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Albert Gates

Burnham and His Managers

(July 1941)

From The New International, Vol. VII No. 6 (Whole No. 55), July 1941, pp. 144–8.
Transcribed & marked up by Einde O’Callaghan for ETOL.

THE publication of the book The Managerial Revolution by James Burnham has caused a considerable stir in numerous circles. The book, shrouded with an aura of mystery, is receiving a clever publicity campaign designed to make it sell in large quantities. Here at last, the publishers say, has come a man who not only explains many things about our world which is not widely understood, but provides an answer as to what will be the character of the future society. Naturally, a man who can tell the bourgeois world what the future holds in store, providing it is not socialism – even though he predict the end of capitalism – is a highly welcomed individual, for the bourgeoisie, in any case, has long ago learned to distinguish between dangerous theories and those which are merely exciting, diverting and unusual. The bourgeoisie does not feel that way about the theory of the managerial revolution because this theory, when stripped of its own brand of semantics, is fundamentally a justification of fascism and all forms of totalitarianism. In the case of Burnham, and a host of others, it is issued forth as the result of objective scientific research, but is nonetheless a product of a mental rationalization which justifies the “wave of the future.”

The theory of the managerial revolution is a product of the economic, political and social chaos of decay monopoly capitalism. It forms part of world ideological confusion arising from the salient and unavoidable fact that capitalism is dying; that the socialist victory which many awaited has not yet occurred; that socialism has suffered uninterrupted defeats; that capitalism resorts, in one country after another, to methods of barbarism and acknowledged abnormalities in economy in order to maintain itself. It is a theory which springs of hopelessness and despair.

Theories similar to Burnham’s managerial revolution have been published, but none with the simplicity and fullness of the erstwhile member of the Workers Party. He has presented a complete blueprint of this managerial revolution: the decay of capitalism, the emergence of the new society, the time element involved, the character of the new state, the new class struggle and the future of mankind in the next period of history! The presentation is schematic, mechanical and static. It is grounded upon little or no facts, and this is, as we shall shortly illustrate, no slight or unconscious omission, for despite Burnham’s constant allusion to the need of scientific procedure (about which he has so often lectured Marxists) and the necessity for verification (empirically) by the facts of history, there is little of this in the book.

In Passing ...

In the course of elaborating his theory, Burnham writes:

“Nor have the managers themselves been constructing and propagating their own ideologies: this has been and is being done for the most part by intellectuals, writers, philosophers. Most of these intellectuals are not in the least aware that the net social effect of the ideologies which they elaborate contributes to the power and privilege of the managers and to the building of a new structure of class rule in society. As in the past, the intellectuals believe that they are speaking in the name of truth and for the interests of all humanity” (page 73).

Thus a considerable agitation takes place for a new society. It is characteristic of this situation that none of the proponents of the new order are conscious of what it is they agitate for or theorize about. A seemingly sad situation for the new society, but it is made all the sadder by the fact that the new “ruling class,” the managers, are abysmally ignorant of existing historical currents which seek to place them into power as the new dominant class in a new social order.

It is apparently Burnham’s “historical rôle,” however much he declines the honors at this time, to enlighten the “new class” to its gigantic social rôle, even though he “has no program to offer” and has no subjective feelings one way or another about the new society, so that it may understand whither it is drifting, what it is fighting for (even though it is not fighting) and, above all, to understand the power it already has.

The purpose of this review is to objectively examine the central features of the managerial theory and to reserve specific analysis for another time. An agitational denunciation of Burnham because he is a renegade from socialism solves not a single question involved in the instant case, for it is incumbent that his theory be scientifically analyzed to determine whether or not it has any merit. There is a time and place for everything. The fact that Burnham is an apostate would not automatically prove the invalidity of the managerial theory, though it will help to establish some of the inner urgings that prompted more flagrant statements contained in the book. A reading of the book will amply show that the author cannot be separated from his theory.

