Schumpeter, Veblen, Mills, Bell and Wright on Advanced Industrial or Post-Industrial Society
Gaurang R. Sahay
There are a number of scholars or sociologists who have presented basic features of economy or economic life in advanced industrial or post-industrial society. The most notable names belonging to this group of scholars are Joseph Schumpeter, Thorstein Veblen, C. Wright Mills, Daniel Bell and Erik Olin Wright. Their main ideas are as follows:
Joseph Schumpeter
Schumpeter was not a Marxist but he respected Marx’s ideas. After a number of successful appointments in Europe including as the minister of finance in the Austrian Republic and as president of a Bank he emigrated to the USA where he ended up his career at Harvard University. Like Marx, Schumpeter also wrote in his book Capitalism, Socialism and Democracy: Can capitalism survive? that Capitalism could not sustain itself as system and thus would inevitably come to an end. He believed it will be replaced by socialism and socialism can survive and work.
Marx saw capitalism’s collapse in terms of its failure whereas Schumpeter viewed capitalism’s collapse in terms of its success. For Schumpeter, the working class would play no role in the collapse of capitalism. He wrote, ‘ The true pacemakers of socialism were not the intellectuals or agitators who preached it but the Vanderbilts, Carnegies, and Rockefellers’ (Schumpeter 1942: 134).
He believed that the entrepreneurial class consisting of Vanderbilts, Carnegies, and Rockefellers is chiefly responsible for the powerful productive capacity of capitalism due to its willingness to take risks in the competitive market. This development happened along with the emergence of modern bureaucratic corporation which led to the economic decision making by a new and increasingly influential stratum consisting of administrators or managers in the corporate hierarchy. The ultimate outcome of this development was that the entrepreneur increasingly became irrelevant, replaced in importance by the managers, who succeed in institutionalizing methods that ensure economic progress.
For Schumpeter, capitalism demise did not entail the end of the market or the emergence of a classless society. It simply meant that the entrepreneurial class, having outlived its usefulness, ceased to exist, being supplanted by the managers of the corporate bureaucracies.
For Schumpeter, socialism is ‘an institutional pattern in which the control over the means of production and over production itself is vested with a central authority, and with this centralization, ‘the economic affairs of society belong to the public and not to the private sphere’ (Schumpeter 1942: 167). In other words, socialism means a system of centralized authorities making economic decisions on behalf of the interests of the public. Thus, Schumpeter concluded that if a revolution has taken place in Industrial society, it is what James Burnham (1941) called a ‘managerial revolution,’ the ascendance to power of a class of people equipped with the expert knowledge necessary to make a modern industrial society function and expand.
Thorstein Veblen
Thorstein Veblen lived on the margins of American academic life. He was an original thinker but a bad teacher. Though he was married, but carried on numerous amorous relationships with women. His extramarital affairs were the primary reason he was forced to leave both Chicago and Stanford. Veblen was raised in rural Minnesota in a Norwegian immigrant enclave characterized by hard work and an ascetic atmosphere.
In his most famous book, The Theory of Leisure class (1899), Veblen’s pen dripped with sarcasm in his characterization of the owners of business enterprises. He viewed the owners as the dominant class in capitalist industrial society as due to their success in the struggle for survival. Although the business owners lived off of the success of industrial society, they did little to contribute to that success. For this reason, he could refer to them as the ‘leisure class’. In his view, ‘The leisure class lives by the industrial community, rather than in it. Its relations to industry are of a pecuniary rather than an industrial kind’ (Veblen 1899: 246). He viewed the giant industrialists of his era as predators and survivors from an earlier era. As such, he found it most appropriate for them to be dubbed the ‘robber barons’. By introducing the terms ‘conspicuous consumption’ and ‘conspicuous leisure’, he opined that the consumption pattern of the leisure class are designed not to fulfill genuine needs but to advance prestige claims. They are predicated on waste – waste of time, effort, and goods. Thus he saw them as acts of consumption that do nothing to enhance human well-being (Veblen 1899: 85-98).
For Veblen, the leisure class has never had a genuinely beneficial role to play in industrial society. It exists in a parasitical relationship to what are actually the productive classes consisting of both white collar and manual workers.
Veblen treated technological developments as a major, perhaps the major, source of social change. Technological developments made necessary cadres of workers with expert knowledge such as engineers and technicians manage the economic system effectively and efficiently.
Thus, industrial society was characterized by a dichotomy between business and industry or in Veblen’s words, between pecuniary interests and industrial interests. Although the owners were motivated by the desire to make money, it was only the experts who were capable of producing socially useful goods. Industrial society would continue to be wasteful and would fail to meet actual human needs as long as business owners belonging to leisure class constituted the dominant economic class.
