The IE Brown Student Blog

“How Slavery Led to Modern Capitalism”

blended.team — Thu, 26 Jan 2012 15:05:11 +0000

“How Slavery Led to Modern Capitalism” by Sven Beckert and Seth Rockman, historians at Harvard University and Brown University respectively. Seth Rockman also forms part of the faculty for the IE Brown Executive MBA.

: A slave being auctioned, 1861. Source: Sketch by Thomas R. Davis, Library of Congress, Prints and Photographs Division

When the New York City banker James Brown tallied his wealth in 1842, he had to look far below Wall Street to trace its origins. His investments in the American South exceeded $1.5 million, a quarter of which was directly bound up in the ownership of slave plantations.

Brown was among the world’s most powerful dealers in raw cotton, and his family’s firm, Brown Brothers & Co., served as one of the most important sources of capital and foreign exchange to the U.S. economy. Still, no small amount of his time was devoted to managing slaves from the study of his Leonard Street brownstone in Lower Manhattan.

Brown was hardly unusual among the capitalists of the North. Nicholas Biddle’s United States Bank of Philadelphia funded banks in Mississippi to promote the expansion of plantation lands. Biddle recognized that slave-grown cotton was the only thing made in the U.S. that had the capacity to bring gold and silver into the vaults of the nation’s banks. Likewise, the architects of New England‘s industrial revolution watched the price of cotton with rapt attention, for their textile mills would have been silent without the labor of slaves on distant plantations.

The story we tell about slavery is almost always regional, rather than national. We remember it as a cruel institution of the southern states that would later secede from the Union. Slavery, in this telling, appears limited in scope, an unfortunate detour on the nation’s march to modernity, and certainly not the engine of American economic prosperity.

Yet to understand slavery’s centrality to the rise of American capitalism, just consider the history of an antebellum Alabama dry-goods outfit called Lehman Brothers or a Rhode Island textile manufacturer that would become the antecedent firm of Berkshire Hathaway Inc.

Reparations lawsuits (since dismissed) generated evidence of slave insurance policies by Aetna and put Brown University and other elite educational institutions on notice that the slave-trade enterprises of their early benefactors were potential legal liabilities. Recent state and municipal disclosure ordinances have forced firms such as JPMorgan Chase & Co. and Wachovia Corp. to confront unsettling ancestors on their corporate family trees.

Such revelations are hardly surprising in light of slavery’s role in spurring the nation’s economic development. America’s “take-off” in the 19th century wasn’t in spite of slavery; it was largely thanks to it. And recent research in economic history goes further: It highlights the role that commodified human beings played in the emergence of modern capitalism itself.

The U.S. won its independence from Britain just as it was becoming possible to imagine a liberal alternative to the mercantilist policies of the colonial era. Those best situated to take advantage of these new opportunities — those who would soon be called “capitalists” — rarely started from scratch, but instead drew on wealth generated earlier in the robust Atlantic economy of slaves, sugar and tobacco. Fathers who made their fortunes outfitting ships for distant voyages begat sons who built factories, chartered banks, incorporated canal and railroad enterprises, invested in government securities, and speculated in new financial instruments.

This recognizably modern capitalist economy was no less reliant on slavery than the mercantilist economy of the preceding century. Rather, it offered a wider range of opportunities to profit from the remote labor of slaves, especially as cotton emerged as the indispensable commodity of the age of industry.

In the North, where slavery had been abolished and cotton failed to grow, the enterprising might transform slave-grown cotton into clothing; market other manufactured goods, such as hoes and hats, to plantation owners; or invest in securities tied to next year’s crop prices in places such as Liverpool and Le Havre. This network linked Mississippi planters and Massachusetts manufacturers to the era’s great financial firms: the Barings, Browns and Rothschilds.

A major financial crisis in 1837 revealed the interdependence of cotton planters, manufacturers and investors, and their collective dependence on the labor of slaves. Leveraged cotton — pledged but not yet picked — led overseers to whip their slaves to pick more, and prodded auctioneers to liquidate slave families to cover the debts of the overextended.

The plantation didn’t just produce the commodities that fueled the broader economy, it also generated innovative business practices that would come to typify modern management. As some of the most heavily capitalized enterprises in antebellum America, plantations offered early examples of time-motion studies and regimentation through clocks and bells. Seeking ever-greater efficiencies in cotton picking, slaveholders reorganized their fields, regimented the workday, and implemented a system of vertical reporting that made overseers into managers answerable to those above for the labor of those below.

