From goods-dominant logic to service-dominant logic? Service,service capitalism and service socialism

Abstract

Vargo and Lusch (V&L) have claimed that there was a movement from a goods-dominant logic to service-dominant logic in marketing. We problematise this narrative via attention to multiple strands of service discourse from the late 19th to mid-20th century. Our focus begins with the promotion of service in the economics literature. A close reading of a publication important to V&L’s account reveals the politics associated with the rise of service discourse. This is elided in their work. Our genealogy subsequently engages with the publications of A. F. Sheldon. His views are unpacked and links to the Rotary Club explicated. The evidence indicates that service discourse was relational in orientation and ethically driven, with the intertwined themes in Sheldon and Rotary’s publications generalised into an emergent ‘theory of society’ that had applicability around the world. We term this discursive formation ‘service capitalism’. This perspective was contested by a ‘counter manoeuvre’ labelled ‘service socialism’. Service socialism differed fundamentally from Sheldon’s axiology, Rotary’s service capitalism or the midpoint view detailed by Edward Filene due to its focus on the deleterious impact of the profit motive, the significance of ‘use value’, the reorientation from ownership to access-based consumption and attention to human welfare and economic security. Service socialism, we conclude, generates insights that require engagement today.

Keywords

Arthur Frederick Sheldon marketing theory Rotary Club service-dominant logic service socialism

Introduction

Vargo and Lusch (V&L) have sought to trigger a revolution in marketing. Partly historical, partly drawn from multiple strands of contemporary literature, their analysis attracted considerable attention. V&L’s work has been cited thousands of times (Hunt, 2020), won numerous academic honours including the H. H. Maynard Award for their contribution to marketing thought (Laczniak, 2020) and ‘has had an enormous impact on the field’ (Wilkie, 2020: 323). Certainly, it chimed with the managerial orientation of service marketing (Fisk et al., 1993), wider changes in the economic and industrial context (e.g. deregulation of service industries) and the interests of powerful actors (e.g. the American Marketing Association and Marketing Science Institute) whose support has been cultivated by scholars in this domain (Berry and Parasuraman, 1993). The promotional efforts of V&L have continued to extend the reach of service-dominant logic (SDL) into other disciplines, securing the attention of practitioner groups and government bodies at the same time.

But for a research stream that aims to demonstrate the plausibility of a shift from a goods-dominant logic (GDL) to SDL, they draw upon a limited amount of material derived from the history of marketing thought to support their account (e.g. Lusch and Vargo, 2014: 6; Vargo and Lusch, 2004: 4, 5, 9; 2008b: 30). Because of this they fail to register the level of engagement with related service discourses at the cusp of the 20th century (cf. Hunt, 2020: 291). Arguably, identifying these types of missing links in our knowledge of marketing thought (Jones and Tadajewski, 2018) is a contribution that should be welcomed. It deflates marketing ‘folklore’ (Savitt, 2009) and ‘myth’ (Jones and Richardson, 2007).

We believe that the alleged transition from GDL to SDL is a myth. Like those before us who have encouraged a rethinking of marketing thought from historical (e.g. Fullerton, 1988; Keep et al., 1998) and critical marketing perspectives (e.g. Fougère and Skålén, 2013; Skålén et al., 2008), we aim to scrutinise V&L’s narrative. This is achieved using a genealogical approach to trace the emergence of service discourses and linkages between four groups: Arthur Frederick Sheldon (1868–1935), the Rotary Club (1905>), Edward Filene (1860–1937) and the League for Industrial Democracy (L.I.D.)¹ (1905–2010). Our concern is with discerning the politics driving multiple threads of service discourse. This makes our account critical in the manner discussed by Foucault: ‘Criticism consists in…showing that things are not as obvious as we might believe’ (1982: 34).

In this case, it means pluralising our understanding of service, incorporating voices that did not feature in V&L’s work and registering the associated politics. From the late 19th century, service was postulated as an axiology for describing and explaining the success of capitalism in contradistinction to socialist thinkers who treated it as a synonym for exploitation. Our insight, then, lies in refusing to homogenise early marketing writing into ‘GDL’. Instead, we explore the plurality of articulations of service discourse in the period 1900–1950, the timeframe that SDL advocates typically (but not exclusively) associate with GDL thinking.

As such, we do not review SDL and its foundational propositions in their entirety. Our focus is on V&L’s invocation of a ‘march of progress’ from GDL to SDL (Miles, 2014: 748). Relatedly, we develop Miles’ point that this was made possible by constructing an ‘antagonist’. Miles (2014) suggests that in SDL ‘The crisis facing marketing is portrayed as a battle between the old goods-dominant view and the emerging service-dominant one’ (Miles, 2014: 748). Our attention to the service discourses in circulation during the 20th century will problematise this assumption ground, revealing the tenuous storyline underwriting the SDL project and its apparent progressivism (Miles, 2018).

The structure of our manuscript is as follows. We begin by questioning V&L’s historical account. A brief review of our theoretical position and methodological strategy is outlined. The politics associated with the concept of service that are sidestepped by V&L are discussed. Attention is then turned to Sheldon’s value system, his role at the Rotary Club and their promotion of service capitalism. Subsequently, we examine service socialism, ultimately using the foregoing threads to reveal the debatable nature of V&L’s thesis. Using the assumptions of service socialism as a springboard, we illuminate the conceptual and empirical limitations of SDL.

History and SDL

Throughout V&L’s papers, we are confronted with claims that require attention. Reading V&L (2004), it seems as if the dawning of the 1950s led to the illumination of a backward intellectual landscape. Before this period, their logic implies, practitioners and scholars failed to appreciate the centrality of the consumer and their needs. This view is incommensurable with various publications that undermine it (e.g. Hunt, 2020; Jones and Richardson, 2007; Witkowski, 2017). This might lead us to question their argument that relationship marketing practices emerged in the 1970s (Hartmann et al., 2018) or 1980s (Lusch and Watts, 2018).