The solution to this situation revolved around the ability of the engineers or technocrats to wrest control of the economy from the owners. This class of experts, and not the proletariat, was crucial to any possibility of liberating industrial society from the impediments of its capitalist moorings. However, Veblen did not explore the likelihood that these knowledge experts would be either willing to organize collectively to usurp control of the economy from the owners.
C. Wright Mills
C. Wright Mills, 1916, was a professor of sociology in university of Wisconsin, USA. He was interested in comprehending the new forms of stratification that were arising in a novel phase in the history of industrial society, one that involved reconfiguration of the class structure.
He published a three books on new forms of stratification in USA. The first book in the trilogy, The New Men of Power (1948), is a study of the American labour movement. Referring Marxism as labour metaphysic, he argued that Marxism was wrong to see the working class as a revolutionary class. He indicated that the labour leadership had been thoroughly co-opted by business and government. Accordingly, they have been integrated into power system as junior partner. Mills believed that the group of general workers was not a militant force. They were quite willing to pursue bread-and-butter issues, seeking to obtain a larger piece of the economic pie within capitalism rather than desiring the establishment of socialism.
Mills in his another book White Collar argues that advanced industrial society had also signaled the numerical decline of the blue-collar workforce and with it the dramatic expansion of the middle class that he termed new middle class consisting of white collar workers. In contrast to the self-employed members of the old middle class, the new middle class incorporated a wide range of occupations including, for example, managers, technicians, administrators, civil servants, salaried supervisors, clerks, etc. Like blue-collar class, the new middle class worked in the companies owned by capitalists. Mills suspected that the new middle class were inclined to moderate, careful, and conformist in matters cultural and political due to their location in the class structure. The dramatic growth of this class encouraged the homogenizing tendencies of mass society. In politics, the new middle class seemed unlikely to band together collectively to promote their interests. Their conformist tendencies meant that despite their numbers, they were inclined to be part of what Mills referred to as a ‘politics of the rearguard’.
In the third volume of trilogy, The Power Elite, Mills was convinced that American democracy was being undermined due to the growing concentration of political power in the hands of tripartite elite consisting of high ranking officials in the federal government, the corporate elite, and the highest ranking officers in the military. The emergence of the welfare state during the New Deal contributed to the growing concentration of political power, whereas the economy experienced a similar concentration because of the expansion of giant corporations. World War 2 and the ensuing Cold War signaled a bigger role for the military. The elites not only experienced a dramatic expansion in their power but also increasingly worked cooperatively. The result was a highly coordinated and remarkably unified power elite. Neither working class nor middle class opposed the establishment of elite rule in place of democratic rule in America.
Daniel Bell
Daniel Bell,1919, was Henry Ford II Professor of sociology in Harvard University, USA. He was a son of Jewish immigrants. Bell chose to employ the term postindustrial to depict advanced industrial society. The idea that we were entering a distinctly new period in the development of industrial society was related to Bell’s earlier work on ideologies, reaching its full expressions in Bell’s influential book The Coming of Post-Industrial Society. The central thesis is that whereas industrial society was a ‘goods-producing-society’, ‘post-industrial society’ is organized around knowledge for the purpose of social control and the directing of innovation and change.
A post-industrial economy requires the existence of a highly educated professional class that possesses the scientific, technical, managerial and administrative training needed to insure that the economy will function well. Moreover, this class should be capable of making decisions independently. A postindustrial economy also requires more highly centralized coordination in governance. Thus, a new interconnection arises between the economy and the political system. Bell considers government to be the cockpit of the new industrial order. Therefore, the knowledge class asserts itself in government planning and policy formulation as well as decision making in economic firms.
The driving force of change is technology. Technology has reduced the levels of inequality. Bell however does not think that postindustrial society signals the end of social divisions and conflict. Far from it, because one of the characteristic features of post industrial society is a lack of coordination between economy, polity and culture. Problems arise in so far as each operates on the basis of what Bell terms differing axial principles, by which he means different norms and values.
Economy is guided by axial principles based on instrumental rationality. Polity is guided by principles that promote equality and citizen involvement. And culture is guided by the principle of fraternity. The built-in tension can at various times lead to conflict regarding how power is allocated. In The cultural Contradictions of Capitalism (1976) Bells talks about the tension between economy and culture. In his view the youth counter culture epitomized the new cultural sensibility, which placed a premium on feelings, self expression, and individual fulfillment which are decidedly anti-rational.
The implications of these divisions are not entirely clear, but Bell is convinced that we are entering a period of great uncertainty and instability in the age of post-industrial society.
