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

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 Managerial Society Part Three — Fabian Version (1958)

From the January 1958 issue of the Socialist Standard

Link to Part Two

Management is a nice neutral word to describe capitalist property relations. It has no harsh ring of class antagonism, no hint of social conflict. The word is greatly in favour with Tories and Labourites. Once Labourites talked about capitalism and even hard-faced capitalists, but that was long ago. Now, according to the new Fabians, capitalism has gone, and capitalists— including the hard-faced ones—have been displaced from power by—Management. Some of the new thinkers now refer to capitalism in the past tense, just as historians refer to Rome or feudalism.

Capitalists without Capitalism
Although capitalism has gone, vide Crosland and others, capitalists still linger on, presumably through sheer inertia. It appears, however, that they are but vestigial survivals in the socio-economic body, like the appendix. Time and the managed enterprise plus State planning will wither them away. Actually it was not the new Fabians who pioneered the notion of a departed capitalism, but an old-time Labourite, Mr. Morrison, who in a more remote past used to talk in an old-fashioned way about the capitalist system. Nevertheless with the return of the 1945 Labour Government—which he regarded as a “victory for Socialism,” he declared: “The Labour Party does not propose to abolish the profit motive” (Observer, 28/10/46). In the same speech we were told the “new order” would be based on the recognition that “Management must in future recognise Labour as a service and not as a commodity.” He added that “this new status of the worker would, however, involve new duties as well as new rights.” It may be recorded that, “The victory for Socialism” was unblemished by any attempt of counter-revolution on the part of the capitalists.

To show that by 1948 class antagonism had been abolished, Mr. Morrison in another speech (Observer, 14/3/48) assured us that

  “The modern worker is or should be a responsible partner in industry . . . knocking at the manager’s door with ideas and suggestions.”

After that it was easy for Mr. Morrison to define Socialism as

  “The assertion of social responsibility for matters which are properly of social concern.”

This, of course, is crass confusion. The terms social and Socialism do not mean the same thing apart from the fact that both are derived from society. Anything from the issuing of licences to the supervision of brothels can be of social concern, but they have nothing to do with Socialism, which means the establishment of a social organisation based on free and social access to the agencies of production and distribution.

Enter the New Fabians
After this the new Fabians began to feverishly explore the “new social order” via the New Fabian Essays. Mr. Anthony Crosland, one of the contributors, is certain that capitalism has been abolished. What he isn’t certain about is the form of society which has replaced it, so he plumps for calling it “Statism,” and it becomes his version of the Managerial Society. All it amounts to is the fact that vast units of capital and the enlargement of the State’s economic functions have replaced the laissez-faire capitalism of the 19th century. But even laissez-faire was not a universal feature of capitalism. The U.S.A., Germany, Italy, Japan, etc., all began as capitalist countries, with marked State intervention, so there must be some feature more fundamental to capitalism than laissez-faire. If, of course, State intervention into the economic life of a country is “Statism,” or ” Socialism,” as the new Fabians hold, then the countries just mentioned have never had capitalism. Such are the startling conclusions drawn from the logic of Mr. Crosland.

It is a Marxist commonplace and acutely analysed long ago by Engels, that the growth of monopoly capital is a logical development from laissez-faire. Thus we can say —capitalism is dead, long live capitalism. If the elastic and highly competitive character of 19th century capitalism led by its very nature to monopolistic forms, this does not mean that competition has been eliminated, but, on the contrary, re-enacted on a vaster scale.

Old Fallacies of New Fabians
Because Crossman, Crosland, Roy Jenkins, Albu, and other Fabians believe, as did old-time Fabians, that State economic activity is Socialism, and because they limit capitalism to mean merely the uninhibited free play of market forces, for them State enterprise and the existence of huge formations of monopolistic and semi-monopolistic capitals is the negation of capitalism. Having restricted the content of capitalism to mean laissez-faire, they see State intervention and government policy entwined with capital interests as the decline and fall of the system. They fail to see that the transformation of 19th century State policy from non-intervention in economic organisation to active participation, was not due to so-called Socialist tendencies, but to the challenge by other powers to England’s economic supremacy.

Just as both old and new Fabians have not taken into account the fact that for English 19th century free trade competition there was substituted international competition, in which tariffs and protection were legitimate aids, and for the cut-throat competition of the free market there is substituted the cut-throat competition of the international units of capital. Add to this the colonial policies of the Big Powers, the export of capital and the search for spheres of influence and it is not hard to see how capitalist economics and politics go hand in hand.

Again, it was not socialistic tendencies, but world competition which compelled governments to undertake to subsidise or nationalise those industries whose services and commodities are vital to the needs of the capitalist economy as a whole, i.e., coal, gas,, electric power, transport, etc. And the need for State intervention becomes especially urgent where conflicting interests prevent these industries, when privately owned, from carrying out the necessary reorganisation. Again, the necessity of supplying cheap services and facilities for industry as a whole may mean a rate of profit or a slow rate of return unattractive to outside sources of investment or that private funds have ample and more lucrative avenues elsewhere. In that case it becomes necessary for the government to reorganise certain basic industries essential for the entire economy.

