The Destruction Of The Institutional Framework Of Capitalist Society

The capitalist process destroyed the institutional framework of feudal society.

• It also undermines its own in much the same way.

The success of capitalist enterprise paradoxically impairs the prestige or social weight of the class associated with it.

The giant unit of control tends to oust the bourgeoisie from the function to which it owed that social weight.

The corresponding change in the meaning, and the incidental loss in vitality, of the institutions of the bourgeois world and of its typical attitudes are easy to trace.

On the one hand, the capitalist process attacks the economic standing ground of the small producer and trader.

What it did to the pre-capitalist strata it also does—and by the same competitive mechanism—to the lower strata of capitalist industry.

Here, Marx scores.

It is true that the facts of industrial concentration do not quite live up to the ideas the public is being taught to entertain about it (see Chapter XIX).

The process has gone less far and is less free from setbacks and compensatory tendencies than one would gather from many a popular exposition.

Large-scale enterprise:

• annihilates
• creates space for the small producing, and especially trading, firm.

Also, in the case of the peasants and farmers, the capitalist world has been willing and able to pursue an expensive but effective policy of conservation.

In the long run, however, there can be little doubt about the fact I am envisaging, or about its consequences.

Outside of the agrarian field, the bourgeoisie has little awareness of the problem, or its importance for the survival of the capitalist order.

The typical businessman focuses on the profits to be made by rationalizing the organization of production, especially by cheapening the commodities from the factory to the ultimate consumer.

What are the consequences of these?

A very common type of social criticism which we have already met laments

The “decline of competition” leads to the decline of capitalism because of:

• the virtues it attributes to competition
• the vices it attributes to modern industrial “monopolies”

In this view, monopolization:

• plays the role of arteriosclerosis
• reacts on the fortunes of the capitalist order through increasingly unsatisfactory economic performance.

We have seen the reasons for rejecting this view.

Economically neither the case for competition nor the case against concentration of economic control is anything like as strong as this argument implies.

Whether weak or strong, it misses the salient point.

Even if the giant concerns were all managed so perfectly as to call forth applause from the angels in heaven, the political consequences of concentration would still be what they are.

The nation’s political structure is profoundly affected by the elimination of small and medium-sized firms as their owner-managers, together with their dependents, henchmen and connections, go to the polls.

• They have a hold on the foreman class that no management of a large unit can ever have

The foundation of private property and free contracting wears away in a nation in which its most vital, most concrete, most meaningful types disappear from the moral horizon of the people.

On the other hand, the capitalist process also attacks its own institutional framework—let us continue to visualize “property” and “free contracting” as partes pro toto—within the precincts of the big units.

Excepting the cases that are still of considerable importance in which a corporation is practically owned by a single individual or family, the figure of the proprietor and with it the specifically proprietary interest have vanished from the picture.

There are the salaried executives and all the salaried managers and submanagers. There are the big stockholders.

And then there are the small stockholders. The first group tends to acquire the employee attitude and rarely if ever identifies itself with the stockholding interest even in the most favorable cases, i.e., in the cases in which it identifies itself with the interest of the concern as such.

The second group, even if it considers its connection with the concern as permanent and even if it actually behaves as financial theory would have stockholders behave, is at one remove from both the functions and the attitudes of an owner.

As to the third group, small stockholders often do not care much about what for most of them is but a minor source of income and, whether they care or not, they hardly ever bother, unless they or some representatives of theirs are out to exploit their nuisance value; being often very ill used and still more often thinking themselves ill used, they almost regularly drift into an attitude hostile to “their” corporations, to big business in general and, particularly when things look bad, to the capitalist order as such. No element of any of those 3 groups into which I schematized the typical situation unconditionally takes the attitude characteristic of that curious phenomenon, so full of meaning and so rapidly passing, that is covered by the term Property.

Freedom of contracting is in the same boat. In its full vitality it meant individual contracting regulated by individual choice between an indefinite number of possibilities. The stereotyped, unindividual, impersonal and bureaucratized contract of today—this applies much more generally, but a potiori we may fasten upon the labor contract—which presents but restricted freedom of choice and mostly turns on a c’est à prendre ou à laisser, has none of the old features the most important of which become impossible with giant concerns dealing with other giant concerns or impersonal masses of workmen or consumers. The void is being filled by a tropical growth of new legal structures—and a little reflection shows that this could hardly be otherwise.

Thus the capitalist process pushes into the background all those institutions, the institutions of property and free contracting in particular, that expressed the needs and ways of the truly “private” economic activity.

Where it does not abolish them, as it already has abolished free contracting in the labor market, it attains the same end by shifting the relative importance of existing legal forms—the legal forms pertaining to corporate business for instance as against those pertaining to the partnership or individual firm— or by changing their contents or meanings.

The capitalist process, by substituting a mere parcel of shares for the walls of and the machines in a factory, takes the life out of the idea of property. It loosens the grip that once was so strong—the grip in the sense of the legal right and the actual ability to do as one pleases with one’s own; the grip also in the sense that the holder of the title loses the will to fight, economically, physically, politically, for “his” factory and his control over it, to die if necessary on its steps.

This evaporation of what we may term the material substance of property—its visible and touchable reality—affects not only the attitude of holders but also that of the workmen and of the public in general.

Dematerialized, defunctionalized and absentee ownership does not impress and call forth moral allegiance as the vital form of property did. Eventually there will be nobody left who really cares to stand for it—nobody within and nobody without the precincts of the big concerns.