Friedrich August von Hayek: Review of The Managerial Revolution (1942)

Hayek’s November 1942 journal book review examines James Burnham’s account of the emerging “managerial society” as a diagnosis of totalitarian transformation. Its central distinction is between the plausibility of Burnham’s description and the necessity claimed for it. Hayek finds the projected social order realistic and worthy of serious attention, but he does not accept that capitalism must give way to comprehensive economic direction. The review moves from Burnham’s premises to his political sympathies, then to the administrators who embody managerial power, before assessing the book’s intellectual value and potential danger.

Hayek makes his initial concession explicitly conditional:

If one grants the author's initial premises, that under "capitalism" large scale unemployment is inevitable and that therefore the tendency towards complete central direction of all economic activity must continue, his conclusions are probably inescapable.

The force of Burnham’s conclusions thus depends on assumptions that the review identifies without endorsing. Hayek’s concern is that a compelling description of what central direction could produce may be mistaken for proof that this outcome is unavoidable. He also notes the unusual relationship between Burnham’s Marxist intellectual background and his un-Marxist conclusions: the successor to capitalism is a managerial order, not the emancipated society anticipated by Marxist doctrine. The book’s substantial reliance on American experience during and after the New Deal gives this argument an immediate institutional setting.

The second movement challenges Burnham’s claim to scientific detachment. Although his imagined future is unattractive, Hayek detects sympathy for the new order over the old. Burnham presents Nazi Germany as an early form of the future super-state, treats wartime England and France as survivals of the past, and regards Russia as the most advanced managerial society. Hayek emphasizes the political implications of this historical ranking: Burnham expects German victory and represents Germany’s war as a response to the challenge of supposedly backward Western powers. The review thereby exposes a tension between explaining historical change and lending authority to the regimes identified with its future.

Its longest piece of evidence is Burnham’s portrait of the younger administrators, technicians, and bureaucrats within the New Deal. Hayek treats this portrait both as an illustration of managerial rule and as a clue to the outlook informing the book. These officials exercise power through the expanding state apparatus; their confidence in their administrative competence coexists with distrust of a free, classless society, contempt for capitalist ideas, and flexibility about the relation between public statements and actual purposes. The passage culminates:

They believe that they can run things, and they like to run things.

This formulation gives managerial power a motive as well as an institutional location. The attraction is not simply efficiency or public service, but the exercise of direction itself. For Hayek, Burnham’s account is revealing because it describes people whose practical ambitions can help bring the predicted order into existence.

Hayek briefly identifies two further objections: Burnham may mistake the managerial class’s emergence for a cause rather than an effect of social transformation, and he understates the historical extent of competitive capitalism. Yet the review does not pursue these disputes, because the decisive question remains whether the initial premises warrant a claim of inevitability.

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

The concluding assessment therefore combines recommendation with warning. Thoughtful readers should study the book, but others may be swayed by its persuasive presentation of supposedly inevitable tendencies. Hayek locates its defensible core in Hilaire Belloc’s earlier argument that socialist doctrine acting upon capitalist society can produce a third order, the Servile State. Burnham’s importance lies less in establishing a new historical law than in rendering that prospect frighteningly concrete. The review’s enduring conceptual move is to separate recognition of a real danger from submission to its alleged necessity: an account of the future can illuminate emerging power while also encouraging the attitudes that make it more likely.