Big Sister is watching you.

In my post on Monday, the third of April, I explored why the power shift from a capitalist to a managerial society occurred according to James Burnham. What I did not make clear was who the managers were or are. In today’s post, I will cover who James Burnham believes the managerial class is, their function, and why they will consolidate and incorporate the capitalist class capable of funding them.

To put it succinctly: Managers specialize in directing technical labor and coordinating production processes (p. 72). For Burnham, while this definition does encapsulate what a manager is, it does not answer two key questions: 1.) How does management relate to social and economic functions; and 2.) What prerogatives do managers have? Before I answer these two questions, I think it will be prudent to review the managerial types.

There are four managerial types according to Burnham. First, there are the managers, then executives, finance capitalists, and, finally, stockholders. These four types will be classified as groups 1, 2, 3, and 4 respectively. Group 1’s job is to “organize the materials, tools, machines, plant facilities, equipment, and labor in such a way as to turn out [a product]” (p. 75). Group 2’s job is to “[guide] the company toward a profit; of selling [a product] at a price in the most suitable numbers for yielding a profit; of bargaining over prices paid for raw materials and labor; of arranging the terms of financing of the company; and so on” (pp. 75-76). While this group may generally be recognized as managers, their association with profit in no way changes the quality of the product itself, which is Group 1’s duty. The third group is “interested in the financial aspect not merely of the automobile company but of many other companies and many market operations” (p. 76). This group “may wish to unite this company with others, in order perhaps to sell a stock or bond issue to the public, independently of the effect of the merger on the technical process of production or on the profits of [the] original company.” They’re interested in competing with other companies through financial manipulation, influencing politics to benefit their company, inflating prices on a product to undermine a competitor, and can act in a manner “altogether independent of the requirements of production or profit in [a particular company]” (pp. 76-77). Lastly, group 4's members are those who, legally speaking, ‘own’ the company. The legal owners receive dividends “when on occasion dividends are declared by the directors” (p. 77). 

Of these four groups, Burnham regards Group 1 as the essential group (p. 79). Groups 2, 3, and 4 are the product of Group 1’s actions and goals. If any company wishes to create a product, it needs Group 1. Group 2 cannot generate profits without a product, nor can Group 3 leverage the company’s power without the resources and logistical outputs of Group 1, nor can the company's legal owners claim to have a functioning company without Group 1’s actions. Without Group 1, there’s no product; without a product, there’s nothing to profit from; without profits or resources generated by Group 1, there’s nothing for Group 3 to do; and without a product, there’s nothing for Group 4 to own or profit from. Importantly, because group 1 is essential and it is not concerned with profits, only producing a good, that good becomes the chief article of value in a managerial economy. In other words, Group 1’s goal is not primarily profits. This means they can, according to Burnham, resolve the problem of unemployment (which Burnham believes is a chief concern for any society because it generates discontent). The finance capitalists, however, are incentivized to ensure unemployment to keep the cost of labor low and, thus, profits higher. Without unemployment, because Group 1 is not concerned with profits primarily, a major cause of social discontent is resolved, and the society can outcompete its competitors.

The conflict between the finance capitalists and the managers points to the issue of control. By control, Burnham simply means ownership. As we can see, Group 1 (the managers) control the product, regardless of whether Group 3 or 4 has legal ownership over the company. Without the product, there’s no company. Therefore, because Group 1 controls the company’s product, they also have preferential control over who has access to the product. This gives them power over the finance capitalists whose access to the capital generated by the product’s distribution is in the hands of the people managing the product’s production. If Group 1 doesn't want a product given to someone the finance capitalists prefer, Group 1 can cease production (leveraging their power), preventing Group 3 from competing with other companies or leveraging their power. In essence, this gives Group 1 the power to leverage their position to obtain the highest profits; and because we can know who’s in charge by the share of the product they receive or control, we know Group 1 is in charge (pp. 85-86).

These managers will not simply be the new bourgeoisie or capitalist class. For a start, they will not be capable of building up the vast wealth the top bourgeoisie families have (p. 94). Burnham believes one sign of this is that new blood is seldom added, if at all, which he takes as a sign of its decadence (p. 95). Secondly, Burnham argues that “personally held capitalist property rights” will no longer be the chief means of control. The rights will be explicitly managerial. Thus, the most effective way to acquire power in a managerial society is not as a capitalist but as a manager.

Since I covered why the managerial transition occurred, and what the managers are generally, I think it is necessary to discuss how the managers acquire and implement their control.

Firstly, we must identify what a capitalist government is to understand why we are not dealing with a capitalist government. A capitalist government “acts in the economy chiefly to preserve the integrity of the market and of capitalist property relations, and to give aid and comfort, as in wars or international competition or internal disturbances, where these are needed” (p. 96). In other words, when the government or does not act to “preserve the integrity of the market [or] capitalist property relations,” or does not “give aid [or] comfort” during wars, international competitions, or internal disturbances, according to the capitalists’ needs, then it is not a capitalist government. Burnham argues that contemporary governments no longer put the capitalists’ interests before the managers’.

