the possibilities of industrial policy overlie the axes of class competition and conflict. ... There are two major reasons why full employment became a key U.S. policy ... the existence of the reserve served as a lever against the demands and lethargy ... of jobs in the public sector, relatively insulated from private hiring and firing.
WILLIAM DARITY, JR.*
The Managerial Class and Industrial Policy REACTING TO THE CURRENT STATE OF MALAISE in the U.S. economy, various claimants to the crown of "economic savior" profess to have found the pathway to sustained material prosperity. Prominent among the pretenders are the advocates of industrial policy—especially those who perceive such a strategy as a way to cure the fundamental ills of capitalism, including its failure to produce continuous full employment. A careful examination of the ease for industrial policy, using the lens of arguments made about its capacity to eliminate unemployment, provides a fuller understanding of what is at stake. The debates among the experts about the possibilities of industrial policy overlie the axes of class competition and conflict. The arguments, however, in and of themselves fail to reveal the general character of the future that industrial policy ofiers—even if it does provide full employment. The task of this essay is to examine some aspects of that future.'
The Evolution of Full Employment as a Policy Objective There are two major reasons why full employment became a key U.S. policy objective in the aftermath of World War II (see Brown, 1983; DuboflF, 1977). Both of these reasons were magnified by the experience of the Great Depression. First, there was a perception of an immense waste of productive capacity associated with the massive unemployment of the Great Depression. But this, in turn, was only an extreme instance of the persistent phenomenon of an underutilized working class. Second, poverty and financial insecurity were attendant on unemployment. Jobs were the primary—virtually the only—source of income for the overwhelming majority. Without jobs, access to income was denied. *A.ss()ciate Prore.s.sor of Economics, University of North Carolina at Chapel Hill. 'The author is grateful to Bobbie Horn and two anonymous referees for copious and helpiul comments on an earlier draft. RKLATIONS, Vol. 25, No. 2 (Spring 1986). ©1986 by the Regents of tlio Univensity of Californiii. 0019/8676/86/525/212/S10.00
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Managerial Class and Industrial Policy I 213 In the thirties, the wastefulness of unemployment became one of the major indictments of capitalism by those on the left who argued that socialist planning could insure work for everyone. The charge that capitalism always produces unemployment was coupled with the charge that capitalism tends toward recurrent crises, which in turn make the reserve swell far beyond its "normal" proportions. Only a defender of capitalism as startlingly honest as Joseph Schumpeter (1978) could concede the left's case and still endeavor to uphold the merits of capitahsm. Schumpeter applauded capitahsm's creativity and its capacity to raise productivity and living standards for the masses, a dynamism precipitated by the "heroic entrepreneur. " But in the forties even Schumpeter predicted capitalism's doom, owing to the increasing bureaucratization of business enterprises as they steadily expanded and to the growing web of restraints on entrepreneurship as steps were taken to mitigate the ills of capitalism: crises, perpetual impoverishment of a segment of the working class, and the financial vulnerability of the employed who might soon become unemployed. Ironically, at the analytical level, Schumpeter's and Marx's perspectives are not markedly dissimilar. Both crises and the reserve of labor are necessary to the proper functioning of a capitalist economy. Marx (1977) argued that the reserve was necessary under capitalism for two reasons. First, the existence of the reserve provided capitalists with great flexibility. By drawing upon the labor surplus, they could avail themselves of the option "of suddenly throwing great masses of men into the decisive areas without doing any damage to the scale of production in other spheres" {ibid., p. 785). Second, in Marx's view the existence of the reserve served as a lever against the demands and lethargy of the employed fraction of the working class: The over-work of the employed part of the working class swells the ranks of its reserves, while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to over-work and subjects them to the dictates of capital, {ibid., p. 789) The reserve of labor and the persistence of unemployment were thus functional under capitalism—a functionality recognized by both Schumpeter and Marx. For that function to be served, the linkage had to remain strong between unemployment and the potential for pauperization. Such a strong linkage virtually guaranteed that the reserve would behave in the manner best-suited to the interests of capital. In the U.S., though, this linkage was severely attenuated in the thirties with the introduction of the welfare state. Although the scheme of transfer payments did not by any means assure those without work a high standard of living, it was at least a cushion against starvation.