The perverse reality of a capitalized labor force led to new accounting methods that incorporated (human) property depreciation in the bottom line as slaves aged, as well as new actuarial techniques to indemnify slaveholders from loss or damage to the men and women they owned. Property rights in human beings also created a lengthy set of judicial opinions that would influence the broader sanctity of private property in U.S. law.

So important was slavery to the American economy that on the eve of the Civil War, many commentators predicted that the North would kill “its golden goose.” That prediction didn’t come to pass, and as a result, slavery’s importance to American economic development has been obscured.

But as scholars delve deeper into corporate archives and think more critically about coerced labor and capitalism — perhaps informed by the current scale of human trafficking — the importance of slavery to American economic history will become inescapable.

(Sven Beckert and Seth Rockman, historians at Harvard University and Brown University respectively, are co-editing “Slavery’s Capitalism: A New History of American Economic Development,” to be published by University of Pennsylvania Press in 2013. The opinions expressed are their own.)

To contact the writers of this post: Sven Beckert at beckert@fas.harvard.edu and Seth Rockman at Seth_Rockman@brown.edu.

Sexism behind lyrics? by Prof. Tricia Rose

blended.team — Fri, 20 Jan 2012 11:05:03 +0000

Jay-Z: Dropping the B-word doesn’t begin to cover it

Tricia Rose, professor of Africana studies at Brown University, is well-known for her work on the emergence of hip hop culture, Black Noise: Rap Music and Black Culture in Contemporary America (1994). In 2003 she wrote about black women’s sexual life stories (Longing To Tell: Black Women Talk About Sexuality and Intimacy), and she returned to hip hop in 2008 with The Hip Hop Wars: What We Talk About When We Talk About Hip Hop–And Why It Matters. This essay first appeared in the Guardian (U.K.).

Sean Carter, who performs under the name Jay-Z, has apparently vowed never again to use the word bitch in the wake of the birth of his daughter, Blue Ivy Carter.

And while I celebrate and congratulate his new fatherhood, this vow didn’t impress me.

It doesn’t begin to address his role in contributing to and profiting from the global power of a hyper-sexist brand of hip-hop masculinity. I need to hear quite a bit more about how he feels about this legacy and its impact on millions of black girls and boys before getting all teary-eyed.

Sure, hip-hop didn’t invent sexism, nor has it been the only musical genre to profit from promoting it. The vast territory that is popular music is a treasure trove of sexist ideas and images. And it is also true that racist, rightwing critics have targeted hip-hop as a way to continue the demonization of black men while remaining silent on countless other sexist images, sounds, and stories that define U.S. culture.

As I noted in The Hip Hop Wars, just because your enemy is wrong, it doesn’t make you right. It is quite true that hip-hop has played a starring role in making sexist ideas sexy, visible and funky. Through the power of black music, style, swagger, and lyrical creativity, Jay-Z and many other highly successful rappers (e.g, Snoop Dog, 50 Cent and Lil’ Wayne) have expanded the visibility and value of aggressively sexist lyrics. And, frankly, if you want to find openly celebrated sexism against black women, there is no richer contemporary source than commercial, mainstream hip-hop.

This hasn’t happened because commercially powerful artists have randomly or dutifully dropped a sexist word here or there to punctuate an infectious beat. Whole identities in countless songs rely on excessively sexist behavior and name-calling to define the protagonist’s power and importance.

More than in any other genre in the history of black music, commercially celebrated hip-hop swagger depends on a brand of manhood that consistently defines black women as disrespected objects. And fans of all racial background, but especially young white males, who make up the bulk of U.S. consumers, eat it up.

Black women know much about the brutality of colonialism, racism, economic exploitation, and incarceration and their targeted impact on young black men. In the interest of protecting black men and boys from the extraordinary violence they face, many women have spoken out on behalf of men and remained silent about the violence done to women. They worry that naming their own suffering will add to black male suffering. But the forces aligned against black men roll on anyway, don’t they? And, as Audre Lorde so powerfully reminded us, “Your silence won’t protect you.”

Some members of the hip-hop generation have spoken up. Some young women have courageously responded in protest; and films Daphne Valerius’s The Souls of Black Girls and Byron Hurt’s Beyond Beats and Rhymes challenge fans on the subject. But the biggest players in commercial hip-hop — the artists and the major corporations that promote and distribute them — have shielded themselves from sustained engagement and accountability.