He argues that this was caused by slow, government encroachment throughout the whole of society prior to and after WWI (pp. 96-97). By the time Burnham explored this topic, new investments had shifted away from private enterprise into state enterprise (p. 98), which he believes signals the ascent of the managerial state. If people prefer to invest in state enterprises, they put more faith in what the managers produce than what the capitalists produce. According to Burnham, the government can achieve its aims more effectively than the capitalists because it does not have to make a profit, yet it can still achieve its goals. The goals, as products, are thus put into the hands of the managers. Thus, they can determine what the goals will be. Burnham believes that because the government can run without a profit, the capitalists are no longer necessary in a society primarily managed by the government (pp. 98-99).

This shift from a capitalist to a managerial society was, in part if not primarily, caused by the capitalists’ need for the government. Though they do not necessarily require the government's aid, they can benefit from it significantly. When they seek its aid, they hand over some of their authority to it. The managers' authority comes from their control over the capitalists' actions. When the capitalists delegate this control to someone else (the governmental managers), they are handing ownership of a product over to the government. As this happened slowly over time, the government acquired greater control over the capitalists’ property and actions, they began to manage more of the capitalists’ affairs than they did themselves. When this happens in any society, the transition from a capitalist to a managerial system is ensured (p. 107, p. 118). Burnham notes that this system effectively enables the socialists (if we regard the socialists as managers in ideological garb) to control the means of production and to abolish private property by simply waiting and letting the capitalists give it to them. The Leninists and Marxists did not need a physical revolution – they simply had to be patient.

Managerial economies will have class distinction (p. 111) and they will be exploitative, which means that “the processes, whatever they may be, whereby” an unequal distribution of resources comes about (p. 112). One of the main forms of currency in the managerial economy will be status, as well (p. 113). While the managerial state’s products may be what is primarily consolidated by the managers, the access to those products will be determined (or at least has been determined) by who you know, your connections, and your reputation. This selective distribution of products, including the state and her institutions (including academic institutions), means the managers already in control of the government’s reigns can selectively determine who will have access to the state’s reigns (p. 115). In other words: because the managers can determine who can become elite, it is their prerogative to determine the nation’s character, and a nation’s character is determined by her elites.

A contemporary society’s conditions prevent them from effectively competing as a capitalist society and force them to adopt managerial attitudes. The managerial society’s ascent is predicated on her social conditions and the capitalists’ need for the manager to survive. These conditions, as Burnham alleges, require state ownership of the “major instruments of production,” which inevitably will lead to private property’s abolition. The state’s products, which are necessary to its function (railroads, roads, telephone, electrical, internet, or radio lines and transmitters, essential services), are not contingent on their profitability but their utility; they will always be needed. The incessant demand for these essential services (or their like) means they can be run without profit considerations. When these services are run for profit, they are done so because of capitalist interests. As the state grows in power because capitalists delegate their authority to the state, the interests become managerial and they no longer need to be run for profit. As the state extends into all sectors of society, this means it can direct the state to whatever ends it chooses and those ends and the striving for those ends (the status associated with achieving goals for the state) become the chief form of social currency, which could take some monetary form. Still, that currency is effectively for show. It is the manager’s prerogative to distribute the state’s booty to whomever they wish and, thus, it is ownership of the state (the manager’s ultimate product) that becomes the chief form of currency; all others simply represent its utility (p. 118).

These economies are not unassailable, however. Managerial societies are weakest against technological and political forces (p. 121). The “breakdowns in bureaucratized administration [caused by] complicated problems of sudden shifts to war or peace or abrupt technological changes; or from mass movements of dissatisfaction and revolt” could generate managerial instability. Because managerial economies are driven by ideologies and ideologies (by their nature) cannot be systematically examined to eliminate errors, “errors may accumulate." The ideologies of managerial societies bind and blind themselves (in the words of Haidt) with their myths and ideologies. I shall have more to say about these ideologies on Friday. Still, the errors caused by the managerial society’s inability to account for its ideological errors could lead to war or internal political strife, both of which could threaten any managerial society significantly, resulting in political, juridical, or physical conflicts (p. 126) and, therefore, shifts in the managerial class’s character.

The managerial class will also achieve dominance over the institutions of the old capitalist society. This dominance over the social institutions characterizes the managers as the sovereign rulers of the society. A group that “makes and enforces its own rules for itself, and does not recognize rules made for it by any agency outside the group” is sovereign (p. 128).  A sovereign body must be technically proficient (p. 129) and its ideologies must be publicly accepted. For the capitalists, the institution that determined their sovereignty was the parliamentary institution. Post-WWI, the utility of parliamentary institutions had significantly waned (p. 130-132). When the managerial class took control, parliament was no longer necessary to enforce the ruling class’s will. If parliamentary institutions remain after the managerial class’s ascendancy, they become a propaganda wing for the managers (p. 134).