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The Rise of the Managerial Class Ian Gough (1975) interprets the expansion of the state and state expenditure in the post-Great Depression western world as "concessions" to the working class—concessions designed to preserve the capitalist order in a proto-revolutionary environment. But an alternative and richer interpretation would focus attention not on the gains of the working class, but on the gains of the "middle class"—the professional-administrative ("white-collar ") strata, or what James Burnham (1941) described as the "managerial class," Lewis Corey (1935, p, 23) argued that the shocks of the Great Depression had led to an abrupt ideological conversion of the western middle classes, from champions of "rugged individualism" to proponents of "increasing state intervention in economic activity and the suppression of democratic rights, " In much of western Europe the new sentiment among this intermediate class gave rise to fascism; in the United States it gave rise to comparable tendencies, although not as openly centrist in character. And, as Gorey {ibid., p, 23) added, the swing from rugged individualism was so abrupt that "Not only do middle class people accept relief, they now demand relief as a right," The welfare state assisted the middle class in two ways: first, it provided direct income support in time of need; and, second, it opened up a new set of jobs in the public sector, relatively insulated from private hiring and firing decisions and the exigencies of the capitalist business cycle. The post-World War II state thus became the institutional base for independence from capital on the part of a rising "new class "—a class situated between capital and labor. This new "managerial class, " whose independence is tied so intimately to the unlimited extension of the state, is broadly consonant with Lebedoff's (1978) "new elite," Poulantzas' (1979) "new petty bourgeoisie," Glade's (1979) "professional-bureaucratic intelligentsia," and the Ehrenreichs' (1979; and Ehrenreich, 1984) "professional-managerial class," The latter offer an especially careful examination of the contemporary intermediate class, isolating professionalization and credentialism as key features of status distinction for its members. But the Ehrenreichs stop far short of suggesting that the managerial class has achieved dominance over capital via its control over knowledge, technique, and information, Gapital, in contrast, relies ultimately upon its control over wealth and finance. It is this failure to recognize the dominion of the social managers that limits the Enrenreichs' ability to illuminate contemporary trends and developments. The New Deal did, indeed, bring the managerial class into power in the United States, This was a change that amounted to much more than making "concessions" to the working class. It catapulted the intellectual-administrative strata into a position of social authority. The working class should be seen
Managerial Class and Industrial Policy I 215 more as incidental "beneficiaries" of these "reforms, " rather than as primary recipients. For these were authentically revolutionary reforms from the standpoint of the middle class; that is, they were empowering reforms for the managerial elite. Managerialism and the black middle class. Development of the welfare state in the thirties created new positions for the managerial class as a whole. Expansion and extension in the sixties laid the groundwork for a partial desegregation of the managerial class, to defuse explosive racial tension (see Miroff, 1981). The recent growth and "progess " of the black fraction of the managerial class can be traced directly to the expansion of social welfare programs under the Great Society and Civil Rights legislation. As Michael Brown and Steven Erie (1981, pp. 308-309) have observed, "expanding public social welfare employment has served as a major port of entry for the new black middle class...55% of the 1960-76 increase in black professional, managerial, and technical employment (PATs) occurred in the public sector, compared with 34% for whites." Noting the "significant shift" in the sixties, whereby middle-class black professionals and administrators "moved into noneducational social welfare agencies at the state and local level," Brown and Erie (p. 