The Boss, by Roy Lewis and Rosemary Stewart

[p030] The Boss Class The Boss, by Roy Lewis and Rosemary Stewart (Phoenix House, 21s.) The fashion these days is to play down the role of the capitalist class and to spread the myth that this class no longer exists; or if it does it is no longer important. This theory has found its way into the Labour movement and appears in most of the Labour Party policy statements. Here at last is a book which acknowledges the fact that the boss still exists and, what: is more, claims unashamedly that he is the mainspring of the economy. The current theory among the Labour ‘new thinkers’ runs on these lines. The old days of the capitalist entrepreneur of the nineteenth century are gone. The one-man boss of the factory has virtually disappeared. With the development of a complicated financial structure in the economy, the ownership of capital has become diffused, so that the members of the board room in general own between them only a small share of a firm’s total capital. .In these circumstances it is claimed that ownership of capital is no longer important, that the capitalist class as a class wielding decisive influence has disappeared and that it has been replaced by a managerial class (interested only in doing a good job!). As ownership is there- fore no longer decisive, it is control that matters; and so it is claimed it is important for Labour to control industry rather than to own it. From this the buying of shares by the State in enterprises is deduced, as being an effective method of controlling the capitalist economy. The authors of this book give the lie to these assertions. ‘If it comes to a show-down a man is not master of a firm unless he has 50} per cent. of the voting stock; but security of tenure can be very complete for the directors of a firm in which they have barely a share apiece. It takes a cataclysm —that is, a shareholders’ revolt organized on a formidable scale—to unseat them.... Twenty per cent. of a company’s equity is sufficient in practice to ensure control, but much less, often suffices.’ ‘It has in fact become fashionable to talk about management 59 '

[p031] LABOUR REVIEW and not business, and this is the mask under which the capitalist class likes to masquerade when the word ‘capitalist’ or ‘boss’ carries with it certain emotional overtones. “Most place their hopes .. . in describing themselves merely as “top management” so that they will persuade the public to look on them in a new and perhaps even American way. They wish to get over to the public an echo of the modesty of the Elizabethan statesman who said “We are but the upper servants in a great house”.’ It is not easy to distinguish precisely between the capitalist proper and a member of the managerial class. Inevitably, in the complicated financial structure of industry and commerce, this distinction is blurred. But one suggested distinction is ‘between men who understand the strategy of business and those who are only concerned with their own functions. The salaried company official in middle management whose highest ambition is to be head of his department—even if it is the sales department—and retire on the firm’s contributory pension scheme in a manner perfectly analogous to that of his suburban neighbour, a Civil Servant, who will not think of himself as a business man as he thinks of one of his directors as a business man, or the tough owners of firms to whom he “sells” the firm’s output, or the proprietors of the garage that services his car.’ One of the themes of this book is how the capitalist class must come to terms with the socialist aspirations of the Labour movement. Some doubt is even entertained as to whether or not the British business man has failed in his labour relations. The authors say that in the early nineteen twenties most British employers wrecked the original hopes of those who set up the Federation of British Industries that it would sponsor a great charter of labour relations, welfare and fringe benefits such as a guaranteed minimum wage and compensation on redundancy; instead the employers turned the initials FBI into a synonym of reaction. They acknowledge however the employing class’s debt to Keynes ‘to have a vision of a new regulated private enterprise system which would not run into periodical crises because it would bring into relation the two basic qualities of the business spirit, thrift and enterprise, saving and investment. He could be described as the saviour of private enterprise, as he showed how limited government planning could maintain a reasonable equilibrium in the economic system and thus remove some of the revealed defects of private enterprise without destroying it. Though many business men disliked him, Keynes alone could claim to have produced the only usable philosophy of business since “laissez-faire” ceased to be an all-conquering battle-cry.’ No apology whatever is made by the authors for the fact that the boss in making his fortune often does it in a way which contributes nothing to the fundamental strength of the economy. In times gone by—that is, in the last century—the ‘Victorian business man would justify everything by saying that he was doing a useful job. Nowadays, however, it has to be admitted that the greatest post-war fortunes have not been . made out of a productive asset but out of the buying and selling of businesses on a large scale by means of the ‘take- over bid’. ‘Small and medium-sized public companies which have been unduly conservative in their dividend policies, either in response to the government’s call for wages restraint or perhaps because the management does not care for share- holders, are sitting ducks for this kind of deal. It is possible to offer the shareholders a very much higher price for the assets than the existing stock market price of the shares, which reflects past dividend distributions and current and conservative management policies. Often the break-up assets of a firm exceed the current market valuation of the equity capital. If the shareholders accept the offer—which they normally do—it is sometimes possible to pay them off from the accumulated reserves, and thus acquire the buildings, 60 July-August 1959 plant, machinery and goodwill for next to nothing.’ It is by no means true that it is impossible nowadays to make a fortune (how often have we heard from the Right wing that the rich are taxed out of existence?). The dialectic of the situation is understood by the authors when they say that the high and progressive taxation and creeping inflation provide a bigger incentive for people like Mr Charles Clore to exercise their talents than for a young engineer to build up a great firm from the purchase of a second-hand machine and its installation in his own backyard (ie., it is by virtue of high taxation and the so-called ‘wage-price spiral’ that fortunes are being made by some). . What sort of moral atmosphere exists in the rat race to the top? The boss must be prepared ‘to sacrifice friends, betray confidences, turn the screws with threats, unmask unexpected batteries of blackmail, enter into pacts with enemies, even men he despises and regards as wholly disastrous to the company’. His relations with other people become warped. ‘Because they [the bosses} are only interested in practical and immediate results they have shallow relations with most human beings other than their superiors or heroes, and in particular see their subordinates as doers of work rather than as people.’ One must learn not to form close attachments, because it is easier, as one American business man has said, ‘to fire the guy when you are moved ahead of him’. Small wonder then that in business (more in the USA than here) the psychologist as father confessor is required to restore the balance. Ludicrous as it may seem, in one American company all top managers spend an hour a week with the psychologist consultant ‘who helps to relieve them of their guilt feelings, of their sense of isolation and of not being understood’. Vv The main object of the employers’ venom is the working class. ‘As the business man sees it, labour expects the annual increase in the standard of living as advertised but will make no real contribution to get it... There is irony in this. What has increased production now availed“the miners® What has increased production periodically availed the motor-car workers when stocks accumulate and men are laid off redundant? The authors, as might be expected, ignore the fundamental contradictions of capitalist society. For them, as for the business man, it is simply a question of expansion: ‘If the nationalized industries fail to make their contribution by not producing enough coal or extra power which will be needed in the years ahead, private industries will have to step into the breach.’ The authors must be thanked for revealing some of the ways and means of minimizing the impact of high taxation. The point is made that at an income of £15,000 a year, net income after tax is £5,090 (married man with two children) and there- after every £1,000 of income represents £75 disposable income. Here again, one is reminded of speeches made by the elder statesmen of the Labour Party that capitalists have virtually been taxed out of existence. Top positions in industry and commerce allow means of supplementing income, avoiding tax and living at a considerably higher standard than a gross income at current tax levels permits. They allow this to a far greater extent than in any other walk of life. There is the expense account and all that this involves. “The free use of a large car may be easily worth £700 a year: of a large house or luxury flat in town at least £1,000. A free secretary provides the equivalent of £700 or £750 of service, and free service in the company house or flat almost as much again (and indeed more, since servants are not easily obtainable even by those who can afford them). Meals may easily be worth £1,500 a year and holidays tacked on to business trips another £1,000. This is quite a modest assessment of the worth of such things—yet it totals already £4,700, which is the equivalent, to those who must pay for them from their net earnings, of a gross income of at least £55,000 a year on a basic salary of £8,000 gross. In short,

