Capitalism after Capitalists
What James Burnham Got Wrong
I discovered last month that teaching a seminar and staying up on my writing was like walking and chewing gum at the same time. In short, I’ve been behind on writing work to share publicly. However, on the other hand, teaching and discussing with other learners has been extremely fruitful for my reflection, so hopefully those gestating ideas will start to unfurl in the coming months.
This piece is a bit longer: ~ 16 minutes to read. Thanks for tuning in!
I - the managerial revolution never happened
The philosopher James Burnham prophesied in The Managerial Revolution (1941) the arrival of a near future where managers would rule everything — a society of “managerialism.” But we’re now living in what was for Burnham that coming era of managerialism, and while his analysis of the managers (now often modified as ”professional managerial class” or “PMC”) remains essential for understanding our current social and political conditions, what can we learn from the failure of his predictions to pan out? It seems that we are still living under capitalist conditions, that the state has failed to tame capital, and the managers, while powerful, are not fully in control. So, what happened?
Burnham argued that a new social stratum of managers were divesting the capitalist class of power by inserting an intermediary layer between the owners and the means of production which they ostensibly owned. These managers were emerging as a distinct class, and through wielding both the epistemic authority conferred by their expertise and the de facto power resulting from their daily proximity to the means of production, they were gaining the upper hand in their struggle against the capitalist class for social dominance. In the end, Burnham foresaw a future where the managers would use state power to appropriate the means of production and manage it from a technical and scientific perspective, cutting the capitalist class out of the picture entirely.
With the rejection of Kamala Harris at the ballot box in November 2024, and the subsequent moves to gut the managerial state by Trump and Elon’s DOGE, we have recently been privy to some monumental episodes in the ongoing struggle between the capitalists and the managers. Polling and voting results show that both the working class and many in the capital class are now turning on the managers, attacking them from all sides.This transition from capitalism to managerialism, which Burnham predicted, has failed to fully materialize. The class war rages on, and sometimes it feels more like the capitalists are winning than the managers.
In his critical piece “Second Thoughts on James Burnham” George Orwell muses about how the supposed hard-nosed “realism” of the Marxist-turned-conservative Burnham had not really helped him make better predictions about history. For instance, Burnham at the time of writing The Managerial Revolution seems to take German victory in WWII for granted, even saying that the international order of the near-future would revolve around Japan, Germany, and the USA. For all his Machiavellian realism about the cold and calculated operations of power, Burnham could not see the possibility of the dramatic reversal which hid just over the horizon of history, leading to total German and Japanese defeat, ushering in the Cold War, and ultimately resulting in total American hegemony in the 90’s.
Orwell instead portrays varieties of political realism as a lurid fascination with power, a secret reverence which believes that what is ascending will continue to ascend. Burnham saw that under Roosevelt in the US, under Hitler in Germany, and under Stalin in the USSR, the managers’ power was on the rise through ambitious state projects, regulatory control of capital, and an expanding bureaucracy in both the public and private sectors. All the trends were behind the rise of the managers, and why should that change? In the end, the worship of power makes us blind. As Nietzsche says, “every drive wants to be master — and it attempts to philosophize in that spirit!”
In light of Orwell’s critique, I would contend that Burnham failed to conceptualize what a successful counter-maneuver from the capitalist class might look like, and he also underestimated the resiliency of the capitalist system itself to adapt to threats. In this essay, I’d like to focus on the first of these ideas by arguing that the capitalists have executed a successful counter-attack against the rise of the managers, albeit one in which they have had to make a crucial compromise. Burnham did not foresee those moves which the capitalist class would make to preserve their power, block the managers’ rise, and unlock new market forces. The world we’re living in today was born from the adaptation (and compromise formation) of the capitalists in their attempts to outmaneuver the managers.
II - are there any capitalists left?
I first began to sense that something about Burnham’s theory needed to be re-thought for our moment as I reflected on his four classifications of managers. Unlike the way that the phrase “professional managerial class” has come to give the impression of a homogenous group (functioning nearly like an indiscriminate slur in some circles), Burnham actually distinguished four different types of managers, all of whom exercise power in distinct ways which demanded to be theorized individually.