311) conclude that, "The principal economic legacy of the Great Society for the black community.. .has been the creation of a large-scale social welfare economy of publicly funded middle-income service providers and low-income service and cash transfer recipients. " Several additional points merit attention here: First, the expansion of government spearheaded by the Great Society-Givil Rights legislation made it possible to provide positions to the black middle class without displacing members of other ethnic and/or racial groups already holding government posts. Expansion precluded the tensions of zero-sum game rivalry among potential contestants for public-sector employment. Moreover, not only did the nonblack middle class avoid displacement, with the expansion they gained a substantial number of new positions. The more recent contraction of the welfare state has led to renewed confiict over the racial distribution of publicsector employment. Second, the black middle class, for the most part, entered positions supervising a client population that was disproportionately black and poor. This managerial accommodation to the crisis posed by an impending black revolt brought the black middle class into a narrow range of government activities. Blacks were confined to social welfare agency administration and remained absent from wider spheres of decision and infiuence. By 1980,
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blacks were concentrated in relatively lower skilled jobs in the federal government,^ Third, by the time the black middle class had gained an administrative toehold in the welfare system, evidence began to accumulate about the existence of an underclass of permanent welfare recipients who were disproportionately black, (It is now apparent that more than half of long-term welfare recipients are black [Goe, 1983]), Therefore, to the extent that the black underclass is marginalized, as other elements of the nation question support for welfare recipients, the black middle class also drifts into superfluity. Fourth, renewed expansion of the government under the Great Society closely follows Burnham's (1941) description of the boundless scope of the managerial state, in contrast with the limited, or circumscribed, capitalist state. The managerial elite and the interventionist state. World War II produced conditions that, if anything, accelerated the trends inherent in New Dealism, The emergency circumstances led to the most extensive experiment with national planning in the country's history, including the use of a full-scale incomes policy. Under the labels of wartime rationing and targeting of strategic industries, the United States moved closer to a scheme of central planning than ever before (see, e,g,, Golander, 1984), Despite the retreat from the wartime arrangements in the aftermath of the annistice in 1945, the economic history of the era 1940-1970 can be understood best as the period of ascendancy of the managerial class. As noted above, it is a class whose continued exercise of power depends upon expansion of the terrain of the state ("New Frontier," "Givil Rights," "Great Society," militaryindustrial complex, educational management, health and human services, etc). By the late sixties, the welfare state had expanded so dramatically that high employment prevailed and the connection between unemployment and pauperization was much diminished in comparison with previous epochs,
Managerialism, Investment, and the Reserve of Labor The rise of the managerial class did not, of course, vanquish capitalism. It left untouched a final, critical reservoir of capitalist influence, one that meant that while the managerial class could gain cultural hegemony, it could not take full control of the U,S, economy. For in embracing an interventionist state that made social transfers to the poor and unemployed. ^Sawyer (1980) has documented the post-Great Society growth in the federal government ljy referring to changes within occupational categories; engineers rose by more than 50 per cent to 98,931; computer specialists increased 600 per cent to 46,361; the number of attorneys doubled to 15,532; and there was a 230 per cent increase in social scientists, psychologists, and welfare workers to 58,166 between 1960 and 1980, But blacks rarely could be found outside the category of welfare workers.
