Managers in the dynamics of social change

Transcription

1 Managers in the dynamics of social change Preliminary draft Gérard DUMÉNIL and Dominique LÉVY CNRS and PSE-CNRS Gérard Duménil is an economist, former Research Director at the Centre National de la Recherche Scientifique, CNRS (EconomiX, Paris West University Nanterre La Défense); Dominique Lévy is an economist, former Research Director at the CNRS (Paris-Jourdan Sciences Economiques (PSE), Paris). A shortened version of this paper will provide the basis for the projected entry Management for the Historical-Critical Dictionary of Marxism. Address all mail to: PSE-CNRS, 48 bd Jourdan, Paris, France. Tel: , Fax: dominique.levy@ens.fr, gerard.dumenil@u-paris10.fr Web Site:

2 Introduction The rise of management and managers in the history of capitalism was a gradual process. A break occurred, however, in the late 19th century and early 20th century, in the United States, in what is known as the Managerial revolution. This break opened a new era in the history of capitalism in which capitalist and managerial traits are tightly combined in a form of organized capitalism, a managerialist capitalism (Section 1.1). In these new social patterns, managers are not simply the upper fraction of a continuous hierarchy of wage earners. Their position within relations of production is distinct from the situations of both the owners of the means of production and production workers (and clerical and commercial workers). A convergence occurred between the social position of enterprises managers and the upper fractions of civil servants within state institutions. We contend managers, in this extended definition, must be considered a class, in the full sense of the term. In the Volume III of Capital, Marx already analyzed this forthcoming transformation (Section 1.2). Based on the observation of the first steps of these evolutions during the 19th century, Marx, in his distinction between the active capitalist and the money capitalist, foresaw the growing importance of the separation between ownership and management; he also described the delegation of the tasks of the active capitalist to salaried managers. As a class, managers play an important role in the configurations of class hierarchies and struggles. After the victory of revolutionary movements, in the countries of self-declared socialism, ruling classes of managers took power within new regimes with specifically bureaucratic features (Section 2.1). This configuration was dissolved in the former USSR in the late 1980s, and survived in China in a complex relationship with the new capitalist trends. Managerial classes play a key role in the succession of the various phases of capitalism that we denote as social orders (Section 2.2). In the social compromise during the first decades after World War II, an alliance was struck between the managerial classes and the popular classes of nonproduction and production workers with, to various degrees, social-democratic features. In the wake of the crisis of the 1970s, this compromise blew to smithereens as the outcome of a class struggle in which capitalist classes restored their hegemony. A new social order, neoliberalism, was established under the leadership of the upper fractions of capitalist classes in alliance with managerial classes, notably financial managers. The prospects opened by the crisis of the early 21st century must be assessed in this framework (Section 2.3). In the United States and Europe, the treatment of the crisis renders necessary a new autonomy of private and government managers in the management of corporations and the conduct of policies. This new powerful leadership is required to strengthen the economy and, at least, slow down the rapidly declining international hegemonies of these countries. The two first themes above are jointly introduced in a first broad section whose focus is on historical and theoretical foundations. The three subsequent issues are the object of the second such section, specifically devoted to the role of managers in history from the early 20th century to the current crisis This study draws on previous research: G. Duménil, La position de classe des cadres et

3 2 Managers 1 - Historical and theoretical foundations The first set of developments below introduces what we denote as a neomarxist interpretation of history (in the United States and Europe since the managerial revolution). The second section recalls Marx s main contributions to the analysis of managerial relationships. 1.1 Managerialist capitalism The revolution in the institutions of the ownership of capital The evolution of capitalist production is obviously a continuous process but, in the history of capitalism, it is also possible to locate a number of important breaks. Industrial capitalism developed during the 19th century in England and on continental Europe, with the United States gradually catching up. The growth of the size of enterprises and the rise of monetary-financial mechanisms was a common feature, as well as the role played by governments. One particular aspect of the US economy was, however, the dramatic step forward at the transition between the 19th and 20th centuries (which later accounted for the international hegemony of the country). This transformation is particularly relevant to the analysis of management, since one of its major aspects was the managerial revolution. It is important to stress that this transformation of the institutions of capitalism occurred in the context of the structural crisis of the 1890s, in the wake of a sharp decline of the profit rate. Due to the increase in the size of enterprises, the crisis manifested itself as a crisis of competition. Capitalist owners, pinning the decline of their profit rate on the violence of competition, formed trusts, cartels, pools to share markets and profits. Around 1900, when these arrangements were forbidden and new laws enacted authorizing new forms of mergers (beginning in New Jersey), the corporate revolution occurred in which large corporations were established. This new framework cannot be separated from the financial revolution, that is, the formation of the new system of large banks (of the Rockefellers or Morgans) directly backing and dominating the new corporations. It is within this new institutional context that the managerial revolution occurred, the third component. 2 The size of enterprises was such that the earlier trends employés. La fonction capitaliste parcellaire, Grenoble: Presses Universitaires de Grenoble (1975); G. Duménil, D. Lévy, The Emergence and Functions of Managerial and Clerical Personnel in Marx s Capital, in N. Garston (ed.), Bureaucracy: Three Paradigms, Boston: Kluwer Academic (1994), p , The Economic Functions of Managerial and Clerical Personnel, A Historical Perspective, in N. Garston (ed.), Bureaucracy: Three Paradigms, Boston: Kluwer Academic (1994), p , Au-delà du capitalisme?, Paris: Presses Universitaires de France (1998), Capital Resurgent. Roots of the Neoliberal Revolution, Cambridge: Harvard University Press (2004), and Production and Management: Marx s Dual Theory of Labor, in R. Westra, A. Zuege (eds.), Value and the World Economy Today. Production, Finance and Globalization, London: Palgrave (2004), p , The Crisis of Neoliberalism, Cambridge: Harvard University Press (2011) 2. A.D. Chandler, The Visible Hand. The Managerial Revolution in American Business, Cambridge: Harvard University Press (1977).

