Are the Managers Really in Control? Part Two (1981)

From the February 1981 issue of the Socialist Standard

Link to Part 1. 

In Part One (Socialist Standard, January 1981 ) we discussed James Burnham’s clearly expressed  argument that class society could exist without property titles vested in individuals. He was of course proved wrong by events: industrial managers have not replaced private capitalists as the possessing, ruling class, on the basis of the state ownership of the means of production (for Burnham never expected the managers to come to power within the legal framework of private capitalism).

Burnham gave as the reason why the “managers”, by which he meant those who actually managed the process of production, would be the new ruling class the alleged fact that a ruling class must have some function in the process of production :

“Social rule . . . depends on de facto control of the instruments of production—the means whereby society lives; and such control can be held only by some group which plays a direct and integral role in production” (The Managerial Revolution, p. 232).

In the past when the means of production were small-scale and scattered this was so. At that time the various means and instruments of production could be, and were, controlled individually. But today, due precisely to the development of modern industry brought about by capitalism, this is no longer so; the production of wealth has become socialised. The wealth of modern society is produced by the co-operative labour of those who work. In this sense the point of production is not the individual mine or factory, but society. Thus it is those who control society, not those who manage production at factory level, who are really in a position to control the use of today’s means of production.

It is the state which is the centre of social control so that whoever controls the state controls society and so, potentially at least, the means of production. This is so even in Western capitalism with its legal property titles. The private capitalists of the West, just as much as the possessing class in Russia (which in fact is also a capitalist class), now possess the means of production because they control the state rather than vice-versa. They use this control to back up their historically-inherited legal property titles, having long ceased to have any necessary productive function. Whereas in Russia the possessing class own the means of production directly through the state, in the West this is done indirectly through individual property titles ultimately enforceable by the state. In the end this amounts to the same thing: today’s socially-operated means of production are possessed and controlled by a minority class socially, through the state, the centre of social control.

Actually, Burnham himself unwittingly recognisedthat access to the modern means of production can only be controlled socially when he argued that managerial rule would be based on the state ownership of the means of production. For, on the basis of state ownership, any group which established its exclusive stable control over the state would become a collective possessing class precisely because it would therefore control the use of the means of production. If industrial managers were to organiseas a group, win popular support or acquiescence, and come to gain control of state power they would indeed become the ruling and possessing class—but  by virtue of controlling the state not of being managers.

Burnham was wrong, then, in assuming that the managers’ technical function in production was a compelling reason why they should emerge as such a group whereas in fact they were no more, or less, likely than any other group to do so.

State Capitalism

Both Rizzi and Burnham (and, indeed, Wittfogel also) rejected the view that Russia could be described as state capitalism. Both of them regarded Russia as a new class society: “bureaucratic collectivism” for Rizzi and “managerial society” for Burnham. This rejection of a state capitalist analysis of Russia was an inheritance from their Trotskyist past where they had learned to identify capitalism with private capitalism. For Trotsky, capitalism could not exist without private property titles vested in individuals; for him “state capitalism” was state control of private capitalist industry.

Capitalism, however, is not characterised by the legal form that class possession of the means of production takes, but by the social fact that those who “possess” the means of production exploit wage-labour and accumulate the surplus-value thus obtained as capital. An examination of “the specific economic form in which unpaid surplus labour is pumped out of the direct producers” in Russia shows this to be the case there. The excluded majority live by selling their labour-power to various state enterprises; the products of these enterprises are sold on the market with a view to profit; and the difference between the wages of the producers and the value of what they produce is surplus value which is used for capital accumulation and the consumption of the privileged class. Russia is thus capitalist and its possessing, ruling, privileged class a capitalist class.

Russia can be described as state capitalist in order to distinguish the form of capitalist class possession of the means of production there from the legal property-holding of the West. It should not be forgotten, however, that private property titles do still exist in Russia (though, admittedly, not as the predominant form) and that this could grow in the future. Equally, elements of non-legal de facto class possession through the state exist in Western countries, though the capitalist title-holders are able through their control of Parliament to prevent politicians and state officials gaining a permanent and widespread privileged consumption at their expense.

We see, then, that in East and West alike control of the use of today’s socially-operated means of production rests ultimately in the hands of those who control the state. It is clear that on the basis of class possession of the means of production a variety of such forms—both with regard to control of production and to the allocation of consumer goods among the privileged class—are possible. Each particular case needs to be examined on its own in the light of the historical and social facts. It is not possible to lay down a priori, as Burnham tried to do, which particular group would be most likely to emerge as the ruling class on the basis of state-owned industry. Nor can it be said that there is any particular reason why there should be any tendency for individual property titles to be abolished and replaced by de facto possession through the state.

Classless Society

The above analysis has certain practical implications. Since the state is the organ of social control, and since it is through controlling this organ that the capitalist class, East and West, is able to maintain its possession of the means of production, it is clear that the excluded producing class of wage and salary earners must, in order to establish a classless society, begin by gaining control of the state. Not, be it quickly added, to form a “socialist government” or a “workers state” (both absurd contradictions; when there is socialism there will be no state and where there is a state there is no socialism), but simply and solely to take state power out of the hands of the capitalist class, so removing the last obstacle to society establishing common ownership and democratic social control over the means of production. This presupposes both a widespread desire and understanding among the working class to establish a classless, socialist society and that the working class have democratically organised themselves, without political or industrial leaders, to carry out this desire. In the absence of such majority socialist understanding any attempt to establish socialism would inevitably fail and most probably lead to the sort of state capitalist society, based on de facto class possession of the means of production which we have been discussing.

The essence of class possession is precisely control over the use of the means of production by a section only of society. Once the use of the means of production is under the democratic control of the whole of society then “class possession”, “private property”, “class ownership”, call it what you will, has been abolished. The means of production could still be said to “belong” to those who controlled their use—in other words, to be “commonly owned” by the democratically-organised community.

But to talk of “common property”, “social property”, and the like can be misleading in that these terms do not fully bring out the fact that the transfer to society of the power to control the production of wealth makes the whole concept of “property” redundant. The question “who would own the means of production in socialist society?” can be answered just as correctly by saying “nobody” as by saying “everybody”, or “society”, or the “community”.

What social control over production will mean in practice is that every member of society will be free to take part, on equal terms with every other member, in deciding how the means of production should be used. As Burnham put it:

“For society to be ‘classless’ would mean that within society there would be no group (with the exception, perhaps, of temporary delegate bodies, freely elected by the community and subject always to recall) which would exercise, as a group, any special degree of control over access to the instruments of production; and no group receiving, as a group, preferential treatment in distribution” (The Managerial Revolution, p.55).

Society’s power to control production would be embodied in various democratic institutions. “Common ownership” and “democratic social control” of the means of production are merely, as we have said, two different ways of describing the same situation. This is why discussion as to whether one could exist without the other is quite meaningless.

