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Journal number 4 ∘ Elguja Mekvabishvili
Economic Metaphors that Lead Us to Interesting Conclusions

Recently a member of the editorial board of our Journal, Acad. Lado Papava, offered me, as editor-in-chief, an interesting idea: to publish Georgian translations of articles written on topical problems of well-known or relatively unknown Western economists in the journal periodically. The first step in implementing the idea was the publication of Georgian translation of the article of the prominent American economist P. Krugman in the third issue of the journal "Economics and Business," with commentary by L. Papava.

In the present issue, we offer our readers the article by John F. Tomer, Manhattan College Emeritus Professor, which, we think is interesting in several respects.

 First, this is an article of "purely" theoretical and methodological content, the kind of work which our readers are less pampered with. Secondly, the article contains many original ideas, and thirdly, the views developed therein may be inconsistent with the main postulates of the modern mainstream neoclassical direction.

What is a metaphor and what does its use give to the economist? The author notes that metaphor is a language that an economist can use and at the same time expresses the philosophical and economic views of the researcher. Metaphors can bring two distinct areas, cognitive and emotional together.

A. Smith offered us a classical example of the use of metaphors in economic analysis as an "invisible hand" and an "economic man" which are organically interconnected. Under "invisible hand" it is meant a free market that forces an individual to do more that was not in his or her plans, and in this way significantly increases public welfare. It was this principle that became the basis of the functioning of a capitalist market economy during the XVIII-XIX centuries. However, the free market in reality did not appear to be as perfect and as ideal as it was imagined by A. Smith. On the contrary, it had many flaws, known in economic theory as "market failures", or "market fiasco". According to the author of the article, through the dysfunctional nature of the free market should be explained the origin of the "visible hand" metaphor, which some scholars, for example A. Chandler uses it to characterize so-called "managerial capitalism" in the late 19th and early 20th centuries.

At the “visible hand” stage, there were carried out many important structural, institutional, and organizational-economic changes in the US (and other leading capitalist countries) economies. These include the separation of the functions of "Capital Ownership" and "Capital Management" from each other and the significant strengthening of managerial positions. The author of the article quotes Chandler as saying: "Managers have become the most influential group of economic decision-makers." At the same time, new types of corporations were formed that became the locomotive of the US economy.

 The "disappearing hand" metaphor relates to the functioning of the XX century capitalism. It is expressed, on the one hand, in weakening of firms’ excessive diversification, on the other hand: (a) in the development of production and management network systems, and (b) in the globalization of resources and finished product markets. In our opinion, the analysis of the phenomenon of the "disappearing hand" in the article has received relatively little attention and many aspects of it have remained unclear to us.

 Moving from one stage of economic development to another does not merely change the structure of the economy. There are significant shifts in the motivation of owners of capital and other resources. In particular, there is a substitution of purely economic motives for non-economic motives of profit. The article provides examples of several companies to illustrate these changes. At the same time, the author is preparing some ground, in our view, to move on to the most interesting and novel issue, concerning the prospect of functioning of the US economy in the conditions of "humanistic hand." What may be the reason for moving to a new stage? According to the author, the huge imbalance that currently exists between economic and human indicators in the United States. In many cases, economic progress was achieved through increased human costs (losses).

 The author of the article points out that many people in the US currently suffer from various chronic diseases, overweight, which is a direct result of improper and unhealthy nutrition, drug addiction, inequality, poverty, etc. The deterioration of the ecological environment got also an irreversible nature. In short, we are dealing with humanitarian and social dysfunction, which can be seen as a direct result of market failure. Moving to the stage of "humanistic hand" seems to be a difficult and lengthy process that will require a transitional period. Its main task may be the improvement of human indicators in a way that does not harm the effective functioning of the economy.

 Another important and interesting aspect of this complex transformation is related to the opportunities, ways, mechanisms and methods of enhancing the effectiveness of modern corporations’ management. This issue presented in the thesis is based on E. Ostrom's research about the use of common well-being resources, according to which the noted goal can be achieved through teamwork, face-to-face communication, mutual trust, and so on. All of the above can be combined into the notion of a relationship based on collectivism. These considerations of Ostrom and Tomer are, we think, very close to the beliefs of Drucker which is recognized as the "father" of modern management. Drucker discusses structural changes in interpersonal relationships (Druker, 1999), noting that workers in modern corporations are not "subordinate" to each other, but rather to "partnerships" (p.18). At the same time, coercion has lost the importance of the founding element of the organization, trust and co-operation (p.187) with each other taking its place.

Ostrom made his conclusion on small-scale situations, but this, in the author's view, does not exclude the possibility of extrapolating it to larger situations.

Establishing a humanistic hand economy (and society along with it) can be accomplished in several ways. First, the achievement of high labor productivity that ensures maximum satisfaction of human needs. On this basis, priority value will become the spiritual, cultural, intellectual needs of man. This means that the economic society will be replaced by the post-economic one just as the industrial economy (society) was replaced by the post-industrial at the turn of the 70s and 80s (Bell, 1976; Toffler, 1970); Second, a much higher level of social justice will be achieved as compared with todays. Prof. Tomer discusses the third direction as the process of cultural evolution, which involves many social experiments, and in his view may be regarded as some sort of "managed mutation".

Finally, we would like to point out that a serious and interesting researcher's attempt to understand public progress in such a broad general civilization context, whether we use it or not, is "undoubtedly valuable", a "source of new motivation" and provides a "basis for optimism."