William Morris and the Socialist Movement (1946)

From the November 1946 issue of the Socialist Standard

Last month was the fiftieth anniversary of the death of William Morris. He is principally known to the world as a poet and the founder of a new movement in arts and crafts. To us he is significant as a pioneer in the Socialist movement in this country. Born into the circle of the comfortable, he was revolted by the ugliness which he saw around him; an ugliness that he gradually realised was due to the profit-making principle that guided production and brought poverty and misery to the producers. In an article he wrote. “How I Became a Socialist,” he tells of his discontent with the existing system :—

   “What shall I say concerning its mastery of and its waste of mechanical power, its commonwealth so poor, its enemies of the commonwealth so rich, its stupendous organisation—for the misery of life! Its contempt of simple pleasures which everyone could enjoy but for its folly? Its eyeless vulgarity which has destroyed art, the one certain solace of labour? All this I felt then as now, but I did not know why it was so.”

Then he asked himself were the past struggles of mankind which had produced this "sordid, aimless, ugly confusion” to end in “a counting house on the top of a cinder heap.” Bat it dawned on him that the seeds of a great change were beginning to germinate. "The whole face of things was changed to me by that discovery, and all I had to do then in order to become a Socialist was to hook myself on to the practical movement.”

Morris confesses that when he joined the Democratic Federation, founded by Hyndman in 1881, he was "blankly ignorant of economics”; this he immediately set out to remedy by tackling Marx's works, including "Capital.” He did not stay long in the Democratic Federation, which had become the Social Democratic Federation, as he soon became disgusted with the reformism that permeated it. In December, 1884, along with Belfort Bax, Eleanor Marx, Frederick Lessner and Edward Aveling, he left the Federation to form the Socialist League, and in February, 1885, the first issue of the "Commonweal” was published, edited by Morris and Aveling. This first number contained the Manifesto of the League and also an "introductory” by Morris, the beginning of which is worth quoting as an example of the attitude of the new body towards its official organ:—

 "We beg our readers' leave for a few words in which to introduce to them this Socialist journal, The Commonweal. In the first place we ask them to understand that the Editor and Sub-Editor of The Commonweal are acting as delegates of the Socialist League, and under its direct control; any slip in principles, therefore, any mis-statement of the aims or tactics of the League, are liable to correction from the representatives of that body.
  "As to the conduct of The Commonweal, it must be remembered that it has one aim—the propagation of Socialism.”

This was certainly a promising start; a few paragraphs. from the League's Manifesto will further indicate how far Morris and his associates had progressed in understanding:—

    "Fellow Citizens,
    "We come before you as a body advocating the principles of Revolutionary International Socialism; that is, we seek a change in the basis of Society—a change which would destroy the distinctions of classes and nationalities.
    "As the civilised world is at present constituted, there are two classes of Society—the one possessing wealth and the instruments of its production, the other producing wealth by means of those instruments but only by the leave and for the use of the possessing classes.
      "These two classes are necessarily in antagonism to one another. The possessing class, or non-producers, can only live as a class on the unpaid labour of the producers—the more unpaid labour they can wring out of them, the richer they will be; therefore the producing class—the workers —are driven to strive to better themselves at the expense of the possessing class, and the conflict between the two is ceaseless. Sometimes it takes the form of open rebellion, sometimes of strikes, sometimes of mere widespread mendicancy and crime; but it is always going on in one form or other, though it may not always be obvious to the thoughtless looker-on.
     "We have spoken of unpaid labour; it is necessary to explain what that means. The sole possession of the producing class is the power of labour inherent in their bodies; but since, as we have already said, the rich classes possess all the instruments of labour, that is, the land, capital, and machinery, the producers or workers are forced to sell their sole possession, the power of labour, on such terms as the possessing class will grant them.
    "These terms are, that after they have produced enough to keep them in working order, and enable them to beget children to take their places when they are worn out, the surplus of their products shall belong to the possessors of property, which bargain is based on the fact that every man working in a civilised community can produce more than he needs for his own sustenance.
   "This relation of the possessing class to the working class is the essential basis of the system of producing for profit, on which our modern Society is founded.”

