huntington, "government that is strong is illegitimate, government that is legitimate is weak."
5. SCIENTIFIC SPECIALIZATION. Knowledge, the justification for education and science, is obtained through specialized analysis. If experts understand the parts, the whole will take care of itself.
Implicit in individualism is the assumption that man has the desire to acquire power-that is, to control external events, property, nature, the economy, politics, or whatever. In combination with the concept of the limited state, this drive serves to guarantee progress through competition.
Many of our most important institutions
-- notably the large, publicly held corporations, trade unions, and the federal government -- have departed radically from the old ideology, or are in the process of doing so, in order to achieve such goals as efficiency, economies of scale, productivity, and global competitiveness.Although many small enterprises remain comfortably and acceptably consistent with the five basic Lockean concepts, and probably can remain so, large institutions in both the so-called private and public sectors cannot so easily practice what they preach. Yet Locke's concepts are what is meant by "the free enterprise system," and that system is regarded as the basis of institutional legitimacy. Because Americans cling to the old ideology, much of institutional America lacks legitimacy, and thus authority. So illegitimacy
-- and dubious authority-- abounds.
Communitarianism is the emerging rival to individualism in contemporary America....
Once given the five basic Lockean concepts, it is a simple task to outline their counterparts in Communitarianism.
1. THE COMMUNITY, says the communitarian, is more than the sum of the individuals in it; the community is organic, not atomistic. It has special and urgent needs as a community. The survival and the self-respect of the individuals in it depend on the recognition of those needs.
Individual fulfillment derives from a sense of identity, participation, and usefulness in a community. In the complexity of today's societies, says the communitarian, few can live the life that Locke envisioned.
2. RIGHTS AND DUTIES OF MEMBERSHIP. Since Locke's ideas were first brought to this continent by European settlers, the concept of property rights has been paramount in our society. In recent years, however, a set of rights has been superseding the idea of property in both political and social realms. These include survival, income, pensions, health maintenance, and other entitlements which have come to be associated with membership in the American community, or in some component of that community, such as a corporation. (These new rights constitute the "safety net" which President Reagan, early in his tenure, promised to maintain.) The rights do not derive from any individualistic action or need, nor do they emanate from contract. Rather, they are communitarian rights that Americans and others now hold to be consistent with a "good" community. This is indeed a revolutionary departure from the old conception, under which only the fit survived.
Inevitably, the escalating rights of members in society have strained our ability to pay the bill. All levels of government have been forced to "limit" rights through various budgetary caps, and some entitlements have been deferred, reduced, or abandoned. This process has prompted a debate-- at times rancorous-- which has in turn generated some new, shared perceptions. For example, many have come to realize that if the community is to assure rights, it must also require duties. But who decides a citizen's duty? In Japan, from time immemorial, the community has imposed a sense of duty. But in America, our legacy of individualism has made us inclined to leave the question of duty to the individual - to the dictates of upbringing, religion, and conscience.
The inexorable advances of Communitarianism, however, are beginning to force government to define the duty of those who do not seem to be doing it for themselves. In one manifestation, this has been called "workfare." If everyone has a right to a job, as the Humphrey-Hawkins Act suggested in 1977, does not everyone who is able-bodied have a duty to work? if so, how does a nation implement this idea? Having granted that the idle have a right to survive, there are only three practical ways of dealing with them: government can support them, government can subsidize them through public employment, or government can coerce or subsidize business to employ them. In practice, Europe and the United States have tended to favor the first two options, while Japan has preferred the third. The U.S., however, appears to be moving toward the third option; if this. proves to be true, we must soon consider the inherent implications for the role of government, and its relationship to business.
The continuing debate naturally tends to focus on those whom society must subsidize. But if the duties of the poor and the weak are to be made more explicit, does it not follow that those of the rich and powerful must also be clear? This is largely unexplored territory; even today, we hear echoes of noblesse oblige in the calls for increased charitable donations by the rich to make up for cuts in public spending. Such an archaic approach has its clear limitations. As noted in the last chapter, while the Reagan budget cuts were making their way through Congress in the summer of 1981, Office of Management and Budget (OMB) director David Stockman found himself shocked at the failure of government to require sacrifice from well-organized and powerful economic interest groups. Significantly, his response was ideological and unconsciously communitarian: he felt that the moral premise of austerity had been eroded.
Perhaps the single most important ideological shift in our society has been the erosion of the concept of "private property" as a legitimizing force. It is quite obvious, for example, that our large public corporations are not "private property" at all. The shareholders of General Motors do not and cannot control, direct, or in any real sense be responsible for "their" company. Furthermore, the vast majority of them have not the slightest desire for such a responsibility. They are investors, pure and simple; if they don't earn an adequate return on their investment, they will put their money elsewhere...
If General Motors and hundreds of similar corporations are not property, then what are they? Currently, they are no more than collections of people, machinery, and re-sources. They drift in a philosophical limbo, vulnerable to the charge of illegitimacy, and to the charge that they are not subject to community control. It is an awkward and dangerous position.
Consider, for example, how the management of these nonproprietary institutions are selected. Our mythology tells us that stock-holders select the board of directors, which in turn selects the management. This is not generally true, however; more often, management selects the board, and the board blesses management. Managers thus achieve that rank through a hierarchical process of questionable legitimacy. Under such circum-stances, it is not surprising that "management's rights" are fragile, and its authority waning...
The large corporation is a reality and a necessity, and there is no doubt that some means will be found to legitimize it and make it responsive to community needs. Even now, several trends are discernible:
1. More coherent and balanced regulation by the state is evolving.
2. Worker-management schemes are being put in place by some companies.
3. Partnerships with government are increasing, especially in troubled sectors such as the steel, automobile, and utilities industries.