Socialism is democratic or it is not socialism. A society where the means of production were formally the common property of society but where only a minority took part in deciding how they should be used would be one in which “common property” was merely a fiction since in practice the means of production would be the sectional possession of the decision-making minority.

In the end the only guarantee in socialist society against the emergence of a new ruling class which would negate the common ownership of the means of production is people using the democratic institutions—the actual democratic participation of all the people in the running of society. This is why it is absolutely essential that those who establish socialism—the majority working class who will constitute also the major part of the people of socialist society—must be fully aware of its implications, being prepared and organised to participate not only in its establishment but also in its subsequent running.

Adam Buick

A feeble criticism of Marx (1948)

From the January 1948 issue of the Socialist Standard

Modern criticism of Marx tends to crystalise itself into the concession that Marx discovered but unfortunately over-emphasised certain important truths about the nature of social development. Thus do his capitalist critics damn him with a faint praise. Mr. Christopher Hollis, broadcasting “On the Merits and Defects of Karl Marx” (Listener, 4/9/47) offered a slight variation of the theme by at least appearing to praise him with rather more than faint damns. Apart from that his treatment of Marx has no further claim to originality.

Marx himself, sensitive to the fact that his analysis of existing social forms demanded some insight, into his historical method, presupposed in the preface, to “Capital,” people who were willing to learn something new and therefore think for themselves. Viewing his motley crowd of critics by and large, might suggest that this presupposition erred on the side of over-optimism. Indeed many of Marx’s critics have resolutely refused to take him neat. Instead they have preferred to swallow him heavily diluted with secondhand versions and hear-say of others. The sharpness and flexibility of Marx’s method must, however, be judged by the way Marx himself used it. The fact that certain people have criticised Marx without troubling to discover what can be learned from Marx himself has not prevented them from offering their own versions “of what Marx really meant” or should have meant. It did not, of course, prevent Mr. Hollis.

Calling Marx’s Historical Materialism crude economic determinism he nevertheless conceded that economic circumstances have a great influence on men’s views and conduct. “It is a naive and adolescent crudity that they are the sole influence,” he added. It is more naively adolescent for Mr. Hollis to attempt to foist on Marx a view he never held and the fallacy of which he himself exposed. Education, philosophy, religion, law, and political struggles, as Marx revealed, in their action and reaction on each other, played an important part by in turn modifying and influencing the main trend of economic development. What Marx did say was that the key to the whole social picture was to be found in the economic relations under which men live, for it is this which constitutes the most important influence over men’s lives and through their lives their ideas, institutions, and general cultural activities.

For Marx all social development is historically conditioned. That men make history is central then to his doctrine. Not out of any old circumstances it is true but out of the material conditions they find to hand ; again for Marx the vital difference between a colony of bees, or an organisation of ants lies in the fact that men’s historically determined social behaviour is consciously formulated for given purposes and directed towards given ends. Mr. Hollis could even learn that Marx’s theory of Historical Materialism is not only a way of understanding history but through that understanding a way of helping to make it.

According to Mr. Hollis Marx’s economic determinism merely formulated the fact that human nature had been predominantly ruled by greed throughout history. To expect human nature to change, except by the most gradual evolution, was from the standpoint of Marx’s own logic and materialistic thesis, utterly irrational. Socialism being ruled by a spirit of love and service was therefore impossible. Capitalism may pass, said Mr. Hollis, indeed it is reasonable to think so, but on the day of its overthrow the new Socialists and Communists speaking the language of the classless society will establish themselves as a new governing class.

Marx’s belief in the coming of Socialism, was, according to Mr. Hollis, the rewriting of his ancient Jewish ancestral creed, Marx being the son of a Jew who became baptised in the Christian faith, Marx himself the inheritor of generations of Jewish faith translated the coming of the Lord in terms of the coming Communist revolution. Other “psychologists” have also explained Marx’s theories in terms of personal motivation. With that delightful lack of agreement and refreshing inconsistency which characterises “the finding” of these mind experts they have arrived at different conclusions to those of Mr. Hollis. Thus Marx’s theories of social revolution have been rationalised, as a desire to be revenged on his father for turning a Christian; the result of an ineradicable inferiority complex ; and even as a bye-product of an unhealthy liver. Doubtless a perverse ingenuity could think up a, dozen more reasons equally good—or bad. We for our part confess our utter inability to attempt an objective assessment of a many ideas in terms of subjective personal motivation. Generally speaking, such is the vast range of human motives that they are mostly too complex and obscure for people themselves to be really clear about them. For us the only satisfactory criterion of a man’s ideas is whether it is a more, or less objective representation of the processes he seeks to explain. Mr. Hollis’ attempts to deal with Marx’s theories from this aspect were, however, singularly unsatisfactory.

Mr. Hollis even described Marxism among other things as a psychology. Although he added “there is no psychologist today who would accept Marxian Psychology.” He thought that in the realm of psychological motivation there was infinitely more truth in Adler’s lust of power theory than in Marx’s crude economic determinism. Not only Marx himself but also his theories are shifted by Mr. Hollis into the realm of “psychological motivation.” The results of Mr. Hollis’ efforts in so doing are sensational. For if we are to believe Mr. Hollis it is not Marx’s view that it is the historical development of social productive forces which put men’s social needs and economic interests in a definite social cast but rather it is certain fixed and inflexible psychological attributes which bring about the social superstructure necessary for their expression. Mr. Hollis, with a wave of his psychological wand, is thus able to turn Marx the materialist into Marx the idealist. For Marx, if we are to believe Mr. Hollis, merely regarded historic social changes as but the derivative and outcome of a state of mind, albeit a greedy state of mind. Social productive relations are not then the prior and indispensible conditions for men’s existence but some ghostly process tacked on as it were to their immutable economic behaviour. All of which leads to the inescapable conclusion that Marxism is but the affirmation of the subjectivist claim that nothing exists but thinking makes it so. Mr. Hollis is probably unaware of the fact that it was Marx who with objective criticism and scientific acumen scourged those idealistic thinkers, such as Stirner, Bentham, etc., who held such notions! Incidentally, although innocently, Marx also scourged the idealistic Mr. Hollis.