   "Nationalisation of the land alone, which many earnest and sincere persons are now preaching, would be useless so long as labour was subject to the fleecing of surplus value inevitable under the Capitalist system.
     "No better solution would be that State Socialism by whatever name it may be called, whose aim it would be to make concessions to the working class while leaving the present system of capital and wages still in operation; no number of merely administrative changes, until the workers are in possession of all political power, would make any real approach to Socialism.
     "The Socialist League therefore aims at the realisation of complete Revolutionary Socialism, and well knows that this can never happen in any one country without the help of the workers of all civilisation.”

There is little wanting in clearness in the above and the last paragraphs quoted are certainly not out of date. Unfortunately the adherents were few and it was largely on money supplied by Morris that the organisation was able to carry on until an influx of anarchists swamped those who stood with Morris, modified the policy of the League and compelled Morris and his group to resign in 1890. The Anarchists had found an opening in the fact that the League eschewed political action for the time, concentrating upon educating the workers.

Morris did a vast amount of lecturing, street-corner speaking and writing. He constantly harped upon a theme that was of abiding interest to him—the introduction of conditions that would enable the producer to find joy in his labour and would thus enable him to make articles that were both useful and beautiful. Morris has been charged with looking back to the hand labour of mediaeval times and building an utopia out of touch with the realities of his time. This is not so. An essay he wrote on “A Factory as it Might be” dispels this view. The essay opens up as follows : —

  "We Socialists are often reproached with giving no details of the state of things which would follow on the destruction of that system of waste and war which is sometimes dignified by the lying title of the harmonious combination of capital and labour. Many worthy people say: 'We admit that the present system has produced unsatisfactory results, but at least it is a system; you ought to he able to give some definite idea of the results of that reconstruction which you call Socialism.’

   "To this Socialists answer, and rightly, that we have not set ourselves to build up a system to please our tastes, nor are we seeking to impose it on the world in a mechanical manner, but rather that we are assisting in bringing about a development of history which would take place without our help, but which, nevertheless, compels us to help it; and that, under these circumstances, it would be futile to map out the details of life in a condition of things so different from that in which, we have been born and bred.”

From the quotations we have given it will be seen that Morris had got a grip of the fundamentals of the working class position and was not just an artistic expression of revolt against ugliness. Many of those who eulogise him to-day, and gloss over his sturdy championship of the real working class position, he would have scorned as associates in his day. He was a worthy pioneer even though he had not yet worked out the full implications of an independent working class policy. The Socialist Party had sufficient regard for his views to publish, as one of their first pamphlets, his “Art, Labour and Socialism,” now unfortunately out of print.

We would have liked to have given a full and critical estimate of Morris’s relation to the Socialist movement, but, with our restricted space, the above fragment will have to suffice for the present.

Gilmac.

The Phoney Revolution - Part 2 (1957)

From the December 1957 issue of the Socialist Standard

Part One

The Managerial Revolution

The Managerial Society is now part of popular mythology. Even in Marx’s time it seems to have been a commonplace, for he quotes Dr. Ure as saying in 1840, that not the industrial capitalists but the industrial managers “are the soul of our industrial system.” (Capital, vol. 3, pp. 454/5).

It is of course true as the managerial theorists say that the unity between owners of capital and the actual direction of production has been ruptured. In fact Marx himself acutely analysed in the third volume of Capital the reasons for this and showed it to be intimately bound up with the concentration of capital (the continuous enlargement of the productive units) and the centralisation of capital (the amalgamation of a number of smaller capitals into a single capital). The centralisation of capital was considerably helped by the tremendous growth of the credit system and with it the emergence of the joint stock company.

When Marx speaks of the credit system he includes the whole financial machinery of capitalism, i.e., banks, finance houses, security markets, etc. It is via the credit system that scattered capitals can be deposited in vast amounts and made available for large scale capital investment. In this way said Marx it “transforms itself into an immense social mechanism for the centralisation of capital.”

The Absentee Capitalist

Joint stock companies (corporations) operate not merely with their own capital but other peoples. Of them Marx says, “Capital … is here directly endowed with the form of social capital … as distinguished from private capital and assumes the form of social enterprise as distinguished from private enterprise. It is the abolition of capital as private property within the boundaries of capitalist production itself.” Marx adds, that it leads to the “transformation of the actually functioning capitalist into a mere manager, and administrator of other peoples capital and the owners of capital . . . into mere money capitalists.” (Capital, vol. 3, pp. 516/17.)

