The Rise of the Corporate State in America

Author(s): Daniel R. Fusfeld

Source: Journal of Economic Issues, Vol. 6, No. 1 (Mar., 1972), pp. 1-22
Published by: Association for Evolutionary Economics
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 The Rise of the Corporate State in America

Daniel R. Fusfeld

Every society contains within itself the forces that create its own
future. The social order is always in the process of becoming, and the
future inevitably must be different from the past. The processes of
change are rooted in the past, operate in the present, and thrust into the
future. Social scientists have to develop a triple vision; they must look
backwardto the world we came from, analyze the world in which we
live, and try to discern the future into which we will inevitably be cast.
The crisis that came upon the world in the mid-i1960s-Black revolt, the
youth culture,disaffectionof the intellectuals,turmoilin Southeast Asia,
continuingpeasant revolts in many parts of the world, the breakdownof
the internationalfinancialsystem -compels us to look for the sources of
the crisis, and ask where are we going and what forces propel us. We
must look at the past to understandthe present and divine the future.
The thesis of this paper is that the United States has moved well
down the path toward a corporate state. Economic power is concen-
trated in the hands of a relatively few supercorporationsthat are now
moving toward a dominancein the world economy to match their posi-
tion in the domestic economy. Political power has shifted heavily into
the hands of the executive branch of the federal government as the
positive state has taken on an increasingly significantrole. These two
centers of economic and political power have developed a growing
symbiosis. The self-selectingelite of the supercorporationdominatesthe
decision-makingprocess, while lesser centers of power in labor unions

The author is Professor of Economics, University of Michigan, Ann Arbor. This paper
was the presidential address presented at the Annual Meeting of the Association for
Evolutionary Economics, New Orleans, Louisiana, 27-28 December 1971.
1

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2 DanielR. Fusfeld

and the universities are drawn into the system as junior partners by a
variety of economic and political mechanisms. Because of the tre-
mendous economic strengthof the United States, these domestic devel-
opments have tremendousimportfor the rest of the world. They enable
American economic and political power to be used in the world at large
in the interests of those who manage the emerging American corporate
state.
The corporatestate in this country involves an economic and political
compromisebetween those who hold power and those who do not. As
long as the economic system provides an acceptable degree of security,
growing material wealth, and opportunity for further increase for the
next generation, the average American does not ask who is running
things or what goals are being pursued.The system and those in power
remainunchallengedas long as the materialpayoff is sustained.The elite
is free to use the great wealth of America to preserve and extend its
power, and to use its power to preserve and extend its wealth.

Three Long-Term Trends

Three great long-term trends have dominated the development of

Americaneconomic institutionsin the twentieth century: the continuing
growth of giant corporations,the rise of the positive state, and a move
toward American dominancein the world economy. Together they con-
verged in the quartercentury after World War ll to create the basic
outlines of the emergingAmericancorporatestate.

TheGiantCorporation
The chief outlines of the rise of the giant corporationto a position of
dominance in the American economy are familiarto all. Three merger
movements, at the turn of the century, in the 1920s, and after World
War II, created the pattern of big enterprise oligopoly that dominates
those sectors of the economy to which we look for the products and
services of the affluenteconomy and the sinews of national power. In
manufacturing,for example, the 100 largest firms in 1968 held a larger
share of manufacturingassets than the 200 largest in 1950; the 200
largest in 1968 controlled as large a share as the 1,000 largest in 1941.
This aggrandizementof the giants is matched by similar, but less
well-documented, trends in other sectors of the economy where big
enterprisefinds its home.
Increasedconcentrationis supplementedby ties that bind large corpo-
rations into communitiesof interest, based on stockholdingsby wealthy

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 The Rise of the Corporate State 3

families, interlockingdirectorates, and financial connections with large

banks. The trust activities of banks and trust companies add another
dimension to linkages within the corporate community and strengthen
the strategic position of financialinstitutions. In addition, trade associ-
ations promote common policies in both economic and political activity,
and strengthenthe leadershipof large firmswithin their industries.
Several aspects of the large corporation merit further exploration.
First, giant internationalfirms have appeared.The internationalcorpo-
ration was made possible by advances in the technology of trans-
portationand communicationafter World War II (jet aircraftand auto-
matic data communication,for example). U.S. corporationswere able to
take advantage of the new technology much more readily than foreign
corporations, in part because much of that technology was developed
here, but chiefly because of the predominanceof the United States in
world trade and internationalfinance. The result is that U.S.-based
corporationsdominatethe populationof giant internationalcorporations
and provide an organizational expansion of the U.S. economy that
supplementsits outwardthrustof trade and finance.
Second, the internal organizationof the giant corporation is author-
itarian,hierarchical,and bureaucratic.It is run from the top by a man-
agement that is largely self-selecting. Separation of ownership from
control may have spread ownership very widely, although that con-
clusion remains controversial, but it has enabled managementsto free
themselves from control by owners to a considerable degree. The chief
force with which they must contend is the influence of financial in-
stitutions that dominateaccess to the capital markets. The combination
of the rise of giant firms of an authoritariannature with separationof
ownership and control brought a self-selecting business elite whose
influenceover economic affairsincreases with the growing dominanceof
the firmsthey manage.
Third, giant corporations become private governments, in the sense
that their actions and policies govern the alternativesopen to millions of
people and thousands of communities. Prices, investment policy, prod-
uct development,location of plants, wage and employmentpolicies -the
whole range of corporate policy-are decisions of national importance
because of the size and significanceof the organizationsthat make them.
In that sense much of our life is governed by the decisions made by a
small group of men who are responsible only to themselves, who select
their successors, and whose organizations continue for an indefinite
time. A pattern of economic decision making has emerged that is only
imperfectly controlled by market forces and which has questionable
legitimacyand limited accountability.