Table: Contrasting Industrial and Post Industrial societies
|
Industrial |
Postindustrial |
Key Resource |
Machinery |
Knowledge |
Key Institution |
Business Firm |
University |
Key Decision Makers |
Businessperson |
Professional/Expert |
Power Base |
Property |
Knowledge/Skill |
Role of Politics |
Laissez-faire |
Government/Corporate Partnership |
Erik Olin Wright
Erik Olin Wright (1947), a professor in the Department of Sociology, University of Wisconsin, Madison, USA, developed a perspective that seems more useful for structural class analysis of advanced industrial society. Wright’s works, Class, Crisis and the State (1978), Class Structure and Income Determination (1979), Classes (1985), and Class Counts (1997), are theoretical, historical and quantitative, builds on earlier Marxian approaches to the study of social class, and also introduces ideas and approaches reminiscent of Max Weber and other writers. Wright’s works examine organization of jobs and enterprises along with views and characteristics of individuals in the labour force.
Some of the characteristics of Wright’s approach are as follows:
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Economic organizations are key to understanding social structures and the organization of society. He argues that positions within the mode of production, and forms of exploitation and relationship to exploitation are key to describing and understanding social class.
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His analysis begins with the positions and locations occupied as a result of the manner in which production is organized, rather than the individuals who fill these positions and locations. Further, these form the basis for the social relationships which are part of a totality and are reasonably stable over time, with conflicting social relationships leading to change.
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The attitudes and behaviour of individual has a connection to the location they occupy within production relations or the division of labour and the contradictory locations that exist in capitalism.
Changes in Capitalism
The major developments in capitalism which Wright points to in “Class Boundaries and Contradictory Class Locations,” are three:
a. Loss of control over the labour process by workers
Wright traces the manner in which control over the actual work process was taken away from workers during the development of capitalism. Originally, workers owned their own tools, and controlled many of the aspects of the actual work process. The development of the factory and developments within the factory such as assembly lines and scientific management all have acted to take control away from the worker. There has been a deskilling of many jobs (Braverman), with new skills of other types being created.
The importance of these developments has been (a) to provide means of extracting more surplus labour and surplus value from the worker. In addition, (b) this has increased the gap between mental and manual labour in many sectors of the economy. The division of labour expands in such a way as to create jobs associated with high levels of skill or technology. For Wright, this is a means by which a new class location is created, that of semi-autonomous experts like computer technicians, engineers and professional teachers. This has created new divisions within the working class, perhaps creating a new class or classes, or in Wright’s terminology, a new class location.
In Classes, Wright notes that these experts, a group within working class exploit manual workers by taking surplus value directly from them. In terms of class interests and political organization, the skilled workers or semi-autonomous experts with more privileged positions in the division of labour identify with the owners and top level of management in the hierarchy. If so, then this acts to divide these more privileged workers from less privileged or uncredentialed workers. That is why Wright considers these privileged, expert workers to be in a contradictory class location because this group is not part of the bourgeoisie, or even the petite bourgeoisie – rather it occupies what Wright terms a contradictory class location between the working class and the petite bourgeoisie.
The contradictory class location of this group of workers is proven by the fact that they are unable to legally own the means of production, and are unable to establish and generate the labour process on their own. Their surplus labour may have been extorted from them by the bourgeoisie, and are generally prevented from exercising the power of the bourgeoisie who control the means of production. Further, to the extent that this is a highly educated group of workers, they may view, like other workers, the manner in which the means of production is organized as irrational. There are thus also a number of aspects to this group which lead them to identify with the less privileged working class, so that there are common interests between privileged and less privileged workers in opposing some of the political agenda of the bourgeoisie – for example, both sets of workers might have a common interest in maintaining a strong public health care system. Wright concludes that these more privileged skilled workers really do have contradictory ideological, economic and political interests.
b. Differentiation of the functions of capital
In early capitalism, the entrepreneur was both the owner and manager, organizer of capital and production, and being directly involved in capital accumulation and exploitation of workers. As the concentration and centralization of capital developed and as the economy and the corporation became more complex, it became difficult for the entrepreneur to carry out all of these functions. In particular, the development of the large scale corporation, with separate divisions, and the separation of economic and legal ownership mean that capital today itself is much more complex phenomenon than in early capitalism denoting a social relationship which is not as immediately clear as earlier. This blocked the development of class consciousness making workers struggle against their immediate managers and the representatives of capital rather than against the legal owners of capital. The intermediate layers, i.e. semi-autonomous experts, between workers and owners obscure the class relationships, making it difficult for workers to see the real contradictions inherent in these relationships. Today with large corporations having headquarters in one location and branches around the world, there are many such intermediate layers.
c. Development of complex hierarchies
Wright notes that as capitalism developed, the scale of companies increased and economic ownership (control over investments and finance) concentrated more rapidly than has possession (control over production). That is, capitalist economy can manage with relatively few owners, but requires considerable numbers of supervisors and managers. This has created multidivisional corporations within the business sector. A few of the levels of these hierarchies can be described by considering the various kinds of decisions that are made within these corporations. The decisions concern what is to be produced involve 1. control over the means of production, 2. control over how things are to be produced, and 3. control over labour power.
