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James Burnham’s Managerial Elite

Conservative polemicists have long presented a caricature of a decadent liberal elite, and liberals have offered a competing caricature of a conservative plutocracy. But few have attempted to understand how these ostensible opponents function as elements of the same elite, or how they have participated in maintaining the broader intellectual, political, and economic status quo. Today, with the old partisan categories in disarray, many pundits have begun to acknowledge the existence of a transpartisan elite with its own interests, if only as the antithesis of so-called populists. Yet although many efforts have been made to examine the motives—and, almost always, the pathologies—of populism, little serious thought has been given to the interests and character of the elite as a class.

This refusal to interrogate or even conceive of a ruling class of elites reflects the once prevalent—and still lingering—belief that ideological conflict ended after the Cold War. Without a critique of the dominant ideology, the distinct class consciousness and interests of the elite seem to disappear. If there is no critique of the general political consensus, then there is no critique of the political elite, for it is that elite which constitutes and defines the larger society.

But a politics that sees itself as non-ideological is always politics at its most ideological. Apparent political consensus is not the end of all ideologies but merely the temporary triumph of one. Now that the intellectual and political consensus of the last few decades is visibly crumbling, the managerial elite begins to reemerge as a class and managerialism as an ideology. Thus what is commonly seen today as the “rise of populism” is just as much—or rather, in fact, primarily—the decline of the elite.

Such an analysis of the political and economic elite—its composition, its genesis, its beliefs, its myths, and its failures—is the common strand running through the writings of James Burnham. For Burnham, a society is defined by its elite, and an understanding of the “ruling class” is the key to understanding all society.

Socioeconomic analyses of the elite were common in academic literature and beyond throughout much of the twentieth century. Commentators as diverse as C. Wright Mills, Irving Kristol, and Daniel Bell, along with many others, wrote influential pieces in this genre. Burnham was neither the first nor the last to approach political analysis from this perspective, nor the only one even to define and analyze what he called “managerialism.” His understanding of the twentieth century elite was uniquely perceptive, however, and his work still offers many insights into our own time. It allows us to understand not only the rise of the managerial elite and its ideology but also their unraveling.

Rediscovering James Burnham

Born in 1905, the son of a railroad executive, Burnham attended Princeton and Oxford before becoming a professor of philosophy at NYU. From 1934 to 1940, Burnham was a prominent member of the Trotskyite faction of the international Communist movement and an occasional contributor to leftist publications. However, at least as early as 1939, he began to break with Trotsky personally and Communism intellectually. Opposition to the Molotov–Ribbentrop Pact may have been the proximate cause of Burnham’s resignation from the party, but by this time he had also developed deep disagreements with Marxist theory. In particular, he had come to reject the view that Communism would succeed capitalism as an inevitable consequence of the development of history.

Burnham’s 1941 bestseller The Managerial Revolution: What Is Happening in the World is his exploration of an alternative to Marxist historical theory. Burnham argued that the West was undergoing an irreversible transformation away from capitalism. It was not socialism that was in the ascendancy, however, but rather a new type of exploitative society that he termed managerialism. In managerial society, according to Burnham, a technocratic elite of credentialed managers, exercising power through enlarged corporate and government bureaucracies, would occupy the commanding heights of the economy, politics, and culture. Private property would not disappear, but the state nonetheless would exercise a dominant role in the economy, and social and political arrangements would be radically altered. The managerial economy would be categorically distinct from previous forms of entrepreneurial capitalism, and the managerial regime would not be democratic or classically liberal in its essential characteristics. Although any work of this type will contain some obsolete projections, the contemporary reader will find many of Burnham’s predictions uncannily prescient.

In 1943, Burnham published The Machiavellians: Defenders of Freedom, an interpretation of Dante, Machiavelli, Gaetano Mosca, Georges Sorel, Robert Michels, and Vilfredo Pareto. Continuing to move away from Marxist theory, Burnham argued in even more explicit terms that political history was simply the playing out of elite conflict over power. The book is perhaps best described, in a word, as a “deconstruction” of moralistic self-ideologizing, to which even democracies are prone, and argues that a clear-eyed and amoral understanding of politics is essential to human freedom.

With The Struggle for the World (1947) and The Coming Defeat of Communism (1950), Burnham established himself as an ardent cold warrior. He opposed policies of appeasement and containment and called for nothing short of a concerted effort to roll back and defeat the Soviet Union. The Suicide of the West, published in 1964, was a scathing attack on contemporary liberalism and the liberal elite, which Burnham found to be incapable of defending the cultural and intellectual heritage of the West against Soviet Communism.

By this time firmly identified with the Right, Burnham helped found National Review in 1955 and gained a reputation as something of a pragmatist among its staff, at least on domestic policy. He supported Rockefeller over Goldwater in 1964, for example, and Nixon over Rockefeller and Reagan in 1968.

William F. Buckley Jr. said of Burnham, “I would consider him the number one intellectual influence on the National Review since the day of its founding.” The historian George H. Nash wrote, “More than any other single person, Burnham supplied the conservative intellectual movement with the theoretical formulation for victory in the cold war.” Despite such praise from these and other conservative luminaries and the impressive bibliography outlined above, Burnham nevertheless fell into relative obscurity after his death in 1987. Many of his books remain out of print, and, compared to his contemporaries, he has attracted little attention from subsequent conservative columnists or scholars—or anyone else.

