Rise of the Managerial Class
By William Pfaff
AT A TIME WHEN corporate America is exploring and exploiting its new
Supreme-Court-bestowed role in the management of American election
results, an earlier transformation in the composition and political
role of American business leadership should be recalled. This was the
replacement of the Gilded Age capitalists and
industrialists—audacious, rapacious and innovative, who created the
post-Civil War American industrial economy—by the early 20th-century
professional managers who took their place.
James Burnham (1905-1987), before becoming the godfather of
neoconservatism (as he is best known today, to those who recall him)
was an eminent American Trotskyist during the period when Trotskyism
was a serious matter among American intellectuals. His father was an
English immigrant who became an executive of the Burlington Railroad.
His mother was a Catholic.
The young Burnham, after Princeton and Balliol, converted to the
secular religion of Trotskyism, and became a founder of the American
Workers Party, which in 1934 merged with another dissident Marxist
group to create the Trotskyist Workers Party of the United States,
which attracted an intellectual membership (Sydney Hook, James Rorty,
In 1941, he caused a considerable international stir with his book,
“The Managerial Revolution.” It was the only important American
contribution to the Marxist debates surrounding the Crash and Great
Depression—although in George Orwell’s view (writing in 1946), Burnham
was actually more a Machiavellian thinker than a Marxist.
Orwell did not live to see Burnham’s ultimate conversion to aggressive
Burnham’s Trotskyist period ended with a declaration in 1940 that he
had decided that Marxism was merely a form of imperialistic class
politics, and he proposed a new theory which said that the managerial
class was the new force in the class struggle, seizing privilege and
control over society. Capitalism, he said, as a form of social
organization, was finished. His new managerial class was taking over
in German Nazism, Soviet Stalinism and in F.D.R.’s New Deal.
This idea had been heard before in Trotskyist circles. As Daniel Bell
later wrote, Burnham’s theory about capitalist management had been
anticipated eight years earlier by A.A. Berle and Gardiner Means who
had identified the same change inside the modern corporation, where
the capitalist owner ceded control to the professional manager (on the
way to being eventually replaced by a board of directors, supposedly
representing the anonymous mass of stockholder “owners,” but actually
nominees of the new managers themselves, usually their friends and
counterparts from other corporations).
Orwell accused Burnham of an inordinate fascination with power, which
led him to predict that Germany and Japan would win the Second World
War and would remain the centers of world power afterwards. Burnham
took for granted that “managerial” Germany was in all respects more
efficient than a capitalist democracy such as the U.S. or France. He
expected Hitler to attack and defeat Stalinist Russia (“a great man,”
Burnham earlier had said of Stalin). He saw society generally on its
way to oligarchy and the concentration of industrial and financial
This predilection for both colossal error and world-historical theory
never left Burnham. By the end of the Second World War, he was an
anti-Soviet rightist, author of such books as “The Struggle for the
World” (1947) and “The Suicide of the West” (1964)—national suicide
allegedly the result of the malign influence of America’s liberals.
Burnham was a great influence on William Buckley and on the oddly
xenophobic, reactionary and anti-intellectual version of
“conservatism” that developed in the postwar United States (with its
cultish infatuation with the heroic capitalism of Ayn Rand) and
continues today, finding its bizarre culmination in the tea-party
upheaval in the Republican Party.
Burnham’s theory that a new class of professional and technocratic
managers were taking control of modern economies accompanied another
phenomenon of the wartime and postwar years in the U.S. Intellectually
moribund university business schools were reawakened by the influence
of “scientific” and strategic management theories and practices
developed by military staffs and at such institutions as the RAND
Corporation. These made use of mathematical models, behavioral theory
and operations research (usually a glamorized and heavily numerate
version of empirical or common-sense analysis) and gave business
executives an aura of scientific professionalism.
This combination eventually gave us the version of global finance and
industry that has given us world crisis. It generally is run by
managers who, without necessarily investing a farthing of their own
money, control the American (and increasingly European) economies,
enriching themselves by assigning to one another titanic emoluments as
rewards for having been hired, for carrying out executive duties that
earlier professional managers performed for unexceptional rewards and
eventually rewarding themselves for leaving their jobs.
These individuals usually are not founders or creators but hired
hands, graduates of American business colleges. They form the American
plutocracy today, and the Supreme Court has authorized them to make
use of the (technically stockholder-owned) resources of the
enterprises they control to devote unlimited and unregulated wealth to
promoting the election of political figures sharing their views on
Since American elections, in contrast to the 1930s, tend to be decided
by broadcast political advertising, and during the Reagan
administration the legally mandated “Fairness Doctrine” that since
1934 had required impartiality in broadcast political debate was
ended, it would seem that this plutocratic power is permanently
installed in the United States government, since nearly all of the
economic, political and communication groups in a position to change
the situation richly profit from it.
The apparently imminent installation in the United States of
irreversible oligarchy, in succession to constitutional democracy,
characterized by a morbid concentration of money and power, validates
what Burnham anticipated in his first two books (“Managerial
Revolution” in 1941 and “The Machavellians” in 1943). They claimed
that oligarchy is the natural form of society, and its power rests on
force and fraud. Quoting George Orwell’s summary of the early Burnham,
democracy never existed—“and so far as we can see never will.”
While Burnham later changed his mind, the prescience of his earliest
books must be saluted.
Visit William Pfaff’s website for more on his latest book, “The Irony
of Manifest Destiny: The Tragedy of America’s Foreign Policy” (Walker
& Co., $25), at www.williampfaff.com.