Burnham’s theory of the managerial revolution may be summarized as follows:

  1. Capitalism is doomed. Unable to solve a single one of its contradictions, it cannot maintain itself and has already retreated under the pressures exerted by the onward rush of the new social order.
  2. Socialism “is not possible of achievement or even of approximation in the present period of history.”
  3. The managerial revolution occurs before our very eyes. In truth, it began in or at the close of the First World War, has continued uninterruptedly ever since and will be completed within fifty years. Its victory is inevitable; it is worldwide.

Capitalism, and the Present Epoch

The justification of the theory of the managerial revolution can be partially sustained by proving the irremediable collapse of capitalism and the impossibility of socialism, for only then is it possible to pose alternative social solutions. Thus, Burnham proceeds to prove first of all the collapse of capitalism. But it is precisely herein that the basic error of his theory is exposed. Burnham’s analysis of capitalism is highly superficial and composed of half-truths. In outlining seven characteristics of capitalism, long ago described by Marx and Engels, he omits mention of the decisive structural changes which occurred at the close of the nineteenth century, namely, the development of monopoly capitalism as a world economic order in which the world market, the world division of labor and world trade have become paramount. The era of finance capital, the significance of which was recognized even by enlightened bourgeois economists, and the internal economic changes wrought by this development, the attendant political changes which followed, and the increased intervention of the state in the economic process – all of this fails to find a place in the Burnham analysis, though reference to it is made in the latter portion of the book, where he discusses the Berle-Means theory of ownership and control, and “statification” of the economic process is his theme.

This omission is interesting because Burnham constructs his theory on the concept of “free” capitalism, laissez-faire, simple class relations and the relatively simple rôle of the state.

Capitalism has been in a state of permanent crisis since the outbreak of the First World War. The rise of the imperialist epoch, while it increased the production of goods, raised to a small degree the world standard of living and increased the total wealth of capitalism, at the same time intensified its inherent contradictions on a world plane. The forecasts of Marx and Engels were fully verified. Technological improvements, the organic composition of capital and the falling rate of profit, the growth of mass unemployment on a world scale, the limitations of the home market and in turn the world market, polarization of wealth, all of these characteristics create the capitalist doom.

The Marxists have demonstrated that these insoluble capitalist contradictions based on socialized production lay the basis for socialism. Socialism can solve the contradictions by removing the primary cause for their existence: private ownership of the means of production, production for profit and the market (world), bourgeois class relations to capital. Unless capitalism is abolished these corroding contradictions make life a hellish nightmare for the millions and millions of inhabitants in this world. Unemployment, poverty, misery and war are not merely conditions offering the possibility of agitational activity against the bourgeois social order; they are economic and political problems of the highest magnitude.

The nature of the capitalist crisis, its cyclical character was established by Marx many years ago, while bourgeois economists sailed in a fog and never understood this phenomenon. Many of the latter have paid obeisance to the founders of scientific socialism for their acute observations on this riddle of capitalist economy. It was therefore both surprising and amusing to read that Burnham, while he agrees with much that Marx and Engels wrote about the capitalist crisis, feels that they did not answer everything in relation to it, had left much unsaid and therefore only partially answered the question. However, one is disappointed, for, having been led into the belief that Burnham would supply that which is missing, one finds that the sponsor of the new social order immediately passes over this point as if it were not decisively important.

“Free” Capitalism and the State

The development of capitalism has not proceeded in a straight line; it has been uneven (industrial, agricultural and colonial nations) and combined (the merging of advanced industrial and backward agricultural methods, overlapping, development by leaps, etc.). The role of the state as the instrument of the ruling classes, has likewise reflected this uneven and combined development of capitalism and was subjected to particular changes on the basis of peculiar national developments. But whatever the nature of the particular development of any national state, its fundamental role has been that of a bourgeois state representing the historical social interests of the dominant economic class, the bourgeoisie.

The state in Germany was possessed of features quite different from that of the United States; the French from the English; the Russian from the Scandinavian. The form of the state in all countries was dependent upon the manner in which their capitalism arose, peculiar national traditions, the way in which the proletariat and the bourgeoisie as classes came into existence, the share of the national economy in the total world capitalist economy, etc. But no matter what the form, whether it was democratic, absolutist, constitutional monarchy, in all instances the state represented the interests of the dominant economic class.

