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Is the reproduction of 'the family' crucial to the production of capitalism?

Introduction

Both 'the family' and capitalism are central to human society. They each have a degree of input on constructing the way in which our lives function and they affect most societies of the world in some way or another. Feminist scholars in the 1970s and 80s proposed that 'reproduction' was not only biologically constructed through the procreation of children, but also through the social production of people able to work (Yanagisako, 2002). When analyzing whether or not family is crucial to capitalism, assuming that 'family' is those kin who are characterized by their biological identity and economic unity, it is logical to conclude that this feminist definition of reproduction allows us to include a broader range of those who can be classed as being part of the means of production within the family business. It is challenging to provide a formal definition of capitalism, but in the words of Weber, capitalist economic action is 'one which rests upon the expectation of profit by the utilization of opportunities for exchange' (2003, pp. 17). When studying capitalism it can see how familial social structure is closely linked to the economic success of capitalist firms in the world run by kin groups, and how in many ways they rely upon each other. In fact family firms account for over 80 percent of all businesses worldwide (Gersick, 1997). I will argue that the reproduction of 'family' is crucial for the production of capitalism by discussing firstly the emotional and economic grounds on which the production of capitalism necessitates the need for family support. I will then analyse the techniques practised by family firms to show how such approaches contribute to economic success. The evidence for successful family firms is the decisive factor when deciding whether family reproduction is crucial. In my final paragraph I will provide evidence for successful family businesses and how family and kinship may even affect non-family firms. Throughout the discussion I will be using supporting examples from ethnographies I have found particularly interesting and useful in helping me to come to my decision that family reproduction is undeniably vital in the production of capitalism.

Why Firms Require the Use of Kin

A reality of human life is that all families require some kind of capital to function. However, this is a system that works both ways and the production of capital may often require the input of the family. When attempting to understand the importance of this to economic security of the family and ultimately their society, it is essential to consider both the emotional and economic reasons why firms choose to remain family based.

When researching emotional ties in the family business it has become clear that there is an unmistakable sense of loyalty among family firms. Even the world's leading family businesses feel this sense of devotedness. For example, the Ford family, who currently still own the multinational motor corporation, have continued their business ownership even though the company is facing economic downfall. Ford family members claim 'there is not any situation which would cause them to sell out' and Bill Ford has stated that 'it is very much an emotional commitment' (Vlasic, 2009). With this loyalty, family members will always be obligated to assist each other and the fear that workers will decide to leave the firm is avoided, where as in a non-family firm, employees can resign at any time. However, if the company does employ non-family members, they may also share the feeling of loyalty as there is often a sense of patriarchy, a common factor of a family business. When it comes to inheritance there is a sense of tradition that must not be broken. Families are very proud of their business heritage, so proud to the extent that in Yanagisako's (2002) ethnography on the Italian silk industry there is more than one example of a firm owner denying the existence of or importance of somebody in the firm whom they were not related to. This idea of claiming that the firm is completely homogenous in terms of kin groups gives a feeling of belonging that encourages members of the family to stay within the firm. As inheritance is so significant, the next to accede the firm must have a high degree of trust invested in them by the current proprietor. When the business is family run, faith is embedded at a much earlier age than if the inheritor were to be non-kin. An example of the trust being demonstrated is a case in East Africa where a manager sent his son out to run the particularly important errand of taking papers to a shareholder to sign. The company did employ a paid secretary, but there was not an equivalent trust invested in them (Benedict, 1968). When Just describes the structure of family capitalism on the Greek Island of Meganisi he recounts that 'a continuity existed between casual familial operation and a formally constituted business enterpise' (Just, 2000, pp.170). This demonstrates that a family may feel far more at ease in their working environment when working with their own kin. He then comments that 'no threshold was perceived through which one passed into an impersonal world of commerce where the affections of family and kinship were to be subordinated'. This confirms that there will be a better understanding of personal matters and therefore fewer disputes. The business may even help clear up conflict in a disengaged family. When the employees are happy and comfortable working together, this passes on an optimism to consumers, letting them feel more at ease and creates an added chance of them remaining loyal to the firm. Positive emotion is vital when attempting to run a successful business.

