Navigation links at the bottom of the page
|Cartoons in this series by Gordon Collins|
is more than thirty years ago since James H. Burnham's work The
Managerial Revolution was first published. In a review, George
Orwell noted that the book provoked comment from business circles on
both sides of the Atlantic. This was not so much for any new revelations
as for the fact Burnham was the first to predict the development of
what he called the 'managed society'.
Two popular works of fiction of which this idea is a fundamental theme are Aldous Huxley's Brave New World and Orwell's Nineteen Eighty-Four. Orwell's novel, in fact, stems directly from The Managerial Revolution, a significant fact which must be obvious to anyone who is familiar with the works of both writers. For example, Burnham predicted the rise of three economic super states which would be continually at odds with each other. Similarly, in Nineteen Eighty-four three such states - Eastasia, Eurasia ant Oceania - are described as being in shifting alliances of perpetual conflict. Again, Burnham wrote of the disappearance of political government (though actually he was more specific in writing of capitalism) with its place being taken by economic management; Orwell went a step further in describing the kind of life one could expect under a management style oligarchy. Both works are depressing indictments of future society.
As to the differences between Brave New World and Nineteen Eighty-four they are too well known for me to contribute anything new in literary criticism. Furthermore, our interest lying in other directions, we are not concerned with literary merit. We are concerned with what Burnham and his contemporaries described as 'managerialism'. For reasons discussed in a previous article (see Foreign domination and the Canadian Manager) and which I will further develop shortly I prefer the term 'international corporatism' to managerialism.
It will be useful to summarize what Burnham said in The Managerial Revolution, most easily expressed in the form of a syllogism. "Those who control production will become the new elite of society regardless of the political system under which they operate. The power exercised by this corps of managers will eventually dominate all other institutions of society. Mankind will then experience a new form of totalitarianism,"
The question we must ask ourselves in the light of our experience beyond The Managerial Revolution is how far have we travelled along the road Burnham mapped out for us? We already have our three super states. These are the European Economic Community, the Communist bloc led by the Soviet Union (at the time of writing), and the United States - which pretty well resemble Orwell's Eurasia, Eastasia and Oceania. There are other powerful economic units, of course Japan, for instance but the three already mentioned constitute the dominant concentrations of economic power. Furthermore, they are indeed competing furiously for the remaining uncommitted markets of the world, as Burnham predicted.
It is obvious to here state the obvious in noting that each economic bloc operates under a different political philosophy, outwardly strong and well-entrenched. The Communist bloc shows no signs of coming unstuck, politically: U. S. capitalism repels with ease all attempts from the 'now left' to gain a foothold on that political scene; and member countries of the E. E. C. whose politics we may describe as being broadly socialistic pendulate between left-wing and right-wing socialism.
The reason for stating these well-known facts is to establish common ground for the central issue of this discussion, which is this. Each of the super states has had to accommodate a new force one beyond the simple 'managerialism' envisaged by Burnham a force in the guise of international corporatism. The power of that corporatism rests on the collective power of the manager corps, and the influence they exert on the rest of society.
Few will deny that managers are the new elite of society and if this fact was obvious to Burnham, our recognition merely confirms the prediction. Since about the period of the Second World War, when the need for greater productivity became a matter of life and death, the influence of managers in the affairs of the industrialized nations has steadily increased. It has been from the corporate level that this influence has developed most strongly. At the same time there has occurred a proportionate decline in the power exercised by the institution of political government.
The large corporations have grown larger. New words have been conscripted to describe the bigger and better corporate structures. We have witnessed the creation of those monolithic administrative empires-called conglomerates in the west-which control a mixed and diverse bag of 'acquired' industries. The vertically-integrated corporation has come into its own-a corporation. that is, with control over a complete process from primary extraction of mineral ore through milling and manufacture of goods to marketing. We may be sure that the Soviet bloc has its state-created corporations with like characteristics.
Two main features have contributed to the immense concentration of corporate power. The first is a natural tendency for corporations, as for all institutions, to coalesce with a consequent decline of privately-owned enterprises. The second is a substantial increase in the number of shareholders -still a very small fraction of the total population-and a consequent watering down as it were of voting power in corporate affairs. For example, the largest single shareholder of G.M. owns less than three per cent of the stock, even though this represents a sizeable fortune. The institutional buyers such as insurance companies, mutual fund operators and pension fund investors have become powerful shareholders of a sort, but these types of investors are managers with fiduciary responsibilities - managers all the same - so that corporate affairs are less and less influenced by the will and wishes of the 'owners'.
The motivating force behind managers as a group, their allegiance to the body corporate 'and the management psyche has been thoroughly investigated by W. H. Whyte in his "The Organization Man". Nor -are his findings necessarily restricted to managers on the North American continent. The same conclusions may be applied equally as well to those managers operating in a Socialist-style economy. What may not be so obvious, but which nonetheless may be taken for granted, is that the same style of managers-and -I mean this in the corporate sense-must be a fact of life in the Communist world.