A progressive, feminist, anti-racist community is not born, it is made. Through widespread exchange of ideas about how these injustices are perpetuated we learn why it is in all of our interests to fight for justice for all. This is why direct engagement and accountability matters so much. It should not be about finger pointing, or separating “them” from “us.” Part of the power of sexism and racist sexism is their capacity to seem so normal they almost disappear from view: They recruit us all into participation even when we know better.

But at the same time, we cannot continue to defend or silently condone commercial mainstream hip-hop’s hefty contribution to the hostility and disrespect endured by black women. To do so is not to defend black men or hip-hop; it is to defend sexism against black women.

Meet Mark, current student, IE Brown Executive MBA

Vani Nadarajah — Tue, 20 Dec 2011 10:37:37 +0000

Introducing our wonderful Mark!

Mark exemplifies the IE Brown student: caring, passionate and motivated, with a strong belief in this new era of business education. Hailing from an extensive career in the banking industry and more recently an entrepreneur in the real estate business, hear Mark’s perspectives on the value-add of the IE Brown EMBA amongst other US EMBA programs, the flexibility of the program’s blended technology and the intense experience of completing an MBA in 15 months.

Also hear about Mark’s views on the IE Brown EMBA flagship Entrepreneurship module: Innovation and Entrepreneurial Leadership, and how it feels to be working with his classmates on an exciting, investor-ready business plan.

Click here to view the embedded video.

Meet Inga, current student IE Brown Executive MBA

Vani Nadarajah — Thu, 01 Dec 2011 11:45:41 +0000

Hear from our amazing Inga on how the IE Brown EMBA provides an environment for exploration and experimentation. One of the greatest aspects of the program is the interaction between the students and Inga highlights how this is the space to throw out opinions, start discusssions, challenge professors and debate in a safe space.

Also hear her thoughts on the unique Liberal Arts part of the program and how she relates this to the executive search industry, where some of the most successful senior managers she sees hail from arts, humanities or engineering backgrounds.

Click here to view the embedded video.

Creativity and Innovation: Part II

Vani Nadarajah — Wed, 23 Nov 2011 17:32:37 +0000

And now for something absolutely dazzling!

Follow the progress of our students as the Cultivating Conditions for Innovation and the Creative Process course evolves. A few months since the first beautiful video was made about this course, how are Richard Fishman and Ian Gonsher of Brown University impacting the creative spirit of the senior executives in our inaugural class?

Take a look at this:

Click here to view the embedded video.

New Virtual Information Session : 24th November

blended.team — Mon, 21 Nov 2011 12:41:55 +0000

Don´t miss the next Virtual Information Session

IE Brown Executive MBA

Madrid Date: 24 November 2011, 13:00

Local Date: 24 November 2011, 13:00 (Madrid time)

Language: English

Click on the image below to get to the registration landing page.

Once registered, we will send you, a day before the event, an email which includes the access URL to this virtual session.

In the spotlight of IE Brown: Peter MacDonald

blended.team — Mon, 14 Nov 2011 11:49:36 +0000

Peter MacDonald (IE Brown Executive MBA candidate) is an award winning Senior Executive with an exemplary

Peter MacDonald-IEBrown

record in international business and product development for various companies in the education sector. He is particularly recognized for his entrepreneurial mentality and success in taking underperforming, unprofitable business units and turning them around to profitability.

He successfully:
o collaborates with Universities on development and execution of international strategies
o works closely with Deans, Presidents, and Pro-Vice Chancellors
o identifies new opportunities for creating international activities
o supervises high performance sales and marketing teams
o shares his knowledge of the Education Sector

CAREER PATH AND REACHING THE CURRENT POSITION
QS Quacquarelli Symonds was founded in 1990 and has established itself as the leading global provider of specialist higher education and careers information and solutions. At QS, we believe that education and career decisions are too important to leave to chance, we want to ensure candidates have access to the best tools and the best independent expert information before making a decision.
Our activities span across 50 countries, working with over 2,000 of the world’s leading higher education institutions and over 12,000 employers. We provide services at each key career stage; first degree, Masters, PhD, MBA, and Executive-level.
I have been at QS now for nearly 5 years, originally recruited to develop the company’s services that target the world’s leading universities at Masters and PhD level. In June 2010 I was promoted to Commercial Director and am now responsible for all sales, marketing, logistics and operations for our face to face and online products that focus on the under graduate through to PhD level business areas.
Previously I have had experience as a start-up entrepreneur, a Director in an MBA Accreditation body and a Group Head responsible for advertising sales at a national newspaper, in total I have worked in the graduate education sector for nearly 15 years.

