Bruce R. Scott

Paul Whiton Cherington Professor of Business Administration, Emeritus

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Bruce R. Scott is the Paul W. Cherington Professor of Business Administration. His particular area of interest is the impact of public policy on the business environment. From 1963 to 1968 he lived in Europe and researched the French system of industrial planning. In 1972 he was asked to head the required MBA course which has subsequently been named Business, Government and the International Economy. Since 1979 he has taught in various executive education programs as well as a second year MBA elective in Economic Strategies of Nations.

For several years his research and writing have focused on a book that is titled Capitalism: Its Origins and Evolution as a System of Governance, which was published in 2010. 

His outside activities have included participation in the scenario planning activities of Royal Dutch/Shell, a scenario analysis of the Venezuelan economy (1983-85) and similar analyses of the prospects for transition in South Africa (1990-91, and for Luxembourg (1997).

His books are Industrial Planning in France (with John McArthur), U.S. Competitiveness in the World Economy (with George Lodge), South Africa: Prospects for Successful Transition (with Robert S.K. Tucker), and EUROPE 2012 Globalisation et Cohesion Sociale: Les Scenarios Luxembourgeois.

In 1991 Professor Scott was appointed by the U.S. Senate as one of its four representatives on the U.S. Competitiveness Policy Council, an advisory board established by the Trade and Competitiveness Act of 1988.

Professor Scott holds a B.A. in economics (Swarthmore College, 1954) and M.B.A. and D.B.A. degrees from Harvard Business School (1958, 1963).

Professor Scott is married, with three children and three stepchildren. His extracurricular interests focus on making trails in the woods in New Hampshire.

Featured Work



  1. Capitalism: Its Origins and Evolution as a System of Governance

    Bruce R. Scott

    Capitalism, as defined in this book, is an indirect, three-level system of governance for economic relationships (i.e., economic, administrative, and political). Whereas economic markets can coordinate supply and demand within an existing system thanks to the invisible hand of the pricing mechanism, capitalism must have the administrative capability to regulate the behavior of economic actors within those markets and the political capability to redesign their institutions; regulation and the design of market frameworks require the visible hand and coercive powers of a political authority. This three-level structure closely parallels that of all organized team sports. The play on the field is like the markets of capitalism, and the actions of the players are regulated by referees who enforce a set of rules created and promulgated by a political authority that enjoys an anti-trust immunity. Capitalism is not a natural system and it did not emerge or spread by an unguided process like biological evolution; it has only existed since the liberation of the markets for land, labor, and capital, i.e., the end of feudalism. Its spread is a story of the politics of hostile takeovers and/or liberation. Capitalist evolution requires the continuing transformation of its three levels of governance.

    Keywords: Economic Systems; Price; Governance; Government and Politics; Books; Markets; Relationships; System;

  2. The Concept of Capitalism

    Bruce R. Scott

    This monograph on the concept of capitalism is the intellectual core of a larger work, entitled Capitalism, Its Origins and Evolution as a System of Governance, due for publication November 2009. The purpose of this monograph is to put forth an original concept of capitalism as a system of governance, including a theory of how it functions at any point in time and how it evolves through time.

    Keywords: Economic Systems; Framework; Governance; History; System; Theory;


    Scott, Bruce R. The Concept of Capitalism. Springer, 2009. (Online version available by clicking on title.) View Details
  3. EUROPE 2012 Globalisation et Cohesion Sociale: Les Scenarios Luxembourgeois

    Albert Bressand, B. R. Scott, Manuel Baldauff, Leon Halbach, Gerard Hoffmann and Thierry Wolter

    Keywords: Cross-Cultural and Cross-Border Issues;


    Bressand, Albert, B. R. Scott, Manuel Baldauff, Leon Halbach, Gerard Hoffmann, and Thierry Wolter. EUROPE 2012 Globalisation et Cohesion Sociale: Les Scenarios Luxembourgeois. Luxembourg: Fondation Alphonse Weicker, 1997. View Details

Journal Articles

Book Chapters

Working Papers

Cases and Teaching Materials

  1. Chile: The Conundrum of Inequality

    Bruce R. Scott and Jessica Leight

    Following the violent overthrow of the Allende regime, Chile embarked on economic reforms that emphasized free markets. These reforms were followed by rising inequality as well as growth. In 2005, business leaders speak out on the necessity of reducing the inequalities.

