In the autumn of 1962 a Soviet economist in his mid-thirties spent four months travelling the United States on a scientific exchange programme, and was received by Henry Ford II, Henry S. Morgan, David Rockefeller and Cyrus Eaton. He sat down with the chairmen and presidents of dozens of corporations and with thirteen of the twenty-five American commercial banks then holding assets above a billion dollars. Then he went to the library of the New York Stock Exchange and spent, in his own words, "many days" going over proxy statements. The book that came out of it is the one you are holding, and it is one of the few titles Progress Publishers ever issued in English that a working economist could still cite without embarrassment.
That sentence is not a courtesy. Millionaires and Managers is a serious empirical study of who controlled American big business, built out of American sources, arguing a case that was live and contested in Western economics at the time and that has, on the central question, been vindicated. It deserves to be read as economics and not merely as a specimen of Soviet ideological production — which is what makes its one great silence so much worth naming.
Start with the date, because it matters more here than in most volumes of this series. The spine says 1969. The Preface to the English Edition, signed December 1968, says something else in its first sentence: "This book, written in 1962–63, is a result of a special investigation of control in large American corporations." Menshikov adds that in preparing the English edition he "fully reviewed it, giving, whenever possible, the latest statistical data and abridging some places not of prime interest to the foreign reader," and that he asked himself "has not the book become out of date?" — concluding, with a French tag, that the more it changes the more it stays the same, and therefore deciding "not to concentrate on altering all details."
He is being honest, and the honesty is worth taking at face value: this is a 1962–63 text with 1968 patches. The internal evidence confirms it. His freshest primary source is the Patman Report — Chain Banking. Stockholder and Loan Links of 200 Largest Member Banks, the report by Wright Patman as chairman to the House Select Committee on Small Business, Washington, 1963 — which he says was published "at the beginning of 1963 in the teeth of resistance by the big bankers," and which he uses twice as the evidentiary backbone of his chapters on bank control. The 1968 updating is real but thin: refreshed Fortune rich-lists, a few 1966–68 statistical abstracts dropped into tables built years earlier.
The decisive proof is a negative one. The word "conglomerate" does not appear in this book. Not once. The conglomerate wave — Litton, LTV, Gulf and Western, ITT under Geneen — was the structural transformation of American corporate ownership between roughly 1965 and 1969, the thing every business journalist in New York was writing about while Menshikov was preparing his English edition, and the phenomenon that would supply the sternest test his own thesis ever faced. A book on the control of American corporations completed in 1968 that never uses the word was not really revised in 1968. Read it as a book of 1962–63, and its blind spots become intelligible rather than culpable.
The target is the "managerial revolution" thesis. Adolf Berle and Gardiner Means had argued in The Modern Corporation and Private Property (1932) that as shareholding dispersed across hundreds of thousands of small holders, effective control of the large corporation passed from owners to salaried managers. James Burnham — whom Menshikov identifies, with evident relish and complete accuracy, as "a former Trotskyite" — turned this into a theory of class succession in The Managerial Revolution (1941). Berle himself extended it after the war in The 20th Century Capitalist Revolution (1954) and Power Without Property (1959) into a claim that the United States had become an "economic republic" in which, as Menshikov summarises him, the terms "collectivism", "people's capitalism" and "non-statist socialism" were "equally suitable."
The Marxist reply is that dispersed shareholding masks concentrated control rather than dissolving it, because control does not require a majority — it requires the largest coherent bloc facing a scattered and passive remainder. This is now close to the settled view in corporate-governance scholarship. In 1962 it was a minority position, and Menshikov set out to establish it empirically rather than assert it.
He did the work. The apparatus is overwhelmingly American and overwhelmingly primary: proxy statements read at the Stock Exchange library; Moody's manuals, cited two dozen times; the Patman Report; the Temporary National Economic Committee materials; SEC and Federal Reserve data; the Statistical Abstract; the New York Stock Exchange's own shareowner censuses of 1962 and 1965; and above all Fortune, which he cites more than a hundred times and reads with real attention — not as propaganda to be quoted derisively, but as the trade press of a ruling class talking to itself.
The empirical core is a company-by-company examination of control in the largest American industrial corporations, and the finding is stated without hedging:
Thus, we can draw a very definite conclusion: in so far as more than 100 of the biggest U.S. industrial corporations are concerned, they are not controlled by their hired executives and there are no signs of such a tendency.
Of the twenty-nine companies where salaried managers predominated on the board, he found that at least twelve were firms where control belonged undisputedly to a single family, and that in fourteen more, large family blocs plus Wall Street bank representation excluded managerial control. Exactly one — Bethlehem Steel — looked like a genuine case, and even there control was "based for a long time not only on its managerial position but also on the ownership of substantial blocks of stock." That is a real result, obtained by counting.