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4 Daniel R. Fusfeld

The Positive State

The rise of the positive state is the second major trend that is trans-
formingour economic institutions. Its distinguishingfeature is new and
expandedfunctionsfor the federal government.Startingwith the Feder-
al Reserve Act of 1914 and continuingthroughthe EmploymentAct of
1946 to the full-scale adoption of Keynesian macroeconomicpolicy in
the 1960s, the nationalgovernmenthas taken on the function of stabiliz-
ing the economy and fostering full employmentgrowth. Simultaneously,
it has socialized many of the economic risks of a self-adjustingsystem of
markets through unemployment insurance, workmen's compensation,
old age and survivors'insurance,mortgageguaranteeprograms,guaran-
ty of bank deposits, stabilization of farm prices, and a host of other
programsthat reduce or shift economic risks that formerly were borne
by individualsand business firms. Resolution of conflicts between labor
and management is the object of a series of laws related to labor
relations. Another area of conflict, that between consumer and seller,
has been the concern of legislation at both the federal and state level,
startingdecades ago with regulationof public utilities and expandingto
other areas of regulationdecade by decade. Governments at all levels
foster the education and trainingneeded to keep a complex economy
functioningand growing.All of these measures share a common charac-
teristic. By intervening in the mechanism of the self-adjustingmarket,
they are designed to create a framework within which the modern
economy can flourish. They are positive action to achieve designated
goals by a positive state, in contrastto the laissez-faire state.
A shift in constitutionallaw accompaniedthe functionalchange taking
place in the role of government. The laissez-faire state's constitutional
frameworkof limited powers permitted the federal government to do
only those things specificallydesignatedin the Constitution. In a series
of path-breakingdecisions over a five-yearperiod in the mid-1930s those
limitationswere set aside: the federalgovernmentwas enabled to use its
taxing and spending powers to further the general welfare, and the
general welfare was to be defined by Congress. We moved from a
constitution of limitations to a constitution of powers, to use Arthur
Selwyn Miller'sexpressive phrase.
These functionaland legal changes were accompaniedby a shift in the
locus of political power. The New Deal years, with their enlarged
federal functions and increased federal budgets, initiated a long-term
shift of power from local and state governments to Washington.Within
the federal governmentpower tended to shift from the legislative to the
executive branch.This change occurredpartly because the departments

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 The Rise of the CorporateState 5

of the executive branchhad more funds to spend; the ability to allocate

and use those funds increased the power of the administrativebureau-
cracy. Congress lost control of many programsbecause they were set up
on a continuingbasis that seriously reduced the freedom of Congress to
restructurethe budget. In addition,new programsor changes in old ones
originatedin the executive departments;they had the experts and the
experience necessary to determinewhat was necessary to achieve policy
goals. Finally, power shifted to the executive branch because the new
programswere national in scope. The president and the executive de-
partmentshad a national constituency, while Congress was an agglom-
eration of local constituencies. Initiatives for the solution of national
problemswere bound to come from those with a nationalpolitical base.
During World War II the locus of power within Washington shifted
further, to the military and the national security managers. They had
vastly increased funds to spend; they had a technical competence in an
area that was a terra incognita to most Americans; they had a near
monopoly on information;and they held national survival as a hostage.
After World War II, when militaryspendingwas sharplycut, it seemed
as if the power of the nationalsecurity managerswas waning, but events
quickly changed their position. The Cold War, the Korean War,
McCarthyismand anticommunism,the missile gap of 1960, the rise of
Fidel Castro in Cuba, and the Vietnam War pushed militaryand related
spendingto new heights. The militarizationof America over the last two
decades kept the military and the national security managers firmly in
positions of great power.
Throughoutthis period the role of the chief executive also was grow-
ing. The president, not Congress, was responsible for the formation of
economic policy under the Employment Act of 1946. In addition,
foreignpolicy and internationalaffairsbecame almost totally the respon-
sibility of the president and the executive branch.As those issues came
to dominatepostwar federal policy, the president inevitably became the
focus of government.
In this fashion, over a period of forty years the locus of power shifted
to Washington,within Washingtonto the executive branch, and within
the executive branch to the president and to those policy makers con-
cerned primarilywith militaryand nationalsecurity affairs.

Americaandthe World
Concurrentlywith the rise of the giant corporationand the positive
state, the United States moved to a position of economic and political
dominance in world affairs. It is now the largest single participantin

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6 DanielR. Fusfeld

world trade,accountingfor over 6 percent of world exports and imports.

It is the largest supplier of capital to the world economy, generating
more than 50 percent of the world's savings. After decades of foreign
investmentand an outwardflow of capital, the U.S. balance of payments
shows an annualnet income on private internationalinvestment of about
$6.4 billion, as comparedwith about $1.6 billion for the nine next most
important trading countries combined (1968 figures). U.S. economic
growth and high living standardshave made it the world's most impor-
tant marketand the most importantsource of capital in the world.
The U.S.-based internationalcorporation is in a special position of
prominence.In 1970, U.S. direct investment abroadreavhed $78 billion
in book value, and is expected to total $85 billion in 1971. The market
value is undoubtedly much greater. Sales from U.S.-owned overseas
production facilities are about $68 billion, which is more than double
total U.S. exports of about $27 billion. Profit rates earned by overseas
facilities generally exceed those from U.S. facilities, which partially
explains why foreign operations of U.S. concerns are expanding more
rapidlythan domestic investment. IBM, for example, earned more total
profitsin 1970 from its internationaloperations than it did from those in
the United States, while Dow Chemical expects its foreign sales to equal
its domestic sales sometime duringthe 1970s.
American economic penetrationof the world economy was strength-
ened by the internationalfinancialsystem established at Bretton Woods
in 1944. Under that system each nation's central bank was requiredto
maintainthe value of its currencywithin 1 percent of par. That innocent
provision, when combined with a persistent U.S. balance of payments
deficit, resulted in an annual shift of assets from foreign to U.S. own-
ership of from $1 billion to $3 billion annually, which was financed not
by U.S. savings, but by foreigncentral banks. It also created inflationary
pressures abroad that had to be countered by macroeconomicpolicies
which tended to restraineconomic growth in the countries in which they
were applied. Meanwhile, the flow of additional assets to American
ownership aided the internationalgrowth of U.S. corporations and
helped the U.S. governmentto pay for some of its militarycommitments
abroad.
This system finally collapsed in 1971, under the impact of U.S.
inflationand expanded militaryspending abroad. The inflation brought
our seeminglypermanentfavorablebalanceof trade to an end, while the
Vietnam War escalated our overseas military spending. When foreign
centralbanks indicatedunwillingnessto finance the resulting$22 billion
deficit in the U.S. balance of payments,we were forced to float and then
devalue the dollar. The fundamentalreality of U.S. economic power

