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Book Summary: The Managerial Revolution – What is Happening in the World

Have you ever noticed that over the past few years that the government has shown greater interest in the economy than it used to? If you did, then you must be wondering why. It seems that everywhere we look, in any organization, bureaucrats and managers are multiplying left and right and truth is, we are witnessing a managerial revolution.

Book Summary: The Managerial Revolution - What is Happening in the World

Read this book summary to discover why the economy and society at large were changing so drastically during World War Two, as seen through the eyes of the visionary James Burnham. Find out whether communism has any chance to replace capitalism, which is in a downward spiral, as our economic structure.

As power is transferred from the hands of one ruling class to the next, it is important to understand what individuals are capable to drive our society and who are those who will benefit disproportionately from everything it produces.

In an ever-changing world torn apart by conflict, the things that you will learn from this book summary about the mechanics of social dominance, about socialism and capitalism are just as relevant now as they were when James Burnham first published his book in 1941.

Here are some of the most important things that we’ll discuss throughout our summary of James Burnham’s book, The Managerial Revolution:

  • What can we learn about the world of tomorrow from Russian history;
  • Why most of our assumptions about capitalist societies are wrong; and
  • how our society is being affected by the changing role of government, businesses, and managers.

Content Summary

Genres
Capitalist societies have a few important characteristics.
There are many signs that indicate that capitalism might not continue and no evidence that it will.
The Russian experiment with communism proved to be disastrous, but that doesn’t mean capitalism will be more successful.
The dominant class in a state-controlled economy will be managerial and not capitalist.
A new managerial class has emerged as a result of the increased technical and organizational complexity.
The power of the managers grew as governments took over vital industries.
Summary
About the author
Table of Contents
Overview
Review/Endorsements/Praise/Award
Video and Podcast
Read an Excerpt/PDF Preview

Genres

Economics, Politics, History, Business, Management, Sociology, Philosophy, Political Science, Literature, 20th Century, Social Sciences, Government, Theory of Economics, Laborand Industrial Economic Relations, Fascism

Capitalist societies have a few important characteristics.

When the author was working on this book, the dawn of the new era seemed imminent. It seemed that society was transforming from a capitalist one to a managerial one. But before we can discuss the new world, we must first understand how capitalism works.

Capitalism has been a dominating economic and political structure ever since the end of the Middle ages, especially in Europe and the United States. But what are the most notable features that make a capitalist society stand out?

The first and most important feature of capitalism had to do with production. When it comes to capitalist societies, the entirety of the produced goods, whether they are meant to entertain or to feed us are viewed as commodities. This means that every single thing has a price or a monetary value. From jewelry to bread to a person’s labor, in capitalist societies, everything is viewed as something that has monetary exchange value, regardless of how useful or useless it is.

The second most important feature of capitalism consists of the role that money plays in building the economy. Money has a vital role in a capitalist economy, one that is completely separate from its function as a medium of exchange. In capitalist societies, money can be transformed into labor, raw materials, and machines that can make more products. When these products are sold, the money that was spent is recovered and transformed into capital. In other words, money makes money in capitalist societies.

Another key feature of capitalism is that the main function of goods production is to carry out a profit. For instance, a shoe factory will be built if the shoes can be sold on the market and turn a good profit, and not if the locals are going barefoot.

Last but not least, in capitalist societies people can be separated into two main social classes. The individuals who own production instruments such as machines, factories, railroads, etc. and who hire other people to operate them are known as capitalists. Because they own the production instruments, these people are wealthier and are considered the ruling class. The proletariat or the workers are the second class of citizens of capitalist societies. The workers sell their labor to the first class of citizens and do not own anything themselves. As a result, they receive a smaller and unequal share of the money. The aforementioned aspects of capitalism are all too common today, but will they still be around tomorrow?

There are many signs that indicate that capitalism might not continue and no evidence that it will.