An economic motive for capitalist firms wishing to remain family based is that there is a guarantee that wealth will be kept within the family. Profit will be reinvested into the production of capital, meaning wealth is circulated, rather than profits being distributed to shareholders and salaries outside the family, as it would in a non-family firm. Founders often wish for their firm to remain within the family because their children are likely to pay them a lot more respect than non-kin employees. An example that demonstrates such admiration of the owner is the portraits of Lord Marks and Lord Sieff (the founders of the Marks and Spencer Corporation, still owned by the Sieff family) that hang in every store. These were installed after a vote was put to share holders and consumers, not family members (Aris, 1973). When this trust and family closeness is perceived by patrons, it often transfers into respect paid by customers as they feel the sense of unity themselves. A study on consumer loyalty has argued that there is a higher degree of trust that consumers invest in family firm management policies and practices than those of non-family firms (Orth and Green, 2009). Ultimately, if respect and trust are displayed by family members and patrons this is more likely to result in consumer loyalty and thus to better profit.

Techniques Unique to Family Firms

There are certain practices that are implemented by family businesses that would be impossible for a non-family firm to exercise. Returning to the feminist definition of reproduction, this states that reproduction refers not just to the biological reproduction of children, but there is also the social reproduction of a person to work. This is fully recognised in pre industrialised where families were or are the means of production. The clearest example of this is when a family business alliance is created by marrying a daughter into another successful family firm. The people of Maganisi, where Just conducted his ethnography, have demonstrated this method of business coalition; ''The familial relationships caused by death and marriage immediately result not only in the creation of a new configuration of kin but also in a new fishing parea and a new financial partnership' (2000: pp. 170). Because of the importance of family and capital in human life, when the two are combined it is no surprise that there is no resistance in the family urge to discuss business whenever there is an opportunity. 'They understand each other's minds intimately and because they never stop talking and thinking about the business, they are in effect a board that is in continuous session, even at weekends' (Aris, 1973, pp.139). There is a huge pressure put upon children to stay within the firm. A member of a family firm in East Africa has said 'If I don't go back my father will feel bad and my brother will say 'See, he betrayed us' ', (Benedict, 1968, pp.5). However, children do not have the chance to imagine their life any differently. Often, founders of the firm don't like to show how much pressure they have put upon their successors. Yanagisako's study on the Italian silk industry (2002) makes a crucial point that capitalists are created and not born. The expectancy of children to join the family business is shown when a son of the Vederio family states that it is his grandfather that makes the decision for him to inherit the firm (2002, pp. 74). Putting this expectancy on a son or daughter will guarantee a successor to the business that will be trained to their own high standards. Children of a family business are brought up in the working environment and experience it first hand from a very young age. In the same East African family business mentioned previously, at the age of twelve children would be spending three hours a day in their fathers business, learning as they watched (Benedict, 1968). Similarly, in the early textile industries of Philadelphia, after basic schooling boys would enter straight into an apprenticeship with their fathers, ending in automatic partnership at the age of 21 (Scranton, 1986). This strategy of training creates a higher quality employee. In no other style of business practice will an employee have been involved from such a young age, when their brains are capable in taking in far more information. This also demonstrates to these young future family employees the level of effort required from them if the family business is to continue to be an economic success. When a family are working together in a business, they feel more obliged than a non-related employee to put in extra time and energy, for their family's sake. Another profitable technique that can be utilised by family firms only is the concept of using the family name as the business name. There are countless examples of internationally recognised corporations who use this method; J Sainsbury, Ford, Michelin, just to name a few. This advertises the fact that they are family based, which may often attract customers, due to the earlier discussed point that consumers feel more comfortable being involved with a confident family firm. Indeed, even when family firms such as Rowntree and Fry in the UK have been taken over by multi-nationals such as Nestle. The multi-national company taking over respects the success of the family and family name remains in the consumer's minds and often in the branding of products.

Evidence for Success

As previously mentioned, over 80% of firms worldwide are family based (Gersick, 1997). A proportion as high as this demonstrates the importance of family reproduction for capitalism. Some of the world's most successful businesses are family run. As well as already previously mentioned family run transnational corporations, others include Wal-Mart, Samsung and BMW. In Taussig's (1980) ethnography, there is a demonstration of a late capitalist family, the Arboleda family, who in 1830 used slaves to help them produce capital, although this industry was eventually abolished they were still among the wealthiest men in the country. This shows that whatever the ethical nature of the firm may be, as long as it is family based there is always chance to be tremendously successful. Family capitalism has in fact 'outlived the Industrial Revolution and the second Industrial Revolution to remain a predominant business form up to the present' (Jones and Rose, 1993).