In part, this may be a result of the fact that Burnham’s most energetic interpreter and advocate, Samuel T. Francis, discredited himself with malignant statements on race that were rightly denounced. Burnham’s own writings also include a few extraneous comments on racial issues that would have to be considered, at best, typical of someone born in 1905. But the essential elements of Burnham’s thought—and even much of Francis’s distinctive interpretation of Burnham—have nothing to do with race. Dismissing Burnham on these grounds betrays either an unwillingness to engage seriously with his work or a willingness to disregard nearly every thinker outside of one’s own time.

More fundamentally, doctrinaire conservatives will probably always find it difficult to fully appreciate Burnham because the core of his thought is simply not conservative in any conventional sense. Although Burnham’s later writings differ significantly in their outlook from his previous works and certainly fit more easily within the conservative canon—The Managerial Revolution, he later said, contained too many “remnants of Marxism”—Burnham did not entirely abandon the core of his early thought concerning the economic and social transformations of the twentieth century. His 1959 book Congress and the American Tradition traces the declining power of Congress after the New Deal, a decline he had predicted in The Managerial Revolution. The critique of liberalism in The Suicide of the West also contains echoes of his treatment of managerialism.

Burnham’s hardline anti-Soviet stance was happily embraced by the Right, but the political realism of his early works retained significant aspects of Marxian social theory. Burnham rejected the Marxist vision of history marching inevitably toward socialism, but he did not totally reject the Marxian approach to historical analysis. He continued to see economic relations determining political relations, at least to some extent, while other conservative intellectuals reflexively dismissed such thinking as economic determinism. (Yet conservatives engage in economic determinism whenever they argue that increasing commerce will lead to more political freedom—failing to recognize, as Burnham did, that the managerial economy is fully consistent with and actually requires “state capitalism.”) Other major influences on Burnham, such as Pareto, likewise cannot be easily accommodated within the American conservative mainstream.

Still, Burnham has not entirely faded away. His reputation may even be enjoying something of a revival. David Brooks, Ross Douthat, and Matthew Continetti, among others, have recently pointed to his work as essential to understanding the current political moment. Yet many of Burnham’s most important insights remain overlooked, and if it is possible for his thought to inform a new political perspective, such a program has not been expounded in any meaningful way.

Defining Managerialism

Burnham argues in The Managerial Revolution that the managerial economy is specifically differentiated from entrepreneurial capitalism because “the position, role, and function of the managers are in no way dependent upon the maintenance of capitalist property and economic relations (even if many of the managers themselves think so).” More precisely, the motive force behind managerialism’s internal logic and historical development is the peculiar dynamic arising out of the separation of ownership and control, which Burnham called “the mechanism of the managerial revolution.”

Whereas in entrepreneurial capitalism the owners are the managers, in managerialism the owners rely upon the technical expertise of the managers and over time cede to the managers effective control of the economy. The most obvious illustration of this trend is the gradual withdrawal of the large bourgeois owners from active business management, to the point where the major corporations are nominally owned by passive shareholders but actually controlled by technically trained and credentialed professionals who own a trivial percentage of stock.

The initial separation of ownership and control that gives rise to the managerial elite is brought about by the historical development of capitalism. Managerialism succeeds because it proves more capable of fulfilling capitalist desires than capitalism itself. Simply to continue acquiring, the bourgeoisie must turn to the managers. But the impetus behind managerialism is not merely the desire for new technology. Burnham points out that the medieval master artisans required greater training and skill than the average capitalist laborer or even the typical bourgeois entrepreneur. Increasing technical complexity alone does not give rise to managerialism. Rather, it is the coordination of massive systems—mass production and consumption, mass politics, mass armies, and so on—that necessitates distinctively managerial competencies. Managerialism is thus a consequence of capitalism’s universalist ambitions, and its power derives from the managers’ ability to exert dominance over an ever-widening sphere.

At its root, the separation of ownership and control is the separation of production and consumption, which constitutes a direct challenge to capitalism. Although it expands the division of labor, classical capitalism is nonetheless predicated on the unity of production and consumption in individual property. The capitalist labors in order to acquire property so that he may fund either consumption or further production. Any critique of this unity is a critique of capitalism itself. In the Marxist critique, exploitation occurs through property owners’ extraction of the surplus value of labor. Burnham, however, locates the breakdown of the capitalist process not in the alienation of labor, strictly speaking, but in the transformation of property.

In managerialism, property is not created through production and is not held through individual ownership, but rather capital is appropriated as an object of managerial control. That is not to say that the legal status of property necessarily changes but rather that the power of the capitalist owners is transferred to the managers. One’s legal property still allows for consumption, and its increase is still desirable, but it does not provide power over the means of production—the source of social and political power—except in the increasingly rare event that the owner is also a manager. “Ownership means control,” wrote Burnham, and the managerial revolution is the long process whereby managerial control effectively becomes ownership. “Control over access [to the means of production] is decisive, and, when consolidated, will carry control over preferential treatment in distribution with it: that is, will shift ownership unambiguously to the new controlling, a new dominant, class.”

Ownership as managerial control, however, is radically different from capitalist ownership. In managerialism, ownership not conceived of as an individual right, as in capitalist property. It is a function of a managerial position, independent of the individual holding it. “The managers will exploit the rest of society as a corporate body,” said Burnham, “their rights belonging to them not as individuals but through the position of actual directing responsibility which they occupy.” The managers thus gain all the powers of ownership but not the same sense of property or responsibility. They are owners without being full stakeholders.

When managerial control replaces individual property as the basis of “ownership,” production and consumption are necessarily separated. Both the bourgeois and the proletarian rely upon the managers to provide for their increasing consumption. Organizing production becomes the exclusive province of the managers; everyone else is reduced to a consumer, dependent upon the managers. It is status as a member of the managerial class, not as an individual property owner, that determines economic and political power.

