in quest of sovereignty kirchheimer

8/4/2019 In Quest of Sovereignty Kirchheimer

http://slidepdf.com/reader/full/in-quest-of-sovereignty-kirchheimer 1/39

Southern Political Science Association

In Quest of SovereigntyAuthor(s): Otto KirchheimerSource: The Journal of Politics, Vol. 6, No. 2 (May, 1944), pp. 139-176Published by: Cambridge University Press on behalf of the Southern Political Science AssociationStable URL: http://www.jstor.org/stable/2125270 .

Accessed: 22/08/2011 12:30

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of

content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms

of scholarship. For more information about JSTOR, please contact [email protected].

Cambridge University Press and Southern Political Science Association are collaborating with JSTOR to

digitize, preserve and extend access to The Journal of Politics.

http://www.jstor.org

http://www.jstor.org/action/showPublisher?publisherCode=cup

http://www.jstor.org/action/showPublisher?publisherCode=spsa

http://www.jstor.org/stable/2125270?origin=JSTOR-pdf

http://www.jstor.org/page/info/about/policies/terms.jsp

http://www.jstor.org/page/info/about/policies/terms.jsp

http://www.jstor.org/stable/2125270?origin=JSTOR-pdf

http://www.jstor.org/action/showPublisher?publisherCode=spsa

http://www.jstor.org/action/showPublisher?publisherCode=cup



T h e Journa l o f Polit ics

Vol. 6 MAY, 1944 No. 2

IN QUEST OF SOVEREIGNTY

OTTO KIRCHHEIMER

Institute of Social Research, New York City

Fashion in political theory seems to change quickly in

our days. Hardly more than ten to fifteen years have

elapsed since the state was declared moribund in pluralistictheories. With their peculiar mixture of shrewd analysisand ethical utopias, these theories seem to be the legitimatesuccessors of nineteenth-century liberal theories. Liberal

theories, though at times still professed, look like apolo-getic rear-guard actions.' Theory cannot but take cogniz-

ance of the fact that what was called "free institutions" in

the language of the nineteenth century suffocates under the

impact of all the changes in the social structure which in-

dustrial society has engendered. Their remnants rapidly

turn into propaganda tools to be indifferently used by friend

and foe alike. Ever-increasing discrepancies between the

power of the subject and the impotence of the object ofdomination gave birth to a crop of diverse interpretations.

They have been used for building up the totalitarian theory

of the state. But the same set of facts has also supported

the doubts often expressed in our days in opposite political

camps as to whether the term "state" may still be consid-

ered an appropriate starting point for an inquiry into the

1 The manner in which liberal constitutional doctrine which takesits task seriously has to turn thoroughly interventionist in order toattain an effective equilibrium of social forces is impressively demon-strated by David Riesman, "Civil Liberties in a Period of Transition,"'in Public Policy (Cambridge, Mass., 1942), Vol. 3, pp. 33-96.

139



140 THE JOURNALOF POLITICS [Vol. 6

power relationship of social forces in present-day society.

Since statements concerning the concept traditionally calledthe state, or the absence of such concept, refer to the formand contents of mutual relations between individual socialbodies, it seems convenient first to investigate the presentstage of such relations.

Social, Political, Economic Groups. The importance ofgroups in political life is somewhat obscured by the liberal-ity with which the pluralists of the immediate past bestowed

political capacity onto each and every social grouping.Pluralist doctrine never tired of describing "the vast com-plex of gathered nations" 2 to which men are entitled to givetheir allegiance. If human personality shall find its fulfill-ment, men must be free to participate in the widest range ofsocial and cultural experiences, and they may accordinglydivide their loyalties among different organizations. Nosocietal rule, pluralists insisted, can make loyalty to the po-litical organization prevail automatically in the event of aconflict between group loyalty and loyalty to the state. Loy-alty to the particular organization of our free choice mightwell prove to be the stronger one, as shown by the exampleof historical conflicts between the state and religious bod-ies.3 Whether situations of conflict do or do not arisedepends upon our arbitrary decision to grant or withholdsupport.