4 Managers 3 already manifesting the delegation of organizational tasks to salaried managers were prolonged and enlarged. Simultaneously, as part of the same evolution, new management procedures scientific management were developed. Taylorism and the assembly line are the most familiar aspects of these transformations. Actually, a much broader revolution was involved, not only in the workshop but in all aspects of managements, such as accounting, marketing, etc. The consequences of this revolution were spectacular, resulting in very large gains in labor productivity, while, paradoxically, the capital / labor ratio diminished: Sophisticated machinery were implemented but they did not have the detrimental effects on the composition of capital they typically entail in capitalism (as Marx described in his tendency for the profit rate to fall). To the mid-1960s, profit rates increased despite the rapid growth of real wages. The Great Depression was a paradoxical and disastrous side-effect of these trends (Section 2.2.1) Managers as a class Finance We consider managers form a class in the full sense of the term. Two main categories of reasons are involved. First, the social position of managers must be defined in relation to the means of production. They do not own these means of production but, in sharp contrast with direct producers, they make the decisions required by their use. They perform what Marx called the tasks of the active capitalist (Section 1.2). Second, from the managerial revolution onward, it is no longer possible to provide a concrete picture of class struggle along the lines of the traditional dual pattern pitting capitalists and the proletarian class of workers. Since the early 20th century, the historical analysis of the integration of managers within social hierarchies and their involvement as actors in the successive episodes of class struggle testify to the class nature of their social position (Sections 2.1 and 2.2). A fraction of the tasks of the active capitalists has always been supported by salaried employees, such as secretaries, accountants, and salesmen and women. The new aspect in the managerial revolution was that capitalists had to share the upper aspects of decision making in which initiative and authority are involved. A new relationship was established with a fraction of salaried employees. As the capitalist functions were transferred to managers, the separation was prolonged between the accomplishment of the truly managerial tasks and those of the other categories of employees, distinct from production workers. Thus, not only the social category of managers is involved in the new pattern of management, but also the activity of lower ranking employees supporting the repetitive components of nonproduction activities. Abstracting from the traditional categories of shopkeepers, crafstmen, and small farmers, four components must be distinguished in the definition of class patterns: (1) capitalist owners; (2) managers; (3) clerical and commercial workers (nonproduction workers); and (4) production workers. In the analysis of contemporary capitalism, we consider nonproduction and production workers within a same category that we denote as popular classes. This analysis must be contrasted with the traditional approach to social patterns in advanced capitalism, in which the emphasis is placed on middle classes or petty-