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 The Rise of the Corporate State 7

politics was revealed by Secretary of the Treasury Connolly, however,

who told the Group of Ten at Geneva that the new currency relation-
ships we sought would have to provide a favorable balance of trade for
the United States of $13 billion annually, to finance our "normal"
foreign investments and overseas military spending with $2 billion to
spare for emergencies. He was proposing,in essence, that the contribu-
tion of foreigners to U.S. world dominance be shifted from the in-
ternationalfinancialsystem to the internationaltrade system, and that it
be made permanent rather than subject to the discretion of foreign
central banks.
In passing, we should note that Connolly'sproposal was equivalent to
an annual tax of $13 billion on the U.S. economy, in real terms. Yet
neither the public nor Congress were consulted on the American posi-
tion, which illustrateshow much power has shifted into the hands of the
executive. We also should note that the agreements reached in
mid-Decemberof this year reconstitutethe BrettonWoods system with
a somewhatgreater degree of flexibility, but leave it equally vulnerable
to the same forces that broughtits downfall.
American economic expansion had political allies. Economic pre-
dominance in Canada came from the flow of capital and proximity of
markets.Those forces plus the Monroe Doctrine and militaryand diplo-
matic intervention brought Latin America under U.S. economic
influence. The rest of the world was to be available to American eco-
nomic interests through the Open Door policy, enunciated first with
respect to the Congo in 1884 and later for China in 1895- 1900. We
even tried colonialism in the Philippines and Cuba, but those were
aberrantexperiments for a nation whose Manifest Destiny lay in the
pervasive spread of its financialstrengthand the attractingforce of its
great market. It is not necessary for the United States to have colonies,
or even political spheres of influence, as long as its more than 200
million people consume more than half the world's production of raw
materials and manufacturedgoods, and generate over half the world's
savings. It is only necessary that the rest of the world be open.
World War II brought political and military predominance as well.
American technology achieved an initial monopoly of nuclear weapons
and methods for their delivery. The war had left no nation in Western
Europe with the strengthto counter the USSR, so we filled the vacuum
with troops, economic aid, and military alliances. Liquidation of the
British and French empires in Africa and southern Asia brought U.S.
militaryand political power to predominancethere. In the Far East our
militaryvictory over Japan left us in command. Aside from the Soviet
Union, Eastern Europe,and China, world power lay in Washington.

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8 DanielR. Fusfeld

The internationalthrust of Americanpoliticaland economic power is

of the greatest significancefor the rise of the American corporate state.
The interests of big governmentand big business coincide most strongly
in the internationalsphere, where the political and military strength of
the one supportsand is supportedby the economic power of the other.
For example, U.S. oil companies in North Africa and the Middle East
produce crude oil essential to the economic life of Europe and Japan,
and they profitaccordingly.A U.S. fleet in the Mediterraneannot only
maintains U.S. power and supports our Western European allies, but
also maintainsthe existing political situation in the area and helps to
stabilize economic arrangementsthere. It is one of the clearest examples
of the symbioticrelationshipsbetween U.S. political and economic posi-
tions aroundthe world. As America moved toward militaryand political
predominancein the years after World War II it finally was able to
achieve an Open Door policy that gave U.S. trade and U.S. capital full
access to the world.

The Merging of Public and Private Power

Concentration of economic power and the emergence of executive

power in a positive state were not independentof each other. There has
been a growing tendency for them to merge. Economists are familiar
with an early manifestation, the regulation of utilities and other in-
dustries "affected with the public interest." What began ostensibly as
protection of the public was gradually transformedinto protection of
those presumably being regulated, with the power of the state united
behindthe economic power of industry.
The petroleumindustryis the classic example of the cooperative use
of public and private power for private gain. It is the second largest
industry in the country and its fuel products are essential to a modern
economy. The federal and state governments cooperate with the large
integratedoil companies to maintaina complex system of market con-
trol. The domestic market is protected from foreign competition by
federal legislation that restricts and licenses imports of crude oil. The
states, underthe InterstateOil Compact Commission,regulatedomestic
outputon the basis of quotas that, in effect, maintaincurrentprices. The
quotas are enforced by federal prohibitionof transportationin interstate
commerce of oil produced above the quotas. Control of crude oil pipe-
lines by the industry giants, validated by an antitrust consent decree,
enables large firmsto profitfrom transportingthe raw materialof smaller
competitors. Finally, the industry as a whole is given a favored tax
position through its large depletion allowance. This system stabilizes

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 The Rise of the Corporate State 9

prices and protects the existing firms. The industry charges prices that
not only produce a normal profit, but also provide, in normal times,
almost all the capital needed for expansion. Existing stockholders can
monopolize the gains from economic growth and new technology rather
than sharingthose gains with suppliers of new capital. Capital for ex-
pansion comes from the taxpayer and from the consumer of the in-
dustry'sproducts.
On a much larger scale the symbiosis of big business and big govern-
ment encompasses the whole economy. Big business needs big govern-
ment and the services it performs. Modern macroeconomic policies
provide the economic growththat large corporationsneed to satisfy their
own desires for growth. Full employmentstabilityprovides the security
and makes possible the long time horizons that enable giant firms to
carry out long-rangeplans. For example, in 1971 the automobile com-
panies begin planningfor the automobilesthat will be marketedin 1978;
they can be relatively secure in their expectations about total purchasing
power and automobile demand because they know the federal govern-
ment will assure relatively full employment. Assurance of full employ-
ment growth provides the lush economic environment in which the
supercorporationflourishes.
Big business needs big governmentfor a second reason. Socialization
of risks, social insurance, and welfare programs resolve some of the
personal problems inherent in a market economy. By bringinggreater
security to people these programsstabilize the social order. They give
the ordinaryman a stake in the status quo, and they allay some of the
discontent that otherwise might lead to social and political change. A
similarpoint might be made about labor legislationand resolutionof the
conflict between labor and management,but more about that in a mo-
ment.
Finally, big business needs big government to educate the technical
and managerialcadres that staff big enterprise.Most of the investmentin
humancapitalrequiredby the giant corporationis made by governments
when not by individuals.Much of the basic scientific research that lays
the groundworkfor technological change is carried out under public
auspices.
On the other side of the bargain,big governmentneeds big business,
particularlyin a nation that has the position of world power of the
United States. The technology of modern warfareis provided by giant
firms. Modern weaponry implies such firms as Lockheed Corporation.
Faced with this need, the Departmentof Defense consciously set out to
create, foster, and succor such firmsduringand after WorldWar II. The
recent rescue operation for Lockheed is only the latest and largest