Whereas the ethic of bourgeois capitalism was a certain kind of self-discipline and self-reliance that directed energies and resources into productive uses—the “Protestant ethic”—the ethic of managerialism is one of consumerism, hedonism, and meliorism. Increasing consumerist appetites makes the managers more necessary and, therefore, more powerful.

The Managerial Ideology

This transformative separation of ownership and control, of production and consumption, correlates with equally profound changes in politics and ideology. “The control of the state by the managers will be suitably guaranteed by appropriate political institutions, analogous to the guarantee of bourgeois dominance under capitalism by bourgeois political institutions.” In classical liberalism, the legitimacy of the government is based upon its ability to secure the rights of individuals under the social contract, most especially their right to acquire property—which is both the right to labor or “produce” freely, and to enjoy the fruits of their labor or to consume freely. The legitimacy of managerial society, by contrast, rests solely upon the managers’ ability to provide for the “right” to increasing consumption—to ensure “freedom from want.”

Moreover, as Burnham notes, production is a social and political phenomenon—indeed, a uniquely human capacity. Consumption, however, is apolitical. Mere consumers are an undifferentiated mass and not citizens. Thus the legitimacy of the managerial elite is not based upon a liberal social contract, at least not in the sense that one exists between autonomous producer-citizens. Unlike the bourgeois elite, the managerial elite has no self-imposed ideological limitations on its power. Its status as a class is untethered from any social contract except one: as long as the managerial elite is competent enough to increase material consumption, its legitimacy is secure.

The selection of the managerial elite itself is similarly unmoored from either democratic or traditional political processes. The managers themselves, “through the possession of privilege, power, and command of educational facilities, will be able to control, within limits, the personnel of the managerial recruits.” As a result, the managerial elite becomes increasingly self-selecting, self-perpetuating, and self-referential.

The separation of political power from the political community naturally follows from this separation of ownership and control. Increasingly, power is shifted away from individuals elected to represent the political community toward unelected officials qualified to hold the positions responsible for administering the government—that is, providing for consumption. Like all managers, they derive their power from the administrative expertise and credentials that qualify them for office rather than from democratic legitimacy. They are accountable, that is, not to the political community but to the other managers that define their qualifications.

The Rise of the Managerial State

The managerial revolution did not take place as a single event nor was the triumph of the managerial elite immediate. It was far from complete when Burnham was writing, and, he acknowledged, vestiges of previous elites never completely disappear. However, a decisive point in this transition from capitalism to managerialism, which allowed Burnham to identify its contours, occurred during the period from World War I through the Great Depression. The Depression revealed not only that entrepreneurial capitalism had failed economically in a fundamental way but also that its ideologies had “become impotent.” Thus it was during this period that the state emerged as the most effective instrument for moving more of the economy away from capitalist ownership and placing it under managerial control:

The managers will exercise their control over the instruments of production … not directly, through property rights vested in them as individuals, but indirectly, through their control of the state…. The state—that is, the institutions which comprise the state—will, if we wish to put it that way, be the “property” of the managers. And that will be quite enough to place them in the position of ruling class.

As the managers consolidate their power, commercial activity transitions away from a competitive market of profit-making firms toward a cartelized economy of large corporations operating under state regulation and coordination, to which the principles of classical economics often do not apply. Political power moves away from “bourgeois institutions” like Congress and toward the executive bureaucracy designed to manage the new economy. Burnham had in mind the original New Deal agencies, and it is hardly necessary to cite examples of the strengthening of administrative power since. The effect is the reduction of nonmanagerial political institutions to increasingly nominal status. Forms of “constitutionalism” may still be permitted to exist, but the managerial elite does not derive its power or legitimacy from them. It can, therefore, easily manipulate or simply ignore these institutions while pursuing its own ends. It begins, for example, to define any political result that conforms to its interests as “democratic,” whereas any electoral result that does not is called “illegitimate.”

Despite the universal extension of capitalist appetites and ambitions, bourgeois institutions must rely upon and maintain a certain decentralization and localization through which individual property owners can exercise their independence. This contradiction explains why bourgeois capitalism began to founder once capitalist economic activity extended sufficiently beyond the basic social contract of liberal government, the nation-state. Managerial society, by contrast, is apolitical and self-consciously globalist in outlook. Because the managers’ power is derived not from their individual ownership of property, guaranteed by political rights, but rather from their positions in the bureaucracy that controls economic activity, the managers are not compelled to limit the power of those positions in order to preserve the liberties of property owners. The managers succeed where the capitalists fail because of their ability to exercise power over larger and larger domains and to do so with ruthless competence. Indeed, they are driven to expand the reach of managerial political and economic institutions at the expense of nation-states in order to enhance their own power to organize the world economy. Managerialism thus combines the enlargement of the state apparatus with the weakening of national sovereignty:

The comparatively large number of sovereign nations under capitalism is being replaced by a comparatively small number of great nations, or “super-states,” which will divide the world among them. Some of the many nations which are eliminated in fact may be preserved in form; they may be kept as administrative subdivisions, but they will be stripped of sovereignty.

Managerialism and Neoconservatism

It is tempting for conservatives who read The Managerial Revolution to stop here and focus exclusively on those aspects of the theory that conform most conveniently with the standard critiques of “big government” and “Progressivism.” But the managerial revolution did not stop here, and managerialism is not merely New Deal Progressivism. On the contrary, twentieth-century conservatism in many ways accelerated the development of managerial society.