Marx, however, denied that men’s economic interests and needs were to be found by an abstract psychological study of men’s minds; any more than they can be found in a physiological study of their bodies. Such interests are not psychologically derived but socially conditioned. More specifically, men’s social interests and economic exigencies have their origin not in the consciousness or unconsciousness of individuals but in the role these individuals play as members of a social group or class, in the organisation of production. Whether a man is born into that social group which makes him slave owner or slave, feudal lord or serf, employer or wage earner, depends not on his good or bad intent but on a set of productive relations indispensable to his existence and independent of his will. A mode of production based then on private property relationships, expresses the way different classes stand to each other in the division of wealth and the manner and extent in which the total social product is divided between them. In a society such as Capitalism the continued social well-being of the class who own the means of wealth production is dependent on the exploited class who are non-owners. It is true that hero and there an individual succeeds in changing his independent status, but for the overwhelming majority of the dependent class their social and economic conditions are given. Consequently their position of social servitude cannot be changed without revolutionising the productive relationships which make this servitude indispensable for the exploiters The interests of an individual are then but the expression of the common interests of his class. Whatever incidental differences may arise between members of the same social group they are subordinated and subservient to those common benefits that serve their class needs.

In the same way the conflict of class interests is never a conflict which originates and centres around abstractions like “human greed” and “lust for power.” These class conflicts themselves have their objective source in the antagonistic character of social relations based on class ownership of the means of living. The solution for the resolving of these class conflicts likewise is not the outcome of arbitrary choice or ethical preference. On the contrary it is the conscious realisation of concrete class needs made possible by the objective opportunities provided by the development of the social forces within present day society. For it is only when social production is freed from the restraint of private ownership which gives power over the lives of the many and hampers their- free development can a state of affairs—common ownership of the means of living—provide the social basis on which “the free development of each individual is the condition for the free development of all.” Which shows how much or how little Mr. Hollis understood of the subject he so kindly undertook to explain.

Nevertheless, Mr. Hollis assured his listeners that Capitalism was passing away. While Mr. Hollis was reticent about the shape of things to come he was at least emphatic that the shape would not be Socialism. Sombrely his political horoscope pointed instead to the emergence of a new ruling class. From his statement that the new Society was in its birth pangs we may deduce the fact that the exploited section will continue to be the working class. The economic function of the working class is, of course, to produce surplus value, i.e. the difference in value over and above the cost of their own subsistence and the value of the total product they produce. The appropriators will then be Mr. Hollis’ “new ruling class” who will monopolise the means of living. But it is this method of exploitation based upon the conversion of the dispossessed labourers’ working energies into a commodity and a section who appropriate their unpaid labour which is the starting point and distinctive feature of Capitalism as an historic mode of production. Nothing in essentials will be changed in Mr. Hollis’ “new society.” For a new ruling class to come into existence it must presuppose an entirely new set of economic conditions having entirely different social aims and economic objectives. To call managers, functionaries, bureaucrats, etc., operating and monopolising the means of production under the aegis of the State, a new ruling class is a misnomer. As appropriators of surplus value they would merely be fulfilling the same economic function as the entrepreneur and private corporations they had replaced. The method of exploitation would still exist in the form of capital and wealth accumulation ; or more strictly capital accumulation by the process of seeking, as far as possible, the expansion of surplus value, would be the dominant economic aim and objective. What distinguishes a ruling class is not a particular set of personalities who make up its ranks but the particular way a ruling class, by ownership of wealth resources, appropriates the labour of others. Mr. Hollis’ new ruling class would then be merely different individuals of the old ruling class. In the same way as the former Nazi leaders by forced purchases, appropriation and penetration into large scale industry did not, as some have fondly imagined, form the, nucleus of a new ruling class, but as recipients of surplus value, became part of the German Capitalist class.

It is also an illusion held by Burnham and other supporters of the so-called “managerial revolution” that State intervention weakens and finally destroys the basis of Capitalism. What, in actual fact, does happen is that with the monopolistic growth of modern Capitalism the political functions of the State become more and more integrated into the economic functions of capital. The purpose of political controls is then to ensure as far as possible the smooth running of the various branches of Capitalist production ; the easing of the friction between various sections of the Capitalist class; and the regularising and spreading over of some part of the capital resources of the ruling class in the main field of Capitalist production. State intervention, so far from weakening Capitalism, attempts to strengthen and preserve it in the interests of the Capitalist class as a whole. Even where a considerable measure of State control of industry has been carried out it merely means that the appropriation of surplus value is carried out by the State on behalf of collectivised capital. That is why Mr. Burnham, in his desperate attempt to find a new economic basis for his Managerial Society, merely discovered the novelty of another name for a form of highly developed State Capitalism.

Mr. Hollis also tried to foist on Marx an economic breakdown theory. He said Marx held that only by loans to undeveloped countries was Capitalism able to stave off the breakdown due to its inability to generate sufficient purchasing power ; finally, however, collapse would come. Nowhere did Marx put forward such a doctrine.

Mr. Hollis also thought that the increase of the wealth of the poor was a denial of Marx’s forecast about the development of Capitalism. To talk of the increase of the wealth of the poor is a comical phrase, like talking about the increased health of the permanently diseased. He argued that the worker’s standard of living has increased incomparably more than in all previous recorded history. Yet, strangely enough, never, perhaps, has history recorded such vast inequalities of income on the scale obtaining in Capitalism. What is true is that in spite of the incomparable increase in producing wealth in ever vaster quantities the poverty of the great majority in Capitalism is not merely a logical deduction from Marx’s theories but a physical and social fact.

Mr. Hollis complained that the taxation of the rich was becoming increasingly heavier. One can only say that a system of society, such as the present, where the State is compelled to spend vast resources on the upkeep of such things as armies, navies and armaments in general, can hardly constitute a satisfactory defence of capitalism. If anything it is another excellent reason why Capitalism should go.

That Mr. Hollis should read into what he calls the logic of Marx his own crudely naive and adolescent fatalism of a world in the grip of iron laws based on human greed is lamentable. What is perhaps more lamentable is that it should obtain licence to be performed publicly. Doubtless, however, the traditional “B.B.C. impartiality” is best preserved by letting its listeners hear Marx explained by non-Marxists or even anti-Marxists.

In conclusion we may add that from Mr. Hollis’ discourse on Marx we failed to discern either “the merits or defects of Karl Marx.” We did, however, in this respect discover the defects of Mr. Hollis.

Ted Wilmott

What is common ownership? (2005)

From the April 2005 issue of the Socialist Standard

  John Major didn’t believe in ‘class society’, Margaret Thatcher didn’t even believe in society, but private ownership is the defining factor of both. Meanwhile the concept of common ownership has only resulted in feeble nationalisation programmes. So, the question is What is common ownership?

The basis of any society is the way its members are organised for the production and distribution of wealth. Where a section of society controls the use of the means of production, then there is a class society. Another way of putting this is that the members of this section or class own the means of production, since to be in a position to control the use of something is effectively to own it, whether or not this is accompanied by some legal title deed.

