Qualitative Economics—A Perspective on Organization and Economic Science ()
1. Introduction
Economics and organization is human interaction and construction in and of everyday of life. So to develop economics in to a science that can describe and understand human dynamics, the focus has to be on the demands for such a science in relation to its ontology and epistemology.
The dominant and traditional view on economics is that, it is a matter of constructing theories that can explain the laws invisible to the eye and under the surface. This is the tradition that develops during the 19th and 20th centuries when social science was established, with its roots in positivism (e.g. Comte, [1] Durkheim, [2]) and rationalism (e.g. Descartes, [3]) and later on in system theory (e.g. von Bertalanffy [4]). The epistemologycal question here is if the factors and laws are connected, not in relation to reality but to the models and the constructed theoretical universe. There are no empirical arguments for if and in which way reality is constructed as a system or as a mathematical reality. And if it is possible that reality can be explained strictly on numbers, or if there are universal laws which are only assumed by the tradition.
An alternative to those concepts of science comes from the central philosopher in connection with the development of a subjectivistic approach, especially Immanuel Kant (1724-1804). Kant [5] thought that the inner activities of man as conceptualized in the minds of human beings must be brought into focus. Our thoughts are not turned toward the objects, as they are represented or defined in themselves, independent of human intersubjectivity. Science only understands the world in so far as we have shaped it ourselves by forming ideas of it. If therefore the sciences shall have at least an element of truth in their analyses, pronouncements and validity, they must build on the relative necessity1, which is maintained by the intersubjective everyday life reality experienced by man. Sciences do not constitute a reference system standing above, abstracted and removed from the world to justify the validity of everyday life. The scientific conceptualization rests on preconditions, which mankind places into science itself, by being a participant in the experiencal world of everyday life. It is not necessary that the single scientist knows everything about the organizing of an experience. Therefore, he does not necessaryily see the viewpoint presupposed by science or the basis of which he works himself. Kant’s view of the relation between science and everyday life throws light on science as a human endeavor in which we are responsible ourselves for its outcomes [5].
In 1935, Husserl criticized a natural science approach in social science, as being a science that had lost its soul. (Social) Science had to a great extent been studying the culture at the terms of nature. That is, natural science had determined the trend of science, also seen in cultural and social sciences. But man has a soul, a life and a history, which disappear completely, if it is studied on the premises of natural science. Husserl was of the opinion that man has to seek his roots to understand the meaning of his life [6]. His phenomenology is the study of consciousness, and he rejects the notion that consciousness or its contents can be fully investigated from a “theoreticcal attitude” using the philosophical assumptions, conceptual categories, and quantitative methods of science. Instead, the study of consciousness should start from the “natural attitude”: the relationship of consciousness to the Lifeworld—the world of ordinary, everyday experience. Only from the “natural standpoint” can we do justice to the exploration of consciousness and human experiences [7].
Schutz [8] underlines that from a phenomenological perspective with the observation that social scientists’ facts, events and data are of a totally different structure than in the objective approach. The social world is not structureless in its nature. The world has a special meaning and structure of relevance to those people that live, think and act in it. Human beings have pre-chosen and pre-interpreted this world through a set of commonsense constructions of everyday of life reality. Such a construct of the world outlines those topics of thoughts that determine individual’s actions, defines the aim for their actions, the means to achieve them, and that are accessible to reach them. This perspective helps people to orientate themselves in their natural and socio-cultural milieu and to become comfortable with in it. The topics of thoughts that are constructed by the social scientist, refers to and are founded upon the topic of thoughts that are constructed by an individual’s commonsense thinking as they live their everyday lives among other people. The constructions, therefore that the scientist use, are thereby constructions of a second order, namely constructions of the constructions that are performed by the actors on the social scene. Then the scientist observes these actions and seeks to understand them in relationship with his scientific procedure rules.
If we are looking for what is meaningful in understanding reality we must have concepts of what that reality is. This is the area of ontology and in relation to economics we have to connect the discussion of economic figures, relations, forces, etc. to where they arise and in which way they are meaningful. The only way to do this is to take the departure in the subject and the subject relation to the phenomenon: both the economic actor and the researcher who is trying to understand the subject. We need a moving picture of what the economic actor is and what his realities are, and we need a focus upon how knowledge of this is produced.