He sketches:
Professionals: exercise technical knowledge, overseeing operations and production
Executive Leadership: responsible for company strategy and profitability
Financial Capitalists: market makers concerned with investment and money
Stockholders: hold shares in companies, but have no practical involvement
Those who malign the PMC today tend to identify only the first group as “managers” — supervisors, administrators, credentialed professionals, etc… — and can sometimes have a tendency to valorize the other three. The cult of the maverick CEO, the mystique of the quant, and the value-hunting quest of the investor all circulate as fantasies within the current ideological atmosphere of capitalism. But Burnham describes these figures as managers too.
In fact, if we grant this schema he outlines, who is a capitalist? Are there any capitalists left?
Burnham seems to operate with an implicit definition of what a capitalist is, and it unites three important attributes — someone who owns and controls the means of production. Under the framework of capitalism which Burnham argues is being replaced by managerialism, the capitalist is a person both owns and runs their own organization. Burnham thinks that the managers are gaining their power precisely by driving a wedge between this ‘owning’ and the ‘running’ parts of the definition of the capitalist, with the aim of ultimately driving them apart.
If a person simply owns something on paper, but they never interact with or have any practical knowledge of how that thing works, what is the true nature of that ownership? Sure, it amounts to a right to the productive increase, but now whatever profits the capitalist may enjoy has already been picked apart by the salaries, benefits, and incentives paid to support the bureaucratic apparatus which actually runs the productive machinery of the corporation day to day. What have they given up in constructing this machine for running their capital, and what powers have they invisibly ceded in doing so?
While it’s true that the individual capitalist never had the personal capacity to run the corporation on their own, the managers now make it such that the capitalist does not even have the practical knowledge to run the corporation even if he wanted to. In the end, we have a situation where the capitalists class’ ownership becomes increasingly abstract, existing only in the realm of contracts and technicalities, but without having any practical force or effect.
Once the capitalists reach a certain point of irrelevance to the whole system, Burnham expects that they will either be entirely subjugated (as in fascism) or simply eliminated (as in communism). The managers would use the state to expropriate the capital directly, or perhaps concoct a legal and regulatory framework which gave the state de facto control to manage the economy, its actors, and its resources.
This question of ‘where have all the capitalists gone’ indicates to me the possibility that the capitalist class has undergone a transformation in the wake of the managers’ rise, but that this transformation has not thereby resulted in the hegemony of the managers. I would argue that the capitalist class has performed a trick whereby they have both protected their power and influence while simultaneously becoming more difficult to spot, and they have done this by trading away the dual power of ownership-control for a byzantine system of fractional ownership and influence. They have made a crucial compromise in doing so, but let’s look at a couple examples of powerful CEOs/founders to see how this dynamic plays itself out.
Today, it’s become rarer to encounter large or influential corporations where any single individual enjoys majority ownership. Some of the old family-owned businesses persist and provide notable exceptions, like how the Walton family still owns Wal-Mart, but by-and-large, most corporations have a plurality of ownership where no single entity exercises a controlling stake. This is why Burnham characterizes CEOs as managers rather than as capitalists.
Consider how Jensen Huang, whose estimated net worth approaches $109B, only owns between 3%-3.6% of Nvidia, a corporation which he founded and runs as its CEO. Of course, his position as manager gives him an outsized influence on strategic and operational decisions which you would not be able to directly infer from the size of his ownership, but it also remains the case that Huang does not exercise the kind of singular control which defined capitalists of earlier periods. Ultimately, he answers to other investors and the board of directors, and it remains within the realm of possibility that he could be fired from the very company that he founded if a coalition of other owners found themselves dissatisfied with his performance.
