Managerial Theory, Part I: James Burnham & the Managerial Revolution

 

James Burnham was born in Chicago at the turn of the 20th century, the son of an English immigrant railroad executive. His life was the life of an academic – he attended Princeton and then Oxford. in 1929, he became a professor of philosophy at New York University, and then later went on to co-found National Review with William F. Buckley, where he had considerable initial influence and was considered the preeminent intellectual mind of the formerly formidable Conservative publication. His early political stances were quite radical, as he considered himself a Trotskyite during his early professional years. In the mid-1930’s, he was a friend to Leon Trotsky, & Burnham himself led the Trotskyite-wing of the US Workers Party. However, Burnham’s romance with the various branches of Marxism was short-lived, and by 1940, he had broken with Trotsky and Marxist ideology in the publication of his book Science and Style: A Reply to Comrade Trotsky, in which he discussed why dialectical materialism (and more specifically, historical materialism), was an incorrect lens through which to view historical phenomena and could not be supported by current events.

I reject, as you know, the “philosophy of Marxism,” dialectical materialism….The general Marxian theory of “universal history,” to the extent that it has any empirical content, seems to me disproved by modern historical and anthropological investigation.

Marxian economics seems to me for the most part either false or obsolete or meaningless in application to contemporary economic phenomena. Those aspects of Marxian economics which retain validity do not seem to me to justify the theoretical structure of the economics.

– James Burnham

Soon after his break with Marxism, Burnham turned his mind towards a descriptive theory of what he saw as really happening in the socioeconomic realm of the late 19th & early 20th century, and continues on into today. This resulted in his 1941 work, “The Managerial Revolution: What Is Happening In The World,” in which Burnham posits that not only is there a more likely alternative to both the continuation of traditional Capitalist society & a theorized, but never materializing, Communist utopian revolution, but that the shift to this new form of economic arrangement was already well underway.

Review of Capitalism & Socialism

Burnham starts his book by addressing two common assumptions that require attention in order to properly set the stage for his Managerial theory. Burnham focuses on two main points:

  1. The idea of the permanence of a capitalist economy & legal system
  2. The idea of socialism/communism as the only alternative to capitalism

Burnham argues that of all of the different theories of what type of social organization is just above the horizon awaiting us, nearly all boil down into two, and only two.

Permanence of Capitalism

The first theory as to the future of socioeconomic organization is the prediction that Capitalism is somehow a long-lasting, possibly even indefinite, arrangement of affairs. Put into another form, this theory states that the major institutions of capitalist society, including the legal system that privileges it above other forms of socioeconomic arrangements, will not be changed in any sort of radical manner into the far future. This is the prevailing opinion of many, particularly in the Western world, and I myself would fall into this camp if using the general concept of Capitalist relations, rather than Burnham’s particularly narrow definition of “capitalism”. Because of Burnham’s affinity for Marxism, the lens through which he examines the world skewed his perspective here. Burnham is mostly concerned with the natural consequence of stratification of the populace into two primary classes: the bourgeoisie and the proletariat, with the bourgeoisie consisting of those with ownership interest in the instruments of production. The rest of the important aspects that Burnham talks about flow back to this fundamental stratification, and particularly, the role of the bourgeoisie. Of particular interest to Burnham is the idea of private property, ownership, and the privileges of ownership. Specifically, he identifies the right to control access to the means of production as being the key determinant in who is truly exercising power. It is this key issue that Burnham regards as the prime factor in who really controls & rules the socioeconomic landscape.

As to the permanence of the Capitalist arrangement, he notes that this idea is usually based on two assumptions. First is the assumption that society has always been capitalist in structure, and presumably, always will be. One merely need look back in history, however, to show that this is a symptom of a short memory, rather than of any serious truth. While the post-Renaissance world has shifted towards Capitalism from feudalism, the pre-Renaissance world was decidedly not capitalist at all.

The second assumption is that capitalist societal arrangements reflect some form of “human nature”, which Burnham notes is merely a re-statement of the first assumption:

This, as a matter of fact, is the same assumption as the first but expressed differently. To see that it is false, it is not required to be sure just what “human nature” may be. It is enough to observe that human nature has been able to adapt itself to dozens of types of society, many of which have been studied by anthropologists and historians in depth, and a number of which have lasted far longer than capitalism.