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10 DanielR. Fusfeld

example of many similar situations in the past. The military-industrial

complex, with its intricate and interwoven relationshipsbetween public
officials and private firms, between public needs and private gain, is the
offspringof the dependence of national power upon the economic base
providedby big business.
Big government needs big business in an even more fundamental
sense. Giant corporationsnow are so importantthat government must
preserve them in orderto keep the economy functioning.The case of the
Penn Central Railroad is instructive. That corporation occupies two
strategicpositions in the economic landscape. Its transportationfunction
is essential for the proper functioningof the industrialeconomy of the
northeasternstates; remove the Penn Central and the entire economy
must falter. In addition, the financial obligations of the railroad con-
stitute an important share of the assets of many leading banks and
insurancecompanies,and its debts are owed to many municipalitiesand
industrialfirmsas well. A financialbreakdownof the Penn Centralcould
bring with it a succession of other bankruptcies.For these reasons the
federal governmenthad to intervene to keep the railroadoperatingand
to enable it to pay its most pressing debts. The entire economy was the
Penn Central's hostage, and the federal government responded ac-
cordingly.
The mutuality of interest and symbiotic relationship between big
business and big governmentis assumingformalorganization.The most
recent step in this directionis the system of economic controls instituted
by the Nixon administrationin its effortto halt inflation.An organization
combiningrepresentativesof business, labor, and the public, under the
leadership of government officials, seeks to define national economic
policy with respect to wages and prices, makes decisions that bring
those policies into effect, and has the legal sanctions necessary to en-
force its decisions.
Whateverone may thinkof the wisdom or effectiveness of the policies
and their administration,we must recognize here both the philosophy
and the mode of operationof the corporate state: individualinterests are
subordinatedto the common good, which is determinedby representa-
tives of the chief economic interests affected, and the decisions are
enforced by the state. It echoes the style pioneered by Fascist Italy and
tried once before in this country by the NRA of the 1930s. We do not
know what the ultimate pattern will be, but the chances are good that
some form of incomes policy embodyingthose principleswill emerge as
a permanentfeatureof the Americaneconomic constitution.

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 The Rise of the Corporate State 11

BigBusinessandBigLabor

The emerging corporate state creates a subtle mutuality of interest

between big business and big unions, despite the contest between the
two in collective bargaining.The patternof labor-managementrelations
established under the umbrella of federal law helps to preserve and
stabilize the positions of big business and big unions. Long-term con-
tracts, industry-widebargaining,grievance procedures and arbitration,
even the process of collective bargainingitself, contributeto the security
of both sides. If corporationsgain uniform wage rates throughout the
industry, one source of cost differences between firms is eliminated
and maintenanceof common prices in oligopolistic industries is facil-
itated. Long-term contracts assure large corporations of known wage
costs over a period of one to three years, facilitatingthe planning that
gives large firms an advantage over small. Firms protected against
unauthorized strikes and work stoppages need not contend with dis-
ruptionof productionlines. As long as reasonable collective bargaining
agreements are reached, the industry is protected against government
interventionin determiningwages and workingconditions.
Unions as organizationsalso benefit. Exclusive bargainingagreements
protect the union from having its membershipraided by other unions.
Grievance procedures and arbitrationare means to channel members'
discontent into agreed-upon settlement procedures, thereby reducing
internalpressures. Even union dues often are collected by the firm and
paid directly to the union. Finally, a wise business management will
protect a "reasonable"union leadership by seeing to it that its con-
stituents obtain sufficienteconomic gains to keep it contented with that
leadershipas well as with theirjobs.
In recent years this growing mutualityof interest has been disturbed
by the process of inflation.As long as the economy expands at a rate
fast enough to maintain reasonably full employment, and government
fiscal and monetary policies provide the necessary level of total spend-
ing, both unions and management can seek gains that promote
inflationaryprice increases. As long as wage increases plus fringe ben-
efits do not exceed productivitygains, there is no internalcost pressure
on the business firm, but it is tempting for unions to push for greater
gains, particularlyin oligopolistic industriesin which administeredprices
can be moved upwardwithout damagingprofits. As long as government
stands ready to maintainaggregate demand at full employment levels,
the burden is shifted to the general public, to the mutual benefit of

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12 DanielR. Fusfeld

workers and business firms. Inflationvalidated by macroeconomicpol-

icy can be a safety valve that eases the conflict between unions and
management.
When inflation is caused by excessive aggregate demand, as during
the escalation of the Vietnam War, and government imposes fiscal and
monetarypolicies designed to halt the rising prices, the conflict between
unions and managementis intensified. Union members press for wage
increases to compensatefor the rapidrise in prices, while managementis
faced with both rising costs and government pressures to keep prices
from going up. These were the conflicts, coming to a head in the summer
of 1971, that forced the Nixon administrationto take a further step
towardthe corporate state by imposingcontrols on prices and wages. It
now seems that the controls will succeed in rescuing the corporate
communityfrom the pressures of union demands on the one side and
deflationarymacroeconomicpolicy on the other.
Clearly there are conflicts within the pattern of mutualityof interest.
Inflationcreated by the state's thrust toward world power disrupts the
tripartiterelationshipbetween state, corporation,and union. The prob-
lem is resolved by a greater dose of economic planning and further
developmentof the corporatestate.

The Universities
Americanuniversitieslong have functionedas traininggroundsfor the
business elite, particularly schools of law, engineering,and business
administration.This function has grown steadily, as technology has
become more complex, as the scope of the giant corporation has ex-
panded,and as the legal niceties of corporaterelations with government
and labor have become more intricate. In recent decades a close rela-
tionship between universities and governmenthas arisen to supplement
the ties with business. The center of this new relationshipwas military
needs and internationalaffairs: universities did much of the basic and
applied research on developmentof new weapons, and they trainedthe
experts in overseas areas required by the nation's expanded in-
ternationalcommitments.
Development of militarytechnology involves a symbiotic relationship
between government,universities,and militarycontractors.Government
supportsweapons research in the universities; the enterprisehires pro-
fessors as consultants and sends its personnel into the university's
classes; and everyone involved receives some kind of payoff. Roswell
Gilpatric, then deputy secretary of defense, described an ideal rela-
tionship of this sort in a 1962 speech at South Bend, Indiana, to an
audienceof midwesternbusinessmenand universitypeople.

