The Chief Executives

from the book

The Power Elite

by C.Wright Mills

Oxford Press, 1956

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The corporations are the organized centers of the private property system: the chief executives are the organizers of that system. As economic men, they are at once creatures and creators of the corporate revolution, which, in brief, has transformed property from a tool of the workman into an elaborate instrument by which his work is controlled and a profit extracted from it. The small entrepreneur is no longer the key to the economic life of America; and in many economic sectors where small producers and distributors do still exist they strive mightily-as indeed they must if they are not to be extinguished-to have trade associations or governments act for them as corporations act for big industry and finance.

Americans like to think of themselves as the most individualistic people in the world, but among them the impersonal corporation has proceeded the farthest and now reaches into every area and detail of daily life. Less than two-tenths of 1 per cent of all the manufacturing and mining companies in the United States now employ half of all the people working in these basic industries. The story of the American economy since the Civil War is thus the story of the creation and consolidation of this corporate world of centralized property.

1. In the development of each major industrial line, competition between many small firms tends to be most frequent at the industry's beginning. There is then a jockeying and maneuvering which, in due course, results in consolidation and merger. Out of the youthful competition, there emerges the Big Five, or the Big Three, as the case may be: a small set of firms which shares what there is to share of the industry's profits, and which dominates the decisions made by and for the industry. 'The power exercised by a few large firms,' John K. Galbraith has remarked, 'is different only in degree and precision of its exercise from that of the single-firm monopoly.' If they compete with one another they do so less in terms of price than in terms of 'product development,' advertising, and packaging. No single firm among them decides, but neither is the decision made impersonally by a competitive, autonomous market. There is simply too much at stake for that sort of slipshod method to be the going rule. Decisions become, explicitly or implicitly, the decisions of committees; the Big Three or Four, one way or another, are in on the major decisions that are rendered. In this there need be no explicit conspiracy, and certainly none that is provable. What is important is that each big producer makes his decisions on the basis of his impression of the reactions of the other big producers.

2. In the process of corporate consolidation many owning entrepreneurs and even salaried managers become too narrow; they cannot detach themselves from their own particular company. Managers with less personal feelings for any one firm come gradually to displace such men narrowed by their own experience and interests. On the higher levels, those in command of great corporations must be able to broaden their views in order to become industrial spokesmen rather than merely heads of one or the other of the great firms in the industry. In short, they must be able to move from one company's policy and interests to those of the industry. There is one more step which some of them take: They move from the industrial point of interest and outlook to the interests and outlook of the class of all big corporate property as a whole.

The transitions from company to industry and from industry to class are aided by the fact that corporate ownership is, in a limited way, scattered. The very fact of the spread of ownership among the very rich and the chief executives of the great corporations makes for a unity of the property class, since the control of many corporations by means of various legal devices has excluded the smaller but not the larger propertied interests. The 'scatter' of sizable property is within a quite small circle; the executives and owners who are in and of and for this propertied class cannot merely push the narrow interests of each property; their interests become engaged by the whole corporate class.

3. The six and a half million people who owned stock in publicly held corporations in 1952 made up less than 7 per cent of all adults in the population. But that is not the whole story; in fact, by itself, it is misleading. What is important is, first, what types of people own any stock? And second, how concentrated is the value of the stock they own?

First of all: 45 per cent of the executives, 26 per cent of all professional persons, and 19 per cent of all supervisory officials hold stock. But only 0.2 per cent of the unskilled workers, 1.4 per cent of the semi-skilled workers, and 4.4 per cent of foremen and skilled workers hold stock. Some 98.6 per cent of all workers in manufacturing own no stock whatsoever.

Second, in 1952, only 1.6 million (25 per cent) of the 6.5 million people who held any stock received as much as $10,000 per year from any and all sources. We do not know how much of that $10,000 came from dividends, but there is reason to believe that the average proportion was not great. In 1949, some 165,000- about one-tenth of 1 per cent of all U.S. adults-received 42 per cent of all the corporate dividends going to individuals. The minimum income of these people for that year was $30,000. The idea of a really wide distribution of economic ownership is a cultivated illusion: at the very most, 0.2 or 0.3 per cent of the adult population own the bulk, the pay-off shares, of the corporate world.

4. The top corporations are not a set of splendidly isolated giants. They have been knit together by explicit associations, within their respective industries and regions and in supra-associations such as the NAM. These associations organize a unity among the managerial elite and other members of the corporate rich. They translate narrow economic powers into industry-wide and class-wide powers; and they use these powers, first, on the economic front, for example with reference to labor and its organizations; and, second,' on the political front, for example in their large role in the political sphere. And they infuse into the ranks of smaller businessmen the views of big business.