In the pluralists' zealous endeavors to destroy the image

of the centralized state and to install the free reign of thevoluntary groups on its ruins with a kind of vast "superclearing-house" 4 as a coordinating agency, social reality ofgroup life in industrial society was invariably romanticized.It is one thing to harmonize relations between differentclubs which may be indiscriminately and simultaneouslyjoined by the same individuals; it is an entirely differentmatter to harmonize the life of mutually exclusive groups.

2 John N. Figgis, Churches in the Modern State (London, 1914), p.70.

'Harold J. Laski, "De Maistre and Bismarck, in Problems of Sov-ereignty (London, 1917), p. 211.

'G. D. H. Cole, Social Theory (London, 1920), p. 134.



1944] IN QUESTOF SOVEREIGNTY 141

Human beings as a rule do no more choose their social

affiliations than they do the place where they live or thequality of the consumer goods they prefer. Even in thecase of the church, the showpiece of a well functioning plur-alist society, social status is often a formative influence inthe choice of religious preferences. Mere multiplication oforganizational affiliations is without any significance whenthe organizations in question have only the character ofsatellites working in the same social zone as the main or-ganization.

It is true that modern society has produced a host of vol-untary social organizations which unite members of themost different social strata on a religious, national, or racialbasis. It is an accepted technique of such associations tooperate on a basis of strict equality. Yet such equality isa pre-condition to the smooth coordination of heterogene-ous social elements which are made to fit into the acceptedpattern of society, and coordinating them often forms the

main purpose of such organizations. The authors of one ofthe most formidable enterprises yet undertaken in the fieldof statistical analysis of groups structure say that "withinthe associational membership per se there is equality, butclass attitudes still operate to differentiate the people whobelong to the different positions within this structure." 5

The primary political function of such organizations isthe advancement of general patterns of life deemed desir-

able by the groups that dominate them. In consequence,their political activity exhausts itself in the task of integra-tion. They envisage direct and concerted group action onlywhen the specific objectives of the organization are underdiscussion, for example, subsidies for denominationalschools, pensions for war veterans. This does not exclude

W. Lloyd Warner and Paul S. Lunt, The Status System of aModern Community (New Haven, 1942), p. 20. The authors split theclass structure of modern society into six groups. As transitions in asystem of advanced group differentiation are bound to be very nu-merous, their first conclusion that "constant interpenetration takespart between neighboring classes" is self-evident. Their second con-clusion "that the classes at the two ends are much less related thanthe others" (p. 23) is more interesting although it does not necessarilyfollow from their working premises.




the possibility that a prominent member of such an "inte-

gration" organization will take an advanced stand on somevital question. Although such attitude may carry heavyweight, as shown by the recent case of the Archbishop ofCanterbury, it must not reflect upon, or commit the organi-zation as a whole. The organization will be the less affected,the better it has succeeded in keeping its main dogmas outof the area of immediate social conflict. Such organizationsas the Catholic Church have through long experience devel-

oped a well functioning system of "intra-organizationalequilibrium." It purposely allows prominent members toserve as contact men to the most different social groups,and often "satellite" groups with radically opposite socialgoals are encouraged. The net political effect is invariablythe aggrandizement of the main group. At the same time,such measures destined to preserve the "intra-organiza-tional equilibrium" tend to enhance leanings towards politi-cal "neutrality." 6

Such organizations form the subterraneous channelswhich give stability to the dominating pattern of society.They support a structure which allows for acceptance ofchanges only over fairly long periods. The structure andcomposition of such organizations preclude their more directinitiative in shaping social and economic policies. Generalformulas and popular phrases cover the area of social dis-agreement.

Transitory social alignments may express themselves inthe sudden appearance of new social groupings. The im-poverishment of the independent middle class may createspecial pension groups. The disenchantment of the worldmay produce new religious groups which will concentratetheir endeavors on some especially objectionable features ofa radically mechanized world. But their action, for the most

6 This division of functions within the church had earlier attractedthe attention of Georges Sorel, Reflexions sur la Violence, 6th ed.(Paris, 1925), p. 430; as regards the distinction between the politicalbeliefs of individual church members (in which they may indulge attheir own risk) and the mere integrating function of the church("creation d'un esprit essentiellement chretien."), see Jacques Mari-tain, Humanisme et Integral (Paris, 1936), p. 287.