In some places, they aver that relational perspectives were generated by ‘service marketing scholars’ in the 1980s who ‘were responsible for the movement toward thinking about exchange in terms of relationships, rather than transactions’ (Vargo and Lusch, 2008b: 28). This is a strong statement and it appears repeatedly (e.g. Vargo, 2009: 377). Even their carefully crafted assertions that ‘since the 1970s, researchers and practitioners have increasingly recognized the importance of relationship selling. Relationship selling emphasizes the roles of salespeople in developing and maintaining relationships with buyers for mutual long-term benefits’ should make us wary (Vargo and Lusch, 2004: 3). It only avoids refutation due to the accent on relational approaches being ‘increasingly recognized’. This suggests that people were aware of them, just in smaller numbers than appreciated their importance post 1970.

It seems fair to say that V&L have bypassed various streams of literature, most notably material published between 1900 and 1950, when their engagement with the marketing discipline is much less developed than their attention to the history of economics. They appreciate this fact (e.g. Vargo and Lusch, 2008b: 27). This means their ‘evolutionary’ thesis is too strongly worded. They state, for instance, that ‘marketing has moved from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which intangibility, exchange processes, and relationships are central’ (Vargo and Lusch, 2004: 2). Fleshing this out: ‘Over the past 50 years, marketing has been transitioning from a product and production focus to a consumer focus and, more recently, from a transaction focus to a relationship focus’ (Vargo and Lusch, 2004: 12). They spotlight their distance from GDL:

S-D logic is built on a different rationale about the purpose and process of exchange from that of G-D logic, one that is foundationally distinct, rather than superficial or cosmetic. It is built on the idea that exchange is about the process of parties doing things for and with each other, rather than trading units of output, tangible or intangible. (Vargo and Lusch, 2008b: 29; emphasis in original)

Consistent with the work of Bastiat, and bypassing the politics foregrounded below, their primary axiom states: ‘service is the fundamental basis of exchange’ (Vargo and Lusch, 2008a: 6). Clarifying their understanding of service, they say,

…service is defined as the application of specialized competences (operant resources – knowledge and skills), through deeds, processes, and performances for the benefit of another entity or the entity itself. It is important to note that S-D logic uses the singular term, “service,” which reflects the process of doing something beneficial for and in conjunction with some other entity, rather than units of output’. (Vargo and Lusch, 2008b: 26; emphasis in original)

V&L have acknowledged their historical limitations and their work is periodically revised. Vargo and Morgan (2005: 48), for one, lamented that a ‘precipitous cause for increased and focused attention to services, as distinct from goods, in academic marketing thought is difficult to pinpoint’. Slightly later a seminal study is registered that should require them to modify their progressivist assertions. Lusch and Vargo (2011: 1302) signal the importance of Kitson’s outline of service discourse. Originally, Kitson suggests, ‘service’ was used in an apparently ‘goods’ centric manner, that is, as a supplement to the core product being sold. But, the meaning of ‘service’ shifted, coming into line with SDL: ‘Within recent years…service has come to be regarded not as an accessory but as a real part of the commodity, indeed the commodity itself’ (Kitson, 1922: 419). Kitson’s comments are consistent with established precursors (e.g. Alderson and Levitt) to SDL (see Brown, 2007; Wooliscroft, 2008):

…there has been developing a noticeable tendency to define selling as a process of rendering service. Thus the manufacturer does not sell automobiles; he sells transportation. And he uses as his strongest selling point the argument that the buyer of his cars will have uninterrupted transportation. Similarly a manufacturer of tires does not sell tires; he sells mileage. And if one casing does not give satisfactory service he will furnish another. (Kitson, 1922: 417)

Kitson’s paper should make us circumspect about assuming the validity of V&L’s analysis. Appreciating this, our article will, firstly, reveal that V&L’s treatment of service is seemingly apolitical. This is a contrast to literature they drew from which conceded that service discourse was politically charged. Secondly, Kitson’s (1922) account can be linked genealogically to Sheldon’s work and tracked forward to the Rotary Club. In drawing attention to Sheldon, Rotary and Filene’s publications, we counterpoint V&L’s implication that any service discourse prior to 1950 must have reflected a transaction orientation. Sheldon was unambiguous in confirming that ‘no matter what you are doing, you are manufacturing service in some form’ (Sheldon, 1929: 64). He was the ‘Philosopher of Selling’ and considered influential ( Chicago Daily Tribune, 1935). For example, the former American Marketing Association President flagged up Sheldon’s impact, stating that he started ‘taking salesmanship apart’ in the early 20th century, making major contributions along the way (Coutant, 1946: 289). Strong (1925) concurred, pointing out Sheldon’s influence on advertising. Knudsen (1955), in turn, remarked upon the positive effect of Sheldon’s correspondence school (Tadajewski, 2011).

Kitson did remind the reader that the Rotary Club was a prominent force in promoting service discourse around the world, disseminating what we will call ‘service capitalism’. For whatever reason, V&L ignore this fact. We seek to recall it. Through the Rotary Club, Sheldon disseminated his vision for better marketing practices, believing that ‘service’ was not only profitable, it was an ethical approach that could lead to reduced friction between geopolitical groups and greater social harmony. Still, there were additional responses to the Rotary extension of service we need to consider. Edward Filene’s publications are an exemplar. They provide one of the two ‘bridges’ (Foucault, 2008) between Rotary’s service capitalism and socialist reflections on service. Commensurate with Foucault’s view that exercises of power generate resistance, we examine critical reactions to Rotary’s axiology by socialistic groups who outlined their own variant of service discourse; a perspective we term ‘service socialism’.

Before we turn to Sheldon, we need to appreciate the contextual politics when he was writing. This is because the concepts and assumptions we draw upon are influenced by our environment. First, however, we examine our theoretical perspective, epistemological assumptions and methodological approach.

