The failure of Managerial State-ism

01 November 2011 Robert W Vivian, University of the Witwatersrand

Another popular protest movement is gathering momentum worldwide. The Occupy Movement started as Occupy Wall Street and has since manifested as Occupy London, Occupy Rome, Occupy Frankfort and Occupy South Africa, among others… Are these protestors taking

The Occupy movement is supposed to be apolitical and leaderless. It is therefore difficult to understand what the movement aims to achieve. It appears they are protesting the failure of capitalism and greedy bankers. These protesters believe that America’s economic problems can be solved by an additional tax on the rich. These beliefs have earned the Occupy movement an anti-Capitalist tag. But I will argue that the worlds’ economic problems are caused by the state and managerialism– this is a new phenomenon which I will call Managerial State-ism – rather than capitalism.

In targeting capitalism these protests totally miss the mark. We are living in neither a capitalist nor communist dispensations. I would venture to add that the dispensation in which we are living has not yet been recognized or named – so I will baptise it the age of Managerial State-ism. It is this dispensation rather than capitalism that has failed the people!

A post-capitalist age

Economists recognize three economic ages. The first was the hunter-gatherer age which could only sustain very small numbers. The second was the agricultural age. And finally the industrial age, ushered in by the industrial revolution which dates from 1760 onwards. The industrial age gradually supplanted the agricultural age and it is only recently that more than 50 percent of society became urbanized.

The idea of the capitalist emerges in both the agricultural and industrial ages. In the agricultural society the wealthy were the land owners, while in the industrial society the capitalists were the factory owner. In each system capital was equated to the ownership of productive means – either land or factory. Wind the clock forward and you will find that the traditional capitalist has disappeared. In his or her place is the modern corporation which is owned largely by institutions which have pooled the savings of employees.

Modern corporations are owned by pension funds, insurance companies and banks all of which hold the savings of individuals. The true owners of capital – the owners of companies – are in fact the employees of the selfsame companies. We can quite positively say that we are living in a post-capitalist age.

Marxism is ill-defined

It is not clear that there was ever a Marxist age… Marx spent his entire life trying to define Marxism without success – and he died before finishing his work. Subsequent volumes had to be published by his friend Engels. Marx was never able to define a system that would replace the capitalist age either. Even during his lifetime it was clear that Marxism was full of contradictions which could not be resolved.

Marx’s objective was to show that capitalism would fail and not to build a new economic system. The net result is that the new system, communism for want of a better word, had no clear theoretical foundation. It is for this reason we cannot only talk about Marxism but need to add Leninism, Stalinism, Maoism and so on. What we do know is that the attempt to implement a communist system failed, at the cost of millions of lives, and was subsequently abandoned. It is clear, therefore, we are in the post-Communist age too.

Introducing the State-ism concept

The first obvious characteristic of the modern age is the growth of the state. The state does not play a major role in either the capitalism or communism systems. In the capitalist society the role of the state is to define and protect property, which it does by passing and enforcing clear laws. The modern state does not do this very well.

What is not obvious is that the state plays no role in Marxist thinking. If one takes one of Marx’s points of departure for analysis, that of oppression, then it is clear the state should not exist. In Marx’s confused history one can identify two oppressors, the capitalist and the state.

The state as the oppressor

By far the greatest oppressor has always been the state. It is after all the state which murdered millions under Hitler and Stalin. In Marx’s theory one did not need to bother about the state since in his view, the state would wither away. That of course has not happened and subsequent writers such as Engels and Lenin had to reinterpret Marx and reinvent a role for the state.

The state has not and is not going to wither away. It has just grown so the one facet of our modern age can be referred to as the age of State-ism. It is neither part of the capitalist nor Marxist ages. Marxism has of course had to reinvent itself several times and no-doubt the modern Marist will argue that State-ism is in fact Marxist.

The Managerial aspect

The second characteristic of the new age is that of managerialism. Going back to the protestors the one aspect about which they are very unhappy is the ‘greedy bankers’. But who are these lucky bankers who earn billions of dollars and after nearly destroying the world financial system had billions of taxpayers’ money thrown at them? They are certainly not the capitalists, but merely bank employees.

How did bank employees become billionaires? In the absence of capitalists, specific owners of firms, the employees could help themselves to whatever they liked. And in the absence of a state which defines and protects property rights there is nothing to stop them. The new wealthy are not the capitalists but employees. Not all employees of course, only the senior one – the managers. This gives rise to the Managerial aspect of the modern age.

Back to the protestors

We can now re-examine the protestors’ demands. They seem to hold the view that they should be bailed out in similar fashion to the banks. But to offer financial support to another group of the population would add further costs to the state, which is already running at a severe deficit, the cause of the current world financial woes. Additional state expenditure is not a solution because it is the existing problem! By adding more to the enormous government debt overhang we simply compound the problem. And compounding the existing problem is certainly not the answer!

The solution to the greedy banker problem is to understand the existence of the Managerial State-ism age, which as in the case of communism violates property rights. The problem is that we are in a new age which is not yet understood. The beginning of the solution to any problem is to correctly understand the problem. It is not the failure of capitalism which is in issue, but the demand for further handouts. We are not in the capitalist, free market or communist age, but in the Managerial State-ism age. It has failed even before we understand it.

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