The Theory of the Proletarian Socialist Revolution

The other major alternative theory to the permanence of Capitalism is the ever-coming, always-around-the-corner Socialist revolution of the proletariat. While the various strains of thought differ in the means by which they will achieve their goals, the goals themselves are quite similar:

  • Classless society, equality of all ensured
  • Fully democratic
  • International in scope

A “classless” society is one where no person or groups of persons has property rights in the means of production different from all others. It is, in effect, the abolishment of property rights in the means of production. The democracy of the people is to extend to all spheres, social, political & economic, and it must be organized on an international scale, either all at once or through incrementalism. Even if a socialist revolution does not achieve internationalism, they are internationalist, and advocate for the revolution to continue in all regions where property rights & class remain.

Those who advocate for the proletariat revolution implicitly operate on an assumption that Capitalist relations will not last. This assumption is usually followed by the assertion that socialism (or a variant thereof), is the only available alternative to Capitalism & that Socialism will replace it. Burnham split with his former comrades on this point:

But the proposition that capitalism is not going to last much longer is not at all the same as the proposition that socialism is going to replace it. There is no necessary connection between the two, and my primary concern is with the second.

[…]

Analysis of Marxist literature shows that it is far, far weightier in its analysis of Capitalism & why it will fail than in the analysis by which it motivates the all-important positive belief that socialism will replace capitalism. Yet the fullest agreement with the first, of which I agree with much of it, does not in any way compel us to accept the second. In fact, careful study will show that Marxists offer scarcely any evidence for the second belief. They base their belief on one argument and two assumptions. The argument itself is meaningless with respect to the problem, the first assumption is either meaningless or false, and the second is simply false.

The argument that Burnham is referring to here is the theory of “dialectical materialism,” the primary mechanism that Marxian analysis uses. Taken from Hegel’s logic of “thesis, antithesis, and synthesis”, the idea is that through some mechanism, socialism will issue out of the clash between who antithesis classes, the bourgeoisie and proletariat.

The problem with this theory is that the events of physical reality cannot be predicted from a deduction of a metaphysical theory. One can predict only from experience and inferences we take from our experiences, and even then, one can only predict events with a measure of non-certain probability. Thus, the Marxist argument can be discarded in this analysis. Burnham then turns to the remaining assumptions:

The first assumption is put by Marxists (and others) in this way: that socialism [or their preferred variant] is the “only alternative” to capitalism. They then assert, in effect, the following syllogism: since capitalism is not going to last (which I grant), and since socialism is the only alternative to capitalism, therefore socialism is going to come. The syllogism is perfectly valid, but its conclusion is not necessarily true unless the second premise is true, and that is just the problem in dispute. The evidence will show, I believe, that another type of society, Managerial society, is not merely a possible alternative to both socialism and capitalism (which is enough to upset the assumption), but a more probable alternative than either.

 

The second assumption is that the abolition of capitalist private property rights in the instruments of production is a sufficient condition, a sufficient guarantee, of the establishment of socialism – that is, of a free, classless society. We already have available historical evidence, both from ancient and modern times, to show this assumption is not correct. Effective class domination and privilege does, it is true, require control over the instruments of production; but this need not be exercised through private property rights. It can be done through what might be called corporate rights, possessed not by individuals but by institutions, as was the case conspicuously with many societies in which a priestly class was dominant. Russia, as we will repeatedly see, has already proven that such phenomena are not confined to the former ages. The assumption that the abolition of capitalist private property guarantees socialism must be entirely rejected. It has simply no justification on the facts. It is a hope, that is all; and, like so many hopes, one scheduled for disappointment.

With both contemporary theories of socioeconomic relations thoroughly discredited, Burnham then turns his attention to his own theory of the Managerial Revolution.

The Managerial Revolution

“The general field of the science of politics is the struggle for power among organized groups of men.”

This general truth is at the heart of the theory of the Managerial Revolution. In nearly all societies, the production process is technically social in character. That is to say that no individual is self-sufficient in producing the things that he requires for life; in our society most people produce, on their own, hardly anything at all. Production is a social process.

