Nearly forty years ago (1984 to be exact) I completed and defended my dissertation and earned my PhD in Sociology at the University of Kentucky. The central thesis of that study was that
“with the development of corporate capitalism there is a corresponding rationalization of [business,] the state and other social institutions. Rationalization incorporates greater centralization of decision-making, increased specialization, greater emphasis on technical problem solving, and the proliferation of written rules and procedures. The rationalization of the state comes about as various agencies and organizations respond to corporate needs for long-term planning and stability of resources, markets and labor. Rationalization becomes the mechnism through which biases are built into the everyday functioning and decision-making of state bureaucracies. These organizational and procedural biases favor policies necessary for the growth of large-scale corporate capitalism. Moreover, rationalization places every-increasing restrictions on who may participate in decision-making and on what terms.”
My dissertation focused on the U. S. Forest Service and examined a specific case in which the rationalized process of decision-making in the USFS led to a serious conflict with a wide coalition of southwest Virginia residents (from five counties) over plans for the Mount Rogers National Recreation Area. However, the pattern of increasing rationalization of decision-making has been present across all government agencies, giving rise to a civil service composed of people hired for specific skills and training that today (2023) numbers about 2 million full-time equivalent positions (excluding the postal service).
For more than 100 years, since the passage of the Pendleton Civil Service Reform Act of 1883, the rationalization of government bureaucracies has paralleled and supported the rise of large, publicly traded, for-profit corporations. Both government bureaucracies and large capitalist corporations have exhibited increasing levels of rationalization, a process in which
abstract and formal rules and the dictates of calculability and efficiency come to dominate action. It shows itself in the primacy given to science and technology, in the concern to quantify, calculate, and ensure efficiency, in the prestige given to trained expertise, in the specialization of tasks, in the rigorous and intensive codification of rules, and in the increasing centralization of control. (Goldman and Wilson 1977)
This does not mean corporations necessarily liked everything that government did, much less that individual wealthy people always supported the role of government in providing a stable legal and economic system in which corporations could grow and expand their capital investments. But most of the time, most of those running corporate businesses understood the benefits that rationalization provided for capitalism, both the rationalization within corporations and that within government.
At the beginning of the 1980’s the first signs of a true fissure between the interests of capital and those of the state began to materialize, showing up in the policies that made up Reaganomics. One important aspect of that symbiotic relationship was the, usually grudging, acknowledgement that since the wealthy benefited the most from governments role in ensuring long-term planning and stability of resources, markets and labor, that the wealthy should pay a higher percentage of their income (through a progressive tax system) to support government; an agreement that had been in place since the Great Depression, and had underwritten the explosive economic growth of the 1950’s and 1960’s.
The “trickle down” idea of Reaganomics, has lead in the past 40 years to substantial erosion of tax paying by those at the top of the economic heap, to the rising of the public debt, and to the rise of a small number of obscenely wealthy billionaires. In the 1960’s and 1970’s a significant number of publicly owned corporations commanded wealth or capital in the tens of billions, but no individuals did. In 1980, the highest tax bracket in the United States was (for a married couple) $215,400 and above, and the tax rate for that bracket was 70%, so every dollar over $215,400 that a couple earned, they paid out 70 cents in taxes and kept only 30 cents. Today, the highest tax bracket (for married couple) begins at $628,301, and the tax rate is 37%; so for every dollar over $628,301 a couple earns they pay out 37 cents in taxes and keep 63 cents (assuming that one does find a dozen ways to reduce that with deductions and exceptions). As a result, amassing a fortune in the tens of billions, or even the hundreds of billions, is much easier today than it was forty years ago.
I believe that the presence of billionaires, who command resources once only available to publicly owned corporations (and countries) has contributed (at least one small factor) to the increasing attacks we see today on the rationality of government, such as those on scientists (e.g., Dr. Fauci), on science (e.g., the anti-VAX movement), on government civil service (e.g., Trump/DeSantis weird flipping of “drain the swamp” to mean replace civil service with cronyism). And even attacks on rationality within their own businesses (e.g., Elon Musk’s wholesale firing of the technicians and experts that made Twitter work).
A publicly traded corporation has a board of directors that is answerable to the shareholders as a whole. While not all shareholders participate, enough do that there are some checks on the actions of the board. The officers of a large publicly traded corporation are often simply higher paid, highly educated employees of the corporation. Even in cases where the founder, a child or grandchild or even great grandchild of a company’s founder holds and executive position in the company, they work at the behest of the shareholders, not as individual agents. In recent decades however, we have seen the rise of billionaires who head up their own corporations which are not publicly traded (Elon Musk pops to mind, but is not the only example). Individuals acting on their own as citizens or as heads of a business, are not constrained by voting shareholders, they can be eccentric, vindictive, whimsical, and capricious, acting on their own desires and interests. They are less likely to think in terms of the balancing of interests or of long term growth, than shareholder governed businesses. They can act to satisfy short term desires rather than long term needs. This is not to say that publicly held companies always act in terms of long term interest, just that short term decision-making is much easier for the individual billionaire than for the corporation with those same resources.
This is the first in a series of newsletters, in which I’m going try to make sense of some of the things going on politically today, by drawing on my knowledge of the history and functioning of the administrative state, and its role in the advancement of capitalism. Hope some of you come along for the ride. I also very much hope that you may have observations and insights to share with me and the other readers through the comments.
References:
Goldman, Robert and John Wilson. 1977. “The Rationalization of Leisure.” Politics ad Society. Vol. 7, no. 2.
Greer, L. Sue. 1984. Rationalization, Power and the Forest Service: A Case Study of Conflict Over the Mount Rogers National Recreation Area, Virginia. Unpublished dissertation available from the University of Kentucky Libraries.