None of this is to say that American conservatives have not been sincere in their desire to restore limited government or in their other professed goals. However, by failing to correctly recognize the nature of the managerial elite and its sources of power, their opposition has been misdirected. Indeed, the effect of recent conservative policy, whatever its intent, has been the strengthening of the managerial class.

“Neoconservatism,” in particular, has been criticized as a capitulation to the administrative state or managerial society. To the extent such criticism is true, however, it is not primarily a result of the neocons being insufficiently conservative but rather, paradoxically, insufficiently “neo.” In other words, neoconservatives did not fully appreciate that managerialism represented a radical historical departure and an essentially distinct economic and social system from entrepreneurial capitalism. Thus, as capitalism faded into managerialism, neoconservatism’s defense of capitalism transformed into the promotion of managerial power.

Not accidentally, the original neoconservatives devoted considerable attention to many of the same issues Burnham described. In certain matters, they even reached similar conclusions concerning the social changes driven by capitalism’s internal contradictions. But they differed in a decisive respect: they viewed the cultural transformations unfolding around them as fundamentally distinct from any economic base, which they still considered essentially capitalistic.

In The Coming of Post-Industrial Society (1973), Daniel Bell specifically rejects Burnham’s concept of the managerial revolution, although on the arguably shallow grounds that corporate and state bureaucracies remained, for the most part, composed of distinct individuals and were sometimes in conflict (whereas Burnham’s argument pertains to classes and types, not individuals). What Burnham identified as a transition from bourgeois capitalism to managerialism Bell sees as simply the disjunction of cultural and economic phenomena. “The culture of the past 100 years, that of the ‘modern movement,’ has triumphed over a society that in its social structure (economics, technology, and occupational bases) remains bourgeois,” he argued in The Cultural Contradictions of Capitalism. “The culture has become detached and self-determining.”

Where Burnham saw an entirely new social structure emerging, Bell describes a contradiction opening up within capitalism, or, more precisely, an inversion of capitalism’s original contradiction. In early capitalism, the revolutionary implications of capitalist economics existed alongside a constraining culture. In late capitalism, conversely, a revolutionary culture exists alongside constraining bourgeois economics:

In the early development of capitalism, the unrestrained economic impulse was held in check by Puritan restraint and the Protestant ethic…. But the Protestant ethic was undermined not by modernism but by capitalism itself. The greatest single engine in the destruction of the Protestant ethic was the invention of the installment plan, or instant credit…. The system was transformed by mass production and mass consumption, by the creation of new wants and new means of gratifying those wants….

When the Protestant ethic was sundered from bourgeois society, only the hedonism remained…. The cultural, if not moral, justification of capitalism has become hedonism, the idea of pleasure as a way of life.

Curiously, Bell suggests that the original contradiction of capitalism was resolved by economic developments but that the modern contradiction represents an unbridgeable rupture between culture and the economy. He refused to accept that the new cultural modes were simply those consistent with the new managerial economy. Whereas Burnham argued that changes in politics and culture were concomitant with the transition to managerial economics, for Bell, postmodern culture arose independently—rather than because—of the coming of postindustrial society.

Nevertheless, Bell’s own observations concerning the purely economic modalities of early and late capitalism betray profound and essential differences, even if Bell himself did not draw the same conclusion. The early capitalist entrepreneur, in Bell’s account, “freed from the ascriptive ties of the traditional world … seeks his fortune by remaking the economic world.” In contrast, the late capitalist is “concerned with the organization of production and the allocation of goods and services,” premised on “efficiency, least cost, greatest return, maximalization, optimization, and similar measures … about the employment and mix of resources.” Needless to say, remaking the world and optimizing returns are very different motivations and imply very different economic systems. In the final analysis, what Bell sees as a contradiction of capitalism can be better understood as the contradiction between capitalism and managerialism.

Irving Kristol understood perhaps even more clearly the political implications of the transitions occurring in advanced economies. In his essay “On Corporate Capitalism in America,” Kristol identifies the same changes in business dynamics that Burnham observed. Describing past forms of entrepreneurialism, he writes:

The entrepreneur was conceived of as a real person, not as a legal fiction. The “firm” was identified with such a real person (or a family of real persons) who took personal risks, reaped personal rewards, and assumed personal responsibility for his actions.

In late capitalism, by contrast:

Stockholder elections are almost invariably routine affirmations of management’s will … for a long while now stockholders have essentially regarded themselves, and are regarded by management, as little more than possessors of a variable-income security. A stock certificate has become a lien against the company’s earnings and assets—a subordinated lien, in both law and fact—rather than a charter of “citizenship” within the corporate community.

Kristol goes so far as to assert that this economic system, managed by the “self-perpetuating oligarchy” at the top of large corporate cartels, “not only seemed to be but actually was a significant deviation from traditional capitalism.” Indeed, “The Founding Fathers and Adam Smith … could not have interpreted the domination of economic activity by large corporate bureaucracies as representing, in any sense, the working of a ‘system of natural liberty.’” But Kristol still insists that “corporate capitalism” is, at bottom, capitalism, not managerialism, and goes to tortuous lengths to defend it—at one point even calling the corporate managers “entrepreneur-functionaries,” a contradiction in terms if there ever was one.

Instead of Burnham’s managerial class, which is comprised of both corporate managers and government bureaucrats, Kristol defines a “New Class” of “scientists, lawyers, city planners, social workers, educators … etc.” who are mainly engaged in the public sector and who are “far less interested in individual financial rewards than in the corporate power of their class.” In contrast to Burnham, Kristol sees the New Class as hostile to the corporate bureaucracy, not of the same type or participating in the same system, or entering through the same revolving door.