In most types of society, particularly in complex societies such as our own, there is a generally small grouping of individuals and families that control the chief means of production (enforced through the legal mechanism of property rights, even though it is not the legality, but the fact of control, that is of importance). So what is meant by the term “fact of control?” What property rights truly grant the owner is, ultimately, the ability to prevent access by non-authorized individuals to the controlled object(s) in question, and in controlling access to the object, to also have a preferential treatment in the distribution of the goods that are produced or able to be produced by the controlled objects. It matters not who legally is the “owner” of the property, but rather, who controls the access to the property in question.

Why is this important?

Because those who are able to wield control over access to the means of production, and to have preferential treatment in distribution of the goods produced are going to always be among the socially dominant or ruling class of that society. Over time, those who exercise control over access will grant themselves or those who will benefit them the preferential treatment in distribution of the produced items. Groups that are in contest with one another who wish to alter the distribution of goods must somehow gain control over access first.

In feudal society, the means of production was the land itself, and the burgeoning capitalist class sought favor with the Kings and aristocracy to gain access to the land in order to grow their merchant activities. In modern capitalist society, the decisive economic sectors are industrial, financial, and mercantile in nature, and the ruling class – the bourgeoisie – are the ones who exercise control over the means of production in those sectors.

In order to credibly claim that there is a new societal order on the rise would require there to be a new, distinct group who would wield control over access to the instruments of production in the place of the former bourgeoisie. It was Burnham’s belief that this new ruling class, which would control means of access, would instead consist of the managers of large-scale corporations, state-owned organizations, and in State bureaucratic organizations, and that large-scale ownership by individuals would largely disappear as a result of centralization & increased societal scale.

What does it mean to “own” a thing?

When we talk of ownership, we generally think of personal ownership. When you purchase object A, object A is now considered yours, and you, and you alone, determine who is allowed access to object A. But this is not the case with corporate or state-owned corporations, where ownership of property is distributed amongst those who (legally) “own” the corporation or is held by those who are in charge of the bureaucratic organization tasked with running the production company. In modern society, the fact is that most of the means of production are owned by these types of entities. Thus, ownership is (legally) held by large groups of stockholders or by those who exercise control of the state bureaucracy who “owns” the company.

As was stated above, the legal ownership of an item is not truly the question at hand here. In these new forms of ownership, even where individual people can own stock in a company, they cannot exercise the most fundamental of ownership rights, which is to control access to the property in question. Thus, legal ownership and control have been separated, resulting in a “de-materialization” of ownership into legal, but not substantial means. So if one can have legal ownership of property, but cannot control access to the means of production, who has de facto “ownership”?

Enter the managers.

The managers, both the managers who control production & those managers in the government, are the ones who will exercise control over the instruments of production, and who will gain preference over the distribution of the goods. This will not occur directly, in that they will somehow gain legal ownership of the property, but indirectly, by their direct production control and through control of the State mechanism, which is sovereign & can, even if it is unlikely, seize control of the means of production through their monopoly on violence.

In the simplest of terms,

…the theory of the managerial revolution asserts merely the following: modern society has been organized through a certain set of major economic, social, and political institutions which we call capitalist, and has exhibited certain major social beliefs or ideologies. Within this social structure we find that a particular group or class of persons – the capitalists, or bourgeoisie – is the dominant or ruling class in the sense which has been defined. At the present time, these institutions and beliefs are undergoing a process of rapid transformation. The conclusion of this period of transformation, to e expected in the comparative near future, will find society organized through a quite different set of major economic, social, and political institutions and exhibiting quite different major social beliefs or ideologies. Within the new social structure a different social group or class – the managers – will be the dominant or ruling class.

 

What is the mechanism for this shift in ruling classes? At this point, it has already been discussed: control over access to property, when consolidated, grants preferential treatment of distribution. This shifts effective ownership of production property to the new controlling class. This is the mechanism of Burnham’s managerial revolution.

