The Last Capitalist
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The Last Capitalist
Elon Musk's popularity can be understood within the context of the post-war managerial coup against the capitalist class and our collective yearning for agency and ownership.
Becoming Unmanageable
There is a simple reason why people love or hate Elon Musk.
To his detractors, he is the silver-spooned son of a diamond miner magnate who has succeeded because of government support, skirting taxes, and pump and dump schemes. Worse: he is a billionaire, and being a billionaire comes with all the associations of greed and power that have made them into the public’s piñata.
To his supporters, Musk is a swashbuckling entrepreneur uniquely able to build multiple billion-dollar companies and is leading the charge in sustainable energy and making humanity an intergalactic civilisation. Musk takes big risks and wins big, using his own wealth and personal agency to build the world he wants to live in. Also, his meme game and willingness to buck conformity to zeitgeist narratives like pronouns and cancel culture makes him an avatar of the anti-hall monitor sentiment that exists among normal people against ‘the ruling elite’.
Musk’s popularity and self-styled populist image find him as the unlikely throwback to a bygone age of founder-capitalists that remain our golden standard for agency and ownership.
This is the real reason for the antagonism towards him by the expert class; because contrary to popular perception, we do not live in a ‘capitalist system’. Yes, there are (relatively) open markets, and financiers do have an oversized influence on economic and political life. Furthermore, the very existence of billionaires is also an argument for the existence of a capitalist system.
But the truth is that the billionaires are not our ruling oligarchy and are actually subservient to a higher class of power: the managerial elite.
This elite came into power at the turn of the post-war era, reining in the capitalists and instituting a new order that maintained the capitalist system but under a new hierarchy of power. This soft coup was triggered by the crisis of capitalism in the Great Depression and reached its culmination with the New Deal and the rise of a massively expanded federal state, responding to economic problems and the onerous requirements of war organisation during WWII.
The post-war managerial turn was described in James Burnham’s The Managerial Revolution. Published in 1941, Burnham foresaw with remarkable prescience the transfer of power from the self-made capitalists to a new class of ‘managers’ lying just above them. These managers would be experts trained in the way of scientific management and came from a small ecosystem of institutions including the media, academia, and government bureaucracies.
Founder-capitalists were defined by their agency and ownership. They took the risk to build something from nothing, and therefore had a strong moral claim over their wealth. These were men and women of the frontier, building entirely new systems of their own, according to their own rules, and reaping the rewards for it. American society in this time yet praised these traits.
The managerial elite was and still is defined by their belief in top-down management and hierarchies, and their desire to control the flows of capital. Managers don’t own anything, they just defenestrate the real owners and seize power through clandestine manoeuvres and manipulating ‘procedural outcomes’. This rentier mentality is one of the manager’s hallmark features.
The managerial elite’s control over capital is evidenced by numerous trends in recent decades. The rise of passive investing has removed both agency and ownership in the investment of our capital, replacing them with passivity and ignorance, and intermediaries that really control where our capital is invested. The introduction of ESGs allows for indirect nudging of capital to favoured causes (and friends). Firms like Vanguard and Blackrock have massively centralised control over shareholder voting rights with trillions of dollars in assets under management, leading to the potential of as few as twelve people having power over most American corporations.
In this context, founder-capitalists like Musk are unique as he not only owns and runs his companies, but he is unwilling to subjugate his wealth to the control of the managerial elite. His outspoken criticisms of ‘woke censorship’ are a signal of his unwillingness to ‘play by the rules’, and antics like the acquisition of Twitter disrupt the regular programming and introduce new possibilities to the flow of events - possibilities that the managerial elite would rather not have.
If you close your eyes and imagine freedom of speech within the boundaries of the law instead of the zeitgeist’s arbitrary moral positions, you can faintly hear ten thousand experts screaming into the darkness.
Musk is a live player, and this is a threatening prospect to a regime of planned scripts and outcomes.
And yet he is a rare oddity in a world where capitalists are largely subservient to managerial diktat. How and why founder-capitalists came to be a dying breed has to be understood within the managerial elite’s soft coup over founder capitalism. For whatever reason, the managerial elite was able to outmanoeuvre and subjugate the founder-capitalists. Why are men like Musk rare today? How did the managerial elite consolidate power? What role does capital truly play in our society?