Marx, unlike our modern theorists, did not believe the development of the corporation to be a step towards Socialism. Collective capital, he said, although it gave impetus to the social character of wealth production could never overcome, but only intensify the antagonism of socially produced wealth and private appropriation. He also added that the development of the corporation and “the credit system, brings a new set of parasites . . . promoters, speculators …  a whole system of swindling by means of corporation juggling, stock jobbing and stock speculation. It is private production without the control of private property.” (Capital, vol. 3,, p. 519.)

The hired managers

Marx also dealt with the replacement of the capitalists as industrial entrepreneurs by managers. The early capitalists, while not producing surplus value, supervised the activities of those who did. This appropriation of unpaid labour was called the profits of enterprise. The economic apologists of the day also called it the wages of superintendance. With the vast growth of capitalism the function of the capitalist as a representative of capital became delegated to managers, whose wages of superintendence was fixed at the market price and was but a mere fraction of what the capitalist had appropriated for such work. Managers are then agents for the capitalists and hence agents for capital.

The so-called Middle Class

Managers constitute the elite of the amorphous mass called by some people the new “middle class.” It includes civil servants, professional workers, office staff, salesmen, etc. They are also known as the salariat. The requirement of large scale capitalism has brought about a considerable increase of these types of employees. Labourites and Tories have claimed that the growth of this group of the working population has falsified Marx’s prediction of the decline of the middle class. When Marx spoke of the decline of the “petty bourgeoisie” he was referring to independent handicraftsmen, small traders and those living on small fixed incomes. This prediction holds good. Such people constitute small property owners. The salariat are not an expanded form of these lower sections of the historic bourgeoisie. This “new middle class” is in substance not a property section but a propertyless section of the community, forced to work for a livelihood. The term middle class is not based upon an objective evaluation of the position of individuals in the economic structure of society but on a subjective assessment of one’s occupation, residence, and general cultural qualifications.

The census of classification of occupations (1951) ignored these finer nuances by classifying sections of the working population as industrial and non-industrial. The census also tells us that in this country there are approximately 750,000 managers. Of these 185,000 are termed general managers and directors. Some of these directors will have been appointed to boards of concerns as top ranking technicians, administrators or because they have big names and influence. Some of these directors will be big stock holders who have got themselves appointed with the additional advantages of expense accounts. The general managers for the most part are not substantial shareholders—what ever they hope to become. It is these with the overwhelming bulk of managers the 700,000 or so who are under orders for the concerns for which they work. As such they are representatives of the capitalists, operating in a capitalist environment and working for capitalist objectives. As such they do not form a separate class with aims and economic interests different and in opposition to those who employ them. It is these, along with the highly placed technicians, who constitute the hard core of Burnham’s and the new look Fabian’s alleged managerial class, who they claim have replaced, or are in process of so doing, the capitalist class.

What is a Class?

Having used the term “class” in the context it is perhaps necessary to define it more precisely. In the first place a class is not merely a question of social origins. An individual born in the working class may enter the capitalist class and vice versa. Nevertheless a class tends to perpetuate itself along the lines of its social origins. It is also true that individuals are influenced by the ideas and attitudes of the class to which they belong. But ideas and attitudes do not determine a class structure.

Nor as is popularly supposed is a class made up of people getting near enough the same income. Some highly paid workers may get as much or more than some small capitalists. It does not mean therefore that they have an identity of interests. A civil servant and an aircraft mechanic may both earn £1,000 per year but it does not give them a class affiliation as against those who earn double or half of that amount. Although differences of income are a feature of classes, it is not the size of the income but the source of income, common to a number of individuals which is more important for the purpose of analysis. But to say no more than this would leave the question up in the air.

To discover the real nature of class structure one must go to the roots of a social system and that must be sought in the social relations of production i.e. the way one set of individuals stand to another set of individuals in the process of producing wealth. Using this criterion we can say that social classes are characterised by those who own the means of production and those who work for them and who provide above the general cost of their maintenance, surplus labour for the former. The appropriation of surplus labour has always exemplified class society of which capitalism is historically the last form. In capitalism the social groups consist of the ruling section who own the wealth producing agencies and the subordinate class—non-owners—who work for them and the surplus labour takes the form of surplus value. The essence of class privilege being the appropriation of unpaid labour, the individuals who make up the ruling section will have a common interest in perpetuating a social order upon which the survival of its privileges depends. An antagonism of interests is then a feature of class society.

