Friday, December 05, 2008

Business and economic myths of the twentieth century - a note

I have been following the Australian trade statistics quite closely.  Australia's improving trade performance - October 2008 statistics shows just how lucky we have been in trade terms, to the degree that anybody can be classified as lucky in the current economic climate.

Browsing through some old notes reminded me of just how many popular business and economic myths there were during the second half of the twentieth century. Quite remarkable really, and connected with the rising interest in business, politics and economic books from the 1950s.

Did you know, for example, that General Motors Holden was once seen as having such a dominant market position in Australia as to be effectively unchallengeable? This created great angst, especially among those opposed to foreign investment in Australia.

In similar vein, IBM's position was once so dominant that many books were written explaining why its technological and market stranglehold was now do dominant that it was beyond challenge in the computer hardware market. This view was still popular in the mid 1980s.

Then there was the European and especially French view popular in 1960s through to the 1980s  that American economic and corporate dominance had become so great as to be beyond challenge in the absence of specific Government action to defend local economies and companies.

A little later, Japan and its corporations, the relations between corporations and state, came to be seen as an unstoppable force. This view was especially popular in the 1980s, with multiple books written on the Japanese model.

More recently, we had the rise of the free marketeers, those who believed in the role of the market beyond all else. Now the opposing school is in the ascendancy, with some quite eery echoes in concept and language from some of the earlier myths.

Each of these myths had kernels of truth, but were then extended in grand constructs, absolutes, that ultimately collapsed in the face of diverging realities. Yet many still retain their believers.

A little while ago I was talking to eldest about her development studies course. I could have sworn I was back in the 1970s. The topic was Latin America, the models being put forward had little to do with empirical analysis or test, much to do with hauntingly familiar theoretical constructs.

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