5 4 Managers bourgeois classes. 3 Managers and lower ranked employees are described as forming such an intermediate class, outgrowing the upper and lower categories defined by the bourgeois and proletarian classes. Finally, the relevance of the reference to class patterns is negated. Two basic differences with our framework of analysis must be stressed. First, we consider managers form a class; second, we believe it becomes more and more relevant to classify nonproduction workers together with production workers. The separation between ownership and management was crucial to the continuation of capitalist ownership, but it also posed a threat on the private property of the means of production, as expressed in the paradox of ownership without control. 4 This is where the impact of the financial revolution appears crucial. In a sense, not only management (as within corporations) was delegated, also the upper capitalist functions such as the collect of financing, the allocation of capital between various fields of activity, the comparative assessment of performances, the discipline imposed on enterprises, and the like. These functions were transferred to the new financial sector backing corporations (and also delegated to specialized managers within these institutions). The financial sector became the main agent of this core component of capitalist ownership, in Marx s terminology, the administrators (or managers ) of the capital of money capitalists (Section 1.2). We call Finance the upper fractions of capitalist classes (involved in large ownership) and their financial institutions. In the concrete history of capitalism, the role of this hybrid agent is central (Section 2.2) The twofold nature of social relations With the new configuration of social relations the delegation of capitalist functions to managers and financial institutions capitalism entered into a new era that we call managerialist capitalism. (The meaning of managerial capitalism is distinct, Section 2.2.) The phrase manifests the twofold nature of social relations, namely capitalist and managerial relations, with the dominance of capitalist ownership though the importance of the managerial features is growing. 5 Along such lines, the tripolar class pattern can be interpreted as the dialectical combination of the two categories of social relations. The capitalist aspect is manifest in the distinction between capitalists and production workers; the managerial aspect, in the distinction between managers and the popular classes of nonproduction and production workers. We denote as the managerial hypothesis, the view that the continuous progress of managerial relations might lead to the prevalence of a new mode of production beyond capitalism. Along such lines, neoliberalism can be interpreted as a historical 3. N. Poulantzas, Social Classes in Contemporary Capitalism, London: New Left Review Press (1974); E. Olin Wright, Class Counts. Comparative Studies in Class Analysis, Cambridge: Cambridge University Press (1997). 4. A. Berle, G. Means, The Modern Corporation and Private Property, London: Macmillan (1932); A. Berle, Power without Property, New York: Harcourt, Brace (1960). 5. A.D. Chandler, The Visible Hand, op. cit. note 2; J.K. Galbraith, The New Industrial State, London: Penguin Books (1969); G. Duménil, D. Lévy, Au-delà du capitalisme?, op. cit. note 1, p. 38.

6 Managers 5 attempt on the part of capitalists classes to prolong their domination, imposing trajectories conducive to the gradual metamorphosis of their class position under favorable conditions (Section 2.2). 1.2 Marx s contribution Value and capital Marx s concept of value is a category (an elementary concept) of the theory of commodity at the beginning of Capital. The analysis of the commodity is a necessary preliminary step introducing to the exposition of the concept of capital, as value taken in a movement of self-expansion. 6 (The two aspects are combined, namely the theory of surplus-value, as in Volume I, and the theory of the movement of the valuecapital through its three forms, as in Volume II.) Within this theoretical field, labor is either productive or unproductive, depending on its capability to create value or not (in the theory of commodity), and its potential nature as a source of surplus-value or not (in the theory of the valorization of capital). In this framework, the reference to unproductive labor is fully negative: Labor that does not create value and cannot be the source of surplus-value is unproductive. The situation is distinct within the theory of capital. The tasks involved in the extraction of surplus-value and the circulation of capital are unproductive but their usefulness comes to the fore and can be theoretically qualified. Moving to Volume III of Capital where the two facets (valorization and circulation) of the theory of capital are considered jointly, the function of unproductive labor can be made explicit: The objective of this unproductive labor (such as circulation costs) is the maximization of the profit rate. Thus, we contend Marx s theory of labor, as performed in the context of enterprises, is dual, distinguishing between productive labor and profitrate maximizing labor. Marx does not articulate explicitly these categories but, we believe, this is the most faithful account that can be given of the implications of his entire framework. These distinctions are relevant to the analysis of management since, in the theory of capital, these tasks are, precisely, unproductive and targeted to the maximizing of the profit rate Capitalist functions and their delegation A well-known distinction is the separation by Marx, in Volume III of Capital, between the active capitalist and the money capitalist, resulting from the introduction of interest-bearing capital. A category of capitalist is active within enterprises, performing the functions of maximization of the profit rate described earlier; a second category only contributes to the advance of capital. The second group receives a share of profits as interest or dividends. The remaining profit is called the profit of enterprise. It simultaneously rewards the ownership and the labor of the active capitalist. (Marx further explains that the active capitalist may pay to himself 6. G. Duménil, M. Löwy, E. Renault, Lire Marx, Paris: Presses Universitaires de France (2009), Troisième partie.