Perhaps motivated by the fight against Communism, Kristol seeks to aggressively defend what he calls corporate capitalism, whatever its flaws, against the apparent threat of the New Class. Viewing the New Class as essentially a cultural phenomenon, he follows Bell in severing the culture from the economy and adds a moral attack: the New Class is a decadent class.

Those who benefit most from capitalism—and their children, especially—experience a withering away of the acquisitive impulse. Or, to put it more accurately: They cease to think of acquiring money and begin to think of acquiring power so as to improve the “quality of life,” and to give being priority over having…. Consequently the gradual usurpation of managerial authority by the “new class”—mainly through the transfer of this authority to the new breed of regulatory officials (who are the very prototype of the class)—is almost irresistible.

Kristol here does not appear to consider the possibility that the advent of the New Class was not primarily a symptom of capitalism’s decadence but of managerialism’s rise—or that, in managerialism, any perceived conflict between corporate and state bureaucracy always empowered the managerial class as a whole. He does not sufficiently appreciate Burnham’s prediction that the new managerial class, in replacing the old bourgeoisie, would include “many of the children of capitalists themselves, who perhaps sense that the dominion exercised by their parents as capitalists can be continued by the children only through giving up capitalism.”

These criticisms notwithstanding, the neoconservative interpretation of history had profound effects on the development of conservatism more generally. Eliding the differences between capitalist and managerialist economies allowed conservatives to defend the managerial world as essentially capitalist and classically liberal. It also taught them that the laws of classical economics still applied even though the conditions they were premised upon had long since passed. Meanwhile, if the cultural decadence they perceived was disconnected from any economic system, then it could be corrected simply through a concerted effort to assert an opposing cultural orientation. “Postmodernism” and various other bêtes noires were merely bizarre cultural phenomena that had no roots in the broader society. The right university lecture, a better reading list, or a sharply written op-ed could return America to the virtues of her founding. And when one accepts the notion that culture operates independently of economic or other social relations, as the neoconservatives did, it is not much of a leap to believe that hostile societies could be completely reformed through the introduction of new electoral institutions. Seen in this light, it is not particularly surprising that neoconservatism, which became mainstream conservatism, has ossified over time into an unwitting and ultimately untenable combination of corporate boosterism and Wilsonian moralism, successful only in the promotion of managerialism.

Still, it should not be forgotten that neoconservatism triumphed over the various forms of the “old Right”—probably because it at least contained some appreciation of the transformations taking place in the economy and offered some pragmatic policy responses to them. The old Right, whether it emphasized a purely libertarian aspect or one of the many shades of cultural traditionalism, avoided some of the contradictions of neoconservatism, but, insofar as it ignored the true nature and sources of economic power, it was always doomed to futility.

At the very least, returning to pre-managerial capitalism and its culture constitutes a revolutionary and not a conservative goal. Today it is tantamount to desiring a return to the monasticism of medieval Nursia or the aristocracy of Edmund Burke. Whatever its philosophic merits might be, restoring pre-managerial capitalism and its culture would involve a total reorganization of society, the dismantling of much of today’s economy, and all the financial destruction and disruption that would entail. Such a platform thus has no constituency of any economic significance. Various groups may have various reasons to seek to manipulate government policy, perhaps even in seemingly “conservative” directions at times, but no major business or financial interest actually wants to abolish the administrative state or create a “level playing field” in such a way that would undermine the status of the managerial class.

The “Conservative” Acceleration of Managerialism

Blind to the economic realities underlying managerial society, conservatives have stumbled unawares between an unconscious promotion of managerialism and a hopelessly reactionary opposition to it. It should not be surprising, therefore, that conservatives have been politically successful only when their platform aligned with managerial interests, however unintentionally.

Because conservatives refuse to acknowledge the differences between the economy of 1890 and the economy of 1990, they think that their enemy is the state. They fail to recognize that although the managerial elite uses the state as an instrument to acquire power, the real enemy is not the state but rather the managerial separation of political and economic power from the liberal social contract. In their confusion, they have done nothing to restrain the state, but the effect of their efforts has been to further undermine the political community as a whole, advancing only the interests of the managerial class.

Thus the lasting effect of Reaganite conservatism was not the revival of the entrepreneur but the liberation of the managers. Reaganism did little to restore classical capitalism or “limited government.” But it did release capital and labor from the last vestiges of political responsibility and citizenship. The financialization of the economy that Reaganism unleashed was successful in restoring growth and increasing consumption, but it altered the configuration and incentives of the business community in such a way as to further enhance managerial power.

The chief effect of financialization was to accelerate the subordination of classical ownership to managerial control. Making the economy more responsive to financial investors might offer some semblance of a victory for competitive capitalist markets along with a restoration of shareholder “rights” and “activism.” But in reality these financial arrangements were merely the empowerment of additional managers. The financial shareholders remain categorically distinct from bourgeois entrepreneur-owners, insofar as their capital remains categorically distinct from capitalist property. Simply put, their capital is not their property. It is simply a pool of capital managed on behalf of someone else, often another manager. The typical shareholder of a large corporation today is a fund manager who receives capital from the manager of a “fund of funds,” which in turn receives its capital from a pension fund or endowment that is ultimately managed by its own managers under the auspices of the state.

Far from a return to the capitalist concept of property, financialization represents the complete virtualization of it. All economic relations are redefined as transactions of “variable-income securities,” in Irving Kristol’s phrase, not entrepreneurial creation and certainly not “citizenship in the corporate community.” Superficial appearances notwithstanding, financialization is in essential respects a movement away from capitalism. In the managerial economy, financial exchanges function less as markets and more as instruments through which the managers increase income or consumption independently of the “real economy.” Accordingly, the political interests of the financial managers are far from those of classical liberalism. To them, freedom is nothing more than the freedom to acquire more managerial control. They often seek, for example, the expansion of the administrative apparatus provided that they are allowed to manage its finances.

