The Managerial Revolution

This is part two of my article on the Fifth International. 

 Capitalism would not have survived without Marx and Marxism and finally Marxism in practice; the new Jacobinism of Lenin. That was the stunning realization of James Burnham. 

 The Bolsheviks had created a new model for capitalism in Russia, the revolution itself had made capital aware of its limitation and need for reform, hence Keynes comes to its rescue as Negri points out, and the revolution created a model of bureaucratic state capitalism to rescue capitalism from itself. 

 The Fifth International originated out of the crisis in the Fourth International it revealed the final flaw in Leninism/Bolshevism. Burnham's work was influential on both the Anti-Leninist Left of Trotskyism and of Left Communism, as much as it was on the creation of neo-Conservatism. 

Together they are the Fifth International a critique of the nature of Capitalism in the post war era; Sometimes called the welfare state, Keynesianism, or the Post War Social Compact. The historic advent of State Capitalism created a new class of white collar workers called managers. 

It originated after the First World War of Industrial Capitalism. Post WWI saw the advent of two important developments that changed capitalism forever; Fordism and Taylorism. They were the natural outgrowth of the rise of Joint Stock companies and the concentration of trusts at the end of 19th Century and in the pre-war years of the 20th.

With the impetus of the Civil War, capitalism and the State had too great a head start on the centralization of economic and political life for the anarchists to catch up.

In 1911 Tucker judged that this centralizing process had created an accumulation of wealth in the "trusts" that had superseded their need for the "four monopolies." He argued that "even the freest competition" could not presently hope to destroy the trusts, which could afford to sacrifice large sums of money to remove new competition. Tucker thought that only political or revolutionary forces could now whittle down this concentration of capital. He warned, however, that the anarchistic economic solution - "and there is no other solution" - must be taught to following generations. In the meantime, anarchists who aid the "propaganda of State Socialism or [violent] revolution make a sad mistake indeed, "hastening the advent of revolution before the people were prepared to do without the State."

MANAGERIAL REVOLUTION

Traditionally, manufacturing enterprises had been owned and controlled by individuals or families. In the mid 19th century however, joint-stock companies began to emerge and over time increasing numbers of investors held a share of ownership and received a portion of the profits. These companies no longer had a single owner and managers emerged to control business operations. It was assumed that this new breed of salaried workers would transform the workplace: values other than profit would enter into business calculations and there would be greater harmony between workers and executives. Since most managers have become large stock holders (and thus owners) the significance of the managerial revolution has been called into question.

Like its predecessor the American Civil War, WWI was an industrial revolution for European and North American capitalism, it ended the power of the old European Imperialism and brought in the age of Modernism. The creation of mass warfare, chemical, tank, steel ships, airwar, etc. etc. all were hastened by the mass production of Fordism. And in order to industrialize the workplace management was created to take power away from the craft worker and make them cogs in the machine.

Veblen and the Political Economy of Technocracy:

In the early 1900s, engineers the United States began developing their own analysis of the economy. Thorstein Veblen, in The Engineers and the Price System, gave a systematic treatment of that analysis. But Veblen's approach to political economy was broader than that of the engineers. His understanding of social change was based on a two-part research program: First, recognize the institutional elements of social stability; then identify an operative force with technological values that could foster change. When applied to the U.S. of his day, this research program resulted in Veblen's seeing a conflict between pecuniary and industrial values. Veblen believed that the triumph of industrial values was crucial for making society compatible with mass-production technology. These values were held to by both engineers and industrial workers. Veblen's earlier works emphasized workers as being agents for social change; later he shifted his focus to engineers. In both cases he reacted to the social activism of each group.

The dialectic of the Management Revolution meets the contradiction of Globalization; expanding Financial Capitalism.

Man & Managers | TIME Monday, May. 19, 1941

Author Burnham's theory: World War II is a social revolution, but not the kind of social revolution almost everybody thinks it is. When World War II is finished, capitalism and socialism will both be finished. After some 50 years of ruthless struggle, there will emerge a "domination and exploitation by a ruling class of an extremity and absoluteness never before known." Author Burnham calls his new class "The Managers"—the one class in society which is indispensable in making modern industry productive. Moreover, in two decisive sectors (Germany with most of Europe; Russia with half of Asia) the managerial revolution has already won. What remains is mopping up, division of the British spoils.

The answer, says Author Burnham softly, and the common factor in all these paradoxes, is to be found in the character of what he calls the managerial revolution. He says: "

We are now in a period of social transition ... a period characterized . . . by an unusually rapid rate of change of the most important economic, social, political and cultural institutions of society. . . What is occurring in this transition is a drive for social dominance, for power and privilege, for the position of ruling class, by the social group or class of the managers. ..."

Their immediate drive, says Burnham, is to control the instruments of production. They do not want to own them. The managers prefer to control them through their control of the state. "The state—that is, the institutions which comprise the state—will ... be the 'property' of the managers. And that will be quite enough to place them in the position of ruling class."

By managers, Author Burnham means the men who organize and coordinate the various elements of production "so that the different materials, tools, machines, plants, workers are all available at the proper place and moment and in the proper numbers." In business, managers are sometimes called " 'production managers,' operating executives, superintendents, administrative engineers, supervisory technicians." In government they are called administrators, commissioners, bureau heads. "I mean by managers, in short, those who . . . are actually managing, on its technical side, the actual process of production, no matter what the legal and financial form—individual, corporate, governmental. . . ."

The relative strength of the two groups in a period of social change, Burnham implies in two casually grim sentences: "The position, role and function of the managers are in no way dependent upon the maintenance of capitalist property and economic relations (even if many of the managers themselves think so); they depend upon the technical nature of ... modern production." "The position, role and function of the most privileged of all groups, the finance-capitalists, are, however, entirely bound up with capitalist property and economic relations. . . ."

There are excellent chapters in The Managerial Revolution on Russia (the most developed managerial society); on Germany (a somewhat less developed managerial society). But U.S. readers will easily understand what Burnham is driving at from his account of the New Deal.

Says Burnham: "We must be careful not to identify the New Deal and New Dealism with Franklin Roosevelt and his acts. Roosevelt is a brilliant and demagogic popular politician, who did not in the least create, but merely rides when it fits his purposes, the New Deal. The New Deal sprang from the inner structural drives of modern society, the forces that are operating to end capitalism and begin a new type of social organization, the same forces which at later stages and under different local circumstances produced the revolution in Russia and Germany.

"The firmest representatives of the New Deal are not Roosevelt or the other conspicuous 'New Deal politicians,' but the younger group of administrators, experts, technicians, bureaucrats, who have been finding places throughout the state apparatus: not merely those who specialize in political technique, in writing up laws with concealed 'jokers,' in handing Roosevelt a dramatic new idea, but also those who are doing the actual running of the extending government enterprises: in short, managers. These men include some of the clearest-headed of all managers to be found in any country. They are confident and aggressive. Though many of them have some background in Marxism, they have no faith in the masses of such a sort as to lead them to believe in the ideal of a free, classless society. At the same time, they are sometimes openly scornful of capitalists and capitalist ideas. They ... are not so squeamish as to insist that their words should coincide with their actions and aims."

For some eight years these New Dealers have been trying to steer the U.S. from capitalism to a managerial society. Some of their methods: 1) doubling government expenditures in five years; 2) making agriculture wholly dependent on state subsidy and control; 3) moving toward state control of foreign trade; 4) shrinking private control over capital funds by acts governing the issuance of and trading in securities; 5) divorcing money from its metallic base, making it a currency managed by the state; 6) running up annual deficits of billions of dollars, while using the national debt as an instrument of managerial social policy; 7) imposing taxes to secure social and political ends rather than income; 8) weakening capital relative to themselves by curtailing pri vate property rights in measure after measure ; 9 ) the taking over by the executive bureaus of the attributes and functions of sovereignty: "the bureaus become the de facto 'law makers.' " Burnham believes that the gradual reduction of parliaments (the congress of Soviets, the Reichstag) to a mere sounding board is an essential feature of the managerial revolution. "With occasional petty rebellions," Congress, he notes, has sunk "lower and lower as sovereignty shifted from the parliament toward the bureaus and agencies. ... By 1940, it was plain that Congress no longer possessed even the war-making power, the crux of sovereignty. The Constitutional provision could not stand against the structural changes in modern society and in the nature of modern war: the decisions about war and peace had left the control of the parliament."

ORWELL, GEORGE.

James Burnham and the Managerial Revolution. [Wrapper title]. [London: Socialist Book Centre, July, 1946]. 1st ed. 12mo. 19 pp. Orig. printed wrappers. Text browned, but a fine copy. $750.00

Fenwick D.2a. If not pivotal, Burnham's post-war essay on The Managerial Revolution, which describes a new governing elite about to take power, gave a concreteness and a certainty to Orwell's fears about the future, conceptualized in Nineteen Eighty-Four. As Woodcock wrote in The Crystal Spirit, Orwell presents in Nineteen Eighty-Four "the picture of a society which, in form if not in inner character, closely resembles that prophesized, in an approving tone which Orwell found distasteful, by Burnham in The Managerial Revolution. "It is a society in which a self-perpetuating elite has taken the place of the older forms of political and social domination and rules over a great slave class, and in which the world is divided into three great states perpetually in conflict over the marginal areas of the earth." This essay is further evidence that in Nineteen Eighty-Four Orwell in his thinking was well beyond the political conflicts of the Second World War between Communism and Fascism. It is quite rare.

James Burnham and the Managerial Revolution

George Orwell, New English Weekly, (May 1946)

James Burnham’s book, The Managerial Revolution, made a considerable stir both in the United States and in this country at the time when it was published, and its main thesis has been so much discussed that a detailed exposition of it is hardly necessary. As shortly as I can summarize it, the thesis is this:

Capitalism is disappearing, but Socialism is not replacing it. What is now arising is a new kind of planned, centralized society which will be neither capitalist nor, in any accepted sense of the word, democratic. The rulers of this new society will be the people who effectively control the means of production: that is, business executives, technicians, bureaucrats and soldiers, lumped together by Burnham under the name of ‘managers’. These people will eliminate the old capitalist class, crush the working class, and so organize society that all power and economic privilege remain in their own hands. Private property rights will be abolished, but common ownership will not be established. The new ‘managerial’ societies will not consist of a patchwork of small, independent states, but of great super-states grouped round the main industrial centres in Europe, Asia, and America. These super-states will fight among themselves for possession of the remaining uncaptured portions of the earth, but will probably be unable to conquer one another completely. Internally, each society will be hierarchical, with an aristocracy of talent at the top and a mass of semi-slaves at the bottom.

In his next published book, The Machiavellians, Burnham elaborates and also modifies his original statement. The greater part of the book is an exposition of the theories of Machiavelli and of his modern disciples, Mosca, Michels, and Pareto: with doubtful justification, Burnham adds to these the syndicalist writer, Georges Sorel. What Burnham is mainly concerned to show is that a democratic society has never existed and so far as we can see, never will exist. Society is of its nature oligarchical, and the power of the oligarchy always rests upon force and fraud. Burnham does not deny that ‘good’ motives may operate in private life, but he maintains that politics consists of the struggle for power, and nothing else. All historical changes finally boil down to the replacement of one ruling class by another. All talk about democracy, liberty, equality, fraternity, all revolutionary movements, all visions of Utopia, or ‘the classless society’, or ‘the Kingdom of Heaven on earth’, are humbug (not necessarily conscious humbug) covering the ambitions of some new class which is elbowing its way into power. The English Puritans, the Jacobins, the Bolsheviks, were in each case simply power seekers using the hopes of the masses in order to win a privileged position for themselves. Power can sometimes be won or maintained without violence, but never without fraud, because it is necessary to make use of the masses, and the masses would not co-operate if they knew that they were simply serving the purposes of a minority. In each great revolutionary struggle the masses are led on by vague dreams of human brotherhood, and then, when the new ruling class is well established in power, they are thrust back into servitude. This is practically the whole of political history, as Burnham sees it.

Where the second book departs from the earlier one is in asserting that the whole process could be somewhat moralized if the facts were faced more honestly. The Machiavellians is sub-titled Defenders of Freedom. Machiavelli and his followers taught that in politics decency simply does not exist, and, by doing so, Burnham claims, made it possible to conduct political affairs more intelligently and less oppressively. A ruling class which recognized that its real aim was to stay in power would also recognize that it would be more likely to succeed if it served the common good, and might avoid stiffening into a hereditary aristocracy. Burnham lays much stress on Pareto’s theory of the ‘circulation of the élites’. If it is to stay in power a ruling class must constantly admit suitable recruits from below, so that the ablest men may always be at the top and a new class of power-hungry malcontents cannot come into being. This is likeliest to happen, Burnham considers, in a society which retains democratic habits – that is, where opposition is permitted and certain bodies such as the press and the trade unions can keep their autonomy. Here Burnham undoubtedly contradicts his earlier opinion. In The Managerial Revolution, which was written in 1940, it is taken as a matter of course that ‘managerial’ Germany is in all ways more efficient than a capitalist democracy such as France or Britain. In the second book, written in 1942, Burnham admits that the Germans might have avoided some of their more serious strategic errors if they had permitted freedom of speech. However, the main thesis is not abandoned. Capitalism is doomed, and Socialism is a dream. If we grasp what is at issue we may guide the course of the managerial revolution to some extent, but that revolution is happening, whether we like it or not. In both books, but especially the earlier one, there is a note of unmistakable relish over the cruelty and wickedness of the processes that are being discussed. Although he reiterates that he is merely setting forth the facts and not stating his own preferences, it is clear that Burnham is fascinated by the spectacle of power, and that his sympathies were with Germany so long as Germany appeared to be winning the war. A more recent essay, ‘Lenin’s Heir’, published in the Partisan Review about the beginning of 1945, suggests that this sympathy has since been transferred to the U.S.S.R. ‘Lenin’s Heir’, which provoked violent controversy in the American left-wing press, has not yet been reprinted in England, and I must return to it later.

It will be seen that Burnham’s theory is not, strictly speaking, a new one. Many earlier writers have foreseen the emergence of a new kind of society, neither capitalist nor Socialist, and probably based upon slavery: though most of them have differed from Burnham in not assuming this development to be inevitable. A good example is Hilaire Belloc’s book, The Servile State, published in 1911. The Servile State is written in a tiresome style, and the remedy it suggests (a return to small-scale peasant ownership) is for many reasons impossible: still, it does foretell with remarkable insight the kind of things that have been happening from about 1930 onwards. Chesterton, in a less methodical way, predicted the disappearance of democracy and private property, and the rise of a slave society which might be called either capitalist or Communist. Jack London, in The Iron Heel (1909), foretold some of the essential features of Fascism, and such books as Well’s The Sleeper Awakes (1900), Zamyatin’s We (1923), and Aldous Huxley’s Brave New World (1930), all described imaginary worlds in which the special problems of capitalism had been solved without bringing liberty, equality, or true happiness any nearer. More recently, writers like Peter Drucker and F. A. Voigt have argued that Fascism and Communism are substantially the same thing. And indeed, it has always been obvious that a planned and centralized society is liable to develop into an oligarchy or a dictatorship. Orthodox Conservatives were unable to see this, because it comforted them to assume that Socialism ‘wouldn’t work’, and that the disappearance of capitalism would mean chaos and anarchy. Orthodox Socialists could not see it, because they wished to think that they themselves would soon be in power, and therefore assumed that when capitalism disappears, Socialism takes its place. As a result they were unable to foresee the rise of Fascism, or to make correct predictions about it after it had appeared. Later, the need to justify the Russian dictatorship and to explain away the obvious resemblances between Communism and Nazism clouded the issue still more. But the notion that industrialism must end in monopoly, and that monopoly must imply tyranny, is not a startling one.

Where Burnham differs from most other thinkers is in trying to plot the course of the ‘managerial revolution’ accurately on a world scale, and in assuming that the drift towards totalitarianism is irresistible and must not be fought against, though it may be guided. According to Burnham, writing in l940, ‘managerialism’ has reached its fullest development in the U.S.S.R., but is almost equally well developed in Germany, and has made its appearance in the United States. He describes the New Deal as ‘primitive managerialism’. But the trend is the same everywhere, or almost everywhere. Always laissez-faire capitalism gives way to planning and state interference, the mere owner loses power as against the technician and the bureaucrat, but Socialism – that is to say, what used to be called Socialism – shows no sign of emerging:

“Some apologists try to excuse Marxism by saying that it has ‘never had a chance’. This is far from the truth. Marxism and the Marxist parties have had dozens of chances. In Russia, a Marxist party took power. Within a short time it abandoned Socialism; if not in words, at any rate in the effect of its actions. In most European nations there were during the last months of the first world war and the years immediately thereafter, social crises which left a wide-open door for the Marxist parties: without exception they proved unable to take and hold power. In a large number of countries – Germany, Denmark, Norway, Sweden, Austria, England, Australia, New Zealand, Spain, France – the reformist Marxist parties have administered the governments, and have uniformly failed to introduce Socialism or make any genuine step towards Socialism. . . . These parties have, in practice, at every historical test – and there have been many – either failed Socialism or abandoned it. This is the fact which neither the bitterest foe nor the most ardent friend of Socialism can erase. This fact does not, as some think, prove anything about the moral quality of the Socialist ideal. But it does constitute unblinkable evidence that, whatever its moral quality, Socialism is no going to come.”

Burnham does not, of course, deny that the new ‘managerial’ régimes, like the régimes of Russia and Nazi Germany, may be called Socialist. He means merely that they will not be Socialist in any sense of the word which would have been accepted by Marx, or Lenin, or Keir Hardie, or William Morris, or indeed, by any representative Socialist prior to about 1930. Socialism, until recently, was supposed to connote political democracy, social equality and internationalism. There is not the smallest sign that any of these things is in a way to being established anywhere, and the one great country in which something described as a proletarian revolution once happened, i.e. the U.S.S.R., has moved steadily away from the old concept of a free and equal society aiming at universal human brotherhood. In an almost unbroken progress since the early days of the Revolution, liberty has been chipped away and representative institutions smothered, while inequalities have increased and nationalism and militarism have grown stronger. But at the same time, Burnham insists, there has been no tendency to return to capitalism. What is happening is simply the growth of ‘managerialism’, which, according to Burnham, is in progress everywhere, though the manner in which it comes about may vary from country to country.

