CEO replied: ‘the social responsibility of management has broadened […] Management no longer represents, as it once did, merely the single interest of ownership; increasingly it functions on the basis of a trusteeship which endeavors to maintain, between four basic interlocking groups, a proper balance of equity’.11 Thus was formulated a new ‘philosophy of management’, ‘the “trustee” philosophy or fiduciary administration’, which presented managers as the trustees of several social groups.12
What happened in the wake of the book by Berle and Means, over several decades, was that an ideology of the social responsibilities of the businessman was attached to the problem of the separation of ownership from control. In what is considered to be the founding text of this paradigm, Social Responsibilities of the Businessman, published in 1953, Howard R. Bowen rejected the view that ‘no rules for the individual would be required except those of following one’s self-interest ardently and competing vigorously’.13 True, businessmen must make a profit, but they are also obliged to ‘to conduct their enterprises with concern for all the interests affected’ by the business’s activities.14
Where legitimate private authority was thought to be an attribute of property rights – it’s because the business is mine that I am authorized to manage it – ethical managerialism now justifies it in a non-patrimonial way: the manager now draws his legitimacy from non-proprietary interests. It is precisely to the extent that I do not manage the business for myself that I am justified in doing so. As Hal Draper notes: ‘In this approach, then, the new irresponsibility of the uncontrolled Institutional Leaders is no longer a thing to view with alarm but rather a necessary precondition to freeing them from the petty, distorting influences of short-range, profit-maximizing considerations’.15 The empowerment of managerial power, the very same empowerment that led to anxieties about a drift into autocracy, now miraculously transfigures itself into moral autonomy. The turnaround is complete, since it could now be claimed, pace Burnham, that this new managerialism was not a new form of dictatorship and that ‘the managerial ethic is inherently benevolent’, precisely since ‘the manager is in no sense an owner’.16
If the art of leadership is that of ‘balancing interests’, so the position of the ‘almost anonymous managers’ will be a ‘point of convergence’ between multiple claims that they will decide fairly, in accordance with the ancient virtue of the juste milieu (the middle ground).17 If business thinks of itself as ‘a system of private government’,18 the manager will change his spots and be transformed into a sort of ‘statesman’19 – ‘L’État c’est moi, mais moi, je suis une corporation (‘The state is me, but I am a corporation’), as one American commentator wrote at the time, resorting to French.20
Until the early 1970s, the thesis of Berle and Means on the separation of ownership and control was the object, as the sociologist Maurice Zeitlin pointed out, of an ‘astonishing consensus’ in the American social sciences.21 This thesis was at the heart of a managerialist vision of capitalism based on a series of established truths. Here they are:
1) The main site of economic power has moved: ‘the decisive power in modern industrial society’, concluded Galbraith, ‘is exercised not by capital but by the organization, not by the capitalist, but by the industrial bureaucrat’.22
2) The principle of profit maximization was rejected: ‘Never has the imputation of a profit motive been further from the real motives of men than it is for modern bureaucratic managers’, claimed Dahrendorf.23
3) The capitalist class, divided between shareholding and managerial functions, has lost all consistency, giving way to an ‘amorphous power structure’.24 Berle went so far as to refer to a ‘capitalism without capitalists’.25
4) Private property of the means of production, which was already being seen as liquid, evaporated for good: ‘Ownership’, announced Kaysen in 1957, ‘is disappearing’.26 ‘Private productive property, especially in the United States’, confirmed Bell in 1961, ‘is largely a fiction’.27 In short, it was now certain: ‘Capital – and thereby capitalism – has dissolved’.28
As Daniel Bell concluded, there had once been ‘a society “designed” by John Locke and Adam Smith and it rested on the premises of individualism and market rationality […] We now move to a communal ethic, without that community being, as yet, wholly defined. In a sense, the movement away from governance by political economy to governance by political philosophy – for that is the meaning of the shift – is a return to pre-capitalist modes of social thought’.29
Here, I would make one remark. This idea of governance, the idea that prevailed before the great neoliberal shift, is what I propose to call, both as an echo of and in contrast with the notion of governmentality, ‘manageriality’. Michel Foucault conceived ‘liberal governmentality’ as an answer to the cardinal problem of the arts of governing: how can the economy be brought within the remit of the state? How is power to be exercised ‘in the form of the economy’?30 As an extension of this project, neoliberalism sought to analyse ‘non-economic behavior’ (etc.) through ‘a grid of economic intelligibility’, leading to ‘the criticism and appraisal of the action of public authorities in market terms’.31 But its predecessor, the managerialism of the 1950s and 1960s, did the complete opposite, in both those aspects (practical and theoretical). Its problem was not that of introducing the economy into the state, but on the contrary of introducing an analogon of political government into the private management of economic affairs. It was not conceived as an art of exercising political power in the form of the economy, but on the contrary as an art of exercising economic power in the form of a certain politics, of a private politics. Manageriality does not have the economy as its ‘major form of knowledge’; rather, its fundamental epistemic predilection gazes beyond ethics into politics and, as we shall soon see, strategy.
In 1954, in The 20th Century Capitalist Revolution, Berle depicts the magical image of a prince-manager administering business as an ‘oracle of the public interest’. We can read this text as an anachronistic iteration, right in the middle of the American twentieth century, of the old genre of the mirror for princes.32 Berle refers to Augustine and his City of God, where ‘a moral and philosophical organization […] ultimately directed power’.33 He also mentions the Plantagenet court, where a man, often a priest, called the ‘chancellor’, played the role of ‘keeper of the conscience of the king’.34 The manager, the new prince, will likewise exercise his benevolent power with business ethics as a safety rail. The only limit placed on the power of the manager is his conscience, hemmed in by the informal sanctions of public opinion.35 A few lines further on, without seeing any particular contradiction in this, Berle can argue that managers constitute ‘tiny self-perpetuating oligarchies’ and that the ‘tacit philosophy of the men who control them’ guarantees a ‘real control’ against the excesses of such power.36
But many, including those who followed the managerialist mindset, were sceptical: ‘how could managers be trusted to advance social welfare when they could not be trusted with their own shareholders?’37
Rather than relying on the self-proclaimed virtue of the managers, some people proposed regulating the exercise of business power by a kind of internal constitution – a charter stating the rights and duties of management. This meant applying to managerial power ‘the concepts of limited government which are the essence of Western constitutionalism’.38
In 1962, Richard Sedric Fox Eells, a General Electric executive, noted that wondering whether business possesses a ‘constitutional structure’ is tantamount to asking the ‘question of business governance’39 – note that Eells is one of the first to use this term, outmoded at the time, in this new