He is equally good on the demolition of "people's capitalism". The New York Stock Exchange, he notes drily, published the number of shareowners but declined to publish how many shares they held, and he argues from the Exchange's own tables that it possessed the second figure and chose not to process it. So he goes to the tax data instead: in 1964, shareholders with incomes under \$5,000 were 16 per cent of all shareholders and received 6 per cent of dividends, while families with incomes above \$50,000 — about 1 per cent of shareholders — received 37 per cent. Ten years earlier that same top group had held about 35 per cent of all shares. His conclusion: "Thus, in the ten years which, as claimed by the ideologists of the bourgeoisie, were marked by the swift growth of 'people's capitalism', the share of the wealthiest group in the United States in corporate capital did not change." He adds the University of Michigan survey finding that 95 of every 100 families earning under \$3,000 owned no shares whatever, and observes that for those who did, dividends came to between 0.5 and 2.5 per cent of household income — which "clearly makes the workingman a capitalist to no greater extent than if he were to buy a lottery ticket or keep a small sum in a savings bank."
On the employee share schemes then being promoted as the arrival of popular ownership, he is sharper still, and here the polemic is doing analytical work rather than replacing it: of 248 plans registered by 1961, only 114 involved direct sale of shares to employees, and only 31 per cent of eligible employees bought any. Scattered worker shareholdings, he argues, do not threaten the controlling bloc — they reinforce it, since the votes are administered by the company or by its own banks. "Such is the practical aspect of 'people's capitalism'."
He also disposed of a specific falsifiable prediction. Burnham had claimed in 1940 that the conditions of modern capitalism could no longer throw up new multimillionaires or enlarge the old fortunes. Menshikov simply counted, using Fortune's own surveys: in 1957 the magazine put 45 individuals at \$100 million or more; in 1968 it identified 153. He was right, and the trend he identified has continued for sixty years.
Two further judgements deserve credit because they were not obvious in 1962. The first is his treatment of stock options, which he identifies as the mechanism by which senior managers are converted into owners — "one of the main forms of enriching the top executives" — while noting that managerial shareholdings remained under 10 per cent of the stock of the leading corporations. He saw that executive compensation was becoming a channel of recruitment into the propertied class rather than a wage, which is roughly where the literature arrived thirty years later. The second is his refusal of a crude answer to his own question. He does not claim managers are powerless. He claims their power is delegated and revocable, and he illustrates it with an image that is the best thing in the book:
A manager may head a financial group today only if there is no suitable candidate from among the plutocracy itself. Here an analogy with a medieval monarchy can be drawn. If the throne was occupied by a nitwit or an infant, regents ruled the state. The same is true of the financial oligarchy.
Hence the National City Bank, run by "regents" — Vanderlip, Mitchell, Rentschler, Sheperd — from the early 1920s until James Stillman Rockefeller had completed a schooling designed "to compensate by diligence for the lack of special talents" and ascended a throne that had stood vacant for thirty years. Hence Harry Bennett, Henry Ford's chief of private police, ruling at Dearborn until Henry Ford II came of age. These are not decorations; they are the argument.
His final formulation is careful and, I think, correct:
the financial oligarchy, that is, the group of people whose economic power is based on the disposal of colossal masses of fictitious capital, is limited to that part of the monopoly bourgeoisie which holds a leading position in the main financial groups of the given country. The financial oligarchy draws its personnel from among the finance-capitalists proper, the financial aristocracy and the top managers.
That is not the vulgar position; he is not saying the managers are nobodies. It is a claim about recruitment and subordination within a composite ruling group, and it is a good deal closer to what the evidence supports than Berle's economic republic.
One credit he does not claim, and could not have claimed, belongs in the record here. The argument Menshikov made in 1962–63 had been made — from the same source, in nearly the same words — twenty-one years earlier, in a magazine he would not have been permitted to cite. Joseph Hansen reviewed The Managerial Revolution in Fourth International (vol. II, no. 5, whole no. 12, June 1941), within months of its publication, and went straight to the same weak point:
Burnham makes no attempt to challenge Lenin's analysis of this process whereby finance capital becomes predominant. Instead, Burnham, basing himself on Berle-Means' The Modern Corporation and Private Property, arbitrarily insists that this process signifies the expropriation of the big bourgeoisie by the "managers."
Hansen then quoted Ferdinand Lundberg's America's 60 Families at length against Burnham, including this:
control of corporations by legal device, while excluding small stockholders from a voice in affairs, does not exclude the big interests.
and this:
In no part of the book, however, do they suggest that a non-ownership management has wrested any corporation away from the big owners.