Theory, epistemology and method

To contest the narrative underpinning SDL, we use the insights of Michel Foucault. Specifically, his reflections on genealogy. Genealogy ‘attempts to restore the conditions for the appearance of a singularity born of multiple determinations’ (Foucault, 1997: 57). Put differently, this means examining how a service discourse became possible as an object for knowledge; how it was organised, why it was supported or critiqued (Foucault, 1991). Attention must be directed to the ‘conditions of acceptability’ (Foucault, 2015), identifying the relays and supports that promoted this way of understanding social and economic relations (Foucault, 1997). To do so, we use – among others – texts that have gathered dust in the library. This strategy will enable us to disrupt the progressive account offered by V&L (Canguilhem, 1994). Genealogy, consequently, requires ‘a vast accumulation of source materials’ (Foucault, 1991: 76).

As is well known, Foucault pluralised relations of power, pointing out that various groups can affirm or undermine a discourse (i.e. a set of statements about a given ‘object’ like service). He tells us that discursive mobilisation is usually ‘organised from starting points of local conditions and particular needs…in piecemeal fashion’, reflecting ‘a complex play of supports’ (Foucault, 1980: 159). Connected to this, we need to look at the sense of ‘direction’ given to service. Such a task requires attention to the wider social forces that impact on marketing thought, looking for ‘lines of structuration’ (Foucault, 2017: 303). Depending on context, power relations might be reversed through ‘counter manoeuvres’ (Foucault, 2006). In reversals of power, groups attempt to redefine our world view (Foucault, 2015).

Our genealogy is not an attempt to say that the service narratives of the past are the same as the present (Foucault, 2017). They do not map directly on to SDL – although affinities are noticeable. Rather, our intent is to question the progressive story associated with the parsing of marketing thought into GDL and SDL. Such a bifurcation fails to register the ‘strategic relations’ that permeate service debates taking place during the 20th century (Foucault, 2017). Genealogically, we want ‘to show that things are not as self-evident as one believed, to see that what is accepted as self-evident will no longer be accepted as such’ (Foucault, 1988: 155).

Capitalism, service and socialism

In an important text, Delaunay and Gadrey (1992) trace the development of services in economic thought. They cover similar ground to V&L, outlining the growth in attention to service in economics between 1850 and 1930. This should be expected. Vargo and Lusch (2008b, 2011) cite them. In this period, the idea of service was fostered by multiple influences. It was important to a Victorian sense of self (Charles, 1993) and prominent economists devoted attention to related issues of ‘social ethics’ (Ely, 1896). Where Delaunay and Gadrey (1992) differ from Vargo and Lusch (2008b, 2011) is that they appreciate the role of politics in knowledge production, providing insight into the ‘conditions of acceptability’ for the concept of service.

They register that exchange relations ‘were more frequently described as service relationships’ (Delaunay and Gadrey, 1992: 58) such that ‘Towards the end of the 19th century, society was described as a framework of relationships which were held to be exchanges of services’ (Delaunay and Gadrey, 1992: 71). Importantly, on the same page that Vargo and Lusch (2008b) partly draw from, but also partly bypass, Delaunay and Gadrey (1992: 65) opine,

…the late 19th century view of capitalist market relationships as service relationships represented the views of…dominant groups in society. The theory responds to conflicts with the socialists by conceptually recasting asymmetric relationships, as present under capitalism, as mutual market exchanges of services.

At this juncture, the commercial world was devoting attention to the ‘external problems of business’, that is, to societal evaluations of their activities (Usui, 2008). Calling attention to their ‘service’ ethos helped legitimise practice and elide the potentially corrupt motives working against consumer interests. As Heald (1961: 128) registers, ‘Probably no single motto or slogan exercised more appeal within and beyond the business community’.

Echoing the sentiment from Delaunay and Gadrey (1992), ‘Managers often acknowledged that their growing interest in harmonious relations with employees, stockholders, customers and the public resulted quite as much from the exegeses of profit under changing economic conditions as from moral or social concerns’ (Heald, 1961: 130). The same is true of Sheldon, the Rotary Club and – for Miles (2014) and Zwick et al. (2008) – SDL and its promotion of service and cocreation today (e.g. Lusch and Vargo, 2006: 415–6; Rotary International, 1948: 103; Sheldon, 1918: 117; 1921b: 57; Williams and Aitken, 2011: 452).

Sheldon’s axiology

Many practitioners at the cusp of the 20th century were looking for anything that could help them succeed in a complex, politicised environment (e.g. Lamoreaux, 1999; Russell, 1908). For some, this meant continued upskilling through education. In this milieu, Sheldon’s correspondence activities were well received, attracting large numbers of students and gaining the ear of employers who wanted to ensure their staff were kept abreast of the latest knowledge on salesmanship and marketing (see Tadajewski, 2011).

Although Sheldon offered various courses, we focus primarily upon The Science of Business Building (1911 edition). This programme was intended to have utility for students wanting to improve their job opportunities, help those seeking promotion and improve their conduct as citizens. The trainee practitioner had to appreciate ‘that only the science of right conduct towards others pays. He comes to see that the science of business is the science of human service. He comes to see that he profits most who serves his fellows best’ (Sheldon, 1911a: 98). In an aphorism that sounds remarkably like V&L, Sheldon submits: ‘It is Service from you to the other fellow, no matter who you may be, that attracts him and his patronage to you’ (Sheldon, 1921b: 57).