Let’s take another example — Elon Musk, at times the wealthiest man in the world and a target of much opprobrium, most likely does not own a controlling share in any of his companies (with the possible exception of The Boring Company). While his holdings of many of his private companies are not fully disclosed, the investment and funding rounds which these companies have undergone to capitalize their operations make it unlikely that Musk owns majority shares in those ventures. Further, we know from public disclosures that Musk owns something between 20%-25% of Tesla. While we are accustomed to seeing Musk as a capitalist who exercises immense influence, through both hard and soft power, his situation has nonetheless taken on key aspects of what it means to be a manager, namely, a split between ownership and practical control, and also being answerable to a coalition of other owners (including public shareholders).
Jeff Bezos offers us a slightly different angle on this, because while he only owns about 10%-12% of Amazon, he owns 100% of both Blue Origin and The Washington Post, as well as having a venture capital fund and being a major backer of biotech startup Altos Labs. So, Bezos possesses greater alignment between his ownership and control, but we see more in Bezos’ case that he’s highly dependent on the managerial layer between him and the actual output of his ventures. Unlike Musk who has a PhD in mechanical engineering and understands the complexity of what SpaceX is doing in constructing and testing rockets, Bezos has no expertise in rocketry or biotech, putting him much more at the mercy of his subordinates, which is perhaps why Bezos developed the distinctive style of management which persists at Amazon.
When the CEO of UnitedHealthcare Group Brian Thompson was assassinated in broad daylight, a meme of a fabricated job posting for his position on LinkedIn went viral the very next day. The dark joke resonated because it signals “manager” — a replaceable professional, a juggler of means, an engineer of signs and symbols. Some powerful people are like Brian Thompson, and some powerful people are like Elon Musk. They aren’t all the same, but you couldn’t necessarily understand the magnitude of the difference simply by looking at how their assets are structured. That we can classify both Thompson and Musk as managers signals that there exists a differentiation and heterogeneity within the managerial class itself, but also that this difference must be constantly shifting and self-effacing. The managers are powerful, but they have also become the hiding place for a transformed capitalist class which has taken on managerial traits in order to blend in.
III - capital’s adaptations
So far I have been arguing that capitalists underwent a transformation as part of a strategy to counter and adapt to the expansion of managerial power in the first half of the 20th century, the trend which Burnham is analyzing in The Managerial Revolution. In the wake of World War II then, what was the essence of the capitalists’ maneuver to thwart the increasing control of the managers?
In response to the rise of the managers, the capitalist class took steps to erase itself into the managerial class, retreating into a certain obscurity and illegibility, while nonetheless developing new financial, legal, and social tools for exercising their power from a standpoint of ‘influence’ rather than direct ownership and control. We might say that the capitalists have taken their hands off the reins of the economy, fully submitting themselves to the inscrutable movements of Capital’s invisible hand, but have relinquished this control in exchange for retaining some of their power of influence. Like the rest of us, the capitalists too operate under conditions of uncertainty, obeying Capital’s imperative to produce surplus-value for the sake of producing more surplus-value. Capitalists can now only insert themselves into the circuits and flows of global Capital to exert some influence on a system which they do not ultimately control or understand.
Let’s look at two important components of this strategy, as I see it — (1) fractionalized ownership and (2) globalism. Both of these moves introduced a deeper dimension of uncertainty into capitalist economies through enabling powerful and surprising network effects, but they also created leverage and opportunities for new and illegible mechanisms for exercising influence.
We’ll look at globalism first, because I think it represents the most obvious and immediate counter-attack executed by the capitalist class against the managers. In The Managerial Revolution, Burnham traces the proliferation of nationalist and state planned economies staffed by managers, and this is why his prediction takes the form of speculating that managers will use the state to expropriate Capital. They could do this under various ideologies, whether it be the Communist ideology of a worker’s state which holds all property, or the logic of FDR’s New Deal where the economy must be made to serve national interests, such as supporting the war effort or recovery from economic crisis. Whatever way the maneuver might be justified, Burnham saw the next step in this class struggle as widespread grab for control by a managerial state.
