Joseph Hansen

Burnham’s Managerial Revolution

(June 1941)


Source: Fourth International, Vol.2 No.5, June 1941, pp.157-159.
Transcription/Editing/HTML Markup: 2006 by Einde O’Callaghan.
Public Domain: Joseph Hansen Internet Archive 2006; This work is completely free. In any reproduction, we ask that you cite this Internet address and the publishing information above.


Our readers will recall that James Burnham was the ideological leader of a faction which he led in April 1940 in a split from the Trotskyist movement. Burnham and his faction avowedly split from the Socialist Workers Party on the ground that they could no longer submit to the discipline of an organization which stood for the defense of the Soviet Union.

That was a basic-enough issue. However, the faction led by Burnham and Max Shachtman differed with us, not only on the Soviet Union, but on all basic questions of the revolutionary movement. It was a petty-bourgeois tendency driven by a profound social impulse, as Trotsky put it, to break with the proletarian party.

Scarcely had Burnham led the faction out of the Trotskyist movement when he dropped all pretense of adherence to the proletarian movement. Within a few short weeks he resigned from the “Workers Party” he had set up with Shachtman. In his letter of resignation (published in the Fourth International; incidentally, never published by the “Workers Party”!) he made no bones about the fact that the ideas motivating his abandonment of the Marxist movement were ideas he had held for some time. Specifically, that meant that these were his ideas during the period when he persuaded his faction to split from the Socialist Workers Party.

The theory which he carried around in his brief case at the time he launched a struggle against the Fourth International, Burnham has now expanded into book-length. [1] Burnham would scarcely have the grace to say it, but his theory is precisely that which Trotsky said would be the theory of the Burnham-Shachtman faction if it worked its ideas out to their logical conclusion: a denial of the possibility of socialism.

It is part of Shachtman’s betrayal of Marxism that he did not join in smoking out Burnham and his “managerial” theory, but instead combined with Burnham to lead a number of young comrades away from Bolshevism, only to be abandoned by Burnham immediately afterward. But Burnham, though departing, left his mark on the “Workers Party”: its anti-Soviet orientation, its hostility to Leninist organizational methods, its petty-bourgeois aversion to our proletarian military program, etc., etc. The current articles of Shachtman and MacDonald arguing that a new “bureaucratic class” has taken power in the Soviet Union, and the articles of MacDonald arguing that capitalism no longer exists in Germany, are mere variations of Burnham’s views, as the master himself recognizes in his friendly polemic against these pupils in the closing chapter of his book.
 

Burnham’s “Alternative” to Socialism

As Trotsky predicted, this petty bourgeois snob ;has swiftly completed his evolution into a rabid enemy of Marxism. The thesis that Burnham promulgates is that socialism “is not possible of achievement or even of approximation in the present period of history.” His alternative to socialism is the “managerial” society. The essence of Burnham’s alternative is borrowed – without acknowledging the source – from Bruno R., an Italian who developed the theory that capitalism is being replaced by a new kind of exploiting society. (Bruno R., La Bureaucratisation du Monde, Paris 1939).

Bruno R. bases his theory on an asserted identification between the planned economy of the Soviet Union, the Fascism and Nazism of Italy and Germany, and the New Dealism of the United States. Burnham takes over this idea and labels it “managerial society” in contradistinction to Bruno R., who designated his society as “bureaucratic collectivism.” The capitalists, says Burnham, tend everywhere now to be expropriated. Not, however, by the workers, but by the “managers” – the executive and engineering personnel.

Burnham equates the October revolution with Stalinism and the latter with Fascism-Nazism; he calls the October revolution the “first great abrupt jump toward managerial society,” and finds Nazism-Fascism to be merely a more gradual evolution in the same direction.

To achieve these identifications, Burnham of course has to suppress all the facts which he once learned about the nature of Stalinism and the bourgeois character of fascism.
 

He Renders a Service to Stalinism

The crimes of Stalinism, it is true, have indeed served the ends of reaction. Hitler could never have come to power without the aid rendered him by Stalin. If it were not for Stalinism, the world working class could never have suffered the catastrophic defeats of the last twenty-five years. Moreover, there is a connection between imperialist reaction and the historical origin and development of Stalinism. In the last analysis Stalinism and Fascism both flow from the decay of capitalism. That is the connection between them. Both are mortal enemies of the working class.

