Wednesday, 13 November 2013

Managerial Capitalism and Utopian Socialism

A recent visit to the model village of Saltaire in England brought me childhood memories of life in a textile one-company town and the following thoughts: a) what is common between today´s management capitalism and XIX century utopian socialism; and b) will management capitalism fail for the same reasons?

The two types of business organization are different but they share similar ideals and features. Namely, they aim at providing a secluded life-long environment for its workers. Also, such firms engage in fulfilling many of the daily needs of their workers and family in terms of housing, education, culture and vacations. Moreover, in distinct ways, their leaders portray themselves as paternal figures devoted to the well-being of the local community.

Obviously, management capitalism does not goes as far as requiring that all its workers reside in the vicinity of the company because such firms are now multinational companies. Likewise, they reserve the family-like status to just a minority of its workers and managers. Equally, nowadays there are no well-meaning heirs or founders running the business. Instead, directors are co-opted through internal power struggles.

Nevertheless, these differences may not be enough to save managerial capitalism from the fate of utopian socialism. The later failed mainly for the following reasons: a) the collectivization of personal lives around the factory prevented individual freedom and brought psychological misery and apathy; b) seclusion and paternalism killed the entrepreneurial spirit of its members; c) the perpetuation of hereditary elites denied equal opportunities in promotions and professional mobility; and d) big, all-encompassing organizations, demand planning and bureaucracies which are driven by self-perpetuating objectives killing competition and initiative.

In spite of its differences modern managerial capitalism has the same features and problems. The consequences of such features are illustrated in many ways.

For instance, a culture of success through long hours and international mobility pushes people into feeling old and thinking about retirement at 40 or even earlier in their lives. Workers lose their drive for innovation at an age when they could still look forward to enjoy 30 more years of fruitful work. The same applies when at such an early age workers are already overwhelmed by fears about job security. Equally, in terms of job promotions, if one fails to join the right power group or does not seek promotion-for-promotion based on Peter´s Principle he or she will feel excluded from the inner-circle of a self-perpetuating leadership. Likewise, planning and bureaucracy are the mortal enemies of the conglomerates that managers dream about.

Just as utopian socialism could not overcome these problems, it is unlikely that managerial capitalism will do so. Therefore, it seems to me that it is not a matter of if but when will managerial capitalism meet the fate of utopian socialism. However, while the limitations of utopian socialism were immediately visible after one or two generations those of managerial capitalism may last longer. If for no other reason than because managerial capitalism is so intertwined with the political system and state capitalism. Still, its fate will be the same: it is doomed to fail!

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