Is there a universal Management science and universal Economics in

the World?

Prof. Ivars Brīvers

2nd Annual International Conference of

Latvian Economic Association,

March 4, 2011, Riga, Latvia

“Economics is not for Latvian students”

Rene Descartes – deductive method

Conclusions, that are made in a deductive way are always true, if the postulates, on which they are based, are true.

Euclidian geometry – the best example.

Economics is a science, performing conclusions about human behaviour.

Is it possible to anticipate human behaviour?

Is this behaviour equal for all nations and races?

Which are these postulates, that are on the basis of economics?

David Ricardo1772-1823

Human behaviour in economics is predictable, as this behaviour is rational.

The principles of rational behaviour are universal.

Wherewith the economic science is universal in the whole World.

Simonde de Sismondi 1773-1848

It (economics) is not founded on dry calculations, nor on a mathematical chain of theorems, deduced from some obscure axioms, given as incontestable truth…Political economy is founded on the study of man and men; human nature must be known, and also the condition and life of societies in different times and in different places.

(De la richesse commerciale, 1803)

Wilhelm Roscher1817-1894

That which is general in Political Economy has, it must be acknowledged, much that is analogous to the mathematical sciences. Like the latter, it swarms with abstractions… (But) the advantages of the mathematical model of expression diminish as the facts to which it is applied become more complicated. This is true even in the ordinary psychology of the individual. How much more, therefore, in the portraying of national life!

(System des Volkswirtschaft, 1854)

Gustav Schmoller1838-1917

Economic theory, based on deductive method is not only useless, but pernicious, owing to the unrealism of assumptions, as human behaviour is not subjected to any universal principles.

Brilliant neoclassics Alfred Marshall (1842-1924) and Leon Walras (1834-1910) – economic science is universal in the whole World

Thorsten Veblen1857-1929

Human behaviour constantly is not rational – it is determined by human nature – instincts, and the social environment – institutions.

Instincts for different nations and races differ fractionally. Institutions may differ substantially. (Example - Islamic or Jewish banking.)

The weakest point of economic science, based on deductive method – it takes in account only the rational human behaviour.

Is there a universal Management science?

Management science is based on a human behaviour in a larger degree than economics.

Management science:• American, • German, • Italian, • Japanese, (P.Drucker in his Effective Executive indicates the

substantial difference of Japanese management science)

• RussianWhich of these management sciences should be

taught to Latvian students?

From “Management Theory” by Vladimir Ukolov, Alexandr Mass and Igor Bystryakov (in Russian)

The managerial system should be orientated towards the rebirth of entrepreneur-…

(… hozjain in Russian, saimnieks in Latvian, Wirt in German. Approximate English translation Master does not reflect the exact meaning of the word.)

The modern economic doctrine is guided towards entrepreneur, who tends to get maximum profit. A true entrepreneur-… perceives the system of the employees and processes as his … (hozjaistvo, saime (!) ). The increase of profit he assumes as one of the factors among others, which commonly are directed to the functioning and development of the environment for which he is responsible.

(Free translation from the Latvian edition of the book)

Effective Executive

The title of the present edition of this Peter Drucker’s book in Latvian is translated as “Efektīvs vadītājs” – “Efficient Manager”.

More approriate translation should be “Lietpratīgs saimnieks” (Sachkundig Wirt), which contains even deeper nuances than the original title.

Mūsu augstākās izglītības sistēmai

ir jāsagatavo

nevis efektīvus vadītājus,

bet lietpratīgus saimniekus.