Psychology of management

the aim-and-rational
type of activity, became, according to Weber, the 
dominant one at a capitalist enterprise. The rationalization process was being introduced 
gradually and represented a systematic displacing of historically outdated, irrational, affective, 
traditional actions of workers. This process enabled to shape rational economy ethics which 
included rational book-keeping, rational technics, and rational law. Relying on the notion of 
rationality, Weber distinguished two types of capitalists: irrational (archaic, adventurous, 
merchant), and rational (productive). 
The irrational type
of capitalist originated within the 
tribal system with natural economy and unequal exchange of goods. Activities of such a 
capitalist came to getting profit, money, by means of resale of goods. But resale didn’t increase 
the number of goods on the market, and thus, society did not enrich. The appearing of the second 
type of capitalist, 
the rational
one, was enhanced by the church reformation. The values of 
rationalism, freedom, individuality that appeared in the Protestantism as the understanding and 
demand for freedom of religion and those of the possibility of individual communication wit 
God took later the social meaning and were transferred to the labor activity and people’s way of 
life. Weber noted that it was Protestantism that gave rise to the idea of “the necessity to find 
confirmation of one’s belief in the secular professional activity”. The rational capitalist turned 
money from a goal into a means. He created industrial enterprises for turning out new goods, 
provided citizens with new work-places, enhanced the invention of new technologies, new 
means of labor, etc. The principal difference between the capitalists of the first and the second 
type is in moral and ethical attitude to labor. In Protestantism labor got a religious sense, became 
the meaning of life, a moral value. Labor is a mission of a person, a way of doing good to other 
people. 

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Historically, the two types of capitalists coexisted at the same time, but for modern 
creative capitalism consolidation it was necessary that a human of rational type with new ethics 
and labor organization became dominant in society. Thus, gradually there formed a new, rational 
type of behavior and new social structures – systems of governing, education, and science. These 
new structures were described by Weber in his Theory of bureaucracy. He stated that 
bureaucracy is an unavoidable and the most effective type of rational organization of 
management. An employee is more liable to obey rational rules than just orders and instructions 
of a superior executive. The administrative apparatus that carried out rational work organization 
was called “bureaucracy” by Weber. 
Weber’s ideas of rationalization of labor activities and of enterprises’ bureaucratizing 
served as a foundation for development of the principles of management and the creation of 
“modern management” school. The fundamental works for management were those by Henri 
Faiyolle (1841 -1925), a French engineer, scientist, and entrepreneur, a founder of school of 
administrative management. For 20 years he was the managing director of a huge mining and 
metallurgical company. Thanks to his works “General and Industrial Administrating” and “The 
Basics of Management” he earned a reputation of the brightest figure of the European direction 
of scientific management. Faiyolle is believed to be the author of the first and quite complete 
theory of management. 
Faiyolle considered management as a process consisting of several interconnected 
functions: planning, organization, motivation, and supervision. He stated that a company must 
have a