Boardroom Bourgeois Democracy

A few days ago Charlie over at Excuse Me… asked me if I’d write something for him on the question of "the problematic nature of ownership in public companies. The shareholder-company relationship doesn't seem to function much like ownership..", which he in turn had been tagged for by Tom P of the Labour and Capital blog. I put together some notes in a reply to him yesterday based on a critique of the ideas of Burnham in “The Managerial Revolution”, and the later adaptation of those ideas in what came to be called the Post Capitalist Thesis, usually associated with Ralph Dahrendorf. I hope to write something more substantial soon, and post it here.

But, this morning, as I set off for my morning, constitutional it led me to think about the similarities with bourgeois democracy in general. Forgive me if this meanders a bit, but thoughts tend to do that when you are walking. I’ve spoken in the past of the idea that in society there are three sources of power. I’ve kept saying I was going to theorise this, but never got round to it, so what I say here is only some preliminary statements. Those three sources of power are not the bourgeois Constitutionalist ones spoken of by Montesquieu – Legislative, Executive, and Judical. They are what could be labelled “Economic and Social Power”, “Political or Governmental Power”, and “State Power”. The first is the power that comes as it suggests from the power that various classes have as a result of their economic or social position, the two also being closely connected. The bourgeoisie through its economic power flowing from its ownership of the means of production also exercises social power, because its members and representatives also hold positions of power throughout society from the workplace itself, to the local social clubs and so on. Its ideas and interests are spread through and dominate society on this basic level. Its this power that actually dictates in Marxist terms the class nature of “the State” considered not as the institution of the State itself, but the entire polity. However, as a result of a particular class exercising a secure Dictatorship in this field, and the spread of its ideas throughout society as being the dominant ideas, that other concept of the State “the State Power”, does fall under its control and dominance, by virtue of the fact that the real human beings that staff it, have themselves through the mechanisms of all those social institutions, themselves fully imbibed the ideas of that ruling class, and their interests become inseparable from it. Finally, there is the “Political or Governmental Power”, which is tied to but separate from both of these other powers. It can be reflective of society as a whole rather than just the dominant class, or dominant fraction of that class, and so comes into conflict with it. It may have the greatest power in the short-term as a result of reflecting majority opinion, and because of its legislative power, but that power is the most illusory precisely because it is a wholly derived power, and needs the support of one or both of the other powers to be effective.

Under feudalism the local nobility exercised powers that would normally be associated with the state. They collected taxes, tithes and so on from their area. They raised their own armies and so on. But, they needed some national body to protect their overall interests against foreign invaders, they needed some body to arbitrate in questions between them rather than continually having to resort to wars between them, and so arises the political power of the Monarch, and of Parliament. The Nobility derived their economic and social power from their ownership of land and position in society. The state power rested upon that. The political power of the Monarch and subsequently of Parliament is derived from it as a means of conflict resolution, but is limited – hence Magna Carta etc.

In fact, this separation of State Power in the hands of the local nobility not only leads to repeated conflict with the Political power, but is also the reason why no Nation State can arise under these conditions. Only when the economic and social power of those nobles can be sufficiently weakened or broken can a centralised State Power arise, something which really does not happen in Britain for example, until Cromwell. The same thing can be seen in the US. The original Constitution of the US was of a similar nature, and not surprisingly, because it was based on the kind of Libertarian ideas of the 18th century, which themselves spring out of an individualistic peasant economy. In that Constitution centralised state power was conceived of as Minarchist, and highly decentralised. It was the State’s like the old local nobility that were to exercise real State power with the Federal State only there to protect from foreign enemies, and to act as arbiter. But, the development of Capitalism in the 19th century changed all that. Capitalism requires a strong centralised Nation State as a minimum. The American Civil War, wrongly seen as being about freeing slaves in the South, was really about creating that strong centralised Nation State and removing the power of the individual States. Even today the Libertarians bemoan that victory.

If we look at Britain, we see the way in which this process develops. The bourgeoisie develops in the towns and that is where its economic and social power resides. Its in the towns that this bourgeoisie meets up in business, for discussion in the Coffee Shops and Tea Rooms, in the various social gatherings and institutions and discusses ideas, which are gradually filtered and refined, and dispersed within society at large. But, its also in the towns, that arise, from such proceedings, new forms of democracy, and new democratic institutions that become necessary to deal with the problems and issues that themselves are specific to the towns and the new forms of production and social relations. In fact, what can be seen is not only the embryonic economic and social power of the bourgeoisie developing, but alongside it an alternative form of State Power, and also of Political/Governmental Power. It is not just that the bourgeoisie takes over the existing State Power or even wins for itself a majority in Parliament, but that the old State Power that rested upon the local nobles is destroyed, and a new centralised State Power dominated by bourgeois ideas gradually develops and bursts forth, and that although the Parliamentary Power has the same form it is in reality something completely different, because it is now based upon a whole series of local democratic institutions and forums which previously did not exist, and which have grown up in the image of the bourgeois.