Sheldon’s vision of a business community driven by service was straightforward. Service constituted the foundation for all human behaviour and he calls it a ‘natural law’. By adhering to this ‘law’, business and interpersonal success would follow. To secure long-term profit, one had to be fair, sincere and appreciate the need for mutually satisfying exchanges (Sheldon, 1913). Service, consequently, is the guiding tenet in an ethically oriented life which applies to all firms:

…excellence of service from the house…including both employer and employee, to the patrons…is the only possible way of securing progressively profitable patronage. It is the only possible method of insuring permanence of trade relationships with the purchaser of the product. As soon as this fact was clearly perceived employers began demanding good service from their employees to their patrons, as an element in service from employee to employer. We are now just entering an era when employers…have awakened to the fact that the law of service like the law of gravity is a universal law, and as such applies from employer to employee, as well as to customer [and] is sound economics. (Sheldon, 1921a: 116; emphasis in original)

From his perspective, the shopper is the ‘boss’ and ‘the efficient cause of profit is service, satisfactory service to the big boss, the customer’ (Allen, 1924: 7). As such, the position being expressed was distinct from a production, ‘hard-selling’ or ‘transaction’ orientation. These types of strategies were likely to harm the sales practitioner and firm, rather than advance their interests:

The man who sells another what he does not need or cannot use either for his own profit or to re-sell is totally devoid of the spirit of service. He is woefully lacking in sound judgment. He is unscientific, unethical and uninformed as to the true cause of reward and the only possible method of securing progressively profitable patronage. Furthermore he is a destroyer of confidence and a vicious underminer [sic] of [the] permanency of trade relationships. Fortunately this kind is rapidly disappearing from the field of commerce. (Allen, 1924: 8–9)

If business practice was developed in a service-oriented manner, with ‘the elements of usefulness or service to the patron…present…[it makes] future transactions…more probable’ (Sheldon and McDowell, 1924: 20). Sheldon’s logic thus chimes with relationship marketing:

The house is known by the customers it keeps, not by those it just GETS…It is one thing to “get” – a much greater thing to “keep;” one thing “to hold;” one thing merely “to procure” – a much greater thing “to secure.” Business-building salesmanship is the art of SECURING progressively profitable patronage. This requires PERMANENCY of…trade…and good service of the one composite salesman – the house as a whole – to the customers. The life-blood of business is profitable sales. (Sheldon, 1929: 26–7; emphasis in original)

This quotation throws into doubt the transactional–relational distinction used to structure marketing theory. For adherents of a transaction orientation, each exchange was viewed as a discrete interaction between a firm and its customer. There was no past or future being considered. Sheldon’s ideas do not cohere with this view: ‘success in life commercially hinges upon business building, the art of securing permanent and profitable patronage’ (Sheldon, 1911c: 21). By retaining customers, organisations were able to sell them a greater variety of increasingly profitable items. In this way, the interests of business and patron were aligned. Sheldon, however, was interested in extending his philosophy along with his potential audience and sought a means to do so. His vehicle was the Rotary Club and he was a prominent member. Consistent with Sheldon’s writing, both he and Rotary believed that improvements to societal welfare could be facilitated by better managerial practices. Put otherwise, Sheldon identified a link between micro-marketing methods and the meso-level activities of his School and Rotary, all of which enhanced overall welfare.

The Rotary Club and service capitalism

It is not surprising that Sheldon knew about the Rotary Club. He was a self-motivated entrepreneur who appreciated the value that close business relationships generated. Six years (1908) after founding his correspondence school, there is reference to Sheldon joining Rotary (Sheldon, 1921b) and spending time with the founder, Paul Harris (1868–1947). The latter was a lawyer by trade as was Sheldon. Harris had grown up surrounded by close friends and family in the countryside. Throughout his early life, he wandered the United States, ultimately travelling to Europe. Tiring of a peripatetic existence, he located in Chicago (where Sheldon was inducted as a member of Rotary). Adrift in a metropolis, Harris began to see the merit of social networks as a condition of possibility for success in life. To develop the network he lacked, Harris, Silvester Schiele (coal merchant), Hiram Shorey (tailor) and Gustavus Loehr (an engineer) convened a meeting at Loehr’s office for the purposes of social interaction and fostering ‘business reciprocity’ ( Rotary International, 1948: 33). This was the first meeting of the Rotary Club (1905), with the name signifying that each meeting was hosted in a different place of business in turn.

In 1906, the function of Rotary was ‘The promotion of the business interests of its members’ ( Rotary International, 1948: 10; emphasis in original). This positioning would be revised due to association worries about the elevation of financial interest over community friendly activities. By 1911, their societal orientation was encapsulated in the ‘service’ discourse enunciated by Sheldon. Rotary expanded their service focus beyond the realm of commerce into various forms of social provision (i.e. practicing the ‘ideal of service’ in ‘personal, business, and community life’ as well as with respect to the ‘advancement of international understanding, good will, and peace through a world fellowship of business and professional men united in the ideal of service’ ( Rotary International, 1948: 8)).

Given this focus on promoting service through business, interpersonal interactions and fostering connections among a geographically diverse membership, we term Rotary’s stance, ‘service capitalism’. The latter was a rebranding exercise that attempted to downplay the exploitative connotations tied to private enterprise. At the same time, it tried to improve the conditions of acceptability for geopolitical outreach and contain Russian ambitions for Communism (Filene, 1930). Service capitalism emphasised the contribution of business to society, enrolled practitioners as ambassadors who performed their commitment to the Golden Rule, as well as disseminating marketing knowledge and principles (Baker, 1957; Miller et al., 1957).

As discussed above, Sheldon often spoke to Paul Harris about commercial practices. His ideas were given credence:

Sheldon was a natural for our group…Whenever the English language is spoken, Sheldon students are found. The writer has been pleased to find many among Rotarian leaders abroad. For the…convention in 1921 Sheldon was selected…as the one best qualified to interpret to British Rotarians the ideal of service as understood in America. The invitation was accepted and those who heard the message said it was as of one inspired…Sheldon…made us see more clearly our service responsibilities in business and we have him to thank for the slogan: ‘He profits most who serves best’,…Minneapolis Rotarians gave us the other and more terse slogan: ‘Service Above Self’. (Harris, 1948: 234, 251)

When combined, these catchphrases became Rotary’s motto. Nevertheless, Sheldon’s pronouncements on service were not sui generis: ‘There is nothing new about the…Principle of Service as the law of being and becoming successful’ (Sheldon, 1921b: 57). Reflecting this, the emergence of related themes was traced to Hillel, Isocrates, Aristotle, Sextus, Thales, Confucius, Pittacus and Lao Kiun (Stephens, 1927). Calling attention to Christian values, Sheldon unites service discourse with the Golden Rule:

When the Man of Sorrows, the Man of Galilee – whom I say, and say fearlessly, was the greatest General Manager that ever lived, – said unto His disciples “Do unto others as you would have them do unto you,” He enunciated the greatest business doctrine ever put forward by anyone in all the history of the world. (Sheldon, 1913: 29)

Using his motto as their springboard, Rotary tried to recalibrate the commercial system. The point of divergence was that Rotary sought to attract new members from around the world: supporters whose religious views might differ. Registering a need for pragmatism, Sheldon’s perspective was incorporated into a group that ‘recognized no creed’ (Bahlke, 1956: 47). Instead, Rotary represented a unifying platform for the communication of values that would enhance business and personal relations across the globe. At base, they wanted their members to reflect on the following questions:

In my profession…is service my business? When it comes to considering the needs of my clients or patients or pupils, are their best interests in the forefront of my thoughts all the time, or am I concerned mostly with advancing my own career? ( Rotary International, 1948: 14; emphasis in original)

In many respects, Rotary is an archetypal marketing organisation. It advertised itself through various media, distributing its own magazine, The Rotarian, and was affiliated with a public relations agency (Charles, 1993). Its membership contained large swathes of marketers, retailers and salespeople who applied their knowledge and insights in promoting the Club and its value system. The Club, in turn, distributed texts teaching marketing principles that repeated Sheldon’s core themes. In Rotary’s literature, the sales actor is depicted as responding to customer needs and expected to look at their proposition from the latter’s point of view. Once again, we are not within the realm of a sales orientation. As Rotary underlined for their members: ‘How much better for the salesman to study the actual needs of his customers than to try to get business by mere assertion of his own will and desire for an order’ ( Rotary International, 1948: 64). Long-term relations much like Sheldon’s advocacy of ‘permanency of patronage’ and ‘business building’ were the order of the day:

Salesmen who go out of their way to teach customers how to make better use of products or get longer wear from them may lose immediate sales, but they are watering the delicate flower of confidence which blossoms in repeat orders – the most profitable kind of business. A wire-brush manufacturer found a way to double the service of a brush used extensively on a certain kind of polishing-machine. So he made a point of visiting every purchaser of the brush to show him personally how the saving could be accomplished. It looked like plain suicide for the manufacturer, but these visits enabled him to demonstrate also other uses for his brushes. He clinched many profitable accounts and profitable repeat business followed. This is not plain suicide, but the salvaging of a threatened relationship, for, sooner or later, someone else would have discovered the saving and confidence in the manufacturer might have been shaken. (Rotary International, 1948: 66)

Satisfying the customer through the provision of service would lead to firm survival. To return to Sheldon, he presents his business reflections and the socially oriented philosophy of Rotary as intertwined: ‘He profits most and survives best, who serves best…Service to others is enlightened self-interest…The Philosophy of Rotary stands or falls upon that proposition’ (Sheldon, 1921a: 116; emphasis in original). To serve others was a means to enhance the relationships between a diverse range of people, living in many different locations. By seeking to engage with others, the potential for stereotypes and discrimination to skew our world view was reduced. Harmony rather than strife would hopefully triumph. A discourse of service consequently had the potential to enhance business relations as well as forge wider societal connections.

Even so, there were alternatives to Sheldon and Rotary’s views. We label this discursive formation ‘service socialism’. Connecting the three parties – Sheldon, Rotary and advocates of socialism – was Edward A. Filene. His views on service require us to take a brief detour to differentiate service socialism from the other perspectives we have explored.

Service socialism

By contrast to Sheldon and Rotary who were interested in improving the success of practitioners and increasing the standard of living while leaving the capitalist system largely untouched, service socialism provided a critique of capitalism with a view to fostering socialism. There is a link between Sheldon, Rotary and the organisation we discuss here, the L.I.D., namely Filene who participated in the radio programming offered by the group.

Filene was vocal in his support for Rotary and their ‘startling slogan that Business is Service’ (e.g. Filene, 1929: 181). He has been heralded as a ‘pioneer in marketing’ (Bloomfield, 1959) for striving to improve service to the customer. This was achieved by the introduction of innovative pricing, stock management and research strategies as part of improving the efficiency of merchandising operations. Filene’s progressivist energy was diffused through the funding of think tanks (Bloomfield, 1959), the Institute for Propaganda Analysis (Hobbs and McGee, 2014), via his support for the consumer cooperative movement, credit unions, employee unions, as well as by writing, public speaking and frequent meetings with dignitaries from around the world (Engelbourg, 1976; McQuaid, 1976). With respect to the latter, Filene wanted to influence all stakeholders concerned with ‘world affairs and progress’, encouraging them to support his view that they had a role in ‘making the [global] community a better place in which to live and do business’ (Bloomfield, 1959: 298).

In his writing, he indicated the presence of a shift in discourse when practitioners moved from ‘no social responsibility’ in the 19th century to the 1930s when ‘it has been discovered that business can succeed only as it creates success for everybody. The greatest total profits can now come only from the greatest total service’ (Filene, 1932: 101). Treading a path between capitalism and socialism, he imagined a private enterprise system that exhibited greater participation from workers and consumers; all of whom exchanged ‘such services as one could give to the whole world for such services as the whole world could give to him’ (Filene, 1933: 54).

For Filene, the consumer was a change agent, conceptualised as the ‘boss’ of the system. Business was ‘the servant’ (Filene, 1929) who adhered to the Golden Rule (Filene, 1935). Service to the consumer was an ‘imperative’ (Filene, 1932), likely to stimulate long-term relationships, thereby increasing profit (Filene, 1935). As consumption was democratised and prosperity flourished, it led to geopolitical stability (Filene, 1919, 1929). Ontologically flattening the world, he calls attention to global interdependency:

What is new is the discovery that the machinery of modern business does make the whole world one…that no individual and no group can be independent of others, but that we are mutually dependent and must, if we are to give expression to our very will to live, go in with all our heart for mutual service. (Filene, 1932: 114)

While socialist groups welcomed Filene’s input, without substantive changes to the ownership structure that hallmarked capitalism and the types of incentive schemes in circulation (i.e. rewarding returns on profits to shareholders), they felt the profit motive invariably led to social ‘evils’. In a socialist register, profit is dethroned as a marker of success. These views were disseminated widely by the L.I.D. throughout the 20th century.