Managerial Class and Industrial Policy I 217 and attempting to moderate the business cycle through stabilization policies, the managerial class left the decision to invest (where, when, and how much) largely in the domain of capital. Investment remained a private decision. New Dealism and its various iterations, e.g., the Great Society, stopped short of nationalizing key industries or adopting a centrally directed national investment strategy. The emergence of the interventionist state marked a revolution on behalf of the managerial class, but it was an incomplete or unfinished revolution. The failure to socialize the investment decision was thus a failure to extinguish capitalism. Concomitantly, it was a failure to create the conditions under which a reserve of labor no longer would be necessary; it was a failure to create the conditions under which full employment could be achieved. For, at any juncture, if capital went on "strike " (see Grotty, 1980), the U.S. economy could plunge into a downturn. In fact a marked deceleration in investment did occur throughout the seventies. While real investment rose 40 per cent between 1960-1970, it rose 25 per cent between 1970-1980 (see Table 1). Measured productivity growth was relatively robust throughout the sixties, but it grew more slowly throughout the seventies and thereafter. The recession years of 1974 and 1975 marked particularly low points for real investment and economic growth during that decade. The end of the seventies also provided evidence of a renewed slowdown, carrying over into the early years of the eighties. It was not until the recovery of 1983-1984 that real investment surpassed the levels it had reached in 1978. Moreover, Sweezy and Magdoff (1985) have characterized this recovery as "strange," pointing out that the surge of real investment expenditure has been accompanied by an ongoing industrial slump. When they disaggregate total fixed investment between expenditures on producers' durable goods and expenditures on structures, Sweezy and MagdofI find that only the former constitutes a source of renewed investment. They also find that between 1979 and 1984—two years into the recovery—investment in manufacturing machinery and equipment had fallen one-eighth. Following Veblen's (1961) distinction between pecuniary and industrial activities, Sweezy and Magdoff (p. 6) warn that the fact that the rising sectors of investment "have less to do with production than with finance" signals the continued vulnerability of the economy. Veblen (pp. 308-310) observed that pecuniary capital can expand or contract independently—for some time at least—of the industrial capital, since the former is subject to "market values" while the latter is "a matter of mechanical efficiency." Thus, growth in the pecuniary capital could be only a hollow indicator of economic growth. The "problem" of unemployment. During the seventies, measured unemployment rates rose to levels unparalleled since the thirties. This touched
2 1 8 / V^iLLiAM D A R I T Y , J R ,
TABLE 1 SELECTED AGGREGATE STATISTICS, U',S, ECONOMY, 1960-1984
1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984
Crowth rate of GNP (constant 1972 dollars)
Gross private domestic investment (constant 1972 dollars, billions)
2,2% 2,6 5,8 4,0 5,3 6,0 6,0 2,7 4,6 2,8 -0,2 3,4 5,7 5,8 -0,6 -1,2 5,4 5,5 5,0 2,8 -0,3 2,6 -1,9 3,7 6,8
104,7 103,9 117,6 125,1 133,0 151,9 163,0 154,9 161,6 171,4 158,5 173,9 195,0 217,5 195,5 154,8 184,5 214,2 236,7 236,3 208,5 227,6 194,5 221,0 289,7
Rate of change of productivity (output per hour, business sector)
Unemployment rate, all workers
1,5% 3,3 3,8 3,7 4,3 3,5 3,1 2,3 3,3 0,2 0,8 3,6 3,5 2,6 -2,4 2,2 3,3 2,4 0,5 -1,2 -0,5 1,9 0,2 2,7 3,6
5,4% 6,5 5,4 5,5 5,0 4,4 3,7 3,7 3,5 3,4 4,8 5,8 5,5 4,8 5,5 8,3 7,6 6,9 6,9 5,8 7,0 7,5 9,5 9,5 7,4
•
Sourou: Appendices from the Econvmic Report of the President, Washington, D . C : U,S, GPO, 1985,
off a protracted debate among economists over the voluntariness versus the involuntariness of unemployment and the extent to which unemployment was structural, cyclical, or frictional (see Abraham, 1983; Brown, 1983; and Darity, 1981-2), Marx partitioned the reserve of labor into its floating, latent, and stagnant components, the latter containing the pauperized element, or what in modern parlance is "the underclass," Marx was not, however, concerned with fine-tuning the reserve and would have had an interest in the statistical magnitudes of these components only insofar as the data shed hght on capitalism's tendencies. Modern economists, on the other hand, are concerned with "managing" the reserve in a detailed sense. This is so both from the standpoint of lowering its size and from the standpoint of applying appropriate policies to each component of the reserve, i,e,, manpower and training programs to cope with structural unemployment, countercyclical or macroeconomic stabilization policies to cope with cyclical unemployment, labor exchanges to lower frictional unemployment, etc. Of course, for those economists in the seventies who were closely aligned with the business viewpoint, unemployment—regardless of its magnitude—