As an aside, it is worth noting that Silicon Valley, with its celebration of entrepreneurs and founder-owners, is often cited as a counterexample to these trends. Admittedly, certain aspects of it more closely resemble entrepreneurial capitalism—perhaps one reason for its success—but it does not present a meaningful challenge to or escape from the managerial economy. In the first place, Silicon Valley remains dependent upon the larger managerial financial system. Institutional venture capital firms function in the same way as other managed pools of capital and ultimately need to sell into more conventional public or other markets anyway. In addition, Silicon Valley business models typically rely upon the managerial ethic’s tolerance for maintaining money-losing organizations as going concerns, to say nothing of managerialism’s embrace of cultural hedonism and global consumerism. For these reasons, Silicon Valley is hardly a consistent opponent of managerial society and often supplies its most enthusiastic cheerleaders.

In addition, financialization creates its own incentives for further managerial consolidation. When property is redefined as control of a “variable-income security,” it is inevitable that more of the economy will become monetizable through financial markets and placed under the control of financial managers. But this also leads to changes in the nature of financial markets. If almost all significant economic activity—especially consumption—is susceptible to market fluctuations, then the logic of managerialism requires that market fluctuations be managed. It is in the interests of the entire managerial elite, but especially the financial managers, to ensure that markets never go down. The “Greenspan put” and “too big to fail” become social imperatives. Increasingly, markets fall under the coordination of government and the large financial managers. They cease to efficiently allocate capital to productive uses according to capitalist principles and become simply the means by which the managerial elite artificially maximizes consumption, often favoring itself disproportionately.

The Managerial Consensus

The contradiction of contemporary conservatism is that it is an attempt to restore the culture and politics of bourgeois capitalism while accelerating the economy of managerialism. Because of its failure to recognize this contradiction, “much of conservative doctrine is, if not quite bankrupt, more and more obviously obsolescent,” as Burnham wrote in 1972. Since then it has only evolved from obsolescent to counterproductive. At this point, expanding “free markets” no longer has anything to do with classical American capitalism. It is simply the further emancipation of the managerial elite from any obligations to the political community. Likewise, promoting democracy as an abstract, universalist principle only undermines the sovereignty of the American people by rejecting national interests as a legitimate ground of foreign policy.

However, if the Right is the “stupid party” because it suffers from “false consciousness,” then the Left is the “evil party” because it benefits from it. The Left has become the party of the managerial class precisely by pretending to manage on behalf of the people they exploit. But as the managerial class becomes more exploitative, the position of the Left becomes increasingly untenable. That is why, at present, the only program that unites the Left intellectually is identity politics, the sole ideology that can appear to reconcile the interests of the managerial elite with elements of the exploited classes. In fact, however, the balkanization of the American people only strengthens managerialism by preventing a majoritarian confrontation with it.

Hence the policy consensus of the last several decades has been, in all essential respects, the managerial consensus. Corporations, financial capital, and labor markets have been decoupled from political communities. Meanwhile, administrative agencies have been empowered at the expense of constitutional institutions, and international bureaucracies have been strengthened at the expense of national sovereignty. The cumulative effect has been the consolidation of managerialism through its separation of political and economic power from the American polity.

In retrospect, Reaganism was as much a triumph of managerial society as the New Deal. Clinton only hastened the cartelization, financialization, and globalization of the managerial economy, along with the bureaucratization and internationalization of politics, while reinforcing an ethic of cultural hedonism. George W. Bush is notable mainly for his inadvertent weakening of national sovereignty by declaring a constellation of abstract, universalist principles as the only legitimate ground of foreign policy, to the exclusion of any concrete or coherent national interests.

Obama, forced to confront the failures of managerialism, seems to have sincerely sought to be a transformative figure outside of the conventional policy consensus. Indeed, in certain respects he even presented himself as a “nationalist.” But Obama mistook superficial partisan disputes (“Red America and Blue America”) for the fundamental fissure in American politics between the managerial elite and the rest of society. As a result, he more often than not served as an unconscious partisan of the managerial class and further entrenched managerialist policies.

The Failure of Managerialism?

Yet at this moment of unprecedented managerial power it has become possible to imagine, at least, the possibility of a decline in the strength of the managerial elite. And this is possible not because of a new ideological critique or even a purely political shift. It is possible because managerialism is failing economically—failing, specifically, to provide for the increasing consumption upon which its legitimacy is based.

In describing the transition from bourgeois capitalism to managerialism, Burnham outlined nine fundamental challenges leading to capitalism’s failure. Capitalist society’s inability to resolve these structural problems heralded, for Burnham, the inevitable collapse of the old order. And nearly all of them—the sole exception being a decline in agricultural productivity—apply to the current economic and political conditions.

(1) The inability to reduce mass unemployment: although headline U.S. unemployment figures are low, labor participation rates are also at their lowest levels in decades. Broader measures of unemployment that account for labor force participation remain unusually high (from the U6 at 9% to independent estimations at 20+%) almost a decade after the financial crisis. Significant portions of the population have essentially been excluded from the labor force and have no realistic prospects for rejoining it. Furthermore, the few rapidly growing employment sectors are in the low-value service economy and are generally of lower quality than the jobs that have been lost. To quote Burnham, a social organization has broken down precisely when “it cannot any longer provide its members with socially useful functions even according to its own ideas of what is socially useful.”