At this moment in time, there was considerable interest in socialism as a result of the indictments of the business and political communities provided by Lincoln Steffens (1866–1936), Ray Stannard Baker (1870–1946) and Ida Tarbell (1857–1944) along with rising awareness of the problems accompanying industrialism which were illuminated by Jane Addams (1860–1935), Mary Simkhovitch (1867–1951) and Florence Kelley (1859–1932). For large numbers of people, the struggles of the industrial and social world brought them to the door of socialism (Laidler, 1945) and its appeal was reflected in success at the polls, in government (Laidler, 1950a) and reaffirmed during economic depression (Laidler, 1950b). Set up in 1905 by Jack London and Upton Sinclair (among others), both of whom were prominent authors and social activists, the L.I.D. began life as the Intercollegiate Socialist Society (ISS) formed to educate students and faculty about a range of topics including socialism (Laidler, 1933a). At their centre was Harry Laidler (1884–1970). Laidler joined the ISS as an undergraduate member of the Executive Committee, later becoming Executive Director of the L.I.D. and he tirelessly promoted the group in many different forums. Over the course of his life, he was a highly prolific author, lecturer and political campaigner.

Initially, the L.I.D. ‘did pioneer work in spreading an understanding of the problems of industrial democracy in all parts of the country’ (Laidler, 1935: 6). They achieved this via lectures, radio broadcasts, student chapters, the publication of pamphlets, a summer school, conferences, the promotion of racial equality (Laidler, 1950b) and commensurate legislation (e.g. an Anti-Lynching Bill) as well as protesting Fascist groups and supporting student movements abroad (L.I.D., 1935). According to Laidler, the L.I.D. made ‘a deep impression on the social thinking of tens of thousands within and without college walls’ including some of ‘America’s foremost progressive economists, writers and technicians’ (Laidler, 1935: 6) which worried anti-radical groups (e.g. Clum, nd).

In terms of their stance regarding service socialism, major figures associated with the L.I.D. differentiated their views from the Rotary Club:

It is part of the creed of the good Rotarian…that…there is no such thing as a social conflict…Occasional differences of opinion are only due to misunderstanding or to the baleful influence of “outside agitators.” But it is to be feared that even the orthodox Rotarian…keeps his creed for special occasions. Let his own interests be touched and he does not act as if they were identical with those of the men who challenge him. When we get down to brass tacks, all of us know that there is a social conflict. Owners want more dividends, workers more wages. Landlords want higher rents, tenants cheaper and better homes. Managers want a kind of efficiency which often means a terrible slavery to the workers. Producers want high prices, consumers want low. And so, we might go on. (Laidler and Thomas, 1926: iii)

Epistemologically, L.I.D. acknowledged the benefits of capitalism (e.g. innovation) and contrasted it with a socialist alternative which was not equivalent to the communist system established after the Russian revolution (Laidler, 1959). Their analyses take a systemic focus and the roll call of problems diagnosed undercut theoretical perspectives that hinge on service or mutual benefit. Capitalism, basically, is an extremely wasteful system, frequently subject to depression (Laidler, 1920). There was a tendency for marketplace control to flow to a few large companies (Laidler, 1933b). This was compounded by unequal power relations between government and corporations whose size was making oversight difficult (Laidler, 1930). To handle this public relations crisis, industry marshalled all the marketing tools at its disposal ‘to convince the people that the modern motto of business is service’ (Laidler, 1930: 18). Service does play a role, but it is not currently the beacon guiding practice:

Business under capitalism is conducted…primarily for profit, only secondarily for service. The profit instinct permeates all business relationships, and difficult it is for the average man to decide on a line of business conduct, either in relation to the consuming public, to his employees, to the government, or to his co-workers, if that line of conduct seriously interferes with his accumulation of profits. (Laidler, 1920: 38)

The status quo in a capitalist system means that many people are chronically insecure (i.e. service exchange is not equal). For Upton Sinclair, the world did not have to be stratified, with the majority working as ‘slaves’ for a system that provided riches for the few: ‘an economic system can be built, by which goods will be produced, not for the private profit of exploiters, but for the benefit and use of all’ (Sinclair, 1945: 13). The vision being sketched by Sinclair (1945), Chase (1929) and Laidler (1920, 1929, 1933b) invokes humanism and life over existence, with substantive economic freedom the objective, not just for the present, but intergenerationally. Concomitantly, the criteria that indexed ‘success’ in this system would similarly undergo change, with non-economic indicators promoted as culturally valued (Laidler, 1933b). This takes us far beyond shifts from GDL to SDL. The capitalist system is being redrawn and ultimately excised. In effect, this is a groundbreaking form of SDL for humanity at large – a ‘Socialist Dominant Logic’ – rather than one guided by neoliberal values which caters to the minority (Hietanen et al., 2017).

To buttress this move, Laidler provides a list of consumption related problems connected with capitalism. Firstly, the pursuit of profit directs production and distribution efforts towards items that have ‘little merit’. Secondly, the construction and constitution of items may be poor. Thirdly, resources are wasted in production and distribution – this has implications for the natural environment. Fourth, food was frequently adulterated and fraud relatively common (i.e. regarding weights and measures). Fifth, luxury goods do not reward their possessors with equivalent satisfactions. Sixth, an excess of small operators, middlemen and retailers increased the overall cost of distribution; and seventh, the advertising and salesmanship systems are problematic in multiple ways (e.g. cost, demand creation, deception; effects on the urban environment; involvement of skilled workers who might be more productively employed; wastage of time).