THE MOST FUN PART
There are three key areas that I enjoy most about my current role at QS. As an employer with innovation and entrepreneurship at its heart, QS enjoys the ability to attract bright, ambitious, dedicated young stars; I am privileged to work with a direct report team of 15 of the smartest people I have ever known, over the years we have enjoyed a lot of success and have become a close knit circle of friends. Getting to travel the world for 4-5 months a year taking in exotic far flung destinations helping aspirational candidates reach their goal of international study is pretty pleasant work as well!

THE HARDEST PART
The hardest part about my current role is making sure I get my work/life balance right; at the moment I am juggling the IE-Brown Executive MBA, with my commitments to QS and at the same time trying to be sure that James (4) and Lillie (6) get to see enough of me so that they can remember what their Dad looks like!

THE SKILLS REQUIRED
I was once told that good managers attract top talent, they allow that talent the space to develop, have the humility to know when they are wrong and do everything in their power to help that talent surpass their own personal achievements. I believe totally in that advice.

BEING ENTREPRENEURIAL IS…
simply being prepared to question the status quo; challenge yourself not to accept the way things are.

ABOUT GLOBAL JOB MARKETS AND RECRUITMENT TRENDS
One of the key findings from the TopMBA.com Jobs and Salary Trends Report 2011/12 is that in most regions across the world, the demand for MBA-qualified employees has increased in the 12 months up until June 2011. Latin America and Asia-Pacific have the highest demand for MBAs. The Asia-Pacific region saw job opportunities for MBAs increase by 43%. A further rise of 19% has been predicted for 2012. In India, jobs for MBAs have soared with particular demand in professional services, manufacturing, IT/computer services and microfinance. In China, the electronics/high technology sector is also recruiting MBAs in large numbers.
Employers in Latin America report a rapid growth of 47% in MBA jobs. More specifically, multinational companies in Mexico, Argentina and Brazil have been actively hiring MBAs.
Despite economic uncertainty, in the 12 months up until June 2011 there was an increase in job opportunities in Western Europe. For instance, employers in the UK reported a 44% rise in jobs and Germany a 27%. Business school career service officers who took part in the survey had a positive outlook in Western Europe but were cautious about the finance sector.
At the time of compiling data for the report, there was continued active MBA up until June 2011. However since then, many western economies have been struggling with the on-going euro zone debt crisis. If the sovereign debt crisis results in a double-dip recession, then this is likely to affect MBA hiring. Banks are likely to cut back on MBA intake and this will have a knock-on effect as reductions in consumer spending will lead to cutbacks in manufacturing and consulting sectors in particular. This will not be concentrated in the Western economies only and will cause a slowdown in demand in emerging markets. As a result, we are likely to see some slowdown in MBA hiring in Latin America and Asia.
The report surveyed 2,140 employers from 42 different countries, who are actively recruiting MBAs. The report is focused on data provided by employers and therefore gives a unique insight into recruitment trends in the MBA market.

TWO PIECES OF “STAND-OUT” ADVICE:
1. There’s an exception to every rule
2. 2. Beg forgiveness not permission. Whenever I am uncertain about the way forward I look to one of these;
so far so good, they haven’t let me down

For further information on QS please visit www.qs.com

Meet Gerardo, current student IE Brown Executive MBA

Vani Nadarajah — Mon, 07 Nov 2011 11:40:10 +0000

Introducing our lovely Gerardo, current IE Brown Executive MBA student and hear why a General Manager from the Mexican Real Estate industry has chosen the IE Brown Executive MBA.

Hear Gerardo’s thoughts on his classmates, the value of student interaction and the impact that this program helps him bring to his company.

Click here to view the embedded video.

Of Entrepreneurs and Chickens

Vani Nadarajah — Thu, 27 Oct 2011 15:57:11 +0000

Think Beyond Business!

IE Brown Professor of Psychology, Joachim Krueger, explores the mysterious world of entrepreneur behaviour….

Why enter the market when you can chicken out?

I teach a course on “Psychology for Managers” in an executive masters program. It’s beginning to dawn on me that the title is no good. It should be “Psychology for Executives” or better yet, “Psychology for Entrepreneurs.” For what do managers do? They manage. How are you doin’? Oh, I manage. Not very exciting. Entrepreneurs, on the other hand, prend entre. They undertake and take under, though not in the funereal sense. Or, according to some voices in the “Occupy Wall Street” movement, they do this too.