Each of these types of control are separate, although inter-related. Control over means of production (owners, stockholders), for example, may be quite separate from control over how things are produced (managers and technicians). As a result, each of these three aspects of decision making lead to different types of control or lack of control. They are in different dimensions so that each combination can represent a different location within the class system. Wright argues, along the Marxian lines, that “all class positions are contradictory, but ... certain positions in the class structure constitute doubly contradictory locations: they represent positions which are torn between the basic contradictory class relations of capitalist society. ... I will ... refer to them as “contradictory class locations.” For Wright, there are three primary classes within the capitalist system of organization, the capitalist class, the working class and the petty bourgeoisie. The three contradictory class locations are 1. small employers, 2. managers and supervisors, and 3. semi-autonomous employees.
According to Wright, small employers are those who employ 10-50 employees and are different from petty bourgeoisie because petty bourgeoisie are independent self-employed producers who employ no workers” (Class, Crisis and the State, p. 74). The concerns of small employers are also different from large employers regarding various issues such as workers’ wage and facilities, taxation, regulation, etc. Managers and administrators are those workers who supervise other people on the job and administer the functioning of the corporation. Senior or top-level managers are often tied directly to the owner through legal ownership of stocks and bonds as part of their pay – many corporate executives receive stock options as a bonus to their pay. They are also in possession of the means of production in the sense that they control these, give orders that are obeyed, and generally manage and superintend the process of production. As a result, senior managers are likely to have, or to develop, an ideology and political view that ties them to owners and the bourgeoisie. Middle level managers are in a more contradictory position because they do not have sufficient resources or ownership and have little actual control over the process of production, so that they may be very similar in some ways to the proletariat. Yet their position within the chain of command in an organization likely ties them ideologically to the employer and top level managers in many cases. Lower level supervisors and foremen are very close to being workers themselves, and usually begin their career as workers. In that sense their objective situation is not really very different from most workers. Wright notes that “they have moved further from workers by becoming less involved in direct production, and they have moved closer to workers by gradually having their personal power bureaucratized”. Semi-autonomous employees do not supervise others but are likely to have some autonomy in the work situation because they are professionals or have special skills or technical training. Some of these are engineers, teachers, professors, programmers, and some health professionals. These are people in occupations that have a degree of autonomy in terms of decisions related to the job, and while subject to orders, are likely to fill positions that requires their own judgment concerning production and related decisions. The semi-autonomy is described by Wright as being certain degree of control over their immediate conditions of work, over their immediate labour process. In such instances, the labour process has not been completely proletarianized.
Contradictory Class Locations determined by Assets
In his later analysis, Wright conceptualised contradictory class locations in terms of ownership or non-ownership of various forms of assets. He argues that the managers who occupy contradictory class location in class structure control organizational assets—the conditions of coordinated cooperation among producers in a complex division of labour. In an individual or family enterprise, the organizational assets belong to the owner of the business (the entrepreneur), but in a large corporation, the organizational assets are usually turned over to the top managers, who manage the corporation in the interests of the owners. Wright notes that organizational assets are closely related to authority and hierarchy, so that those who control and benefit from these organizational assets are those that exercise control some discretion concerning how production is to be organized “through a hierarchy of authority”. Wright develops a three-fold classification of (i) managers – positions with “effective authority over subordinates”, (ii) supervisors – “positions which have effective authority over subordinates, but are not involved in organizational decision-making”, and (iii) those without any organizational assets in terms of being managers or supervisors. Such managers or supervisors have credentials, skills, and knowledge that they use to establish controlling authority, own shares in corporations and appropriate some of the surplus from production”. Wright’s analysis concludes that those occupying contradictory class location are least class conscious compared to the working class (proletarians) consisting of uncredentialled and semi-credentialled workers as well as uncredentialled supervisors.
Conclusion
The analysis of Wright is similar to that of Weber – the class situation of Weber becomes the class location of Wright. Wright attaches contradiction to this, so he blends the Marxian and Weberian approaches. Like Marx, these locations and classes become the basis for the formation of class consciousness, but like Weber these classes and locations are defined on a multidimensional basis, and with more characteristics than simply ownership or non-ownership of the means of production. That is why the class relationships, class interests, class allegiances and class struggles are not as clear cut as many Marxists claim. The immediate interests of the various groupings may differ by time and place, and there are many possible combinations of interest groups. These are similar to some of the factors mentioned by Weber as making class struggle difficult.