With a progressive view of science, all possible tools and knowledge were yoked to realise an alternative economic and social system. Foundationally, they wanted industrial activities keyed for ‘human welfare and happiness’ (Laidler, 1959: 477) ‘not for private profit’ (Laidler, 1920: 23). To move away from production for profit, replacing this with the concept of use-value, socialists wanted workers, consumers and technical experts to provide input into industrial decision-making (Laidler, 1929). So that without the profit motive guiding their behaviour, it was believed that people would ‘use their power to eliminate waste and war and exploitation, to secure an increasing amount of liberty, equality of opportunity and democracy’ (Laidler, 1929: 3). To achieve the goal of providing sufficient goods to all who desired them: ‘Under public ownership the main criterion of success is service to the community at the lowest possible cost’ (Laidler, 1930: 13; emphasis added).

Buying, consuming, ownership and use-value were frequent points for discussion. Purchasing and consumption based upon non-exploitative relations was unproblematic. Acquiring houses, outfitting them and filling a wardrobe with clothes were perfectly acceptable. What they had found questionable within capitalist society was extreme income inequality and the pooling of consumption (Laidler, 1931, 1933b) which skewed the marketplace (i.e. with the needs of the wealthy being satisfied and the poor ignored). Distributing income and access to consumption throughout the population was the desired trajectory in a socialist world. As Laidler puts it, ‘We, as socialists, want the mass of mankind to have more private property and better private property than they now possess’ (Laidler, 1929: 4).

Socialist theorising often telescoped from the present to a potential future. This makes the comments on use-value telling. They take us firmly into the territory of purchasing access and service, rather than the object: ‘Among the population as a whole…Instead of owning things, we as consumers are getting the use of things. To gain freedom and efficiency, we are exchanging the burden of possession for use’ (Laidler, 1930: 20). Of course, Laidler’s hopes were mostly unrealised. We do not live in a socialist world, notwithstanding the fact that some of their ideas were incorporated into US government policy (Laidler, 1950b).

The ‘cooperative commonwealth’ did not replace capitalism which has demonstrated its adeptness in repositioning a market-oriented economy as reflecting ‘unpolitical socialism’ (Tadajewski and Jones, 2016). Saunders (1959), as a case in point, declares that capitalism is founded upon a service ethic, with mass production leading to the democratisation of consumption. Straining credulity, she asserts that as business responds to consumer needs, people effectively own the companies. In the United States, ‘these corporations belong to the people not just in theory, but in fact’ (Saunders, 1959: 8). Capitalists might applaud this view; socialists would ask questions about false consciousness.

Tying the threads together

The above narrative can be tied together in the following way. Sheldon’s correspondence school sought to improve operational practices, profit potential and foreground ethics. At the micro level, the consumer was viewed as the ‘boss’ (Sheldon, 1921a). Service to the customer was associated with mutual, interactive exchange founded upon ‘usefulness’. Companies who do not provide the appropriate use-value will not receive ‘stored-up human service’ that is, money, from their client base (Sheldon, 1921a: 120). This contradicts Vargo and Lusch’s (2004) account that positions the emergence of a customer orientation much later.

When united, Sheldon and Rotary had a geopolitical emphasis that tried to stabilise the global context. This call to arms remained within the orbit of capitalism and their ethical vision is indicative of a ‘theory of society’ in the present, rather than metaphysical world. As Sheldon writes,

Ethics…we shall treat as the science of right conduct toward others…All too long the great religions of the world have preached the science of right conduct as a passport to the great Hereafter, and that alone. It is time for the world to awaken to the fact that the science of right conduct towards others pays dividends in the Here and Now…[N]ow comes Rotary, saying, in commercial language, “He profits most who serves best,”…and, when you do unto others as you would have them do unto you, what are you doing but rendering service? (Sheldon, 1913: 29)

This discourse had an intergenerational dimension (e.g. Sheldon, 1921a: 142–3). Rotarians were encouraged to volunteer in the school system to inculcate the values of service and social harmony (e.g. Sheldon, 1913: 33–4, 35). Service, ‘usefulness’ and capitalistic values were endorsed or held in readiness for ‘generations yet to be’ (Sheldon, 1921a: 134). In doing so, they register the connections between micro-, meso and macro-level factors in society. Connecting these ‘levels’ is a preoccupation of SDL (Vargo, 2011).

Service socialism delivered analysis and critique of the capitalist system. Their educational function was fused with an activist agenda designed to achieve a cooperative commonwealth. In this idealised framework, production was undertaken for use, not for profit. As was maintained, their diagnosis of consumption practices and their likely future direction are commensurate with SDL’s focus on use – the service – being provided by goods and a concern for access-based consumption rather than ownership (Laidler, 1930). At base, their views were differentiated from the Rotary Club (or SDL) by their disinclination to support the idea that all groups work together in harmony. Axiologically, conflictual relations were central to their ruminations (Laidler and Thomas, 1926), but these could be mediated and eventually eliminated by changing the economic, social and cultural system.

Where V&L genealogically substantiate SDL based on economic thought and argue that marketing has developed theoretically out of economics, Sheldon avers that knowledge of the consumer, their interests and psychology, is the key to service provision (Sheldon, 1910, 1911b, 1913). The salesperson had to be informed about their products and the psychology of the patron. They needed to apply their insights using appropriate advertising theory. Pressing this point home, Sheldon explains:

As we examine into the psychology of commerce a little further we find that in order to have favorable attention, interest, desire and repeated action – and of course we all know that it is the repeaters that count in commerce – we must recognize the law that confidence is the basis of all trade, and that to get and command confidence and keep it we must beget satisfaction, and in order to keep the patron satisfied we must give Service. (Sheldon, 1913: 28; emphasis in original)

But we must be careful here. Sheldon is more nuanced than V&L who present the determination of value to be idiosyncratic (Lusch and Vargo, 2014: 16), but also less so when he relies on structurally deterministic psychology. V&L’s perspective hinges on the assumption of ‘value’ being ‘phenomenologically determined by the beneficiary’ (Vargo, 2007: 57). This deviates from early 20th century accounts of consumer perception (Shryer, 1912) because it neglects the intersubjective structuring of value by socialisation processes such as the role of the family, peers, education and cultural environment. To be sure, Lusch and Vargo (2014) do cite the influence of socialisation, but they do not deal with its impact on value determination.