It is true that people can be classified in innumerable ways, dependent upon the purpose in view. But if we wish to know from whence profits are derived, what determines wage levels and the impetus of capital accumulation, in short what makes the system tick, then only the Marxist classification is relevant for such purposes.

Production of surplus value is the life blood of capitalism. It provides capitalists with their personal incomes and is the source of extended capital accumulation. In a society in which two classes face each other as owners of the means of production and wage workers owning only their working capacities the way control is exercised over the agencies of production is evident. That is why capital is not just another name for means of production, as some woolly minded Fabians think. For the capitalist the means of production represent a sum of values which take the form of investment. The capitalist is not concerned with means of production as such, but as capital and the only function capital has for him is to expand.

Expand or go under

In a world where monopolistic, quasi monopolistic, or free market competition is the order of the day (plus capital depreciation due to technical changes which tend to depreciate capital values) the self-expansion of capital becomes the essential condition for successful survival of the capitalist or combination of capitalists. Capitalism is a social organisation where production and distribution of wealth has to follow certain rules. Capitalists, and the management, must conform to these rules on pain of elimination. Because capitalism was bound up with, (and the outcome of), a past economic evolution, it constitutes a definite stage of historic development. For that reason the aims and motives of capitalists are proscribed within the social framework. Not for nothing did Marx state that his view “can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them.”

If production of surplus value and the self-expansion of capital are the dominant drives of the system, then whether capitalists run their own concerns or have them run by managers they must both act as functionaries of capital. And whatever other motives, capitalists or managers may or may not bring to the direction of enterprises they are all subordinate to the over-riding compulsion of the self-expansion of capital in a profit motivated economy. If they are not successful in capital accumulation they cannot be successful in anything.

Having defined a class as the position individuals occupy in the economic structure of society in relation to other individuals, i.e., as owners and non-owners of the means of production it may be asked in what way do managers constitute a class. In what way do they stand to the relations of production in contrast to the owning class and the non-owning class. What economic function —not occupational or technical—have they separate from employers and employees? What objectives do they pursue which are not capitalist objectives and what is the system they are supposed to be operating which is neither capitalist or socialist? It is precisely on such issues, crucial to the claims of the managerial theorists that they become vague, and even obscurantist.

The Place of the Technician

There is a variation of the managerial theme which holds that the complex character of automation will produce a race of technicians upon whom the capitalists will be so utterly dependent that they and the managers will be able to hold the big capital owners to ransom and impose their own terms upon the system. In substance these arguments were put forward by technocrats thirty years ago. They argued that the ever-growing complex technical evolution of the system would result in the power of control passing to technicians and administrators, who would be small and compact enough to hold the capitalists to ransom. Experience shows, however, that the technical requirements of capitalism have never failed in the long run to bring about a generous, sometimes over-generous supply of necessary technicians, and there is no reason to suppose that automation technicians either now or in the future will not be as liberally forthcoming as they have been in the past.

The Bureaucracy

To the structure of this alleged new ruling class there has been added another component, the bureaucrats. Although what role they are supposed to play in the economy and in what manner they fuse with the managers, is never made concretely clear. Hitler’s Germany is often used as the classic example of managers, bureaucrats and political adventurers usurping the capitalist ruling class. But as was pointed out in a previous article on the “managerial revolution” there was never the slightest evidence to show that an economy other than capitalism had emerged or was emerging under the Fascist regime. It is true that the development of what is known as Monopoly Capitalism has been linked with the expansion of the economic functions of the state which in turn has engendered close contacts between the organisations of big business, chambers of commerce, etc., and the various state departments. Again large scale State investment for the provision of cheap raw material and essential services for the economy as a whole, has brought about an interlocking between parts of the state apparatus and industry. All of which reflects itself in capitalist parliaments and governmental policies. But this has not led to the elimination of the capitalist economy, nor has it led to its undermining but rather to its underpinning.