Even if a firm is not directly family based, the reproduction of family can often affect how successful a firm is. It could be argued that every capitalist firm is a family firm because as Chua et. al (1999) argue, the decisions of a CEO in a widely held corporation may often be affected by the spouse and children. This is displayed in the kinship system of the Native American Navajos. Kinship is central to their survival. The obligations they have to family members affect how much capital is produced and means all earnings must be distributed horizontally (Francisconi, 1998). Even if this is not the case, it is possible to speculate that all businesses in the world have originally evolved from family trade. Hundreds of years ago in pre-industrial society, it would have been rare to find a group that produced capital who were not comprised of a family. Although in his study Taussig (1980) does not concentrate primarily on family produced capitalism, he states that 'the character of the peasant class structure has evolved away from the kindred formation into a stereotypical capital/labour structure'. Here it becomes clear that a 'stereotypical' capitalist structure would not be possible without the kinship based structure, as it would have had nothing to evolve from.

Conclusion

Overall, when analyzing the research I have done, it has become clear that reproduction of the family is unquestionably crucial when producing capital. As shown, there are many emotional factors that mean a family business experiences more unity and a bond that helps to create wealth. There are also the economic benefits such as reinvesting money into the firm that also encourage the production of capitalism in family business. This can often transfer across to the consumer and encourage customer loyalty and the means to increase profitability. As well as this, the business techniques carried out by family firms that are unique to them show that family is vital in a business. In terms of marrying daughters across to other successful family firms, putting pressure on children and training children thoroughly as they grow up, these are practices that non-family firms simply could not accomplish. I have shown evidence of some hugely successful family businesses, and although it is fair to say that there are also some globally successful non-family businesses, there is a significantly lower proportion of these and they do not have all the previously discussed advantages and benefits of family firms. And as my last paragraph discusses, when these non-family firms are successful they have always had the input of family influence. Arguably, all firms have evolved from family business, as historically all capital was produced through family and kinship ties. Ultimately, any person is part of a family, and any business requires the reproduction of people to operate. Therefore, it is inevitable that within a capitalist economy the production of capital, family focused or not, requires the reproduction of family.

Reference List

  • Aris, S., 1973, The Jews in Business, Victoria (Australia): Pelican Books.
  • Benedict, B., 1968, Family Firms and Economic Development, Southwestern Journal of Anthropology, 24(1), pp.1-19.
  • Chua, H.H., Chrisman, J.J. & Sharma, P., 1999, Defining the Family Business by Behavior, Entrepreneurship: Theory and Practice, 23(4), pp. 19-39.
  • Francisconi, R.J., 1998, Kinship, Capitalism, Change: The Informal Economy of the Navajo, 1868-1995, London: Routledge
  • Gersick, K.E., 1997, Generation to Generation: Lifecycles of the Family Business, Boston: Harvard Business Press.
  • Just, R., 2000, A Greek Island Cosmos, Santa Fe: School of American Research Press.
  • Orth, U.R. and Green, M.T., Consumer Loyalty to Family Verses Non-Family Businesses: The Roles of Store Image, Trust and Satisfaction, Journal of Retailing and Consumer Services, 16(4), pp. 248-259.
  • Scranton, P., 1986, Learning Manufacture: Education and Shop-Floor Schooling in the Family Firm, Technology and Culture, 27(1), pp. 40-62.
  • Taussig, M.T., 1980, The Devil and Commodity Fetishism in South America, North Carolina: The University of North Carolina Press.
  • Vlasic, B., 2009, Family Loyalty Anchors Ford in Risky Times, The New York Times, 22 Jun. pp. A1.
  • Weber, M. and Parsons, T., 2003, The Protestant Ethic and the Spirit of Capitalism, 3rd ed. Massachusetts: Courier Dover Publications
  • Yanagisako, S.J., 2002, Producing Culture and Capital: Family Firms in Italy, Princeton: Princeton University Press.

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