One need only refer to the writings of Victor Zorza, for instance, to indicate a noted Soviet observer's acceptance that 'military-economic' managers are, in the USSR a fact of life. Commenting recently on the Supreme Soviet session, required to pass the latest five-year plan, he ascribed responsibility to the economic managers for delaying acceptance of the current five-year plan by the Supreme Soviet. Also, writing of a former party secretary and a leader of the military-economic manager faction of the party, he said, "Shelepin did not speak at the congress, but took advantage of the first major speech he made after it to emphasize the importance of major industry."
There is nothing particularly startling in this sort of statement, but it is indicative of the undisguised recognition given to that influential and powerful body in the Soviet economic bloc which is more 'managerial' than 'political'. It may be argued that in the Soviet context managers and politicians are one and the same. I could not agree-and there are compelling reasons to think otherwise-but we are not so much seeking to divorce one from the other as to draw a distinction between them.
In any case, evidence there may be of the existence of a managerial body in the Soviet economic bloc, but this in itself is not sufficient evidence to establish that the Soviet bloc has opened its arms to international corporatism. There is no doubt it has 'arrived', so to speak, and I will deal with this aspect of corporatism shortly. My main point at this stage is to establish beyond a doubt that a managerial elite does in fact flourish under the umbrella of every type of political system. This is no more than was stated in the first of the propositions I earlier ascribed to Burnham.
As Whyte argued, the common characteristic of managers is an allegiance to 'the corporation'. It matters little whether the corporation is the A.E.I. group in the United Kingdom, I.B.M. Corporation of the U.S. or Energotnachexport of Moscow. The allegiance syndrome is real. Moreover, that particular quality of managers provides us with the necessary causeway to move from managerialism to corporatism. The managers, after all, are the ones on whom the success of corporatism primarily depends.
A NATURAL PROGRESSION
This leads us to the second proposition, which is that 'the power exercised by this corps of managers' - now international corporatism - 'will eventually dominate all other institutions of society.' How much has corporate power increased over the past thirty years? Further how has it developed its international character?
In the first place, corporations have grown through mergers with other enterprises and by the acquisition of smaller concerns, as the practice of takeovers has come to be called. This has brought the corporate movement increased power. During, the past thirty years, direct investment abroad has tripled. Figures are hard to come by, but in the case of U. S. A. direct investment abroad, by 1969 the book-value in major areas of the world stood as: (figures are in $U.S.) in Canada, $21 billion; Europe, $21.5 billion; Latin America, $13.8 billion; and in South Africa, Australia and New Zealand combined, $3.8 billion. Nor is foreign investment on the corporate level limited to U. S. corporatism. The same pattern holds true for the large European corporations.
Foreign investment and control has given the corporate movement power to sway political government to the point where it imposes its will on national governments to an unprecedented degree. As a consequence, the lives of ordinary people have been affected - for both better and worse one might add, depending on the circumstances - but always to the ultimate interest of the corporate body as a whole.
It is difficult to make plain the extent of corporate power and influence without dealing with the subject in detail, which is beyond the scope of a short essay. A few examples, however, will illustrate the point. There is the practice of lobbying political government which we may take as being equally applicable to the governments of communist, socialist and capitalist countries. What better illustration of this type of influence and involvement than the recent I.T.T. affair in Chile? There is the extra-territorial application of a corporation's 'home' laws to subsidiaries in 'host' countries. And if these examples are insufficient we may cite the practice of shipping goods from subsidiary plants to destinations which are otherwise subject to embargoes by the 'home' country.
Twenty-five years ago, the idea that corporate decisions in one country could materially affect the economy of another was remote. What has happened over that intervening period is that corporatism has acquired its international character. It has overcome the hurdle of political boundaries with such smoothness the power it wields today is either not recognized or is simply taken for granted as a fact of life.
In the western world there is relative freedom for corporations to set up shop in the host country of their choice; relative because restrictions on foreign investment vary from country to country. These range from Canada's 'open-door' policy to the fairly restrictive policies of Mexico and Japan. By and large though, foreign investment is encouraged because economic growth is a function of investment - and the foreign kind, therefore, is no less a factor than domestic investment. That foreign takeovers may be engineered with as little as 10 per cent down payment with the rest coming from the host country sources seems to be completely overlooked or disregarded.
The spread of international corporatism continues with inexorable intent and the process leads inevitably to coercion of political government by what we will soon be able to regard as corporate government. Exercise of this acquired power is, of course, again relative. In small, developing countries it may appear, and sometimes is, considerable whereas in more industrialized economies it is proportionately less.
THE SAME DIFFERENCE
What is true of corporatism in the socialist and capitalist systems may also be detected as a growing feature of the Communist world. My contention here is that the spread of international corporatism across the political boundaries of the Communist bloc may be at the embryonic stage, but it has nevertheless begun.