Now, as an interpretation of what is happening, Burnham’s theory is extremely plausible, to put it at the lowest. The events of, at any rate, the last fifteen years in the U.S.S.R. can be far more easily explained by this theory than by any other. Evidently the U.S.S.R. is not Socialist, and can only be called Socialist if one gives the word a meaning different from what it would have in any other context. On the other hand, prophecies that the Russian régime would revert to capitalism have always been falsified, and now seem further than ever from being fulfilled. In claiming that the process had gone almost equally far in Nazi Germany, Burnham probably exaggerates, but it seems certain that the drift was away from old-style capitalism and towards a planned economy with an adoptive oligarchy in control. In Russia the capitalists were destroyed first and the workers were crushed later. In Germany the workers were crushed first, but the elimination of the capitalists had at any rate begun, and calculations based on the assumption that Nazism was ‘simply capitalism’ were always contradicted by events. Where Burnham seems to go most astray is in believing ‘managerialism’ to be on the up-grade in the United States, the one great country where free capitalism is still vigorous. But if one considers the world movement as a whole, his conclusions are difficult to resist; and even in the United States the all-prevailing faith in laissez-faire may not survive the next great economic crisis. It has been urged against Burnham that he assigns far too much importance to the ‘managers’, in the narrow sense of the word – that is, factory bosses, planners and technicians – and seems to assume that even in Soviet Russia it is these people, and not the Communist Party chiefs, who are the real holders of power. However, this is a secondary error, and it is particularly corrected in The Machiavellians. The real question is not whether the people who wipe their boots on you during the next fifty years are to be called managers, bureaucrats, or politicians; the question is whether capitalism, now obviously doomed, is to give way to oligarchy or to true democracy.

Burnham Managerial Revolution

James Burnham wrote The Managerial Revolution in 1941, during the world’s second great war. Surrounded by political upheaval and faced with a majority of the world’s population in economic unrest, Burnham perhaps felt compelled to analyze the world at an economic level. Perhaps he could offer an answer to the question: How will the world be after the war? His expectations of the inherent transformation that was (and had been) taking place in the world is clearly exhibited in The Managerial Revolution.

“According to Marxian theory, only two kinds of society were possible in the modern industrial­ized world: a capitalist (bourgeois) regime or a socialist (workers) regime.”1

Previously a member of the Trotskyite organization and disenchanted by Marxian visions of the Soviet state, Burnham broke all ties to communism and to socialism in general. If the Soviet state in reality was not socialist in its purest form, and was obviously not on its way towards capitalism, then what was it, or what was it going to be? At the same time, capitalism was losing its hold on its societies. Capitalist economies were running into trouble with the continuance of mass unemployment, the decline of private investment the increase of public and private debt, the depression of the agricultural sector; in general, capitalism was losing its control over its own resources. 2 This loss would only become a gain to another regime and socialism didn’t seem to be in line to receive the endowment. What then, would take capitalism’s and socialism’s place in the world? Burnham suggests a new society: a managerial society.

In capitalism, as well as other societies, production and its inputs are paramount to its function. “The instruments by which many of the goods, which are necessary for the maintenance and adornment of life are produced are technically social in char­acter. No individual produces, by himself, everything he uses. The production is a social process.”3

The social importance of production evolved historically with the industrial revolution of the late 1800’s, during which, production became centralized. Going to work no longer meant staying at hone or traveling to a small shop. It meant traveling to a large building and working with perhaps hundreds of others in the production of one type of product. Instead of one person perform­ing all tasks to produce the entire product, many people performed a variety of tasks, which together comprised the production of one product. This so called division of labor, made famous by Adam Smith, is still an integral concept in production today.

The persons who control the instruments of production are very important in. any society. In capitalist society these persons are ordinary individuals (through possession of capital) who have chosen to own these factors of production. These individuals, often called capitalists, because they own and control the actors of production, are the ruling and dormant class in capitalist society.

Capitalist power and status lies solely in the control and owners. In order to own and control and object, two states must be attained. One must have the ability to prevent others access to the object controlled. When this is attained one can they establish a preferential treatment in the distribution of the products of the objects controlled.4 For example, if one owns a plot of land then one has the right to allow or disallow anyone access to that land. Once this is established then the owner can decide who (if anyone) can receive and what quantities the products of the land, such as crops that might be grown there.

Burnham’s central argument for the fall of capitalism lies in these properties of control and ownership. “Ownership means control. If there is no control then there is no ownership. The central aspect of control is ownership, as we have seen. Control over access to the object in question and the preferential treatment in the distribution of its products. If ownership and control are in reality separated, then ownership has changed hands to the control, and the separated ownership is a meaningless fiction”5

Burnham claims that capitalism today violates the union and inseparability of ownership and control. Burnham demonstrates this by observing the growth and resulting hierarchy present in today’s corporation. There was a time when the truest form of capitalism existed. The owner of the corporation was in control of the factors of production, including the hiring and firing of workers, the buying of raw materials and the selling of the product. The owner was directly connected to most aspects of production.

Because capitalism moved successful and demands increased in many businesses, growth with in the corporation occurred. Today there exists ~ hierarchy of management. At its lowest level one finds the operations floor manager who works and supervises on the production floor. He directly controls production through his ability to increase and decrease rates of production or to stop it all together,. however, he is subject to a long line of managers whose primary interests lie in the financial aspects of production. The corporate owners (who may comprise of many as in the case of stock holders) today have the capital to withdraw themselves from production but yet keep themselves close to it through finance. With capital, owners can afford to pay others to direct and coordinate production.

This task of direction and coordination of production has become highly specialized as a result of technological progress. Thus, the owner is no longer the manager in the production sense. Separa­tion of control and ownership has taken place and violates capitalist’s existence as the ruling class.

With the ability to control access to the factors of production, managers will soon gain the ability to establish a preferential treatment in the distribution of the products of production, thus once again uniting control and ownership. Managers may soon realize this inherent power and with it progress to the ruling class of society. Thus a managerial society will result.

Today, perhaps we can see evidence of Burnham’s claims. Man­agers indeed are extremely important to production. But I think owners have realized that “bigger is not better” so the addage goes and are making a conscious effort to become closer to the roots of production with in their own firms. I think today the image of the owner who can be seen on the production floor as well as in the executive board meetings is a pleasing one and deserves respect and reverence. Perhaps this realization came soon enough where capitalism can be preserved.

Sempa | James Burnham (I)

The Managerial Revolution is mostly remembered as a political and socioeconomic work, which in part it was. What is often overlooked, or at least understated, is that the study was Burnham’s first intellectual foray into global geopolitics. In it he sketched an emerging post-war world divided into “three strategic centers for world control”:

1. the northern two-thirds of the Western Hemisphere;
2. north-central Europe, west Asia and northern Africa; and
3. the “Asiatic center,” east Asia and the off-shore islands.

“Geography,” he explained, “gives certain advantages to each of the contestants in certain areas: to the United States in the northern two-thirds of the two Americas; to the European center in Europe, the northern half of Africa and western Asia; to the Asiatic center in most of the rest of Asia and the islands nearby.” A key factor that conditioned Burnham’s selection of those regions as “strategic centers” was their concentrations of modern industry. Burnham predicted that “the world political system will coalesce into three primary super-states, each based upon one of these three areas of advanced industry,” and the “nuclei of these three super-states are… Japan, Germany and the United States.” Russia, he believed, would break up as a result of the war, “with the western half gravitating toward the European base and the eastern toward the Asiatic.” Somewhat more presciently, he predicted the dissolution of the British Empire resulting from “the consolidation of the European Continent….” Burnham explained that England’s dominant position depended on its ability to “balance Continental nations against each other” and that “the balance of power on the Continent is possible only when the Continent is divided up into a number of genuinely sovereign and powerful states.” Burnham was right, of course, about the fact of the collapse of British power, but wrong about its cause. The British Empire broke up because after the war Britain lacked the resources and, more importantly, the will to maintain it. The whole European Continent was not consolidated as Burnham had predicted; instead, the Continent was strategically divided between two super-states. Burnham was correct in predicting that the war would produce a world struggle for power among “super-states.” Whereas he foresaw the emergence of three super-states, however, the war’s outcome produced only two, the United States and the Soviet Union. Instead of three “strategic centers,” there were only two — the northern two-thirds of the Americas and the Asiatic center. Although in The Managerial Revolution Burnham clearly underrated the staying power of the Soviet regime, he accurately forecast the role of the United States in the post-war world. “The United States,” he wrote, “…constitutes naturally the nucleus of one of the great super-states of the future. From her continental base, the United States is called on to make a bid for maximum world power as against the super-states to be based on the other…central areas.” He even foresaw that the United States would become “the ‘receiver’ for the disintegrating British Empire.⁴ By this time Burnham’s break with communism was complete. In The Managerial Revolution he noted that “all evidence indicates that the tyranny of the Russian regime is the most extreme that has ever existed in human history, not excepting the regime of Hitler.” He no longer believed, as he had in his Trotskyite days, that Stalinism was an aberration from true Marxism-Leninism. “Stalinism,” he wrote, “ is what Leninism developed into…without any sharp break in the process of development.”⁵

James Burnham, The Managerial Revolution and The Machiavellians: Defenders of Freedom -

Burnham’s “Alternative” to Socialism

As Trotsky predicted, this petty bourgeois snob ;has swiftly completed his evolution into a rabid enemy of Marxism. The thesis that Burnham promulgates is that socialism “is not possible of achievement or even of approximation in the present period of history.” His alternative to socialism is the “managerial” society. The essence of Burnham’s alternative is borrowed – without acknowledging the source – from Bruno R., an Italian who developed the theory that capitalism is being replaced by a new kind of exploiting society. (Bruno R., La Bureaucratisation du Monde, Paris 1939).

Bruno R. bases his theory on an asserted identification between the planned economy of the Soviet Union, the Fascism and Nazism of Italy and Germany, and the New Dealism of the United States. Burnham takes over this idea and labels it “managerial society” in contradistinction to Bruno R., who designated his society as “bureaucratic collectivism.” The capitalists, says Burnham, tend everywhere now to be expropriated. Not, however, by the workers, but by the “managers” – the executive and engineering personnel.

Burnham equates the October revolution with Stalinism and the latter with Fascism-Nazism; he calls the October revolution the “first great abrupt jump toward managerial society,” and finds Nazism-Fascism to be merely a more gradual evolution in the same direction.

NATIONAL SOCIALISM COMES TO AMERICA
by Joe Sobran

In 1956, at the height of the Cold War, the
historian John Lukacs smiled skeptically at the notion
that it was a contest between the opposing principles of
capitalism and communism. Actually, he said, it was a
rivalry between two broadly similar states, Russian and
American, both of which might be more accurately
described as "national socialist."

Unfortunately, that term had already been taken, and
nobody wanted it after 1945. But Lukacs was far from the
only one who saw that it fit most of the regimes that had
survived World War II. In his influential 1941 book, THE
MANAGERIAL REVOLUTION, the former Communist James Burnham
argued that the American, German, and Russian systems,
despite superficial differences, were all variants of a
new type of bureaucratic state, in which the actual
control exercised by the burgeoning new "managerial"
class was separate from nominal ownership.

16 January 1967

YUGOSLAVIA'S PARTY AND ECONOMIC REFORMS AT
TURN OF THE YEAR

Burnham-Type Managerial Revolution

Of course, the problems in Yugoslavia are much more
complicated than is to be seen from Tito's and Vlahovic's interviews.
A deeper look at what has been taking place in Yugoslavia since
Rankovic's purge in July 1966 reveals that the country has not
only been torn by nationality quarrels but has also been passing
through a phase which the American sociologist James Burnham
25 years ago called "the managerial revolution".[6] At least
this is the opinion of some Yugoslav Party theoreticians.
Not so long ago, a Yugoslav liberal philosopher, the Belgrade
Professor Svetozar Stojanovic, was openly accused by a Politburo
member of having adopted James Burnham's idea that a "new
exploitative class" which advocates "state socialism" usually takes power
in a country in which "the socialist revolution" has been
successful.[7]

However, it is not only Dr. Pecujlic who finds that Professor
stojanovic's and some of his colleagues' ideas have been influenced
by certain American sociologists. Dr. Vladimir Bakaric, the
top Croatian communist leader and a powerful member of the Yugoslave
Party Presidium, also shares Pecujlic's criticism of Professor
Stojanovic. Twice recently Dr. Bakaric, has sharply rejected
the thesis that the "bureaucrats" in Yugoslavia have become a
new exploiting class.[8] Dr. Bakaric, contrary to Dr. Pecujlic,
did not mention Burham by name but referred to him indirectly
by stating that the Yugoslavia bureaucracy, all though having the
same name as for instance the bureaucracy in the United States,
has still been 'our own1 bureaucracy. It has as its basis the
working class. In other words, the structure of society on
which our bureaucracy is based is different" from that in the
United states.[9]

The reason for the attacks on Professor Stojanovic and his
friends by Dr. Pecujlic, Dr. Bakaric, and even indirectly by Edvard
Kardelj was an article published by Stojanovic in the Zagreb
philosophical bimonthly Praxis.[10] Stojanovic wrote as follows:

Really one would have to have a very fertile and even
perverse imagination to see the position of the working
class in a state socialist society as completely
the opposite of what it really is. The ideological
myth of the proletariat as a ruling class is nourished
by the fact that the statistic class is being partially
recruited from the ranks of the proletariat. However,
even in the most liberal sense of this word, a sense
which would not turn into irony and cynicism, one
cannot say that the working class [in Communist
countries] is the ruling class. In such a [state
socialist] society this working class has been more
than subjugated and exploited.[11] Not only has it
no right to decide about the management of production,
but it even does not possess those rights conquered
by the working class in the developed
bourgeois-democratic systems.

Economic Managers vs. Unproductive Party Apparatchiks

Professor Stojanovic tried to protect himself from the
attacks by Yugoslav critics by separating the Yugoslav Party
from the other East European parties. He said: "It is not
easy to admit that the socialist revolution, except in the
Yugoslav case, as degenerated into a new exploitative class
society."[12] As we have seen, it has acutally not helped him,
because Dr. Peoujlic understood Stojanovic' s. article not only
as a criticism of the Communist regimes in Eastern Europe
but also as a clear reference to what has bean taking place
in Yugoslavia itself. Dr. Pecujlio is especially critical of
Professor Stojanovio when he tries to identify Burnham's
claim concerning the similarity between Communism and Fascism[13]
with Stojanovic's criticism of "state socialism" and the "new
exploitative class."

Actually, Professor Stojanovic is much closer to Burnham's
claim that, if people still believe that socialism is possible,
they will have to believe in it on other grounds than those
which have been felt in the past to be sufficient. Professor
Stojanovic simply does not believe that the Communist Party,
as it is now, can help people to achieve socialism, The reason
is Very simple: it is ludicrous to believe, as some Communist
leaders do, that Marx succeeded in providing the general laws
for the whole world's going over to socialism. Consequently,
all parties, basing their theory and practice on Marx's ideas,
are wasting their time in trying to effectuate in the 20th
Century something which was theoretically worked out in the
19th Century, and which appears now to be outmoded.[14]

There is, therefore, nothing strange in the belief of
the young Communist liberals and technocrats that the Party
is no longer capable of leading a highly developed industrial
society. The hard-core old guard in the Party thinks in terms
of "state socialism," which makes it a new "bureaucratic class"
trying to turn the wheel of history backwards. At this point,
the young Communist liberals and technocrats in Yugoslavia are
in agreement with Burnham and his interpretation of the reasons
for the existence of the new ruling class.[15] They obviously
accept Burnham's idea that the easiest way to discover the
ruling group in a Communist society is usually to see which
group gets the biggest income without occupying any "productive"
position in the state economy. For this reason, criticism
of the extremely high salaries paid to Party functionaries is
becoming ever more strident. It is simply considered unjustified
that these people receive high salaries precisely when economic
conditions are progressively growing worse. Now that the Party
has decided to abandon its full control over economic life
because its functionaries have not been able to make any progress,
the technocrats in the economy have come to the logical conclusions
that Party apparatchiks do not deserve any privileged position for
the reason they are not performing any function necessary to
the process of production.

Globalization, Transition and the Discourse of Management

Globalization is a heavily debated phenomenon and can be studied
from many perspectives. In the present paper the perspective of the
discourse of management is presented. Management as an idea and as
practice is also a critically contested phenomenon in today’s fast changing
world. In this paper managerial discourse as an aspect of globalization
is studied. The concepts of globalization, managerialism and
managerial discourse are introduced and their interdependence is described.
Special attention is given to the process of the so-called transition
in Slovenia and its connection to the concepts of managerialism
and managerial discourse. During the process of transition from
one economic and political systemto another,managerial discourse became
adopted in Slovenia and soon constituted itself as a standard or
even dominant discourse in business and economics. Some examples
are drawn from Slovene newspapers and other publications to demonstrate
first the difference between the socialist (self-management) discourse
and managerial discourse, and second, to demonstrate the diffusion
of managerial discourse to other spheres of social and political
life.

Alternating Currents: Nationalized Power in France, 1946-1970

EDF remains one of the purest examples of a modern technocracy. As with any hierarchical system, stability in a technocracy is predicated upon the consent of those at the middle and lower ranks. In non-technocratic social systems, that consent is usually attained by way of an ideology which legitimates the status quo as intrinsically valuable. Socio-political legitimation in a technocracy, however, is based on confidence in its ability to foster controlled change and growth, but that very approach inherently challenges the legitimacy of the status quo. As the history of countless social upheavals indicates and as the conservative French élite traditionally feared, a failure to legitimate the status quo could undermine popular consent and lead to social cataclysm. The task of technocrats, therefore, was to foster change while at the same time assuring that the changes would not stray beyond the bounds of élite control. At EDF, a new legitimating ideology, techno-corporatism, enabled the emerging technocrats to win the consent of non-élites to accept only limited change. One of the keys to understanding the history of EDF can be discovered by studying the ways through which potential opponents to technocratic power surrendered to it.