    Keywords: Developing Countries and Economies; Economic Systems; Equality and Inequality; Government and Politics; Markets; Chile;


    Scott, Bruce R., and Jessica Leight. "Chile: The Conundrum of Inequality." Harvard Business School Case 907-411, February 2007. (Revised September 2007.) View Details
  2. Brcko and the Arizona Market

    Bruce R. Scott and Edward Murphy

    Explores the role of the U.S. military in facilitating the establishment of a spectacularly successful free trade area in one of the most devastated areas of Bosnia. NATO's imposition of law and order, plus protection from local political protection rackets, led to spontaneous growth of a market with over $100 million in annual sales.

    Keywords: Developing Countries and Economies; Trade; Economic Growth; Industry Growth; Government Legislation; Emerging Markets; Bosnia and Hercegovina; United States;


    Scott, Bruce R., and Edward Murphy. "Brcko and the Arizona Market." Harvard Business School Case 905-411, December 2004. (Revised August 2006.) View Details
  3. Capitalism and Democracy in a New World

    Bruce R. Scott, Sarah Potvin and Alison Adams

    Focuses on the formulation of the Northwestern Ordinance as the core of a development strategy for capitalism and democracy in the United States. A precursor to the Constitution, the Northwestern Ordinance was based on the New England Model to achieve a broad and relatively equal distribution of land, ensuring that the distribution of economic and political power was also roughly congruent. By the time Alexis de Tocqueville made his study of American democracy, he observed that capitalism was producing economies of scale and increasing productivity, leading to heightened inequality and the eventual formation of an aristocracy, i.e., capitalism was driving incongruities between economic and political power.

    Keywords: Equality and Inequality; Economic Systems; Income; Laws and Statutes; Government and Politics; Growth and Development Strategy; Power and Influence; United States;


    Scott, Bruce R., Sarah Potvin, and Alison Adams. "Capitalism and Democracy in a New World." Harvard Business School Case 706-030, January 2006. (Revised April 2006.) View Details
  4. Taiwan: "Only the Paranoid Survive"

    Bruce R. Scott and James R. Matthews

    Taiwan has enjoyed remarkable growth since 1950. This case presents differing views of the role and contribution of the state in this process. Then it explores recent industrial policy in semiconductors.

    Keywords: Development Economics; Business and Government Relations; Semiconductor Industry; Taiwan;


    Scott, Bruce R., and James R. Matthews. Taiwan: "Only the Paranoid Survive". Harvard Business School Case 700-039, September 1999. (Revised May 2005.) View Details
  5. U.S. Market Framework for Gasoline, The: Individual Incentives and Societal Goals in Global Markets

    Bruce R. Scott and Edward Murphy

    Traces the role of gasoline taxes in financing U.S. highways and the use of regulations to increase fuel economy to show how and why the U.S. market framework for gasoline is so different from that in Europe. Focuses on whether the U.S. tax should be raised, as advocated by the CEOs of Ford and General Motors.

    Keywords: Taxation; Governing Rules, Regulations, and Reforms; Energy Sources; Market Platforms; Sovereign Finance; Growth and Development Strategy; United States; Europe;


    Scott, Bruce R., and Edward Murphy. "U.S. Market Framework for Gasoline, The: Individual Incentives and Societal Goals in Global Markets." Harvard Business School Case 705-012, September 2004. (Revised April 2005.) View Details
  6. China's Rural Leap Forward

    Bruce R. Scott and Jamie Matthews

    Collectively owned township and village enterprises (TVEs) played a pivotal role in China's rapid growth during the 1980s and 1990s. Although they originated in the policies and institutions of the Maoist era, TVEs thrived only after Deng Xiaoping's economic reforms redistributed property rights, taxing powers, and responsibility for the provision of public goods. These reforms made local governments dependent on their TVEs for tax revenues and gave party cadres powerful incentives to promote economic growth. Local officials often helped TVEs under their jurisdiction to gain access to technologies, capital, and production permits. Instead of rapidly privatizing its state-owned enterprises (SOEs), China gradually liberalized aspects of its economy in a controlled manner, often establishing a "market track" alongside its planned system. As the SOEs' share of output and employment shrank, that of the TVEs dramatically increased. By the mid- to late 1990s, TVEs accounted for nearly 40% of China's industrial output and had created about 100 million jobs. Nevertheless, party officials questioned whether the TVEs were a viable form of organization for an economy with ever-larger firms, more complex products and production processes, and the need for more capital and more skilled managers.

    Keywords: Business and Government Relations; Public Sector; Public Ownership; Development Economics; Governing Rules, Regulations, and Reforms; Macroeconomics; Emerging Markets; China;


    Scott, Bruce R., and Jamie Matthews. "China's Rural Leap Forward." Harvard Business School Case 703-024, November 2002. (Revised June 2003.) View Details
  7. Netherlands:The, A "Third Way?"