So, although a section of the bourgeoisie – the Merchant and Financial bourgeoisie – arise first, and their ideas are able to run alongside to some extent the idea of the existing landed classes, their growing economic and social power, leads to the ideas appropriate to that spreading throughout society, into the corridors of learning, and from their into the corridors of State Power itself. To the extent that the interests of the Landed Aristocracy coincide with those of these fractions of the bourgeoisie – for example in extending their reach overseas with the development of colonies, to the extent that they can use their money hoardes to act as money Capital to finance various such ventures, to the extent that as Capitalist agriculture develops Land itself becomes more and more transformed into Capital, rent Capitalist rather than Feudal rent etc. the nobility itself is able to absorb such ideas itself, and facilitates their acceptance as being the ideas that dominate the State Power. Yet, so long as the majority of the population remains employed on the land, remains the subjects of the nobility, for as long as the Merchants and Money Capitalists remain tied to the nobility, because it is through them that their trade Monopolies etc. are granted, the bourgeoisie cannot exercise Political power. Only when the Industrial Bourgeoisie arises, whose interests are in fact in contradiction with both those of the Landlords and the Merchant and Money Capitalists – they want cheap food prices to keep wages down, they want to do to the Merchants what the merchants do to the peasants and artisanal producers, buy low and sell high, and they want to minimise the interest they have to pay on the Money Capital they borrow – and alongside it the industrial working class – in the process destroying the economic and social base of the landlords – can the bourgeoisie as a whole secure that political/governmental power for itself.

And if we look at the way that works, we can see the parallel with the bourgeois democracy of the Boardroom. The economic and social power within the company is fairly obvious and comes down to the power of the Capitalist owners of the company. And the ideas that flow from that spread necessarily throughout the company at all levels even down to the companies workers who largely take on board the ideas of profitability etc. and see their interests tied to the interests of the companies owners, the company’s success being their success or at least job security. It is not just in the forum of the political/governmental power of the Boardroom where those ideas are reflected. But, rather like Parliament the Boardroom as such a forum can reflect other ideas. The owners and their ideas may dominate the society of the company, but other ideas exist alongside them just as they do in society at large. The workers will have ideas that reflect their own interests, and will be organised through their Trade Unions, and those ideas will be reflected to some extent in the Boardroom too, if only from the perspective of can or how are those interests to be addressed in the interest of social peace within the company i.e. avoiding strikes etc. Where, for example in Germany, there are Worker representatives on the Board that is even clearer. External pressures may also find their representation such as a concern for the environmental impact of the Companies activities, and a desire at least to be seen to be taking on board those questions for the sake of the Companies Public Relations.

All of this mirrors the way bourgeois democracy works. On the one hand the society/company encompasses a wide range of views and interests, which get discussed filtered and passed through the bourgeois democratic process until they find outlet in the Political/Governmental power. That power makes decisions based upon a prevailing view that emerges in that process. The task of implementing that view is the responsibility of the State Power, which in this instance means the actual Executive Directors of the Company, its full-time permanent managers – who, of course themselves are part of that opinion forming process – and who by virtue of their position have the power to frustrate those decisions, just as the permanent state machine has the power to frustrate the decisions of governments and parliaments. It is its job, ultimately, to secure the interests not of that wider society whose views are reflected by the Board, but of the people who hold the economic and social power i.e. the Capitalists owners, and in particular the dominant fraction thereof.

But, just like the Permanent State machine itself, these managers too have their own interests that they try to satisfy. In society at large the bourgeoisie allows the State Machine some leeway in its actions, and excesses of its staff, writing them off as the faux frais of production the costs it has to pay for handing over the task of actual administration of its affairs to a professional bureaucracy. So, too with that bureaucracy employed to fulfil the same functions in the day to day management of the company. But, in both cases only to a point. If the State apparatus begins to over extend its reach the Capitalists can mobilise both their economic and social power, and the political power against it. They may allow the managers of their companies a certain degree of excess, but where it extends too far as with Enron, or TYCO to an extent that threatens their own economic or political interests they will act to set the limits that tell those Managers to rein in. In fact, in the US in more brutal fashion than in Europe, where such Managers are frequently gaoled when they act to threaten the interests of the bourgeoisie.

There are I think lessons from this. The idea that the old State has to be smashed is commonplace amongst Marxists, but I think what is also important is the degree to which we see these other features of the way power is exercised shows that a simple takeover of power is not likely to succeed. The bourgeoisie over a fairly prolonged period developed alternative forms of state and political power alongside its economic and social power. And those forms complimented that economic and social power, reinforced it and so on. They were central to the diffusion of its ideas and culture, which made its revolution possible. The bourgeoisie had the advantage that it had growing economic and social power, and was taking power from an existing exploiting class whose interests it could largely subsume within its own. The working class does not. It needs both to develop its own economic and social power – which can never supplant the economic and social power of the bourgeoisie for the above reason until it also secures State Power and Political Power – but, also for that reason needs to develop the new forms of State and Political power appropriate to its economic and social power alongside it. That does not mean building Soviets now! It does, however, mean that alongside the Co-operatives that will be the basis of the workers economic and social power before and after the revolution, the working class will need to develop the appropriate Co-operative, participative and inclusive forms of state and political power on which, and from which it will be able to challenge the bourgeoisie on its own terms.