Back in 1941, when James Burnham started working on his book, mass unemployment was on the rise in Western Europe and the United States and the Second World War was raging. There is no doubt that the 1940s were a time of upheaval and unbelievable change. Yet, many people firmly believed in the capitalist system despite witnessing these enormous challenges. The people’s belief and trust in the capitalist society was based on two major assumptions, which were, unfortunately, both wrong.

The first misconception is that capitalism has been around for a very long time, and as a result, it will always be effective. But in fact, capitalism has only been around for a short period of time. The first capitalist systems were developed throughout the fourteenth century, but it took hundreds of years for them to become dominant.

The second misconception is that capitalism is a system that perfectly matches our intrinsic “human nature.” But this is not true. Throughout the course of known history, humans have adapted to many different types of societies, and a lot of them were much more effective than capitalism and endured a lot longer.

So, after taking a closer look at capitalism, it would be safe to assume that this type of governing would eventually falter. As we previously mentioned, when the author was working on his book, a lot of capitalist nations were struggling with unemployment. But this wasn’t the first time nations were facing this difficult issue.

In fact, it has been observed that unemployment precedes the end of a social organization. For example, during the final years of Classical Athens, mass unemployment was a major problem, especially among urban workers of the Roman Empire. A wave of unemployment also happened when the Middle Ages were ending, when the first capitalists started to banish the serfdom en masse from their lands.

In general, a wave of mass unemployment indicated that a particular type of social organization has become ineffective and that a society can no longer provide its citizens with socially useful roles. Additionally, such a society will also lack the resources to support the masses of unemployed people. As a result, people who became unemployed would linger on the edges of their dying societies like a stone around their necks. But they wouldn’t always be passive, as they would be a huge risk and a dangerous reservoir of force that could, at any given moment, clash with society at large.

Given the popular misconceptions that have fueled people’s belief that capitalism is a system that will continue, and the very real evidence that we find when we look at history that suggests the opposite – it might be safe to say that a change is imminent. But what would this change entail?

The Russian experiment with communism proved to be disastrous, but that doesn’t mean capitalism will be more successful.

There are people who believe that a communist society based on egalitarian principles is ideal. But there are others who think that the communist aversion towards private property is a nightmare. But there is one thing that everyone can agree on, the fact that capitalism is losing its grip on Western societies and that communism might replace it. But would this be possible? Communism is fully democratic in nature and it is classless. As opposed to capitalist societies, communist ones forbid private ownership over production instruments.

Despite this, it is highly unlikely for communism to spread to countries like the United States, France, or England. But why is that? Mainly because we have learned from the only communist regime that has ever existed that this type of social structure is extremely difficult to implement. For example, despite the fact that the Soviets made huge efforts towards abolishing private property and they ensured that every single means of production was owned by the state, they simply couldn’t achieve a classless society.

On the contrary, the Russian state’s rejection of capitalist ideas and the seizure of private property actually made Russian social classes more prominent than ever before. For example, an article based on statistics published in Soviet newspapers and written in 1939 by Leon Trotsky found that 50 percent of the national income went directly into the pockets of only 11 percent of the Russian population.

Ironically, despite all communist ideals, this wealth imbalance was worse than in the United States, where just 35 percent of the national income went to the top 10 percent of the population. Furthermore, the Soviet experiment with communism has shown us that it is very difficult to achieve freedom and equality for all citizens and absolute democracy.

A few measures of democracy and freedom that were observed in the early days of the Russian revolution consisted of giving union rights to workers, and eliminating discrimination from the educational system. Unfortunately, in later years, a lot of aspects of democracy and freedom were expunged from Soviet societies.

Political opposition parties were outlawed, institutions and organizations had fewer rights, and distinctive marks of social status started to appear once again. The terrible failure of the Russian revolution proves that implementing a truly communist society might be an impossible goal. So if we are witnessing the final days of capitalism, but communism is unlikely to replace it, what system are we transitioning to?

The dominant class in a state-controlled economy will be managerial and not capitalist.