In order to develop such a picture of everyday economic interactions we have to focus upon what will be described as “qualitative economics”, as a perspective and understanding of economics. Qualitative is seen in the complex construction by the actors of the economic organizing. The roots in this are in the traditions of “Lifeworld” and interactionism. Lifeworld comes from the German die Lebenswelt, with its roots in the 18th Century philosophy of Kant [5], and later on Husserl [9], Heidegger [10], Schutz [11], Gadamer [12], and can also be seen in the tradition of American philosophers’ Mead [13] and Blumer [14] from the early to mid-20th Century. The theoretical development from this philosophical tradition is seen in different schools of contemporary social science thought ranging from phenomenology, hermeneutic, ethnomethodology, linguistics and symbolic interactionism. The Lifeworld tradition and its interactionistic theoretical development is an approach to theorizing, describing, understanding and explaining everyday life, and is therefore creating the science of qualitative economics.
The aim of this paper is therefore—through the everyday life tradition—to discuss the central issues and basic concepts in order to understand and develop a qualitative economic perspective.
2. The Logic of Qualitative Economics—The Object of Thought
The reality of economics has been investigated and explained in many ways. But the discussion of how to understand the business research, and how the research is done along with the (ontological and epistemological) assumptions lying behind the research and its reality in everyday life, are rarely discussed. Discussions of philosophy in science and methodology are important for understanding reality and theorizing on its applications in everyday life. It is precisely these connections among philosophy of science that theorizing and methodologies arise to capture the reality, which must be in the center of any scientific discussion. Furthermore, openness and a specific discussion of an alternative philosophical approach to the established traditional way of seeing science and reality are necessary. Thinking and reflection are critical in the scientific investigation of reality together with and related to the basic philosophical assumptions. It is only in this connection that we can talk about something being true (e.g. correct) or false.
We will discuss how to understand the very concept of organizations and how organizations are constructed and developed. We need to have an understanding of what people are and what they bring to the organizational economic context by interacting with one another and in groups.
When the functionalistic economic theory fails to understand business life, the root to the problem is in the lack of a conceptual discussion on the very understanding and meaning of business activities within the firm. This section focuses on interaction and the firm as a social construction and upon understanding the process of change and development of the firm. The purpose is to discuss a conceptual understanding of the firm as a subjective, interactionistic and processual phenomenon. The discussion focuses upon the way in which actors in their everyday of life create an understanding of business reality and through their actions and interactions construct and change the firm.
2.1. The Constitution of the “Firm”
Organisations are created, maintained and developed though everyday human interaction [3]. All business and economic activities are conducted by individuals communicating in an interactive or face-to-face manner, where the relations consist of concrete meetings between members in the firm. The word “Organization”/“Firm” is (only) a concept, which we use to describe a phenomenon. It is a conceptualization of what we believe and do and what we orient our actions toward. Organization is a concept in the same way as the concepts of family, class in school, a football team, an union etc. In other words, organization is a phenomenon that we experience when and where we see more than one person involved in activities over time.
Thus, organization becomes a collective arrangement where people try to give the situation and the activities meanings. In line with Blumer [14] organizations consist of the fitting together of lines of activity—the interlinking of lines of action. Actors mixing, sharing, competing, and cooperating are parts of the interactive process that define groups and organization. And that is why most organizations, by definition, change and move dynamically in space and time.
By fitting together the lines of action and interaction as logically prior in organization, we are discouraged from mistakenly regarding organizations as “things” or simply “solid entities” such as a building or structure. Organizations are not concrete, immutable or even life-like objects that, somehow independent of our conscious intentions or unconscious motives, shape and determine what we do. The technical term for this kind of cognitive error is “reification”, an unconscious tendency to forget or be obvious to the role of human agency in creating, sustaining, and transforming social relations [15]. We actively construct our social reality through language, through a process of symbolization by forming words and sentence to describe our experiences as well as our wants and desires. We create our organizational existence and live within it.
The language we share and use constitutes our relationships [7]. An organization should therefore be understood through the actors who by their actions and knowledge create the firm in their everyday pursuit of life. In this the relation between action and knowledge is the central issue of interaction.