A managerial society’s institutions of power will be boards and bureaus (p. 135).  Burnham notes that these boards and bureaus and the laws they produce are now the primary interest of lawyers. The executive agencies of the U.S. government serve this role in the manager’s society (p. 136). This raises a question: who’s in control, the managers or executives? The managers in the industrial sector and executive agents are effectively the same, although there are some substantive differences (p. 138). Because managers have “power,” the bureaucrats or executive agents will require the support of the managerial class’s power to achieve their goals. The executive’s managerial dependence subjects them to the managerial class’s will (p. 147).

Managerial societies can ultimately be described as totalitarian. Burnham believes the managerial state is totalitarian because of the modern forms of communication and transportation available to people within the 20th Century and beyond. No other society in history has access to the forms of communication and transportation control the managerial elites have (including their contemporary control over the flow of information on the internet), and this kind of control essentially ensures their ability to dominate the world around them totally. (p. 141). They mainly exert this totalitarian control over societies to prevent violence (p. 156). As Burnham notes in Suicide of the West, this desire to prevent violence justifies all kinds of violence and abuses against the people the managers claim they’re protecting.

In managerial societies, democracy is still a viable option. However, the extent of the democratic nature of the managerial society is limited, extremely. Only actions and actors that are regime approved (working within the basic ideological framework of the specific managerial society) may participate within the democratic framework (p. 159). The ideological framework, as a product of the incumbent managerial class, thus, is optimized to filter out those who do not match the character the managerial class approves of. Only managerial-approved candidates can run and be successful under the managerial paradigm. Any others will face severe backlash. The managers' willingness to promote democracy and freedom – an effectively meaningless term – is simply a way to prevent terroristic violence by consolidating the mass’s distress; by letting them blow off some steam now and then, the managers preserve social control. Thus, the dictator of the plebiscitary government becomes the managerial class’s puppet.

Effectively, the managers' totalitarian social control means opposing them is a Herculean feat. Yet, opposition to the managerial class is still possible. Ideological differences, which I will discuss further on Friday, could generate divisions between various managerial groups (p. 158). These differences could be exploited. As technological changes occur, social dissatisfaction sets in, or economic disparities severely differentiate the classes, one managerial group of a substantially different character can challenge a seated managerial group’s power. Someone who opposes managerial societies might find it useful to exploit any social, economic, or technological divisions and to exacerbate them.

Ultimately, Burnham does not believe any totalitarian, Managerial state can achieve world dominance. Firstly, Man’s technical limitations prevent them from achieving such a monumental task. Secondly, the managerial state would lack the manpower to police the world. Lastly, the differences between peoples are so significant that global cohesion will be impossible (p. 162). If any managerial group wanted to achieve global dominance, they would have to overcome these three limitations identified by Burnham, but I would be surprised if they could. Instead, Burnham argues that the managerial powers will consolidate into three distinct groups: the American, Asiatic, and European managerial societies. Any two of these three may form a group, but they will never be able to defeat the other, or so Burnham claims. Because the Managerial elites are not driven by profit, they will also be better at utilizing the Third World's resources, as well (p. 169). These Third World societies will never form a group to challenge the three Burnham identifies. Instead, they will be incorporated into any one of the three to become a resource and product for any managerial society’s ends. The three groups will essentially use war to ensure perpetual control over their people and to extend their power. Total war, then, shall be the managerial class’s modus operandi.

What I’ve tried to explore today are the characteristics of the managerial class and society. I am skeptical of some of Burnham’s claims, primarily that the managers are unconcerned with profit, but I could see how it might be possible. When the state’s rule serves as the manager’s core product, and all other products serve to maintain the state, the goal of maintaining the state becomes the managers' and their workers' goal. Status, one of the chief forms of currency under a managerial regime, can therefore be acquired by working to support the state. This currency (i.e., status) can be used as leverage to use the state (a product of the managers and their workers) to achieve whatever ends its user desires. Of course, the managers will have primary access to this currency and can get the state to do whatever they want, as long as it does not degrade the state as a product for other managers.

What’s fascinating is that the managerial state’s nature explored today is the same used by George Orwell to write his famous book 1984. This book is often alluded to when the conservative Right discusses the state of the West’s and America’s contemporary society. I think this is for a specific reason: we are in the managerial society identified by Burnham and he accurately captured its character. He may have gotten some of the specifics wrong, but I think he mostly got it right. If Burnham’s managerial class were not in power, then we would not feel as if we were living through something like 1984. Yet, we do.  

Bibliography

Burnham, J. (1941). What is Happening in the World: The Managerial Revolution. Lume Books.

Burnham, J. (1943). The Machiavellians: Defenders of Freedom. Lume Books.

Burnham, J. (1964). Suicide of the West: An Essay on the Meaning and Destiny of Liberalism. Encounter Books.