But there the resemblance ends. Whereas Stalinist reaction has unfolded on the basis of a degenerating proletarian revolution in the Soviet Union, Fascism-Nazism and all the kindred phenomena of imperialist reaction have unfolded on the basis of capitalist decay and capitalist counter-revolution. All the points of similarity between the totalitarian bureaucracy based on the degenerated workers’ state (Stalinism) and the totalitarian bureaucracies based on the rule of monopoly capital (Fascism) cannot be made to bridge the class gulf between them.

What Burnham actually does is to utilize the crimes of Stalinism as his main proof of the incapacity of the proletariat to establish a socialist society. But to utilize the crimes of Stalinism for that purpose, he must also mitigate those crimes. Instead of crimes against the international working class they are transmuted by Burnham into natural elements in the creation of a “managerial society.” The GPU murder-machine becomes in Burnham’s version a necessary “curb” on the masses. The Moscow Frame-up Trials which shocked the entire world become likewise part of this “historically necessary” process. Listen to the professor:

“The great public trials gave, we might say, a formal flourish to the solution of the second part of the problem (i.e. the “managerial problem” of “curbing the masses”), which left the masses properly subordinated in the new social structure... in a sense, the mass purges were largely symbolic and ideological in purpose.” (p.211)

What are the Moscow Frameups? “A formal flourish!” What is the significance of the mass purges which have taken a monstrous toll of thousands upon tens of thousands of Soviet revolutionists, workers and youth? “Largely symbolic!” He thus invests Stalin’s monstrous crimes and abominations with a historical justification: they are, if you please, “solutions” of problems posed by “history.”

The struggle against Stalinism is a life-and-death question for the American workers as well as workers the world over. Like all struggles, this one demands above all a correct policy. If any persons still remain in the “Workers Party” who sincerely wish to continue the struggle against Stalinism, let them ponder seriously the logical conclusions flowing from the “theories” and method of their former ideological leader.
 

His Points of Agreement With Goebbels

And now we come to Burnham’s points of agreement with the “anti-capitalist” demagogy of the Nazis.

To believe Burnham is to believe the lie that Nazi “anti-capitalism” has already led to virtual expropriation of the capitalists in Germany. What proof does he offer? “A recent estimate,” he writes, “by a New York statistician gives as a mere five per cent the share of the German national income going to profits and interests.” The most zealous proponent of “hard facts” (empiricism) would hardly be stupid enough to rest his entire “inquiry” on a single “fact” such as the one adduced by the professor. Yet not another item of factual data in this connection is presented by him. (“The statistics,” he explains, “which are, in any case, not reliable – fail to indicate the full meaning.”)

Why, then, did he bother to cite the statistician from New York and this “mere five per cent?” Here we are initiated into the holy of holies of Burnham’s method. If he refers to the “mere five per cent” it is in order to proclaim immediately on his own authority the following:

“Moreover, of the German capitalists’ five per cent, the greater part is appropriated by the state as taxes and ‘contributions’.” (p. 238)

This “mere five per cent” is typical of Burnham’s whole book. We imagine that America’s Sixty Families would not be unduly alarmed at such a type of “managerial society” in their own hemisphere.

Daniel Guerin wrote a book, Fascism and Big Business. MacDonald, whom Burnham left to represent his interests in the “Workers Party,” wrote a preface to the English edition in December 1938. MacDonald was not then a Burnhamite.

“By means of a detailed examination,” he insisted then, “of a large body of factual data – I am aware of no other book on Fascism which offers so systematic an exposition of so vast an amount of information – Guerin is able to demonstrate that fascism does serve the rulers of the big bourgeoisie.”

What refutation of Guerin’s vast amount of information and factual data does Burnham offer? None.

In addition to the above cited “five per cent,” Burnham offers the following six pieces of “prima facie evidence” that Germany is no longer capitalist. Let us examine them:

  1. Germany “should have been bankrupt five years ago” and “its currency should have gone into a wild inflation.” Ergo:- German capitalists have been expropriated or are on the verge of expropriation. By what laws of political economy should Germany have been “bankrupt” and in “wild inflation” five years ago? By laws known only to Burnham, for he does not tell us what they are. That is, Burnham merely implies there are such laws, in order to conclude that the transcendence of these “laws” proves the non-capitalist character of German economy.
  2. The territorial expansion of Germany has been “rapid.” Ergo: German capitalists have been expropriated or are on the verge of expropriation.
    In that case, following Burnham’s logic, judging by the territorial expansion of Japan, the Japanese monopoly capitalists no doubt have all been expropriated by the “managers” led by the Divine Mikado.
  3. Germany “makes war better than the undoubtedly capitalist nations.” Ergo, it is not capitalist.
    Then, to judge from Mussolini’s successes in “making war,” the Italian capitalists have surely recovered – during the operations in Albania, Libya, Ethiopia, etc. – all the property which had been “expropriated” by the “managers.”
  4. “Nazi Germany inspires fanatical loyalty in millions of persons.” Ergo, it is a new social order.
    At long last, then, the members of the “Workers Party” should be able to grasp the full “social-revolutionary” significance of the fanaticism of the millions of followers of the Holy Roman See, Voodooism and Mumbo-Jumbo.
  5. “The outstanding political, military and economic leaders of Germany are much younger ... than the leaders of France and Britain.”
    Ergo?
  6. Elimination of unemployment is “in and by itself, a sufficient proof that Germany has left the basis of capitalism and entered the road of a new form of society.”
    America’s Sixty Families are hereby informed that they had better beware of eliminating unemployment by means of the war boom, conscription, forced labor, concentration camps, prison, etc., on pain of suffering “expropriation.” Q.E.D.
  7. “Finally, there is the notorious Nazi ‘Fifth Column.’” Since he doesn’t explain how this (7) proves his point, we reserve further comment until Burnham appears as a witness before the Dies Committee.

Such, then, is all the “prima facie evidence” presented by Burnham as “sufficient to refute the opinion that Nazi Germany is a type of capitalism and to show that it is on the contrary an early stage of a new type of society.” (p.235)

Like a good lawyer with a bad case, Burnham has avoided all the embarrassing facts. It would be amusing, if not instructive, to have him (or MacDonald of the “Workers Party”) on the witness stand and see him try to explain – to mention but one piece of factual data – the very detailed description of the financial operations of Goering, Hitler’s heir, which the May 1941 Social Research publishes. We should like to see anyone find a semblance of “managerial society” in the great corporations owned by Goering, leader of the big capitalists in the Nazi machine.
 

How Burnham Serves Imperialism

Burnham’s insistence on the non-capitalist character of German economy is undoubtedly pleasing to the Nazis, whose “anti-capitalist” demagogy is essential to their rule. But the Nazis are not the only ones who deny the capitalist character of Germany. Some of the shrewder ideologists of the “war for democracy” – like Sidney Hook – also insist that Germany is no longer capitalist.

Such a characterization of Germany by “democratic” war-mongers like Hook does two things: (1) It serves to refute the Marxist conclusion that this is a war between imperialist powers; for if Germany is no longer capitalist-imperialist, the Marxist proposition cannot be true. (2) It rules out the Marxist conclusion that fascism is the expression of a decaying capitalist order, susceptible of being destroyed by the German proletariat, particularly if it is aided by the workers in the opposing countries carrying on a correct internationalist policy. By endowing Nazism with the character of a “new order,” capable of indefinite length of life, Hook leaves to the capitalist governments of the “democracies” – and to them alone – the task of destroying Nazism.

Thus the “non-capitalist” concept of Germany, so useful to the Nazis, also has its uses for the “democratic” imperialists. Like the latter, Burnham concludes from his theory that World War II is not an imperialist war. In language which Hook might well have written, Burnham claims that the “war of 1939” has nothing in common with the “war of 1914,” that it is a struggle between “two ideologies,” etc. Small wonder that the big metropolitan press has been so respectful and, indeed, friendly to Burnham’s book!

We come now to Burnham’s attempt to prove that the United States under the New Deal is moving toward expropriation of the big capitalists by those who hitherto served them as “managers.” The road to the “managerial society,” says Burnham is indicated by the growing separation between “ownership” and “control” of capital.

The actual phenomenon which he describes in these terms has been understood very well by Marxists. That phenomenon is part of the mechanism whereby finance capital dominates bourgeois society in the epoch of imperialism. Here is what Lenin had to say about it:

“It is characteristic of capitalism in general that the ownership of capital is separated from the application of capital to production, that money capital is separated from industrial or productive capital, and that the rentier, who lives entirely on income obtained from money capital, is separated from the entrepreneur and from all who are directly concerned in the management of capital. Imperialism, or the domination of finance capital, is that highest stage of capitalism in which this separation reaches vast proportions. The supremacy of finance capital over all other forms of capital means the predominance of the rentier and of the financial oligarchy; it means crystalization of a small number of financially ‘powerful’ states from among all the rest.” (Imperialism, p. 59)