Managerial Class and Industrial Policy I 219 was by assumption "voluntary," The secular upturn in the measured unemployment rate they attributed to demographic changes that brought more persons with weaker labor market attachments into the work force and to the growth in transfer payments alleged to make it easier for people to choose not to work. Thus, the high rates of measured unemployment could be dismissed as a mere rise in the "natural rate" of unemployment (see, e,g,, Friedman, 1977), A careful statistical study by Cain (1979) indicated that the rising measured unemployment rate could not be explained by such considerations, but this finding had little impact. The gauntlet had been thrown. The real issue was the failure of the reserve to perform its disciplining function. If the welfare state could be rolled back (which would cause the population to become better "motivated"), capitalism could provide "fuller" employment, (For an examination of the evolution of this position, see Brown [1983] and Duboff[1977]), The case made by the "supply-siders" was, in effect, an arguinent for repeal of the New Deal (and the Great Society), It was a case that could be expected to resonate with that segment of the working class which was at work, but for less than spectacular wages. It was a case that was consistent with growing fears over an unmanageable fiscal deficit and desires to curb the scale of government. Perhaps, only slightly overstated, it was a case for a capitalist counter-revolution. In essence, capital was announcing the tenns under which it would end its strike—the environment it desired in order to renew its expenditure on expansion of plant, equipment, and machinery. These terms involved contraction of the state—precisely the opposite of the requirements of the managerial class for its sustained independence as a class. But for those economists and policymakers in the seventies committed to an expanding province for the managerial class or, at least, a desire to preserve the thirties' "reforms" of capital, a different answer surfaced. Their solution took the form of industrial policy. Within many of the proposed policies lie the seeds for a thoroughgoing "socialization " of investment by public sector institutions, hence the basis for completion of the managerial class' ascent to power and, once again, the possibility of full employment. Industrial policy has the potential to bring about the final transition from capitalist to managerial society. The final chapter in the history of capitalism need not augur an ascension of the proletariat—especially since the managerial class is already well on the road to power.
Industrial Policy and Full Employment The goal of industrial policy is neither specifically nor singularly to alleviate the problem of unemployment. It has been introduced as a strategy
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to renew economic growth in the U.S. Insofar as growth reduces unemployment, higher employment may be one of its many professed benefits. It is only certain versions of industrial policy which make strong, explicit stateinents about achieving permanent full employment. Self-styled, conservative industrial policy formulations cannot be expected to produce full employment, nor do they make such claims. Kevin Phillips' neomercantilist strategy for industrial redevelopment on behalf of the Business Roundtable is an apt example. Phillips (1984) himself makes clear the limits of his scheme, owning that it is not "far-reaching" and does not "involve industrial redevelopment banks or mechanisms for picking winning or losing industries or technologies. That wotdd mean too much interference in the marketplace." (p. x, emphasis added) Likewise, it would mean that in Phillips' preferred world there is no prospect for full employment. This might not be a serious concern for Phillips, since he might also acknowledge the necessity of the reserve to sustain capitalism. At minimum, the types of industrial policy schemes that offer the possibility of full employment must involve extensive public direction of investment. They could take the form of Thurow's (1980) endorsement of selective public sector investment in leading or "sunrise" industries; Reich's (1983) reindustrialization plan; the Alperovitz-Faux (1984) plan to guarantee all citizens basic necessities; the Bowles-Gordon-Weisskopf (1983) strategy to bring industrial democracy to the United States; -or the International Association of Machinists and Aerospace Workers' (IAMAW) proposal to "rebuild" America (see Winpisinger, 1984). The latter two are quite similar and seek to overcome simultaneously the problems of unemployment, inflation, and deindustrialization (for evidence on the magnitude of deindustrialization, see Bluestone, Harrison, and Clayton-Matthews, 1986). Less jingoistic in tone than either the Thurow or Reich plans, both of the latter nevertheless make overtures toward restoration of U.S. product competitiveness in international markets. But most important, all of these plans, by requiring concentration of the investment decision in the hands of a public authority, de facto complete the empowerment of the managerial class. Such a step finalizes the shift in control of the economy from capital to the professional-administrative class. This completion occurs even if the industrial policy scheme specifically calls for "democratic" management of the economy, as do the Bowles-Gordon-Weisskopf and IAMAW plans. A close examination of these two schemes reveals that even in these cases the proposals mean consolidation of managerial domination. It is fruitful to explore this matter by inquiring how such plans might produce full employment. Presumably it could be done by selecting the cotnposition, direction, and magnitude of public sector investment to maximize
