Academic journal article Washington and Lee Law Review

In Critique of a Reductivist Conception and Examination of "The Just Organization"

Academic journal article Washington and Lee Law Review

In Critique of a Reductivist Conception and Examination of "The Just Organization"

Article excerpt

I. INTRODUCTION

The constructed theory and simulation contributed by Dean Karen Newman's article, entitled The Just Organization: Creating and Maintaining Justice in Work Environments, provides some basis for optimism.(1) Certainly, one must be hopeful for the broader achievement of the results alleged to flow from the creation of more "just organizations." These benefits include greater employee commitment to the organization and its goals. Indeed, many of the participants in this symposium have taken positions that resonate strongly with Dean Newman's final inference from her empirical study.(2) In her conclusion, Dean Newman delineates the organizational benefits of explicitly stated corporate goals that address and consider a wider set of objectives than merely stockholder wealth maximization.(3) Thus, this research provides an empirical basis for challenging the myopic foundationlism generally attributed to law and economic scholars.

Undeniably, the power of economic analysis in corporate law has been its focus upon shareholder welfare and its attempts to provide an objectified basis for monitoring management performance.(4) This approach to the basic fiduciary problem of corporate law is helpful to some extent. My concern with a focus on shareholder wealth maximization as the stick against which all regulation must be measured is that such measurements do not include in their calculus other important aspects of corporate existence and other ways in which corporate entities affect society. I generally share the often stated reductivist critique of economic analysis in the law.(5) The analysis is powerful, but the scope of the examination is too narrow. The economic focus upon individual, rational decisionmakers ignores the reality that humans are social beings and that their tendencies and behavior patterns are significantly affected by their social experience. Dean Newman's theory of the effects of a just work environment upon workers supports the idea that individuals, particularly in a group setting, are affected by their social milieu.

An anthropomorphic analogy illustrates the issue raised by a too narrowly focused analysis: an individual may be doing quite well financially but living an unethical life. Such ethical failures may portend ultimate disaster, but the myopic focus upon strictly financial issues may allow such shortcomings to be ignored. Occasionally, we have seen this sort of precipitous collapse of organizations with exemplary financial stability. Examples include such colossal failures as Equity Funding,(6) Drexel Burhham Lambert,(7) and a list of probably a thousand savings and loan companies across the country. However, the unrecognized costs or missed opportunity that might result from an organization's failure to achieve and maintain ethical work environments, under Dean Newman's analysis, is principally sub-optimal organizational performance. The general critique that I have for the theory expressed and the conclusions drawn from this study is that, while quite helpful, Dean Newman's study may suffer from a scope problem. In brief, the narrowness of the theory, the rhetoric, and the nature of the empirical study, as well as the pool of participants used for it, ultimately raise questions about the application of these results to broader society.

II. PUTTING THE STUDY IN CONTEXT

As an initial matter, it is important to situate Dean Newman's study within broader trends affecting organizations and the study of their management. American industry is generally in the process of conversion from a predominantly Taylorist(8) or Fordist(9) hierarchical model of management to a post-hierarchical model. The hierarchical model involved an image of management as science in which human capital was applied to specific tasks and functions within a very confined job description with layers of close supervision.(10) This sort of orientation worked well with the mass production economy. …

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