Bruce R. Scott

Paul Whiton Cherington Professor of Business Administration, Emeritus

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.

  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.