It looks like a regime where a caste of unelected leaders exercises undivided power. As one British anarchist concluded in the early 1960s:
The political system we find in industry is, on the contrary, one in which the government (the management) is permanently in office, is self-recruiting, and is not accountable to anyone, except formally to the shareholders […]. At the same time, the vast majority of those who are required to obey this permanent government have not citizenship status at all, no right to vote for the leaders who form the government. The only rights that the masses have in this system are the right to form pressure groups (trade unions) seeking to influence the government and the right to withhold their co-operation (the right to strike). Such a political system […] no more deserves to be called democracy […], than does the oligarchical political system of 18th century Britain.54
Big business employees are not only deprived of political rights, but also of certain freedoms otherwise recognized as imprescriptible: ‘For nearly two centuries’, wrote a professor from Harvard Business School, ‘Americans have enjoyed freedom of press, speech, and assembly, due process of law, privacy, freedom of conscience, […]. But Americans have not enjoyed these civil liberties in most companies, […]. Once a U.S. citizen steps through the plant or office door at 9 a.m., he or she is nearly rightless until 5 p.m., Monday through Friday. The employee continues to have political freedoms, of course, but these are not the significant ones now’.55
The fundamental problem, the major ideological aporia, is that liberal democratic theory provides no consistent justification for this asymmetry of treatment. ‘Capitalism’, said the economist of self-management Jaroslav Vanek, ‘is based on property rights, and democracy on personal rights. […] One of the main reasons why the western world is so schizophrenic is that we have political democracy and economic autocracy’.56
In the 1960s and 1970s, in response to the workers’ revolts, philosophers and economists of a critical turn of mind developed theories of economic democracy. The form of authority still prevalent in business – the one that Marx described as being that of a ‘private legislator’ with ‘autocracy over his workpeople’57 – appears to them as a remnant of archaic power relations, a bastion of tyranny that escaped the democratic revolutions.58
In Spheres of Justice, Michael Walzer takes the example of Pullman, an American village founded in the late nineteenth century by a wealthy industrialist, George Pullman, who, because he was owner of the city walls and the soil on which it was built, claimed to have the right to ‘govern’ the inhabitants in the ‘same way a man governs his house, his store, or his workshop’.59 In his city, Pullman was a private autocrat. No elections, no civil liberties, no proper justice, let alone any right of assembly or right to demonstrate. Believing that the ownership of a city was incompatible with the theory and spirit of its institutions, the Illinois Supreme Court put an end to this state of affairs. Walzer’s question: this kind of power, applied to the inhabitants of a city, is considered incompatible with the principles of liberal democracy, but was the power that Pullman exercised over the workers in his company really different? No, he answers. ‘If this sort of thing is wrong for towns, then it is wrong for companies and factories’.60 In both cases, the same standard of self-determination must prevail: ‘with regard to political power democratic distributions can’t stop at the factory gates. The deep principles are the same for both sorts of institution. This identity is the moral basis of the labor movement […] of every demand for progress toward industrial democracy’.61
The ideas propounded by Berle and Means had thrown the traditional discourse of legitimization of the capitalist order into crisis. The problem was theoretical, but it was also thoroughly political. As Edward Mason put it: ‘As everyone now recognizes, classical economics provided not only a system of analysis, or analytical “model,” intended to be useful to the explanation of economic behavior but also a defense – and a carefully reasoned defense – of the proposition that the economic behavior promoted […] by the institutions of a free-enterprise system is, in the main, in the public interest. It cannot be too strongly emphasized’, he continued, ‘that the growth of nineteenth-century capitalism depended largely on the general acceptance of a reasoned justification of the system on moral as well as on political and economic grounds. The managerial literature appears devastatingly to undermine the intellectual presuppositions of this system. And what does it offer in its place?’62 Nothing, or almost. Worse than that, the ethical managerialism that has striven to fill the void is dangerous, giving a foothold to the demands for democracy in business, thus weakening the institution in its very principle.
Among the intransigent, calls were heard to repudiate such unnatural language and to extol capitalist values: ‘Instead of fighting for its survival by means of a series of strategic retreats masquerading as industrial statesmanship’, advised Theodore Levitt in 1958 in the Harvard Business Review, ‘business must fight as if it were at war. And, like a good war, it should be fought gallantly, daringly, and, above all, not morally’.63
Notes
1 1. Wilbur Hugh Ferry, The Corporation and the Economy (Santa Barbara, CA: Center for the Study of Democratic Institutions, 1959), p. 9.
2 2. Karl Marx, ‘British Commerce and Finance’, The New-York Daily Tribune, no. 5445, 4 October 1858, in Karl Marx and Friedrich Engels, Collected Works, vol. 16 (1858–60) (London: Lawrence & Wishart, 1980), pp. 33–6 (p. 36).
3 3. Charles Fourier, Théorie des quatre mouvements, Oeuvres complètes, vol. I (Paris: Librairie sociétaire, 1846), p. 189.
4 4. Ibid.
5 5. Ibid., p. 190.
6 6. Charles Périn, Le Patron, ses devoirs, sa fonction, ses responsabilités (Paris: Desclée de Brouwer, 1886), p. 49.
7 7. What Macpherson writes in another context about the contradictions of modern liberal theory is also valid here: this theory must continue to use the postulates of possessive individualism at a historical moment when the structure of market society no longer provides the necessary conditions for us to deduce a valid theory of political obligations from these postulates (see Crawford Brough Macpherson, The Political Theory of Possessive Individualism (Oxford: Oxford University Press, 1962), p. 275).
8 8. Berle and Means, The Modern Corporation and Private Property, p. 312.
9 9. Ibid.
10 10. Edwin Merrick Dodd, ‘For Whom Corporate Managers Are Trustees: A Note’, Harvard Law Review, vol. 45, no. 7, May 1932, pp. 1145–63. Tellingly, Dodd had borrowed the title of his article from the speech of a CEO of the period, Owen Young, President of General Electric.
11 11. Lewis Brown, CEO of the Johns-Manville Corporation, quoted by Edwin G. Nourse, ‘From the Point of View of the Economist’, in Stuart Chase (ed.), The Social Responsibility of Management (New York: New York University, School of Commerce, Accounts, and Finance, 1950), pp. 47–67 (p. 53). ‘The manager’, we likewise read in 1951 in La Révolution permanente [sic], a collective work published by the editors of the magazine Fortune, ‘is becoming a professional in the sense that like all professional men he has a responsibility to society as a whole’ (Russell Wheeler Davenport (ed.), U.S.A. The Permanent Revolution (New York: Prentice-Hall, 1951), p. 79).
12 12. T.H. Robinson, ‘Attitudes patronales’, in Bénéfices sociaux et initiative privée (Québec: Les Presses universitaires Laval, 1959), pp. 65–82 (p. 72).
13 13. Howard R. Bowen, Social Responsibilities of the Businessman (Iowa City, IA: University of Iowa Press, 2013; first published in 1953), p. 17.
14 14. Ibid., p. 50.
15 15. Hal Draper, ‘Neo-Corporatists and Neo-Reformers’, New Politics, no. 1, Autumn 1961, pp. 87–106 (p. 91).
16 16. Sanford Lakoff, ‘Private Government in a Managed Society’ (1969), in Sanford Lakoff (ed.), Private Government; Introductory Readings (Glenview, IL: Scott Foresman, 1973), pp. 218–42 (p. 237).
17 17. ‘The manager, in short, is a mediator,