Burnham makes no attempt to challenge Lenin’s analysis of this process whereby finance capital becomes predominant. Instead, Burnham, basing himself on Berle-Means’ The Modern Corporation and Private Property, arbitrarily insists that this process signifies the expropriation of the big bourgeoisie by the “managers.” To show how the “managers” accomplish their “struggle for power” – the quotation marks are his, it is only a “metaphor,” he says, – Burnham uses the American Telephone and Telegraph Co., as the classic example of management-control. A “control group” rules the AT & T, the run of the mill stockholders have less and less say; gradually the “control group” cold-shoulders the stockholders right out of their “ownership.” The “managers” are well on the road to expropriating the “owners.” This will happen throughout American economy.

As we have said, Burnham evades disproving Lenin’s analysis of what the process really is: the rule of finance capital. But one need not appeal to Lenin. Non-revolutionary students of economics agree with Lenin on the nature of this process.
 

Lundberg’s Refutation of Burnham

In Appendix E of his book, America’s 60 Families, Ferdinand Lundberg considers precisely the argument raised by all the Burn hams; and here is what Lundberg has to say:

“Now briefly, what is the Berle-Means book about, that it should be used to prove that big proprietors no longer have anything to do with industry? ... The book’s thesis is simply that non-ownership management control of corporations is on the increase, that myriad petty stockholders have nothing to say any more about running a company.

“What Messrs. Gannett (of the New York Herald-Tribune) and Clapper (of the Scripps-Howard chain) alike innocently overlook in this tendency described so fully by Berle-Means is that control of corporations by legal device, while excluding small stockholders from a voice in affairs, does not exclude the big interests. What has happened is this: the big proprietors, unable to exercise as wide control over as, many companies as they would like by means of simple ownership, have in certain instances abandoned ownership of a corporation as a means of control and have substituted for it control by legal device. The liquid capital they have by this means been able to repossess has then been used to obtain an ownership stake in other additional enterprises. Messrs. Clapper and Gannett are naive enough, apparently, to believe that those corporations controlled by legal device are directed by clever but unknown men who have succeeded by some hook or crook in wresting voting control from the big stockholders. The fact is, however, that managers under the legal device have in virtually all cases been installed by big proprietors.

“This last is not, to be sure, the thesis of the Berle and Means book. Their work is concerned chiefly with analyzing legal modes of procedure with respect to the control of the corporations. In no part of the book, however, do they suggest that a non-ownership management has wrested any corporation away from the big owners. In nearly every one of the cases they cite concerning the two hundred largest corporations of the United States, it is big proprietors, present or former, that are in the saddle.

“One can readily ascertain the facts by turning to page 116 of The Modern Corporation and Private Property. There a tabulation shows that out of 200 of the largest non-financial corporations of the United States, 21, or 10½ per cent, are under management control, and 44, or 22 per cent, are thought to be under management control. However, the fact that they are under management control does not mean that the big hereditary proprietor families are excluded; management control by legal device was installed by just these proprietors, who now run the companies on the basis of shoestring investments. Ninety-five companies, or 47½ per cent of the 200 largest companies, according to Berle-Means, are controlled through outright ownership, majority ownership, and minority ownership, while 40 companies, or 20 per cent, are controlled through legal device, joint ownership, or by uncatalogued special means.

Control of corporations by these means is merely a phase of the development of finance capital, whose newest methods make it possible for big proprietors to extend their control over a vast area ridiculously out of proportion to the amount of money actually owned.” (p.506)

In passing, Lundberg mentions that the AT & T, Burnham’s “classic example,” is actually under the rule of J.P. Morgan and Company.

In short, what is actually financial strategy, legal legerdemain, “merely a phase of the development of finance capital,” is palmed off by Burnham for nothing less than a social revolution. Thus he bolsters the illusion that the Sixty Families do not rule America.

* * *

In a moment of awareness in the days when Burnham condescended to play the part of visitor in our movement he wrote, in collaboration with Shachtman, the following:

“The foulness of Stalinism and imperialism can today breed only maggots; in particular is it impossible for intellectuals to avoid degeneration not merely of their characters as human beings but also of their minds if for any length of time they give their allegiance to those allied monsters of the lie.” (Intellectuals in Retreat, January 1939)

Here is a case where a maggot wrote his own epitaph.

 

Footnote

1. The Managerial Revolution, by James Burnham. John Day. 1941.

 


Last updated on: 15.2.2006