XX Century CAPITALISM

 

BURNHAM:

THE  MANAGERIAL 

REVOLUTION

by  Lori Helin,

October 1988

X X X X X

 

James Burnham wrote The Managerial Revolution in 1941, during the world’s second great war. Surrounded by political upheaval and faced with a majority of the world’s population in economic unrest, Burnham perhaps felt compelled to analyze the world at an economic level. Perhaps he could offer an answer to the question: How will the world be after the war? His expectations of the inherent transformation that was (and had been) taking place in the world is clearly exhibited in The Managerial Revolution.

“According to Marxian theory, only two kinds of society were possible in the modern industrial­ized world: a capitalist (bourgeois) regime or a socialist (workers) regime.”1

 

Previously a member of the Trotskyite organization and disenchanted by Marxian visions of the Soviet state, Burnham broke all ties to communism and to socialism in general. If the Soviet state in reality was not socialist in its purest form, and was obviously not on its way towards capitalism, then what was it, or what was it going to be? At the same time, capitalism was losing its hold on its societies. Capitalist economies were running into trouble with the continuance of mass unemployment, the decline of private investment the increase of public and private debt, the depression of the agricultural sector; in general, capitalism was losing its control over its own resources. 2 This loss would only become a gain to another regime and socialism didn’t seem to be in line to receive the endowment. What then, would take capitalism’s and socialism’s place in the world? Burnham suggests a new society: a managerial society.

In capitalism, as well as other societies, production and its inputs are paramount to its function.

“The instruments by which many of the goods, which are necessary for the maintenance and adornment of life are produced are technically social in char­acter. No individual produces, by himself, everything he uses. The production is a social process.”3

 

The social importance of production evolved historically with the industrial revolution of the late 1800’s, during which, production became centralized. Going to work no longer meant staying at hone or traveling to a small shop. It meant traveling to a large building and working with perhaps hundreds of others in the production of one type of product. Instead of one person perform­ing all tasks to produce the entire product, many people performed a variety of tasks, which together comprised the production of one product. This so called division of labor, made famous by Adam Smith, is still an integral concept in production today.

The persons who control the instruments of production are very important in. any society. In capitalist society these persons are ordinary individuals (through possession of capital) who have chosen to own these factors of production. These individuals, often called capitalists, because they own and control the actors of production, are the ruling and dormant class in capitalist society.

 

Capitalist power and status lies solely in the control and owners. In order to own and control and object, two states must be attained. One must have the ability to prevent others access to the object controlled. When this is attained one can they establish a preferential treatment in the distribution of the products of the objects controlled.4 For example, if one owns a plot of land then one has the right to allow or disallow anyone access to that land. Once this is established then the owner can decide who (if anyone) can receive and what quantities the products of the land, such as crops that might be grown there.

Burnham’s central argument for the fall of capitalism lies in these properties of control and ownership.

“Ownership means control. If there is no control then there is no ownership. The central aspect of control is ownership, as we have seen. Control over access to the object in question and the preferential treatment in the distribution of its products. If ownership and control are in reality separated, then ownership has changed hands to the control, and the separated ownership is a meaningless fiction”5

 

Burnham claims that capitalism today violates the union and inseparability of ownership and control. Burnham demonstrates this by observing the growth and resulting hierarchy present in today’s corporation. There was a time when the truest form of capitalism existed. The owner of the corporation was in control of the factors of production, including the hiring and firing of workers, the buying of raw materials and the selling of the product. The owner was directly connected to most aspects of production.

Because capitalism moved successful and demands increased in many businesses, growth with in the corporation occurred. Today there exists ~ hierarchy of management. At its lowest level one finds the operations floor manager who works and supervises on the production floor. He directly controls production through his ability to increase and decrease rates of production or to stop it all together,. however, he is subject to a long line of managers whose primary interests lie in the financial aspects of production. The corporate owners (who may comprise of many as in the case of stock holders) today have the capital to withdraw themselves from production but yet keep themselves close to it through finance. With capital, owners can afford to pay others to direct and coordinate production.

 

This task of direction and coordination of production has become highly specialized as a result of technological progress. Thus, the owner is no longer the manager in the production sense. Separa­tion of control and ownership has taken place and violates capitalist’s existence as the ruling class.

With the ability to control access to the factors of production, managers will soon gain the ability to establish a preferential treatment in the distribution of the products of production, thus once again uniting control and ownership. Managers may soon realize this inherent power and with it progress to the ruling class of society. Thus a managerial society will result.

 

Today, perhaps we can see evidence of Burnham’s claims. Managers indeed are extremely important to production. But I think owners have realized that “bigger is not better” so the addage goes and are making a conscious effort to become closer to the roots of production with in their own firms. I think today the image of the owner who can be seen on the production floor as well as in the executive board meetings is a pleasing one and deserves respect and reverence. Perhaps this realization came soon enough where capitalism can be preserved.

 

Footnotes

1 Burnham, James, The Managerial Revolution   p. vi, introduction.

2 Ibid. pp. 30—35.

3 Ibid. p. 59.

4 Ibid. p. 59.

5 Ibid.. p. 92.

 

Bibliography

Burnham, .James:  Managerial Revolution, Indiana University Press, Bloomington and London.1941.

 

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