The Managerial Revolution

Society is not static—it shifts, evolves, and changes power structures. Are we witnessing the fall of capitalism and the rise of a new ruling class?

1. Capitalism is built on production and commodification.

Capitalism transforms every product and resource into a commodity that's assigned monetary value. Goods, whether they feed or entertain us, are valued based on their price rather than their utility to fulfill actual needs. This commodification includes even human labor, which becomes an item exchanged for wages.

Money in capitalism serves not only as a medium of exchange but also as capital. It powers production—invested in machines, materials, or labor, it creates products sold for profit, perpetuating the cycle of money generating more money. This system sees products produced primarily for profit, not necessarily to meet societal needs. A shoe factory, for instance, won’t produce shoes simply because children are barefoot—it will only do so if profits can be made.

Finally, capitalist society divides between the capitalists (those who own production means like factories) and the proletariat (the labor force selling their effort). These two classes mirror the inequities inherent to a system that rewards ownership over effort.

Examples

• Commodification of essential foods, even during periods of famine.
• The role of venture capital in starting companies solely to generate returns.
• The widening wealth gap between factory owners and their workers.

2. Capitalism has no permanent foothold in human history.

Although many people assume capitalism is inevitable and eternal, historical evidence shows otherwise. It started only in the 14th century and gained dominance much later. For most of history, different economic systems like feudalism were the norm.

The belief that capitalism aligns with some immutable "human nature" is also misleading. Past societies have adapted to vastly different systems, proving that human behavior shapes itself according to the prevailing economic structure. These systems, some of which endured far longer than capitalism, show that no economic order is absolute or permanent.

The rise of mass unemployment within capitalist nations signals its instability. Like the periods preceding the fall of Athenian democracy or the Roman Empire, mass unemployment caused social systems to collapse when they could no longer provide meaningful roles for their people.

Examples

• Transition from feudal agriculture to capitalist production in post-Medieval Europe.
• The mass unemployment leading up to Rome’s societal decline.
• The global Great Depression as a precursor to systemic transformation.

3. Soviet-style communism cannot replace capitalism.

The idea that communism might take capitalism’s place piqued interest in the early 20th century. In a communist vision, private property is abolished, and equality is paramount. However, the example of the Soviet Union underscored how poorly these ideals translated into reality.

Although private property was outlawed in Russia, inequities remained or even worsened. In 1939, the wealthiest 11 percent of Soviets controlled nearly half the national income, a more significant divide than capitalist America at the time. Similarly, while Soviet communism initially promised democracy, freedom dwindled over time. Trade unions were neutered, opposition suppressed, and class markers like uniforms reintroduced.

Soviet communism revealed startling inefficiencies and imbalances, demonstrating that implementing a "classless" society is far more challenging than theoretical promises imply.

Examples

• Statistics showing higher income disparity in Soviet Russia compared to capitalist nations.
• The suppression of political dissent in the USSR.
• The reintroduction of class distinctions like uniforms under Stalin’s rule.

4. A new managerial class is ascending to dominance.

The decline of capitalism and the improbability of communism point to the emergence of a managerial society. Unlike capitalists, whose power relies on owning production means, managers dominate through their roles in overseeing and organizing production processes.

As industries and governments grow increasingly complex, managing large organizations becomes an indispensable skill. This gives a new ruling class—the managers—effective control over production, even though they don’t "own" it. This shift from ownership to control marks the foundation of a new social order.

State-owned enterprises substitute private ownership in a managerial society. Managers gain control over those instruments of production, leveraging them for power and preferential shares in society.

Examples

• The growth of government-run industries replacing private monopolies.
• The role of bureaucrats organizing production for large-scale state projects.
• Private corporations transferring decision-making power from owners to managers.

5. Industry’s technological growth necessitates professional managers.

In prior centuries, capitalists often managed their businesses themselves. A factory owner would directly oversee operations. However, with growing industrial complexity, this model became unsustainable. Large-scale corporations and rapid technological advancements demanded specialized management.

These managers didn’t own the companies they worked for but still wielded immense power through their technical and operational expertise. Their dominance grew as corporations moved toward shareholder ownership structures, where no single owner retained decisive power. Without firm ownership, it’s the managers who orchestrate and control.

This shift created a new dependency on professional managers, whose knowledge became indispensable across business and government.

Examples

• Public corporations governed by decentralized shareholder voting, diminishing ownership authority.
• The hiring of specialized positions like administrative engineers or operating executives.
• Corporations running like independent ecosystems, far removed from individual owners.

6. Governments’ increasing role empowers bureaucratic managers.

As governments stepped into industries like postal services, housing, and even healthcare in the early 20th century, they stripped capitalists of opportunities for profit. These transitions meant managers running state enterprises, rather than owners, became the ones in control.

Bureaucrats, working behind the scenes in government institutions, began handling the country’s major production needs. Though private managers hold measurable influence, bureaucratic managers in government became even more powerful. Consider the staggering fact that by 1941, much of the American workforce directly or indirectly relied on the government for jobs or resources.

This dependence only grew as governments expanded, further elevating the influence of managers within these institutions.

Examples

• The doubling of U.S. government bureaucracy between the 1930s and 1941.
• Federal agencies exercising control over industries like transport and shipbuilding.
• Workers depending on government programs and projects for their livelihood.

7. Ownership and control are no longer linked.

One of the defining features of the managerial society is the separation of ownership from control. In capitalist economies, those who own factories or businesses typically also control them. However, as managerial systems evolved, ownership became less important than the ability to manage or control operations.

This trend is visible in both private corporations with dispersed shareholders and state-owned industries run by appointed bureaucrats. Whether in private or public spheres, the rise of managers challenges the traditional notion that owning an asset equates to controlling it.

The modern society shifts from "ownership dominance" to "management dominance."

Examples

• Privately owned companies where management decisions override shareholder interests.
• Governments appointing non-elected officials to manage nationalized industries.
• Instances where managers shape policies in contrast to stated ownership goals.

8. Mass unemployment signals the death of economic systems.

Mass unemployment isn’t just an economic failure—it’s a signal that a social system is nearing its end. History shows this, with Athens before its fall and Rome in its decline both experiencing widespread joblessness.

Capitalist societies have similarly struggled to handle unemployment. When people lack meaningful roles, they turn into burdens on society, both economically and socially. This growing tension leads to systemic collapse, pushing society toward alternatives—in this case, toward the managerial framework.

Capitalism is no longer able to provide socially significant roles for all its citizens, paving the way for a new dominant order of technocrats and managers.

Examples

• Great Depression unemployment rates throwing capitalist promises into question.
• Historic parallels of serfs displaced at feudalism's decline.
• Modern automation threatening capitalism’s future workforce relevance.

9. The future belongs to the managers.

The rise of management signals a massive shift in society. As state-controlled industries grow, along with private enterprises’ dependence on managerial expertise, managers increasingly dictate how economies run. They are poised to become the new ruling class, wielding power not through ownership but by commanding production, both public and private.

This transition has fundamental impacts on politics, culture, and economics. As managers refine control, traditional capitalist structures collapse, leaving behind a society ruled by operational expertise.

History points toward this evolution of power as inevitable in a world where complexity demands specialized knowledge.

Examples

• Governments worldwide integrating massive bureaucrats for administration.
• Private industries sidelining capitalist-owners for decision-making managers.
• The concept of democratic ownership replaced by technocratic rule.

Takeaways

1. Observe societal shifts—question commonly held assumptions about "human nature" or economic permanence.
2. Recognize the growing importance of operational and managerial skills in any large organization.
3. Reflect on the impact of concentrated power in bureaucracy and what it means for democratic principles long term.