Because Labourites have represented large-scale formations of capital as a development towards Socialism and nationalisation as its stepping-stone, they are forced to maintain that the coalescing of large industry with State enterprise is the virtual elimination of capitalism and its replacement by a managerial system which constitutes the transitional period of Socialism. In such a way has Burnham’s theory been Fabianised or paralysed.

The State and the Classes
Although the Fabians have “abolished capitalism” they have not abolished the State. But they say it is no longer the executive committee of one class but “the social instrument of all classes.” Thus the army, air force, police, judiciary, etc., are all at the disposal of the working class if and when they care to use them unless, of course, another class wants to use them at the same time. Then one supposes it is a question of priorities. No doubt, when workers are on strike, especially in a big way, they may take note of such useful information.

The Fabians have, however, abolished classes, or almost. Thus Mr. Crossman in a broadcast (August, 1948) :—

  “In the Marxist sense there is no longer a bourgeoisie only a vestigial group to remind us of its former dominance. There is no more a proletariat in the Marxist sense, only a remnant to remind us of past miseries.”

Having eliminated the main division of capitalism, the odds and ends left seem hardly worth classifying, although Mr. Crossman still speaks of classes.

Now many Fabians who criticise Marx at least know someone who has read Marx, or someone who knows somebody who has. But such important sources of information do not seem to be available to Mr. Crossman. Otherwise even he might have known that Marx classified bourgeoisie and proletariat as property owners and those who possessed only their capacities to work. The class structure of capitalism—and this is the essence of capitalism, said Marx—is the division between owners of capital and wage-workers, whose means of livelihood consisted of selling their services to the former. Whether the capitalist is a man of great wealth or only moderately so, or whether the propertyless wage worker—proletarian—receives high or low wages does not determine the social relation which capital owners and employees enter into. It is ownership of means of production which is the basis of capitalist society.

That this division between owners and non-owners, in spite of two Labour Governments and fair shares for all, still holds good, can be statistically verified. The Oxford Institute of Statistics tells us 80 per cent. of capital is owned by 10 per cent. of the population, and that 1 per cent. own half of the entire capital.

Mr. Crossman might even get a few facts about the class division of wealth from some of his Labour cohorts. Writing in the Sunday Pictorial (27/11/55), Mr. Wilfred Fienburg, Labour M.P., stated :—

  “Let us face it, there ARE two classes in Britain to-day . . . one-tenth owns nine-tenths of the wealth and there are the others, 45,000,000 others, who own practically no wealth at all.”

And Professor W. Arthur Lewis writing on the Distribution of Property, Socialist Commentary, December, 1955, said:—

  “Two-thirds of the private property in this country is owned by less than 4% of the population. This uneven distribution lies at the root of most of the evils with which Socialists have been concerned in the economic sphere— especially the uneven distribution of income and economic power.”

Yet Mr. Crosland calmly asserts :—

  “It is no longer true that property relationships determine the distribution of economic power.” (New Fabian Essays, page 38)

Concentration of Wealth
In spite of the fact that, according to the new Fabians, capitalism is going or is gone, the concentration of wealth into fewer hands is still a marked phenomenon of this “non-capitalist society.” In fact, Mr. Bevan, a fellow-member of the same party as Mr. Crosland says :—

  “Even among the wealthy classes the concentration of wealth in the upper layers is disturbing—200 companies out of 176,000 in Britain take more than a quarter of all profits A little over 1 % take 60% of the profits.”—(Reynolds News, 15/5/55.)

While Margaret Hall on “Monopoly Policy” in The British Economy (p. 422), says :—

  “By the mid-twentieth century the concentration of economic power was accepted as the normal evolution of the advanced capitalist systems.”

So, in spite of the fact that, according to some of the new Fabians there has been a dispersal of wealth and economic power, there has been no dispersal in ownership. Neither has Mr. Crosland’s non-capitalist society altered the trends of the concentration of capital.

The Mixed Economy
The mixed economy, as it is called by “the new thinkers” to describe extant capitalism is supposed to be the British way of effecting a happy compromise between capitalism and Socialism. It is neither happy nor a compromise. Actually, over nine-tenths of manufacture, building, trade, and finance is privately owned and the remainder of State enterprise—power and railways—are themselves, as we have said, economic appendages to private enterprise. Even people like Mr. Morrison have never envisaged the mixed economy as more than a two-tenths State industry and eight-tenths private industry. Thus the mixed economy has a whisky and soda flavour. Mostly the spirit of private enterprise and a dash of nationalisation to take off the raw edge—but hardly a mixture.

Propaganda Value of the Managerial Society
The concept of a Managerial Society seeks to soft-peddle working class resentment and feeling in the struggles over the division of wealth. Now, the bloated, top-hatted, cigar-smoking capitalist of old-style Labour cartoons has been faded out. Instead we have managers who, though they seek profits, are really interested in the skills and techniques of management and who, unlike the capitalists, are workers, a special kind of worker, but still workers, and between one section of workers and other sections of workers there should be a general unanimity of interests, not conflict. Under the old capitalist society it was division and struggle. Under the managerial set-up it is, or should be, co-operation and collaboration, and if vide Mr. Crosland we might not be “all Socialist now,” we are at least all workers now.

In this way have the new Fabians presented the Managerial Society or, as they alternatively call it—British Socialism.

Ted Wilmott

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 - 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