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 The Rise of the Corporate State 13

What Bendix has been doing in this field deserves mention. Bendix
personnel, I am informed,have worked closely with the University
of Michigan faculty, sharing the use of the University's nuclear
reactor in significantresearch. The Bendix Systems Division, the
University, and the Federal Government have been associated in
joint meteorologicalprogramsin fieldtests.
Bendix has employed consultantsfrom the University faculty; Ben-
dix technicianshave given part-timeservice as faculty members;and
Bendix personnel are encouragedto take advanced courses and to
secure degrees from the University-with 30 percent of all company
engineershavingtaken some courses.
I am pleased, also, to learn that Bendix maintains contacts with
other great educationalinstitutionsin this area, including Michigan
State University, Wayne State University, and South Bend's own
Notre Dame. These activities may help to explain why Bendix
received $172 million of prime military contract awards in Fiscal
1961 and an even largertotal in Fiscal 1962.
Sometimes research is done by university departments. Sometimes it
centers in quasi-independent research units such as the Lawrence Lab-
oratories (University of California), Willow Run Laboratories (Univer-
sity of Michigan), Lexington Laboratories (MIT), Applied Physics Lab-
oratory (Johns Hopkins), Forrestal Laboratories (Princeton), and
Aeronautical Research Laboratory (Cornell). This organizational device
partially removes administration of military research from academic
controls, and creates an academic vested interest in military programs.
Much university activity outside the sciences is also caught up in the
military-industrial-academic complex. International programs and
training of foreign language experts are funded heavily by federal
fellowships or grants from foundations designed to promote the in-
ternational interests of the federal government. For example, the For-
eign Area Fellowship Program was originated by the Ford Foundation
to help the State Department find expertise "required for the effective
discharge of this country's increased international responsibilities." The
National Defense Education Act also served to move the entire univer-
sity community toward the goals of national policy.

The Managerial Elite

A self-selecting economic elite dominates the emerging corporate

state. There always have been economic and political leaders, but in a
world in which power is dispersed an elite is not possible. In modern
America, however, power itself is concentrated, both in a relatively
small number of giant corporations (200, 250, 500, 750?), and in a small
number of executive positions in the federal government. The supercor-

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14 DanielR. Fusfeld

poration and the positive state have created an institutional structure

readily controllable from a small number of strategic positions. How
many positions? Perhaps several thousand at the most. Certainly no
more than ten thousandbusiness and financialleaders, militarymen, and
federaladministratorsconstitute this power elite.
There have been enough studies of the American managerialelite to
give us a rough idea of its nature and changing scope. As a group, it
comes predominantlyfrom an urban,white, Protestant,upper or upper-
middle income background. Studies of the social and economic char-
acteristics of post-WorldWar II business leaders by W. Lloyd Warner,
C. WrightMills, and G. William Domhof, buildingon studies of earlier
periods by FrankTaussig and WilliamMiller, show very few immigrants
or sons of immigrants, small numbers from farm, worker, or lower
white-collar backgrounds, relatively few Catholics and Jews, and no
Blacks. About 10 percent inherited their top positions by moving into
family-dominatedcompanies; about 5 percent are entrepreneurswho
built their own companies; some 10 - 15 percent are professional men,
mostly lawyers, who moved into top business positions after profes-
sional success. Some 70 percent, however, moved to top positions by
working up through the business hierarchy, which is a much greater
proportionthan in the past. Seventy years ago the entrepreneursand
family-connectedmanagers were far more important (68 percent), the
career executive much less important(18 percent),and the proportionof
lawyers and other professionalswas about the same.
These data suggest that the business elite is a relatively open one. It
recruitsfrom outside the existing group,and this tendency appearsto be
increasing.The major source of recruits is the system of higher educa-
tion; the business elite always has had more education than the average,
and today that is more true than ever. The educational system is a
primaryscreeningmechanismand partiallyexplains why so many of the
business elite are from upper and upper-middleincome groups. They
tend to be drawn heavily from the Ivy League colleges (where most of
the managersfrom "old wealth" families graduate)and from the large
state universities (where most of the career executives receive their
educations).
This first level of screening is supplemented by executive training
programs and on-the-job training. There the aspiring top manager is
indoctrinatedwith the business point of view and the ideology of man-
agement,there he learns to fit in with those already at the top, and there
he develops the good judgment that top management requires. Since
advancement depends on the judgment of those already at the top, a
premiumis placed on development of the viewpoints and styles of life

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 The Rise of the Corporate State 15

that prevail. As Mills put it, "in personal mannerand political view, in
social ways and business style, he must be like those who are already in,
and upon whose judgmentshis own success rests."
The business elite is a self-perpetuatingand self-selectinggroup which
develops a common set of values, an accepted mode of behavior,and an
unspoken but recognizableset of goals. The value system, in particular,
stresses the desirabilityof wealth, both for the individualand the nation,
and accepts as generally beneficent the institutions of private property
and the national state. Indeed, strengtheningand preservation of those
institutionsseems to be the fundamentalpoint of agreementamong the
business elite, irrespective of their political persuasions. Their value
system embraces the slogan of the Medici family in fifteenth-century
Florence: "Money to get power, power to protect the money."
The business elite is supplemented by a group of military leaders
whose socialization occurs in the militaryacademies. There they learn
the values of nationalpower and respect for the status quo, attitudesthat
are reinforced by the selection process for high command within the
militaryitself and by contact with the leadershipof the industrialpart of
the military-industrial complex.
The managerialelite of the executive branch of the government is
another matter.We tend to think of that group as having risen from the
political ranks, moving into top governmentalpositions from governor-
ships, mayoraltys,or other elected posts. While that is true for some, the
great majority are drawn from the business world, as studies by the
Brookings Institution, Gabriel Kolko, and Richard Barnet have amply
shown. In particular,the national security managersof the federal gov-
ernment are drawn almost wholly from the executives of large corpo-
rations, large financialinstitutions,and the large law firms that do their
legal business. A similarsituationprevails throughoutother branchesof
the federalgovernment,but not to the same extent. Nevertheless, one of
the close ties between the positive state and the supercorporationis the
presence of a managerialgroup in governmentthat is drawn in large part
from the top ranksof business leadershipitself.
Within the managerialelite a complex set of relationships oriented
toward achieving a consensus in national policy is at work. Much of
what is taken for pluralistdeterminationof policy by political scientists
is, in effect, a pluralismof the managerialelite. A sketch of the process,
which is quite familiarto all once we stop to think about it, will clarify
the point.
Corporationmanagers, their bankers and lawyers, and the wealthy
families associated with them dominate the boards of trustees of the
great private universities scattered from Cambridgeto Palo Alto. They

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16 DanielR. Fusfeld

also dominate the large foundations, which had their origins in the
wealth of an earlier elite generation. The foundations, in turn, provide
funds for the "think tanks" staffed by professors and researchers from
the academicworld and often affiliatedwith the private universities. The
think tanks provide expert advice and advisors directly to government
agencies, and also create an expertise used by a wide variety of policy
planning groups dominated by foundations and corporate managerial
elite, such as The American Assembly, the Committee for Economic
Development, and the Council on Foreign Relations. Ideas and person-
nel from these organizationsand think tanks flow to the federal govern-
ment, particularlythe executive branch, and to federal task forces,
commissions, and working parties, composed in large part of the man-
agerialelite and its expert advisors. These groups examine problemsand
make policy recommendations,with the result that national goals and
federal policy strategies are derived from a pluralist consensus of the
elite. Specific policy programs come from the political hurly-burlyof
Congress, but the goals of nationalpolicy are seldom determinedthere.

