Question

Chapter 2: Ancient and Medieval Economic thought and institutions

Question:

Explain Xenophon’s views on what constitutes a good manager and how the manager’s objective is accomplished.

Chapter 2: Ancient and Medieval Economic Thought and Institutions

The two millennia of Western thought spanned in chapter two introduces students to the contributions of the ancient Greeks, the Roman Empire, Chinese and Arabic scholars, and medieval Scholastics. Beginning with the ancient Greeks, Xenophon (c. 427–355 BC), a student of Socrates, is introduced as a writer who focused on organization and administration with an eye to understanding individual decisions in terms of efficiency. Key concepts of a later era in economic thought can be traced to Xenophon, most notably the principle of the division of labor and the hedonistic psychology of pursuing pleasure and avoiding pain—an idea that preceded the formation of subjective value by later economists.

Plato (c. 427–327 BC) analyzed the political and economic structure of the state. Extending Xenophon’s recognition of the usefulness of division of labor, Plato attributes the origin of the city to both specialization and the division of labor. The introduction of specialization, moreover, generates mutual interdependence, which in turn creates reciprocal exchange. While a theory of exchange was not established until Aristotle (c. 384–322 BC), Plato focused on how goods get distributed via the marketplace. Plato did not consider the marketplace to be a self-regulating mechanism, however, and he proposed that the rulers of society live under a system of communal property so as to remove the temptation to acquire wealth by usurpation of power. Plato’s concern was that profit and interest led to deviations from the status quo (an ideal state), which could only be a threat to social welfare. Consequently, Plato established a class system whereby an elite group constituted the ruling class. He perhaps naively assumed that authoritarian rule would result in social harmony.

Protagoras (c. 480–411 BC) was more of a relativist, believing that all opinions were subjective and that “man is the measure of all things.” Protagoras, unlike Plato, embraced the democratic process and believed that means were more important than ends. Protagoras maintained that the role of administration was to offer an informed choice of means to achieve given ends. Some believe that Protagoras anticipated two main cornerstones of contemporary economics: first, that utility maximization is the goal of individual activity, and second, that hedonic measurement provides a basis for informed choice.

Two-party exchange begins its analytical journey with Aristotle’s analysis of isolated exchange. In such a trading system, exchange is based on the subjective preferences of the individual trading parties. While his model created no market price, it is believed that Aristotle was seeking to determine the criteria for fairness. Defending private property for all classes on the grounds of efficiency, Aristotle departed from his teacher, Plato. His idea of the ideal economy was far different from Plato’s, especially in his emphasis on economic incentives. Although his model of exchange was primitive, Aristotle nevertheless recognized some necessary preconditions for trade. Moreover, he influenced future inquiry by approaching the subject of value in terms of incremental comparisons and by establishing the distinction between value in use and value in exchange, which reappeared in Smith’s formulation of the water- diamond paradox.

Answer 1

Introduction : Xenophon of Athens, who lived 430–354 BC, addressed business management in one of his works Oeconomicus . Oeconomicus by Xenophon is often treated as one of the earliest sources of economics that we have information about . The book discuss the relationship with principals and servants, masters and slaves, and many other relevant subjects till this day which is useful to the managemnt, such as: education, religion, and politics.

some of the main concepts xenophon explains in his work about management and managers are,

" all assets are only useful, if they are used diligently and wisely "

"Business management is understood here as the establishment of a functioning order in which all natural resources have their proper place, all human resources havetheir proper task and role , and the business manager regulates and governs the proper use of these natural and human resources in order to make profit. This involves the structuring of the business and the assignment of an appropriate place to each part of the business."

What the managers , need to understand better is that there is not only one way to do things and the more we find out about different techniques, subjects, or processes we can then find a style that best suits our personality. Management does involve not only the elites of managers but all people in the company, project, etc.

It concerns the placement of employees in functioning order.

Only those who serve the state and are loyal to society are held in the highest esteem by the state. the business manager establishesand maintains the functioning order of the business in such a way that it integrates public and private interests.In order to establish and maintain the functioning order of the business, the manager has to engage in the business operations himself via direct labor according to Xenophon.

Xenophon is more positive about direct engagement in the business operations of the business manager via direct labor –planting, for instance .–as it contributes to their happiness as purpose of life (eudaimonia) The joy of direct labor provides satisfaction and self-confidence, as their mastery in the production of the products and services that the business provides matures.

One other important reason for direct involvement in labor is that an important task of managers is to teach their employees, which requires know-how as we will see.Here, direct labor is not a goal in itself but serves the manager’s aim to fulfil his role

The business management concerns the manager’s engagement in the business operations via the work of other people, i.e., the management of his subordinates to perform all roles and tasks in a proper way. His task is to give subordinates a proper role and task and manage them in such a way that they are not imprisoned and enforced to perform their task in a proper way, but that they are free and willing to work for the business manager

the business manager has to establish a management system because he cannot control everything himself, for instance, in case of other branches of the business that are not under his direct control. One way to maintain the functioning order of the business is by establishing internal rules and regulations that all employees have to comply with . the business manager maintains the functioning order of the business by assigning proper roles to trusted middle managers that send him reports about their business performance, and that can perform the management tasks in the name of the business manager. This middle manager should have the same personal characteristics as the business manager as owner of the assets, for instance, self-control and eagerness to improve the business .

Also , the business manager cannot delegate all management tasks to the middle managers because of the considerable importance of teaching and training, as we have seen. This requires his leading by example and therefore, his direct engagement in the business operations anyway. This brings a next level of engagement with thebusiness operation via the work of other people to light, namely people management of the employees of the branches that are under his direct control. At this level, management consists in leading subordinates in such a way that they obey willingly and contribute to the profitability of the business, instead of running away in times of setback

Xenophon’s philosophy of management enables us to criticize the contemporary focus on profit maximization and to articulate an intrinsic relation between business and society; to criticize the contemporary disconnectedness of business management and to develop a broader set of individual competencies and know-how that is required for business managers; to criticize the contemporary focus on management and control; and to rehabilitate the role of business management as ability and capacity that involves know-how, actual engagement, and virtuous competencies. Finally, this concept of management challenges contemporary conceptualizations of the differences between private and public management in political philosophical debates.

The aim of business management is not to increase property as such. The aim of business is to satisfy the wants of the business manager and to serve his friends and the state: “Surely those who can maintain their own estate and yet have enough left to adorn the city and relieve their friends may well be thought affluent and powerful man”. and even when Xenophon seems to suggest that the increase of property is a purpose in itself, this increase is limited by the condition of self-control, which prevents greed and impulsive behavior, by the condition of fairness and honorability andby the condition of providing pleasure.