Two interrelated notions undergird techno-corporatism: meritocracy and a unilinear trajectory of all `progress.' A meritocratic basis for hierarchy serves to validate a new élite strategy by implying that expertise within the productive system assures ascendency of the fittest individuals. Mastery over the functional aspects of production is far easier to sell to labor and consumers than simple status by birth, and it appears to provide a measurable standard of success. The very notion of merit remains largely undefined in popular discourse, though it is usually derived from concepts of rationality and the capacity to abstract from function to model. The intellectual tradition out of which techno-corporatism emerged developed from the assumption that an analysis of component parts (or, in modern parlance, subsystems) can lead the way to an understanding of the whole. Analysis obviates synthesis, for synergy remains undefinable in an entirely quantitative framework. That which cannot be quantified is irrelevant. Functionalism precludes æsthetics and most qualities can be quantified; those that cannot are irrelevant. For the techno-corporatist, nothing succeeds like measurable success.

Productive successes and the techniques used to attain them forestalled internal and eventually, external, opposition to the management of EDF. Sophisticated models and specialized technical language effectively made it impossible for potential critics to frame a discourse of opposition. Many of the managerial models passed off political and social judgements as objective, science-based necessities. The new managers presented as revealed truths capitalist economic models which implicity subsidized large industry or limited EDF's presence on the capital market in order to avoid displacing private bond issues. The ostensible necessity for a market economy was as objective as Ohm's Law. Economic models emulated reality just as surely as E=IR describes the relationships among voltage, current, and resistance. One could no more violate the laws of marginalist economics than transgress the law of gravity. EDF managers ultimately used normative models of a purely competitive economy to make policy choices, just as engineers used hydrologic models to design dams.

The dynamics of consent explain why electrical workers and their unions, the key forces behind the nationalization, allowed EDF to cease challenging the capitalist order and to become allied with it. Ironically, whether an EDF union was Communist, Catholic, socialist, or purely `professional,' its leaders fundamentally accepted the technocratic notion of progress and the meritocratic structures of legitimation upon which the technocracy was based. Alternative visions of the possible remained elusive.

Socialism and Anti-Technocratic Struggle

in the French May Events of 1968: An Essay in Retrieval

The leaflet I have translated for you begins by rejecting the option of a popular front government, that is to say, a government of Socialists and Communists substituting itself for the Gaullists. A popular front or a union settlement would leave the basic structure of society unchanged. The only effective way of altering the system, the leaflet argued, would be to prove that socialism was possible in practice starting out in each individual factory.

I quote, "Comrades, the occupation of the factories must now signify that you are capable of making them function without the bourgeois framework which exploited you....Assure production, distribution: the whole working class must show that a workers' power in possessiosn of its means of production, can establish a real socialist economy....Practically, self-management consists in the worker comrades operating their factories by and for themselves and, consequently, the suppression of the hierarchy of salaries as well as the notions of wage earner and boss."

The leaflet goes on to explain that production should be started up again and coordinated regionally, nationally, and even internationally. To prevent bureaucratization, the councils should be elected and their officers rotated. The authors of the leaflet were quite clear about not wanting socialism in France to resemble the Russian model. They conclude, "DEMONSTRATE THAT WORKERS' MANAGEMENT OF THE ECONOMY IS THE POWER TO DO BETTER FOR EVERYONE WHAT THE CAPITALISTS DID SCANDALOUSLY FOR A FEW."

Obviously the strategy did not take hold but that isn't to say that it was without influence. On the contrary, for ten years, from 1968 to in 1978, the theme of self-management was central to all left political discourse in France. The Socialist Party in particular coopted that theme and promised to promote self-management once in power. Although at first it bitterly resisted, even the Communist Party eventually tried to buy into the idea of self-management for its electoral appeal. Of course these parties were not serious advocates of council communism, but they created an ambiguity around their position in order to benefit from the popularity of the notion of democratizing industrialism. So I think it would be a mistake to see these ideas as falling barren on hostile soil. Their failure was not due to public indifference but to more complex causes rooted in the history of the French left after 1968.

I want to conclude very briefly by reflecting on the significance of these ideas today. If we see the May Events as an outburst of juvenile narcissism or in terms of the Leninist problematic of seizing state power it will of course look like a complete failure. It does not look much more interesting as a final replay of the old Marxist schema of proletarian revolution. But I believe there is something else going on under the surface of the Marxist language that is still relevant today. This is the anti-technocratic critique I have highlighted in these remarks. In saying this I do not want to claim that the May Events held the solution to the problem of technocracy in its hands. It is of course still quite uncertain that the attack on technocracy from above in the student movement and the administrations could have been successfully coordinated with the attack on capitalism from below in the radical wing of the workers' movement. To that extent that idea of self-management put forward in 1968 remains abstract and speculative. But precisely because the Events were unsuccessful, we do not need to know if there was a solution to this thorny problem. What we do know is that the Events launched a whole new approach to politics that lives to this day and that has born fruit in the many social movements around technical issues in such different domains as medicine, the environment, and computerization. These unprecedented struggles and innovations testify to a growing will on the part of the citizens of advanced societies to control their own technical destiny.

WORKERS CONTROL The Czechoslovak Experience Robert Vitak

Unfortunately, events in some of the countries Ramelson had in mind hardly confirm this view; witness the accumulated problems, economic and political, that Czechoslovakia was trying to solve under Dubcek's leadership in 1968, and more recently, and more alarmingly, the unhappy events of December 1970 in Poland. And in Czechoslovakia especially we have seen over the past two years not an expansion but an erosion of the industrial democracy which began to take shape through what has been known as the Prague Spring. The workers councils set up at that time have now been abolished and supremacy of state power in the economy has been reaffirmed. The Socialist industrial manager, Rude Pravo wrote on 29 October '970, is empowered by the socialist state to direct and organize production in his enterprise in a qualified manner in accordance with the society-wide aims and in the interests of all members of the community. He performs his management functions within the socialist production relations which have abolished the contradiction between management and labour. The job of the socialist manager, the article continues, is more demanding than that of his capitalist counterpart, for whenever he makes an important decision he must consider not only the interests of the collective he leads, but also those of the entire national economy . . . Creating a continual harmony between society-wide interests and the interests of the enterprise collective is the feature of the decisionmaking process of a socialist manager. We have here an emphasis on decision-making at the top by a manager who has to "master the art of leading and motivating people correctly and providing the preconditions for developing their working initiative". It was this system of "one-man management" under centralized state control-instituted under very different circumstances in the Soviet Union-that had already proved an unwieldy, undemocratic instrument long before 1968; and while the reference to the interests of the collective is perhaps a concession to criticism of rigid centralization, it is still the managerial and not the democratic voice that will decide. Therefore the dilemma of power still exists, and the whole experience of Czechoslovakia provides an interesting commentary on the realities behind the concept of "workers' power".

The Visible Hand: The Managerial Revolution in American Business ...

The book lays out the task and theme by stating a number of propositions: 1. Modern business enterprise came in when administrative coordination did better than market mechanisms in enhancing productivity and lowering costs. 2. The advantages of coordinating multiple units within a single enterprise could not be realized without a managerial hierarchy. 3. It was the growing volume of economic activities that made administrative coordination more efficient than market coordination. 4. Once a managerial hierarchy does its job, it becomes its own source of permanence, power, and continued growth. 5. Such hierarchies tend to become increasingly technical and professional. 6. Over time, such professional structures become separate from ownership. 7. Professionals prefer long-term stability and growth to short-term gains. 8. Big businesses grew to dominate branches and sectors of the economy, and so doing, altered their structure and that of the economy as a whole.

That came with the railroad in the 1840's and 1850's. Here for the first time one had large enterprises dispersed in space, requiring heavy investment and maintenance in road, rails, tunnels, and bridges, tight organization of rolling stock, and all kinds of passenger and freight arrangements including timely service, mobilization of capital and handling of money income and outlays -- in short a world of its own. Chandler noted here the critical contribution of men trained in the military academies, for armies were even earlier enterprises of vast scale, though more improvisational and transitory in character, and with destructive-predatory rather than constructive objectives. (The only comparable commercial enterprises to the railroads were the canals, but for topographical reasons, these were less important in the United States than in Europe. The one exception was Erie, but even there the waterway was soon lined with railroads. Chandler notes that in the 1840's, only 400 miles of canal were built, to make the nation's total canal mileage something under 4,000. In that same decade, over 6,000 rail miles were completed, making the national total 9,000. Time counted, and railroads were faster and more efficient.)

The introduction of such managerial and organizational techniques into industry waited on gains in scale of enterprise. The traditional manufacturing firm, for example, was a personal or familial operation, assisted by outside supply and demand facilities and initiatives -- the shop writ large. Past a certain threshold, however, ways had to be found to pull the parts together, to oversee, coordinate, and control. In the United States, it was the chemical and even more the automobile manufactures that led the way. Chandler is particularly well informed here because of his earlier work on Du Pont, with its subsequent ownership of a controlling share of General Motors. GM itself tells a fascinating story of transition from personal to corporate enterprise. It started with William C. Durant, a kind of freebooter who pulled together a number of independent manufacturers - Buick, Oldsmobile, Cadillac, Chevrolet et al. -- and did his best to stay on top but ran into impossible financial impasses, personal and corporate. It then fell into the hands of the bankers and moneymen: J.P. Morgan and Company and Pierre du Pont (rich from wartime earnings). And with the aid of manager Alfred Sloan, Jr., they set up a command structure that became a model for all manner of industrial enterprises.

The move to a rational managerial system was bound to encourage professionalization. One of Chandler's merits was not only to call attention to new schools and curricula, but also to show how much could be achieved in the strangest places. Here again, his later comparative work filled out the American story along lines already explored by European scholars: the creation and transformation of professional schools to meet the needs of state bureaucracies; the differences in national achievement; the implications for the larger process of economic growth and development. Again, each industry had its own requirements and opportunities, just as each society had its own areas of preference. The British, who had accomplished much on the basis of apprenticeship and bench learning, were slow to adopt formal class and lab instruction. The Continental countries, especially the Germans, French, and Scandinavians, strained to catch up and learned not only to transform the older branches but to advance in new areas of production.

The growing reliance on professionally trained managers entailed an assault on the structures and habits of personal and familial enterprise. This was particularly true of technologically complex branches of production, which found it easier to hire good people than to tame them. Inevitably, the people who ran the show nursed aspirations that contradicted family control, the more so as such experts often were remunerated by share options that gave them a piece of ownership. Growth, moreover, entailed mobilization of funds, whether via bank loans or public sales of ownership shares, and this too often countered family interests.

Art Kleiner: Professor Chandler's Revolution

The Visible Hand described how a century ago customers suddenly found goods more plentiful and cheap than they had ever been. The book showed the dramatic impact the railroads had on the modern economy. Although the transition started in the 1840s, its most visible changes occurred between 1880 and 1920. Mass manufacturers of everything from typewriters to canned goods learned to bypass or swallow up the networks of jobbers, factors, merchants, and other independent middlemen who had controlled the flow of commerce throughout history. One of the fascinating aspects of The Visible Hand is the examination of how innovation in distribution and marketing preceded production. For example, the United Fruit Company started in the 1890s not with banana plantations, but with a refrigerated transportation network, modeled after those of meat packers, that kept fruit fresh. American Tobacco, Diamond Match, the National Biscuit Company, and Quaker Oats all built marketing networks (and networks of purchasers of farming goods) and then used the profits from sales to finance their new production. They rarely needed outside financing.

The Visible Hand was also a direct attack (signaled by the title) on Adam Smith’s primary notion of a marketplace controlled by no one, but operating for the betterment of all. Professor Chandler didn’t argue that Smith was wrong, but that he was outdated. A global mass market had emerged. In this environment, large corporations had capabilities that smaller, upstart competitors couldn’t match; the visible hand of the large corporation had replaced the invisible hand of the market. This heresy may have cost Alfred Chandler a Nobel Prize in economics, or so Peter Mathias believes. (In 1993, when the prize was preannounced as focused on economic history, Professor Chandler was nominated; but it went to Douglass North and Robert T. Fogel.)

In the final book of his trilogy, 1990’s Scale and Scope: The Dynamics of Industrial Capitalism, Professor Chandler proposed that the same type of evolution took place around the world and was thus an innate feature of capitalism, instead of being some kind of aberration unique to America. Borrowing the phrases of first-mover advantage from economics, he proposed that barriers to entry in a business stem not just from the dominant first-mover’s economies of scale, but also from its economies of scope — the expansion of production capabilities to reach several markets at once, usually by capitalizing on already existing knowledge. International Harvester trounced Ford in the tractor business in 1928, even though Ford was a far more efficient manufacturer. The reason? IH knew, from its plow and spreader business, how to sell to farmers, and Ford did not.

In the perennial war for legitimacy between professional managers and investors, all this puts Professor Chandler firmly on the side of managers, particularly those steeped in production. He dismisses the argument that financial raiders improved corporate performance in the 1980s by forcing managers to break up (or merge) their companies. The ebb and flow of financial markets, in Professor Chandler’s story, is mere froth on the surface of the fundamental force of real-world technology and production, especially in the hands of the largest mass-market corporations. “He has never paid a lot of attention to banks,” notes fellow economic historian Richard John of the University of Illinois at Chicago. Professor Chandler also pooh-poohs the idea that we are moving toward a decentralized, entrepreneurial economy. “If the U.S. thinks it is going to regain global competitiveness through small businesses,” he told Forbes in 1989, “it is fooling itself.”

Conviction Politics and Dynamic Conservatism: Mrs. Thatcher's Managerial Revolution

Les Metcalfe

The main change in British government in the 1980s was that there was no change of government or, more importantly, of prime minis ter. Improving public management was an integral part of Margaret Thatcher's brand of conviction politics. Political continuity provided the conditions for overcoming the dynamic conservatism of public administra tion and implementing irreversible changes. This managerial revolution has redefined the boundaries and relationships between the public and private sectors as well as transforming the public sector itself through the introduction of business models and methods of management.

This paper examines these developments and assesses future prospects by distinguishing four overlapping phases of reform. (1) The Rayner scruti nies of departmental operations. (2) "Lasting Reforms" of departmental systems and structures. (3) The Next Steps programme for the creation of agencies. (4) Structural reorganizations of major public services such as health, education and local government finance. The main thesis is that the reform process is being compromised by its own early successes. The convictions which underpin the reform process have led to the repeated use of management models and methods of managing change which are inappropriate to achieve increasingly ambitious reform objectives.

Manufacturing Rationality: The Engineering Foundations of the Managerial Revolution

Yehouda Shenhav. New York: Oxford University Press, 2000. 247 pp. $49.95.

Manufacturing Rationality begins by asking, What are the ideological roots of modern management? This is an important question for those interested in the social, cultural, and political origins of modern organizations and organization theories. As an answer, Shenhav describes how our modern concept of management, as both an ideology and a practice, was a byproduct of engineers' efforts to legitimize and extend the boundaries of their emerging profession at the turn of the twentieth century. This group of actors, independent of capitalists or the working class, created a new discourse based on instrumental rationality that became not only "the underpinning ideology of management, but a prism through which social and cultural issues were interpreted and determined" (p. 18). Shenhav charts this discourse during the formative years of industrial organizations, from 1880 to 1932, to illustrate how engineers translated their emerging models of engineering rationality from the design and operation of machines to th e design and operation of organizations.

This book provides evidence that modern management's explicit focus on rationality, standardization, and systematization was rooted less in the quest for efficiency than in struggles for legitimacy and power by the emerging profession of engineers as managers. Mainstream management history portrays managerial rationality as a natural and inevitable outcome of modernization (e.g., Chandler, 1977). From this perspective, the role of professional managers evolved naturally between owners and workers as an inevitable solution to the increasing size and complexity of industrial enterprises. The story Shenhav tells is not about the efficient evolution in organizational forms but about the social and political movements that, masked in such rationality, shaped the early years of industrial management. Shenhav argues that the emergence of management in its current form-as well as our explanations for this emergence-rests on the very assumptions of rationality that engineers first introduced into the discourse on management to legitimize and extend their influence in organizations. To Shenhav, modern management represents both an ideology of managerial rationality and a practice of management systems. The ideology of managerial rationality is built from instrumental rationality, which reduces human action to a set of cause-and-effect relationships and gives them meaning in the organized pursuit of efficiency and profit. The practice of management systems entails the development and application of explicit routines to rationalize human action within organizations, beginning with the shopfloor systematization of work typical of scientific management but extending to more white-collar activities such as cost-accounting systems and standardized hiring and reward practices.

Management systems, strikes and the coverage of “labor unrest” in the engineering literature during the Progressive era

Author(s): Ishak Saporta, Yehouda Shenhav

Journal: Management Decision

ISSN: 0025-1747

Year: Jun 2001 Volume: 39 Issue: 5 Page: 407 - 414

DOI: 10.1108/EUM0000000005476

Publisher: MCB UP Ltd

Abstract: This article provides first-hand, empirical data to demonstrate that during the Progressive period, mechanical engineers used labor unrest as a rhetorical device to increase public interest in management systems. This political strategy was necessary, given the objection of manufacturers to the installation of management systems in industrial firms. The study is based on systematic analysis of two magazines in which the study of management was first codified and crystallized: the Engineering Magazine, and the American Machinist.

In 'Systems and Labor Politics' of Yehouda Shenhav's Manufacturing Rationality: The Engineering Foundation of the Managerial Revolution( Oxford University Press,1999), the author writes, ' However, one must appreciate the dialectical--Janus-like--nature of the relationship between labor unrest and management systems. On the one hand, labor unrest was used by mechanical engineers to promote the rhetoric of systems...clearly point to the intensification of the system discourse in the periods of intense strikes. On the other hand, it was through the filter of systems perspective that labor unrest was, in turn, viewed and conceptualized as a purely mechanical, rather than political issue. (p. 172)

Oxford University Press: Manufacturing Rationality: Yehouda Shenhav

The Vanishing Hand -- Abstract

In The Visible Hand (1977) and subsequent works, Alfred Chandler focused the spotlight on the large, vertically integrated corporation. He did this not merely to chronicle the rise of that institution but also to explain it and to give it a prominent place in American economic growth during the last century and a half. The force and originality of Chandler’s ideas coalesce in the book’s title, a provocation in the direction of Adam Smith (1976). Smith had predicted an increasingly fine division of labor as the response to a growing extent of the market; and, although he was actually quite vague on the organizational consequences of the division of labor, Smith was clear in his insistence on the power of the invisible hand of markets to coordinate economic activity. Chandler’s account appears to challenge this prediction: internal organization and managerial authority became necessary to coordinate the industrial economy of the late nineteenth and early twentieth centuries. The visible hand of managerial coordination had replaced the invisible hand of the market.

