A Free-Market Energy Blog

A New Energy Treatise (via a ‘contra-capitalist’ company)

By Robert Bradley Jr. -- September 5, 2018

“We still have much to learn about and learn from Enron’s remarkable history to understand its meaning for twenty-first-century American capitalism.”

 —Malcolm S. Salter, emeritus professor, Harvard Business School; author of Innovation Corrupted: The Origins and Legacy of Enron’s Collapse (2008)

This week, Scrivener Publishing and John Wiley & Sons begin shipments of a book that I have been working on for many years, along with my research assistant/editor Roger Donway. We searched and searched for this or that. We debated paragraphs, sentences, even words. And we never cut a corner for what is easily, between the two of us and copy-editor Evelyn Pyle, a 10,000-hour book. [1]

Enron Ascending: The Forgotten Years, 1984–1996 is Book 3 in my tetralogy on Political Capitalism inspired by the rise and fall of Enron. The first two volumes were the theoretical and the historical antecedents:

Political Capitalism as a distinct sociopolitical system, as well as my book series, are described at my website, PoliticalCapitalism.org. The key term contra-capitalism, defined as a company routinely engaging in rent-seeking (cronyism), strategic deceit, and risky imprudence, introduced in Enron Ascending, has been explored previously at MasterResource.

Characteristics

Enron Ascending is a treatise. The print edition (hardback only) is 805 pages with the chapter appendices (39); source notes (~5,300); and complete bibliography (~1,000) moved to the Internet. There are almost one hundred interviews with Enron executives (even Ken Lay and Jeff Skilling). 

Second, the book is a business treatise in the Harvard Business School (HBS) tradition. Along with scholar/mentor Jack High (see here and here), I am trying to resurrect this grand standard of business scholarship for future studies of companies and entrepreneurs in America’s mixed economy. [2]

Third, this book is a political economy treatise, carefully documenting corporate decision-making in regard to legislative change and regulatory upheavals in the natural gas and the electricity industries. In addition, the book covers major developments in environmental regulation pursuant to the federal Clean Air Act and its amendments.

In what is a first for a business book, the (two-level) subject index has been divided into a 32-page Business Index and a 21-page Political Economy Index. (A three-level index is being prepared for the Internet for serious scholars.)

Fourth, the book qualifies as an energy treatise, although it is different from my two-volume Oil, Gas, and Government: The U.S. Experience (1996). It is a corporate energy treatise versus a government-policy tome, an energy law textbook, or an energy engineering handbook.

Finally, Enron Ascending is the first business-history treatise in the classical liberal tradition. Before, free-market-oriented business books have been overviews, joining management books (notably by Charles Koch), business-ethics works, with some business biographies.

What is Classical Liberal Business History?

A classical-liberal business history, to me at least, is characterized by three things, two managerial and one methodological. 

  1. Management decisions in a free market where challenges and barriers are confronted and (as the general result of undesigned order from prices, profit/loss, and decentralized knowledge) largely overcome.
  2. Management decisions in a mixed economy where entrepreneurs qua political capitalists shape and/or exploit legislation/regulation in degrees of cronyism.
  3. Both #1 and #2 are informed by process analysis, where cause-and-effect are chronologically understood in light of the prevailing knowledge and incentives of the time.

My preface makes the third point:

… reliable and scholarly history must capture the context and purpose of events, not only their sequence. Enron was not a place or thing or event; it was a process of decision making, with each stage unfolding into the next. Contextual, insider, purpose-centered history—as opposed to mere external storytelling—requires a detailed you-are-there approach to understand what might otherwise be bewildering, even to Enron scholars.

External “storytelling” that fails to get inside the minds of the decision-makers as they were situated at the time can miss some of the most important takeaways. The why of corporate history must also understand the why behind the why, the purpose of the decision-maker(s) in choosing one course of action over another. And in so doing, the theme of the “slippery slope” and “path dependence” become very important to unlock the meaning of bad-to-good, and good-to-bad business management.

A Challenge to Progressivism

There is early evidence that the “mainstream” has already ignored the book for its challenge to the Progressive view of business in general and Enron in particular (the subject of a separate post). Why? Because Enron Ascending documents that the mainstream got it backwards by blaming capitalism writ large for the sins of Enron.

In fact, Enron personified a contra-capitalist company engaging in the crony sport of rent-seeking, gaming, conflicts-of-interest, philosophic fraud. And the very likable, smart, experienced, soulful Ken Lay is revealed (tragically, as it turned out) as a second-hander, a perceptionist, when only realism would do.

Part II tomorrow will explore the areas of the book that are bigger than Enron–and thus give the book more life and staying power than just another business book. For those interested in energy history and policy, this book might be for you.

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[1] This book began with oral interviews of key Enron executives in 2000/2001 for a sanctioned corporate history. After Enron imploded in late 2001, I began writing sections of Enron Ascending. The book project then split into multiple volumes. Since 2011, I have focused on Book 3, along with Roger Donway. Evelyn Pyle’s efforts were all in 2018.

[2] Back in the 1950s/60s, a group of Harvard business professors, led by Henrietta Larson, wrote outstanding corporate histories, almost all in the oil industry (I will have a future post on this). These authors, pursuant to legal agreements with the companies, had access to internal company documents and full access to executives. Suffice it to say that much insight about the market process versus government intervention into the market comes from these books, treatises all.