[p032] BOOK REVIEWS though it may look as if few Britons can have a net income of £10,000 a year on present taxation, in fact it is possible to live on a £10,000 a year basis, and indeed considerably higher, without drawing on capital or being dependent on capital gains.’ Underlying much of this book is the fear of socialism and workers’ control of industry. The latter part of the book deals with this. The bosses, from long experience, know how to play their cards well. ‘Having a trade unionist on the [nationalized] board means having a director who knows a hundred ways of saying no” that a man who has spent his life on the manage- ment side would never know.’ In the authors’ view getting rid of the business man does not get rid of industrial society, which must continue to be run by the power-loving, infinitely committee-minded organization man. ‘He, of course, could very well be a socialist. Here, indeed, through the boards of nationalized industry, is an avenue for the envious angry outsiders to become powerful, happy insiders.’ The authors anticipate that the ‘erosion of capitalism will be slowed down at the point at which the trade unions feel that it is losing them their independence of action’. This will be the time that the trade union boss will come to the rescue of the big business boss. ‘Do not despair,’ they seem to say to the employing class, ‘with a little more old-type nationalization, a little more State participation in industry, there will come this closer alliance between the trade union bureacracy and the employers.’ And as if to anticipate the worst possible trends in the future for the employing class, the example of the USSR is taken and some consideration is given to the ways and means by which top Russian executives maintain their privileges. There is a basic salary which is far higher than the average. Add to that premiums based on the plant’s performance and graded according to the degree of managerial responsibility— et voila. Under socialism as under capitalism, the social goals of management are a high standard of living, prestige, power and authority; in short, privilege’ (i.e., if it should come to the worst there is still a place for the boss). Reforms are necessary, provided the fundamental dynamic of capitalist society is accepted, ‘not as blocking change but as easing it’. Workers must not be feather-bedded. They must accept unemployment but be given generous compensation on redundancy. At all costs the capitalist class must learn to accommodate itself to the growth either of nationalization or of State intervention in private enterprises. The following _observations throw a great deal of light on Right-wing Labour Party policy. They speak of the last stage of capitalism but this may prove to be extremely prolonged. ‘Indeed, it may well prove very convenient for Labour governments of the future to prolong it indefinitely. Business men may be with confidence recommended to study this phase and all the pos- sibilities inherent in it for making the world safe for business men.” Ingeniously, the authors point out that the Labour leaders can say to the rank and file that they are in the last stages of capitalism and that everything is now evolving naturally into socialism without the export trade being impaired or the sterling or gold reserves being endangered. “To the Russians (and to idealistic Left-wingers in Asia and elsewhere) they can equally say “Stop calling us rude names; we are in the last stage of capitalism, and we are ahead of you in evolving a new 99 and happier society”. Business men are recommended to continue their criticisms of nationalized industry for its inefficiency and shortcomings. They should keep up the shouting and maintain the contrast, say the authors. It is pointed out that the fight of the private bus companies against nationalization in the last years of the Labour government was a striking success just for this reason. ‘But private industry must choose the ground to stand on with great tactical skill.’ In the working-class movement we use slogans. The bosses also bave their slogans. One prominent industrialist, asked what business men in an industry threatened with nationaliz- ation should do, replied: ‘Get on the committee, boys.’ The final conclusion drawn by the authors is that ‘all in all the last stage of capitalism properly managed could be a great deal pleasanter for the individual capitalist than was the first’. We have been warned. SAM REYNOLDS