It follows that a classless society is one in which the use of the means of production is controlled by all members of society on an equal basis, and not just by a section of them to the exclusion of the rest. James Burnham put this rather well in a passage in his book The Managerial Revolution:

  “For a society to be ‘classless’ would mean that within society there would be no group (with the exception, perhaps, of temporary delegate bodies, freely elected by the community and subject always to recall) which would exercise, as a group, any special control over access to the instruments of production; and no group receiving, as a group, preferential treatment in distribution”

In a classless society every member is in a position to take part, on equal terms with every other member, in deciding how the means of production should be used. Every member of society is socially equal, standing in exactly the same relationship to the means of production as every other member. Similarly, every member of society has access to the fruits of production on an equal footing.

Once the use of the means of production is under the democratic control of all members of society, class ownership has been abolished. The means of production can still be said to belong to those who control and benefit from their use, in this case to the whole population organised on a democratic basis, and so to be “commonly owned” by them. Common ownership has been defined as:

  “A state of affairs in which no person is excluded from the possibility of controlling, using and managing the means of production, distribution and consumption. Each member of society can acquire the capacity, that is to say, has the opportunity to realise a variety of goals, for example, to consume what they want, to use means of production for the purposes of socially necessary or unnecessary work, to administer production and distribution, to plan to allocate resources, and to make decisions about short term and long term collective goals. Common ownership, then, refers to every individual’s potential ability to benefit from the wealth of society and to participate in its running” (Jean-Claude Bragard, An Investigation of Marx’s Concept of Communism, his emphasis).

Even so, to use the word “ownership” can be misleading in that this does not fully bring out the fact that the transfer to all members of society of the power to control the production of wealth makes the very concept of property redundant. With common ownership no one is excluded from the possibility of controlling or benefiting from the use of the means of production, so that with reference to them the concept of property in the sense of exclusive possession is meaningless: no one is excluded, there are no non-owners.

We could invent some new term such as “no-ownership” and talk about the classless alternative society to capitalism being a “no-ownership” society, but the same idea can be expressed without having to do this if common ownership is understood as being a social relationship and not a form of property ownership. This social relationship—equality between human beings with regard to the control of the use of the means of production—can equally accurately be described by the terms “classless society” and “democratic control” as by “common ownership” since these three terms are only different ways of describing it from different angles. The use of the term “common ownership” to refer to the basic social relationship of the alternative society to capitalism is not to be taken to imply therefore that common ownership of the means of production could exist without democratic control. Common ownership means democratic control means a classless society.

When we refer to the society based on common ownership, generally we use the term “socialism”, though we have no objection to others using “communism”, since for us these terms mean exactly the same and are interchangeable.

Not state ownership

Common ownership is not to be confused with state ownership, since an organ of coercion, or state, has no place in socialism. A class society is a society with a state because sectional control over the means of production and the exclusion of the rest of the population cannot be asserted without coercion, and so without a special organ to exercise this coercion. On the other hand, a classless society is a stateless society because such an organ of coercion becomes unnecessary as soon as all members of society stand in the same relationship with regard to the control of the use of the means of production. The existence of a state as an instrument of class political control and coercion is quite incompatible with the existence of the social relationship of common ownership. State ownership is a form of exclusive property ownership which implies a social relationship which is totally different from socialism.

Common ownership is a social relationship of equality and democracy which makes the concept of property redundant because there are no longer any excluded non-owners. State ownership, on the other hand, presupposes the existence of a government machine, a legal system, armed forces and the other features of an institutionalised organ of coercion. State-owned means of production belong to an institution which confronts the members of society, coerces them and dominates them, both as individuals and as a collectivity. Under state ownership the answer to the question “who owns the means of production?” is not “everybody” or “nobody” as with common ownership; it is “the state”. In other words, when a state owns the means of production, the members of society remain non-owners, excluded from control. Both legally and socially, the means of production belong not to them, but to the state, which stands as an independent power between them and the means of production.

The state is not an abstraction floating above society and its members; it is a social institution, and, as such, a group of human beings, a section of society, organised in a particular way. This is why, strictly speaking, we should have written above that the state confronts most members of society and excludes most of them from control of the means of production. For wherever there is a state, there is always a group of human beings who stand in a different relationship to it from most members of society: not as the dominated, nor as the excluded, but as the dominators and the excluders. Under state ownership, this group controls the use of the means of production to the exclusion of the other members of society. In this sense, it owns the means of production, whether or not this is formally and legally recognised.

Another reason why state ownership and socialism are incompatible is that the state is a national institution which exercises political control over a limited geographical area. Since capitalism is a world system, the complete state ownership of the means of production within a given political area cannot represent the abolition of capitalism, even within that area. What it does mean is the establishment of some form of state capitalism whose internal mode of operation is conditioned by the fact that it has to compete in a world market context against other capitals.

Since today capitalism is worldwide, the society which replaces capitalism can only be worldwide. The only socialism possible today is world socialism. No more than capitalism can socialism exist in one country. So the common ownership of socialism is the common ownership of the world, of its natural and industrial resources, by the whole of humanity. Socialism can only be a universal society in which all that is in and on the Earth has become the common heritage of all humankind, and in which the division of the world into states has given way to a world without frontiers with a democratic world administration as well as local and regional democracy.

Adam Buick

Private Property and Class Possession (1981)

From the January 1981 issue of the Socialist Standard

Are the managers really in control? Part One

The basis of any society is the way its members are organised for the production of wealth. Where a section only of society controls the use of the main means of production then we can speak of a class society.

Control of the means of production by a minority class implies the exclusion from such control of the rest of society, an exclusion which can only rest ultimately on physical force. A social organ of coercion, the state, is thus a feature of all class societies and historically first made its appearance with the division of society into classes.

The class that controls the means of production can be said to constitute a stable ruling and privileged class when it:

   1. controls the use of the means of production (possession);

   2. controls the state (rule);

   3. has preferential treatment in the allocation of goods for consumption (privilege).

It is important to keep these three feature—possession,  rule and privilege—separate since they don’t always automatically go together. It is possible for a possessing class to be neither the ruling class nor a privileged class. For instance, it might not actually control the state but just have its protection against the excluded majority. Another minority class might control the state and use it to allocate itself, at the expense of the possessing class, a privileged consumption. In this case there is a socially and politically unstable situation in which the possessing class, starting from the finally decisive fact of controlling the means whereby society lives, will strive to capture state power for itself—strive to become the ruling class as well as the possessing class. This done, it can easily end the privileged consumption of the previous ruling class.

Just such a struggle for power occurred in Western Europe in the five hundred years up to the 19th century. In feudalism the power of the nobility was based on their control of the then main means of production, the land. In time a new possessing class arose in the towns whose economic power was based on trade, money and industry. At first the bourgeoisie (originally, those of the bourg or market town) were often plundered, legally and illegally, by the feudal barons, but in time the nobles learned not to kill the goose that laid the golden egg. The bourgeoisie grew in economic and political influence until eventually they were able to overthrow the feudal aristocracy and shape the state in their own interest. This was done in England in the 17th century, culminating in the so-called Glorious Revolution of 1688, in America with the victory in the War of Independence and in France with the Revolution of 1789.