The basic argument — the vanishing-hand hypothesis — is as follows. Driven by increases in population and income and by the reduction of technological and legal barriers to trade, the Smithian process of the division of labor always tends to lead to finer specialization of function and increased coordination through markets, much as Allyn Young (1928) claimed long ago. But the components of that process — technology, organization, and institutions — change at different rates. The managerial revolution Chandler chronicles was the result of such an imbalance, in this case between the coordination needs of high-throughput technologies and the abilities of contemporary markets and contemporary institutions to meet those needs. It was an organizational solution appropriate to its time and place. But with further growth in the extent of the market and the evolution of institutions to support exchange, the central management of vertically integrated production stages is increasingly succumbing to the forces of specialization.

Robert J. Samuelson - Capitalism's Next Stage - washingtonpost.com

The rise of big business is one of the seminal events in American history, and if you want to think about it intelligently, you consult historian Alfred D. Chandler Jr., its preeminent chronicler. At 88, Chandler has retired from the Harvard Business School but is still churning out books and articles. It is an apt moment to revisit his ideas, because the present upheavals in business are second only to those of a century ago.

Until Chandler, the emergence of big business was all about titans. The Rockefellers, Carnegies and Fords were either "robber barons" whose greed and ruthlessness allowed them to smother competitors and establish monopolistic empires. Or they were "captains of industry" whose genius and ambition laid the industrial foundations for modern prosperity. But when Chandler meticulously examined business records, he uncovered a more subtle story. New technologies (the railroad, telegraph and steam power) favored the creation of massive businesses that needed -- and in turn gave rise to -- superstructures of professional managers: engineers, accountants and supervisors.

The rise of big business involved more than tycoons. Its central feature was actually the creation of professional managers. Like many great truths, this one seems obvious after someone has pointed it out.

Fourth Annual E. Leonard Arnoff Memorial Lecture

Russell L. Ackoff, Chairman of the Board of INTERACT: The Institute of Interactive Management, recently delivered the fourth E. Leonard Arnoff Memorial Lecture on Practice in the Management Sciences at the College of Business Administration of the University of Cincinnati. The topic of the lecture was “Systems Thinking: An Intellectual and Managerial Revolution” in which Dr. Ackoff described and explained the fundamental nature of the transformation of management needed in today’s environment. His presentation centered upon the need to manage interactions of system components rather than just managing each component individually. More than 200 local operations research professionals, faculty and students attended the speech and reception.

Dr. Ackoff is the Anheuser-Busch Professor of Marketing at the Olin School of Business at Washington University in St. Louis and the Anheuser-Busch Professor Emeritus of Management Science at The Wharton School at the University of Pennsylvania. He has an undergraduate degree in architecture and a Ph.D. in Philosophy of Science for the University of Pennsylvania. He has authored or co-authored nineteen books and over 200 articles in journals and books. Dr. Ackoff was a charter member and former president of the Operations Research Society of America and former president of the Society for General Systems Research. He has honorary Doctorates of Science from the University of Lancaster (UK) and Washington University and has been elected a member of the Academy of Natural Sciences of the Russian Federation. His work in research, consulting, and education has involved more than 250 corporations and 50 government agencies in the U.S. and abroad.

The series of lectures is dedicated to E. Leonard Arnoff, former dean of the College of Business Administration at the University of Cincinnati, a partner in Ernst and Whinney (now Ernst and Young), and coauthor of a seminal book in operations research with C. West Churchman and Dr. Ackoff. The Department of Quantitative Analysis and Operations Management sponsored the event with co-sponsorship support from a grant from Omega Rho International Honor Society for Operations Research and Management Science related areas. Previous Arnoff lecturers were Robert E. D. (Gene) Woolsey, Thomas M. Cook and Saul I. Gass.

Managers after the era of organizational restructuring

towards a second managerial revolution?

Bill Martin

Flinders University, Adelaide, Australia, Bill.Martin@flinders.edu.au

Managers’ careers and career orientations have changed significantly since the era of organizational change that began around 20-30 years ago. This article focuses on how managers have responded to these changes. It suggests a significant change in the kinds of ‘capital’ that managers mobilize, and the uses to which they put it. At least some managers now mobilize a form of ‘social capital’ in the form of reputations in informal networks. However, this reputational capital can be difficult to stabilise and therefore risky to hold. Managers therefore attempt to convert it into wealth - economic capital. The article illustrates these arguments using interview data from a longitudinal study of Australian managers. The image of the first ‘managerial revolution’ is most closely tied to the figure of James Burnham, a former Trotskyist writing in the 1940s. Burnham argued that the Soviet Union had undergone such a revolution, making managers a new dominant class. He saw statist political movements in capitalist societies (fascist Germany, the New Deal) as representing a Western version of the managerial revolution (Burnham 1962). Burnham’s argument falls into a group of accounts of the time that saw managers achieving a structural location in industrial societies that placed them at the centre of their societies, and hence on the way to becoming a new dominant class (Szelenyi and Martin 1988). While these statist tendencies have been dissolved or limited with time, the idea that managers did manage to achieve a new class position for themselves during the 20th century has had a wide influence on class theory. The focus on managers’ structural location in Burnham’s analysis remained in more contemporary accounts, though the emphasis shifted from the importance of state-capital connections to a return to the consequences of the separation of ownership and control within capitalist enterprises. Indeed, most recent class analyses of managers in contemporary capitalism see the separation of ownership and control as the precondition for what we might call the first managerialist project, along with the growth in size and complexity of firms (e.g., Erikson and Goldthorpe 1992, Savage et al. 1992, Wright 1985). In outline, this project focused around the idea that managers would be specialist employees who made key decisions necessary for the operation of firms, including what came to be known as investment, production, finance, labour relations, and marketing decisions. It involved the claim that long careers in single organizations were the appropriate basis for making managerial decisions, possibly with some prior formal education such as, eventually, the MBA. Hence, this managerialist project was based around the establishment and stabilisation of organizational internal labour markets for managers (see Martin 1998a).1 In this ideal-typical form, it was successful to the extent that managers achieved: • de facto lifetime employment guarantees and effective insurance against unforseen inability to complete a career; • secure, predictable career paths within organizations; • relatively high incomes; • relatively generous retirement benefits. Clearly, all of these depended on organizations that were hierarchical and in which organizational structure was stable (though with the possibility of expansion along the structural principles that already defined organizations). that are grounded

Intellectual capital valorization - criteria for the managerial performance in the knowledge-based society

Since 1989, Peter Drucker argued that “the transition of the developed capitalist countries thorough the knowledge based society was the biggest change that took place into the modern world”. Taking again the idea in 1993, the same author emphasized that „the basic economic resource (...) is no longer the capital, or the nature, or work. It is and will be the knowledge”. So, it was change the nature of wealth and its source, which brings the opportunity of some new points of view on firms activities and on the way they are managed. More and more individuals and organizations at different levels (local, regional or global) are talking about the knowledge – based society as the context of another two interrelated processes: the globalization of the economy and the managerial revolution. Those two last processes and concepts have also recently entered into the vocabulary of the academic discourse and into the managerial practice sphere. The resemblances do not stop here, but they accompany the whole process of emergence and crystallization of the two notions; we can see a sinalagmatic development pattern here, because: (1) there still are controversies about the moment they appeared and the content of the terms; (2) the main determinant – of the economic globalization and of the managerial revolution as well – is the emergence of the knowledge-based society; (3) in content, both of them are social revolutions; (4) the positive effects of the acceptance and appropriation of there objective character: ensuring firm competitiveness; intensifying international flows of goods, services, capitals, persons and information; creating the premises for economic and technical-scientific co-operation development, etc.; (5) the negative effects induced from the social point of view: maintaining and growing the gaps that already exist regarding the economic development levels; the distribution of power and wealth; the drastic cutting off of the work places, etc.; (6) the multiple faces and dimensions, advantages and disadvantages, opportunities and threats for firms and there management, making necessary a integrative and interdisciplinary approach, capable to unify different elements from management, sociology, psychology, international economics, law, etc.

Jeet Heer, "McNamara as War Manager"

McNamara also forcefully reorganized the military by bringing it under the control of civilian management. As conservative writer James Burnham noted in a 1966 article in National Review, McNamara’s goal was to “make the defense establishment as closely as possible an integral element of our advanced managerial economy. The hotly debated hallmarks of the McNamara regime – program definition, cost-efficiency, systems analysis, centralized procurement, computerized inventory control, ultra-speed internal communications, etc – are the routine methods of modern management as it operates in our great corporations.” Burnham’s article was in fact a rare journalistic celebration of McNamara, often attacked in those years for bringing unwanted change to the military. But Burnham was the appropriate writer to pen a paean to McNamara. In 1941, Burnham had published a book called The Managerial Revolution, which argued that traditional family oriented capitalism (for example, the Ford company in its early years) was being replaced by the rule of a new elite defined by its technical expertise. McNamara’s entire career was “the Managerial Revolution” in action. The New York Review of Books

December 7, 1967: SAME OLD NEW CLASS

The emergence of the managerial group disturbs the simple dialectical antinomy of Capitalists vs. proletariat, thereby disturbs the revolutionary élan. of the intellectuals who want to become socialist managers themselves. It is confusing for them to find these managers already sitting behind the barricades instead of the capitalist owners of the means of production. The fight then would become a fight between an in-group of managers and an out-group of would-be managers, an image which is not conducive to revolutionary élan.

The fact of the matter is that a kind of "socialism" has already arrived in the US but in a rather disappointing form: Galbraith has described it in The New Industrial State:quasi-public agencies called corporations in the private sector; "quasi-private" governmental agencies, in the public sector; (they are quasi-private because they cooperate closely with corporations); all are parts of the industrial-governmental-military establishment. Corporations and public agencies are cooperating and competing with each other for the accumulation of power; the profit motive is by no means dead but it is amalgamated with and obliterated by the drive for power. And the power is exercised not by atomistic independent individuals but by large-scale organizations; whether they are called GM, ITT, or "Armed Forces" makes very little difference. In all these organizations, managers, bureaucratic administrators of the funds and the assets of others, are making the basic decisions. And these decisions, whether they concern advertising, products, services, war, or taxation determine our fate.

March 21, 1974: ALLIANCE WITH GALBRAITH?

The thrust of Galbraith's work is and has always been an attack against orthodox laissez-faire economics. Galbraith is perhaps the best known representative of a long line of economists who emphasized the changes in American capitalism brought about by the growing size of corporations: internally, the separation of management and ownership and the professionalization of management of which the technostructure is the most recent manifestation; externally, the growing importance of market and monopoly power. This is what Galbraith means by the perhaps not too fortunate term "the planning system." It does not reduce Galbraith's importance to note that these ideas were already advanced in the 1930s, e.g., by Berle and Means (The Modern Corporation and Private Property), by Arthur R. Burns (The Decline of Competition), by James Burnham (The Managerial Revolution). These ideas represented an attack against laissez-faire economics and the free market economy if the free market does not function any more because the owners are not any more the decision makers and because of the market power of the management of large corporations, the public purpose can only be ensured by strict government control or even socialization. This is the conclusion for which Berle and Means prepared the ground already in the 1930s. Sweezy would hardly disagree with this conclusion. The Debate on Corporate Governance: An Historical Analysis of Berle and Means Contributions The Journal of Behavioral and Applied Management – Summer/Fall 1999 – Vol. 1(1) In the modern huge corporation, business enterprise has come to be primarily a problem of administration and management, while the aspect of trading has been reduced to a minimum (Means, 1933: 11).

In this respect, technology has been a driving force determining the shape of such a transformation along two steps. First, co-ordination of economic activity through administration rather than market trading as the essential feature of the factory system during the 19th century. Second, the development of the corporation as a form of business organization carrying further the process started by the factory system and resulting in the corporate revolution during the 20th century (Ware and Means, 1936: 12-13).

To explain this, Means turned to the Great Depression. In doing so, the main problem seemed to be in discovering why, in the short three year period from 1929 to 1933, a tremendous unused capacity to produce existed side by side with dire want and distress from the lack of the very things which could have been produced. Why did this "poverty in the midst of plenty" develop and why did it continue? (Means, 1935a: 73). But, to explore the major causes of the Great Depression a reexamination of the structure of American economy was necessary. Conducting an empirical study, Means concluded that a significant distribution of stock ownership took place from 1916 to 1921, increasing both the number of stockholders and the proportion of corporate industry owned by persons of moderate means. While the number of stockholders continued to increase, the United States gradually became "a nation of stockholders" (Means, 1930: 591).

Comparing the result of the great dispersion of stock ownership in America to the legacy of the French Revolution for landholding, Means then turned to the changed meaning of ownership. The ownership of industrial wealth and the control over that wealth are coming to lay less and less in the same hands. Amid such a revolutionary change, ownership of wealth without appreciable control, and control of wealth without appreciable ownership, appeared to be the logical outcome. The increasing diffusion of stock ownership in the largest American corporations was also responsible for the development of a new condition in terms of control. Formerly assumed to be merely a function of ownership, control now appeared to be a clearly distinguishable factor (Means, 1931b: 96).

As revolutionary as that which occurred during the industrial revolution, the separation of ownership and control involved a change in the organization of large enterprises. Since the giant corporation has come to be commonplace in American economic life, a society in which production is governed by blind economic forces fades away in favor of one in which production is carried out under the ultimate control of management. That, in turn, changed the meaning of capital from tangible goods to that of an organization built in the past and available to function in the future (Means, 1931a: 37). Presenting a challenge to the classical economic theory, this new revolution demanded a shift of emphasis from

analysis in terms of competition to analysis in terms of control. Indeed, it is impossible to understand the structure of American economy without grasping the concept of control. A relatively new economic concept, this term embrace five major types: 1) control through almost complete ownership; 2) majority control; 3) control without majority ownership; 4) minority control; and 5) management control. Of these, it was the last type which attracted Means the most because the management of a large corporation may be able to exercise a significant degree of control over the use which is made of resources without itself owning any significant volume of assets (Means, 1962c: 120).

At the same time, the concept of control is similar to what the political scientists call power because the most essential element of the new economy is the element of power. Nevertheless, the term control is most suitable for business administration because "power" is solely a term of position whereas "control" is a term of both position and action since the verb "to control" corresponds to the phrase "to exercise power." The close association between control and policy refers to a power relationship that exists among individuals and groups in an enterprise, and emphasizes the ability to influence the firm’s policies (Means, 1939a: 111).

In this manner, the concept of control includes both market control and nonmarket control. Market control only partly dominates the firm’s policies, and in such a case, an understanding of the concept of control would be covered by an analysis of markets. Still, the major policies developed in large administrative organizations, such as an army or a big business corporation, usually are subject to a very considerable measure of nonmarket control. In general, nonmarket control could be exercised through establishing a climate of opinion within which policies are developed (Means, 1939b: 154).

In the modern huge corporation, business enterprise has come to be primarily a problem of administration and management, while the aspect of trading has been reduced to a minimum (Means, 1933: 11).

In this respect, technology has been a driving force determining the shape of such a transformation along two steps. First, co-ordination of economic activity through administration rather than market trading as the essential feature of the factory system during the 19th century. Second, the development of the corporation as a form of business organization carrying further the process started by the factory system and resulting in the corporate revolution during the 20th century (Ware and Means, 1936: 12-13).

To explain this, Means turned to the Great Depression. In doing so, the main problem seemed to be in discovering why, in the short three year period from 1929 to 1933, a tremendous unused capacity to produce existed side by side with dire want and distress from the lack of the very things which could have been produced. Why did this "poverty in the midst of plenty" develop and why did it continue? (Means, 1935a: 73). But, to explore the major causes of the Great Depression a reexamination of the structure of American economy was necessary. Conducting an empirical study, Means concluded that a significant distribution of stock ownership took place from 1916 to 1921, increasing both the number of stockholders and the proportion of corporate industry owned by persons of moderate means. While the number of stockholders continued to increase, the United States gradually became "a nation of stockholders" (Means, 1930: 591).

Comparing the result of the great dispersion of stock ownership in America to the legacy of the French Revolution for landholding, Means then turned to the changed meaning of ownership. The ownership of industrial wealth and the control over that wealth are coming to lay less and less in the same hands. Amid such a revolutionary change, ownership of wealth without appreciable control, and control of wealth without appreciable ownership, appeared to be the logical outcome. The increasing diffusion of stock ownership in the largest American corporations was also responsible for the development of a new condition in terms of control. Formerly assumed to be merely a function of ownership, control now appeared to be a clearly distinguishable factor (Means, 1931b: 96).

As revolutionary as that which occurred during the industrial revolution, the separation of ownership and control involved a change in the organization of large enterprises. Since the giant corporation has come to be commonplace in American economic life, a society in which production is governed by blind economic forces fades away in favor of one in which production is carried out under the ultimate control of management. That, in turn, changed the meaning of capital from tangible goods to that of an organization built in the past and available to function in the future (Means, 1931a: 37). Presenting a challenge to the classical economic theory, this new revolution demanded a shift of emphasis from analysis in terms of competition to analysis in terms of control. Indeed, it is impossible to understand the structure of American economy without grasping the concept of control. A relatively new economic concept, this term embrace five major types: 1) control through almost complete ownership; 2) majority control; 3) control without majority ownership; 4) minority control; and 5) management control. Of these, it was the last type which attracted Means the most because the management of a large corporation may be able to exercise a significant degree of control over the use which is made of resources without itself owning any significant volume of assets (Means, 1962c: 120).

At the same time, the concept of control is similar to what the political scientists call power because the most essential element of the new economy is the element of power. Nevertheless, the term control is most suitable for business administration because "power" is solely a term of position whereas "control" is a term of both position and action since the verb "to control" corresponds to the phrase "to exercise power." The close association between control and policy refers to a power relationship that exists among individuals and groups in an enterprise, and emphasizes the ability to influence the firm’s policies (Means, 1939a: 111).