Our poor understanding of the world we live in today is because of our poor grasp of modern history. To understand the post-war managerial turn, we have to know the difference between founder capitalism and managerial capitalism.
The story of Henry Ford is a useful case study that can shine some light on these questions - and why Musk’s revival of the founder-capitalist ethos lived out by men like Ford is so appealing and may yet not come to anything.
Henry Ford’s Populist Capitalism
Ford was a steadfast believer in the American capitalist faith of agency and ownership. Today, he is caricatured as an elitist who socially engineered society for the sake of crass material production, disempowered labour for financial gain, and forced us all into the drudgery of the nine-to-five workday so billionaires could reap the rewards. His innovations and worldview are often conflated with Taylorism, a top-down ‘scientific’ system of management governed by college-educated white-collar managers aimed at extracting maximum value from labour through managing workers with physiological and psychological incentives.
On the contrary, Ford was deeply influenced by the Midwestern populist tradition, bringing together agricultural producers and small-scale industrial shops against the encroaching influence of the east coast’s financial elite. Ford actually believed in the importance of the craft tradition of the factory floor, producing innovation through iteration by trial and error. Factory apprentices, not white-collar managers, were meant to govern manufacturing, which was as much an art as a science to Ford.
As I wrote in my Notes on Great Founder Theory, one of the defining beliefs of industrial civilisation is the linear and inevitable march of technological progress. Industrialisation and modernisation were stages that inevitably followed one another to a particular conclusion. However, this is a conceptual trap that ignores the importance of crises in history in creating alternative paths of development.
Ford’s innovations were not inevitable. On the contrary, his innovations in automobile manufacturing were a contrarian process that created alternative paths of development for America. He social engineered a new socio-economic class, shocking America when he raised the minimum wage to $5 per hour (at that time, a sizeable sum) and limited working hours to the nine-to-five we are all so familiar with. Higher wages combined with shorter workdays led to a crisis of labour as other firms were forced to offer similar terms or lose their workforce. He also changed consumption habits by making automobiles affordable to the common man, creating entire new demand vectors through innovations in factory organisation and achieving economies of scale. Ford’s innovations on the factory floor also changed the nature of employment by allowing the mass manufacture of complex goods with unskilled labour, enabling the spread of wealth to non-skilled migrants and even women. However, Ford was stringently anti-union, having an old fashioned ‘bootstraps’ mentality. He believed workers should not restrict their productivity but constantly increase it so they could get wealthy. Ford lived in a time where the possibilities of honest labour in a capitalist system were not so naive as it sounds to us today.
It is hard to perceive it as such, but in Ford’s time, these innovations were deep provocations against the social, economic, and political order of America. Ford transformed America’s mode of production and the social organisation needed to sustain it by focusing on labour productivity and mass manufacturing over the previously dominant economic mode of the extraction of raw resources.
Ford’s provocations were met with heavy opposition by the east coast elites and their local satraps in the Midwest who believed that cars were artisanal luxury products for the rich, not vehicles of utility for the common man. Ford struggled to raise capital among local investors for the Ford Motor Company, relying on a motley group of friends to capitalise the company. FMC successfully generated enough revenue for growth and re-investment to avoid seeking investment, and the rest is history. During his lifetime, FMC remained a private corporation with few shareholders outside Henry Ford himself, and no debts to speak of.
The mark of a true live player is their ability to divert society from the course it is currently on and go down a different path. Ford achieved that to a great extent in his own time, and we still live with the effects of his social engineering today. However, the managers also had their own designs, and the crises of the 1929-1945 era would lead to the undoing of Ford’s worldview.
The Managerial Turn and a Crisis of Succession
The Great Depression was the first major crisis for Ford, shattering his model of reality. His belief in a demand-driven model for automobile manufacturing collapsed when demand ceased to exist owing to the mass impoverishment of Americans. Additionally, his exclusion from elite circles and lack of political acumen meant he could not influence political developments with President Roosevelt instituting the New Deal program, massively expanding the power of the Federal state and the bureaucracies of production with it. This created a demand for the sort of expert manager that could competently manage those bureaucracies, and with it, leverage power over American society.