The rights and duties of ailing giants like Chrysler pose particularly interesting ideological questions. Most obvious among them: Does such a corporation have a "right to survive"? Under the terms of the traditional ideology, the answer is no; such companies should die when they no longer serve the interests of their owners or of consumers. But because the politics of the real world make such corporate deaths unacceptable, they are snatched from oblivion at the last possible moment. Propped up in the name of an ill-defined community need, publicly "humiliated" in the eyes of the individualists among us, they are made to continue their uneasy existence.
What are the alternatives? A more efficient, humane, and competitive approach is suggested by Japan's communitarian system. The sick corporation is diagnosed when its disease first manifests itself-- about 1974, most would say, in Chrysler's case. Industry, government, and labor officials confer; a consensus is reached about the best remedy. The Japanese response to the Chrysler crisis might have been an industry consolidation through merger, with retraining and relocation for displaced workers. (Indeed, there is periodic discussion in Japan of just such consolidation.) An early diagnosis gives all parties time to adjust to the remedy, thereby minimizing disruption and cost. These last considerations alone will probably prove enough to force an ideological overhaul in America; perhaps the only question is when and how this overhaul will take place.
3. COMMUNITY NEED. The needs of the community-- for clean air and water, safety, energy, jobs, competitive exports, and the like-- are becoming increasingly distinct from, and more important than, the desires of the consumer. As a consequence, the ways we determine community need demand greater attention. This becomes more urgent with the recognition of economic limits: when it is impossible for the community to meet all its needs at once, priorities must be carefully established.
Sometimes the concept of "community need" manifests itself in unexpected quarters. In 1971, when the Justice Department was attempting to force ITT to divest itself of Hartford Fire Insurance, ITT took an unusual approach. Its lawyers argued, in effect, that the public interest required ITT to be powerful at home so that it could withstand the blows of Allende in Chile, Castro in Cuba, and the Japanese in general. Before you apply the antitrust law to us, the lawyers concluded, perhaps the Secretary of the Treasury, the Secretary of Commerce, and the Council of Economic Advisors should jointly determine - in the light of America's balance-of-payments problems and domestic economic difficulties - what the national interest is.
Although the company's tactic was eminently pragmatic, the full ideological implications of this stance should not be ignored. Simply put, ITT was claiming to be a partner with the American government -- and more specifically, with the Cabinet -- in the definition and fulfillment of the nation's needs. In fact, the claim was partly true. (Cynics might express some doubts about which was the senior partner, but a partnership it was, and is today.) But this concept is radically different from our traditional ideas, and particularly those underlying the antitrust laws -- namely, that the public interest emerges naturally from free and vigorous competition among numerous companies attempting to satisfy consumer desires.
In the face of real competitive threats from Japanese and European business organizations (which, as we have seen, originate in ideological settings quite different from our own), there will be additional compelling pressure to set aside the old ideology which essentially addressed a domestic competition -- to enable American businesses to prosper in worldwide competition. Managers will probably welcome such a step, but they will almost certainly be less willing to accept the concomitant principle: if we allow restraints on the full sway of competition in the domestic market, then other forces will have to be empowered to define and protect the public interest. These "other forces" will of necessity consist of more effective control by the political order, in one form or another.
4. ACTIVE, PLANNING STATE. The role of the state is changing radically. For better or worse, it is fast becoming the arbiter of community needs. Inevitably, it will take on unprecedented tasks of coordination, priority-setting, and planning in the largest sense. It will need to become far more efficient and authoritative, capable of making the difficult and subtle choices that we now face-for example, between environmental purity and energy supply, between economic stability and growth, and between the rights of membership and a competitive posture in the world marketplace...
Of course, our governmental leaders have from time to time found it necessary to plan. But invariably they have masked their departures from the limited state in the music of the old hymns, attempting to make their interventions appear pragmatic, and without ideological implications. The charade may be reassuring, but it is costly; it only postpones the moment when we will recognize the planning functions of the state for what they are, and must be.
Does this mean more government, and therefore higher costs. Actually, the opposite is true. If the role of government were more precisely and consciously defined, the government itself could be smaller. To a great extent, our burdensome plethora of bureaucracies is the result of a lack of focus and comprehension, the costly and ironic by-product of the notion of the "limited state." With a more conscious approach, further-more, we could better identify those issues which can be addressed on the local or regional levels, and those which require a broader approach.
Presidents Nixon, Ford, Carter, and Reagan each realized this in turn. Each tried to make the executive branch of government more coherent. (His rhetoric notwithstanding, Reagan... moved most radically, giving unprecedented centralized power to the Office of Management and Budget.) All have attempted to close the separation between the executive branch and the Congress, an obvious prerequisite to the consensus upon which any form of planning depends.
Great corporations have also begun to recognize two unavoidable facts: that we require definitions of community need (what's safe, what's clean, etc.), and that the government, sooner or later, will supply those definitions. We are already witnessing increased cooperation between big business and big government toward this end. But the forms of cooperation need careful scrutiny. Industry often has the information and analytical skills -- the competence -- that government requires in order to make an intelligent definition of community need, but it lacks the authority to define. Government has the authority, but is short on competence. Cooperation is in order, but the procedures for combining private competence with public authority must be legitimate, as well as efficient. The ideological implications of any particular procedure must be carefully considered and managed. We can anticipate increased ideological anxiety-- and indeed, cries of "fascism" from the Lockeans-- as more and more decisions are made cooperatively by big business and big government.