Friedrich August von Hayek, Review of Burnham, The Managerial Revolution

First published in Economica in November 1942 and reprinted with editorial notes in 1997, Hayek’s review examines James Burnham’s account of capitalism’s replacement by a society governed by managers. Its central distinction is between the plausibility of Burnham’s description and the necessity of his historical prediction. Hayek considers the emerging order convincingly portrayed, but does not accept that its emergence is inevitable. The review proceeds from this conditional assessment through Burnham’s political sympathies and his portrait of New Deal administrators, before weighing the book’s explanatory value against the danger of treating historical tendencies as irresistible.

Hayek immediately translates Burnham’s managerial terminology into a more politically charged description:

What in the title of this interesting book is described as the "managerial revolution" is to all intents and purposes the phenomenon of the totalitarian transformation of society which the author's "historical theory" makes him regard as the inevitable sequence of capitalism.

This identification establishes the review’s governing concern: managerial society means the concentration of economic direction and political power, not simply a change in who administers enterprises. Hayek reconstructs Burnham’s reasoning as dependent on two premises: large-scale unemployment is unavoidable under capitalism, and the movement toward comprehensive central direction must therefore continue. Grant those premises, he argues, and Burnham’s conclusions are probably inescapable. Yet the conditional formulation matters. Hayek separates the internal force of an argument from the truth of its starting assumptions, without undertaking a full economic refutation within this short review.

He nevertheless credits Burnham with a realistic and skilful picture of the proposed order. Its interest lies partly in the contrast between the author’s Marxist intellectual background and his departure from Marxist expectations, and partly in his reliance on American experience during and after the New Deal. For Hayek, readers who actively desire centralized economic direction especially need to study its likely consequences. Their preferences are themselves among the forces that could help bring such a system into existence.

The second movement challenges Burnham’s claim to scientific detachment. Although his imagined future is unattractive, Hayek finds his sympathies aligned with the new system against the old. Burnham treats Nazi Germany as an early formation of a future super-state, England and France as survivals of an obsolete order, and Russia as the country furthest advanced toward managerial organization. Hayek also draws attention to Burnham’s expectation of German victory and his presentation of Germany’s war as a response to Western provocation. These examples expose the political judgments embedded in apparently neutral historical forecasting. The review’s reminder that Burnham’s book first appeared in America in 1941 situates those predictions in their wartime setting.

Hayek then turns from geopolitical forecasts to the people who would exercise managerial power. His longest quotation from Burnham concerns younger New Deal administrators, technicians, and bureaucrats rather than prominent politicians. Within that portrait, technical confidence coexists with distrust of popular emancipation and contempt for capitalist institutions:

Though many of them have some background in Marxism, they have no faith in the masses of such a sort as to lead them to believe in the ideal of a free, classless society. At the same time they are, sometimes openly, scornful of capitalists and capitalist ideas. They are ready to work with anyone and are not so squeamish as to insist that their words should coincide with their actions and aims.

These are Burnham’s words, reproduced by Hayek as evidence of the social and intellectual background against which the book should be read. The passage makes managerial rule intelligible as the ambition of a particular administrative stratum. Its members’ willingness to govern does not depend on loyalty either to capitalist principles or to the Marxist ideal of a free, classless society. Their practical flexibility also weakens any assumption that their declared doctrines reliably express their aims.

In the final paragraph, Hayek identifies two further objections: Burnham presents the rise of managers as a cause rather than an effect of social transformation, and treats competitive capitalism as a brief historical phase rather than the greater part of Western civilization’s known history. He leaves these disputes undeveloped because they would not substantially alter the conclusions if the initial premises were accepted. His decisive qualification remains:

However much one may disagree with the asserted inevitability of the developments the author sketches, its possibility and even likelihood cannot be gainsaid.

The distinction prevents the review from becoming either an endorsement of Burnham’s determinism or a dismissal of his warning. Hayek recommends the book to thoughtful readers while fearing its influence on those susceptible to accounts of supposedly inevitable tendencies. He concludes by relating its valid insight to Hilaire Belloc’s earlier argument that socialist doctrine acting upon capitalist society could produce a third order, the servile state, distinct from either parent. Burnham’s contribution is thus less a wholly new thesis than a frighteningly realistic exposition. The review’s enduring relevance lies in its scrutiny of how predictions of centralized rule can simultaneously illuminate a danger and encourage acquiescence in it.