The End Of Upward Mobility

In April 1941, with the Wehrmacht in Paris and the Ribbentrop–Molotov pact still in force, the political theorist James Burnham published “The Managerial Revolution,” which famously declared that capitalism was finished. His claim was not that it ought to be finished, but that it was, as a matter of observable fact, being replaced. The successor system would not, however, be socialism, as he had hoped during his earlier days as a Trotskyist.

Socialism, he argued, was a utopia: it required abundance, and since human wants are unlimited, abundance is unreachable. What was coming instead was a new economic system he termed “managerialism,” in which the instruments of production pass to the state and the state passes them on to the men who know how to run things — managers. If capitalists survived at all, it would be merely as a decorative residue: playing golf in Florida while the managers made every decision that mattered.

The USSR was the first managerial society; Nazi Germany, fascist Italy and New Deal America were the next. Burnham noted with some relish that President Franklin D. Roosevelt’s 1940 re-election campaign had stopped using the language of “businessmen” and “bankers” and instead had turned to phrases like “technicians in industry” and “managers.” But Burnham was wrong about nearly everything that followed.

These managerial superstates didn’t divide up the world. The United States and the Soviet Union instead allied against Germany. And by the 1980s America had reverted, with a convert’s enthusiasm, to the sanctity of private property — the one ideological development Burnham had explicitly ruled out, since he believed both private property and the ideas justifying it were on their way to extinction.

Once communism collapsed in Eastern Europe, and capitalism seemed set to become the only game in town, the whole managerial thesis looked like a period curiosity, the sort of thing one cites to show how confidently intelligent people can misread their own moment. Burnham may have been wrong about the political outcome, but he was asking the right question: Who controls the instruments of production, and what class does that control create? This is the only question that has ever reliably predicted anything about the structure of a society and its rulers.

But they didn’t rise against capital, expropriating it through the state. They became capitalists themselves and, in doing so, produced something that neither Burnham nor Marx anticipated: a ruling class simultaneously at the top of the wage distribution and ownership distribution curve. In “The Great Global Transformation,” one of us (Branko Milanovic) coined the term homoploutia to describe a new class of people who are equally or “samely” (homo) rich (ploutia) in both factors of production — that is, who are highly compensated both from their labor and from capital income.