However, the globalization of trade and production, especially within the past 50 years, has enabled the capitalist class to largely bypass the threat of nationalization or state expropriation by using a form of arbitrage to play other states against one another. Now a corporation can be incorporated in Ireland to avoid US taxes, settle its legal disputes in the chancery courts of Delaware, have its headquarters and leadership in Silicon Valley, and handle all of its production through third party contractors in China (here’s looking at you, Apple). As it stands, the US government could not nationalize or expropriate Apple even if it wanted to. While the US government could deploy massive tariffs and penalties to cripple their operations, this would be like cutting off your nose to spite your face — the US economy needs Apple, but Apple has options for where they could go or how they could pivot if the relationship was no longer beneficial. Under conditions of globalization, corporations become entities which can attach or deattach themselves at will to their host countries, only using sovereign nations as long as it benefits them enough to do so.
We recently saw an example of this when Shell withdrew from the Netherlands, re-incorporating in the United Kingdom (read: no longer in the EU). Shell is the 15th largest company in the world, and was, to that point, the largest corporation incorporated within the Netherlands, as well as the second largest company in Europe. It had retained the name “Royal Dutch Shell” since the merger of Royal Dutch Petroleum Company (1890) and Shell Transport and Trading Company (1897) in 1907, but has since pulled up roots and changed its name to Shell plc upon its move to the UK. However, the tax revenue loss for the Netherlands might not be as significant as you’d think because Shell already enjoyed significant tax breaks (even publicly admitting to have paid no corporate tax in the Netherlands in 2019). When the size of your revenue is more than half of your “home” state’s total revenue, and your operations and staff are spread all over the world, you have an unprecedented amount of leverage for bargaining or exiting.
[I’ve wrote earlier this year about this question of whether nations can exist under capitalism, and it’s the precise problem which is now at stake with Trump’s recent tariff move — can a state enact policies which intervene in the flow of Capital’s global circuits? What will happen to such a territory when it tries to exert countervailing power against the leverage exercised by corporations? It remains to be seen, but the question is a vital one today.]
So, we can see that the capitalist classes were able to make a successful end run around the managerial forces of the nation-state which would appropriate the means of production through such methods as regulation, taxation, tariffs, or nationalization. Now corporations can play countries against each other in a race to the bottom where each nation desperately attempts to attract investment (“money goes where it’s treated best”) through favorable tax regimes, lax regulatory environments, and sweetheart financing deals. Alternatively, if corporations in a country can’t outsource, they can push for more immigrants to fill precarious roles at lower salary costs than citizens, thus effectively hiring scabs from overseas if locals won’t accept the wages offered.
However, the second move made by the capitalist class involves an embrace of the already-developing trend which Burnham focuses on in his text, namely, the ongoing fractionalization of corporate ownership. Instead of fighting the increasing separation the capitalist experienced between the ownership of the means of production and the management of those means, capitalists began to preemptively fractionalize their ownership, but simultaneously developed mechanisms for exercising outsized influence both within particular organizations and at the level of entire markets.
A whole array of strategies have appeared for forging beneficial compromises with the managerial structure of the economy and corporations. Rather than a single pattern or structural feature, what we see is more the development of many new apparatuses for generating influence within an organization. From creating complex holding companies or trusts to offering dual-class share structures which separate ownership and voting control, from serving on multiple corporate and nonprofit boards at the same time to intentionally keeping or taking companies private to prevent investor interference, the capitalist class worked with financial, management, and legal professionals to adapt mechanisms for our shifting political milieu, and can pick and choose which ones to deploy for their particular situation. Thus, rather than a wholesale replacement of capitalists by managers, we see a spectrum of adaptations with various degrees of separation between ownership and control.
The rise of asset managers like BlackRock, Vanguard, and State Street also represent a crucial development in this struggle for power between the managers and the capitalists. These three firms are the largest shareholders in roughly 90% of S&P 500 companies, which means that they exert a broad influence on the economy as a whole rather than operating from any single firm. In some ways, these firms benefit more from economic stability than from volatility, which is a strange bias which can produce its own social and political exigencies. However, as “universal owners” the logic of how and when they invest inevitably shapes corporate behavior at the highest levels. The buying strategy of asset managers incentivizes corporations to implement whatever new standards or “thought leadership” happens to be trending at the time, such as when ESG was being pushed heavily during the Biden era.