7 6 Managers interest and dividends as owner, while the remaining fraction of profits appears as the remuneration of a specific category of labor.) Two important notions are involved. First, the active capitalist performs actual tasks, namely his/her functions: Capital s changes of form from commodity into money and from money into commodity are at the same time business transactions for the capitalist, acts of buying and selling. The time which these changes of form take for their completion exists subjectively, from the standpoint of the capitalist, as selling time and buying time, the time during which he functions as seller and buyer on the market. [...] a necessary part of the time in which he functions as a capitalist, i.e. as personified capital. It forms part of his business hours. 7 Second, Marx points to the delegation of the tasks of active capitalists to salaried managers: But since on the one hand the functioning capitalist confronts the mere owner of capital, the money capitalist, and with the development of credit this money capital itself assumes a social character, being concentrated in banks and loaned out by these, no longer by its direct proprietors; and since on the other hand the mere manager who does not possess capital under any title, neither by loan nor by any other way, takes care of all real functions that fall to the functioning capitalist as such, there remain only the functionary, and the capitalist vanishes from the production process as someone suprfluous. 8 It is not possible to do justice, here, to Marx s sophisticated analysis concerning these issues. The previous paragraphs only recall the main aspects. Marx is unquestionably a theoretician of management, boldly anticipating on future developments Financial institutions There is a second important aspect within Marx s approach to these emerging features of capitalism. Marx s concept of banking capital is not well-known. It is introduced at the intersection between the theories of money-handling capital and interest-bearing capital. 9 Setting aside the first aspect, Marx understood the specific function of banks (the financial institutions of the 19th century) as the collectors of the capital of money capitalists. This capital is invested within banks by these capitalists, and the banks put these funds to the disposal of active capitalists. But banks do not only act as intermediaries. They become the managers of these masses of capital: Borrowing and lending money becomes their [banks ] special business. They appear as middlemen between the real lender of money capital and its borrower. To put it in general terms, the business of banking consists from this 7. K. Marx, Capital, Volume II (1885), New York: First Vintage Book Edition (1978), ch. 6, p K. Marx, Capital, Volume III (1894), New York: First Vintage Book Edition (1981), ch. 23, p K. Marx, ibid., ch. 29.

8 Managers 7 aspect in concentrating money capital for loans in large masses in the bank s hands, so that, instead of the individual lender of money, it is the bankers as representatives of all lenders of money who confront the industrial and commercial capitalists. They become the general managers of money capital. On the other hand, they concentrate the borrowers vis-à-vis all the lenders, in so far as they borrow for the entire world of trade. 10 Marx s insight appears, retrospectively, as fully relevant to the analysis of contemporary capitalism. We are very close here to our concept, introduced earlier, of Finance, as the upper fractions of capitalist classes and their financial institutions. Financial institutions perform these core functions of capitalist ownership in advanced capitalism. It is quite remarkable that Marx tightly linked the two aspects, the concentration of capital within banks and the delegation of the tasks of the active capitalists to managers. The relationship is also strong with Rudolf Hilferding s theory of financial capital. 11 Capitalist magnates possess the big economy, financial and nonfinancial, and financial institutions play a key role in these social relations The limits of Marx s analysis of the institutions of advanced capitalism In the discussion of Marx s potential contribution to the analysis of contemporary capitalism, it is important to distinguish between mere insights and the basic conceptual framework. For example, Marx s mention that the tasks of the active capitalist are delegated to salaried managers can be considered an insight concerning on-going trends. Marx did not strive, however, to push these developments concerning the modern institutions of capitalism to their final implications. One can surmise that, besides the still limited development of these social configurations, Marx s concern was political. His main interest was on the historical confrontation between capitalist classes and production workers, and it is hard to contend that he was wrong. (There is a clear continuity between Marx s ambiguous attitude in this respect and the treatment of the issue in the forthcoming debates around the construction of socialism in USSR.) More fundamentally, concerning the basic theoretical framework, it is also necessary to acknowledge that the concepts involved in the strictly defined theory of capitalist production cannot account for the components of contemporary social relationships that lie beyond such logics. For example, Marx s dual theory of labor above is an important contribution to the analysis of management, in as much as, within managerialist capitalism, managers do maximize profit rates. But these categories cannot, for example, account for the distinction between managerial classes and the classes of nonproduction workers (for example commercial workers), also contributing to the same process of maximization. 10. K. Marx, ibid., ch. 25), p R. Hilferding, Finance Capital: A study of the Latest Phase of Capitalist Development, London: Routledge and Kegan Paul, 1981 (1910).