The Political Economy of Our Time

The corporatestate in America rests on a complex political economy.

Its power base is the supercorporationand the executive branchof the
positive state. Its goals are strongly oriented toward national power,
partlyas an end in itself, and partly to preserve the existing structureof
wealth. It is directed by a self-selecting and self-perpetuatingelite. Its
military power and economic strength are used to create a world in
which it flourishes.
The power base is narrow, however, as any elite's must be. Control
can be retainedonly by appeal for support,or at least acquiescence, to
millions who do not share directly in either wealth or power. Two
methods are used: the growing affluencederived from economic growth,
and psychologicalappealsthat seek supporton emotionalgrounds.
First, affluence.Economic growth maintainedat rates that exceed the
growth of populationprovides rising real incomes for the great majority
of Americans. As long as the system has a material payoff for the
average person, little question is raised about who controls power or
who has great wealth. This fundamentalcharacteristicof our political
economy helps to explain the great emphasisplaced on full employment
and economic growth as goals of national policy, why the principal
representativesof big business embraced Keynesian economics in the
1950s, and why President Nixon could say in 1970, "I am a Keynes-
ian." Keynesian macroeconomic policy is essential to the political
compromisethat enables an elite-managedcorporatestate to survive.

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 The Rise of the Corporate State 17

The vital importanceof the materialistpayoff to middle-incomeAmer-

ica is illustratedby the reaction of public opinion to the Vietnam War.
The war broughttaxes and inflationthat gobbled up real income, and the
militarydraft began to take sons and husbands. The American middle
class first became restive and then opposed the war. The materialpayoff
stopped, the political compromise was broken, and opposition spread.
Opponents of U.S. expansionism recognized this strategic weakness of
the American corporate state relatively early. Che Guevarra, for ex-
ample, called for "a thousandVietnams" to put such great strainon the
system that it could not continue.
The U.S. response to that threat is just emerging. Initially, we are
Vietnamizing the war in Southeast Asia to reduce the loss of U.S.
manpowerand placate the suburbs.Inflationis being halted by controls.
For the longer strategy, however, we are developing a new type of
capital-intensive warfare using electronic sensing, automatically con-
trolledweapons, saturationbombing,and new types of chemical warfare
that are designed, with the help of Lockheed's famous C5A, to fight
limitedwars on a moment'snotice in any part of the world with few men
and a great deal of materiel.Simultaneously,we are moving to a volun-
teer army to eliminate the draft. In the future, wars like those in Viet-
nam will be hardly distinguishablefrom peacetime. In both war and
peace there will be plenty of jobs in military production, and active
warfare on a Vietnam scale will disturb us hardly more than our in-
terventionin the Dominican Republicor Guatemala.
Second, psychological appeals. The corporate state needs more than
neo-Keynesianeconomics and a capital-intensivemilitarytechnology. It
needs spirit, belief in its righteousness,enemies. They are provided. All
Americans,rich or poor, are taught the trappingsof nationalismfrom an
early age. Much of the teaching of history in our primaryand secondary
schools performs that function. Stephen Decatur's toast, "My country,
rightor wrong,"is part of our heritage.Lyndon Johnson could appeal to
a sense of national honor to justify his Vietnam policy. We are trained
from childhood to see national goals as our individual goals, psy-
chologically to identify ourselves with the nation, to feel a warm, emo-
tional attachment to Old Glory. If the conditioning is successful the
nationalgoals designed by an elite to advance their wealth and power
become the individualgoals of millions.
For those who need more we provide a messianicdemocracy,the idea
that the United States has a unique political and economic system more
beneficentthan any other, and it is the duty of America and Americans
to spread that system to less fortunatepeople around the globe. From
this chauvinismsprings not only our well-known feelings of superiority
to the rest of the world, but also such programsas the Peace Corps,

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18 DanielR. Fusfeld

foreignaid, and a series of quasi-charitableefforts that appeal to liberals

and reformers.
For the fearful there is anticommunism.It identifies a known enemy
of unknown dimensions, an external and internalthreat that can never
be fully countered. Anticommunismprovides an excuse for American
world hegemony, a rationale for huge military expenditures and space
adventures, reasons for going to war against peasant revolutionary
movements in the Third World, and justification for internal surveil-
lance, mass arrests,and political trials.
Every fascist nation developed emotional appeals designed to gain
loyalty to the regime. Japan deified the emperor, hated the westerner,
and asserted the superiority of the Japanese race. Germany used
anticommunismand anti-Semitism in combination with the appeal of
Aryan superiority. Spain advertised a "Catholic state," whatever that
may be. All were emotional appeals, irrationalin their content, to gain
acceptance for national goals selected by an elite that were opposed to
the best interests of the mass of the people. The corporate state in
America follows in the same path.

WhatIs to Be Done?
The American corporate state is torn by conflict. A broad malaise
affects a society in which the great majorityof people do not control the
decisions that structuretheir lives. The U.S. position in the world is not
sustainable without huge military expenditures, and it leads us into
periodic wars that stop the domestic payoff of materialgains and break
up the political compromisebetween the haves and have-nots. We have
been unable to maintain growing affluence without suffering from
inflations that unsettle both domestic and internationaleconomic rela-
tionships. We have captive nations in our midst, the minoritygroups we
crowd into low-wage, menial, service occupations. Our national goals
are seen by increasing numbers of young people and intellectuals as
essentially irrational,however rationallywe may pursuethem.
Our conflicts demandorder. A society in turmoilreacts by seeking to
impose new systems of control. The only other alternative is drastic
change in the structureof society and the locus of power. We face the
classic dilemma of the industrialsociety of the twentieth century. Will
we opt for preservationof the existing structure by imposing the con-
trols that keep the system's turmoil in check? Down that path lies the
continuing development of our emerging corporate state into a
full-blownfascism, the Leviathanof the future.
At the present moment the tacit agreementbetween those who hold

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 The Rise of the Corporate State 19

power and those who do not has broken down under the combined
impact of the war in Vietnam, the turmoilin our cities, and recognition
by many that American society is malign,not benign. The Nixon admin-
istration seeks to patch up the cracks and rebuild the political com-
promise; it seeks a returnto the days when the goals of the managerial
elite were not seriously questioned;it is doing so by movingcloser to the
formalorganizationof the corporatestate.
The far more difficulttask is to restructureour economic institutions
in the direction of a humane society. We need more than prosperity,
economic growth, and stable prices. We need a redistributionof wealth
to achieve greater equality and freedom. We need a world at peace.
Those goals will not be achieved unless we can take the guns away from
the generals and power from the managerialelite. We must disperse
economic power and governmentalauthority.We must move to nothing
less than a revolutionarytransformationof our economic and political
institutions.