All three revolutions had a similar aim and result: to establish, in their own words, the “rule of law”; “no taxation without representation”; “the rights of property”. The bourgeoisie wanted their possession of the means of production legally recognized and protected and taxes (which, in the end, are a charge on property and property income) levied on them only in accordance with the law, in whose making they would have a say through representation in Parliament.

The bourgeoisie succeeded in shaping the state and society in their own interest and the popular concept of “property” is still very much that of the bourgeois tradition. “Property” is generally taken to mean not only the fact that a person actually possesses a thing, but that he has the legal right to possess it. “Property” has come to mean legally recognised possession and to be almost inextricably associated with the idea of a legal title.

Before we proceed any further we need to be clear on what we mean by “property”. We have a choice: either stick to the meaning which it has historically come to have—legally recognised possession, or substitute for this legalistic definition a broader sociological one which would allow us to say that any class society was a property society on the basis of the fact that a section only of the population controlled the use of the means of production, whether or not this was recognised by legal titles.

In view of the danger of confusion in introducing new meanings to words, we will stick to the established usage, but won’t object to others adopting the sociological definition as long as they make it clear that they are doing this. So we will use “property” to mean the legal recognition of possession. When we wish to refer to the social fact which the law merely acknowledges we shall use the word “possession”. Thus all class societies are based on the “possession” of the means of production by a section only of society. Some, in particular capitalism as it evolved in Western Europe, supplement this possession with legal property titles which the state recognisesand will if necessary enforce through the courts and ultimately the armed forces.

De facto class possession means that the absence or abolition of individual property titles to the means of production in any society does not necessarily confirm that society is a classless one. We must look beyond mere legal forms and determine whether or not there is a section of society which has, as a matter of social fact, control of the use of the means of production.

The Bolshevik leader, Trotsky, is in large part responsible for spreading the opposite view. He and his orthodox Trotskyist followers confuse “property” and “possession” and imagine that the abolition by a vanguard party of professional revolutionaries of legal property titles to the means of production—and hence of a class of legal property holder—is tantamount to establishing a classless society. This is why they describe Russia as a “workers state” (a meaningless term in any case, as we shall see later). The Russian revolution, they claim, abolished bourgeois property rights and vested ownership of the means of production in the state. As long as this state ownership of the means of production is maintained, they go on, then Russia can not be called a class society. Certainly, they admit, there is a privileged group in Russia but its members are privileged only with regard to the allocation of the products, not with regard to production. They thus constitute not a class but only a “caste”. As far as the production of wealth is concerned, we are asked believe that both this “caste” and the working class stand in the same relationship.

This analysis, which places the Russian worker in the same basic social position as the privileged top state and party officials, was so absurd that it did no take long for it to be rejected within the Trotskyist movement itself. In fact it is thanks to the resulting controversy that we owe much of the clarification of the difference between what we called above “property” and “possession “, and in particular to two ex-Trotskyists: Bruno Rizzi and James Burnham.

Rizzi, in a book published in France in 1939 with the title La bureaucratisation du Monde (The Bureaucratisation of the World), argued that capitalism was being replaced throughout the world, not by socialism but by a new exploiting class society not foreseen by Marx. Rizzi called this new class society “bureaucratic collectivism”. In it individual ownership of the means of production was replaced by collective ownership, as foreseen by Marx, but the collective ownership not of all society but of only a section of it. Bureaucratic Collectivism was a class society based not on individual property titles, but on the possession of the means of production by a class, collectively as a class:

  “In our opinion another ruling class, the bureaucracy, has emerged from the October revolution, and its receding, while the bourgeoisie has been dispensed with and consequently has no possibility of returning. The possession of the state gives the bureaucracy possession of all movable and immovable goods which, although socialised, do not the less belong in toto to this new ruling class. It goes without saying that the new ruling class takes good care not to officially declare that it enjoys this possession but it in fact controls all the economic levers and has its property guarded by the GPU and the bayonets of the ‘purged’ army. 

  The class property which in Russia is a fact is certainly not registered with any lawyer or in any register of property. The new soviet exploiting class has no need of such nonsense. It has the force of the state in its hands and that is worth much more than the old registrations of the bourgeoisie. It defends its property with machine-guns, with which its all-powerful oppressive apparatus is provided, and not with lawyers’ deeds. In soviet society exploiters do not appropriate the surplus value directly, as the capitalist class does in cashing the dividends of his enterprise, but they do so indirectly, through the state which appropriates the whole national surplus value and then shares it out amongst the officials themselves . . . We see then that exploitation passes from its individual form to a collective form, in accordance with the transformation of property. There is a class which en bloc exploits another in accordance with class property and which then goes on to distribute internally, through its state, the proceeds amongst its members” (our translation from the French).

Burnham, in his more widely known Managerial Revolution published in 1941, put forward the same general theme as Rizzi about a new class taking over from the capitalists, but for him these were the industrial managers rather than the political bureaucrats.

Burnham wrote very clearly and concisely about how class society could exist without property titles vested in individuals, so clearly that he is worth quoting at some length:

  “In most societies that we know about, and all complex societies so far, there is a particular, and relatively small, group of men that controls the instruments of production (a control which is summed up legally in concept of ‘property right’, though it is not the legal control but the fact of control which concerns us). This control (property right)is never absolute; it is always subject to certain limitations or restrictions (as, for instance, against using the objects controlled to murder others at will) which vary in kind and degree. The crucial phases of this control seem to be two: first, the ability, either through personal strength, or as in complex societies with the backing—threatened or actual—of the state power acting through the police, courts and armed forces to prevent access by others to the objects controlled (owned). Where there is such a controlling group in society, a group which, as against the rest of society, has a greater measure of control over the access to the instruments of production and a preferential treatment in the distribution of the products of those instruments, we may speak of this group as the socially dominant or ruling class in that society. It is hard, indeed, to see what else could be meant by ‘dominant’ or ‘ruling’ class. Such a group has the power and privilege and wealth in society, as against the remainder of society. It will be noted that this definition of ruling class does not presuppose any particular kind of government or any particular legal form of property right; it rests upon the facts of control of access and preferential treatment, and can be investigated empirically. 

  Effective class domination and privilege does, it is true, require control over the instruments of production; but this need not be exercised through individual private property rights. It can be done through what might be called corporate rights, possessed not by individuals as such but by an institution: as was the case conspicuously with many societies in which a priestly class was dominant—in numerous primitive cultures, in Egypt, to some degree in the Middle Ages. In such societies there can be and have been a few rich and many poor, a few powerful and many oppressed, just as in societies (like the capitalist) where property rights are vested in private individuals as such.
  We have defined “ruling class” as consisting of the group of persons which has (as a matter of fact, not necessarily of law or words or theory), as against the rest of the population, a special degree of control over access to the instruments of production and preferential treatment in the distribution of the products of those instruments”.

