EXCERPT

The New Class War of the Managerial Elite

by THOMAS KLIKAUER – NADINE CAMPBELL

 

Ever since Frederic Taylor’s falsely labelled “Scientific Management”, the managerial elite has been on a stratospheric rise. Rather cunningly and often even deceitfully, Taylor named his book “scientific” even though it does not contain a single scientific experiment. What he presented was an engineering ideology – not science. Despite this and together with French factory administration expert Henri Fayol, modern management was born. But managers are not only the people who control workers and tell employees what to do, but they are also a powerful group of corporate apparatchiks and worse, they have established themselves as an ever more powerful social class.

Trained in one of the world’s 13,000 business schools, the managerial elite has slowly but steadily and rather relentlessly taken over ever more institutions of society. Bit by bit, they are replacing democracy with anti-democratic Managerialism, managerialist knowledge and managerialist ideology. Managerial knowledge is about the administration of companies and corporations; managerialist knowledge represents the ideology of Managerialism. Unlike simple management, Managerialism is an even more dangerous ideology. While management is mostly concerned with the managing of a workplace, Managerialism is different.

It spreads fast and into social institutions such as hospitals, schools, universities, etc. Managerialism replaces bureaucracy that previously was there to serve the public. By contrast, managerialist knowledge is based on profit thinking. And in those cases where there is no profit-making (yet), such as primary schools, Managerialism operates as an “as if” ideology. That means Managerialism and its ideological henchmen treats such an organisation as if it were a profit-making enterprise.

Beyond that, the power of Managerialism and the managerial elites infiltrate three key areas of society. These are the government, the economy, and the sphere of culture and the media. In the sphere of the economy, capitalism developed large size companies during the first half of the 20^th century, making it impossible for individual capitalist like Henry Ford to control large groups of workers. It demanded a new class of overseers – the modern manager. As capitalism moved on, it also created corporations owned by invisible shareholders. This furthered the power of a class of managers needed to run corporations on behalf of their owners.

As time went on, special commerce schools that trained managers were established and in a rather genius move, these commercial-administrative schools that teach the simplicity of business administration assigned themselves to universities. With that, they gained the reputation of science for a subject that has been, from its interception onwards, never been a scientific subject. Since Taylor, its clams to “science” remains a fake. Still, management sells itself as management sciences.

Year after year after year, these business schools churn out thousands of corporate apparatchiks trained in the simplicity of corporate administration. Today, their preferred degree still shows management’s origins in factory administration. The “A” in MBA stands for administration. As such, college-educated managers and administrative professionals have succeeded old-fashioned bourgeois capitalists as the dominant elite. Today, this managerial business class has even established its special resting areas found in the airport – the business lounge. The managerial elite and corporate apparatchiks also sit in front of the rest, in an aircraft’s business class. All of that makes them feel unique, privileged and a class of their own. The new rulers of the world. What they have replaced – democratic pluralism – has become managerial neoliberalism.

Unlike neoliberalism that pushes capitalism from upstairs, from the economy, the managerial elite pushes capitalism from downstairs, from companies and corporations. While neoliberalism uses democracy, Managerialism replaces democracy. There is no democracy inside companies and corporations. For corporate apparatchiks, there is no need for democracy. It is a hindrance for Managerialism’s drive to so-called efficiency – one of its preferred ideologies.

With that, the managerial elite marches forward. Many of the powers of democratic legislatures have been usurped by or delegated to, executive agencies, courts, or transnational bodies. College-educated professionals and among them the managerial elite have far more influence than the working-class majority in these institutions. In other words, as the managerial elite moves in, the working class and the general public is moved out. We see this not just in economic institutions – IMF, world bank, Davos, WTO, NAFTA, EU, etc. – but also in hospitals, schools, universities as well as in what was previously seen as the watchdog of civil society: the media.

Simultaneously, corporate mass media have made sure that the issue of class has virtually disappeared from public discourse. So have words like trade unions, strike, revolution, working class, etc. Corporate mass media have almost completely eliminated them from our vocabulary. If we no longer have words, we no longer can think in these terms. It eliminates any revolution long before it is even thought of. In addition, corporate mass media always works hard to make sure that race and nationalism overlay class. It shifts vertical class thinking – bourgeoisie-vs.-workers – onto horizontal thinking. Now it is white workers against non-white workers and domestic workers against foreign workers – the in-group against the out-group.

Meanwhile, the managerial elite has achieved domination. It is the true new ruling class of society. Next to the owners of companies and corporations, these corporate apparatchiks are the people who effectively control the means of production. They run Tesla while Elon Musk travels into space and appears on TED talks. They run Amazon while Jeff Bezos counts his billions.

The managerial elite has crushed the working class and is about to re-organise society in their image. This image is set up through the way they have been trained in business schools. Crucial to all this is access to the corporate managerial elite which is almost exclusively granted to those certified by a managerialist accrediting agent – usually an elite university or business school. This is where the new “uber-class” is trained and certified. Not surprisingly, access is via money – more than $200,000 at the top schools.