But even if the assumption was granted—and there is not any evidence for so doing—that managers, top ranking technicians, and boards of directors have displaced or will displace the big capital owners, does it follow that they constitute a new ruling class? Having defined class within the context of the subject, we have seen that a class is not merely a set of people organised around certain interests but a group of individuals who occupy a certain position in the economic structure of society, and so stand in certain relationship to another group in a specific mode of production. And the ruling group are those who via ownership are able to exercise control of the means of production. In what way then would managers who ousted the former owners constitute a new ruling class. The answer is that they would not. The social productive relations would remain unaltered. The essential features of the capitalist economy would remain and the production of surplus value and extended accumulation of capital would still be the dominant motives of those who now occupied the leading positions in the economy. In short they would still function as representatives of capital. It would still be the ruling class as we have defined it. All that it would mean is that the dominant section would be made up of different persons, and no more significant in fundamental change than the replacement of Jewish capitalists by Aryan capitalists. On such slender threads rests the grandiose assumptions of the managerial theorists. The claims put forward by Labourites and Tories on behalf of managerial society are rooted in political and propaganda purposes rather than in genuine investigation. But this and other matters must remain the subject of another article.

Ted Wilmott

Link to Part Three

The Phoney Revolution (1957)

From the October 1957 issue of the Socialist Standard

Part One: The Burnham Thesis

The roots of James Burnham’s Managerial Revolution go back to the early 19th century Utopian Socialist, St. Simon, who first systematised the notion of the managerial society. Burnham’s second edition of this concept was neither analytical nor in the strict sense statistical, only crudely and melodramatically descriptive. Nevertheless, it met a need in that it gave food for thought to a theory hungry intelligentsia and presented them with a plausible view of what was supposedly happening in contemporary society.

Burnham and the Reformists

Not that the motley crowd of reformists who acclaimed the managerial revolution were prepared to swallow Burnham whole. They eschewed his cynicism as to the effectiveness of any kind of political action; his blatant totalitarianism and bizarre fatalism based on “iron historic laws.” Nor did they share his brutal frankness that this managerial revolution would only be for the working class a change of masters—managers instead of capitalists, and, vide Burnham, a change in some respects for the worse. Rather they diluted the doctrine with democratic and quasi idealistic assumptions. They agreed that a hierarchic social structure was inevitable, even desirable, with an administrative and technical elite at the apex. Political expediency, however, compelled them to a tender regard for the broad based “masses,” who would be comfortably supported in that station of life to which it pleased “management” to call them. Indeed, leftists in their quest for novelty renamed the managerial revolution 20th century Socialism, and in their incorrigible fashion turned Burnham’s nightmare into a Fabian day dream.

Burnham’s proposition

Burnham’s book was tricked out in the pseudo Marxist terminology favoured by Trotskyists and Communists alike. Perhaps many mistook his heavy style for weight of argument, and his metaphysical determinism for scientific exposition. Again, the fact that Burnham as an ex-Trotskyist had been subject to the political paranoia peculiar to the creed, made it easy for him to pass over to the grandiose assumptions of the managerial revolution.

These assumptions can be briefly summarised. It is a fallacy, said Burnham, to believe that Socialism is the only alternative to capitalism. In fact, he contended that the abolition of capitalist property relations holds no implications for the realisation of Socialism. Nevertheless, the present system was doomed. It had lost its power due to the impact of economic crises, modern wars and changing industrial techniques on an already enfeebled system. The New Deal in U.S.A., large scale State organisation carried out by the Soviet and Nazi dictatorships, even the effects of the war economy on Britain, had compelled the major Powers along a path which so far as the old methods of capitalist production were concerned there could be no return. So argued Burnham.

Burnham’s Managerial Class

According to Burnham, capitalism in any significant sense was virtually finished, and the phase we are entering, contrary to Marxist predictions, is not Socialism, but the managerial society, a social set up where control is vested in the administration of business and government by an elite of highly trained and educated men. In short, a society dominated by the manager and technician. Economic evolution, he argued, compels the State to exercise ever greater control and even direction over the means of production. But he concluded, whether managers are representatives of private or public concerns, their power will grow with the growth of economic and technical development. Thus, the managers will emerge as a distinct class, with their own class consciousness, class interests and privileges.

Managerial Society Universal but not Indivisible

Paralleled with this internal development of managerial society, there will externally be a struggle between the three major states or super-states for world supremacy. These super-states will consist of Europe, pivoted on Germany; Asia, whose focal point will be Japan; and America, based on the U.S.A. Each of these states will be autonomous managerial societies based on state ownership of the means of production and political control by the managerial class. We may mention that Burnham wrote his book in 1940 and at the time deemed a Nazi victory possible.