(We would prefer to define “possessing class” in this way, reserving the term “ruling class” for a possessing class which also controls the state).

Burnham refers above to the priest-ruled societies of ancient times as examples of class societies without individual property rights. A study of such societies by Karl Wittfogel, Oriental Despotism was published in 1957. Wittfogel was concerned to show the inadequacy of the view (which he attributed to Marx) that the ruling class in any society is always a class of private possessors of the means of production. In oriental despotism, or “hydraulic society” as Wittfogel also called it, a state bureaucracy, headed by an absolute ruler (the despot), ruled on the basis of the control of large-scale waterworks providing irrigation for agriculture.

These waterworks, however, were not the private property of the despot or his bureaucracy. They were state property. But the state being despotic and bureaucratic, they were, in the terminology we have chosen to use, the collective “possession” of the bureaucracy. Individual private possessors of means of production—merchants, moneylenders, even landowners—did exist in oriental despotism, but they did not constitute a ruling class. Indeed the real ruling class—the state bureaucracy—was in so powerful a position that it was easily able to control the class of private owners and prevent them from becoming the ruling class.

Wittfogel concluded that the existence of oriental despotism with its bureaucratic ruling class was proof of the inadequacy of the view that all states exist to protect individual private property. He was right, but then this is not aview which Marxists are called upon to defend. Our view, expressed earlier, is that the class which controls the use of the main means of production will, in periods of social stability, also be the ruling class (= the class which controls the state). We made no claim that such a class had to control the means of production as individual possessors or private title-holders, but merely that they had to effectively “possess” them. The state bureaucracy of Wittfogel’s hydraulic society clearly satisfies this condition. For, in controlling waterworks in a society where large-scale irrigation was essential to agriculture, they controlled the key means of production, thus making the actual producers, whether slaves, serfs or “free” village communities, dependent upon them.

Wittfogel’s merit, despite his unfair criticisms of Marx, is to have shown from history that private property vested in individuals as individuals is not the only form of class possession, but that a class can collectively possess the means of production.

Adam Buick

(to be continued next month)

The Nature of Russian State Capitalism (1985)

From the November 1985 issue of the Socialist Standard

A few months before the outbreak of the Second World War was published in Paris, in an edition of 500, a book entitled La bureaucratisation du monde. Its author was Bruno Rizzi (who identified himself simply as “Bruno R.”), an Italian travelling salesman who had come to Paris from Milan in 1938. Rizzi had at one time been a member of the Italian Communist Party and was a Trotskyist sympathiser without ever being a member of any Trotskyist organisation.

This book, despite being frequently referred to in all Marxist discussions on the nature of Russian society, has only just become available in English with the publication of a translation of its first part under the title The Bureaucratisation of the World. The USSR: Bureaucratic Collectivism, with a useful and informative introduction by Adam Westoby (Tavistock Publications, £9.95).

The book’s main theme was that capitalism was being replaced throughout the world by a new social system called “bureaucratic collectivism”. This was, like capitalism, a class-divided society based on the exploitation of the producers but one in which the capitalists had been replaced as the exploiting class by a bureaucracy which collectively owned the means of production through the State. Thus Rizzi argued:

  Class ownership, which in Russia is a fact, is quite certainly not registered with notaries, nor in the most detailed of surveys. The new exploiting Soviet class had no need of such things. It holds state power and that is worth much more than the old records of the bourgeoisie. It guards its property with machine guns, with which its all-powerful oppressive apparatus is well supplied, and not with legal scribblings (p.64). 

  In the USSR, in our view, it is the bureaucrats who are the owners, for it is they who hold power in their hands. It is they who manage the economy, just as was normal with the bourgeoisie. It is they who take the profits, just as do all exploiting classes, who fix wages and prices. I repeat – it is the bureaucrats. The workers count for nothing in the governing of society. And what is still worse, they have nothing to do with the defence of this peculiar nationalised property. Russian workers are still exploited, and it is the bureaucrats who exploit them (p.69). 

  In Soviet society the exploiters do not appropriate surplus value directly, as the capitalist pockets the dividends from his enterprise, they do it indirectly, through the state, which appropriates the whole national surplus value and then distributes it amongst its own functionaries. A good part of the bureaucracy, that is to say technicians, directors, specialists, stakhanovites, profiteers, etc is authorised, in one way or another, to exact its high salaries directly within the enterprises they control. Over and above this they also enjoy, as do all bureaucrats, state services, provided out of surplus value, and in the USSR these services are both numerous and important, as befits the pattern of ‘socialist’ life (p.75).

The transition to Bureaucratic Collectivism, said Rizzi, had been completed in Russia, was well on the way to completion in Nazi Germany and Fascist Italy and had also begun in the old capitalist democracies with measures such as the New Deal in America.

A copy of the book was sent to Trotsky in Mexico. What interested him was not so much the characterisation of Russia as a new class society – which he did not accept since he always considered Russia to be a “Workers’ State”, a degenerate one, but a “Workers’ State” nevertheless – as Rizzi’s analysis of what might happen if, with capitalism in decay, the working class should fail to establish socialism. Trotsky regarded such a failure as a remote theoretical possibility only, but conceded that, in that event, the Trotskyist movement would have to revise its political perspectives because it would be faced with the prospect of defunct capitalism being replaced by the new bureaucratic class society described by Rizzi. As the working class did fail to establish socialism after the Second World War Trotsky was committed to revising his analysis of, among other things, Russia and it can be plausibly argued that, had he not been murdered by Stalin’s agents in 1940, he would have come to regard Russia as “bureaucratic collectivism”.

The idea that Russia under Stalin was pro-working class was so patently absurd that, towards the end of the Thirties, it began to be challenged even within the Trotskyist movement. In France Yvan Craipeau suggested that Russia might be some new class society with the bureaucracy as the collective owning and exploiting class. In America James Burnham argued that, although Russia was not capitalist, it could not be described as a “Workers’ State” either. Rizzi followed, and took part in the French Trotskyists’ discussion of this issue and clearly derived many of his ideas and arguments from it.

The discussion was particularly acrimonious in the American Trotskyist Party where it came to a head over the related issue of “unconditional defence of the USSR” (which is of course a logical consequence of attributing some working class character to the Russian State). Burnham, Max Shachtman and the others who rejected this slogan were, with Trotsky’s approval, expelled from the Trotskyist movement in 1940.

