In response to:
What Rules America? from the May 1, 1975 issue
What Rules America? from the May 1, 1975 issue
To the Editors:
Andrew Hacker is right: American academics and intellectuals generally “prefer to circumvent the question of class”; to his credit he states plainly that “America has classes,” and that the rich members of some 20,000 households who own roughly a fifth of the personally held corporate stock in this country form America’s propertied class. To this extent, Hacker points out the “deeper divisions of social life” in America that others prefer to ignore. Further, he also correctly argues that large corporations shape public authority to fit their interests and that they control those parts of our country “that bear on their operations.” Hacker is also right to urge us to try to “understand and deal with power in its institutional form.” However, on the critical question he is wrong: under whose control and on behalf of which class in America is such institutional power deployed?
Hacker claims that by speaking of a ruling class, we “look for power in the wrong places,” for, in his view, the “rich families [who] invest most of their fortunes in corporate securities” do not control the large corporations. Since Hacker agrees that the large corporations tend to shape public authority to their ends, it follows that if he also conceded that these corporations were typically controlled not by “anonymous administrators” but by principal capitalist families and other cohesive ownership interests, then he would have to conclude that we have not merely a “propertied” but a dominant class in this country. Thus, perhaps unwittingly, his focus on “power in its institutional form” serves to neutralize the question of class and class rule in the United States.
While Hacker was kind enough to call attention to my lengthy article, “Corporate Ownership and Control: The Large Corporation and the Capitalist Class,” he simply ignores the gist of it. For it was precisely my thesis, based on a systematic review of the discrepant findings of numerous studies and of critical problems of method and measurement, that the alleged separation of ownership and control in the large corporation, on which Hacker’s own argument rests, is a socially plausible but deceptive “pseudofact.” Even Berle and Means’s widely cited but seldom read work. The Modern Corporation and Private Property, as I show, had information which permitted them to classify as definitely under management control only 22 percent of the 200 largest corporations, and of the 106 industrials, only 3.8 percent!
Hacker asks why I think that “if we are to locate the actual centers of corporate control, we must discover1 the ‘most effective kinship unit.’ ” The answer follows in the very next sentence, which he does not quote, and which sums up the methodological problem: “Without research into the web of kinship relations binding apparently unrelated individuals into a cohesive owning unit for purposes of control, analysis of the locus of control in the large corporation is hobbled at the outset.” Hacker himself points out that even the researchers at Fortune and Business Week rely heavily on gossip to estimate the holdings of even “well-known families” in specific corporations, because the family’s holdings are hiddenâ€”as we both emphasizeâ€”in a welter of brokers, dealers, foundations, street names, and nominees. He should have added that they are also hidden among a host of “apparently unrelated individuals” who actually form a “cohesive owning unit for purposes of control.” Senator Metcalf and his staff have been trying for years, without success, to penetrate the secrecy hiding corporate ownership, leading him and Senator Muskie to exclaim recently that the use of nominees results in a “massive coverup” of the actual principal owners and centers of control in large corporations.2 So how does Hacker know that not capitalists but bureaucrats control the large corporations? And where have all the capitalists gone? The corporations are units in a class-controlled apparatus of private appropriation; and the whole gamut of principal functionaries and owners of capital participate in varying degrees, and as members of the same social class, in its direction. If, following Hacker, we direct our anger not against this class and the irrational system of corporate capitalism on which its wealth and power rest, but against vague “power in its institutional form,” we may be assured that, as Hacker avers, “capitalism’s demise [will be] slated for yet another postponement.”
University of Wisconsin
William Domhoff’s letter shows, better than my review ever could, just what his perspectives are. Keeping files on Edgar Bergen’s playmates, Jacques Barzun’s wife, and Kingman Brewster’s first job is obviously what he does best.
Statistical precision is possible if you make clear what criteria and cut-off points you have chosen. (This is what I did in delineating a propertied class of 23,000 families.) I found Domhoff’s figures strange only because they contradict his prose. According to his own arithmetic, his ruling class contains between one and two million Americans, which works out to about one “ruler” per block. I am unable to square this with his portrait of a wealthy exclusive stratum found only in top boardrooms and posh resorts.
I agree we are ruled; but not by a class. Real power now lies in institutions rather than in the uninteresting people who act as their administrators. Lists of names, marriages, and watering places simply tell us that certain people know one another. But these persons only arouse our attention because they hold institutional positions.
I cited Maurice Zeitlin’s article because it shows one can talk seriously about class without all those winks and leers Domhoff apparently finds necessary. Zeitlin says we need more research on “kinship relations.” But he then anticipates what those studies will tell us: a handful of families control our dominant corporations. It is one thing to discover that Mellon heirs have holdings in major companies. It is quite another to show that all those nephews and cousins meddle in the running of the business. In fact, they interfere far less than lending and investing institutions, which can set stringent conditions on their loans and underwritings.