Bibliography

The leadingworks on the Americancorporatestate are those of John Kenneth

Galbraith,American Capitalism: The Concept of CountervailingPower (Bos-
ton: Houghton Mifflin, 1952); The AffluentSociety (Boston: Houghton Mifflin,
1958); and The New IndustrialState (Boston: Houghton Mifflin, 1967). Charles
A. Reich, The Greening of America (New York: Random House, 1970)
presents a relatedanalysis. Other works that deal with the institutionalstructure
and political economy of the contemporaryAmerican economic system, from a
variety of viewpoints, include Robert T. Averitt, The Dual Economy (New
York: W. W. Norton, 1968); Michael D. Reagan, The Managed Economy (New
York: Oxford University Press, 1963); David T. Bazelon, The Paper Economy
(New York: Vintage Books, 1965); and Morton S. Baratz, The American
Business System in Transition (New York: Thomas Y. Crowell, 1970). A
Marxianview, now a classic, is Paul A. Baranand Paul M. Sweezy, Monopoly
Capital (New York: Monthly Review Press, 1966). An earlier version of some
of the ideas developed in this paper is found in Daniel R. Fusfeld, "Fascist
Democracy in the United States," ConferencePapers, Union for Radical Politi-
cal Economics, Philadelphia, December 1968 (Reprint No. 2, URPE, Ann
Arbor, Michigan).
Three recent books provide a systematic analysis of the place of the large
corporation in the economy and related problems of public policy: H. H.
Liebhafsky,American Governmentand Business (New York: John Wiley and
Sons, 1971); WilliamG. Shepherd,MarketPower and Economic Welfare(New
York: Random House, 1970); and Frederic M. Scherer, Industrial Market
Structureand EconomicPerformance(Chicago: Rand McNally, 1970). Broader
issues of social policy are developed in Robin Marris, The Economic Theoryof
"ManagerialCapitalism"(New York: Basic Books, 1968); RichardJ. Barber,

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20 Daniel R. Fusfeld

The American Corporation: Its Power, Its Money, Its Politics (New York: E. P.
Dutton, 1970); Morton Minitz and Jerry S. Cohen, America, Inc.: Who Owns
and Operates the United States (New York: Dial Press, 1971); Edward S.
Mason, ed., The Corporation in Modern Society (Cambridge, Mass.: Harvard
University Press, 1959); and Harry M. Trebing, ed., The Corporation in the
American Economy (Chicago: Quadrangle Books, 1970). Interlocking direc-
torates are documented in the Report of the Federal Trade Commission on
Interlocking Directorates (Washington: U.S. Government Printing Office, 1951).
The classic study of corporateinterestgroups is National Resources Committee,
The Structure of the American Economy (Washington: U.S. Government Print-
ing Office, 1939), chap. 9 and Appendixes 7- 13. There are earlier classic
studies: Adolf A. Berle, Jr., and GardinerC. Means, The Modern Corporation
and Private Property (New York: Macmillan, 1932); other works by Means
collected in The Corporate Revolution in America (New York: Collier Books,
1964); Robert A. Brady, Business as a System of Power (New York: Columbia
University Press, 1943) with its great foreword by Robert S. Lynd; and the
series of monographsof the TemporaryNational Economic Committee (Wash-
ington:U.S. GovernmentPrintingOffice, 1939-41).
The multinationalfirmis becomingalmost a separate field of study. Some of
the leading pieces are Charles P. Kindleberger,American Business Abroad
(New Haven: Yale University Press, 1969); Stephen H. Hymer, "The In-
ternationalOperationsof National Firms" (Ph.D. dissertation, Massachusetts
Institute of Technology, 1960); and Jack N. Behrman,National Interests and
MultinationalEnterprise (Englewood Cliffs, N.J.: Prentice-Hall, 1970). Louis
Turner, Invisible Empires (New York: Harcourt Brace Jovanovich, 1970) is a
popularaccount. Two other useful books are Mira Wilkins, The Emergence of
Multinational Enterprise: American Business Abroad from the Colonial Era to
1914 (Cambridge, Mass.: Harvard University Press, 1970); and James W.
Vaupel and Joan P. Curban, The Making of Multinational Enterprise (Cam-
bridge,Mass.: HarvardUniversity Press, 1969).
The legal basis of the corporatestate is admirablytreated in Arthur Selwyn
Miller, "Toward the Techno-CorporateState?-An Essay in American Con-
stitutionalism,"VillanovaLaw Review 14, no. 1 (1968): 1-73; and "Corporate
Gigantism and Technological Imperatives," Emory University Law School Jour-
nal of Public Law 18, no. 2: 256- 3 10.
The best materialon the military-industrial
complex and the militarizationof
the Americaneconomy is the work of Seymour Melman, Our Depleted Society
(New York: Dell, 1965), Pentagon Capitalism (New York: McGraw-Hill,
1970), and the book of readings, The War Economy of the United States. They
should be supplementedby RichardJ. Barnet, The Economy of Death (New
York: Atheneum, 1970). Three more popular books are Fred J. Cook, The
Warfare State (New York: Macmillan, 1964); Sidney Lens, The Military-
IndustrialComplex (Philadelphia:Pilgrim Press, 1970); and Ralph Lapp, The
Weapons Culture (Baltimore: Penguin Books, 1968). A more establishment-
oriented treatment is Adam Yarmolinsky, The Military Establishment (New
York: Harperand Row, 1971), while Michael Kidron,WesternCapitalismSince
the War,rev. ed. (Baltimore:Penguin Books, 1970) argues that moderncapital-
ism cannot survive without "an arms economy." Murray L. Weidenbaum,
"Arms and the American Economy: A Domestic Convergence Hypothesis,"
AmericanEconomic Review 58, no. 2 (1968): 428- 37; and WalterAdams, "The

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 The Rise of the Corporate State 21

