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The Phoney Revolution: Part Two - The Managerial Society

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.