To say, as Burnham says, that the state was the true capitalist state which governed the least, and permitted free, unbridled development of competition, is only a half answer. The state “which governed the least” was itself the product of the particular nature of a national economy. It governed the least in the early history of the United States where the development was completely internal, free and unlimited. Yet even in the United States, the state in the field of foreign affairs was a forthright representative of the rising bourgeoisie. But foreign affairs, the relation of one national bourgeois state to another, are based essentially upon economic relations; the affairs of state are political counterparts of the economic needs and relations of the various national capitalist classes.

In Great Britain, however, the development of capitalism occurred in a way which involved the intimate and direct intervention of the state in the creation of the British Empire, the basis of British capitalism. It is universally known, too, that German industry began almost from the start as a cartelized industry nurtured along with the utmost consideration and intervention of the Hohenzollern regime and the Reichstag, which subsidized a large section of the national economy.

The Root Error of Marxism

If Burnham adds little or nothing to our knowledge of capitalism, he at least supplies something new in description, designed to avoid simplicity and understanding. The class character of capitalism and the r61e of the bourgeoisie was never difficult to describe nor difficult to understand. In any case, the bourgeoisie knew that it owned the instruments of production and controlled, as a class, the total distribution of the total production. It remained for Burnham, ever the innovator, to describe this property relation in as obscure a language as possible. Burnham writes that the bourgeoisie “controls access to the instruments of production” and maintains a “preferential control of distribution”! This point is many times emphasized throughout the book in the manner of a discovery, which presumably provides a startlingly new insight on the nature of capitalism. According to him, it is this “control of access to the instruments of production” and “preferential control of distribution” which has been replaced by the “state ownership of the major instruments of production”; or will be so replaced, since the process is now occurring.

It is in elaboration of this point that Burnham weaves his theory of the managerial revolution. State ownership of the instruments of economy signifies control of distribution. The new state is controlled by the managers, who, as we point out in another section of this article, by their control “own” the instruments of production and thereby control the distribution of the total product of the new economy. The character of the state is necessarily altered in this process. Such a development was never foreseen by the Marxists; they were blinded by their belief that capitalism must inevitably be followed by socialism. Their failure to understand that this is not true, that capitalism is inevitably being followed by managerial society eliminates them as a serious and decisive social force. The root of the Marxist error is to be found in their false estimate of the state and its rôle in present-day society. If this were true, we should owe the professor a debt of gratitude, but there are many good reasons for our failure to acknowledge the debt.

The Epoch of Monopoly Capitalism

Marx and Engels sixty years ago forecast alterations in the functions of the state. They prophesied the necessity of state intervention in the economic process as an inevitable development of capitalism, of monopolized and trustified capitalism. In my article, German Society and Capitalism (The New International, April 1941) I outlined the fundamental characteristics of the present epoch in replying to Dwight Macdonald, who also adheres to the notion that a new social order has emerged in Germany – the same kind of social order that exists in the Soviet Union. Macdonald calls his society “bureaucratic collectivism” and mainly differs from Burnham in his rejection of the latter’s theory that it is the managers who rule in the new social order. He asserts that a new class of politicos has arisen in Germany and it is that new class that rules – the same class rules in the Soviet Union.

Oddly enough, it is Macdonald who attempts, however unsuccessfully, to prove his theory upon economic grounds, namely, that there is an absence of production of profit, production for a market, an end of wage labor, and, most important, state control of the economic process (equated by Macdonald to ownership). Burnham says the same things, without attempting any proof, yet both agree that it is a new society. Though their differences are not decisive, we believe Macdonald has more authority for his conclusions than Burn-ham has for managerial society.

For that reason, my reply to Macdonald applies equally well to Burnham. I wrote in my article the following:

“Monopolist capitalism has marked the end of simple capitalism, laissez-faire capitalism. Under these structural changes, the role of the state to the classes has undergone changes, although its basic r61e remains identical: the instrument of bourgeois society. Macdonald speaks of the democratic bourgeois state as bourgeois apologists describe it, but as it actually never was and certainly could not be under monopoly capitalism.

