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Modern Manors: Welfare Capitalism since the New Deal.

Modern Manors: Welfare Capitalism since the New Deal. Sanford M. Jacoby. Princeton, NJ: Princeton University Press, 1997. 345 pp. $35.00.

In Modern Manors, Jacoby sets out to amend our understanding of welfare capitalism and succeeds admirably. Under welfare capitalism, employers attempted to build career jobs for what had been a transient workforce by offering relatively generous wages and health and pension benefits, establishing company unions and educational programs, and constructing cleaner factories and elaborate recreational facilities. The mainstream view among labor historians and other students of industrial relations is that this movement peaked during the 1920s and disintegrated during the Great Depression. While some historians assert that welfare capitalism was already unstable and the Depression was the proverbial back-breaking straw, others suggest that it might have become the norm had the Depression not been so severe.

Jacoby shows that the Depression did not extinguish welfare capitalism. Rather, it lived on in a number of firms. Managers in these firms, with the aid of social scientists and the participation of their workforces, adapted their personnel practices while retaining the essential characteristics of welfare capitalism. The resultant systems resemble the human resource management policies of large American firms of the late twentieth century. Jacoby asks why some companies stuck with welfare capitalism in the middle part of this century despite the Depression, the opposition of trade unions, and the hostility of government. His vehicle for answering this question is a detailed examination of three companies that managed to hang on to welfare capitalism: Kodak, Sears, and Thompson Products (today's TRW).

One might quarrel with his choice of companies. By focusing only on companies that retained welfare capitalism, and none that abandoned it, Jacoby appears to commit the methodological sin of selecting on the dependent variable. In context, however, the wisdom of this choice becomes clearer. Jacoby's work is a response (often explicitly) to a body of work in which the disappearance of welfare capitalism was explained by studying only companies in which it vanished. In effect, Jacoby argues that this selection bias has led us to misunderstand how and why employment relations changed in the U.S. in the twentieth century. He amends this record, supplying the correction for sample selection (one that is historical and qualitative rather than statistical) necessary for understanding the underlying dynamics of the changes in personnel practices.

Jacoby also argues that the traditional views of welfare capitalism do not allow for illuminating distinctions between welfare capitalist firms. To develop such nuances, he chose his three companies to be diverse and broadly representative of a larger set of firms that he notes could include Du Pont, Eli Lilly, IBM, Procter and Gamble, and others. More detail about these other companies might have been instructive, enabling readers to better assess his choice of cases, claims of representativeness, and the more general claims he makes for the endurance of welfare capitalism. Generally, however, the method is successful: the detailed descriptions of the three "manors" are rich and enlightening.

Jacoby draws from company documents and interviews, backing this primary evidence with an impressive array of secondary sources. His central argument is that welfare capitalism survived in a small number of companies, even as the economy, unions, government policy makers, and industrial relations experts contributed to its demise in many others, and that this survival was determined by a complicated set of highly contingent relationships. Economic conditions and the particular product market niches occupied by companies played key roles (Kodak and Sears in particular were not dramatically affected by the Depression). Jacoby also gives considerable attention to workers' attitudes toward their employers and to employers' attempts to create a sense of community in the workplace. Workers at Kodak (in Rochester, New York) considered themselves to be part of an industrial elite. Their attitudes were abetted by Kodak management's policy of hiring only high school graduates, which had the effect of maintaining a high level of homogeneity in the workforce, for it tended to exclude Rochester's blacks and more recent immigrants. Sears' workers (who, Jacoby points out, were disproportionately male for a retail firm, especially in the better jobs) enjoyed working in a flat hierarchy in which there were few status distinctions. At Thompson, which was less exclusionary, a sense of identity with the company was heavily influenced by widespread loyalty to the charismatic chief executive officer, Fred Crawford.

Jacoby also allows for two other factors: luck and timing. As a historian, he is perhaps more concerned than other social scientists with the error term, that unexplained residual that most others see as the stochastic variation that serves to dampen the explanatory power of their models. He displays the historian's frustration with general, sweeping theories, but never does he ignore theory. Rather, he shows, often in discursive footnotes and with extensive detail, the limits of explanations that focus on central tendencies rather than particulars. He continues to display the eye for the telling detail that characterized Employing Bureaucracy (1985). His treatment of Nathan W. Shefferman, the labor relations consultant and huckster who served Sears as hack social scientist, motivational speaker, and union buster, is priceless. Jacoby notes that Shefferman's first job was with the American Institute of Phrenology, where he presumably learned to associate personalities and mental abilities with the shapes and sizes of subjects' heads. Shefferman (who was himself Jewish) helped to design anti-Semitic anti-union-organizing campaigns for Sears' chairman, General Robert E. Wood, whose anti-Semitism Jacoby also documents. Sears' employment of Shefferman, and its adoption of his underhanded tactics aimed at keeping Sears union-free, highlight some of the worst of post-Depression welfare capitalism. Jacoby also shows that Sears employed to good effect social scientists from such institutions as the University of Chicago. These consultants, who heavily influenced Sears' personnel executives, drew on the human relations school of Elton Mayo, using sound research methods, including surveys and focus groups, and blending psychology and sociology to design personnel systems and managerial approaches that would meet workers' economic and social interests. These better-credentialed actors, however, do not get off much easier than Shefferman. Jacoby, raising a warning that rings true today, questions the failure of these researc hers to consider the ethical dilemmas inherent in the wide-ranging use of the techniques of the behavioral sciences to alter individual workers' attitudes and behaviors without their consent.