9 8 Managers 2 - Managers in history Managers were important actors in history and their action will be crucial in the period opened by the current crisis. This action is the general theme of the present second broad section. The first section below is devoted to the countries of selfdeclared socialism, such as USSR or China. The second section covers the period of more than a century, from the early 20th century to the present, in the countries of managerialist capitalism. The third section discusses the circumstances created by the crisis. 2.1 The countries of self-declared socialism Bureaucratic managerialism It should be clear that there is nothing like a capitalism without capitalist owners of the means of production. The reference to a state capitalism is wholly inappropriate. 12 A mode of production is defined in reference to the prevailing relations of production, including the strict homology between relations of production and class patterns. For example, the link is straightforward between the private ownership of the means of production and the existence of a capitalist class. The fact that, in the newly established USSR, the means of production where not in the hand of workers but in those of a new class of organizers within enterprises and central institutions, makes of the existing mode of production a managerialism, with an upper class of managers in the broad sense, including those active within central institutions. Given the prominent role conferred on these central institutions, the phrase bureaucratic managerialism appears appropriate. Concerning USSR, one can refer to the work of Moshe Lewin. 13 Lewin calls the soviet system a bureaucratic absolutism. The means of production were formally owned by the state, but actually, by those who directed the state from the top. Who ruled the country? The answer is a class of managers. Lewin counts the number of individuals involved: If the object of analysis is the ruling elite, the first figure (1000) is the right one, but if the object of investigation is the ruling class, the second figure ( ) must be considered. The conduct of the heroic struggle leading to the victory of the revolution in both USSR and China was supported by a form of alliance between managers-leaders and popular classes. After the victory, however, a process of substitutism 14 occurred, with the transformation of leaders into the members of an embryonic new ruling 12. C. Bettelheim, Class Struggles in the USSR, Sussex: The Harvester Press (1978). 13. M. Lewin, Le siècle soviétique, Paris: Fayard, Le Monde diplomatique (2003) (see G. Duménil, L absolutisme bureaucratique selon Moshe Lewin, Actuel Marx, 39 (2006), p ). We also recommend the fascinating study: K.E. Bailes, Technology and Society under Lenin and Stalin. Origins of the Soviet Technical Intelligentsia, , Princeton: Princeton University Press (1978). 14. In Roland Lew s terminology R. Lew, L intellectuel, l État et la révolution. Essais sur le communisme chinois et lesocialisme réel, Paris: L Harmattan (1997).

10 Managers 9 class, laying the foundations for a full-fledged upper class (as they, later, reproduced and extended themselves). For a whole set of political and economic reasons, these bureaucratic managerialisms proved unable to reform themselves. In the 1980s, in USSR and Eastern Europe, the members of the ruling class understood that they could greatly improve their social position in the context of neoliberal capitalism, and chose this option. The case of China is, of course, more complex with the dual economy, the new path toward capitalism, and the continued hegemony of the Communist party The early debate around the nature of USSR During the first years of the edification of USSR, the debate around the nature of social relations explicitly revolved around the issue of managerialism. With limited exceptions, the relationship to Marx s work remained superficial. Actually, Marx s analysis was used as a form of doxa : The elimination of the private ownership of the means of production would necessarily lead to their collective social ownership, the reign of organization, and the emancipation of the working class. Marx s laudatory reference to the political organization of Paris Commune (advanced forms of direct democracy) and the organization of workers cooperative was formally continued but, actually, superseded by the conviction that the path toward the most advanced forms of technology and organization of capitalism in the early 20th century, notably in the United states, had to be followed. Both Lenin and Trotsky claimed that the managerial revolution had to be imitated in their country. Lenin: Socialism is inconceivable without large-scale capitalist engineering based on the latest discoveries of modern science. It is inconceivable without planned state organization, which keeps tens of millions of people to the strictest observance of a unified standard in production and distribution. We Marxists have always spoken of this, and it is not worthwhile wasting two seconds talking to people who do not understand even this (anarchists and a good half of the Left Socialist-Revolutionaries). 15 Trotsky: We did not invent planning. In its principle, it is the method that Morgan and his general staff are using (better than us) to manage Morgan s trust, namely forecasting, coordinating, and directing. The (major) difference is that we must apply the methodology of planning to our trust of the trusts, that is, the entire Russia. 16 The criticism of these managerialist options, a favorite theme of the left communists, came without delay 17. One of the most acute analysts of these social trends, Nikolai Bukharin, discussed the interpretations put forward by Robert Michels (German sociologist, early Marxist, later supportive of Italian fascism) and Alexander 15. V.I. Lenin, Left-Wing Childishness and the Petty-Bourgeois Mentality (1918), Collected Works, tome 27, p , Moscow: Progress Publishers (1972), p L. Trotski, Rapport au 12 ième Congrès du PCbR (1923), La lutte antibureaucratique en U.R.S.S., Tome I, p , Paris: Union Générale d Édition (1975), p G. Duménil, D. Lévy, Au-delà du capitalisme?, op. cit. note 1, p. 64.