“The state fuses with monopoly capitalism and has a more direct and intimate interest in the economic well-being of the ‘nation.’ In declining capitalism, the duties of the state are magnified, since the increased conflict of ‘national capitals’ marks the struggle between states.”

Any serious student of economics and history can readily understand the ramifications of the above description. In a class society, the welfare of the nation is identified with the ruling class and the state necessarily acts in the best interests of the total capital. The permanent economic crisis of world capitalism, the permanence of modern war, the paralyzing conflict between mutually exclusive classes, require the economic, political and social intervention of the state in all affairs of the nation.

Engels wrote in Socialism, Utopian and Scientific:

“... the modern state, again, is only the organization that bourgeois society takes on in order to support the external conditions of the capitalist mode of production against the encroachments as well of the workers as of the individual capitalist. The modern state, no matter what its form, is essentially a capitalist machine, the state of the capitalists, the ideal personification of the total national capital. The more it proceeds to the taking over of productive forces, the more citizens does it exploit. The workers remain wage-workers – proletarians. The capital relation is not done away with. It is rather brought to a head.”

This development, as described by Engels, has nowhere been completed except in the Soviet Union, where, however, we have a totally different set of historical conditions which make it impermissible to discuss simultaneously with a discussion of the capitalist world. But no matter, Engels described a prevailing tendency inherent in monopoly capitalism. It is this tendency which is in the ascendance. Whether or not this tendency will ever be completed, i.e., whether the state becomes the single capitalist, is highly questionable. In any case, it has not occurred, nor does it appear likely to occur. However, if one understands the nature of the general tendency, he can understand what now appears to be, superficially speaking, non-capitalist developments in world bourgeois society.

For the sake of argument, let of assume that the capitalist class disappears, the state becomes the sole capitalist, operating under managers’ or politicians’ control, the proletariat becomes a slave class, the markets disappear, profits disappear, planned production prevails, all in the interest of a new state form. Should this occur, naturally we would be standing at the threshold of a new society. But none of this has occurred. Neither Burnham nor Macdonald has established that it is occurring, and the facts of current history prove that it has not come to pass.

Efficiency and Proletarian Enslavement

In the course of an elaboration of the nature of fascism Trotsky once pointed out that there was a significant parallel in the existence of fascist regimes in those countries which were economically poor, or were poor in relation to their needs in the world market. The powerful and rich democracies did not require the installation of totalitarian regimes, whose first task is the solution of the class problem – the subjugation of the proletariat. The secret of Germany’s economic revival and military rearmament is to be found not in the inherent superiority of “bureaucratic collectivism” or “managerial economy,” but in the barbaric exploitation of the masses.

Failure to appreciate these fundamental factors leads Burnham, as it did Macdonald, in an exaggeration of superficial and secondary occurrences. Thus, Burnham, in endeavoring to prove the superiority of “managerial economy” (fascism) shows that in Germany finance is controlled, there is no inflation (when as a matter of fact, in the true economic sense, you do have inflation, measured by the tremendous growth of savings in the absence of purchaseable commodities, and in the complete disproportion in production between war goods, heavy capital goods and consumer goods); Germany has rapidly increased her territorial borders; that she “makes war better” than the capitalist nations; that the Hitler regime inspires “fanatical loyalty,” etc.

We prefer to leave this phase of the question for the moment and turn to the concrete development of the so-called managerial revolution.

One final remark, however, is necessary. The conditions which compel statification and state intervention in the economic process, naturally increase the specific weight of that organ, increase its personnel, give it great powers of control. The tendency toward bureaucratism is enhanced. The power of the bureaucracy grows and it enjoys a large measure of independence. But always, until now, its aim is the maintenance of the bourgeois social order, no matter whose rights it may invade to accomplish that aim.

How the Managerial Revolution Occurs

On page 75 of his book Burnham asserts:

“The managerial revolution is not just around the corner, that corner which seems never quite to be reached. The corner of the managerial revolution was turned some while ago. The revolution itself is not something we or our children have to wait for we may. if we wish, observe its stages before our eyes.”