As with any dominant or rising class, the managerial class seeks to consolidate its power, expand their sphere of influence, and to bring to heel forces that would seek to work against their goals. In this way, we can see how expansions in governmental size and scope, a globalist mindset in both economics & government, and Liberalism’s reduction of humanity into units of economic consumption further this goal of expanded power & privilege for the rising managerial class.

Who are the managers?

The easiest way to understand who the managers are is to understand the principal-agent problem. To quote Wikipedia:

The principle-agent problem occurs when one person or entity (the “agent”) is able to make decisions on behalf of, or that impact, another person or entity: the “principal”.

For Burnham’s mostly economic & political analysis, the “agents” are two general groups:

  1. The corporate managers who control the production process (as opposed to those who are legally considered the corporate “owners,” who are the principal)
  2. The governmental bureaucrats who exercise state control (in the name of “the people,” who are the principal)

These groups will be the ones to control access to production property, with group 1 ultimately being subject to group 2 due to the sovereignty of the State. As a result of the tendency for all groups to attempt to increase their power and privilege, governmental bureaucratic managers will always seek to grow their influence and to bring more and more of society under its heel. This natural tendency, combined with the ability of technology to engage in mass surveillance & to deliver mass punishment, gave Burnham much concern over what he saw as the near certainty of a totalitarian future.

Criticisms:

While Burnham’s descriptive theory of the Managerial revolution was enlightening for me, I do have several criticisms of his work, some of which were addressed by Sam Francis’ magnum opus, a follow-up work on the original managerial theory titled “Leviathan and its enemies”.

My primary criticism of Burnham’s work is that his Marxist background limits his foresight mostly to the realm of economics & government structures. Despite abandoning dialectical materialism as a primary principle, he continues to see the world in economic, industrial terms, and neglects (or wholly fails to see) the use of cultural management, the mass media & propaganda techniques, as a form of managerial control.

Because of Burnham’s failure to foresee the use of cultural forms of populace control, because he was a bit of a technocrat, and because of his interest in Russia & Germany, he believed that future managerial states would utilize technology to move towards various forms of totalitarian government structures that would oppress its populace through a politik of overwhelming force & control.

Another major criticism is that Burnham’s definition of capitalism is at first confusing and unrelated to the actual theory of capitalist economic transactions & its legal backing. For Burnham, the only thing that defines an economic or political system is who is exercising power, i.e., who controls access to the means of production, and by virtue of this control of access, who retains preference in the distribution of goods. In Capitalism, under this definition, it’s the merchants and the “owners of the means of production.” This definition is very limited in scope, but if you take it as a defined term and build from there, you’ll easily see his point. The fact that basic capitalist economic transactions remain, and that private property has been upheld and defended (although still subject to the State’s whims, a la suspension of freedom of association), doesn’t seriously hamper Burnham’s theory of managerialism in any meaningful manner.

Additionally, Burnham believed that eventually, state ownership of the means of production would occur as the growing bureaucratic nature of the government tried to continue to expand their influence. He nearly completely dismissed the use of private industry, technology, and a growing consumer base as a means for governmental growth & regulation, and instead believed that the managerial class of the government would prefer direct control. As we have seen across most of the world, this prediction has not panned out, even in previously totalitarian, state-owned industries of highly managerial nations.

My last complaint with Burnham’s idea explains that managerialism will triumph initially over capitalism because managerialism is not constrained by profit and loss, as the State doesn’t require a profit motive to continue production. However, he does not in any form give an explanation for how State managerialism can go on indefinitely operating at a loss. Perhaps he is integrating the National Socialist idea that the true value of a Nation (and subsequently, the State) is not in their gold supplies or in their money vaults, but in their capacity to produce (in the productivity of the people of the nation itself), and thus, a nation is unlikely to truly “go broke” so long as their human capital & production capabilities remain intact. I don’t know his reasoning for his claim, but I was at a loss at the mechanism behind his thought on the matter.

Ultimately, despite the drawbacks of the work, “The Managerial Revolution” was an extremely enlightening book that provided the basic framework through which others, most notably Sam Francis, have been able to modify & expand into a more explanatory & predictive general socioeconomic theory. If one can find a copy of the work, it is well worth the read, if for nothing more than to set the stage for the more complete theory that Francis built off of Burnham.