    Bruce R. Scott and Jamie Matthews

    The economic success of The Netherlands in the 1960s can be attributed to Dutch wages that were kept substantially below those in neighboring countries. But increased pressures in the 1970s led to a wage explosion, which in turn pushed unemployment and disguised unemployment (i.e., disability/sickness schemes and early retirement), up to extraordinary levels--a situation that came to be known as the Dutch disease. Through a series of meetings in the early 1980s, union and employer groups came to a consensus to bring wage levels down. As a result, employee compensation as a share of GDP dropped from almost 60% in 1980 to just over 50% in the mid-1990s. After other reforms, the Netherlands had clearly turned the situation around. By the mid-1990s, it was back up to nearly full employment, was growing at a faster rate than its neighbors, and had a productivity/hour rate that was among the highest in the world. In addition, its corporate profitability performance matched or exceeded that in the United States and, unlike Germany, the Netherlands seemed to be keeping up in the high-technology sector. All this was in striking contrast to Sweden, a country that has experienced much more difficulty in trying to bring its wages back down.

    Keywords: Wages; History; Policy; Problems and Challenges; Macroeconomics; Economic Systems; Employment; Performance Productivity; Jobs and Positions; Economic Growth; Netherlands;


    Scott, Bruce R., and Jamie Matthews. Netherlands:The, A "Third Way?". Harvard Business School Case 702-015, December 2001. (Revised February 2003.) View Details
  8. Corporate Renewal in America

    Bruce R. Scott and Thomas S. Mondschean

    Discusses various macroeconomic, regulatory, technological, and financial forces that led to increased corporate restructuring in the United States beginning in the mid-1980s. The U.S. financial system is often viewed as the most developed in the world and a model for other countries to follow. Similarly, the U.S. model of corporate governance--with its emphasis on shareholder value and an active market for corporate control--is also viewed as a model. Examines pressures for corporate restructuring and the emergence of an active market for corporate control for very large firms beginning in the early 1970s. Discusses the effects of this restructuring on corporate profitability and productivity, and provides data on the evolution of a number of indicators of performance, including productivity by sector, market capitalization relative to replacement cost, and rates of return both on assets and on equity. In brief, it finds that U.S. firms showed significantly improved after-tax returns on shareholder equity over the period while failing to make significant improvements on their pretax returns on assets--adjusted for the effects of the business cycle. Given the lack of comparable accounting data on returns across countries, conclusions about the performance of U.S. firms versus European ones isn't possible.

    Keywords: Performance Evaluation; Corporate Governance; Macroeconomics; Economic Systems; Restructuring; Markets; Private Sector; Corporate Finance; Germany; Japan; United States;


    Scott, Bruce R., and Thomas S. Mondschean. "Corporate Renewal in America." Harvard Business School Case 702-018, January 2002. (Revised September 2002.) View Details
  9. "One Country, Two Systems"? Italy and the Mezzogiorno (A)

    Bruce R. Scott and Jamie Matthews

    GDP per person in northern Italy caught up with average incomes in Britain, France, and Germany in the 1970s, but incomes in southern Italy (the Mezzogiorno) fell further behind. This was partly due to cultural and societal differences that dated to the Renaissance, but even more obviously to northern dominance of the new nation in 1860 and Mafia dominance of much of the south. This case focuses on 50 years of efforts to correct this problem. Italy, with its north-south income divergence, is a good metaphor for the global economy with its divergence between First World and Third World incomes. A rewritten version of an earlier case.

    Keywords: History; Development Economics; Crime and Corruption; Social Issues; Economy; Government and Politics; Macroeconomics; Italy;


    Scott, Bruce R., and Jamie Matthews. "One Country, Two Systems"? Italy and the Mezzogiorno (A). Harvard Business School Case 702-096, June 2002. (Revised August 2002.) View Details
  10. "One Country, Two Systems"? Italy and the Mezzogiorno (B)

    Bruce R. Scott and Jamie Matthews

    In 1992, a corruption investigation and two assassinations created a crisis that prompted the Italian government to dispatch 7,000 troops to Sicily to "retake the island" from the Mafia. This case examines the crisis and the efforts of both the Italian state and the city of Palermo to deal with it. Also explicitly contrasts two development theories in an attempt to explain the economic problems of the South: one cultural (proposed by Robert Putnam); the other political (contained in the writings of Samuel Huntington, Sidney Tarrow, and Simona Piattoni). A rewritten version of an earlier case.

