As capitalism advanced it divided people, in the main, into two classes; the small number who owned enough (sometimes much more than enough) to be able to live without working and the great numbers who did not; the few lorded it over the many. From the early Nineteenth Century the socialist movement strove to alter this, but without much success. Attempts at reform produced marginal changes without managing to alter the social structure, and in the mid-19th Century Karl Marx declared the revolutionary solution more boldly than any before him: make the means of production, the farms, factories and so on, common property so that the poor no longer have to work for the rich. The communists set out to deprive the capitalists of their ownership, expecting in that way to achieve the free society. They have not succeeded and do not seem likely to do so. In 1917 Russia was still predominantly agricultural, with large numbers of peasants under a ruling minority of landowners. The Bolsheviks put an end to the ownership, but control of the many by the few persisted. After the Revolution the general body of the people continued subject to a ruling elite. This did not derive its power from ownership, but it remained as far removed from them, and as indifferent to their wishes, as ever the landowners had been.
For all its faults, the Soviet Union served at least one useful purpose; it provided an irrefutable demonstration, involving hundreds of millions of people, continuing over seventy years and extending over a substantial part of the earth’s surface, that a towering hierarchy, gross differences in material conditions, and dictatorial control of some people by others, can all continue where ownership of the means of production by a minority has been virtually eliminated. From top to bottom of the structure (with a few minor exceptions like the private plots of workers on collective farms) no person or group owned any part of the means of production, yet control of the many by the few persisted and intensified. Some of the system’s critics christened it ‘the command economy.’
Socialism never has had a free hand, largely because the anticipated mass support has not materialised, but it has sometimes won power to move towards its objectives, and even then the results have not been as expected. Neither Soviet Russia nor Labour Britain, with its nationalisation, showed any noticeable decline in control of some people by others.
The West has changed less dramatically than the countries with communist governments, with private ownership surviving. Yet here, too, control has largely been divorced from ownership. In Das Kapital the capitalist himself (acting within limits set by the market) buys and sells, fixes wages and prices. An updated revision would read differently; the great numbers who divide among them the ownership of a multi-national corporation cannot exercise this hands-on control, and although overall control of more enterprises may rest, in the main, with a few institutional investors – banks, insurance companies and the like – those, too, are operated mainly by non-owners. For the most part those who now control do not own, and those who own do not control.
In spite of the media prominence of active entrepreneurs – Forte, Rowlands, Murdoch, Sugar, Weinstock, Sieff and others – the capitalists have largely withdrawn from active management, relying on accountants, auditors, investment analysts, stockbrokers, solicitors, fund managers and the like to perform the functions formerly theirs. (Much of the point of being a capitalist is that you don’t have to work). Those who control large enterprises, although they may well include capitalists, now hold their positions by virtue of ability to produce profits, rather than by ownership. With rare exceptions, their private resources form only a small part of the funds they control, and when their skills fall short of the problems facing them they lose their authority.
Marx and his followers consistently overlooked one highly significant limitation upon the capitalists’ power of control. Although well aware that non-capitalists operated the means of production, they did not see, or at least did not take account of the observation, that if you operate something then you exercise a substantial degree of control over it. Operation implies control.
From the early days of the system the control exercised by the capitalists, even the actively entrepreneurial ones, has been largely limited to providing finance, selecting personnel, and setting the general course to be followed. With these functions taken over by professionals the capitalists withdraw, or are relegated, to the position of profit-takers.
Ockham’s razor, and its younger cousin the principle of parsimony, require us to use the minimum number of factors in an explanation, and the working of modern capitalism can be explained perfectly well without positing control by capitalists. It needs only people who, assuming that ownership carries privileges, will operate the system and hand over the net proceeds to the owners. To put it in more Marxist language, workers exploit workers. In developing to this point the system has done no more than follow its own inherent logic.
Given the circumstances of Marx’s time, with individual entrepreneurs managing the greater part of the economy, the communist attempt to liberate society by expropriating the expropriators was reasonable enough, but in the century and a half since the Communist Manifesto society has moved on. Marx himself recognised that the capitalism he knew formed no more than one passing stage in social development. He even forecast that it would be followed by a worker-controlled system, going wrong only in expecting this to bring the sort of society he would have preferred himself.
We’ve had the revolution Marx foresaw. The people who work for their living have taken control away from the owners as he said they would. It hasn’t brought the changes he expected, and the reason is that those who now exercise overall control, although belonging to a different class from the owners, share for the most part the same major ideology. They, too, incline towards private ownership and hierarchy.
from Ideological Commentary 63, February 1994.