The Sears case study, and Jacoby's other two cases, continue a theme introduced in Jacoby (1985): the Janusian quality of welfare capitalism. With one face, the welfare capitalists smiled, seeking to meet their workers' economic and psychological needs. Here Jacoby endeavors to show that a large number of workers embraced welfare capitalism at various points in time, and with good reason. He also documents welfare capitalism's less friendly face. Despite managerial rhetoric, workers understood that the relation between capital and labor was not one of equals and, even in these most progressive of firms, sought collective representation to redress this imbalance. Even as most of America's industrial leaders were resigning themselves to dealing with collective bargaining, however, in each of Jacoby's firms, managers successfully continued to thwart unionization with a variety of tactics, many of which were demonstrably illegal.

Jacoby shows that both faces were consistent with economic imperatives. While progressive personnel practices were sometimes expensive, they helped companies retain skilled, loyal workers. The union-busting tactics were also rooted partially in economic logic, as managers feared bargaining over wages and were concerned that unions would make it costly to dismiss workers. Jacoby also demonstrates that economic forces could not be the sole explanation for these companies' actions. Welfare capitalist firms often paid their workforces more than unionized workers in other companies, extended their personnel policies to skilled and unskilled workers alike, and were reluctant to dismiss workers even in the absence of unions. Employers also appeared to spend money on anti-union campaigns and lobbying well past the point at which benefits clearly exceeded costs. These tactics and strategies, according to Jacoby, stemmed from deeply held values and theories about the role of the corporation. Kodak managers developed an economic partnership between the firm and its elite workforce. Sears drew on human relations theory to boost morale and provide for the psychological needs of its workforce. Thompson relied on a leader who generated loyalty to himself and his "TP Family" and reciprocated that loyalty. In each case, managers sought to portray trade unions as outsiders, third parties attempting to intervene in a deep and mutually beneficial relationship between the company and its workers. Such a portrayal allowed the managers to bring some internal coherence to strategies that might otherwise have seemed strangely contradictory.

Managers are therefore central players in Jacoby's story, nimble enough to reshape welfare capitalism even as laws, markets, and workers changed dramatically. On several occasions, Jacoby claims that his book provides guidance for the reader seeking to understand the modern American corporation. At the broadest level this makes good sense. Nearly 90 percent of today's private sector workforce does not belong to a union. Progressive human resource management was not invented in the 1970s. But is Microsoft a modern-day Kodak? What can we learn about Wal-Mart from Sears? What does Thompson tell us about today's TRW, let alone about a company like the Caterpillar Corporation of the 1990s, which has taken a harshly confrontational attitude to its existing unions, declaring that the United Auto Workers, which it calls a third party, is not a suitable representative for the views of Caterpillar employees?

Jacoby is not explicit on these themes. The significance of his work, however, goes beyond the history itself. In Modern Manors, the roles of managers and their ideologies get their due: the subtle ways they differ across companies, change over time, and influence outcomes and practices of critical importance to their workforces. While ideologies cannot overwhelm markets or technologies, neither can they be ignored, and this in itself affects the historical trajectories of companies in important ways. Modern Manors succeeds on its own terms. What we really want now is to see Jacoby continue to broaden the sample of companies that historians consider and to cover the latter part of this century with a treatment that parallels his discussion of its first half, to help us understand better the relationships of the ISMs and Procter and Gambles or, even better, the Microsofts and Wal-Marts, to their workers. I hope he is writing a trilogy.


Jacoby, Sanford M.

1985 Employing Bureaucracy: Managers, Unions, and the Transformation of Work in American Industry, 1900-1945. New York: Columbia University Press.
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Title Annotation:Review
Author:Hunter, Larry W.
Publication:Administrative Science Quarterly
Article Type:Book Review
Date:Dec 1, 1999
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