Activist Management: Henry S. Dennison's Institutional Economics
Bruce, Kyle, Journal of Economic Issues
Henry S. Dennison (1877-1952) was a Boston paper-products manufacturer (1) who, in a career spanning some fifty years, was a devoted exponent of scientific management, a pioneer advocate of unemployment insurance, and a leading corporate liberal of the interwar period. He lectured at Harvard Business School and was active in Harvard academic life, maintaining firm contacts with his friends Edwin Gay (in the Business School), Felix Frankfurter (in the Law School), and John Kenneth Galbraith (in the Department of Economics). He was also an adviser to the Wilson, Harding, Hoover and Roosevelt administrations. In both his private and public life, Dennison demonstrated an activist concern with the rationale and character and with the control and management of business enterprise, as well as with the impact of the capitalist business cycle on broader society. He sought to deal with these issues in his role as a business leader and public figure, as a practitioner or "doer." But he also did so as a theoretician or "thinker," in the disciplines of both economics and management. His thought was published widely in economics, management and other social science journals, and in the five monographs he published, two of which were with John Kenneth Galbraith. It was the tension between Dennison's practice and his theoretical bent, viz. his praxis, which shaped his thought and led him to embrace institutionalism.
Though piecemeal efforts have been made to chronicle aspects of Dennison's thinking, (2) these snippets of insight have usually been part of a wider story dealing with more general and wide-ranging topics of interest to economic, business and labor historians rather than students of institutionalist economic thought. There has been no serious attempt to systematically explore the substantial opus of thought, both published and unpublished, that Dennison left in his wake. This paper seeks to amend this oversight and undertake an overview of Dennison's thought in order to pull him out of relative obscurity and discern how his thinking on the nexus between economics and the "science" of management evolved from 1900 through 1952 and led him to embrace institutionalism. As a product of turn-of-the-century developments in economic and management thought, Dennison was deeply influenced by, and made a significant but largely unheralded contribution to the institutionalist approach to economics.
Though much of his thought in these areas was more a reflection of the intuition and "hunch" of a businessman and business opinion in general than it was highly original or pure theory, his organizational economics notwithstanding, Dennison's contribution to institutionalist economic thought can also be gauged from his influence on recognized theorists of the time and on public policy in general. Lionel Robbins once suggested that contributions to scientific research programs should be assessed according to their originality and the extent to which they influence the thinking of others in the field. In this manner, Dennison satisfies both criteria: he was an original thinker and he influenced others with his thought. For instance, Bruce (2000) demonstrated that Dennison played a key role prodding the young Galbraith to defect from mainstream orthodoxy and embrace the ideas of Keynes' General Theory before their wider acceptance at Harvard; and that Galbraith's embrace of more heterodox ideas regarding the corporation and functioning of the industrial order were planted in his mind as a result of his relationship with Dennison. Further, Bruce and Nyland (2001) showed that in his role in the interwar business stabilization movement and through his work on business cycles, Dennison made a lasting impression on Wesley Mitchell, with whom Dennison corresponded in the first half-decade of the 1920s.
Here, I complement the existing work chronicling the important yet unheralded contribution to institutional economics made by Dennison and suggest that in his concern with removing absentee ownership from his family company and in his constant questioning of mainstream economists' conception of "economic man," Dennison's thought was very much akin to Thorstein Veblen's. …