11 10 Managers Bogdanov (early rival of Lenin). These controversies directly pointed to the emergence of a new ruling class. Trotsky, the apologist of the directors of industry (emphasizing the transfer of power to managers in capitalist countries), almost came to the same conclusion but denied the reference to a new class society, only a degenerated workers state. James Burnham left the Trostkist movement, claiming that social investigations had refuted Marx s theory of history. The title of his 1941 book The managerial revolution is, in itself, telling of his analytical framework From the postwar compromise to neoliberalism The bold attempt by classes of managers to wield power under the banner of socialism failed. The role of managers within the history of traditional capitalist countries was and remain, probably, less spectacular, but it should not be judged of lesser import. From the interwar years to the present, managers were a central component of class configurations and a key actor in class struggle. The present section is devoted to the eight decades, from the 1930s to the early 2010s in the countries of managerialist capitalism Four structural crises Three social orders Beginning with the crisis of the 1890s (Section 1.1), capitalism underwent four periods of major perturbations that can be called structural crises. Such episodes typically last about one decade, namely the 1890s, the 1930s, the 1970s, and after 2007 (though nothing tells the duration of this latter episode will be similar). The first and third crises (1890s and 1970s) followed periods of decline of the profit rate and can be characterized as profitability crises. The nature of the two other crises (1930s and after 2007) is distinct. They came in the wake of daring endeavors on the part of capitalist classes extending their incomes and powers. We denote these crises as crises of financial hegemony. To date, capitalism always recovered from these periods of lasting turmoil, though at the cost of significant rearrangements of social relations. In each case, managers played an important role. The entrance into the new phase of managerialist capitalism at the beginning of the 20th century, with the new institutional framework of the ownership of capital and the new tripolar class pattern, was such a transformation. The Great Depression also caused a significant rearrangement, the Keynesian revolution, manifest in the rise of central macro stabilizing devices and policies. During the postwar years, new steps forward were accomplished in the directions opened half a century earlier by the corporate and managerial revolutions. It is still too early to tell what the directions of the new path initiated by the current crisis will be. The historically rising role of managers, simultaneously the cause and the consequence of structural crises, must be distinguished from the sequence of configurations of class dominations and alliances in social orders. The four structural crises were separated by such periods of about 30 years: 18. J. Burnham, The Managerial Revolution: What is Happening in the World, New York: John Day Co. (1941).

12 Managers The first financial hegemony. From the crisis of the 1890s to the Great Depression, despite the rise of management, the power of the new bourgeois class and its financial institutions, namely Finance, remained rather unchallenged. This first social order can be defined as a first financial hegemony (the hegemony of Finance). The period was marked by the shock of World War I. Under obviously distinct circumstances in Europe and in the United States, the war had dramatic effects but setting aside the circumstances of the preparation and conduct of the war, the course of the economy was rather smooth in the United States. Three underlying trends were, however, increasingly threatening the dynamics of the prevailing social order: (1) the heterogeneous character of enterprises, with the growing divergence between the sector of big corporations and traditional small enterprises; (2) the daring financial practices (notably the relationship between credit mechanisms and the stock market); and (3) the lags in the implementation of macro stabilizing devices (despite the creation of the Federal Reserve in 1913). These trends were at the origin of the Great Depression. Similar tendencies were observed in Europe, though to lesser extents. The crisis in the United States was exported to the world. 2. The postwar compromise: Managers in the compromise to the left. The consequences of the crisis were severe everywhere, opening a period of uncertainty up to the conflagration in World War II of which the depression was an important determinant. In Italy, the course of fascism was altered by the crisis in the direction of the increased government intervention; the crisis was one the factors accounting for the rise of nazism in Germany; the confrontation between right and left forces led to the Civil war in Spain... In the United States and France, more progressive options prevailed in the New Deal and the Popular Front. Focusing on the course of events in the United States, the crisis was blamed on Finance and, in the context created by the rise of the worker movement in the world, a new social alliance was struck to the left in the New Deal. The prevailing circumstances conferred a new role on managers within government institutions. (The new dealers were called planners.) Financial practices were the object of a strong repression, with the implementation of a sophisticated regulatory framework (for example, in the Glass-Steagall Act or Regulation q). The preparation and conduct of the war finally allowed for the correction of the trends which had caused the depression. After World War II, a new social compromise was found in which Keynes views concerning the macroeconomy with domestic and international components played a central role. Most aspects of the economy and, more generally, society were affected. The power and income of capitalist classes was significantly diminished. To a large extent, these classes lost their control on financial institutions, a disruption of the institutional framework of Finance. The center of gravity of the social configuration moved to the left, with the new alliance between the managers of the private and government sectors, on the one hand, and the popular classes, on the other hand. Similar social configurations were established in Europe and Japan, often with more radical features such as the nationalization of segments of the economy. As long as the developments of technology and organization inherent in the course of managerialist capitalism since the beginning of the century produced their favorable effects notably the coincidence of the rise of the profit rate and the rapid growth of the purchasing power of wages (including the benefits of social protection) the new course of events was maintained. (This course had, originally, been chaotic given