Managerial Class and Industrial Policy I 221 employment. For example, at the heart of the IAMAW's proposal to achieve lull employment is selection of the right mix of targeted industries. Presumably if tbe private sector goes into full-scale retreat in response to this invasion, the groundwork would be laid for development of public sector enterprises or outright nationalization of existing private enterprises. However, would those doing the selection of targeted industries necessarily choose those industries most likely to absorb the greatest number of workers? Obviously, it depends on the objectives of those making the decision (dare we call them national economic planners?). The Bowles-Cordon-Weisskopf and the IAMAW plans call for decisions to be made "democratically" in some sense. Bowles, Cordon, and Weisskopf would not "concentrate investment subsidies in industries with either the most rapid recent growth histories or the most glittering balance sheets" (pp. 336-337). They advocate, instead, identification of target industries from a "direct assessment of popular needs" and call for financial support to enterprises that promote workplace democracy because it is their behef that worker participation raises productivity. They argue for a "democratization of investment." Unfortunately, though, there is many a slip betwixt cup and lip. One cannot expect the planners always to be such good-spirited individuals as Bowles, Cordon, and Weisskopf themselves. The quality of a strategy should not depend so precariously on who is in charge. Assuming that the planners themselves are subject to a recall procedure, a needs assessment may not identify full employment as a popularly held high priority, or it may be one of many priorities with a relative weight that could be high or low. The needs assessment could just as easily cast up an ambiguous or contradictory set of priorities—which would serve to further free the planners' hands. Ultimately, industrial policy must come under the supervision of those with expertise in economics and planning. Democratizing impulses eventually must bend to the prerogatives of the experts. Voting might affect the trajectory of managerial society in some ways, but it is unlikely to significantly alter it. Countervailing institutions. There are, furthermore, political institutions with the potential to block popular sentiment, even if the assumption is left uncontested that popular sentiment is revealed through voting mechanisms. Certain of these institutions are especially well-suited for the managerial age. Bowles, Cordon, and Weisskopf plainly are nervous about the Federal Reserve Board, for example. The Fed, incidentally, is fully capable of conducting its own industrial policy (see Brimmer, 1971) should it so desire, through its capacity to manage credit allocation and set sectorally differentiated interest
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rates. The Fed could reinforce, accommodate, or undermine the investment strategy undertaken by a "democratic" national planning agency. The BowlesGordon-Weisskopf solution to assure reinforcement, or at least accommodation, requires members of the Fed's board to be elected. Again, this solution presumes that voting mechanisms generate consistent choices and relatively clear mandates. Otherwise, even a popularly elected Fed could become a captive of its own staff economists, who would be the presumptive possessors of expert knowledge. The judiciary is also a potential political arbiter. The courts are in a sense the purest of political managerial institutions. They are a "playground" for lawyers, who are key actors in the managerial era. At the pinnacle of the judiciary is the Supreme Court with its lifetime appointees. The Court almost blocked the ratification of the New Deal (Miller, 1977); there is nothing to guarantee that it would not endeavor to block or alter the course of a "new New Deal." Moreover, given the inherent potential for arbitrariness in judicial review, even a court sympathetic to the democratic socialist variant of industrial policy could give it a different character than that intended by the national planning board. And beyond these potential pitfalls, there is the problem of the military. Who can say how its leadership would respond? To summarize, because of the existence of opposing institutions, a national planning board that seeks to conduct a popularly mandated industrial policy may rather quickly find itself hobbled. The challenging institutions may be captives of elements committed to a rival industrial policy, a rival set of aims, or hostile toward industrial policy altogether. The struggle to conduct industrial policy of a sort that expresses mass sentiment for economic policy will require defusing the influence of both the business interests and the interests of members of the rising intellectual aristocracy over these institutions. Of course, for those industrial policy advocates unconcerned with such niceties as popular control over national planning, the path to managerial class domination is considerably smoother. To achieve full employment under industrial policy, public direction of investment must lead to expansion of those sectors that will absorb the reserve of labor. This means that the nation's investment planners must pursue the selection of targeted industries with employment maximization in mind. They must be able to pursue their task without deterrence from potentially countervailing institutions.