When such associations appear to be unwieldy, containing conflicting lines of argument, cliques have emerged within them which have attempted to steer their programs and lend direction to their policies. In the higher circles of business and its associations, there has long been a tension, for example, between the 'old guard' of practical] conservatives and the 'business liberals,' or sophisticated conservatives. What the old guard represents is the outlook, if not always the intelligent interests, of the more narrow economic concerns. What the business liberals represent is the outlook and the interests of the newer propertied class as a whole. They are 'sophisticated' because they are more flexible in adjusting to such political facts of life as the New Deal and big labor, because they have taken over and used the dominant liberal rhetoric for their own purposes, and because they have, in general, attempted to get on top of, or even slightly ahead of, the trend of these developments, rather than to fight it as practical conservatives are wont to do.

5. The growth and interconnections of the corporations, in short, have meant the rise of a more sophisticated executive elite which now possesses a certain autonomy from any specific property interest. Its power is the power of property, but that property is not always or even usually of one coherent and narrow type. It is, in operating fact, class-wide property.

Would it not, after all, be quite strange if, in a country so devoted to private property and where so much of it is now piled up, and in an atmosphere which in the last fifty years has often been quite hostile, where men of economic means also possess, we are continually told, the greatest administrative and managerial ability in the world-would it not be strange if they did not consolidate themselves, but merely drifted along, doing the best they could, merely responding to day-to-day attacks upon them?

6. Such consolidation of the corporate world is underlined by the fact that within it there is an elaborate network of interlocking directorships. 'Interlocking Directorate' is no mere phrase: it points to a solid feature of the facts of business life, and to a sociological anchor of the community of interest, the unification of outlook and policy, that prevails among the propertied class. Any detailed analysis of any major piece of business comes upon this fact, especially when the business involves politics. As a minimum inference, it must be said that such arrangements permit an interchange of views in a convenient and more or less formal way among those who share the interests of the corporate rich. In fact, if there were not such overlapping directorships, we should suspect the existence of less formal, although quite adequate, channels of contact. For the statistics of interlocking directorates do not form a clean index to the unity of the corporate world or the co-ordination of its policy: there can be and there is co-ordinated policy without interlocking directors, as well as interlocking directors without co-ordinated policy.

7. Most of the thirty-odd billion dollar corporations of today began in the nineteenth century. Their growth was made possible not only by machine technology but by the now primitive office instruments of typewriters, calculators, telephones, and rapid printing, and, of course, the transportation grid. Now the technique of electronic communication and control of information is becoming such that further centralization is entirely possible. Closed-circuit television and the electronic calculator put control of an enormous array of production units-no matter now decentralized such technical units may be-under the control of the man in the front office. The intricately specialized apparatus of the corporation will inevitably be more easily held together and controlled.

The trend within the corporate world is toward larger financial units tied into intricate management networks far more centralized than is the case today. Productivity has and will increase fabulously, especially when automation makes it possible to interlock several machines in such a way as to eliminate the need for much of the human control at the point of production that is now required. That means that the corporate executives will not need to manage huge organizations of people; rather, in Business Week words, they will be 'operating great mechanical organizations using fewer and fewer people.'

All this has not been and is not now inevitable; certainly the enormous size of the modern corporation cannot be explained as due to increased efficiency; many specialists regard the size now typical of the giants as already in excess of the requirements of efficiency. In truth, the relationship of corporate size to efficiency is quite unknown; moreover, the scale of the modern corporation is usually due more to financial and managerial amalgamations than to technical efficiency. But inevitable or not, the fact is that today the great American corporations seem more like states within states than simply private businesses. The economy of America has been largely incorporated, and within their incorporation the corporate chiefs have captured the technological innovation, accumulated the existing great fortunes as well as much lesser, scattered wealth, and capitalized the future. Within the financial and political boundaries of the corporation, the industrial revolution itself has been concentrated. Corporations command raw materials, and the patents on inventions with which to turn them into finished products. They command the most expensive, and therefore what must be the finest, legal minds in the world, to invent and to refine their defenses and their strategies. They employ man as producer and they make that which he buys as consumer. They clothe him and feed him and invest his money. They make that with which he fights the wars and they finance the ballyhoo of advertisement and the obscurantist bunk of public relations that surround him during the wars and between them.

Their private decisions, responsibly made in the interests of the feudal-like world of private property and income, determine the size and shape of the national economy, the level of employment, the purchasing power of the consumer, the prices that are advertised, the investments that are channeled. Not 'Wall Street financiers' or bankers, but large owners and executives in their self-financing corporations hold the keys of economic power. Not the politicians of the visible government, but the chief executives who sit in the political directorate ... hold the power and the means of defending the privileges of their corporate world. If they do not reign, they do govern at many of the vital points of everyday life in America, and no powers effectively and consistently countervail against them, nor have they as corporate-made men developed any effectively restraining conscience .

Power Elite