In this manner, the concept of control includes both market control and nonmarket control. Market control only partly dominates the firm’s policies, and in such a case, an understanding of the concept of control would be covered by an analysis of markets. Still, the major policies developed in large administrative organizations, such as an army or a big business corporation, usually are subject to a very considerable measure of nonmarket control. In general, nonmarket control could be exercised through establishing a climate of opinion within which policies are developed (Means, 1939b: 154).

Townhall.com::Redirecting a managerial class::By William F. Buckley

There has been speculation over two generations about who actually controls business enterprise. James Burnham, in l940, argued the thesis of the Managerial Revolution. It isn't the stockholders who run things; it is the people they nominate to serve in management, people they almost immediately lose control of, he argued. This is so because keeping up with what they do, let alone supervising what they do, is a practical impossibility.

Stockholders are left with the power to remove, which can be likened to the power of Congress to impeach. They have the advantage of a hypothetical watchdog, requiring the execution of certain formalities, like a company's annual reports. What was envisioned as supplementing stockholders' rights was the concept of the public's rights. A WorldCom CEO who dissimulates damages his stockholders, but hurts also a public that, taking heed of what happened at WorldCom Inc., hesitates to back other ventures, slowing down the dynamic of capitalism and inducing skepticism about the very idea of private enterprise.

Congress is busy trying to come up with revised systems of auditing. The most prominent reform being discussed is outlawing the accounting firm that acts in a second capacity as company consultant. That idea would seem to be commendable, though the practice of it could be hard on the smaller of the 16,000 publicly traded companies that would now have to add an entire service echelon to the cost of doing business.

What is needed quickly and extensively is: punishment.

In the late l930s, no less a figure than a former president of the New York Stock Exchange went to jail for the misuse of funds. This is not a call to the denial of due process, but a call to the legitimate use of public punishment as a retributive act.

Richard Whitney was sent to jail in l938. We need his successors to go to jail in 2002. The alternative is to sit by, supine in the gestation of a managerial class that violates the very idea of a capitalist class bound by laws and practices which make it a proud part of a free economy, whose leaders in large enterprises have done their best to discredit.

This is a very real public issue and inevitably will separate many Republicans from many Democrats. The possibilities open to demagogues are great. But the Republicans would do eternal disservice to their responsibilities if they failed to take action against the great post-Marxian challenge to capitalism.

Neoconservativism:The Cult of Techno-Socialism

Historically, FDR's overtly socialistic policies clashed with the anti-statist sentiments of many Americans. Yet, neoconservatives, who have been consistently characterized as "anticommunist" and "pro-American," supported the New Deal. Irving Kristol, the "godfather of neoconservatism," states in his book Neoconservatism: The Autobiography of an Idea that neocons: "...accepted the New Deal in principle..." (x). Later in his book, Kristol writes:

“In a way, the symbol of the influence of neoconservative thinking on the Republican party was the fact that Ronald Reagan could praise Franklin D. Roosevelt as a great American president-praise echoed by Newt Gingrich a dozen years later, when it is no longer so surprising.” (379)

Why were neoconservatives so amicable towards the socialism of the New Deal? The answer is because Roosevelt's Marxist proclivities harmonized with the neoconservative variety of Technocracy. It is interesting to note that "godfather" Kristol was a Trotskyist in his youth. Kristol makes it clear that he is unrepentant: "I regard myself lucky to have been a young Trotskyist and I have not a single bitter memory" (13). The statist tradition found in Marxism is also carried on by the neocons. This is another point made clear by Kristol: "Neocons do not feel that kind of alarm or anxiety about the growth of the state in the past century, seeing it as natural, indeed inevitable" ("The Neoconservative Persuasion").

Marxist economic theory remains firmly embedded within neoconservative ideology. Several neoconservative ideologues have espoused socialist ideas. Arch-neocon William F. Buckley has written: " Congress shall appropriate funds for social welfare only for the benefit of those states whose per capita income is below the national average" (qutd. in Epperson 49). Commenting on Buckley's statement, researcher Ralph Epperson writes:

“This writer [Buckley] advocated a newer brand of Marxism: "From each state according to its ability, to each state according to its needs" (emphasis added). This writer advocated that the national government divide the wealth, taking it from the wealthier states and giving it to the less productive. Pure Marxism, except the writer involved both the state and the federal governments rather than just the federal government as Marx envisioned. This is only expanding Marx one step: the result is the same. Property is distributed by the government just as before. The shock is that this new thought came from the pen of William F. Buckley, Jr., hardly a paragon of Marxism. But notice that Buckley's intent is the same as that of Marx: to use government to redistribute Consumption and Capital Goods. (Epperson 49)”

No doubt, these Marxist proclivities were a consequence of neoconservativism's technocratic heritage. Of course, there are those who would argue that the technocratic tradition has been at variance with Marxism. Indeed, technocratic and Marxist theoreticians have feuded on occasion. Yet, the common thread of state socialism binds both, as is evidenced by their closely aligned economic policies and virtually identical outcomes. The petty differences between theoreticians become inconsequential. Technocracy was a logical outgrowth of earlier variants of socialism. The ideational continuum appears to have been a drift from Bellamyism to Technocracy to New Deal socialism. Neoconservativism is the latest segment in this larger continuity of thought.

Dynamics at the top of large enterprises Résumé / Abstract Inspired by the example of Norbert Elias to use a long term perspective, in this article the thesis of the 'managerial revolution' is studied. The method used is that of comparing the agreements and differences between a limited number of case-histories about firms. It is argued that during the nineteenth century giant corporations have been governed by their owner(s). The complexity of the management tasks was no major reason for the strengthening of the position of managers, the main cause was the fragmentation of stock-ownership. During the last two decennia of the twentieth century the availabiltity of great amounts of investment capital and the invention of new techniques to concentrate these capitals made it possible to buy all the shares of giant companies. Big consulting firms do assist new owners to govern the management hierarchies of these companies. The 'managerial revolution' was just a phase in the long term development of the government of giant firms

The Big Clash of the XXIst Century

The "class struggle" Capital vs. Talent

"Capital versus Talent - The battle that's reshaping business" is a seminal article published at Harvard Business Review (July 2003 edition), authored by Professor Roger L. Martin, dean of Joseph L. Rotman School of Management of University of Toronto, and Mihnea C. Moldoveanu, director of the Centre for Integrative Thinking at the Rotman School. "Now, before the wounds from that epic class struggle (labor against capital, of the twentieth century) have fully healed, a fresh conflict has erupted. Capital and Talent are falling out, this time over the profits from the knowledge economy", wrote Dean Rotman and Mihnea. And they pointed out that "companies cannot generate profits without ideas, skills and talent from knowledge workers, and they have to bet on people - not technologies, not factories, and certainly not capital. Gurusonline.tv interviewed Dean Roger Martin about this hot topic.

The Attributes the Professional Manager

From this vast complex of change, Mr. Swensrud singles out two developments of major significance: (1) The day of the professional manager is here; (2) modern management rests increasingly on fitting together men and technology. He then goes on to point out that in many fields in American industry today, an increasing number of management jobs are being filled by men who were engineers hy original training. We all know this to he true, although, at least in the chemical and chemical process industries, there are many in managerial and administrative posts who were trained as chemists rather than as chemical engineers. We believe Mr. Swensrud would agree. And now to the real meat of his comments. Their signiiicance is ohvious. . . . every management man knows that it is dl too easy for the engineer and the scientist to he narrowly trained and oriented, unsuited for taking on management responsibilities because of his lark of broad knowledge and understanding of tho nlsny other phases of husincss. Knowledge of technology is important in modern industry, but the engineer nlouc is apt to hen mere technician. The engineor who is going to he more than n skiiled technician has to broaden his training and his understanding in at least three important ways. One, he has to undentand the meshing of functions in a business enterprise. He has to know the interrelations of production, marketing, Iinance, human relations; the prohlems raised by the relationships; and the ways in which the profeasional manager endenvors ta deal with these prohlemn. Two, he has to underatand the limitations of the strictly technical approach to problems, and to appreciate how, in favorable circumstances, imagination may break through these limitations . . . Three, he has to understand that the management of businogg enterprise is not only the organization of matcrialn, equip ment, and proces8e8. Even more important, it is the organization of human beings in dective working groups. How to get people to do things is the prime question in every discussion of labor relatiom, in every discussion of the admiuistration of salesmen, in every discussion of supplier-customer relations, in just ahout every discussion of organization and management.

The Classes of the New

The Bureaucrats – Max Weber (1910)

‘Office holding is a ‘vocation’. This is shown … in the requirement of a firmly prescribed course of training … and in the … special examinations which are prerequisites of employment. Furthermore, the position of an official is in the nature of a duty. … Entrance into an office [job], including one in the private economy, is considered an acceptance of a specific obligation of faithful management in return for a secure existence. … Modern loyalty is devoted to impersonal and functional purposes. …

Whether he is in a private office or a public bureau, the modern official always strives and usually enjoys a distinct social esteem as compared with the governed. His social position is guaranteed by the prescriptive rules of rank order …’

Max Weber, Essays in Sociology, pages 198-199.

The Scientific Managers – Frederick Winslow Taylor (1911)

‘[No] … one workmen [has] the authority to make other men cooperate with him to do faster work. It is only through enforced standardisation of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and of enforcing this cooperation rests with the management alone. The management must supply continually one or more teachers to show each new man the new and simpler motions, and the slower men must be constantly watched and helped until they have risen to their proper speed. All of those who, after proper teaching, either will not or cannot work in accordance with the new methods and at the higher speed must be discharged ... The management must also recognise the broad fact that workmen will not submit to this more rigid standardisation and will not work extra hard, unless they receive extra pay for doing it.’

Frederick Winslow Taylor, The Principles of Scientific Management, page 83.

The Engineers – Thorstein Veblen (1921)

‘In the beginning … of the Industrial Revolution, there was no marked division between the industrial experts and the business managers. … But from an early point in the development [of capitalism] there set in a progressive differentiation, such as to divide those who designed and administered the industrial processes from those others who designed and managed the commercial transactions and took care of the financial end. …

This division between business management and industrial management has continued to go forward, at a continually accelerating rate, because the special training and experience required for any passably efficient organisation and direction of these industrial processes has continually grown more exacting, calling for specialised knowledge and abilities on the part of those who have this work to do and requiring their undivided interest and their undivided attention to the work at hand. But these specialists in technological knowledge, abilities, interest, and experience … - inventors, designers, chemists, mineralogists, soil experts, crop specialists, production managers and engineers of many kinds and denominations – have continued to be employees of … the captains of finance, whose work it has been to commercialise the knowledge and abilities of the industrial experts and turn them to account for their own gain.’

Thorstein Veblen, The Engineers and the Price System, pages 76-77.

‘These expert men, technologists, engineers … make up the indispensable General Staff of the industrial system; and without their immediate and unremitting guidance and correction the industrial system would not work. It is a mechanically organised structure of technical processes designed, installed, and conducted by these production engineers. Without them and their constant attention the industrial equipment, the mechanical appliances of industry, will foot up to just so much junk.’

Thorstein Veblen,The Engineers and the Price System, pages 82-83.

The Fordist Worker – Henry Ford (1922)

‘I am now most interested in fully demonstrating that the ideas we have put into practice [at the Ford Motor Company] are capable of the largest application – that they have nothing peculiarly to do with motor cars … but form something in the nature of a universal code.’

Henry Ford, My Life and Work, page 3.

‘The net result of the application of … [the] principles [of the assembly-line] is the reduction of the necessity for thought on the part of the worker and the reduction of his movements to a minimum. He does as nearly as possible only one thing with only one movement.’

Henry Ford, My Life and Work, page 80.

‘… to the majority of minds, repetitive operations hold no terrors. In fact, to some types of mind … the ideal job is one where the creative instinct need not be expressed. … The average worker … wants a job in which he does not have to put forth much physical exertion – above all, he wants a job in which he does not have to think.’

Henry Ford, My Life and Work, page 103.

‘[Our policy of raising wages] … was a sort of prosperity-sharing plan. But on conditions. The man and his home had to come up to certain standards of cleanliness and citizenship. … the idea was that there should be a very definite incentive to [morally] better living and that the very best incentive as a money premium on proper living. A man who is living alright will do his work alright.’

Henry Ford, My Life and Work, page 12

The Managerial Class – James Burnham (1941)

‘We may often recognise them as ‘production managers’, operating executives, superintendents, administrative engineers, supervisory technicians; or, in government (for they are to be found in governmental enterprise just as in private enterprise) as administrators, commissioners, bureau heads, and so on. … [The] managers … [are] those who already … are actually managing, on its technical side, the actual process of production, no matter what the legal and financial form – individual, corporate, governmental – of the process.’

James Burnham, The Managerial Revolution, page 81.

‘The managers … naturally tend to identify … the salvation of mankind with their assuming control of society. Society can be run, they think, in more or less the same way that they know they … can run, efficiently and productively, a mass-production factory.’

James Burnham, The Managerial Revolution, page 177.

The Entrepreneurs – Joseph Schumpeter (1942)

‘[The] … function of entrepreneurs is to reform or revolutionise the pattern of production by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of materials or a new outlet for products, by reorganising an industry and so on. … To undertake such new things is difficult and constitutes a distinct economic function, first, because they lie outside of the routine tasks which everybody understands and, secondly, because the environment resists in many ways that vary, according to the social conditions, from simple refusal to finance or to buy a new thing, to physical attack on the man who tries to produce it. To act with confidence beyond the range of familiar beacons and to overcome that resistance requires aptitudes that are present in only a small fraction of the population and that define the entrepreneurial type as well as the entrepreneurial function. This function does not essentially consist in either inventing anything or otherwise creating the conditions which the enterprise exploits. It consists in getting things done.’

Joseph Schumpeter, Capitalism, Socialism and Democracy, page 132

The Organisation Man – William Whyte (1956)

‘These people only work for The Organisation. They are the … mind and soul of our great self-perpetuating institutions. …

The corporation man is the most conspicuous example … [of how] the collectivisation so visible in the corporation has affected almost every field of work. Blood brother to the business trainee off to join Du Pont is the seminary student who will end up in the church hierarchy, the doctor headed for the corporate clinic, the physics PhD in a government laboratory, the intellectual on the foundation-sponsored team project, the engineering graduate in the huge drafting room at Lockheed, the young apprentice in a Wall Street law factory.

… Listen to them talk to each other over the front lawns of their suburbia and you cannot help but be struck by how well they grasp the common denominators which bind them.’

William Whyte, The Organisation Man, page 8.

‘Look at a cross section of [managers’] profiles and you will see three denominators shining through: extroversion, disinterest in the arts, and a cheerful acceptance of the status quo.’

William Whyte, The Organisation Man, page 183.

The Specialists – Ralf Dahrendorf (1957)

‘In the enterprises of post-capitalist society, … [a] complex system of delegation of responsibility obliterates … the dividing line between positions of domination and subjection. … there are … groups that stubbornly resist allocation to one or the other quasi-group. One of these consists of the “staff” of the enterprise, the engineers, the chemists, physicists, lawyers, psychologists, and other specialists whose services have become an indispensable part of production in modern firms. … the class situation of specialists in the enterprise remains as uncertain as the class situation of intellectuals in society. They are neither superordinates nor subordinates; their positions seem to stand beyond the authority structure. Only insofar as they can be identified as (often indirect) helpers of management, can they be called a marginal part of the ruling class of the enterprise.’

Ralf Dahrendorf, Class and Class Conflict in an Industrial Society, page 255.

The New Class – J.K. Galbraith (1958)

‘The New Class is not exclusive. … Any individual whose adolescent situation is such that sufficient time and money are invested in his preparation, and who has at least the talents to carry him through the formal academic routine, can be a member. …

Some of the attractiveness of membership in the New Class … derives from a vicarious feeling of superiority … However, membership in the class unquestionably has other and more important rewards. Exemption from manual toil; escape from boredom and confining and severe routine; the chance to spend one’s life in clean and physically comfortable surroundings; and some opportunity for applying one’s thoughts to the day’s work …

This being so, there is every reason to conclude that the further and rapid expansion of this class should be … the major social goal of the [affluent] society.’

John Kenneth Galbraith, The Affluent Society, pages 275-276.

The Industrial Managers – Clark Kerr (1960)

‘Industrial managers, private or public, and their technical and professional associates … are the “vanguard [party]” of the future. It is they who largely create and apply the new technology, who determine the transformations in skills and responsibilities, who influence the impact of such changes upon the work force and who exercise leadership in a technological society.’

Clark Kerr, John Dunlop, Frederick Harbison and Charles Myers, Industrialism and Industrial Man, page 30.

‘Management … includes entrepreneurs, managers, administrators, engineers and professional specialists who hold the top positions in an enterprise. In this hierarchy, the organisation builder plays a critical role. He may be the owner of the business, a professional private manager or a government official. He is the keystone in the arch of management …’

Clark Kerr, John Dunlop, Frederick Harbison and Charles Myers, Industrialism and Industrial Man, page 134.

‘There is … no precise dividing line between the managerial group and the industrial labour force. … In some cases foremen are members of the management; in others they are the highest ranking members of the labouring class. … With this qualification, the working force may said to include the following: manual labour of all skill levels, [and] clerical workers … whereas administrators, professional employees, engineers, and scientists are clearly in the managerial category.’

Clark Kerr, John Dunlop, Frederick Harbison and Charles Myers, Industrialism and Industrial Man, page 165.

The Order-Givers – Cornelius Castoriadis (1961)

‘At the objective level, the transformation of capitalism is expressed in increasing bureaucratisation. The roots of this tendency are in production, but they extend and finally invade all sectors of social life. Concentration of capital and statification are but different aspects of the same phenomenon. …

The inherent objective … of bureaucratic capitalism is the construction of a totally hierarchical society in constant expansion, a sort of monstrous pyramid where the increasing alienation of men in labour will be “compensated” by a steady rise in the standard of living, all initiative remaining in the hands of the organisers. … The increasing bureaucratisation of all social activities only succeeds in extending into all social domains the conflict inherent in the division of society into order-givers and order-takers. … The inherent irrationality of capitalism remains but now finds expression in new and different ways.’