At present, the cocreation that SDL presents as axiomatic takes place within a capitalist society, largely ignoring the complex power relations involved. V&L’s project remains beholden to the politics that supported service discourse in the late 19th century, that is, it downplays asymmetric relationships. Genealogically, their work is part of a long trajectory that rationalises capitalism (Bonsu and Darmody, 2008; Zwick et al., 2008). Conceptually and linguistically, this reaction to socialism threads throughout SDL and marketing more broadly. Mutual exchange, service and service relationships were all conceptual attempts to deal with socialist criticism (Delaunay and Gadrey, 1992). Arguably, as a prism, SDL overplays the role of harmony in exchange – much like Sheldon, the Rotary Club and somewhat like Filene – and underplays the existence of conflict: a core assumption of service socialism.

Despite the progressivist narrative V&L utilise, they are only beginning to appreciate the problems that service socialism wanted to challenge. SDL maintains a normative need for ‘symmetry’ in ‘exchange processes’ (Vargo and Lusch, 2008b: 33), while registering unequal power relations (e.g. Vargo, 2018: 721–3, 728). It is apparent that the cocreation thesis as well as the notion of the phenomenological determination of value is problematised by practice (cf. Bonsu and Darmody, 2008: 356, 359, 365, 366; Laczniak, 2020: 295–6; Wilkie, 2020: 324, 326; Zwick et al., 2008: 169, 182). The service socialists were quick to highlight the obstacles associated with corporate power and concentrations of wealth. These issues have not gone away. In the airline, seed, pesticide and beer industries, for example, concentration is marked. The effects of firm power remain consistent with evaluations proffered by socialists. As Sitaraman (2018b: 57) notes, corporate ‘consolidation has depressed wages, increased inequality, and arrested small business formation’. Similar issues confront the technology industry (Sitaraman, 2018a).

Search engine operators can monitor traffic to identify embryonic competition, buying them before they become a threat, thereby suffocating innovation and denying the consumer the chance to cocreate and phenomenologically determine service value. The ability of companies like Amazon to collect and collate customer data provides multiple advantages. They can modify their pricing structure and offerings (Sitaraman, 2018a), consequently increasing their power and potentially leading to disadvantageous outcomes for the customer.

The effects of corporate power do not remain restricted to the marketplace. They permeate the political arena, laying the foundations for greater levels of inequality and disadvantage in future. Wealth buys political access, favourable policy decisions and this makes social change less likely (Gilens and Page, 2014; Sitaraman, 2017). V&L’s plea for symmetry might be normative, but considerable evidence suggests it probably passes unheeded. Moreover, irrespective of the idealism motivating Webster and Lusch’s (2013: 390) call for marketing to ‘recommit’ to its ‘fundamental purpose of improving the standard of living for all’, a socialist reading of their request would point to the profit motive and its likely subversion of their desire.

Engaging with socialist and progressive critiques of the marketplace thus leads to dramatically different representations of market–consumer relations. Rather than mutual benefit, we head in the direction of registering how the profit motive skews social relations and national security interests; the continued prevalence of Veblenite pricing strategies; the ongoing problem of deception and product adulteration; and the persistence of racism in marketer–consumer and consumer–consumer interactions (e.g. Bilott, 2019; Blumberg, 1989; Sitaraman, 2020). Accounting for these issues is the next frontier for SDL advocates who want to make their architecture theoretically, conceptually and empirically realistic.

Conclusion

In this article, we have examined the framing of marketing thought offered by V&L. By contrast to their interpretation, we argued there was more variety in thinking among earlier contributors to our discipline. As such, the progressivist narrative that SDL postulates should be treated with caution. Our account moved from a focus on sales practitioners and their activities through to operations in a geopolitical register. By the time we reach the work of the L.I.D., their critique of capitalism and promotion of socialism, that is, their ‘Socialist Dominant Logic’, it telescopes the reader into a world where production and distribution function for humanity, increasing access to consumption and quality of life. For some, this might still provide hope beyond the neoliberalism of SDL.

Each group studied in this article had definite views about the kind of thinking and action they deemed productive. Sheldon (1921a) understood he was making suggestions about the contours of the commercial and social world that would be open to contestation. Even so, others concurred (Drucker, 1954/2006) and the focus on service continued to influence the way scholars thought about marketing practice throughout the 20th century (Dickinson et al., 1986; Read, 1931). Likewise, marketing academics fostered relationships with the Rotary Club, often taking up the speaking opportunities provided ( The New York Times, 1931, 1933a, 1933b). More recently, their ideas are being rearticulated, with researchers making similar arguments to those provided by Rotary and Filene in relation to ‘Service to Society’, albeit with a greater focus on sustainability² (e.g. Bolton, 2020).

Unfortunately, socialist thinkers were right to point to the dangers of economic concentration. Today, we reference the oligarchy of the wealthy, employment precarity and generalised insecurity. Interestingly, the juncture when V&L start to chart their shift from GDL to SDL is the period called the ‘great compression’, when differentials in income and wealth were greatly reduced. This context might have led to theorising more equal exchange relations. Certainly, the marketing literature encourages it. Sadly, these advances were limited, with inequality growing from the 1970s to the present time. To reflect this, SDL thinking needs a jolt of empirical realism.

Footnotes

Acknowledgements

The first author would like to thank Jill Perry for many conversations about Arthur Frederick Sheldon. He would also like to signal his appreciation to Steve Vargo for reading an early draft of this article. Neither Jill nor Steve is responsible for the contents of this manuscript. The editor and reviewers deserve considerable applause for their dedication during the review process. They have helped make this a much stronger article.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Mark Tadajewski

Notes

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