Consider, for example, an agreement between the Soviet Union and a western auto-manufacturer to establish a manufacturing plant in the U.S.S.R. The Fiat organization of Italy is a case in point. Also, exploratory talks have been in progress with Ford Motor Company for some time. Corporate influence begins in the following manner.
To put a manufacturing plant of the complexity of an auto assembly factory into operation there must be considerable contact between host and foreign managers in three areas. First, the contract requires full transfer of technical information: catalogues, engineering drawings, production schedules and the like. Secondly, no plant making autos can depend on domestic sources entirely for the component parts in the early stages of its operations. Some items will have to be imported - and modern production methods demand streamlined supply programmes. Thirdly, considerable inter-management contact is necessary at the financial level. It is therefore a reasonable assumption that contracts of the type discussed provide international corporatism with the necessary bridgehead it needs to become established in the Soviet Union.
Recently, U. S. Secretary of Commerce Maurice Stans visited the Soviet Union. Upon his return he said that he envisaged American companies helping the USSR to develop its untapped oil, natural gas and copper deposits. He saw no reason why trade between the two countries count not be expanded from the present $200 million to $5 billion by 1975. It is almost certain that some sort of corporate allegiance will be infused in Soviet managers, nor would this process be entirely a one-way street.
There are numerous examples of Soviet-style corporatism seeping into the western hemisphere. In a recent bid for the supply and installation of four 595,000 HP turbines and governors for Canada's Mica Dam Project, Energomachexport of Moscow underbid all other bidders by $5 million. They have since received an order for part of that contract. Likewise, the Soviet Union's heavy equipment export corporation is successfully competing with western manufacturers in the Middle East and Africa. The Russians are obviously not I content to remain on home ground but must vigorously pursue export markets. There is evidence to suggest that their state corporations are as interested in acquiring equity interest in foreign enterprises as is any western corporation. If nothing else, this demonstrates the complexity of international corporatism.
There is evidence, then, of a trend on a world-wide scale, of growth in the exercise of corporate power, of increasing influence, privilege and domination of other institutions of world society. For all these reasons, Burnham's second proposition, therefore, is partially if not totally satisfied.
WORLD CORPORATE GOVERNMENT?
The idea of corporate government - as opposed to political government - establishing itself in the world arena is surely not so preposterous an idea after all. This is not to suggest that the cream of the crop, the top executives of the most powerful corporations, have formally banded together to create a world government intent on world domination. I do suggest that we are now witnessing an unconscious, as yet un-concerted, movement which has begun to manifest itself on society.
A well-known law of physics states that "to every force there is an equal and opposite force". The opposing force to corporate government is, of course, political government. Over the next several years we may expect a looming confrontation between these opposing and powerful forces. Already there are signs to indicate a gathering momentum is underway.
Harold B. Scott, U. S. Deputy Assistant Secretary of Commerce, admitted that there is a growing trend to nationalism throughout the world, based on a reaction to foreign investment and a fear that decisions taken in one country may adversely affect local interests. Within the last five years a number of countries have enacted legislation to limit foreign ownership and participation in their economies. Scandinavia,. Japan, Italy, Mexico and various European countries have introduced laws to protect their interests: Canada is presently wrestling with the problem; the oil-producing nations have banded together to halt the control of their oil reserves by international corporations. We may expect more such confrontations in the future.
The difference between corporatism and political expression is one of concern for human values as well as power. The Communists, one suspects, would see corporatism as nothing more than capitalism in disguise whereas, in relation to international corporatism, capitalism as defined in this discussion is a political philosophy for which the basis is a free-enterprise economy. Likewise, opponents of Communism will abhor that political system for its totalitarian nature. However, accepting that all shades of political philosophy share a common denominator which is a deep concern for the societies in which they operate, the common good and so on, something must differentiate political philosophy from corporate philosophy.
This difference is to be found in the fact that the horizons of corporate managers are inevitably limited to the 'good' of the body corporate. In other words, the one is limited, the other is not. It is here that the essential difference between politicians and managers lies.
No moral judgement is implied here. When it comes to questioning the abstract principles of right and wrong, of whether international corporatism is a good thing or a bad thing for world society, that is for others to decide. My aim has been to point out that the corporate movement - international corporatism - and all it implies is a real and substantial force to be reckoned with by political systems everywhere.
Burnham saw three economic super states, each with its own autonomous 'management' whereas I see the same three super states confronted en bloc by the institution of international corporatism. There is a subtle and distinct difference between Burnham's concept of world society and what I see as the looming reality.If Burnham's first two propositions are satisfied then it is pretty certain that society could experience an entirely new form of totalitarianism in the foreseeable future.
Delta Tech Systems Inc
| Duke of York's Royal Military School|
Royal Hibernian Military School
Reminiscences of a Queen's Army Schoolmistress
World War I - The war to end all wars
Books and Militaria
| Publications and Papers|
Wellington on Waterloo