These asset managers also serve to entangle the material interests of the working and managerial class into the interests of corporations and the economy as a whole by providing financial products which retail investors use in lieu of savings or to save for retirement. Pension funds are invested in their products too. BlackRock and Vanguard do not act like typical owners who buy and invest in a company to generate profit, but rather their profit comes from creating financial products which track a basket of underlying financial vehicles. These products are then sold to clients, and these customers become investors who actually just own the future financial gains of the underlying stocks in the fund. This means that the intermediary layer of the index fund makes it such that the asset manager retains the voting powers conferred by the shares, because the client does not own the shares directly.
We can see how a firm like BlackRock might only own about 5-8% of a company, but it will often be the largest shareholder nonetheless, and this pattern will crop up across all the largest and most important corporations in an economy. This economic position exemplifies what I’ve been trying to characterize as power exercised through “influence” rather than direct control, as BlackRock’s portfolio of holdings clearly provides a point from which leverage or pressure could be applied on specific corporations or the economy as a whole, but it cannot necessarily dictate or control in a strongly authoritarian sense, thus making its activities ambiguous enough to be plausibly deniable and difficult to trace.
Vectors for influence are more flexible and illegible, making it easier to get in and out of financial positions, and much harder to trace the causes for specific economic outcomes or business decisions. No one is exactly making the decisions, and thus no one can exactly be blamed. After all, a board of directors might say that they made a decision under pressure from investors. They can’t be blamed that investors are responding to economic incentives! You also have pseudo-collusion taking place through international organizations like the World Economic Forum where certain aims or visions for society are discussed amongst the wealthy and powerful, not providing exact marching orders, but an overall framework for successfully coordinating business decisions and policy advocacy in their host nations.
This fractionalizing of ownership which the capitalist class embraced converted direct control into the art of influence and the exploitation of vectors for leverage, as well as yielding new ways for harvesting profit without exercising control over everyday operations or holding capital on its books.
IV - Post-Class Fractured Mass
We’ve covered a lot of ground, but now I’m finally planning to move towards a conclusion which will also serve as setting the stage for future investigations.
This analysis of how the capitalist class has made itself illegible by disappearing into the managers suggests some provocative implications, but the one I’m most interested at the moment joins up with what Dave McKerracher at
has been harping on for ages, namely, that our society has become a “post-class fractured mass.” McKerracher derives this concept from Jean Baudrillard’s In the Shadow of the Silent Majority, where Baudrillard’s analysis suggests that class may be losing its value as meaningful form of economic analysis, and instead turns towards an understanding of class as a social reality where categories and structural positions give way to shifting positions in networks of consumption, cultural signification, and information.If we try to synthesize my arguments thus far in this piece with Baudrillard’s, we can see how they illuminate each other, suggesting that older schemas of class may be inadequate for explaining our location within the network of Capital. The idea of ‘structure’ and ‘super-structure’ may need to give way to a networked analysis where actors within the network may exploit particular vectors, deploy apparatuses at crucial junctures, or introduce minor deviations into the network’s flows, perhaps even catalyzing processes which they themselves do not understand. Our position within this network may be more fluid and complicated at times (“is an adjunct professor a manager or a proletarian?” “is a worker with a 401k a manager?”), and much more significance will be attached to identity markers within a social system of signs than one’s relation to Capital.
The capitalists have professionalized themselves, and in the process they have re-subjugated the managerial class, producing a differentiation within the managerial class running along a spectrum, including some managers falling out the bottom of the funnel and being proletarianized from the over-production of college-educated professionals. This heterogeneity within the managers reveals the ways that capitalists and the system of Capitalism have adapted to the rise of the managers in the first half of the 20th century by developing new vectors and apparatuses for exercising influence within the global network of Capital, and these crucial transformations have moved us away from society best understood through class and structure, pushing us instead towards an analysis of networks, nodes, and events.
Fantastic, such a good read