Scientific Management and Business Stabilization .
Consideration of how the US economy might be stabilized in the face of costly cycles has a long history in economics. As early as 1886, Herbert Davenport urged the deferment of public works until times of recession and two years later Commons called for tariff and currency reform and for a program of public works designed to stabilize employment. However, such contributions were rare and market stabilization did not become a topic of serious economic analysis until after Britain introduced national unemployment insurance in 1909. This disinterest in business cycle stabilization reflected both the economic profession's conviction there was little that intervention could achieve and a disinclination to concede capitalism was inherently unstable and needed governance by a visible as well as an invisible hand. At the dawn of the twentieth century the prevalence of this perspective among economists stood in marked contrast to the situation in industry where managers had instituted a litany of measures to insulate their firms from the seasonal and cyclical crises that periodically beset the business world. These embryonic attempts at managing the business cycle at the level of the microeconomy have been variously conceptualized as a many-faceted movement for the regularization or stabilization of business (Feldman 1922; Dennison 1923; Nelson 1969; Metcalf 1972). The stabilization practices of the period fell into three broad categories. First, the time pattern of demand for the firm's products was modified via advertising, the linking of price discounting to time of sale, and diversification into markets with differing demand patterns. Second, firms produced to inventory. And third, firms' capital investment and large-scale maintenance were delayed to times of cyclical downturn (Metcalf 1972, 3). .
Taylor approved of these practices but believed that even the best of traditional managers failed to fully realize their potential capacity to stabilize production and employment because they were insufficiently rigorous in their commitment to empirical analysis and "rule by fact" as opposed to "rule of thumb.
Scientific Management: The next influence on how people were managed came in the form of scientific management resulting from greater company size, complexity and use of technology. ... However, even though scientific management increased efficiency, it did little for employee morale. ...