That last sentence is the one Menshikov also quotes — "he knew of no case when 'nonownership management has wrested any corporation away from the big owners'" — citing Lundberg, America's 60 Families, p. 505. Both men, independently and two decades apart, went to Lundberg for the decisive rebuttal, and both singled out the same pair of newspaper commentators as the popularisers of the Berle–Means reading: Lewis Gannett of the New York Herald Tribune and Raymond Clapper of the Scripps-Howard chain (whom Menshikov's text renders "R. Klepper"). The convergence is not a coincidence of taste. It is what happens when two people apply the same analytical framework to the same body of American evidence. The Fourth International simply got there first, in June 1941, while Menshikov was fourteen years old.
He is also a fair reader of his opponents where he might have been sectarian. C. Wright Mills gets a chapter's worth of serious engagement, quoted at length and credited: Mills "provided in his studies valuable material," and Menshikov's disagreement is precise — that Mills's "reorganisation of the propertied class" into a unified corporate rich collapses a distinction Menshikov wants to keep, between coalescence and subordination. He corrects Mills's social-origin figures using sources Mills had not used, including Warner and Abegglen's finding that a businessman's son had seventeen times the chance of reaching top management as a worker's son. Whether one accepts his correction or Mills's original, this is scholarship, conducted in the open, with the sources named.
Now the thing that has to be said.
This is a book about a ruling stratum that administers an economy it does not formally own; about how that stratum recruits itself, how it reproduces itself across generations, how it converts positional power into personal wealth, and how it perpetuates itself by controlling entry to its own ranks. It was written in Moscow in 1962–63 by a Soviet economist of standing, a man whose career would later take him to the staff of the United Nations and, in the end, into print alongside Galbraith.
The word nomenklatura — the Party's roster of privileged appointments — does not appear in it. Neither does Stalin. Neither does the Soviet Union, except once, in the Preface, as the sponsor of the author's travel. Neither does Yevsei Liberman, whose proposals on enterprise profitability were the great Soviet economic controversy of exactly these years, 1962 being the year of his Pravda article. The only Soviet writer cited on the substance is D. M. Gvishiani, quoted in a footnote to the effect that managerialism "turns out to be the ideological banner of contemporary big capital which unites the reactionary forces for struggle against socialism and democracy" — a sentence that does no analytical work at all, and whose function is to certify the chapter as politically sound before it proceeds.
The silence is not merely an absence. There is a precise place in the text where Menshikov walks up to the comparison and turns away. Setting out the postulates of the managerialist school — Drucker, Appley, MacGregor — he lists as their first proposition:
The work of the manager is a special profession, the art of directing the activity of people, intrinsic in any social system based on developed industry. In principle capitalist management in no way differs from management in socialist society; a bureaucratic hierarchy is a typical and universal form of management of the contemporary productive forces.
That is the one claim on the list that bears directly on his own country, and it is a serious claim. Menshikov's response is: "After a detailed analysis of the social nature of the top executives there is no need for a detailed critique of these assertions." He then offers three criticisms — that the managerialists ignore the dual nature of capitalist management, that they conflate the top echelon with the middle and lower, and that they ignore the subordination of the executive to the finance-capitalist. Every one is a criticism of their analysis of capitalism. None of them touches the proposition that a bureaucratic managerial hierarchy is universal to developed industry regardless of property form. He lists the argument that indicts him and declares it already answered.
And the instrument he has built is exact. Consider the passage he quotes from Fortune, with his own italics, as evidence of the American bourgeoisie's unease at Berle's theory:
In the new theory the manager is part of a self-perpetuating class, which appears in many lights to be superior to the group it replaced; but neither the legitimacy of its power, nor the limits, nor the tests of performance are clear.
A self-perpetuating class; superior to the group it replaced; the legitimacy of its power, its limits, and the tests of its performance all unclear. Menshikov thought that sentence important enough to italicise. He applied it to the United States, where — as his own book demonstrates — there remained an owning class above the managers to whom their performance was in fact tested, and a market that supplied the test. He did not apply it to the country he was writing in, where by 1962 there was no such class above the administrative stratum, no proprietor to dismiss it, and no test at all. The passage is a better description of the Soviet apparatus than of General Motors, and Menshikov put it in his own book.
And the two-sidedness of the managerial thesis was perfectly well understood by the people Menshikov was forbidden to read. That was, in fact, the whole point of Burnham's book, which argued that the United States, Nazi Germany and the Soviet Union were converging on a single managerial form of society — the claim that made it an anti-communist bestseller and that Menshikov, who summarises Burnham accurately elsewhere, declines to engage. George Novack put it plainly in "Mills and Marx" (Winter 1961), a year before Menshikov began writing, noting that C. Wright Mills was "apparently impressed with the erstwhile view of this prophet of world-wide 'managerial revolution' that the U.S. and the USSR are twin prefiguration of a new social formation." Novack rejected the equation, and rejected it from the left, on the grounds that the property forms differed and that the difference mattered. But he stated the question. Menshikov's book is built to answer exactly that question and answers only half of it.