The Three Phases of the Revolution

The managerial revolution, vide Burnham, will be divided into three phases, although the phases may overlap. First, the managers will seize political power from the capitalist class and reduce them, to impotence. Secondly, the curbing of the masses and their indoctrination with managerial ideologies. Thirdly, the struggle between the world Powers for economic supremacy. In Burnham’s view the process took the classic course in Russia. In Germany the working class was curbed first and the capitalists later. Leaving aside the fact that all of Burnham’s major prophecies regarding the outcome of the war were false, what he had to prove was that Russia, via the Bolsheviks, and Germany, via the Nazis, had eliminated capitalism. Further, that the New Deal had been a mortal blow to U.S.A. capitalism and that in the major capitalist countries control of the means of production were passing under the control of the managers. It can be said that Burnham’s premises have no more foundation now than when he first put them forward.

Burnham’s Fallacies

When Burnham argued that the managerial revolution occurred first in Russia, this would seem inconsistent with his own logic. According to him the managerial revolution can only take place as the result of an economic and technical development which renders the capitalist organisation of production superfluous along with the capitalist class. No such process, however, had taken place in Russia. The task of the Bolsheviks was not to supersede capitalism in Russia, but to develop it. Burnham strove to show that Soviet Russia was neither capitalist nor Socialist, but he evaded the basic proposition  that the relations between wage workers and a state employer enchain the working class in Russia to the laws of wage labour as elsewhere in capitalism.

Nor was he on any stronger ground when he argued that the Nazi Germany had begun a new social order. He offered as a proof of this the fact that mass unemployment had been wiped out in Germany. Remembering the vast armament programme of the Nazis and the placing of the economy on a virtual war footing, it would have been strange if the Nazis had not done so.

Burnham tried to clinch his point by saying that capitalist countries like England could not even in total war abolish mass unemployment. Once, however, the war effort was under way mass unemployment was abolished here. He also contrasted what he believed to be the overall efficiency of the alleged managerial set up in Germany with what he termed backward nations like England. Yet, according to official English sources, war production efficiency was superior to that which obtained in Nazi Germany.

Nor did his picture of a virtually non-capitalist economy correspond with the facts. German capitalism all through the Nazi regime and right up to now exhibits the monopolistic and interlocking character which it had in pre-Nazi times. One has only to think of the iron and steel industry dominated by men like Wolf and Flick, Transport, the building, chemical and electrical trades, largely controlled by the Quandt family, or the monopolistic concentration of potash, oil, textiles, glass and cement. While names like Krupp and Klockner were still in Nazi Germany household words. Not only were these monopolists powerful capitalists, but also active participants in their businesses. As such they do not fall into the category of mere coupon clippers or managers in Burnham’s sense of the term. Moreover, these powerful capitalists or groups of capitalists were able, by the familiar devices of inter-connected directorships, plural and proxy voting, share exchanges, profit pooling, etc., to exercise a closer control over the German economy than their counterparts here.

State Regulation and Capitalism

But, argued Burnham, was there not a great deal of regulation and direction of the state, including curtailment of investment, carried out in Nazi Germany. But if this is the characteristic mark of the managerial set up, then English capitalism was equally qualified to be accounted a managerial society. A qualification which in England’s case Burnham would not grant. Burnham contrived to show that market laws and the profit motive were no longer crucial to the German economy. While it was true that the outcome of imperialist rivalries and the needs of German rearmament had blocked certain economic avenues, this had only led to a more intense search for new outlets by means of an aggressive policy of expansion. Thus, extension of markets, export of capital and expansion of capital accumulation were the dominant features of Nazi Germany, just as they were the dominant features of pre-Nazi Germany, and just as they are dominant features today. (Here, of course, we specify West Germany.)

Again, vide Burnham, the index to the advance of managerial society lies in the extent to which state capital replaces private capital. But here once again the evidence which Burnham offered is unconvincing and even paradoxical. In Germany in 1937 the capital invested in state enterprise was only about 7 per cent, of the nominal capital of joint stock undertakings. But if, according to Burnham’s logic, the maturity of the managerial society is an ever-increasing ratio in favour of public financing of industry as against the private industrial sector, then Germany was, under Hitler, still overwhelmingly a capitalist nation.