13 12 Managers the context of World War II, while the new favorable circumstances were expressed during the first postwar decades.) The diminishing effects of the previously initiated trends, combined with the continuation of the progress of purchasing powers, ushered in a new period of declining profit rates. The fall of the profit rate had destabilizing macro consequences. In the context of active Keynesian stimulating polices, a wave of inflation developed. 3. The second financial hegemony: Managers in the compromise to the right. The ensuing crisis the crisis of the 1970s created the economic and political circumstances that allowed capitalist classes to reestablish their rule in a new social order, the second financial hegemony in neoliberalism. The relationship between capitalist and managerial classes was originally one of discipline of the former imposed on the latter, but it was gradually transformed into a new social alliance, the neoliberal alliance to the right. The upward trend of the purchasing power of wage earners was broken, with the exception of upper wages (dramatically in the United States, much less in continental Europe). The violence of the neoliberal revolution was astounding, with dramatic consequences in numerous countries and for the largest segments of the population. For example, the 1979 coup of Paul Volcker, suddenly increasing interest rates, caused unemployment everywhere and the crisis of the debt in Latin America. The deliberate desindustrialization in the United Kingdom had terrible consequences on the working class in this country. In the context of innovation and deregulation and neoliberal globalization (free trade and the free movements of capital), the quest for very high incomes on the part of capitalist and managerial classes led to the rapid expansion of financial mechanisms. (These trends were observed around the world, with the United States as leaders.) Simultaneously, the disequilibria inherent in the macro trajectory of the United States were growing dramatically, namely the declining trend of investment on the domestic territory and the rise of investment abroad, the deficit of foreign trade, and the financing of the U.S. economy by the rest of the world. In this country, the deflationary effects of the deficit of foreign trade were compensated by the wave of mortgage loans, supported by daring financial innovation (as in mortgage-backed securities and related financial devices). This unsustainable macro trajectory and the fragile financial structure were destabilized in 2007 and The financial crisis proper led to the contraction of output in the fall of The circumstances created by financialization and globalization also prevailed in Europe. Thus, the shock in the United States was exported to Europe and the rest of the world in the crisis of neoliberalism. Due to the new situation created by neoliberal globalization, notably the competition of countries with much lower labor costs, the restoration of growth within the United States and Europe will be very difficult, actually almost impossible. In Europe, the various countries have been more or less severely hurt depending on the very unequal levels of developments, as between Germany and Greece. The euro is under threat.

14 Managers Managers in social orders After the Great Depression, managers played a central role in the sequence of social orders, and the same is true concerning contemporary capitalism. In the wake of the depression, in a number of countries in Europe and in the United States, a distance was taken by managers from capitalist classes, with an important role conferred on managers of the government sector. The contrast is sharp with the almost exclusive criterion of the maximizing of the power and income of capitalist classes in the earlier and forthcoming financial hegemonies. After World War II, the reforms of institutional frameworks, the definition of policies, and the management of private corporations were targeted to multifaceted performances such as growth, technical change, full employment, social protection, education, and the like. Various layers of analysis are involved here. A first aspect is the rise of management within managerialist capitalism (the transformation of relations of production), that is, the increasing degrees of socialization of relations of production in contemporary capitalism. Second, a new autonomy was conferred on managerial classes concerning management and policies, the effect of the diminished leadership of Finance. The coincidence of these two categories of determinants accounts for the success of the theories of managerial capitalism during those years, as in Kenneth Galbraith s technostructure during the 1970s. 19 A third aspect was the new alliance with popular classes, manifest in the progress of social welfare. The ambiguous character of the social position of managerial classes since the Great Depression must be emphasized. Economically, their position is strongly grounded, in the sense that they necessarily play a key role; politically, this position is volatile. In the sphere of political compromises, the intermediate nature of their social position opens to managers two alternative options, namely the alliance with capitalist classes or popular classes. Thus, managers are actors in history, but their orientation to the right or to the left is strongly influenced by the overall course of class struggle, basically the struggle of popular classes. The historical dynamics initiated by the Great Depression and the rising wave of the worker movement paved the way to the alliance to the left, while the failure of the postwar compromise and the successful endeavor on the part of capitalist classes paved the way to the opposite political option. We are considering here managerial classes in their entirety. But their various components do not react identically to such circumstances. For example, financial managers are at the center of the alliance between capitalist and managerial classes. 2.3 The perspectives opened by the current crisis The lessons following from the previous analysis concerning the forthcoming decades are rather obvious. Three main scenarios can be contemplated. The first option is a form of neo-neoliberalism ; the second, a continuing alliance at the top of social hierarchies, but under a new leadership of managers, what we denote as a neomanagerialism ; the third and more progressive way out is a new alliance to the 19. J.K. Galbraith, The New Industrial State, op. cit. note 5.