Membership in the college-educated managerialist uber-class represents no more than 10% or 15% of the population in a typical OECD country. It remains highly exclusive and a relatively small minority. This credentialed uber-class of the managerial elite owns roughly half the wealth in the United States.

One of the most important issues is this: American college students tend to have one or more college-educated parents. In other Western democracies as well, membership in the university-educated managerial class is also partly hereditary. As social mobility declines, the managerial elite reproduces itself.

In other words, there is a class ceiling, and it pays to be privileged. However, the managerial elite also remains, at least partly, open to talent from below. In other words, occasionally, non-elite people enter into the elite, but those are the exceptions – not the rule. Overall, the following has to be understood,

it may be true that college degrees are tickets out of poverty, but most of the tickets are passed out at birth to children in a small number of families with a lot of money. In the United States, students with math scores in the bottom half who come from families with the highest socioeconomic status are more likely to finish a college degree than students from families with the lowest socioeconomic status who have math scores in the top half of the range.

Worse, the median family income of the parents of a typical student from Harvard is $168,800. The average income of an American is $40,000 – one-fourth of that. Not surprisingly, 67% of Harvard students come from the highest-earning 20% of American households. The rest of the Ivy League will be rather similar.

The business school trained managerial elite not only gets training is special universities and flies business class, but it also lives in special geographical areas, in so-called “hubs”. These are the locations of the homes of the managerial uber-class. In these hubs or special suburbs, we find people engaged in high-end business services. They work in software, finance, insurance, accounting, marketing, advertising, consulting, and others whose clients are often corporations, including global corporations managing supply chains.

This has devastating impacts on cities as they become gentrified. The gap between the richest and poorest in New York City, for example, is comparable to that of Swaziland. Los Angeles and Chicago are slightly more egalitarian. Both are comparable to the Dominican Republic and El Salvador.

All this is possible on the back of poor workers mostly elsewhere – in the Global South. The fortunes of many San Francisco IT executives and corporate apparatchiks, for example, depend on legions of underpaid factory workers in China and other countries, on energy-hungry server farms located in remote rural areas, and on massive communications and transportation infrastructures stretching over vast distances among cities and nations and maintained by blue-collar workers.

Together with the economic elite representing neoliberalism, the managerial corporate elite has underscored a move away from regulation and thereby weakened organised labour at home and elsewhere. This, of course, has helped to boost corporate profit margins. Increasingly, the money generated, administered and overseen by the managerial elite is held in tax havens. Today, roughly one-fourth of all the world’s wealth is held in such tax havens. Worse, 43% of foreign earnings are parked in just five tax havens: Bermuda, Ireland, Luxembourg, the Netherlands, and Switzerland. The infamous Panama Papers are a very small part of an operation that deprives OECD countries of much-needed taxation, resulting in underfunded schools and hospitals.

Beyond that, the managerial elite works in international institutions that have largely eliminated democracy while simultaneously keeping a democratic cover alive in order not to be accused of being non-democratic. The managerial elite, in the form of corporate lobbyists, keeps this up in order to secure a positive regulatory framework supportive of profit maximisation.

In the European Union, for example, there has been a deliberately engineered erosion of national democracies. With the 2008/2009 Global Financial Crisis, this process has only been accelerated. From its interception, the EU has always displayed a chronic and deliberate bias in favour of business and finance and against organised labour. European labour has been pacified with European Works Councils. These councils have virtually no power. They follow German Works Councils that have some powers over rather inconsequential issues – the infamous colour of the toilet door – and next to no powers over serious issues like wages, CEO salaries, plant re-locations, etc. At the EU, the pacification of labour moves on while the EU is giving capital an almost free hand. It signifies the greater ability of capital, investors, and corporate managers to lobby and organise themselves rather successfully across national boundaries.

In Europe as in the USA, for every dollar spent by labour unions and public-interest groups on lobbying, large corporations and their lobbyists spend $34. With a 34:1 ratio, it is not surprising that EU and US laws favour corporations – not workers. In return for their lobbying, companies and corporations receive low or no corporate tax bills, easy access to tax havens and rafts of pro-business regulation – euphemistically labelled as deregulation. This disadvantages workers systematically. For their meagre $1 for lobbying, workers get low wages, high job insecurity, mass unemployment, horrific working conditions, the rise of precariat, wage stagnation, gig jobs, etc.

For decades, the EU has demonstrated an enduring predisposition in favour of capital, business, finance and against organised labour. It sows the greater ability of investors, corporate managers, and the managerial elite to lobby politicians and to bypass democracy. Next to this, the non-democratic judiciary has also been highly supportive of the managerial elite, corporations, and corporate capitalism. Like the state as such as the police force, in particular, today’s juristocracy – a democracy guided by the judiciary – has been important to the managerial elite because it shields it as well as companies and corporations from the democratic majority.