There is also a psychology OF managers and entrepreneurs, and Busenitz & Barney [BB] (1997) published a now classic paper on how they differ. BB presented evidence that entrepreneurs are less rational than managers. They are more overconfident and they rush to conclusions more cheerfully. In some way, one may take this as a reflection of their minds. Entrepreneurs rely more on intuition and less on careful analysis of evidence. In another way, one must recognize that entrepreneurs and managers operate in very different decision environments. Entrepreneurs face greater risk and uncertainty, and perhaps even seek it out. Managers can support many of their decisions with protocols, traditions, rules & regulations.

Moore, Oesch & Zietsma (MOZ) (2007) published an excellent paper in the BB tradition. They showed that entrepreneurs are particularly egocentric—or “myopic” as they call it—in their judgments and decisions. MOZ show that entrepreneurs do too much of one-cue decision-making. They assess and evaluate their own abilities and resources relative to what is required for starting a business. When the assessment passes a threshold, they enter the market. This means that when the threshold is low, they are more likely to enter than when the threshold is high. Sound reasonable? It isn’t. What entrepreneurs tend to overlook are the abilities and resources of others who are also poised to enter the market. When the threshold for entry is low, it is low for everyone. The task, in other words, is easy. When the threshold is high, it is high for everyone. The task is difficult. If entrepreneurs had a healthy appreciation of the competition’s perspective, more of them would enter difficult markets and fewer would enter easy markets. As matters stand, easy markets (bars, restaurants, liquor stores) have the highest failure rates. In econ-speak, this does not look like an equilibrium.

Reading MOZ, I see what’s missing: Do successful entrepreneurs differ psychologically from unsuccessful ones? Can we find evidence for the idea that successful entrepreneurs rely less on one-cue intuition and think more deeply instead? If someone out there knows of good studies testing these ideas, I would be grateful to know.

Meanwhile, I want to explore the links between entrepreneurs and chickens. By chicken I am not referring to virtually flightless farm fowl, but to the game. Brief review: You and ‘Other’ are both deciding between cooperation c and defection d. You can’t talk and you must act simultaneously. The payoffs are ranked thus: dc [you defect, other cooperates] > cc > cd > dd. This is a tricky game because whatever the other person does, you want to do the opposite. But you don’t know what the other person does. So if you’re chicken, you choose c on the notion that at least you will avoid the catastrophe of dd. Or you pretend you’re playing many rounds of the game (which you’re not) and flip a mental coin (or a real one for that matter) and choose d with a probability of .5.

What does that have to do with entrepreneurs and the rest of us? Think of a group of players making up a national economy. Choosing to entrepend is (bear with me) a defection. If you are among the few who entreprend while the rest of us is chicken, you get rich, so dc is best. Conversely, if all or most of us entreprend, most or all of us will fail with catastrophic consequences, so dd is worst. Now, the remaining two payoffs are not like in the regular game of chicken, but reversed. If no one steps up to the plate, we live in a world of subsistence farming, hunting & gathering, so cc is pretty bad. If there is a class of successful entrepreneurs, we are, though poultrified, not as poorly off. We find that cd is second best. Put together, the payoff ranking is dc > cd > cc > dd.

What a would-be entrepenur now needs is an estimate of the probability that others enter the market in numbers small enough that make entry the better choice. That seems like the rational way to overcome egocentrism and decision myopia. But it wouldn’t be a game-theoretical problem if those others weren’t trying to solve the very same problem. Consider again bars and liquor stores. If everyone thought ‘This market seems too easy; therefore it will be flooded with entrants, many of whom will fail; therefore I will not bother to enter,” this market would actually become a gold mine for those who decide to abandon this rational line of thinking.

Equilibrium sought, I suppose.

What does all of this have to do with Wall Street? Not much. I think that most Wall Streeters are managers rather than entrepreneurs. Many are known as “analysts” and they play with other people’s money.

Busenitz, L. B., & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making. Journal of Business Venturing, 12, 9-30.

Moore, D. A., Oesch, J. M., & Zietsma, C. (2007). What competition? Myopic focus in market-entry decision. Organizational Science, 18, 440-454. doi 10.1287/orsc.1060.0243

Blended learning and the IE Brown Executive MBA

Vani Nadarajah — Mon, 24 Oct 2011 11:51:10 +0000

One of the most powerful advantages of the IE Brown Executive MBA is it’s blended format – meaning part face-to-face and part online learning interaction.

There are numerous benefits to this innovative learning model, but noone puts it better than our very own IE Brown EMBA students. Alaba, Fahim, Garrett and Stephen: the floor is yours!

Click here to view the embedded video.