Management consultants seize on all kinds of ideas in the drive to heal businesses from whatever it is that ails them. This is not criticism delivered lightly, considering the many years I made a living as a management consultant.
At the site for Constitutional Business Consulting, I came across a history of socialism — I think the author’s idea is to convince business managers that they are really using socialism in their management practices, and so the businesses should pay Constitutional Business Consulting to inject some workplace democracy. It doesn’t really matter — what I liked was the history of socialism claimed at the site, and the comparison to the modern, free-enterprise business model.
We could quibble on the history, but why bother: The point is worth discussion:
Socialism literally sprang from observing the success of capitalism, while believing that conditions for workers could be improved if the control of production were moved from capitalists to the state. A top-down control system, such as that used in large business, was the model for socialist society. Yet the true engine of capitalism, the free market, was overlooked and left out of the plan.
Social reformers, from the early Utopian Socialists to the Marxists, were literally awed by the tremendous success of capitalistic industrial production. In The Communist Manifesto Karl Marx stated:
The bourgeoisie, during its rule of scarce one hundred years, has created more massive and more colossal productive forces than have all preceding generations together. Subjection of Nature’s forces to man, machinery, application of chemistry to industry and agriculture, steam-navigation, railways, electric telegraphs, clearing of whole continents for cultivation, canalization of rivers, whole populations conjured out of the ground—what earlier century had even a presentiment that such productive forces slumbered in the lap of social labor. [1]
The socialists did not want to disrupt this technological miracle, but merely to distribute the profits of it more fairly. They observed the workers earning profits for the wealthy business owners and maintained they were being unfairly exploited. Believing the strength of the system was in its structure, they didn’t want to eliminate businesses, but merely to replace the wealthy business owners with the state.
As early as 1791 Talleyrand, in France, compared the ideal society to a National Workshop. [2] In the 1820s Henri de Saint-Simon envisioned the ideal society as one large factory.[3] After his death, his followers, calling themselves the Saint-Simonians, devised a system in which all of society would be organized like a single factory and socialism was the word they chose to represent it. [4] This was the origin of socialism—the conception of a centrally-planned society run like a business.
Throughout socialist writings the theme is recurring. Thomas More, Etienne Cabet, Louis Blanc, Robert Owen, Wilhelm Weitling, Karl Marx, Friedrich Engels, Sydney Webb, William Clarke, and Nikolai (V.I.) Lenin all relied on a top-down structure, like that used in businesses, as the model for socialist society.[5] While they didn’t all express their philosophies the same way, their line of reasoning was basically this: Capitalism, with its scientific approach, had developed the methods of production to such a degree that they became routine tasks. The wealthy capitalists, desiring to live by the labor of others, had divorced themselves from the day to day duties by training others to perform those tasks. The role of the capitalists had therefore become superfluous, and production could go on without them, thus eliminating the exploitation of the workers.
In his work The State and Revolution, Lenin states:
Capitalism simplifies the functions of ‘state’ administration; it makes it possible to have done with ‘bossing’ and to reduce the whole business to an organization of proletarians (as the ruling class) which will hire ‘workers, foremen and bookkeepers’ in the name of the whole of society. [6]
And The Communist Manifesto proclaims:
The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, is its own grave-diggers…. [7]
And, these views were not just restricted to socialists. Even scholars who were avowedly against socialism, believed the success of businesses, with centralized and top-down controls, proved the viability of socialism. In 1942 Joseph Schumpeter—Chairman of the American Economic Board—saw in large business enterprise all the ear-markings of a socialistic structure, and from this he surmised that capitalism could readily be replaced by socialism. [8]
The passage of time has revealed a conclusion quite different from that of Schumpeter’s. Unfortunately, the naive belief that capitalistic efficiency is due to the top-down structure within businesses is simply grist for the mills of social reformers.
Within a few minutes of finding that site, I found a message at a Facebook site from a guy taking exception to John Kennedy’s famous statement about liberalism. I quoted part of the definition above, noting that socialism was organization “like a business,” and responded:
Perhaps some who claim to see socialism in a health care system where private physicians are chosen by patients to deliver medical care in privately-owned facilities, associating with privately-owned hospitals, using therapeutic devices manufactured by privately-owned businesses and pharmaceuticals developed by privately-owned drug companies, really do mean to rail against such free enterprise. But I’m willing to wager they just don’t know them meaning of the word “socialism” nor would they recognize socialism if it moved into their bedrooms and slept with them every night.
What do we mean when we say, “socialism?”
I wonder what sort of success Constitutional Business Consulting gets?
Footnotes, as listed by Constitutional Business Consulting [hotlinks in the quoted sections should take you back to CBC’s site]:
- Marx , Karl; and Engels, Friedrich, The Communist Manifesto, 1848, Penguin Books Ltd., Middlesex, England, 1986, p. 85.
- M. Talleyrand-Périgord, Charles Maurice, Rapport sur l’instruction publique fait au nom du comité de constitution de l’Assemblée Nationale, les 10,11, et 19 septembre 1791, Paris, 1791, p. 7-8.
- Manuel, Frank E., The New World of Henri Saint-Simon, Harvard University Press, Cambridge, Massachusetts, 1956, p. 308-309, 367.
- Hayek, Friedrich A., Individualism and Economic Order, The University of Chicago Press, Chicago, Ill. 1948, p. 3.
- Laidler, Harry W., History of Socialism, 1968, Thomas Y. Crowell Company, New York. Although Laidler’s socialist leanings clearly show through, as a single source of diverse socialist viewpoints this 900+ page book is superb. See particularly, p. 28, 48, 62, 95-96, 108, 109, 197-202, 416, 658, and 660.
- Lenin, Vladimir Ilich, The State and Revolution, 1917, Penguin Books, New York, 1992, p. 44 See also p. 40, 42-46, 56, 61, 86-87, 90-91, and 98-99.
- Marx and Engels, The Communist Manifesto, (noted above), p. 94. Also, p. 85-86.
- Schumpeter repeatedly makes claims such as these in Capitalism, Socialism, and Democracy. 1942. New York. Harper & Roe. 1950. See particularly p. 61, 132-134, 186, and 214-215. He also believed managers of American businesses were suitably trained for future roles as leaders in a socialist society, p. 186, 204-205, and 207.
Spread the word; friends don't allow friends to repeat history.
Posted by Ed Darrell 
Millard Fillmore's Bathtub 