Elsewhere, the professor writes of the managerial revolution that “This drive will be successful.” We are to expect, according to him, that the revolution which began some twenty-five years ago will be completed in fifty years. The managerial revolution has already conquered in Russia, Germany, Italy (of Japan we are not yet certain) and was begun in the United States with the advent of the New Deal.

Having observed the “establishment” of the managerial revolution, we are then told who the managers are and in what manner this revolution occurred; the relation of the state to the revolution and the economy.

“... the managers are simply (!) those who are, in fact, managing the instruments of production nowadays,” writes Burnham on page 77. They are, he declares, production managers, operating executives, superintendents, administrative engineers, supervisory technicians (in government), administrators, commissioners, bureau heads, etc.

Where, in fact, do the aforementioned “managers” actually manage and control industry? What is their relation to the bourgeois owners of the instrument of production? The answers to these questions are evasively given. Reference is made to Germany and Russia, to the New Deal and Italy. But neither in Germany nor Russia do conditions obtain to support the theory of managerial control. Nor will one find this “conclusive evidence” in the New Deal. Something quite different is to be observed in these “examples.” If Burnham seeks refuge in the fact that his revolution has not yet taken place, or is not completed, then he contradicts himself, for his theory is posed variously in the past, present and future; namely, that it has occurred, is occurring and will occur.

The managerial society exists. The leaders of the revolution are named. How does this revolution occur? In Russia it came as a result of the proletarian revolution which degenerated into, or as Burnham prefers, developed into the managerial state. It came there as the result of the expropriation of the bourgeoisie, a social revolution. In Germany it came with the victory of Hitler. In America it is coming through the impulses engendered by the New Deal.

Belief and Reality

In each instance

“The basis of the economic structure of managerial society is governmental (state) ownership and control of the major instruments of production.

“On a world scale the transition to this economic structure is well advanced” (page 118).

It is explained that while parliament “was the sovereign body of the limited state of capitalism,” the bureaus, as governmental bodies, “are the sovereign bodies of the unlimited state of managerial society” (page 148).

Burnham states it in another way as follows:

“In the new form of society, sovereignty is localized in administrative bureaus. They proclaim the rules, make the laws, issue the decrees. The shift from Parliament to the bureaus occurs on a world scale. Viewed on a world scale, the battle is already over” (page 148).

Where do such conditions actually exist? In no country except the Soviet Union, and there in other forms and under an entirely different set of circumstances.

Among other things, Burnham portrays the new society as another exploitative social order, within which the proletariat remains an enslaved class, the class struggle continues unabated between the proletariat and the managerial ruling class (the capitalist class has been destroyed, some entering the ranks of the managers, others the proletariat). On a world scale, wars will continue on a more destructive level as between managerial states which will no longer be confined to the original borders of the dominant managerial powers, but will be wars between different areas of the world (Japan – Far East; Germany – Europe and Africa; the United States – the Western Hemisphere). Thus the blueprint!

If the above appears schematic and unreal, that is exactly the manner in which it is outlined by Burnham. As a rule he confines himself to generalities and assertions. They are so debatable as to make impossible conclusions, because we speak different languages.

In what country do the managers rule the state, control or even manage the instruments of production? We are not here concerned with the control, or management, of a single technical operation in a factory, as Burnham would at times seem to imply in some sections of his book. We are concerned with the totality of the social order. Except for Russia, the de jure and de facto owners, controllers and managers of the instruments of production are the capitalists.

In what country has the state become the owner of the instruments of production? Only in Russia is the state the owner of the means of production, and this was not due to a managerial revolution; it resulted from a socialist revolution (no matter what eventually occurred to that revolution) and the expropriation of the capitalist class.

The Managerial States

In Germany you had a political Bonapartist assumption of power by the fascists – a political revolution, for the sake of argument – but in no fundamental sense was this occurrence a social revolution, a transfer of economic power from one class to another. As I have already pointed out in my articles on Germany, the bourgeoisie in that country remains the bourgeoisie. Class relations to capital are bourgeois. The state, it is true, functions differently in many ways from that of the American or the British, but its fundamental character is not at variance with the states of the democratic powers.