Paul Cardan [Cornelius Castoriadis], Modern Capitalism and Revolution, page 3.

The New Working Class – Serge Mallet (1963)

‘Workers employed in automated industries (or industries in the process of automation) have been called the “new working class”. In fact, this term covers two different types of wage earners, both born of new technical developments and both involved in this process of “integration in the firms”.

The new factory uses two types of workers who are still classified as manual workers. These are the foremen, loaders, operators, and preparers who are assigned to automated production units; and the maintenance workers, who are in charge of repairing and keeping watch over the machinery. ….

The other group, numerically greater, is not exclusively born of automation, but is partly due to the trend in modern industry to devote much time and effort to operations anterior to the classic production process (studies and research) and beyond it (commercialisation, market research, etc.). … The enormous development of research units has … created real intellectual production units, in which working conditions grow increasingly similar to those of a modern workshop, but devoid of physical strain, dirt and stink – though with the same planned timing and mechanisation of office work.’

Serge Mallet, The New Working Class, pages 66-68.

The Knowledge Workers – Peter Drucker (1966)

‘Modern society is a society of large organised institutions. In every one of them, including the armed services, the centre of gravity has shifted to the knowledge worker, the man who puts to work what he has between his ears rather than the brawn of his muscles or the skill of his hands.’

Peter Drucker, The Effective Executive, page 3.

‘The imposing system of measurements and tests which we have developed for manual work – from industrial engineering to quality control – is not applicable to knowledge work. … Working on the right things is what makes knowledge work effective. This is not capable of being measured by any of the yardsticks for manual work.

The knowledge worker cannot be supervised closely or in detail. He can only be helped. But he must direct himself, and he must direct himself towards performance and contribution, that is effectiveness.’

Peter Drucker, The Effective Executive, pages 3-4.

‘Knowledge work is not defined by quantity. Neither is knowledge work defined by its costs. Knowledge work is defined by its results. And for these, the size of the [administrative] group and the magnitude of the managerial job are not even symptoms.’

Peter Drucker, The Effective Executive, page 7.

The Educational and Scientific Estate – J.K. Galbraith (1967)

‘As the trade unions [of the industrial working class] retreat … into the shadows, a rapidly growing body of educators and research scientists emerges. This group connects at the edges with scientists and engineers within the [corporate] technostructure and with civil servants, journalists, writers and artists outside. Most directly nurtured by the industrial system are the educators and scientists in the schools, colleges, universities and research institutions. They stand in relation to the industrial system much as did the banking and financial community to the earlier stages of industrial development. … Education … has now the greatest solemnity of social purpose.’

The educational and scientific estate, like the financial community before it, acquires prestige from the productive agent that it supplies. Potentially, at least, this is also a source of power.’

John Kenneth Galbraith, The New Industrial State, pages 286-287.

The Technocrats – Alain Touraine (1969)

‘Technocrats are not technicians but managers, whether they belong to the administration of the State or to big businesses which are closely bound, by reason of their very importance, to the agencies of political decision-making.’

Alain Touraine, The Post-Industrial Society, pages 49-50.

‘If property was the criterion of membership of the former dominant classes, the new dominant class [of technocrats] is defined by knowledge and a certain level of education.’

Alain Touraine, The Post-Industrial Society, page 51.

‘The principal opposition between … [the] two great classes … does not result from the fact one possesses wealth and property and the other does not. It comes about because the dominant classes dispose of knowledge and control information.’

Alain Touraine, The Post-Industrial Society, page 61.

‘… today’s programmed society … [is] dominated by the new conflict between technocrats and consumers …’

Alain Touraine, The Post-Industrial Society, page 192.

The Scientific Intellectual Labourers – Ernest Mandel (1972)

‘Economically, the … main characteristics of the third technological revolution [of nuclear energy, cybernetics and automation] can be discerned: A qualitative acceleration in … the displacement of living by dead labour. …

A shift of living labour power still engaged in the process of production from the actual treatment of raw materials to preparatory or supervisory functions. … The scientists, laboratory workers, projectors and draughtsmen who work in the forecourt of the actual production process also perform … surplus value-creating labour. …’

Ernest Mandel, Late Capitalism, pages 194-195.

‘The age of the third technological revolution is necessarily an epoch of [the] unprecedented fusion of science, technology and production. … In increasingly automated production there is no further place for unskilled factory or office workers. A massive and generalised transformation of manual into intellectual work is not only made possible, but also economically and socially essential by automation.’

Ernest Mandel, Late Capitalism, page 215.

‘The social position of all those social groups that occupationally participate in supervising the extraction of surplus-value from the commodity labour-power or the preservation of constant capital by labour-power, typically induces a general identification with the class interests of the entrepreneurial bourgeoisie. It might even be said that such identification is a precondition of the performance of their specific function … [within the] factory or society. … By contrast, intellectually qualified workers engaged in the immediate process of production or reproduction, or those whose social function does not necessarily come into collision with the class interest of wage-earners – for example, health-insurance doctors or social workers employed by a local authority – are … more likely to align themselves with the … proletariat.’

Ernest Mandel, Late Capitalism, page 265.

The Knowledge Class – Daniel Bell (1973)

‘If the dominant figures of the past hundred years have been the entrepreneur, the businessman and the industrial executive, the “new men” are the scientists, the mathematicians, the economists and the engineers of the new intellectual technology. …

In the post-industrial society, … the crucial decisions regarding the growth of the economy and its balance will come from government, but they will be based on the government’s sponsorship of research and development, of cost-effectiveness and cost-benefit analysis; the making of decisions … will have an increasingly technical character. The husbanding of talent and the spread of educational and intellectual institutions will become a prime concern of society; not only the best talents but eventually the entire complex of prestige and status will be rooted in the intellectual and scientific communities.’

Daniel Bell, The Coming of Post-Industrial Society, pages 344-345.

‘If one turns … to the societal structure of the post-industrial society … two conclusions are evident. First, the major class of the new society is primarily a professional class, based on knowledge rather than property. But second, the control system of the society is lodged not in a successor-occupational class but in the political order, and the question who manages the political order is an open one. …

In terms of status (esteem and recognition, and possibly income), the knowledge class may be the highest class in the new society but in the nature of that structure there is no intrinsic reason for this class, on the basis of some coherent or corporate identity, to become a new economic interest class, or a new political class which would bid for power.’

Daniel Bell, The Coming of Post-Industrial Society, page 374-375.

The Intermediate Layers – Harry Braverman (1974)

‘Among … [the] intermediate groupings are parcelled out the specialised bits of knowledge and delegated authority without which the machinery of production, distribution and administration would cease to operate. … Their conditions of employment are affected by the need of top management to have within its orbit buffer layers, responsive and “loyal” subordinates, transmission agents for the exercise of control and the collection of information, so that management does not confront unaided a hostile or indifferent [working class] mass. … All in all, … those in this area of capitalist employment enjoy, in greater or lesser degree depending upon their specific place in the hierarchy, the privileges of exemption from the worst features of the proletarian situation, including, as a rule, significantly higher scales of pay. …

This “new middle class” … occupies its intermediate position not because it is outside the process of increasing capital [as with the old middle class], but because, as part of this process, it takes its characteristics from both sides. Not only does it receive its petty share in the prerogatives and rewards of capital, but it also bears the mark of the proletarian condition.’

Harry Braverman, Labour and Monopoly Capital, pages 406-4

The Professional-Managerial Class – Barbara & John Ehrenreich (1975)

‘We define the Professional-Managerial Class [PMC] as consisting of salaried mental workers who do not own the means of production and whose major function in the social division of labour may be described broadly as the reproduction of capitalist culture and capitalist class relations.

Their role in the process of reproduction may be more or less explicit, as with workers who are directly connected with social control or with the production and propagation of ideology (e.g. teachers, social workers, psychologists, entertainers, writers of advertising copy and TV scripts, etc.). Or it may be hidden within the process of production, as is the case with the middle-level administrators and managers, engineers, and other technical workers whose functions … are essentially determined by the need to preserve the capitalist relations of production. Thus we assert that these occupational groups – cultural workers, managers, engineers and scientists, etc. – share a common function in the broad social division of labour and a common relation to the economic foundations of society.

The PMC … includes people with a wide range of occupations, skills, income levels, power and prestige. The boundaries separating it from the ruling class above and the working class below are fuzzy. … occupation is not the sole determinant of class (nor even the sole determinant of the relation to the means of production).’

Barbara & John Ehrenreich, ‘The Professional-Managerial Class’, pages 12-13.

The Proletarianised Professionals – Stanley Aronowitz (1975)

‘As the logic of capital requires a more minute division of labour, more sophisticated integrative mechanisms, enlarged state intervention into the economy, and a larger army of administrative workers, the size of the middle strata of professionals grows. At the same time, those lacking power and authority within the administrative and state sectors also grow. The army of clerical workers, operators of duplicating, accounting, bookkeeping, and other machines accompanies the employment of computer professionals, accountants, designers, and other professionals.

Although clerical workers such as typists, secretaries and office machine operators are certainly part of the working class, their position is by no means unambiguous in the social structure. … Head offices of large corporations and state bureaucracies are apparatuses of bourgeois ideological hegemony as well as social domination. The institutions of schools, health care, and administration … function to reproduce capitalist social relations and culture, as well as facilitate the accumulation and reproduction of capital. …

What is more, often the clerical functions overlap with those of technicians and professionals. The number of “managers” of clerical workers is extremely high in proportion to those who are designated as “clerical” employees. … This tendency is particularly pronounced in the telephone and other branches of the communications industry where the proportion of supervisors to workers is about one to three. In addition, many of those designated in the job categories as technicians and professionals find that, as mechanisation replaces a large number of tasks that were previously skilled aspects of their professions, these college educated, professionally trained employees are reduced to clerical workers.’

Stanley Aronowitz, ‘The Professional-Managerial Class or Middle Strata’, page 236.

The Socialised Workers – Antonio Negri (1980)

‘This [new] proletariat is fully social … and it has extended the contradiction/antagonism against capitalist accumulation of profit from the factory area to the whole of society. It has been responsible for upsetting and destabilising the whole circuit from production to reproduction. And it has developed the contradiction of the social conditions of the reproduction of labour-power as an obstacle against capital accumulation. … It has above all represented a new quality of labour. This … represents a mobile sort of labour force, both horizontally and vertically, a labour-power which is abstract, and which projects new needs. … For this … proletariat, wage gains went hand in hand with advances in the social wage and the conquest of free time.’

Antonio Negri, ‘The Crisis of the Crisis-State’, page 183.

‘… when the whole of life becomes production, capitalist time measures only that which it directly commands. And socialised labour-power tends to unloose itself from command, insofar as it proposes a life-alternative

– and thus projects a different time for its own existence, both in the present and in the future. When all life-time becomes production-time, who measures whom? The two conceptions of time and life come into direct conflict in a separation which becomes increasingly deep and rigidly structured.’

Antonio Negri, ‘Archaeology and Project’, page 220.

‘The … [historical] process, concomitant with those of individual marginalisation and collective socialisation, has brought about a conjunction between (a) the refusal of labour-power to make itself available as a commodity (… the effect of individual marginalisation and the collapse of any relationship between “job” and “skill”) and (b) the socialisation of this mode of class behaviour.’

Antonio Negri, ‘Archaeology and Project’, page 223.

The White-Collar Proletarians – Michael Kelly (1980)

‘Market Situation. Income proletarianisation … the incomes of white-collar workers have fallen relatively or absolutely [compared] to those of manual workers … Different sources of income … the incomes of non-manual workers are derived increasingly from their own productive labour and less from the productive labour of others … Feminisation … the white-collar workforce is becoming increasingly feminine in character … Social origin … the white-collar labour force is becoming increasingly “proletarian” in origin as children of manual workers move into non-manual occupations …

Work Situation Bureaucratisation … as large-scale organisations become increasingly big, they become increasingly bureaucratic and the employee loses his identity as a specialist or professional … Mechanisation and automation … with changes in the division of labour brought about by technological advances, the functions and nature of clerical work have changed, producing routinisation and repetitiveness …

Michael Kelly, White-Collar Proletarians, page 23.

UNPRODUCTIVE LABOR AS PROFIT RATE MAXIMIZING LABOR

UNPRODUCTIVE LABOR [...] in all labour where many individuals cooperate, the interconnection and unity of the process is necessarily represented in a governing will, and in functions that concerned not the detailed work but rather the workplace and its activity as a whole, as with the conductor of an orchestra. This is productive labour that has to be performed in any combined mode of production.9 Thus, the maximizing of the prot rate compels the active capitalist to participate in the labor process. Obviously, not in any position, but as the master and organizer. Management also requires this participation. The fact must be acknowledged that part of the labor of the capitalist becomes productive, but as capitalist. When these tasks are delegated to salaried workers, their nature is unchanged: (1) These tasks are productive; (2) They are the expression of delegated capitalist functions whose purpose is maximizing the prot rate. These salaried workers are, to some extent, distinct from other unproductive workers, as in circulation or mere disciplinary tasks, but only secondarily. The main separation between the various components of clerical and managerial personnel in charge of PRM labor is hierarchical (as in \clerical" and \managerial"), not between technology and trade for example. The theory of PRM labor Writing before the managerial revolution, Marx went as far as possible, actually even further! To him, the transformations of capitalism he described in Volume III, meant a transition beyond capitalism, a preliminary step along the march to socialism. He was certainly conscious of the political implications involved in the consideration of new classes of unproductive salaried workers and, somehow, afraid of the political consequences of this evolution. In the class struggles in France, that he analyzed, this new social conguration did not play any role, anyhow no central role. To Marx, the political project remained determinant. It is, however, intuitive that Marx's most sophisticated framework of analysis, foreshadowing developments still to come, is now crucial in the understanding of contemporary capitalism; but additional elaboration is required. The pattern of class relations is more complex: 1. The classes in charge of PMR labor must be introduced between capitalists and productive workers, as shown in the diagram, but not as a homogeneous entity, a plain middleclass. From the separation between managerial and clerical personnel emerged a new group, which can be called popular classes, as productive workers and clerical personnel tend to 13: For example, despite Marx formulation, it is possible to contend that the work of a sales employee has two facets: the nal act of production (cutting the cheese) and the acceleration of circulation by concentrating demand on this particular capital (smiling to the customer). 14: Using quotes in which Marx assumes that commodities exchange at prices proportional to values, Isaac Rubin contributed to the misunderstanding of these mechanisms. Contrary to what Rubin seems to believe, in all of these passages, prices of production must be substituted for values (still abstracting from rents) (I. Rubin, Essays on Marx's Theory of Value, Rubin Archives: http://www.marxists.org/subject/economy/authors/rubin /value/index.htm (1928), ch. IV). This is not a unique case. When Marx writes that labor embodied governs, in the last instance, the movement of relative prices, he refers Managers dene a new component of ruling classes, simultaneously cooperating and vying with the capitalist class. The theories of managerial capitalism reached their climax in the 1960s or the 1970s but were, then, abandoned because of the reassertion of the power of the capitalist class in neoliberalism, as stated below.17 This new social relation is, however, at issue here, as suggested in the diagram. The balance of power between capitalists and managers is a key element in the historical dynamics of capitalism since the managerial revolution and, more generally, the emergence of the institutions of modern capitalism at the beginning of the 20th century.18 Three phases can be distinguished: (1) A rst nancial hegemony, that is, the unchallenged power of the capitalist class and its nancial institutions; (2) the decades of the Keynesian compromise in the wake of the Great Depression and World War II; and (3) The new nancial hegemony in neoliberalism since the beginning of the 1980s. During the Keynesian compromise, nance was contained and, in some countries like Japan or France, \repressed", while managers controlled the economy and society in general, rather autonomously. They did so within a social compromise widely open to popular classes. There is a strong contrast between this social deal to the left, and the new neoliberal compromise, to the right, in which managers, in particular their upper fractions, cooperate with the capitalist class.19 This is, we believe, the class foundation of the polarization between left and right, in contemporary capitalism. In this framework of analysis, the distinction between productive and unproductive labor is central. Forgetting, David Ehrenfeld Before the Second World War, universities were run by a rather small cadre of scholars-turned-administrators, usually distinguished professors who had reached a point in their careers where pomp and affluence were more appealing than the library or laboratory. This was harmless--even useful. Every university needs a royal family to get money and charm the public. But after the war, things began to change. The Managerial Revolution was upon us, university administration became a career in itself (especially for those whose academic work wasn't going anywhere), and administrators proliferated like weeds in a garden. By the seventies and eighties, control of most universities had shifted from faculty to administration, and the ranks of administrators had grown by five- and ten-fold or more. Where did the money for expansion come from? The money came from the overhead on research grants--a postwar phenomenon--and from patents. Overhead, the amount charged by the university to administer grants, was like manna from heaven. Real administrative costs of grants are only a few percent of the total, but administrators soon discovered that they could bump up the figure to 60, 70, or even more than 100 percent of the actual research request without protest from the federal granting agencies. Better yet, the money disappeared into an administrative black hole--even the researchers who obtained the grants couldn't find out what happened to the overhead. Patent income was much the same.

There was only one catch. Grants and patents are not fixed budget items. A bloated administration required more and more of these unregulated funds to support its growth, but grants and patents are undependable.

Inevitably, universities began to bid against one another to attract those scientists (the wixels) who had the best records of getting large grants. Research priorities shifted to a few areas, such as genetic engineering, with the greatest cash flow from government and industry. Everything else, traditional research, innovative speculative research, and of course teaching, was sacrificed.

University administrators now find themselves on a treadmill that they can't get off. They must spend fortunes to gain fortunes, but they hardly ever gain as much as they spend. Student tuitions are raised and raised, "unproductive" departments are closed, budgets (except the wixels') are pared. Many universities, despite massive endowments and cash flows, are now little more than shells. The system is spiraling out of control.

