Corporations and the Managerial Class

"In this age of Kali, everyone is dependent on another's mercy for the maintenance of the body; therefore everyone is classified as a Shudra."

One of Hans Herman Hoppe’s arguments against democracy was that democratic policy was ultimately centered around short-term goals. Where a King, like a private owner of any property, has an interest in appreciating his estate in the long run, a democratically elected leader or legislator only really has the interest in making sure things work until next election cycle. Another argument against Democracy, albeit one I am not sure Hoppe made, is that all political effort must go towards placating the most voters. Wasting taxpayer money on things like space travel or the construction of monumental architecture results in kvetching from your political enemies over how that money could have gone into the pockets of their constituents. This also applies to instances in which the government sets aside resources, and saves them, for a reason not immediately materially beneficial for some element of the constituency. For example, the natural parks. Of course, we have natural parks, but only after influential people started promoting them to the public. Before people like Theodore Roosevelt the preservation of nature was primarily the prerogative of kings and fiefs, who declared certain woods off limits from peasants to lumber, so they would have pristine hunting grounds.

But I digress. I’m not going to talk about that today. I’m talking about corporations and particularly the modern corporate environment, which I think suffers from many of the same pitfalls that democratic governments do. The issue, of course, is the solution to this problem. Believe it or not, corporations are extremely capable because they’re entirely comprised of investment. The problem is, as the pool of investors grows, the corporation becomes a sort of uneven democracy where corporate profits must go towards the benefit of the shareholder. In a business owned by a man, or a family, or even a corporation owned only by a relatively small group of people, that owning body can essentially do whatever he wants with his profits.

Like a democracy, the reign of the faceless body of shareholders prefers policies which increase revenue sooner rather than later. Later is not bad, but sooner is always preferable because people don’t just hold onto stocks forever, in fact the average stock holding period has been cut down to a fifth of what it was in the 1970s. The causes of this are irrelevant and may not represent everyone just becoming day-traders (even though that would fit with our societal trajectory), but the point is there is less of an incentive to cultivate long-term interests let alone interests not directly profitable to the financiers. And I’m not saying this is true for all corporations. In some corporations where one guy has a huge proportion of the stock, he can sort of do what he wants with it, but this is becoming less prominent. Things get even more complicated when you have corporations dedicated entirely to investment, like Blackrock, who can turn dozens if not hundreds of firms into their bitch and influence standards for investment and corporate boards (ex: board and employee diversity benchmarks) which in a sort of ironic way might serve to benefit themselves because they can handle the heat better than their competitors can.

The most discussed example of this is probably wages. I believe there have been a few supreme court cases on the subject of companies increasing wages at the cost of the shareholders, but I am not well versed on them. I don’t think there’s any evidence that corporations pay less than companies anyways given the same level of capital. Better examples I think involve things like the patronage of art and architecture. For example, the Woolworth Building in New York City. It was an extreme project, not only building the world’s tallest skyscraper but decking it out in a brilliant neo-gothic style. It was the vision entirely of Woolworth himself. It might have been financially successful due to the prestige it brought to the company, but it was not something easy to measure. Another example is Ford, which didn’t go public until the 1950s and famously played the long con by paying its workers a wage high enough that their own workers could buy Ford products. This also applies to things done with the profits made by owners, such as Carnegie’s building of libraries and universities.

I don’t really have a practical solution to this problem yet, since corporations seem to do rather well for themselves and so might just naturally outdo private companies. Although, it’s hard to find a straight answer as to whether or not corporations actually function better than private companies, or if it’s just that well-functioning private companies have a tendency to go public. These sort of things may also be solved to some degree by an increase in monopolies, ironically enough, as monopolies cannot be as pressured into acting a certain most-profitable way when they don’t have to compete with anyone. This is why right-wing reactionaries and progressives have often suggested the economy being operated by nationalized monopolies as a position contrary to laissez-faire and state-planned economies alike. That is really a subject for another day.

But, this isn’t the only form in which I see Hoppe’s “short term democracy” poisoning corporations today. And in this way, it is much more directly both a societal burden and a profit burden. That is, the managerial elite (most famously analyzed by Sam Francis). The Managerial elite is not just limited to the private sector, it encompasses every complex system. Complex systems need bureaucratic organs, and systems have become much more complex over the past one hundred or two hundred years. The problem is, the people operating these bureaucracies are not necessarily interested in the success of these institutions. They’re interested in cementing their position in these institutions and furthering their apparent significance to the institution, which often actually lags down the institutions by creating more red tape and creating unnecessary jobs below the managerial elite to prop up the managerial elite as more significant than they really are.

The managerial class is in an interesting position in accordance to the old Marxian class system. They aren’t necessarily bosses, although they could be. But either way, they’re not bourgeois. They don’t make the primary source of their wealth off of assets, it comes from wage labor. Now, they might own a house or some stocks on the side, but that’s a case-by-case scenario. Many of them don’t even own any real estate and live in the city. And despite this, they often make a great deal of money (more than many small business owners and independent farmers), and they actually determine most institutional policy which impacts our culture. The board is responsible for money decisions, but these people are responsible for whatever stupid expertise they’re involved in. This doesn’t even begin to touch on government bureaucrats and academic bureaucrats, who are far more of a drag on their systems than corporate bureaucrats are.

When systems become large enough, it becomes very difficult to trace large-scale institutional failures or deficits to any particular bureaucrat, allowing for bureaucrats to slink away from their own (often deliberate) incompetence. Most importantly, the bureaucrats themselves are the trusted “experts” everywhere in society — from academia to media, so they are given the privilege of determining whether or not their own actions are beneficial for institutional success (for example, DEI is justified by the same people who manage DEI projects inside institutions, rather than the people who actually own or fund these institutions, with a few exceptions).

But this is all stuff you have probably heard before if you have ever watched or read anything relating to this idea of the “Managerial class”. What I really wanted to bring up here, was that this class of people is moving jobs much faster, which means that they don’t really have an incentive to improve their company in the long run at all. It has a lot to do with less cost than ever to job hop due to online jobs and more mobility, and it is unfortunately financially more viable to hop jobs a lot. But what you end up with is a reality which some might find cumbersome to certain anti-capitalist takes from the right. That is, corporations, universities, and governments *don’t* act in their best interests, because they are a chimera-monster of owners and managers who have different interests. And because the truth of what actually is best interests is contorted by the managers we entrust “facts” with today.

Ideally we would see a rise in business tyrants doing what Elon Musk did and just gutting all of these intuitively stupid bureaucratic positions from companies, putting more focus on people who actually produce the good or service and improving their circumstances. But, again this is a bit harder to do when you have to abide by the shareholders’ interests and especially hard when activist firms like BlackRock are forcing you to stab yourself in the foot for some of their pimp money.