He was not the first person to notice. Trotsky's The Revolution Betrayed (1936) had made this the centre of its analysis: that the Soviet bureaucracy was not a class in the classical sense, since it owned nothing, but that its command over the distribution of a scarce social product gave it the substance of privilege without the form of property, and that this was an unstable arrangement which would resolve either through political revolution from below or through the bureaucracy's conversion of its administrative position into ownership. The archive of this series does not hold The Revolution Betrayed itself, and I will not quote from memory what I cannot verify. But it holds Trotsky's restatements of the argument from the following year, and they are unambiguous. In November 1937, replying to critics who wanted to declare the USSR a new class society outright, he wrote:
Nobody has ever denied the possibility – especially in case of prolonged world decay – of the restoration of a new possessing class springing from the bureaucracy. The present social position of the bureaucracy which by means of the state holds the productive forces in its hands "in some respect" is an extremely important point of departure for this process of transformation. It is, however, a question of a historic possibility and not of an already accomplished fact.
(Once Again: The USSR and Its Defense, written 4 November 1937.) Three weeks later, in Not a Workers' and Not a Bourgeois State?, he set out the mechanism by which the stratum feeds itself:
At the same time it mercilessly exploits its role as distributor of the meager necessities of life in order to safeguard its own well-being and power.
and named the criterion by which the direction of travel should be judged: "if the bureaucracy becomes ever more powerful, authoritative, privileged, and conservative, this means that in the workers' state the bourgeois tendencies grow at the expense of the socialist."
Whatever one makes of Trotsky's insistence that the USSR remained a workers' state — an argument that split his own movement within three years, with Burnham himself among those who left over it — the analytical apparatus was on the table in 1936 and 1937. Menshikov could not have used it and kept his post. That is a statement about the conditions he wrote under, not a charge against his character. But the reader should hold the two halves together, because the book acquires its full force only when they are. Millionaires and Managers supplies a precise, empirically grounded method for identifying a self-reproducing elite that rules without owning: how to trace its recruitment, how to measure its social composition, how to detect the difference between formal title and effective control, how to read the gap between what an institution publishes and what it declines to publish. It was written by a man whose own society was the outstanding case in the world for that method, and to which he was professionally forbidden to apply it. The instrument is sound. It was simply pointed in the only permitted direction.
There is a smaller irony worth recording. Twenty-six years later, in 1988, Menshikov sat down with John Kenneth Galbraith for ten days at Galbraith's Vermont farmhouse, and the two published the transcript as Capitalism, Communism, and Coexistence: From the Bitter Past to a Better Prospect. By then he could say a good deal more about the management of Soviet industry than he could in 1963. The title's "bitter past" was doing work that the author of Millionaires and Managers had not been permitted to do in the book itself.
Read Chapters I to III for the argument and Chapters IV to VI for the evidence — the latter, on bank monopolies, finance capital and the mapping of the New York and regional financial groups, is a substantial piece of work on the structure of American finance and remains usable as a description of that structure as it stood in the early 1960s, whatever one thinks of the framework.
Read it knowing what it cannot see. It predates the conglomerate wave, and the reader should ask what Menshikov's method would have made of Harold Geneen — a salaried manager who assembled ITT and answered, effectively, to no owning bloc. It predates by a decade the rise of the institutional investor to a position where pension funds and mutual funds became the controlling blocs themselves, a development he glimpses when he notes Berle's own observation that small holders' property is "increasingly concentrated in the hands of insurance companies, pension and mutual funds," but does not follow. Both of these complicate his thesis without overturning it; the modern literature on ownership concentration has come out broadly where he did, by routes he did not take.
And read it against its silence. The anti-Stalinist left had, by the time this book was written, spent three decades doing to the Soviet bureaucracy what Menshikov does here to the American financial oligarchy — counting it, tracing its recruitment, asking who really controlled what. Trotsky's The Revolution Betrayed (1936) is where that begins, and it should be read alongside this volume by anyone who wants the comparison Menshikov could not make. For the reply to Burnham on his own ground, Joseph Hansen's review in Fourth International, June 1941, is still the sharpest short treatment, and it has the advantage of having been written before anyone knew how the argument would come out. For the American sociology Menshikov engages, George Novack's review of The Power Elite — "The High and the Mighty", Winter 1957 — and his "Mills and Marx" (Winter 1961) cover the same ground from the same tradition, and Novack's objection to Mills is close enough to Menshikov's to be worth setting beside it: that Mills's power elite, assembled from corporate rich, warlords and politicians, never settles the question of "which is the master and which the servants?"
Put those texts beside this one and you have something none of them provides alone: a method, and the case it was never allowed to be used on.