Because similar processes are occurring throughout our society--from hospitals to secondary schools to the Department of Defense--and because we have squandered most of the natural resources that gave us our wealth, we will soon run out of money to support the Managerial Revolution, and it will end. But abrupt, unplanned endings mean chaos, which nobody wants. How can we brake the administrative juggernaut before it crashes? This is one of the major unsolved problems confronting society. The only solution I can think of starts by drastically reducing the flow of money to administration--soon. There is no reason why unspecified grant overheads should exceed 8 or 10 percent. In the case of heavily endowed schools, there should also be an end to knee-jerk giving by wealthy alumni, especially contributions for new buildings. In the modern university, money is increasingly proving to be a corrosive substance.

Turning off the money tap is not enough, however. An informed public will have to demand cuts in administration, greater faculty and student influence, a tuition freeze, a moratorium on construction of "high tech" facilities, a higher priority for teaching, and support for a diversity of low-cost research projects which can function without multimillion-dollar grants and which may not generate lucrative patents.

And if there is no effective change, what then? Then we can expect the managerial ethic to continue to prevail and teaching to become vestigial as the existing university structure falls further into disarray. True, a new kind of university may emerge, perhaps already is emerging. It will have some positive features. But whatever its virtues, it will not be capable of transmitting our assembled knowledge of the natural world to the next generation. I fear for conservation when there is no one left in our places of learning who can tell one moth from another, no one who knows thehabits of hornbills, no one to puzzle over the diversity of hawthorns.

Theses on the Mass Worker and Social Capital - Silvia Federici ...

In this sense the Councils remain a revolutionary experience. As for the ideological aspect of the self-management project, the hypothesis of a workers' management of the production of capital, it also becomes clear that "the pre-figuration of a more advanced level of capitalist development was the specific way in which workers refused to yield to the capitalist needs of the time, by trying to provoke the failure of capital's plan and expressing the autonomous working-class need for conquering power". (De Caro) It is in the workers' refusal to be pushed back into a malleable labour force under capitalist rule, and in their demand for power over the productive process (whether in the form of the Councils' "self-management" and freeze over development, or in the Bolsheviks' plan for development under "workers' control") that the fundamental political novelty of these cycles of struggle lies: on an international level, the workers' attempt to divert the direction of economic development, express autonomous goals, and assume political responsibility for managing the entire productive machine. When the capitalists move to counter-attack, they are not prepared to grasp the two main givens of the cycles of struggle : the international dimension of class struggle, and the emergence of labour power as the political working class. Thus while the international unification of the working-class struggle raises the need for an international unification of capital's response, the system of reparations imposed on Germany by the Versailles Treaty merely seals the inter-capitalist split. While confronted by the international working class, the capitalists can only perceive their national labour powers. The outcome is a strategic separation between their international and domestic responses. Internationally, world revolution appears to the capitalists as coming "from the outside", from the exemplary leadership of the USSR: hence the politics of military isolation of the Revolution in Russia. Domestically, all the capitalists know is the traditional tools of their rule: (1) the violent annihilation of workers' political organizations (the Palmer raids and the destruction of the IWW; Fascism in Italy; bloody suppression of the "Red Army" in the Ruhr, and so forth), which breaks the ground for (2) technological manipulation of the labour force (Taylorism, the "scientific organization of labour") as a means of politically controlling class composition.

Taylorism, the "scientific organization of labour", the technological leap of the Twenties serves but one purpose: to destroy the specific articulation of the labour force which was the basis for the political re-composition of the working class during the first two decades of the century (Thesis 3). The introduction of the assembly line cuts through traditional cleavages in the labour force, thus producing a veritable revolution in the composition of the entire working class. The emergence of the mass worker, the human appendage to the assembly line, is the overcoming of the vanguard/mass dichotomy upon which the Bolshevik Party is modeled. The very "aristocracy of labour" that capital created after 1870 in its attempt to control the international circulation of the Paris Commune (the very workers supposedly "bribed" by the eight-hour work day, Saturdays off, and a high level of wages) became one of the pivots of the circulation of struggles in the Teens. Through the assembly line capital launches a direct political attack, in the form of technology, on the skills and the factory model of the Councils' professional workers. This attack brings about the material destruction of that level of organic composition which served as the basis of the self-management project. (The political unity between engineers and workers is also under attack. From Taylorism on, engineers will appear to the workers not as direct producers, but as mere functionaries of the scientific organization of exploitation; and the self-management project, devoid of its original class impact, will reappear as a caricature, the "managerial revolution" to come.)

INVESTING IN ORGANIZATIONAL CHANGE:

In the early eighties, when awareness of the microelectronics revolution was at its peak and debates raged alternately heralding its promises and fearing its threats, Ingersoll Engineers came up with a set of surprising results from a survey of British manufacturing. When assessing the risk of investment in automated technologies their results showed an inverse relationship between the level of automation and the likelihood of achieving increased productivity. In fact, they found only an 18% rate of success in firms that went for the "high technology" option, in contrast with an 84% success rate in firms that focused mainly on reorganization, introducing only a few selected changes in equipment (See Fig.3).

Rather than conclude that computer interation and flexible manufacturing systems (FMS) cannot yield expected results, what Ingersoll argued is that organizational change is a precondition for reaping the potential benefits offered by the new equipment. They also found that there is considerable leeway to improve production processes through organizational change that can be undertaken before any new equipment is incorporated. In some of the cases they studied as much as 80% of the initial improvements in productivity could be attributed to reorganization alone[10] .

These findings are in line with the increasingly accepted explanation of the productivity paradox in the OECD countries. At a time when investment in modern equipment was growing rapidly and new technologies had been widely applied, instead of the expected increase in efficiency there was a decline in the rate of productivity growth in these economies. The TEP Report locates the main causes of this phenomenon in the "various diffusion barriers including human resources, organizational and management practices and more broadly the surrounding social, economic and institutional environment[11] .

After several years of great interest in microelectronics and the information technology revolution, the center of concern thus shifted to another wave of equally pervasive but "soft" generic technology. By the mid-eighties the managerial revolution, centered on the new organizational practices developed in Japan, had become the focus of a debate in terms of promises, threats and applicability. Slowly it came to be understood that the greater success of Japanese firms was rooted in an organizational model which allowed them to take much better advantage of modern technologies[12] . Since then there has been a mushrooming of consultancy services in the new organizational practices, various "gurus" in the field have appeared and many books and journals are propagating the new principles, their diverse forms of application and the many specific examples of success or failure in using them.

Organization as the Achilles heel of the traditional technology leader

In 1986 the Massachussetts Institute of Technology set up a special Commission on Industrial Productivity (MIT/CIP) to address the causes of the decline in U.S. competitive performance[13] . It convened more than fifteen top academics in economics, technology management and political science who mobilized dozens of expert researchers to probe into manufacturing companies in eight industries in three continents. Their results point clearly to the organizational issues, rather than to hard technology.

The report groups the causes of the loss of U.S. competitiveness into six categories:

1. Outdated strategies
2. Short time horizons
3. Technological weaknesses in development and prodution Neglect of human resources
4. Failures of cooperation (within the firm and with other firms and supporting institutions
5. Government and industry at cross-purposes

As can be seen, the great majority are social, organizational and institutional weaknesses. The first two relate to overall managerial attitudes to business. The last two refer to the relationship of firms to other actors in their environment. The fourth is directly related to human capital. Only the third is truly "technological" in nature. And yet, when it is spelled out it turns out to be mainly related to management of technology and attitudes towards it. It includes: neglect of manufacturability in product design, lack of teamwork in the product development process, lack of attention to the manufacturing process itself and poor exploitation of the potential for continuous improvement in the quality and reliability of products and processes. When the MIT Commission analyzed the determining features of competitive American firms, it also found that at the root of their achievement were certain common patterns of managerial and organizational practice. Thus, organizational technology seems to underlie competitiveness as much as mastery of specific technologies, product innovation and generic technologies[14] .

Reorganization as an effective option of modernization

Recent experience in developing countries has shown that much ground towards competitiveness can be covered with organizational efforts and modest investment in intangibles. There are many examples of impressive cost reductions and quality improvements, of successful rationalization and specialization that have resulted from managerial reconversion[17] . Such cases show that not all modernization processes involve great expenditures in new equipment.

One particular study that does quantify the initial trade-off between hard and intangible investment is the case of a U.S. paper mill presented in the Harvard Business Review[18] . It is worth summarizing it here as an illustration of the type of effort involved and the sorts of results that can be achieved.

In 1983 the mill was losing a million dollars a month and was the last of the five suppliers in their part of the market. Equipment modernization costs were estimated to be $23 million with a timetable of at least five years to reach break-even. The choice was filing for bankruptcy or trying the reorganization route. They did the latter.

The company decided to turn everyone into a problem solver. "Together, managers and mill workers learned to take the initiative not just for identifying problems but also for developing better processes for fixing problems and improving products... The entire organization learned how to learn[19] ". They established contact with customers, pinpointed the flaws that had to be corrected, went to the root causes in their process and, in the end, not only corrected those problems (going to "zero defects") but actually developed a new thinner paper grade which created a profitable niche in the market.

In less than two years the mill was making profits, by the third year they had become the number one supplier in their group with a tenfold rise in prices per share and capable of financing expansion out of profits.

Reengineering Management: Mandate for New Leadership The co-author of the monumental bestseller Reengineering the Corporation continues the reengineering revolution with another national bestseller that has already sold more than 165,000 copies in hardcover Reengineering Management is a brilliant, practical and much needed book on the most powerful management idea of the decade. Reengineering—changing the traditional and outdated organization, processes and culture of a company—is corporate America's greatest challenge today. In Reengineering Management, Champy examines the far-reaching changes managers must make for themselves and their companies to succeed in an era of unprecedented competition. Through his extensive consulting and research work, he shows how reengineering succeeds only when managers reinvent their own jobs and managerial styles

Corporate stories: 'Fortune' magazine and modern managerial culture

This dissertation uses Fortune magazine to explore the relationship between professional corporate managers after 1920 and the cultural impulses of urban modernism which helped define them and their institutions. Fortune's reporting, photography and design is part of the larger story of business from 1930 to the early 1950s, and the dissertation argues that the magazine helped make a fundamental articulation between the concepts of liberated individual leadership and institutional mastery. It elaborated a specific vision of corporate architecture and governance compatible with the staff's political aesthetics, and offered a useable cultural identity for the “managerial revolution.”

Management; Manangement Fads and Witch-Doctoring

Management trends are however of interest for a couple of reasons.

First, since they do play to hopes and fears, they provide a window on the emotions and world-views of managers; they are white collar folk-tales.

Second, management preserves the condition of knowledge before the scientific revolution almost intact. Then, typically, in any field of endeavor there was a fund of artisan skill — of unsystematic, untheoretic, even inarticulate know-how — which could be capable of quite impressive achievements (e.g., metal-working), side by side with a theory which was metaphysical, full of human and ethical significance, and dead wrong whenever it was definite enough to make any contact with reality at all (e.g., alchemy). We are nowadays quite skilled at setting up and running institutions, and have in fact gotten a lot better at it in the last, say, two centuries. J. Random American Podunk Burg of a hundred thousand people displays a degree of formal organization which would have boggled any Sung mandarin or Roman proconsul (public school, police, post office, utilities, political parties). Managers and management are essential to this — but it doesn't follow in the least that what gets taught in business schools and said in business books plays any valuable role in it. That is the part which resembles alchemy. (There's a business book in that, of course.) — There is a substantial and respectable body of research on institutions, in economics, and on organizations, in sociology; but this is only peripherally connected.

Marx, Marxism and Global Management

At first sight, the ideas of Marxism and management seem to have not much to do with each other - even to be antithetical. Nevertheless, with the increasing complexity and scope of the productive forces during the twentieth century, there has been much interaction between the two. After all, the Soviet Union was a very (ill) managed society, and both Lenin and Gramsci were enthusiastic about Taylor’s ideas of ‘scientific’ management of the labour process. And, on a wider scale, many writers (and many of them Marxist) in the mid-twentieth century analysed the all-persuasive increase in bureaucracy and sometimes predicted the emergence of managers, whether in capitalist or communist societies, as a new ruling class. James Burnham’s The Managerial Revolution is but the most extreme example of this trend. The basic idea here is that, whereas in Marx’ s day the owners of business enterprises directly controlled their operation, with the rise of the joint-stock company, there has been a separation of ownership and control. The ownership is dispersed among relatively powerless shareholders: the people with the power are the invisible managers accountable, if at all, only to the laws of the market.

All the above propositions are controversial. But it does show that the Marxist tradition does have something to say about management. And, given that Marx has been voted in a recent BBC poll Britain’s favourite philosopher, it seems appropriate to ask what he and his followers have to say about contemporary management. The contributions which follow sketch out possible answers in different fields.

In a wide-ranging historical survey, Kieron Smith, a manager himself, discusses Marxist views about the position of managers in the class structure of society and the altering role of the manager based upon economic and social changes in capitalist economies. He stresses the ways in which Marxist thinking can help managers to do a better job by understanding the broader economic context in which they operate. John Luhman’s article on McDonaldization strikes a different note: in a punchy and innovative style, that the advent of global rationalization à la McDonald, although almost universally lamented, he claims might turn out to be progressive with its very repulsiveness producing an equally global aversion to capitalism and its effects. The next four contributors are more specific: Bryan Evans adopts a Gramscian perspective on how neoliberal ideas have become embedded among public sector managers - in this case, Ontario; Alan Tuckman takes us back to Marx’s discussion of the ‘commodification of time’ and then explains its relevance for understanding the changing role of managers in contemporary global capitalism; Matthias Varul uses Marx’s theory of value to launch a wholesale critique of Human Resource Management whose approach he sees as both specious and potentially totalitarian; and Ernesto Gantmann looks at how the development of the Argentinian economy has changed the nature of management training. Returning to a wider perspective, Kevin Young presents a Marxian theory of management by looking at the changing nature of consumption and the growth of the small business sector to illustrate how neoliberalism can effectively reproduce itself by removing politics from economics. And finally Nesta Devine gives us a sharp dissection of the attempts of some Marxists to use Public Choice Theory, normally associated with anti-Marxists such as Hayek, to express their own strategy.

Thus the contributions below, taken in their entirety, do show that large sections of contemporary management, both in the public and private sector, could benefit from more self-analysis and an attempt to locate themselves more clearly in contemporary economic development. Such a self-awareness can only help the contribution of managers to a more humane society. And the contributions to this issue show that the types of Marxist approach demonstrated in them can help in this process.

 

What capitalism do we live in?

Thesis: Sometime in the period from the 70s to the 90s, there took place the transition from a Fordist-welfare state capitalism to financial-market capitalism. The latter is characterized by the fact that the owners of the large financial funds dominate capital utilization and social reproduction in general.

The Fordist- welfare state capitalism that pushed through its hegemony in the confrontation with other forms of “solving” the crisis of finance monopolistic capitalism (such as fascism) after the Second World War as the dominating form of capitalism is based on the capacity of large productive producing enterprises to subordinate themselves their own financial accumulation (for instance, by way of small stockholders and their own financial institutions). It was the case of a capitalism, whose production and reproduction process, whose capital utilization was dominated by the large economic firms, the capitalist companies. The managers of the large stock-holding companies themselves exercised the central ownership function and, therefore, pursued “no strategy of profit maximization…, but…. (only) tried to ‘achieve a satisfactory profit’”. Their primary goal was the growth of firms and not that of the capital invested. Market power and not financial power stood in the foreground.

On this basis, it was possible to conclude an interest alliance between management and employees as well as a welfare and “social state” pact, which links capital utilization, wage development and social integration under the dominance of the interests of capitalist big enterprises and this in a positive way. There resulted a lessening of competition, not last on the basis of a high growth. The banks, therefore, had to compete to be able to issue credits, which made the interest rate and, as a result, capital costs sink. At the same time, the profit fell, and the capitalist orientation hit its limits. For the late 60s of the 20th century and the one-and-a-half decades afterwards, Jörg Huffschmid, therefore, notes consequentially: “In this situation of inner and outer pressure on the post-war arrangement, there was on the agenda – theoretically, and as it turned out also practically – a historical decision between two fundamentally different ways for the solution of the problems and for continued economic and social development: the continuation and deepening or the taking back of the post-war reform.”

Attempts to drive the Fordist- welfare state capitalism beyond itself in a social and democratic way and to overcome the dominance of capital utilization, the broad protest against the rigid structures of a “middle-class society” (behind which there continued to hide the division into large classes) and its patriarchal roles, against the exploitation of the Third World, as well as also the end to the extensive use of factually cost-free raw materials, which became visible by the rapid growth of oil prices, and last but not least the ever stronger resistance of the capital owners against the constraints to capital utilization signaled the end of this capitalism. It entered into a sequence of crisis.