Military-IndustrialComplex and the New IndustrialState," ibid., pp. 652-65

are key articles on the institutionalrelationshipsbetween government and the
military.Another very valuable collection is Herbert I. Schiller and Joseph D.
Phillips, Super-State: Readings in the Military-Industrial Complex (Urbana:
University of Illinois Press, 1970).
Very little is available on relationships between the universities and big
business-big government. A useful survey is James Ridgeway, The Closed
Corporation: American Universities in Crisis (New York: Random House,
1968). Chemical warfareresearchat universitiesis documentedin Seymour M.
Hersh, Chemical and Biological Warfare (Indianapolis: Bobbs-Merrill, 1968;
Anchor Books edition, 1969). Cases of university involvement in the cold war
are described in Irving L. Horowitz, ed., The Rise and Fall of Project Camelot
(Cambridge,Mass.: MIT Press, 1967); and Robert Scigliano and Guy H. Fox,
Technical Assistance in Vietnam - The Michigan State University Experience
(New York: FrederickA. Praeger, 1965).
There is a wealth of materialon American expansionism. I have found the
following books particularlyhelpful: William A. Williams, The Contours of
American History (Cleveland: World, 1961), The Roots of the Modern Ameri-
can Empire (New York: Random House, 1969), and The Tragedy of American
Diplomacy (Cleveland: World, 1959); Richard W. Van Alstyne, The Rising
AmericanEmpire(New York: Oxford University Press, 1960); Albert K. Wein-
berg, Manifest Destiny (Baltimore:Johns Hopkins Press, 1935); Ronald Steel,
Pax Americana (New York: Viking Press, 1967); Claude Julien, America's
Empire (New York: Random House, 1971); Sidney Lens, The Forging of the
American Empire (New York: Thomas Y. Crowell, 1971); Lloyd C. Gardner,
ed., A Different Frontier (Chicago: QuadrangleBooks, 1966); Julius W. Pratt,
Expansionistsof 1898 (Baltimore:Johns Hopkins Press, 1936); and Gene M.
Lyons, ed., America: Purpose and Power (Chicago: QuadrangleBooks, 1965).
Americanimperialismin the post-WorldWar II era is treatedby Harry Magdoff,
The Age of Imperialism(New York: Monthly Review Press, 1969); K. T. Fann
and Donald C. Hodges, eds., Readings in U.S. Imperialism (Boston: Porter
Sargent, 1971); Andre Gunder Frank, Capitalism and Underdevelopment in
Latin America (New York: Monthly Review Press, 1969); and Bahman Niru-
mand, Iran: The New Imperialism in Action (New York: Monthly Review
Press, 1969; German ed., 1967). The relationshipbetween business and foreign
policy is discussed in David Horowitz, ed., Corporationsand the Cold War
(New York: Monthly Review Press, 1969). The internationaltrade in arma-
ments is examinedin George Thayer, The WarBusiness (New York: Simon and
Schuster, 1969). An interesting treatment of communicationstechnology and
American expansion is Herbert I. Schiller, Mass Communications and Ameri-
can Empire(New York: Augustus M. Kelley, 1969).
The American economic elite can be studied in F. W. Taussig and C. S.
Joslyn, American Business Leaders (New York: Macmillan, 1932); William
Miller, ed., Men In Business, new ed. (New York: Harper and Row, 1962);
Lloyd W. Warner and James C. Abegglen, Big Business Leaders in America
(New York: Harper and Row, 1955); C. WrightMills, The Power Elite (New
York: Oxford University Press, 1956); E. Digby Baltzell, An American Busi-
ness Aristocracy (New York: Collier Books, 1962; originallypublished in 1958
as Philadelphia Gentlemen: The Making of a National Upper Class); Floyd
Hunter, The Big Rich and the Little Rich (Garden City, N. Y.: Doubleday,

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22 Daniel R. Fusfeld

1965); G. William Domhof, Who Rules America? (Englewood Cliffs, N. J.:

Prentice-Hall, 1967); and two classic studies by Ferdinand Lundberg, America's
Sixty Families (New York: Vanguard Press, 1937), and The Rich and the Super
Rich (New York: Lyle Stuart, 1968). The theoretical literature on elites is
summarized by T. B. Bottomore, Elites and Society (Baltimore: Penguin Books,
1966). Joseph Schumpeter, Imperialism and Social Classes (New York: Au-
gustus M. Kelley, 1951; Meridian Books edition 1955) is also useful. Books that
are particularly useful in relating the economic elite to the structure of power are
James Burnham, The Managerial Revolution (New York: John Day, 1941); and
Robert S. and Helen M. Lynd, Middletown (New York: Harcourt Brace, 1929),
and Middletown in Transition (New York: Harcourt Brace, 1937). Two older
classics should also be mentioned: Gustavus Myers, A History of the Great
American Fortunes (New York: Modern Library, 1936; originally published
1909); and Matthew Josephson, The Robber Barons (New York: Harcourt,
Brace, 1934).
Literature on the ideology and value system of the American economic elite
includes Richard Hofstadter, Social Darwinism in American Thought, rev. ed.,
(Boston: Beacon Press, 1955); Sidney Fine, Laissez Faire and the General-
Welfare State (Ann Arbor: University of Michigan Press, 1964); James
Weinstein, The Corporate Ideal in the Liberal State, 1900-1918 (Boston: Bea-
con Press, 1968); Moses Rischin, ed., The American Gospel of Success (Chi-
cago: Quadrangle Press, 1965); Edward C. Kirkland, Dream and Thought in the
Business Community, 1860-1900 (Ithaca, N. Y.: Cornell University Press,
1956); James W. Prothro, Dollar Decade: Business Ideas in the 1920's (Baton
Rouge: Louisiana State University Press, 1954); Francis X. Sutton, Seymour
E. Harris, Carl Kaysen, and James Tobin, The American Business Creed (Cam-
bridge, Mass.: Harvard University Press, 1956); John R. Bunting, The Hidden
Face of Free Enterprise (New York: McGraw-Hill, 1964); and David Finn, The
Corporate Oligarch (New York: Simon and Schuster, 1969).
My treatment of national goals and the elite follows G. William Domhof,
"How the Power Elite Set National Goals," in Kan Chen, ed., National Prior-
ities (San Francisco: San Francisco Press, 1970), pp. 51-60. The place of the
business elite in the executive branch of the federal government is documented
by David T. Stanley, Dean E. Mann, and Jameson W. Doig, Men Who Govern
(Washington: Brookings Institution, 1967); Gabriel Kolko, Roots of American
Foreign Policy (Boston: Beacon Press, 1969); and Barnet, The Economy of
Death.
Finally, two important books document and describe the larger trends in
relationships between government, business, and labor, and their ideologies: W.
Lloyd Warner et al., The Emergent American Society, volume 1, Large Scale
Organizations (New Haven: Yale University Press, 1967); and R. Joseph Mon-
sen, Jr., and Mark W. Cannon, The Makers of Public Policy: American Power
Groups and Their Ideologies (New York: McGraw-Hill, 1965).

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