The conflict between Nazi Germany and Great Britain can not be explained as the struggle between opposing social orders, but only by the nature of the power of these imperialist nations and then- relation to the world market. Every feature of bourgeois economy, the profit system, wage-labor, private ownership of the means of production, the financial structure, the character of the war and the manner of their prosecution of this war are unchanged in either nation.

It is not necessary to restate the figures I have previously produced to show that the foregoing is the fact. The present German state corresponds in a large measure to the character of the bourgeois state outlined by Marx and Engels. The political bureaucracy in Germany exerts an enormous power. To a considerable degree, it controls the economic, social and political life of the nation. However great the abnormalities inherent in the nazi power, they do not conflict with the fundamental nature of the bourgeois economic order. They result from contradictions emanating from a powerful productive apparatus isolated from the sources of profitable existence by the nature of world capitalism. The status of the proletariat remains unchanged. Political changes have been many and for the Nazi Party they have meant state power, economic sinecures for many thousands of previously disfranchised and declassed elements; it has meant riches and entrance into the ranks of the bourgeoisie for the Brown shirt hierarchy.

What of the managers in Germany? They remain “managers,” operating executives, superintendents, administrative engineers, etc., in the employ of the bourgeoisie, from whom they receive their orders and their salaries, even though that bourgeoisie may be compelled to subordinate itself to the demands of the state under the conditions of the war. Otherwise, what has happened to the bourgeoisie in Germany, to the powerful association of Ruhr industrialists or the Junkers? Have they been liquidated or economically expropriated? Are they now salaried individuals who obtain the lion’s share of national income, merely on sufferance from a triumphant managerial state which has no need of a bourgeoisie? The question answers itself.

The Class Position of the “Managers”

Let us return to the United States. The managers in this country play even less a special rôle, industrially, politically or socially, than in Germany. It is not an accident that the “managerial class” is unaware of what Burnham considers the overwhelming fact of present-day society: the managerial revolution. The “managerial class” happens not to be a class. It cannot be identified by common economic interests which claim their adhesive organization. Burnham’s assertion that the binding quality of the “managerial class” is the all-powerful desire to produce, to continue producing, and to operate industry is a kind of subjective individualistic desire (we do not for a moment grant that this feeling exists) which has no great social, political or economic significance, certainly not the significance which enables one to conclude that this disorganized, goal-less, idea-less conglomeration is now engaged in taking or has already conquered power.

Is Stettinius a manager? Is Knudsen a manager? In the simplest meaning of the term, yes. But they are also members of the bourgeoisie, like so many others of their rank. Their economic interests, their habits and associations, their psychology is bourgeois, for they are, economically, politically and socially, members of the ruling class.

The thousands upon thousands of other “managers” who fit the description given by Burnham make up a part of America’s middle class. Their consciousness, their activity, their basic role in the national economy is to be likened to that of the total middle class. What superior aptitudes and greater social consciousness do superintendents, operating engineers, draftsmen, production men, foremen, have over other equivalent economic groupings? Because they do not represent a basic and fundamental class, with common ideas and common aims, because they have no goal, no program, either for themselves or society as a whole, because of their unstable economic position, it is futile to assign grandiose historical tasks, such as “managerial revolution,” to them. The whole of this group are employees, who decide nothing, but carry out orders, each doing his specific task in a given industry, which is coordinated at the pinnacle. They in no sense determine or direct production. But Burnham does not prove what he says about them, he merely state his point and lets it rest there.

* * *

Burnham’s scientific objectivity suffers in discussing the question of Managerial Society and Socialism. Like all apostates, his socialist past is embarrassing and he must needs salve his conscience by “proving” the impossibility of socialism, at least in his own lifetime. Thus he lays his pattern: the specific social weight of the proletariat diminished with technological developments, the proletariat declines in numbers; the development of war science foredooms the socialist revolution since you cannot take power with “street barricades and pikestaffs.” In any case, the managerial society Will precede socialism in the next period of history. We shall return to these questions in our next article.

If thus far we have failed to answer concrete data in favor of the managerial theory, it is because the author has not supplied any; his theory is composed of assertions which, whether true or not, one is asked to accept.

(To be continued)

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