The actions exist in a context that is created by the actor through his/her actions. The action is related to the actor’s interpretation and understanding of the situation in the context of meanings imparted in the interaction of the phenomenon [11,13,14,16,17]. The actor has motives and definitions of the situation that makes the social world into an inner logic, which have rules and lines of action derived from the situation itself. Actions also happen in connection with expectations. When the actors are involved in the society, they expect suitable actions from themselves and from others: They are capable of understanding meanings of action by others and make their own point-of-view on themselves based on the response of other actors. They associate meanings to situations and to other actor’s actions and act in relation to their interpretations of these meanings. This can be understood in relation to typifications, formed by the earlier experiences of the actor, which define his/her “thinking-in-future” of others’ possible reaction to his/her actions.
The typifications that the actor uses in a situation are dependent on his/her knowledge in everyday life that is, “the-stock-of-knowledge” and “the generalized other” as Blumer [14] described the phenomenon. These typifications give the individual a frame of reference that the actor can use to create actions and make sense of others’ actions. See Blumer’s notion of “reflections” for example. Typifications are thereby expectations to others actions containing symbols in relation to community and collective interpretations.
This social reality is pre-defined in the language by which we are socialized. The language gives us categories that both define and emphasize our experiences. The language spoken and dialogue among actors within an organization can be seen as communication of meanings and actions. But such language-usage is also a means to create a new understanding, changes in meanings and a new worldview. Language is the base line from which we understand and can interpret knowledge. Thus, knowledge, as expressed in language-usage, can thereby be understood as moving pictures of reality: experiences and information are produced through actions and transformed (by interpretation and retrospection) to the knowledge that the actor’s experiences are useful and relevant.
The world with which the actor is confronted is composed of experiences which the process of consciousness will develop or simplify toward different paths (or structures) and then transformed into actions (again). The actor uses and develops a scheme for interpretation to connect episodes of social action in a sensible way. A “scheme” should be understood as active information seeking pictures that accept information and orient actions continuously [18,19]. The action-knowledge process gives an understanding of the way in which people think, act, reflect and interact. Simultaneously it shows that the actors are engaged in their environment by means of interpretation and orientation with one another. Through this process they give define and give meaning.
The focus in the understanding of the organization is upon the way organizational members interpret their organizational world, which is nothing else than a special sphere of the individual’s Lifeworld. Lifeworld refers to the fact that in any real-life experience there is something that is given in advance or something that exits in advance and thus, taken for granted. This taken-for-granted world includes our everyday life and whatever prejudices and typical interpretations we may derive from it. Acting as a member of an organization, therefore, does not differ essentially from acting as an individual, for “whether we happen to act alone or, cooperating with others, engage in common pursuits, the things and objects with which we are confronted as well as our plans and designs, finally the world as a whole, appears to us in the light of beliefs, opinions, conceptions, certainties, etc., that prevail in the community to which we belong” [17]. The important characteristic of this experience in any organization becomes the typical form of everyday life. Or as described by Schutz [20]: The individuals commonsense knowledge of the world is a system of constructs of its typicality. In social interaction, the role of typification is important and can be expected to vary according to the nature of the relationship.
2.2. “Environment”
The environment is not an objective fact but something members of the work shop produce or rather co-produce as a consequence of their acts [21]. The enacted environment is orderly, material, social construction that is subject to multiple interpretations [22]. The existence of the objects in the environment is not questioned, but their meanings are. The traditionally distinction as well as the conception of environments and organisations embedded in organization literature is seriously questioned by Weick [18,22]. We think Weick is right stating that when concepts like organization and environment are treated as entities they start working as pre-judgment [12] or selffulfilling prophesy. In other words when researchers make a clear-cut between an organisations and its environment they automatically or unconsciously starts looking for confirmation on these assumptions. In Weick’s perspective even an analyses of the environment becomes an act affecting and shaping the environment. The basic assumption is that reality is seen as a social construction [18]. Members, and especially managers, of organisations enact the environment by constructing, rearranging, singling out and demolishing [18] phenomenon in their surroundings. Since the construction of reality is a social process the manager is not alone when reality is constructed. The manager is obviously interacting with others and during these interactions reality is constructed. Clearly an enacted environment is not synonymous with a perceived environment [18] but it is also clear that the perception of reality must somehow be influenced by the reality being socially constructed by members of an organization. The social construction of reality work as a self-fulfilling prophecy making members of an organization look for and find what they expect to find in the environment.