    Keywords: History; National Security; Crime and Corruption; Economic Slowdown and Stagnation; Italy;


    Scott, Bruce R., and Jamie Matthews. "One Country, Two Systems"? Italy and the Mezzogiorno (B). Harvard Business School Case 702-097, June 2002. View Details
  11. Austin, Texas: Building a High-Tech Economy

    Bruce R. Scott and Srinivas Sunder

    Members of the community decide to try to diversify the economy of Austin, Texas, by welcoming high-technology firms and by augmenting the electrical engineering faculty at University of Texas--Austin.

    Keywords: Development Economics; Diversification; Information Technology; Policy; Government and Politics; Engineering; Technological Innovation; Competitive Advantage; Higher Education; Texas;


    Scott, Bruce R., and Srinivas Sunder. "Austin, Texas: Building a High-Tech Economy." Harvard Business School Case 799-038, October 1998. (Revised June 2002.) View Details
  12. Country Analysis in a "Global Village"

    Bruce R. Scott

    Substantially rewritten to establish the relevance of countries in the global context. It does so in terms of their differing economic performance in recent decades, and also by contrasting those that have "converged" toward the rich country norm (as theory would predict) from those that have not. It then develops the country analysis framework, with a scheme to identify context, strategy, and performance. Adds a political dimension, following Sam Huntington's emphasis on the strength of a state/government rather than its form; Hernando de Soto's notion that property rights are more important for most Third World countries than FDI receipts; and Joe Stiglitz's thesis that the notion of differing positions on a common production function is simply not plausible. Thus, advantages remain to be created, and substandard returns should be expected in order to catch up. In addition, provides an economic strategy matrix for the classification of strategies, or for the analysis of their evolution through time. A short bibliography is included. A rewritten version of an earlier note.

    Keywords: Globalized Economies and Regions; Macroeconomics; Trade; Business Strategy; Performance Evaluation; Industry Growth; Currency; Policy; Development Economics;


    Scott, Bruce R. Country Analysis in a "Global Village". Harvard Business School Background Note 701-074, January 2001. View Details
  13. Economic Reform in the Czech Republic: Velvet Revolution or Velvet Blanket?

    Bruce R. Scott and Thomas S. Mondschean

    Describes the economic reforms from 1990 to 1998, their success, the subsequent 1997 crisis, and the fall of the Klaus government.

    Keywords: History; Sovereign Finance; Development Economics; Privatization; Policy; Government and Politics; Economics; Czech Republic;


    Scott, Bruce R., and Thomas S. Mondschean. "Economic Reform in the Czech Republic: Velvet Revolution or Velvet Blanket?" Harvard Business School Case 700-100, June 2000. (Revised June 2000.) View Details
  14. Japan (D1): A Strategy for Economic Growth

    Bruce R. Scott and Audrey T. Sproat

    Data on Japan's unparalleled economic growth in the post-war era: How was it achieved and what future risks might be foreseen in 1971?

    Keywords: Economic Growth; Growth and Development Strategy; Risk and Uncertainty; Japan;


    Scott, Bruce R., and Audrey T. Sproat. "Japan (D1): A Strategy for Economic Growth." Harvard Business School Case 378-106, October 1977. (Revised April 1998.) View Details
  15. California: The American Future?

    Bruce R. Scott and Kevin Price

    California has long been a lead state in terms of population growth, income, and societal norms. In the 1990s, California voters approved referenda to restrict benefits to immigrants and to prohibit affirmative action. Is this likely to be another leading indicator for the country as a whole?

    Keywords: Fairness; Governing Rules, Regulations, and Reforms; Policy; Laws and Statutes; Civil Society or Community; Public Opinion; California;


    Scott, Bruce R., and Kevin Price. "California: The American Future?" Harvard Business School Case 798-001, December 1997. View Details
  16. Japan (A), Supplement

    Bruce R. Scott

    In an economy marked by severe inflation, a balance of payments problem, and large investment needs for modernization, the Minister of Finance has been asked to design a remedial program that cannot include borrowing abroad. He does so, and the case describes the outcome of the policies in the early 1880's. Discussion is expected to focus mainly on the long-term institutional spin-offs from these policies, and on the appropriateness of these institutions to the needs of a developing country.