Burnham, disillusioned with Trotskyism, went on to write his best-seller The Managerial Revolution, which first appeared in 1941, where he argued that the capitalists were everywhere being replaced as the ruling class by the managers. Shachtman and his supporters, on the other hand, continued to regard themselves as Trotskyists and founded a new organisation, the Workers’ Party, which, despite a minority led by Raya Dunayevskaya and C.L.R. James which came to regard Russia as state capitalist, adopted as its official policy the view that what existed in Russia was neither capitalism nor socialism, but bureaucratic collectivism. The Workers’ Party, which later changed its name to the Independent Socialist League, continued to exist as an independent organisation committed to the bureaucratic analysis of Russia until 1958.

Many have claimed that Burnham plagiarised Rizzi, a view endorsed by Rizzi himself. Certainly Burnham, like Rizzi, saw the world, led by Stalinist Russia, Nazi Germany and Fascist Italy, evolving towards a new class society based on State ownership where the workers exploited by a class which owned and controlled the production. On the other hand, there is no evidence that Burnham ever read La bureaucratisation du monde; he may have done in the unlikely event of Trotsky having lent him his copy, but it is much more probable that he learned of Rizzi’s theory through the references to it in Trotsky’s articles and letters.

Trotsky, we have noted, had dealt with the theoretical possibility of what might happen if, with capitalism in decay, the working class failed to establish and had conceded that Rizzi would be right: the world would be heading towards Bureaucratic Collectivism. Burnham, who in his disillusionment had come to the working class as incapable of establishing socialism, merely drew a logical conclusion from Trotsky’s admission: the world was heading towards a new class society based on State ownership of the means of production.

Burnham, however, called this new society “managerial society” and not “bureaucratic collectivism”. This is significant and a reason for concluding that Burnham did not simply plagiarise Rizzi. For Burnham rejected the term “bureaucratic collectivism” precisely because he held that the new ruling class would not be the political bureaucrats but rather the industrial managers, who were directly involved in production. In the final chapter of his book he distinguished his theory from what he called “the similar theory of the bureaucratic revolution”, a reference to theories such as Rizzi’s. Further, Burnham had suggested that Russia might be some sort of “non-bourgeois, non-proletarian State” before Rizzi wrote his book. For he is the B of the “Comrades B and C” referred to by Rizzi at the beginning of Chapter II.

There is another important difference between the theories of Burnham and Rizzi, At the end of Chapter VII, Rizzi suggests that the orthodox Trotskyists should drink the cup of bitterness to the last dregs and recognise that Stalinist Russia was not a “Workers’ State”. But he did not himself drink the cup to the last dreg since he continued to regard the Russian revolution as a proletarian one. Burnham, on the other hand, had no hesitation in declaring: “The Russian revolution was not a socialist revolution . . . but a managerial revolution” (The Managerial Revolution, 1945, p,185).

This is a much more logical position for those who hold Russia to be a class society (whether managerial, bureaucratic collectivist or state capitalist) to adopt – and much more in accord with the Marxist method of judging historical events by their practical outcome instead of by what their participants said they were doing – since it makes the revolution which overthrew the old ruling class part of the process of the rise of the new ruling class.

Rizzi could have made a better case for having been plagiarised by Shachtman who adopted his view of Russia, including the name “bureaucratic collectivism”, unchanged. But then Shachtman did not agree that Nazi Germany and Fascist Italy were bureaucratic collectivist or that the whole world was evolving in such a direction.

The fact is that Rizzi, Burnham, Shachtman, Dunayevskaya, James and the others drew their ideas from a common pool provided by the discussion in the Trotskyist movement on “the nature of the Soviet State”. In this discussion all sorts of ideas were put forward even if only to be rejected by those who brought them up: that the bureaucracy was a class; that Russia was state capitalist; that a class could own without legal property titles; that Stalinist Russia and Nazi Germany had the same social system . . . In these circumstances it is quite out of place for one of the participants to claim that he was plagiarised by another. Rizzi can however be allowed to regard himself as the originator of the term “bureaucratic collectivism”.

In any event, “the theory of the bureaucratic revolution” was proved wrong. It is now more than a generation since both Rizzi’s and Burnham’s books were written, but the capitalist class in the West are as firmly established as ever and show no signs of being ousted by industrial managers or a political bureaucracy. Certainly the Russian system has spread to Eastern Europe and China and to a number of countries in Africa, Asia and Latin America, but the question here is whether the system in Russia can really be regarded as a new, non-capitalist exploiting society.

It is true that in Russia the exploiting class collectively own the means of production and do not have legal property titles to it, and in this respect they do differ from the capitalist class of the West. But, to use a phrase of Marx’s which comes up in Rizzi’s book, this does not necessarily mean that “the specific economic form in which unpaid surplus labour is pumped out of the direct producers” is different. In fact it is basically the same: the producers are separated from the means of production and, in order to live, are forced to sell their labour-power for a wage or salary. In the course of their work they create, over and above the value of their labour power, a surplus value which is realised when the commodities in which it is embodied are sold. Thus in Russia, as in the West, the working class are exploited through the wages system. All the other features and categories of capitalism also exist in Russia: commodity production, value, profits, capital accumulation, and so on. The difference – in the form of ownership but not of exploitation – between Russia and capitalism in the West is best indicated by referring to Russia as State capitalism.

That there is, and has been, a continuous trend towards state capitalism all over the world is undeniable. This has taken place not only in the underdeveloped countries where various groups controlling State power (army officers, party leaders, nationalist intellectuals) have substituted themselves for weak or non-existent private capitalists in the process of primitive capital accumulation (as, indeed, the Bolsheviks had been forced to do in Russia). It has also taken place in the developed capitalist countries where the State has more and more intervened to organise national capital for the struggle for a share of the world market. In this sense Rizzi and Burnham did correctly identify a trend, but they analysed it wrongly. What they saw as a struggle between the old capitalist class and a “new class” was in fact the continuation of the tendency seen by Marx towards the centralisation of production under capitalism, a tendency which makes the private capitalist more and more obviously superfluous.

Supporters and opponents alike often mistakenly analyse this tendency towards state capitalism as socialist. Indeed, as a result of years of misuse the word “socialism” has now virtually come to mean “state capitalism” for most people. But socialism must be clearly distinguished from State capitalism otherwise the working class will be intervening on the political scene only to support State capital against private capital, just as in the last century they intervened to support the industrial capitalists against the landed aristocracy. Socialism means a system of society based on the common ownership and democratic control of the means of production by and in the interests of society as a whole. While State capitalism retains all the features and categories of the capitalist economy – the wages system, commodity production, profits, money, banks socialism abolishes them. Socialism is opposed to both private and State capitalism and alone is in the interests of the working class.