The actors in their “environment” construct reality and knowledge. It is precisely because knowledge is a relation to and has an orientation towards the “environment” through action, that the environment itself can be defined as the experiential space and as the interpretation space.
The experiential space is what is close and concrete, where the actors travel and interact. This can be seen in the consciousness of human beings in “the natural attitude” first of all being interested in that part of the actor’s everyday of life world that is in his reach and that in time and space are centered around him/her [8]. The place where the body occupies the world, the actual here, is the point from which one orientates oneself in the space. In relation to this place, one organizes elements in the environment. Similarly, the actual now is the origin of all the time perspectives under which one organizes events in the world as before and after, and so on. This experiential space is experienced by the actor as the core of reality, as the world within his reach. It is the reality in which we are all engaged.
The interpretation space can be seen as the reality beyond the actor’s knowledge (e.g. through stories, tales) where something which the actor relates to, but which is not centered around his or her everyday of life, e.g. not in time. In relation to this, we can see the distinction that Weick [23] talks about when he says, that humans live in two worlds—the world of events and things (or the territory) and the world of words about events and things (or the map). In this, the process of abstraction is the process that enables people to symbolize [14], and is described as “the continuous activity of selecting, omitting, and organizing, the details of reality so that we experience the world as patterned and coherent”. This process becomes necessary but inherently is inaccurate, because the world changes continuously and no two events are the same. The world becomes stable only as people ignore differences and attend to similarities. In a social constructed world, the map creates the territory. Labels of the territory prefigure self-confirming perspectives and action.
This perspective also means that the development of knowledge has its start in the actor’s existing knowledge. Or as Weick [23] put it: it takes a map to make a map because one points out differences that are mapped into the other one. To find a difference, one needs a compareson and it is map like artifacts which provide such comparisons.
The development can be seen in relation to the actor’s everyday experiences with his attempt to orient him/herself and to solve problems. When the actors act in their experiential space, they thus widen their understanding of reality by interpreting and relating themselves to the result of the actions. Development of knowledge involves interpretation and retrospection whereby the actors create their experiential space: Reality is what one sees; hence it changes every time the actor constructs a new concept or a picture of connections. Development of knowledge thus demands that the actor reflects and relate to an understanding of the situation and the experiential space.
The essence is in the idea that we all develop knowledge through actions and that actions are the means by which we engage ourselves in the reality; our actions construct and keep us in touch with the world [24,25]. The action-knowledge discussion is built upon the assumption that we only have a reality in force of that we are engaged in it: reality is socially constructed. This does not imply that people are in full control over the process of constructing the reality or that they have possibilities to change it basically, because they do not act alone and because it is an on-going process.
It is necessary now to take the discussion of actors, actions and knowledge, and develop an understanding of the way in which people are orientated toward each other and in which way the organizational reality actually becomes a reality.
2.3. Interaction and Knowledge
Interaction is symbolic in the sense that actors respond to the actions of others, not for some inherent quality in them, but for the significance and meanings imputed to them by the actors. Meanings shared in this way, in an intersubjective way, form the basis for human social organization [26]. People learn symbols through communication (interaction) with other people, and therefore many symbols can be thought of as common or shared meanings and values [27]. This mutually shared character of the meanings gives them intersubjectivity and stresses that it is interaction and intersubjectivity that constitute the firm as a reality for the actors. Interaction in this relation should be understood as a complete sequence of interaction, as a process of interaction.
The central point in this is the time perspective and the dependency of the context and the acts: It is the actions by the actor and the process of interaction that give and make the firm over time. The “firm” therefore both has a past (the experiences of the actors) and a present (the actors interpretations and pictures) and a future in relations to the actors fantasies of the future and orientations. The processes related to interaction are presented in the figure below.
Figure 1 outlines interaction between the actors in the firm. It is a process of knowledge development, which occurs through the process of interaction in an experiential space. It is intersubjective and can be seen as a moving picture that defines what the actors’ experience as important and real. Thus, knowledge has an impact on future actions and is central for an understanding of the actors’ orientation and the organizational actions. The actors’ act in relation to the picture and definition they have of the experiential space and the situation. Each action means possibilities for experiences and information, and for strengths or weaknesses in interpretation of connections in the situation. In every situation there is the possibility of several different interpretations. This means that changes in the experiential space create ambiguity and the actors are tempted to use previous successful actions and interpretations—the existing picture of reality.