Full Employment of Which Workers? Of course, full employment under managerial industrial policy need not mean eradication of poverty. If real wages are not sufficiently high
Managerial Class and Industrial Policy I 223 to insure that employment eradicates pauperization, poverty will persist. An employed underclass can still be an underclass. Social hierarchy will focus even more plainly on occupational differentiation in a fully employed economy. Distribution of income and quality of life will depend explicitly on the distribution of jobs and the structure of wages. Status and self-importance will depend upon selection mechanisms for assignment to occupations, a mechanism which will be increasingly administered from above. Otherwise, a system of transfer payments to supplement the incomes of low-wage workers becomes an issue. Then, even in post-capitalist civilization, the capitalist incentive problem will reassert itself How high should such income supplements go? Will effort be the same with or without income supplements? Who will be taxed to finance additional income supplements for those at the bottom of the ladder? "Supply-side" concerns can reappear even on the topography of the managerial age. Particularly for Bowles, Cordon, and Weisskopf, who are so deeply concerned about labor motivation and effort, these incentive issues should be weighed carefully. If full employment plus nonpoverty incomes are assured for all, will the high productivity they so admire actually be forthcoming? Or will the industrial planners themselves come to believe that a relatively immiserized segment of the working class is necessary to provide adequate discipline for the workforce? And which groups are liable to bear the brunt of that necessity? If the decision is made popularly by a broad electorate, then the problem of outvoted and unpopular minorities will reappear with a vengeance. For example, it is easy to anticipate that a fully employed underclass would be disproportionately black. There is a still more disturbing and fundamental secular tendency likely to become manifest in the managerial age. The pauperized segment of the working class—the underclass—that survives into the new age may come to be viewed as too great a social nuisance. As technical advances render more and more nonintellectual occupations obsolete, the absence of profit-motivated production under managerialism will obliterate the functional necessity of a reserve of labor. Capitalism's historic tendency has been to produce technical change that discharges labor-power from the labor process, progressively reducing socially necessary labor time. But within the context of the class struggles characteristic of capitalism, waves of labor-replacing innovations tended to cluster at 40-50 year chronological intervals. Under managerialism, the pace might be accelerated because the engineers can be unleashed to pursue development on pure efficiency grounds, without the constraints of profitability considerations. Furthermore, members of the managerial class tend to have a cultural disdain for manual labor and an intellectual disdain for the problems associated with
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union-management struggles at the workplace and at the collective bargaining table. Thus, they are liable to encourage technical change to advance most rapidly toward elimination of those categories of occupations. Technical change will become the product of uninhibited scientific inquiry and the ideological predilictions of the social managers. Paradoxically, then, a class that comes to power in part by arguing that it can make jobs available for all workers is likely to conclude that it is the number of workers that needs to be adjusted to an optimal quantity of jobs. If the underclass comes to be viewed as too expensive, unruly, and irredeemable, a set of quietly genocidal policies are liable to surface (see Darity, 1983). Full employment could come about by literal elimination of the surplus population. A reputed expert on the "underclass," Ken Auletta, has reported that already some social policymakers are advancing "more ominous" solutions to the problems posed by the lowest layer of the reserve—specifically the disproportionately large black element of the underclass (see Muwakill, 1985, p. 6). These include involuntary sterilization and castration. More than onequarter of all Native American women of child-bearing age have been sterilized already (Dillingham, 1977). These are the more extreme steps, but they indicate the tendencies of managerial society toward those peoples deemed marginal. "Voluntary" access to abortion—if disproportionately resorted to by women whose child-bearing is tied to state support—can have similar genocidal effects. The ongoing inclination of conservative and liberal spokespersons alike to advocate family planning programs as measures to reduce the welfare rolls reflects this pattern (Darity, 1983). The managerial class leans in its own newness toward a new eugenics. Since the reserve of labor will lack functionality in the post-capitalist era, it can be removed either by being fully employed or by being systematically exterminated.