We might also remember that in 1938 and, taking account of the different price levels, profits distributed in Germany were 1,200 million marks, and undistributed profits were over 2,000 million marks. According to the Oxford Institute of Statistics (The Economics of Full Employment), “Profit margins were extraordinarily high in Germany in 1938 as compared with other countries or with conditions prevailing in Germany in the ’20s.” Also the same source states that between 1933-1938 there was a decline in Germany in real wages. Nor did German capitalism remain a static economy. Some concerns expanded, others declined. Some made huge profits, others made small profits. Some even went out of existence. In short, under the Nazis the economic set up had all the basic features associated with the economic behaviour of capitalism. As such it hardly corresponded with Burnham’s picture of a non-capitalist, non-profit economy.

State Intervention and Capitalism

Burnham also advanced as a crucial proposition in support of his managerial thesis that state intervention, he instanced the New Deal, undermines the basis of capitalist society. In principle Burnham had to argue that state intervention is a move away from capitalism to the managerial society. But state intervention is a typical feature of capitalism, and its purpose is to, and does in fact, strengthen the structure of the capitalist economy. While groups of capitalists in America opposed state intervention via the New Deal, the undoubted intention of Roosevelt was to strengthen and stabilise capitalist property relations, and in this he succeeded. The fact that state intervention of some sort has been a consistent and permanent feature of capitalism, including the state regulation and interference of its mercantilist period, exposes the poverty of Burnham’s argument.

Burnham and U.S.A. Capitalism

It was American capitalism which Burnham made the touchstone of his contentions. For this he leaned heavily on Berle and Means study, The Modern Corporation and Private Property. They stated that “The dominant institutional feature extant in America is the large corporation. Typically they said this is controlled by its management, who have no substantial ownership interest in it and consequently receive no benefit from it apart from their salaries.” They add that in 1929 65 per cent. of the 200 largest corporations, totalling 80 per cent. of their assets, were management controlled. Burnham, however, went far beyond the findings of Berle and Mean. Indeed, only a total misreading of their work could lead one to conclude that they were advancing a theory of the managerial revolution. Apart from what they termed pure management; i.e., Burnham’s definition of the managerial class, they included in management those whose interest was financial and profit making.

Since the publication of Berle and Mean’s book, The Securities and Exchange Commission of the Temporary Economic Committee (T.N.E.C.) carried out an exhaustive analysis on the same lines, which emphasised an aspect of corporation control ignored by Burnham. The report stated that “In about 140 of the 200 largest corporations the blocks of shares in the hands of one interest group were large enough to justify with other indications, such as representation on management, the classification of these concerns as more or less ownership controlled.” This, of course, is even truer for the vast number of smaller companies. The same report stated that the 2,500 officers and directors of the 200 companies own more than two billion dollars’ worth of stock, which amount is heavily concentrated in the hands of about 250 men. Again, it can be noted that the dominant group need hold as little as 20 per cent. of the total stock providing sufficient proxy votes can be arranged, and the rest of the stock can be sufficiently dispersed. It is true that the salaried employers of big corporations—managers in Burnham’s sense—may by investing their savings or even judiciously speculating with the funds of the corporation in which they are employed, strengthen their financial position and reach the status of capitalists. But it was no part of Burnham’s case to prove that there can be and are changes in the personnel of the capitalist class.

What Burnham failed to prove

But even apart from the decisive controlling interests of the powerful capitalist groups who are outside Burn-ham’s managerial classification, he failed to answer the crucial question, and that was in what way do the most important managers employed by capitalists have interests and aims different from their employers? Further, if the mode of production of the managerial society is to be neither capitalist or Socialist, in what way will it be different from both? Burnham himself was aware of the basic weakness of this part of his case, and although he strove to get round it, he left the whole matter up in the air. Thus we find in the end that Burnham’s managerial society, with its integration of state with capitalist industry, is merely a new name for an old process, the development of monopoly capitalism.

We might conclude by saying that Burnham typifies the arrogant, peevish intellectual. He qualified to become a leading Trotskyist by making all the political errors it is possible to make. Some might have been dangerous— if anybody had taken any notice of him. Thus, in 1936, he was not only still asserting that the Soviet set up had a Socialist basis but further, that in the event of a war between Russia and other capitalist powers, the workers should turn their arms against their nationals in support of Russia. Now he has stopped being a Trotskyist, he has not, however, stopped being foolishly dangerous. He is now advocating American world domination—and at this point we leave him.

Ted Wilmott

Part Two