Thursday, August 23, 2012

Klein on Marglin, and different emphases

Peter Klein had an interesting recent post on a new paper on the value of bosses, and he invoked Stephen Marglin. I was fascinated by the different emphasis that people have when talking about a guy like Marglin. Klein writes: "Do bosses matter? Stephen Marglin famously argued that management doesn’t affect productivity, just the share of output appropriated by managers. (I’ll take David Landes instead, thank you very much.) Despite a huge management literature on bosses, economists have not quite known how to answer the question. Ed Lazear, Kathryn Shaw (ironically, a former boss of mine), and Christopher Stanton have an interesting new take on this using detailed microdata, showing substantial effects of supervisor on worker productivity"

My U.S. economic history professor last semester was a fan of Marglin, but I had his work framed somewhat differently. I think we got the point that bosses try to appropriate output, but that was not hte emphasis that we were taught at all. We were taught that Marglin (and Charles Babbage before him) presented what the professor called an "economic theory of the division of labor" as opposed to the more common "engineering theory of the division of labor". Ironically, Smith and others - the economists - maintained an engineering theory of the division of labor, while Charles Babbage (an engineer) had an economic theory. Smith thought that there were actual production efficiencies in the division of labor, and he listed many such advantages in detail.

Babbage, and then Marglin, instead said that the division of labor was actually a managerial recognition of differences in skill. Dividing and sub-dividing tasks and jobs and organizing them hierarchically (aka "management", for Marglin) could be thought of as a form of price discrimination in the labor market.

I think it's pretty reasonable to accept that the organization of the workplace has a mix of both of these, and I think anyone who has worked in a large office recognizes both in practice.

That comes to about the same place as Klein's interpretation of Marglin. He was a radical, after all. But I found the different emphases interesting. When I hear "Stephen Marglin" I think "economic theory of the division of labor and the emergence of personnel management". The phrase "managers appropriating output from workers" does not immediately come to mind, although I suppose that's equally legitimate.

Radical economists are not always right, but they often have important insights that are glossed over by non-radical economists. One of the nice things about being taught by people with radical sympathies is that you learn those things. The same logic applies to the Austrians, really - you wouldn't go to Paul Krugman to learn about Austrians, would you? You probably shouldn't even go to Tyler Cowen. Same principle applies.


  1. Did you read David Landes's The Unbound Prometheus in your Economic History class last semester, Daniel?

    The reason I ask is because Dr. Michael Emmett Brady cited it in his dissertation, and he also includes it as one of his books in his list of the best "books with the best decision theoretic and philosophical foundation".

    Have you read any of the books that he has included in that list, aside from Keynes's General Theory?

    1. It looks like that book is about Western Europe. This was a U.S. history class.

      I'll make a deal with you, Blue Aurora: if you ask one Brady question in the comment section a week I promise I will answer that question very thoroughly, whatever it is. Hopefully this will be more satisfying for all parties.

    2. Actually, I wasn't expected all that thorough an answer in this instance, but it was good to know. Has David Landes written a book specifically about American economic history?

    3. You don't know who David Landes is? He was an economic historian at Harvard University, where that Stephen Marglin fellow you talk about also teaches. David Landes wrote The Unbound Prometheus and The Wealth and Poverty of Nations.

      But speaking of Marglin, Dr. Michael Emmett Brady has reviewed a book by Stephen Marglin that criticises the economics profession - particularly the mainstream/neoclassical strand. Feel free to comment on the following review if you'd like!


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