Conclusion Industrial policy, if enacted, enthrones a new—managerial— economic order compatible with the new cultural-political order. "Democratization" of industrial policymaking will place negligible constraints on managerial initiative because of the class' ideological diversity and because its members possess a monopoly on the expertise required for full-scale national planning. "Democratic" procedures need not produce "democratic" outcomes. A mass electorate will have to choose among competing experts to decide upon the specific course economic/industrial policy will take. Such a choice affords no final guarantees on implementation, however, partly because of the discretionary features of administrative mechanisms (Stone, 1980), but
Managerial Class and Indii.strial Policy I 225 also because of the existence of obstructive political institutions such as the Supreme Gourt, which function at great distance from the mass electorate. And once investment is socialized it will be hard to return to capitalism. The debate in the political arena will be transmuted into a conflict over the aims of public sector investment and the selection of the best sectors for development. Maximum employment may prove to be only one of many conflicting aims of comparable worth to the planners. Managerial society will release the ideological divisions among the managers over preferred policy. While competition between capitalists centers on struggle over profits, competition among the social managers amounts to a struggle to promote the winning ideas. Persuasion, debate, propaganda, and rhetorical innovations will become the dominant cultural activities of the new age. These activities will be both recreational and pragmatic. In such a milieu it would even be possible for ideologies to emerge that advocate continued reproduction of a reserve of labor. But the rationale would be to serve the desired ends of the fraction of the managerial class advancing the position, not the presei-vation of capital's profit-seeking environment. Such an ideology is unlikely to persist in the face of the diminishing functionality of the reserve of labor from the standpoint of sheer productive efficiency. This new post-capitalist society contains its own vision of the future—one where all embrace the lifestyle of the social managers. Those who will not or cannot do so will be excluded from that future. To the extent that this excluded population threatens to obstruct a managerial future or to impose undue costs on the character of that future, steps will be taken to quietly eliminate it. Therefore, class struggle in the new age is liable to center on control of fertility and culture. Industrial policy is the managerial class' critical entry point—a veritable Trojan horse—in its journey toward the new age. For inauguration of industrial policy could extinguish capital as a rival. This would leave the managers at last face to face with those whom they are accustomed to managing. The managers would appear to have all the advantages in such a confrontation, but no social class has yet proven invincible. It remains to be seen whether the heralds of industrial policy will break the pattern of history. References Abnihani, Katberine G. "Structural/Frictional vs. Deficient Demand Undeiemployniont, American Economic Review, LXXIII (September, 1983), 708-724. Alperovitz, Gar and Jeff Faux. Rebuilding America. New York: Pantheon Books, 1984. Bluestone, Barry, Bennett Harrison, and Alan Clayton-Matthews. "Structure vs. Cycle in U.S. Manufacturing Job Growth,' Industrial Relations, XXV (Spring, 1986), 101-117. Bowles, Samuel, David M. Gordon, and Thomas E. Weisskopf. Beyoiul the Wasteland: A Democratic Alternative to Economic Decline. Garden City, N|: Anchor Piess/Doubleday, 1983.
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