So if our modern societies are not heading towards a communist regime, and capitalism will not be around for much longer, what will the future look like according to James Burnham? The answer is pretty straightforward: the transition that we are about to witness consists of switching from a capitalist system to a managerial one.

The managers – also known as the people in charge of making decisions about the usage of all means of production would control society. In other words, from Burnham’s perspective, our world is on the brink of a managerial revolution. The author argues that after a transitional period, a new stratum consisting of managers would obtain social dominance and would topple the capitalists, becoming the ruling class in society.

Additionally, this would be a worldwide transition that has already begun and that will affect a lot of different countries. The managers would become dominant in our society due to an economic framework based on the ownership of the state over every major production instrument, from railroads to factories. Within this economic framework, nobody would have private property rights over these production instruments.

At this point, you might be wondering how would the existence of a ruling class be possible within this economic framework. Doesn’t this framework seem a bit too similar to the early days of the Russian communist society? Not quite. It’s important to remember what a ruling class actually means.

A ruling class refers to a group of people who, as a result of the socio-economic climate, have gained control over the instruments of production. Naturally, the members of the ruling class will give themselves preferential treatment and will become wealthier. In a society dominated by managers, the managers would, indeed, have control over the production instruments and will have an advantage in the distribution of products, but not directly, through property ownership, but indirectly, through their ability to control the state.

More importantly, this control would not come about through a revolution, or through deliberate actions. Rather, it might come naturally, as the state began to control and own more and more production instruments, the bureaucrats and the people who manage the day-to-day running of state will become the main controllers of the production instruments. And, in practice if not in theory, control can be as effective as ownership. As such, those bureaucrats who manage and control the running of the state will, slowly but surely, become the ruling class.

A new managerial class has emerged as a result of the increased technical and organizational complexity.

We now arrive at an interesting question: who is this new ruling class and who are these managers that we keep talking about? Well, they are the people who control and manage the production instruments. It seems crystal clear that the capitalists are the ones who manage the production instruments in a capitalist society. Otherwise, how could they maintain their status as a ruling class which depends so much on having control over the production instruments? The most straightforward answer to this question is that they could not maintain it. Up until the 1940s, the production instruments were controlled by capitalists, but a new class of managers was starting to emerge.

Over the years, this class has had many different names such as superintendents, operating executives, administrative engineers, or managers. More broadly, in this context, the name “manager” refers to the people who, at the point when James Burnham was writing this book, were already controlling the actual production process, whether that production was governmental, corporate, or individual.

The concept of a manager is not a new one, as they were always in an important part of the industry. And, as times are changing, they have become more and more economically dominant starting with the middle of the century.

For example, in previous times, the standard capitalist was a manager in his own right. He owned the whole factory and he was the individual entrepreneur of his steamship company or coal mine actively managing his own venture.

But throughout the first half of the twentieth century, we notice a significant growth in large-scale public corporations. The amazing technological advances of the modern world have made management more difficult and complex. This resulted in a series of changes that eliminated the enterprises that were managed by capitalists. Instead, the complex companies needed armies of managers in order to function to full capacity.

Additionally, as companies were growing and expanding, a lot of them switched from being owned by individual capitalists who had absolute power to several shareholders. The shareholders had less power and their ability to take action against the managers was diluted. And, if the owners are weak, it’s the managers who take matters into their own hands.

The power of the managers grew as governments took over vital industries.

It is important to mention that this managerial class would not dominate just the field of private enterprise, but also the society and it would go on to become the new ruling class. In fact, the managers who worked for the state would achieve an even greater social dominance than private industry managers.

What’s even more worrying is that this new ruling class was already running the government. But, because it was a different context, they were known as bureaucrats instead of managers. Capitalist governments are not interested in entering the economy themselves. However, this limited role of the government was abandoned in all the nations of the world in the first half of the twentieth century.

The most extreme example of this was, of course, Russia, but the same thing was happening at a slower pace in the United States. Namely, the vital sections of the economy such as housing, health care, ship-building, transportation, postal service, etc. were all controlled by the government and were all becoming government enterprise fields.