(2) Economic cycles are no longer trending higher: boom-bust cycles are economic inevitabilities, but when cycles overall trend downward, as the post–financial crisis recovery would suggest, it is a sign that the society “can no longer handle its own resources.” Perhaps an even greater problem of this type at present, however, is the fact that median real wages have barely risen in decades. Neither a capitalistic nor a managerial elite can maintain its popular legitimacy if it cannot provide for increasing consumption.

(3) “The volume of public and private debt has reached a point where it cannot be managed much longer,” at least not by any ordinary means. Explanation of this point today seems unnecessary, but it is worth adding that even if capitalism’s moral or economic frameworks concerning debt no longer apply in managerial society, the system’s increasing dependence on borrowing is indicative of deeper imbalances.

(4) Instability and manipulation of foreign exchange: many of the world’s major economies are effectively engaged in an undeclared currency war against each other. In addition, an economy as large as China’s operating under a pegged currency regime is a unique development in recent times that causes further strain on the global system.

(5) Excess uninvested cash: the “mass unemployment of private money is scarcely less indicative of the death of capitalism than the mass unemployment of human beings. Both show the inability of the capitalist institutions any longer to organize human activities.” The same is true for managerial institutions. The inability of corporate or financial investors to find productive uses for increasing cash hoards—especially in light of unusually low interest rates—signals profound and systemic economic dysfunction.

(6) Failure of advanced nations’ policies toward developing economies: in recent decades, the managerial model for economic development has been “globalization,” or the offshoring of labor-intensive industries to geographies with lower wages and employment costs. This model is now breaking down and not only because of political resistance in Western nations. The so-called low-hanging fruit has already been harvested. Emerging countries are increasingly competing with each other for low-wage manufacturing and many are facing the “middle income trap.” Globalization of this type is unlikely to generate accelerating growth in the manner it once did in either advanced or developing economies.

Meanwhile, developed and emerging nations are no longer converging politically. The failure of “democracy promotion,” both of the hard and soft varieties, is part of a broader failure of managerial foreign policy that both indicates and itself creates a deeper destabilization of the system.

(7) The inability to exploit technological advances: this failure applies not only to hypotheses concerning a slowdown in innovation but also to the likelihood that fully exploiting available technological advances would not positively “disrupt” but rather destabilize society. For Burnham, the fact that capitalism would be unable to implement new technologies without significantly increasing unemployment was a further indication that a new social organization had become necessary. Today the situation is similar. The introduction of self-driving vehicles alone will add meaningfully to unemployment rolls, and automation will continue to erode blue-collar jobs and is beginning to replace high-paying, white-collar professions as well. All of the happy talk about education and innovation offers little of substance concerning the unemployment of an increasingly larger mass of society that is being rendered economically superfluous. Such “technological unemployment” shows, in Burnham’s words, “that capitalism and its rulers can no longer use their own resources. And the point is that, if they won’t, someone else will.”

(8) In place of the 1930s agricultural depression that Burnham described, consider the systemic challenge to managerial society posed by the collapse of the universities. They face two crises. The first is the frequent abandonment of genuine academic inquiry in favor of rigid ideology and mindless political correctness, which progressively degrades the quality of the elite. Moral fanaticism and paranoia are not inherently signs of imminent societal decline, however. The more significant crisis threatening the system is the explosion of student loan debt, a clear indication that the universities are creating more would-be managers than are useful, or at least too many of low quality. Since the main purpose of the universities today is to credential the managerial elite, such failures signal that managerial institutions can no longer organize their human resources.

(9) Ideological impotence: “no one who has watched the world during the past twenty years can doubt the ever-increasing impotence of the bourgeois ideologies,” wrote Burnham, “The words begin to have a hollow sound in the most sympathetic capitalist ears.” This is as true of managerialist ideologies now as it was of capitalism then, as anyone who has listened to Mitt Romney or Hillary Clinton speak can attest.

“On the one hand, the scientific pretensions of these ideologies have been exploded.” They are increasingly seen to represent not universal laws of nature but “at best just temporary expressions of the interests and ideals of a particular class of men at a particular historical time.” Significant portions of social science research and even some of the basic principles of economics are now being questioned within their disciplines and beyond. As the power of academic economics in particular has risen, both its precepts and its most prominent figures have failed to comprehend the most important economic phenomena of recent years. This supposed science is increasingly revealed to be little more than the quantitative expression of global consumerism and managerial ideology.

Perhaps even the managers themselves have begun to lose confidence in their own ideologies. The economic, foreign policy, and technological optimism of previous decades is gone. Preserving the status quo has become the sole aspiration—and primarily for the purpose of preserving the class privilege of the current elite, which, even if not admitted, is becoming obvious to voters. The managerial class seems increasingly willing even to abandon democratic formalities. Once the elite itself loses faith in its ideologies and begins to see its class interests as essentially exploitative, it cannot survive.

Slavoj Žižek has likened the waning period of an ideology to the belief in Santa Claus in late childhood. The parents pretend to believe because they think it makes their children happy. The children pretend to believe because they think it makes their parents happy. But no one believes any of it. No image better captures the politics of recent years. No one seriously believes that the Democratic Party’s principal agenda is anything other than empowering the likes of John Podesta. No one seriously believes that the Republican Party’s principal agenda will accomplish anything toward the realization of American founding principles. The same politicians repeat the same tired applause lines and the audience still claps, but both sides know it is a charade. And they keep playing precisely because they know it is a charade. To stop would force an even more uncomfortable confrontation with the grim reality that managerial power is completely divorced from any public purpose.