    Keywords: Design; Developing Countries and Economies; Inflation and Deflation; Borrowing and Debt; Policy; Outcome or Result; Problems and Challenges; Programs;


    Scott, Bruce R. "Japan (A), Supplement." Harvard Business School Supplement 394-066, October 1993. (Revised January 1994.) View Details
  17. Malaysia (A)

    Bruce R. Scott

    Riots in 1969 bring martial law and a new, more firmly Malay government which sets out to promote redistribution of opportunity, income, and wealth by race-based quotas. Dr. Mahatherl, a Malay nationalist says Malays have a non-competitive alliance which must be forced to change.

    Keywords: Wealth and Poverty; Change Management; Race; Conflict and Resolution; Power and Influence; Malaysia;


    Scott, Bruce R. "Malaysia (A)." Harvard Business School Case 792-101, April 1992. View Details
  18. Case Studies in Political Economy: Japan --1854-1977, Course Module

    Bruce R. Scott, John W. Rosenblum and Audrey T. Sproat

    Keywords: Economy; Government and Politics; Japan;


    Scott, Bruce R., John W. Rosenblum, and Audrey T. Sproat. "Case Studies in Political Economy: Japan --1854-1977, Course Module." Harvard Business School Case 980-003, August 1980. (Revised January 1983.) View Details
  19. Introduction to Balance of Payments Analysis

    Bruce R. Scott

    Minimal background to permit interpretation of positive or negative balances in the key summary accounts of a balance of payments statement; also to permit relating these balances and relevant supporting detail to a possible national development strategy. Designed for use with Foreign Investment in Canada (A).

    Keywords: Accounting; Development Economics; Planning; Accounting Industry; Canada;


    Scott, Bruce R. "Introduction to Balance of Payments Analysis." Harvard Business School Background Note 378-043, August 1977. (Revised February 1981.) View Details

    Research Summary

  1. Capitalism as a System of Governance

    by Bruce R. Scott

    My research interest is in further exploration of the analytic utility of an original conception of capitalism as an indirect, three level system of governance for the economic relationships within political entities, and mostly within nation states. This three level model of capitalism is analogous to organized team sports, which are also governed through indirect three level systems, where players are allowed complete freedom of action so long as they obey the rules.

    My research begins from an understanding of why capitalism originated in Europe in the period 1400-1800, and then spread very sporadicalluy to other areas, almost invariably after a change of regime. In brief, its origins were based on limited grants of power to individuals so that they could create new activities to boost incomes and thus be liable for increased tax payments to the crown. Europe experienced unique circumstances in the period 1400-1800 wherein the number of political entities was reduced through open competition and warfare from more than 300 to approximately 40. In the process there were many hostile takeovers. Thus, the spread of capitalism was not gradual, like water flowing along an almost flat surface. Instad it was discontinuous, and dependent upon a change of regime. For example, it may be said that France became capitalist following the events of 1789, while England had already done so in 1689, and China did not do so for almost another 200 years.

    One major hypothesis of my work is that capitalism is centered in the factor markets, which are deeply embedded in society. Thus while trade dates far back in history, factor markets in land, labor, financial capital and the use of legal systems for the mobilization of capital are quite recent developments, and all require that governments relinquish power to private actors. Venice was an early leader in institutional innovations, including escorted convoys to the Middle East to protect its merchants, but it enjoyed approximately 1000 years of limited monarchy before its regime was overthrown by Napoleon's armies; until then, it did not have the free mobility of its factor markets to achieve captialism. An exceptional case is that of the early American colonies; soon after settlement, the colonists established both capitalism and democracy, distributing land relatively equally and therefore creating free factor markets and relatively equal voting rights (I deal with the South as a distinct case).

    Another major hypothesis of my work is that capitalism will tend to yield increased eonomic inequality and thus oligarchy, unless government takes measures to see that all residents have opportunities for human development. Hence I arrive at a paradox: democracy depends on capitalism (i.e., you need decentralized economic power to truly enable decentralized political power) to emerge, yet capitalism also contains the seeds of its subversion.

    I have just finished writing a 700 page book on this topic that is scheduled to be published later this year by Springer Verlag of Heidelberg. My next project will be to try to create a corresponding workbook to be marketed along with the book to interested students and faculty. The workbook will make some of the legal and regulatory isues of capitalism more understandable to non-lawyers, while at the same time making their implications more understandable to students of several disciplines. An example of what it will contain is as follows: legal, business, and political cases from the US in the 19th century, when the society that Tocqueville found to be the most egalitarian in the world in 1830 had become a corrupt oligarchy 70 years later. Improved understanding of the roles of the Supreme Court, the Senate, the legal profession, and the strategies of large firms will be at the center of this example and, in fact, of this workbook as a whole.