As a result, as every section of the economy was controlled by the government, the capitalists were losing power. When the government started to run these enterprise fields, the capitalists lost their control over the means of production. Also, it is worth mentioning that in 1941 more than a million people were part of the American federal government bureaucracy. That’s twice as many as in the 1930s.

Furthermore, if we count the employees of municipal and state governments, the courts, the navy, the prisons, and the recipients of all types of relief, it becomes obvious that half of the American population depends on the United States government for its means of living. And who has the most power in this huge government enterprise? It is none other than the managerial class.

The daily tasks of the running of this behemoth enterprise is now in the hands of the men who work in the countless government agencies, bureaus, and commissions. These men (and it is important to underline the fact that they were mostly men and not women), and their counterparts in private industry, seemed to become the ruling class of our modern world. And the power of the managers would become absolute once the state would finally take control of all aspects of the industry.

Summary

What is the key message of James Burnham’s 1941 book The Managerial Revolution: Our current social structure, known as capitalism is changing dramatically and thanks to a few key factors such as mass unemployment it might actually be on its way out.

Although a lot of people believe that communism is the only acceptable alternative, the managerial society will most likely replace capitalism. When the state takes control of industry and private property rights start to disappear, we notice that those who manage will slowly but surely become the ruling class.

About the author

James Burnham was an American philosopher and political theorist. He chaired the philosophy department at New York University; His first book was An Introduction to Philosophical Analysis (1931). Burnham became a prominent Trotskyist activist in the 1930s. He rejected Marxism and became an even more influential theorist of the right as a leader of the American conservative movement. His book The Managerial Revolution, published in 1941, speculated on the future of capitalism.

James Burnham was an American political theorist and philosopher. In later life, he was a prominent public intellectual who regularly contributed to publications such as the National Review.

Table of Contents

Second Thoughts on James Burnham by George Orwell i
Orwell’s Notes xxv
I: The Problem 1
II: The World We Lived In 7
III: The Theory of the Permanence of Capitalism 26
IV: The Theory of the Proletarian Socialist Revolution 34
V: The Struggle for Power 53
VI: The Theory of the Managerial Revolution 65
VII: Who are the Managers? 70
VIII: The Managers Move Toward Social Dominance 87
IX: The Economy of Managerial Society 102
X: The Managers Shift the Locus of Sovereignty 128
XI: Totalitarianism and Managerial Society 141
XII: The World Policy of the Managers 160
XIII: The, anagerial Ideologies 172
XIV: The Russian Way 192
XV: The German Way 212
XVI: The Future of the United States 236
XVII: Objections 256

Overview

Burnham’s claim was that capitalism was dead, but that it was being replaced not by socialism, but a new economic system he called “managerialism”; rule by managers.

Written in 1941, this is the book that theorised how the world was moving into the hands of the ‘managers’. Burnham explains how Capitalism had virtually lost its control, and would be displaced not by labour, nor by socialism, but by the rule of administartors in business and in government.

This revolution, he posited, is as broad as the world and as comprehensive as human society, asking “Why is ‘totalitarianism’ not the issue?” “Can civilization be destroyed?” And “Why is the New Deal something bigger than Roosevelt can handle?”

In a volume extraordinary for its dispassionate handling of those and other fundamental questions, James Burnham explores fully the implications of the managerial revolution.

Review/Endorsements/Praise/Award

‘Burnham has real intellectual courage, and writes about real issues.’ – George Orwell

‘The stoic, detached, empirical, hard-boiled, penetrating, realist mind of James Burnham is something to behold, to admire, to emulate.’ – National Review

‘James Burnham was an astonishing writer. Subtle, passionate, and irritatingly well-read.’ – New Criterion

‘The immense significance of Burnham’s approach is potential. We can ignore it only at the risk of being disarmed by the future course of events.’ – Irving Kristol

Video and Podcast

Book Summary: The Managerial