Adam Buick

Is There a “Managerial” Revolution? (1943)

From the February 1943 issue of the Socialist Standard

The capitalist class are able to maintain their ownership and control of society’s means of life because they have control of the machinery of government through which laws acceptable to the owning class are made and enforced. That is why Socialists point to the necessity of a Socialist working class democratically obtaining control of the machinery of Government in order to introduce Socialism. Various opponents of Socialism give other interpretations of the facts and one of the theories now achieving some acceptance is that effective control has passed, or is passing, out of the hands of the capitalist class, not into the hands of the working class, but into the hands of the managerial section of industry. A recent book (The Managerial Revolution, by J. Burnham; Putnam; 7/6)) states the case for this view. It was reviewed by the City Editor of the News-Chronicle, the argument in the book being summarised as follows : —

  His (Mr. Burnham’s) thesis briefly is this. The dominant political power was once in the hands of the great landowners, the feudal lords; then it passed to the big merchants and manufacturers—the capitalists. But capitalism is now moribund, because the people who own the instruments of production no longer manage them. The next phase is not socialism . . . but—if I may coin the word, “managism.” Power is now passing to the “social group or class of the managers,” who, in the course of a generation or so, will have achieved social dominance, will be the ruling class in society all over the world.— (News-Chronicle, August 10, 1942.)

It is interesting to observe that the City Editor of the News-Chronicle, Mr. Oscar Hobson. whose views on this matter are certainly entitled to be given some weight, can see no signs that such a development is taking place. He writes : —

  The works managers I know are not of the stuff of which revolutions are made. In this country they are singularly unvocal. They are not a class apart, differentiated from finance executives and all the rest of the capitalist hierarchy. And when Mr. Burnham sees the rise of Nazidom in Germany as part and parcel of the managerial revolution I almost scoff! Where among the Nazi leaders will he find a “manager”?

Who Controls Whom ?
Actual incidents in contemporary capitalism support Hobson’s view as against Burnham’s. All the evidence is that in Germany and Italy it has not been the case that managers have become the political ruling class, but that the Nazi and Fascist leaders, once they have achieved control of the machinery of Government, have set about acquiring or extending their ownership of industrial, commercial and financial concerns. Their actions prove that they at least do not believe that management is the thing that matters, they have gone all out to become owners. A writer in the Times recently described how the Fascist leaders in Italy have used their hold on political power to acquire ownership or shareholdings in businesses; their political control has been used to make them rich. The Times writer summed it up by saying that whereas the Fascists jibe at Britain and America as countries of “plutocrats,” i.e., countries where the wealthy have acquired political power, Italy under Fascism may be described as a country of “cratoplutes,” a country in which the Party bosses have used political power in order to acquire wealth.

In this country recently we have had some examples of how capitalist industry is controlled and the way that control is exercised. On November 17 the case of Sir Roy Fedden was discussed in the House of Lords. According to Lord Brabazon (reported in the Times, November 18) Sir Roy Fedden was chief engineer of the Bristol Aeroplane Company, and was reputed to have outstanding technical achievements to his credit, among them “the most successful radial air-cooled engines in the world,” and Lord Sempill claimed that Fedden is “one of the greatest geniuses in aircraft design in the world.” But the Company, which was originally founded by Sir George White, is controlled by the family—”Never had anyone but the family and relations of it been allowed on the board. Of the present board, none was an engineer ” (Lord Brabazon). But trouble arose and when Sir Roy Fedden refused to agree to the board’s order that part of his  organisation was to be controlled by the Production Manager he was dismissed. Sir Roy Fedden’s own statement was:—

  On February 6 the Chairman gave me six months’ notice, on the grounds they wanted to make a new agreement. … I have never wished to leave the company. While negotiations were going forward I was dismissed on October 1.” (Evening News, October 31, 1942.)

Lord Sempill also stated in the House of Lords (Times, November 18, 1942) : —

  The trouble was a symptom of other troubles in the aircraft industry. Something should be done to prevent a repercussion of the same kind of difficulties in which people on the financial side made war against those on the technical side, and, as in the case of Sir Roy Fedden, threw them out of a job. The other companies specifically concerned with such trouble were the De Havilland Company,, the Fairey Aviation Company, Napiers and Sons, and Short Brothers. There was another, but the matter was sub judice and he would not mention the name.

It will be seen from this that the man with the technical knowledge was entirely at the disposal of the family who owned and controlled.

Another illustration of the vital importance of ownership was given by the case of Sir Edward Baron and Carreras, Ltd., the £5,000,000 tobacco concern. Here the position was that the Baron family hold 150,000 out of 240,000 £1 ordinary shares and it is only the ordinary shareholders who, under the articles of the company, have voting rights on the Board. The case taken to Court revolved around the question whether Sir Edward Baron, the Managing Director, should persist in his refusal to let the majority of directors make their own choice of a director to be re-elected to the Board, it being alleged that Sir Edward Baron had given a verbal contract not to use his voting rights. The Court held that no such contract had been entered into (Times, December 19, 1942), so the family group of shareholders will continue to control the management of the Company. Where, it may be asked, do Mr. Burnham’s managerial group come into this picture? It was solely a dispute between two groups of owners and their nominees, the Baron group and the minority group—nobody ever thought of mentioning the non-owning managers.

It is quite true that with the growth of mammoth amalgamated concerns the direct control of family groups declines, and that in the public utility corporations the State itself takes a hand in the appointment of the boards of directors. This is, so to speak, an interference by the capitalist State, representing the capitalist class as a whole, in the affairs of individual capitalist undertakings, but two points of paramount importance should be observed. One is that the main interest of the owners, the safeguarding of their income from their investments, is not interfered with. The second is that the creation of public utility corporations under some kind of Governmental control is not in the slightest degree the work of the managerial group but is carried out by those who control the machinery of government.

Russia also has been instanced as a country where the so-called managerial revolution, is in progress, but according to a writer in the Economist who refers to Schwarz’s ”Heads of Russian Factories” (Economist, January 9, 1943), Russia has now gone over to one-man control, the controller being the industrial manager appointed by the State. The Economist writer claims that as a result of recent changes the new type of industrial manager in Russia has as his aims : "Fulfilment of the monthly plan, a rising graph of production, absolute obedience and discipline in the workshop, and one-man direction of the plant.” He has “almost unlimited powers to establish his authority and to deal with slackness and infringements of labour discipline.” True he has to deal with the Bolshevik Party “cell” but ”the once familiar conflict between party cell and factory director has long been forgotten. The fullest unity between party and management has in fact been achieved. The manager is now only very rarely a non-party man. The Party on the other hand has evolved into an almost non-political body. All its interests and activities have been centred on the problems of production.”

Here again we see that the State and those who have its backing are supreme against other groups.

In spite of Mr. Burnham the managers will not become a new ruling class unless they do so through political control. The task of the workers still remains that of gaining political control for Socialism.

Edgar Hardcastle

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