WWII would be the final undoing of Ford’s populist vision of mass production. By this time, his chief competitor General Motors (‘GM’) had surged ahead in production and become the world’s largest company. Notably, GM had adopted the Taylorist vision of scientific management and worked astutely to ingratiate itself with the east coast financial elite who were the main source of investment for GM. GM also played a key role in America’s wartime production, with key figures like successive GM Presidents William S. Knudsen becoming head of U.S. wartime production in 1942, and Charles Erwin Wilson becoming Secretary of Defense in 1953. The union of the federal state, industrial production, and the managerial class was solidified.
It would be Henry Ford Jr. who would undo his father’s legacy upon succession. He began by reforming the governance of FMC in line with the principles of scientific management that had seen GM outproduce FMC to become the world’s greatest automobile manufacturer. He also took the company public in 1956, disrupting his father’s fifty-year-old tradition of private ownership and management. Finally, Ford Jr. turned the Ford Foundation into one of the primary proponents of scientific management both in America and around the world.
Ford Sr. believed in the importance of productive labour and factory processes and machines, and that prosperity in the developing world could only come through the transfer of technical knowledge for industrialisation. His belief in this was so strong that he maintained a no-patent policy, allowing would-be industrialisers from American rivals like Nazi Germany, Soviet Russia, and Imperial Japan to visit his factories in the Midwest and acquire all the information they wanted to take back home.
Ford Jr. believed in the scientific management of human organisation and set about to turn the Foundation into a training ground for the next generation of managers, helping to staff bureaucracies and corporate offices, and ultimately providing the manpower that the managerial elite needed to subjugate capital. The true secrets of industrialisation were gatekept, selectively exported as part of America’s nation-building programs to post-war ‘allies’ like West Germany and Japan but otherwise restricted. Industrialisation and mass production was abandoned in favour of a new vocabulary to promote post-war American hegemony: democracy and consumerism, expertise and management.
With these developments, the populist mission of Ford Sr. had died alongside the founder-capitalist model of agency and ownership.
The Last Capitalist
The story of Henry Ford is an important case study within the wider context of the post-war managerial turn. It also helps us to understand the model of founder capitalism that Musk espouses - and why it generates such opposition among his detractors.
What Musk represents is that sense of agency and ownership that has long since been marginalised in our culture. We dare not dream of creating and owning things of value without a manager sticking his grubby paws into our pot and demanding their ‘share’ of our hard work. And if we resist, the manager resorts to subversion and theft. Musk’s use of internet memes, bull market pumps, FU money, and rhetoric against ‘woke’ narratives have allowed him to harness the mimetic power to raise capital, sell his goods and services, and even purchase ‘the commanding heights of the information ecosystem’.
What will determine Musk’s fate is whether Musk is simply playing the part of a brazen founder-capitalist because of the attractiveness of the image, because it distracts the managers so he can continue to build, or he truly believes that he is a warrior against the managerial order. Already, organs of the managerial class are manoeuvring to counter him. It is likely that Musk will not introduce too many changes to Twitter and rock the boat so he can avoid the worst of their wrath.
The founder-capitalists were defeated by the managers in the post-war era, and there will never be a return to that period of history. Founder capitalism not only failed to face up to the crisis of the Great Depression but the wartime demands placed on the American state and industrial capacity could only be met by expanding bureaucracies of production, a system of governance that continues to expand indefinitely.
Although Musk is an avatar for agency and ownership, recovering them, in reality, will require a different approach that has not been tried before. It will not find its conduit through markets and corporations or founder-capitalist billionaires. We require new forms of social, economic, and political organisation and niches capable of escaping the attention of the managerial elite until it is too late for them to stop the process.
What remains to be seen is whether Musk has a feeling for the myth he has created around himself and whether he can avoid self-destruction by overplaying his hand.
The person who experiences greatness must have a feeling for the myth he is in... And he must have a strong sense of the sardonic... The sardonic is all that permits him to move within himself. Without this quality, even occasional greatness will destroy a man. — Sayings of Muad’Dib, Dune
References
Books
The Managerial Revolution, James Burnham
Forging Global Fordism, Stefan J. Link
Papers
The Future of Corporate Governance Part I: The Problem of Twelve
Articles
Elon Musk Expose Documentary From the New York Times Announced
EU warns Elon Musk over Twitter moderation plans
Is Indexing Worse Than Marxism?
The Secret Diary of a ‘Sustainable Investor’ — Part 1