In short, the reliance on the legal system and courts instead of a democratically elected legislature is shaping public, economic, and labour policy while shifting power away from working-class voters. It is shifted ever more towards an un-elected uber-class of – often elite – university certified judges. They are the new rulers in robes representing yet another credentialed uber-class assisting the rise of the managerial elite. Of course, all of this adds up to what Warren Buffett admitted in 2006,

There’s class warfare, all right,

but it’s my class, the rich class,

that’s making war,

and we’re winning.

Buffett’s statement only shows how to secure corporate capitalism and its managerial elite is in what it is doing: class warfare. The only reasonable challenge to the power of the managerial elite during the last few years did not come from the working class. It came from right-wing populism. This challenged the managerial uber-elite but not corporate capitalism. Still, one might not see the managerial elite as a unified entity. It consists of, at least, three factions:

The Right: The first group is the right-wing hardcore neoliberal managerial elite representing the ideology of Hayek’s neoliberalism, extreme anti-unionism, deregulation (i.e. re-regulation for business), taxation only of the working class and not the rich, etc. This faction is represented by the ideology of Milton Friedman and financed by the infamous Koch brothers. Ideologically, it is supported by the likes of the Cato Institute.

The Moderates: The second faction of the managerial elite is the more moderates like the Clintons, Obama, etc. They represent a slightly more restrained version of market-friendly neoliberalism living in the eternal hope that capitalism can be nice.

The Centre: Finally, there is the centre of the managerial elite which consists of the Bush dynasty, former British prime minister David Cameron, Germany’s Merkel and France’s Macron. These represent a centrist form of neoliberalism.

Meanwhile, the rise of right-wing populism is a fight against these three groups of the managerial elite. The right-wing counterrevolution of the populists comes from the outside using forces that are generated from below – those Donald Trump calls the poorly educated. In short, today’s right-wing populist demagogues target the uber-class and thereby the establishment. These are framed as the enemies. The fight of right-wing populism takes place in all three realms of power currently run by the managerial elite: politics, the economy, and the culture-media-industry.

It attacks the managerial elite’s cosmopolitanism, and its drive towards globalisation by being staunchly nationalistic – America First! In Europe, right-wing populists are resolutely anti-Europe. Their most outstanding triumph remains Brexit. In the sphere of culture and the media, right-wing populist politicians deliberately ignore the elaborate political etiquette of managerialist and political uber-class. Right-wing populism uses crude, insulting, and aggressive language. Right-wing populists hate, reject, and fight against political correctness.

While Karl Marx saw religion as the opiate of the masses, right-wing populism has found a few new and plenty of old opiates to conjure up, like xenophobia, racism, sexism, antisemitism, nationalism, etc. Unlike the Catholic Church in the year 1622, Stalin and Hitler in the early 20^th century, today’s propaganda can be distributed quickly and widely through Facebook, Twitter, YouTube, etc. Then as today, the question of whether socialism or barbarity is still with us.

If banana republicanism is to be avoided as the fate of Western democracies, it demands a fight against both the managerial elite as well as right-wing populism. Besides, right-wing populism tends to be somewhat self-destructive. Right-wing populists are by far better at campaigning than at governing. Rather quickly, Trump discovered how difficult it is to staff his administration with competent technocrats from the legal, political and managerial elite willing to serve under a politician despised by many experts and officials. In short, the Washington managerial-administrative elite not only rejects Donald Trump it did not even want to work for him.

Whether the managerial elite, corporate apparatchiks or right-wing populists, they are a bit like homoeopathic medicine. The alleged cures that are proposed to treat our social, economic, political and environmental illnesses that capitalism’s free-market has causes are to be fixed with a hefty dose of more free market. This is not going to work.

Instead of the faked solution of the managerialist uber-class and right-wing populists, real empowering can only come from organised labour. This empowerment should be based on something like a tripartite business-labour-government arrangement that engages in collective bargaining. Only such a mechanism can provide real checks on the managerial uber-class and keep right-wing populists at bay. For democratic pluralism, free and fair elections remain essential, but these are by no means sufficient condition for genuine democracy.

Tripartite labour-business-government wage-setting institutions need to resemble one-person-one-vote democracy. There must be economical and political checks and balances in addition to political checks and balances to reduce and perhaps eventually eliminate the power of the managerial class.

Today, this managerial uber-class is still in the minority. But it has assembled a near-monopoly of wealth, political power, expertise, media influence, and academic authority. Given its power, it can completely and successfully repress the numerically greater but politically weaker working-class majority. If this continues in North America and Europe, both may very well look a lot like present-day Brazil. A country run by nepotistic oligarchies clustered in a few swollen metropolitan areas surrounded by neglected hinterlands that are rundown, depopulated, and loathed.

Notes.

Michael Lind’s The New Class War is published by Penguin.