1944] IN QUEST OF SOVEREIGNTY 143

part, does not reach the political level; it disappears in the

vast sea of formless discontent reserved till the day of finalreckoning. Consumer organizations, for example, alwaysremain groupings of secondary social importance, althoughthey seem predestined to cover a wide area where substan-tially identical interests prevail.7 Indeed, of all configura-tions around which the organization of society could center,"consumer sovereignty" seems the one which remains atmaximum distance from the realities of present-day society.

The failure of such organizations to develop beyond a some-what insubstantial influence in the field of consumer protec-tion stems from the fact that the status of a communitymember is regulated by his position within the process ofproduction. A consumers' victory may impose some pricecuts; it may standardize or improve some lines of consumergoods; it may within certain well-defined limits help to workout a more satisfactory family budget, but it will not changethe social status of an individual or of a family. Changes in

the individual's status as a producer, however, must inev-itably affect his general-social status. If the change is far-reaching and of an enduring nature, it will involve eithersurrender or the capture of positions within the socialgroup; it will mean social degradation or social advance-ment. The more society is mechanized and depersonalized,the more societal standards are calculated according to thequantities of easily measurable goods at the disposal of the

individuals. This comparability of consumption standardsstops only at the top strata of society. The handful of thosewho dispose of the means of production, emulated in morerecent times by the "practitioners of violence," show theirexalted rank by entering into a competition for maximumindividualization of consumption standards. But this com-

petition for "conspicuous waste" takes place, on account of

its expensiveness, on a rather restricted scale. Even for

those holding rank immediately below the top strata, indi-vidualization means standardization of consumption habits,

' See, e.g., a well-founded judgment in Temporary National Eco-nomic Committee, Reports, Vol. 21, Competition and Monopoly inAmerican Industry (Washington, 1941), p. 11.



144 THEJOURNAL FPOLITICS [Vol. 6

though on a comparatively high level. Personality is in the

end merely one side of the equation, the other side is posses-sion of certain goods.

Pre-bourgeois society attempted to freeze societal posi-tions at a given level and invented artificial devices for de-ferring and penalizing changes in social status. Such staticpolicies and delaying tactics are alien to the acquisitive so-ciety. It knows of few, if any, royal Schatullen for impov-erished members of erstwhile mighty clans, and its social

registers mirror truthfully the ups and downs of individualfortunes. In fact, acquisitive society relies on the toniceffects of immediate debasement or loss of social positioncaused by changes in status in the process of production toenforce "voluntary obedience" to its usages.8 Acquisitivesociety may not have found a remedy for the changes whichmodern fascism or socialism seeks to introduce into itsstructure. But the all-pervading mechanism of calculablesuccess which has molded its human material forestalls anychance of social foundations being broken up by any kind ofpassive resistance to prevailing social patterns that mightoriginate from present-day followers of St. Francis ofAssisi.

Social struggle consists primarily in a strife for posses-sions within the process of production, the spheres of distri-bution keeping second place when they are not-as seems

to happen in an increasing measure dominated by theforces of production themselves. Political parties are onlyincomplete instruments for recording individual stages of

this process. Sometimes they may be patterned accordingto group functions in the process of production, but often

such a simplifying denominator is missing, and in such cir-

cumstances political groups fail to mirror the social land-

scape. Then the already mentioned integrating function

overshadows the function of indicating and measuring so-cial power relations. Further inquiry must thus be focused

8 "The singular effectiveness" of this arrangement is markedlyemphasized by Joseph A. Schumpeter, Capitalism, Socialism and De-mocracy (New York, 1942), p. 73.




on those forces which take part in the process of production

proper.Organization of Economic Interests. There seems to be

no doubt in our minds that the different national economieshave taken "an associational character" 9 by now. Fascistsbuild their spurious charters on that assumption, and law-yers in liberal countries take pains to reconcile this factwith the individualistic principles of the respective consti-tutions. But it is a long way from the image created by any

kind of Genossenschaftstheorie to the reality of groups asthey have emerged from the vagaries of industrial society.The concept of communal life as independent of the narrowinterest of the individual member fails to take cognizanceof the character of the bonds which tie the individual to thegroup.