15 14 Managers left. It is not too difficult to set out the alternative contents of these new configurations. The thorny issue is the determination of the factors that might lead to the prevalence of one of the three. It is important to keep in mind here that the current crisis is basically the crisis of the United States and Europe. As is well known, many countries in the rest of the world are also suffering from the current world juncture but several other countries, like China, India, and Brazil, benefited from their insertion within neoliberal globalization. The focus in the present section is on the old capitalist centers The strategy of upper classes in a new neoliberalism, social struggles, and the national factor The financial crisis proper culminated in the fall of 2008, that is, almost five years before these lines are written. To the end of the 2009 recession, very active policies were enacted. In particular in the United States, the memory of the Great Depression was in all minds. Central banks supplied the necessary funding to financial institutions, and very large deficits of governments were allowed to prevail. The rules that had been carefully established in Europe concerning the European central banks and governments deficits in order to guarantee the preservation of neoliberal options, were violated. As outputs timidly recovered after the second half of 2009, a new pressure was placed on governments to check deficits, with Germany leading. On both sides of the Atlantic, nothing or almost nothing was done to check the underlying determinants of the crisis. In the context of neoliberal globalization, the competition from countries with low labor cost is unsustainable. Due to its industrial leadership in Europe, Germany enjoys a more favorable situation but, as is well known, other countries face severe processes of desindustrialization and deficits of foreign trade, with large exports of capital (as in France, beginning in the late 1990s). In this context, the neoliberal strategy of capitalist classes and managers in a neo-neoliberalism, boils down to the attempts intended to increase the pressure on popular classes, namely, the stagnation or reduction of the purchasing powers of these classes, the control of welfare expenses, the deterioration of the conditions of labor, and the like. Given the resistance met in the implementation of this strategy and the continued absence of treatment of the root causes of the structural crisis, the dilemma is clearly set out, namely between the continuation of unsustainable governments deficits, on the one hand, and very poor macroeconomic conditions as obvious in the new recession in 2013 in Europe, on the other hand. This strategy is fraught with two main types of contradictions: (1) domestically, the rise of social struggles with the potential progress of the radical left or extreme right (as in the wake of the Great Depression); and (2) internationally, the continuing decline of the hegemony of the United States and Europe. In the United States, this second set of factors already plays a crucial role (in sharp contrast with Europe) in what we denote as the national factor.

16 Managers Managers central stage: A neomanagerialism On the road leading to the deepening of neoliberal trends, the two categories of contradictions above might confer a new role on managers, in particular in the government sector (as after the Great Depression). To only slow down the comparative decline of the United States and Europe, very strong policies must be used. Important reforms, to a large extent blocking neoliberal strategies, are required. Among the measures to be taken, one can list: (1) restrictions to free trade; (2) limits to the free mobility of capital; and (3) regulations placing important limitations on the action of financial institutions, in particular the reversal of financial globalization. One cannot expect any overall consciousness of the severe characters of the present situation on the part of governments still devoted to the defense and enlargement of the interests of upper classes rather than the defense of their own economic territories (local industries, employment, and the like). Awareness is coming through the back door. Not coincidentally, as of 2013, the first symptoms of such new trends are manifest in the present campaign against tax heavens. Government deficits contradict neoliberal options; hence a key aspect of financial globalization, namely tax heavens, contradicts neoliberalism though financial globalization is a key component of neoliberalism... The conduct of such very demanding policies limits placed on the free movements of capitals, regulations imposing limitations on the action of financial institutions, in particular the reversal of financial globalization requires the rise of managers to a new leadership, notably a strong intervention of governments, what we denote as a neomanagerial trajectory. Along such lines, the interest of Finance would be tamed to some extent, though the alliance at the top would be fundamentally preserved. These new directions would, anyhow, remain much more favorable to capitalist classes than a new compromise to the left. Under the present circumstances of a weak worker movement, the establishment of a managerial leadership within the alliance at the top is a possible scenario, notably in the United States. A major risk is that neomanagerial trajectories can be conducted by the political forces of the far or extreme right, as in a few countries in Europe during the interwar years. A pessimistic interpretation is that this latter option could be the most likely configuration susceptible of ensuring the preservation of the alliance at the top in neomanagerialism. The leadership of managers, with the intervention of the government in a daring program of reforms but still preserving the interest of capitalist class, would necessarily lie at the far right. And this would be all the more true, that a strong popular movement would threaten the hegemony of upper classes A new alliance to the left The other option lies at the left. The two-pronged bifurcation is clearly set out as prior to World War II: A strong popular movement is the only force susceptible of opening a way out to the left, though it could also stimulate a move to the far right. A key element would be a political drift to the left within managerial classes as in the New Deal in the United States. Despite the ambiguous social position of managerial classes and the death of utopia, significant fractions of these classes could project their vocation as organizers in a program radically confronting neoliberal strategies, in particular, the most reactionary forms of these strategies.