The Contradictions of Managerialism

If managerial society is indeed unraveling, it will, like capitalism, be undermined by its own contradictions. The fundamental contradiction within managerialism is that while the power of the managerial elite—its competence—rests upon its separation from any political community, from “the people,” this increasing separation eventually undermines its legitimacy and competence.

As both Burnham and Irving Kristol understood, the legitimacy of the managerial elite is not derived from constitutional or democratic or any traditional authority. It is based, rather, on its ability to satisfy the desires of a hedonistic society, its competence in increasing consumption and “quality of life.” Its legitimacy, according to Burnham, is found in its being seen as “indispensable to society” for these reasons. At the same time, in order to be indispensable, it must be competent, but the nature of managerial competence lies in its intentional separation from everything except its own form of technical, apolitical knowledge. Stated another way, what grants the managers legitimacy in society and what grants them legitimacy among themselves are separate and contradictory.

Every aspect of managerialism tends toward separation: the separation of ownership and control, the separation of production and consumption, the separation of political sovereignty from the political community, and, ultimately, the separation of the managerial elite’s own conception of itself from the rest of society. At a certain point, the managerial elite itself begins to totally define what constitutes its competence independently and internally. It defines its own ends as well as means. It sees its class interests as the interests of the whole. And here it ceases to be indispensable to the rest of society and loses legitimacy in it.

With no basis outside itself upon which to measure or ground its competence, it inevitably becomes incompetent or, at best, competent only in exploiting the rest of society for its own class interests. Without any conception of their connection or responsibility to society, the managers fail to perform their function in a way that satisfies the desires of society. To the managers, competent management or governance has become not what benefits the society—even in the most basic sense of increasing consumption—but what is defined as such by the class of experts, the managers themselves. In this way they cease, in an essential sense, to be managers. They no longer “manage” on behalf of a broader interest and become simply controllers and exploiters.

A class that originated through its superior competence thus becomes totally incompetent toward the rest of society without even knowing it. “This nullity imagines that it has attained a level of civilization never before achieved,” to quote Max Weber. A Caesar or even the archetypal tyrant, who governs purely for his own self-interest, would likely be more attentive to the needs of the larger society, as Machiavelli taught, if only for the mercenary purpose of maintaining power. But the managerial class, a self-worshipping clerisy convinced that its superiority is based upon the knowledge that only it can access, cannot do even that.

The contradiction of managerial society is analogous to the conventional formulation of the corporate “agency problem” between management and shareholders, but much deeper. For it is not only that the interests of the managerial class diverge from other classes. Rather, the society itself disappears. Even if certain legal forms are maintained, they no longer have the same meaning. There are no shareholders in the original capitalist sense, only other managers. There is no property in the classical sense, only forms of managerial control. And finally there is no political community. There are no individuals, and there are no peoples, only a detached managerial apparatus through which power is exercised but which has no other purpose. The crisis of Burnham’s managerialism is not so much that its means become ends, but that, without an end, they cease even to be means.

A New Managerial Elite?

It is impossible say whether the accumulating problems facing managerial society are in fact the beginning of its demise or whether a transformation into new social arrangements is underway. Unlike in Burnham’s time, no new elite appears to be rising as a class. Perhaps the outcome will not be the end of the managerial elite but simply a transformation in its character. It is clear, however, that the degeneration of the managerial elite has emerged as the foremost issue in American politics and beyond. And because the conventional partisan antagonisms do not and cannot comprehend this central issue, they are increasingly irrelevant.

Any alternative to the present managerial ideology must involve, therefore, an alternative to the existing partisan ideologies. It must begin, as the early neoconservatives did, with a re-examination of the structure of the economy. It will have to recognize that the organization of the present economy is managerial—not an ideal of entrepreneurial capitalism—and understand why that economy is failing. There is little doubt that the benefits of managerial “globalization” are nearly exhausted while the costs continue to mount. The question is whether there is a viable alternative.

Ultimately, there is no alternative to managerialism without the revival of the political community and, almost certainly, the nation. The managerial elite’s separation from—indeed, its destruction of—the political community is the cause of its degeneration. It cannot govern effectively on behalf of the American people because it cannot even conceive of an American nation. The question is whether a society based upon the political community is stronger than one based upon managerial detachment.

The fact that Burnham’s philosophical radicalism often led him to policy pragmatism should not be forgotten. The only prudent resistance to managerialism may simply be the empowerment of managers whose interests and ideology are grounded in the larger society—who seek neither the destruction nor enlargement of the state but rather its reconnection to the political community—who seek neither regulation nor deregulation for abstract theoretical reasons but rather a reconnection of the economy to the particular society that underlies it. But this, in itself, would constitute a radical change from currently prevailing political arrangements and socioeconomic structures. It would require a new elite that in at least one essential respect would be radically distinct, insofar as the invigoration of such an elite is almost certainly inseparable from the reinvigoration of the American political community.

Burnham’s interpretation of history as the power struggles of competing elites is often viewed as unsettling. Indeed, he offers no vision of a society free from exploitation. But the alternative is darker still. If the end of history is neither socialism nor capitalism but managerialism, then the managerial elite will only have succeeded in reducing society, including itself, to a mass of apolitical beings who neither recognize nor resist their exploitation. It means that managerialism destroys the people faster than it destroys itself, to the point where political action becomes impossible. The end of managerial globalism is not the triumph of a universal community but the destruction of all human communities. It is a world, in Hegelian terms, of “self-contained individuals associated as a community of animals and their deception.”

This article originally appeared in American Affairs Volume I, Number 1 (Spring 2017): 126–51.

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