Working for themselves? Capital market intermediaries and present day capitalism 

This paper uses earlier debates on managerial capitalism to set up and explore questions about the role and possible effects of fee-earning capital market intermediaries in present day capitalism. The question then becomes whether a new group of actors (the capital market intermediaries) taken a new leading role in the economy, in part by constraining the discretionary power of an old group of actors, the salaried corporate managers A broader analysis of social effects makes two key points: first, business models in activities such as investment banking, corporate law and private equity all generate substantial rewards for senior intermediaries; second, the different agendas of these different groups have the net effect of encouraging an economy of permanent restructuring with implications for the rest of us. The literatures on managerial capitalism are vast, diverse and include many texts that do not get into a canon that starts conventionally in the 1930s and 1940s with Berle and Means (1932) and Burnham (1941) and ends in the 1990s with a dispiriting amount of repetition and secondary misrecognition of supposedly classic texts. It was Tawney’s influential 1921 book, The Acquisitive Society, which introduced a new language to register ‘the divorce of ownership and work’ or ‘the separation of ownership and management’ (p. 64, 202) and then argued that the rise of salaried professional managers was an important development which changed the nature of capitalism. His agenda-setting analysis of what was subsequently constructed as separation of ownership and control opened the way for the development of many different positions on how the rise of a professional managerial class enabled discretionary management strategies at enterprise level and new social compromises between capital and labour at national level as well as unaccountable elite projects. Economics started from the assumption that salaried managers were unitary calculating subjects with consistent preferences and executive discretion about goals and policy. Hence, for example, Marris’ (1964) theory of managerial capitalism which supposed ‘managers… maximize the rate of growth of the firm they are employed in subject to a constraint imposed by the security motive’ (p.47) and rooted this in behavioural psychology about growth as the test of ‘professional competence’ and the basis for advancement of individual and group (p.102). From a politico-legal perspective, Berle enrolled managers rather differently as the subjects of history and the social basis for (new deal type) social compromises that civilized capitalism by reconciling different social interests. The classic Berle and Means text, which announced the separation of ownership and control, envisaged a kind of stakeholder firm whose technocratic managers would not serve shareholders but ‘balance a variety of claims by various groups in the community’ (1932, p.312). As for Berle in the 1950s and after, he believed that unionism, anti-trust legislation and such like had socialized corporations in ways that proved they could be ‘checked by public conscience and disciplined by political intervention’ (1960, p.157). If different authors take a bewildering variety of positions on what the rise of the (salaried) manager portends, the emphasis from the 1920s onwards is on their socio-economic agenda or the implications for the rest of society of purposive management calculation and action classically situated within the organisational frame of the giant firm (Chandler, 1977) From beginning to end, this went along with the claim that management rewards (individually and collectively) were modest and should remain so. Thus, Tawney in 1921 rhetorically identified the salaried ‘managers… experts and technicians’ as an intellectual proletariat and added the evidence that, in 1913, almost 90 per cent of colliery managers earned £500 a year or less, or roughly 10 times the standard manual wage of £1 week. Thirty years later, in America, where relativities have always been steeper, Berle (1960, p.4) argued that top corporate managers could no longer ‘make a large fortune’ and would have to content themselves with ‘a comfortable salary and an excellent pension’ which meant ‘his son will have to go out and look for a job like anyone else’. Of course, top to bottom corporate pay differentials have changed significantly since then. UK giant firm CEOs in the FTSE 100 enjoyed large pay increases in the 1980s and 1990s which opened out the top to bottom differentials from 9:1 in 1980 to around 50:1 by 2000. In contrast, US S&P500 CEOs start from this kind of relativity in the early 1980s and then win large earnings increases so that they continue to earn at least five times as much as their British counterparts in the early 2000s as in the early 1980s (Erturk et al. 2005). The pace of intellectual change is much slower than the rate of CEO pay increase because the old idea of social compromises survives in a new debate about forms of capitalism; just as agency theory in mainstream finance hangs on to ideas about discretionary objectives but turns them around so that managers are now villains not heroes. The argument about forms of capitalism from Hall and Soskice (2001) onwards develops and builds on Berles’ idea of the firm as site of a national social compromise. Meanwhile, from the 1970s onwards, agency theory by US finance academics like Jensen and Fama (1983) represented the passing up of profit opportunities by managers as a big problem for shareholders. Thus, the old debates about managers resonate in present day capitalism. But even more so, the old debates frame new questions about capital market intermediaries who are the new actors of the present day just as professional managers were the new actors of the 1920s and 1930s. After reading authors like Hywel Williams on the City and the more academic literature on fund managers, we can ask: to what extent are the intermediaries collectively unified and a coherent group? If not a class, are the intermediaries an elite; and, if so, do they have a projects? Are we entering an era of intermediary capitalism where corporate and other strategies are defined by the priorities of the functionaries of finance? It is much easier to ask these questions than to answer them because the publicly available evidence about intermediaries is much more modest than the evidence about managers of public companies. But, as the rest of this paper shows, it is possible to say something. The next section answers questions about ‘who are the intermediaries and what do they now do?’ by mapping a semi invisible and heterogeneous group and arguing about the socio economic implications and effects of their activity. The final section of this paper analyses intermediary business models within which senior intermediaries claim large rewards before the conclusion draws together the argument about intermediaries as a new elite group. One of the great unresolved intellectual issues is about whether any group, project or social effect can format the dynamic and characteristics of capitalism in a period; or more specifically, to what extent are terms like ‘managerial revolution’ or Fordism illuminating rather than limiting. From this point of view, and on the basis of a partial preliminary analysis we would observe that finance meets resistance but it has permeated large sections of the firm and household economy in advanced capitalist economies. And, as Marx would have said, the trager or supports of this process are the intermediaries who are working for themselves, in contradictory ways, and producing powerful (unintended) effects in an economy of permanent restructuring (Froud et al. 2006) e where everything is for sale, where assets and risks can be bundled, unbundled and traded through coupons against a background of sharply increasing inequalities in income wealth and security. We need to research the different aspects of this transformation rather than rehearse a phrase like intermediary revolution but meanwhile we would argue that capital market intermediaries are in many ways the emblem of our present day capitalism.

Markets and Managerial Discretion Tooth & Co, 1970-1983.

Markets are a key factor in the explanation of management activity within firms. Business and labour historians alike have been able to show that, unlike the tenets of orthodox economic theory, while markets are important in understanding management and corporate behaviour they are not determinants of this behaviour. The empirical studies of Chandler and his discussion of the emergence of the ‘visible hand’ of management argues that the administration of business by managers came to replace the market as the primary sphere of allocating resources within firms in the US. Like economic theories of the firm this administration emerged when it resulted in lower transacting costs and greater effectiveness than market based contracts. However, with the emergence of large scale firms came a trend toward managerial capitalism which saw a separation between ownership and control as well as the privileging of policies that favoured stability and long term growth.2 Markets remained important as: ‘[t]he current decisions as to flows and the long terms ones as to allocating resources were based on estimates of current and long-term market demand.’3 For Chandler the development of markets, which was often facilitated by changes to production technologies and transport infrastructure, has seen the development of the managerial business enterprise wherein managers have the capacity to make decisions about operations, employment, output and future operations.4 Managerial agency, referred to by Chandler as strategy, follows the development of large scale divisionalised firms. While Chandler’s work is richly detailed and his arguments systematically supported with historical cases, differentiating Chandler from more recent writers using the notion of management strategy, Froud et al argue his work can be described as ‘firm in product market’.5 This generally refers to the notion that the giant firm confronts a particular product market situation which shapes the plans and decisions of managers. This firm in product market approach is indicative of a number of studies of companies across of number of discipline areas, however according to Froud et al the business history studies of Chandler and others are the most detailed and rigourous examples of this approach. A number of writers have used this general approach to specifically examine the way companies address their labour force management. Among labour management writers the nature of product markets has come to gain prominence as the primary factor driving the activities of employers and managers. During the 1980s a literature developed that asserted the prominence of product markets as a factor that helped to account corporate labour management initiatives, particularly in the United States.6 These empirical studies of United States companies show that product market competition, or a companies inability to control its product market, creates a clear incentive to redraw labour management strategies. The types of strategies that are developed will be influenced by development and access to production and communication technologies.

Managerial Commitments and Technological Change in the US Tire Industry

This paper attempts to reconcile the anomaly between the assumption that inertial forces resist change among successful incumbents to new technology and empirical evidence attesting to willingness to change despite strong economic disincentives. It looks at managerial commitment to employees, customers and communities as influencing response to radical technologies and considers the response by the largest US tire firms to the revolution in radial technology. The paper introduces a theoiy linking commitments and firms' response to disruptive technological changes, provides a brief history of the US tire industry prior to the radial revolution and considers the consequences of the radial revolution. It concludes that managerial commitments played an important role in tire makers' response to radial technology, thus supporting the claim that commitments should be considered with competences and economic incentives in examining how incumbents respond to technological discontinuities.

 

How Did Computing Go Global? The Need for an Answer and a Research Agenda 

The answers to how computing went global have ramifications for historians and society far beyond mere documentation. By understanding the complexities of how IT computing technology spread around the globe, we may gain insight into future technologies and be able to help shape their deployment to a larger extent, which may ultimately better benefit humankind, while learning more about how technologies have spread in the past.

 

Industrial Organization and the Organization of Industries: an American Perspective David B. Audretsch, William L. Baldwin

Résumé de l'article

This paper suggests that the scholarly field of industrial organisation is shaped and directed by the debate concerning some of the most pressing policy issues at any historical time period about the link between the organisation of industries and economic performance. By industrial organisation, we mean the scholarly field of research. By the organisation of industries, we mean the actual way in which economic activity is organised within the unit of observation of an industry. A shift in the organisation of industries that is taking place, away from economic activity based on the traditional factors of production, such as labour and capital, and towards knowledge-based economic activity. Accompanying this shift is a new public policy debate focusing on how to create new knowledge and facilitate its commercialisation. The field of industrial organisation is responding with a new focus on the link between the dynamics of the organisation of industries, or how industries and firms evolve and change over time, and innovative performance.

 

An Angry Look At Modern Schooling Extending Childhood

Only by a massive psychological campaign could the menace of overproduction in America be contained. That’s what important men and academics called it. The ability of Americans to think as independent producers had to be curtailed. Certain writings of Alexander Inglis carry a hint of schooling’s role in this ultimately successful project to curb the tendency of little people to compete with big companies. From 1880 to 1930, overproduction became a controlling metaphor among the managerial classes, and this idea would have a profound influence on the development of mass schooling.

I know how difficult it is for most of us who mow our lawns and walk our dogs to comprehend that long-range social engineering even exists, let alone that it began to dominate compulsion schooling nearly a century ago. Yet the 1934 edition of Ellwood P. Cubberley’s Public Education in the United States is explicit about what happened and why. As Cubberley puts it:

It has come to be desirable that children should not engage in productive labor. On the contrary, all recent thinking...[is] opposed to their doing so. Both the interests of organized labor and the interests of the nation have set against child labor.¹

The statement occurs in a section of Public Education called "A New Lengthening of the Period of Dependence," in which Cubberley explains that "the coming of the factory system" has made extended childhood necessary by depriving children of the training and education that farm and village life once gave. With the breakdown of home and village industries, the passing of chores, and the extinction of the apprenticeship system by large-scale production with its extreme division of labor (and the "all conquering march of machinery"), an army of workers has arisen, said Cubberley, who know nothing.

Furthermore, modern industry needs such workers. Sentimentality could not be allowed to stand in the way of progress. According to Cubberley, with "much ridicule from the public press" the old book-subject curriculum was set aside, replaced by a change in purpose and "a new psychology of instruction which came to us from abroad." That last mysterious reference to a new psychology is to practices of dumbed-down schooling common to England, Germany, and France, the three major world coal-powers (other than the United States), each of which had already converted its common population into an industrial proletariat.

Bad Character As A Management Tool

A large piece of the answer can be found by reading between the lines of an article that appeared in the June 1998 issue of Foreign Affairs. Written by Mortimer Zuckerman, owner of U.S. News and World Report (and other major publications), the essay praises the American economy, characterizing its lead over Europe and Asia as so structurally grounded no nation can possibly catch up for a hundred years. American workers and the American managerial system are unique.

You are intrigued, I hope. So was I. Unless you believe in master race biology, our advantage can only have come from training of the American young, in school and out, training which produces attitudes and behavior useful to management. What might these crucial determinants of business success be?

First, says Zuckerman, the American worker is a pushover. That’s my translation, not his, but I think it’s a fair take on what he means when he says the American is indifferent to everything but a paycheck. He doesn’t try to tell the boss his job. By contrast, Europe suffers from a strong "steam age" craft tradition where workers demand a large voice in decision-making. Asia is even worse off, because even though the Asian worker is silenced, tradition and government interfere with what business can do.

Next, says Zuckerman, workers in America live in constant panic; they know companies here owe them nothing as fellow human beings. Fear is our secret supercharger, giving management flexibility no other country has. In 1996, after five years of record profitability, almost half of all Americans in big business feared being laid off. This fear keeps a brake on wages.

Next, in the United States, human beings don’t make decisions, abstract formulas do; management by mathematical rules makes the company manager-proof as well as worker-proof.

Finally, our endless consumption completes the charmed circle, consumption driven by non- stop addiction to novelty, a habit which provides American business with the only reliable domestic market in the world. Elsewhere, in hard times business dries up, but not here; here we shop till we drop, mortgaging the future in bad times as well as good.

Can’t you feel in your bones Zuckerman is right? I have little doubt the fantastic wealth of American big business is psychologically and procedurally grounded in our form of schooling. The training field for these grotesque human qualities is the classroom. Schools train individuals to respond as a mass. Boys and girls are drilled in being bored, frightened, envious, emotionally needy, generally incomplete. A successful mass production economy requires such a clientele. A small business, small farm economy like that of the Amish requires individual competence, thoughtfulness, compassion, and universal participation; our own requires a managed mass of leveled, spiritless, anxious, familyless, friendless, godless, and obedient people who believe the difference between Cheers and Seinfeld is a subject worth arguing about.

The extreme wealth of American big business is the direct result of school having trained us in certain attitudes like a craving for novelty. That’s what the bells are for. They don’t ring so much as to say, "Now for something different."

Bionomics

The crude power and resources to make twentieth-century forced schooling happen as it did came from large corporations and the federal government, from powerful, lone-established families, and from the universities, now swollen with recruits from the declining Protestant ministry and from once-clerical families. All this is easy enough to trace once you know it’s there. But the soul of the thing was far more complex, an amalgam of ancient religious doctrine, utopian philosophy, and European/Asiatic strong-state politics mixed together and distilled. The great facade behind which this was happening was a new enlightenment: scientific scholarship in league with German research values brought to America in the last half of the nineteenth century. Modern German tradition always assigned universities the primary task of directly serving industry and the political state, but that was a radical contradiction of American tradition to serve the individual and the family.

Indiana University provides a sharp insight into the kind of science-fictional consciousness developing outside the mostly irrelevant debate conducted in the press about schooling, a debate proceeding on early nineteenth-century lines. By 1900, a special discipline existed at Indiana for elite students, Bionomics. Invitees were hand-picked by college president David Starr Jordan, who created and taught the course. It dealt with the why and how of producing a new evolutionary ruling class, although that characterization, suggesting as it does kings, dukes, and princes, is somewhat misleading. In the new scientific era dawning, the ruling class were those managers trained in the goals and procedures of new systems. Jordan did so well at Bionomics he was soon invited into the major leagues of university existence, (an invitation extended personally by rail tycoon Leland Stanford) to become first president of Stanford University, a school inspired by Andrew Carnegie’s famous "Gospel of Wealth" essay. Jordan remained president of Stanford for thirty years.

Bionomics acquired its direct link with forced schooling in a fortuitous fashion. When he left Indiana, Jordan eventually reached back to get his star Bionomics protégé, Ellwood P. Cubberley, to become dean of Teacher Education at Stanford. In this heady position, young Cubberley made himself a reigning aristocrat of the new institution. He wrote a history of American schooling which became the standard of the school business for the next fifty years; he assembled a national syndicate which controlled administrative posts from coast to coast. Cubberley was the man to see, the kingmaker in American school life until its pattern was set in stone.

Higher Education in the United States

Higher education's golden age: 1945 to 1970. Between 1941 and 1945 American colleges and universities participated directly and effectively in a complex national war effort. This track record in times of duress brought long-term rewards and readjustments after the war. In 1947, the President's Commission on Higher Education in a Democracy concluded that federal funding of research should continue even in peacetime. In response to the "problem" of returning military personnel to the domestic economy and as a measure of gratitude, Congress passed the Servicemen's Readjustment Act (1944), popularly known as the "G.I. Bill." For at least a temporary period, this generous and flexible financial aid program enabled an unprecedented number of veterans to attend colleges, universities, and an array of "postsecondary" institutions. This legislation also gave energy to civil rights cases linked with educational access.

In addition to federal funding, growing states with enthusiastic governors and legislatures sought ways to work with their state's educational leaders to accommodate an impending enrollment boom. The rising birth rate and increased migration into selected states, along with a deliberate extension of college admissions, caused this dramatic growth. California led the way in statewide coordination with its Master Plan of 1960. This program aimed at accommodating mass access to affordable higher education by channeling students into tiered institutions.

Among the most conspicuous transformations was the emergence of a network of public junior colleges. Founded in the early 1900s, junior colleges experienced expansion in California during the 1930s. After World War II these institutions carried out two critical functions in mass postsecondary education. First, they developed a "transfer function" in which students could enter colleges or universities after two years of course work at the junior college. They also offered advanced, terminal degree instruction and certification in a range of professional and occupational fields. By the 1960s, the addition of a third function–readily accessible, low-priced continuing education for adults–led to a change in the name from junior college to community college.

The federal government participated in the expansion of sponsored research and development education during the 1950s and 1960s. Drawing from former MIT President Vannevar Bush's 1945 monograph, Science: The Endless Frontier, Congress and a succession of U.S. presidents endorsed federal sponsorship of high-level, peer-reviewed national research projects. Federal agencies that became most involved were those requiring applied technical research, specifically defense and agriculture. The behavioral sciences gradually adopted this model for large-scale psychological testing, and then various health care programs also sought funding. Agencies such as the National Institute of Health possessed a limited scope and a miniscule budget in the late 1940s, but acquired an increasing presence over the next four decades. In 1963, Clark Kerr's work The Uses of the University summarized this culmination of government patronage in research and development. According to Kerr, about fifty to one hundred institutions had positioned themselves to be "Federal Grant Universities": powerful incubators of advanced scholarship in the sciences possessing the ability to inspire confidence and funding in their research grant applications.

Both public and private universities benefited from governmental concerns about "cold war" defense and competition with the Soviet Union. Fears resulting from an extended definition of "national defense" led to funding for advanced studies in foreign languages, anthropology, and political science as well as the "hard" sciences of physics and chemistry. The transfer of these national programs to higher education institutions increased both the founding of new campuses and the construction of new buildings on older campuses. According to one study in 1986, about 75 percent of American campus buildings were constructed between 1960 and 1985, suggesting that the symbol for higher education during the cold war ought to be the building crane.

The Vanishing Hand: the Modular Revolution in American Business

The Managerial Revolution and the Developmental State

The Managerial Revolution in British Health Care F. G. Hattersley and G. N. Cash., 1971

The promises of managerial revolution bibliography

James Burnham | American Political Theorist | The Managerial Revolution Articles and Books from Questia.

Pre-Bureaucratic Administration.doc

The Information and Services Economy a.k.a. Business Architecture PPT

Americanism and Fordism: The Second Industrial Revolution

Communication and the Control Revolution | James R. Beniger | OAH

A Mental Revolution: Scientific Management since Taylor

The Information Technology Enabled Organization: A Major Social Transformation in the U.S.A

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