Organization means the most rational and effective formto realize a maximum of profit for the individual member.A true image of such organization may be seen in theAmerican type of management organizations. Here nocooperative body whatsoever comes into existence. Severalmembers of the same trade hand over those activities inwhich concerted action seems mutually advantageous to abusiness concern which specializes in the field of organiza-tional management.10 Management organizations are fre-quent in small-scale industries, where emphasis is laidmainly on the gathering and exchange of information and

every member may use the information in a way he deemsmost suitable for his purpose. Management corporationsmay be able to coordinate the activities of trade membersof similar strength. But the protective value of this systemrests on nothing else than the individual producer's will-ingness to take advantage of an exact knowledge of themarketing conditions of his product.

Yet, reliance on the insight of the individual producer is

a haphazard procedure, especially when conditions are

'James J. Robbins, "The Power of Groups to Govern," UnitedStates Law Review, Vol. 73, p. 380. (1939).

10 Temporary National Economic Committee, Reports, Vol. 18,Trade Association Survey (Washington, 1940), p. 38.




bound to turn rapidly; any action of an individual producer,

however legitimate it may be from the point of view of self-defense, may upset a precarious equilibrium. A higher de-gree of centralization, a more permanent collaboration isdeemed necessary to that effect. Names and labels do notmean much and are subject to all changes which individuallaws of different countries may make necessary. Some asso-ciation may only be the signboard for a single corporation;behind the front of another association a whole hierarchy

of dependency relationships may hide; still another one mayunite producers of fairly equal bargaining power. In eachindividual case the degree of voluntariness or, conversely,of the permanence of the individual's subjection will reflectin the coherence, strength, or weakness of organized groupaction.

Within the wide range of possible group action, the "con-stitutional" goal of the producers' group will always be thesame, though the degree of the success or failure may de-pend on many, partly unpredictable factors. Strategicalelements determining the growth of production will be se-cured and consolidated with all possible devices of legalprocedure and marketing technique. To attain this aim thegroup must try to achieve such strength that rupture fromwithin shall seem as unprofitable as competitive attackfrom without. The danger coming from substitute productsmust be appropriately met either by removing them from

the market permanently or by strengthening the competi-tive position of the group's own product through changesin the price structure or through improving its quality.

Consolidation of group positions was facilitated by theadvance of specialization. Organization of production andtechnical equipment were specialized without, however, re-quiring higher skills for the majority of the operating per-sonnel. The advance of specialization, accompanied by the

fact that only a few have knowledge of the entire processof production, facilitates the exclusion of would-be intrud-ers. For these exclusive practices individual ownershipbrings welcome support.

Private property connotes more than the juxtaposition of




private and state enterprise.11 It also contains the justifi-

cation for excluding all others from the use of privatelyappropriated resources, processes, and services. Stretchingout this private title as far as conceivable has providedmajor weapons in the fight for domination over productionprocesses. In order to prevent premature depreciation ofexpensive investments, exclusion of others from the use ofimproved or substitute processes has become the primaryobject of well coordinated industrial policy. Would-be com-

petitors, inventors, and researchers aretaken on the pay-

roll; patents are hoarded regardless of whether their exploi-tation is planned or not.

The aim of such a policy of domination would be com-pletely reached when no independent technician, corpora-tion, or agency is left within the specialized field of produc-tion; the objective is not only in the exclusion of any con-ceivable danger of competition but also in forestalling anyindirect pressure which could arise if the public or the

government had the opportunity to form opinions of theirown by using such independent channels. Exclusion is atthe same time one of the potent weapons with which to moldthe inner structure of the group to the image of the rulingfew. Cartel democracy thus may become only a convenientmask. Even the disparity of shares will not always indi-cate the full extent to which the association is but anassociation on sufferance and small units are satellites.

The existence of a comparatively small number of pro-duction units with ample financial resources which may bestaked for a well-planned long-term policy seems to enhancechances of effective monopolization. The existence of agreat number of small units seems more likely to preventthe rise of autonomous associations. In many distributionand service trades, capital requirements are small, accessto business is wide open, and specialization is no more thana function of individual skill. To gain a monopolistic posi-tion may prove an almost impossible task for an individualor a corporation even on a strictly local basis. But manifold

11W. H. Hutt, "The Sanction for Privacy under Private Enter-prise," Economica, Vol. 9, p. 237 (1942).




pressure exercised by producers, by vertical combines ex-

tending into the retail field, and by financially betterequipped, mechanized distribution giants, cause a generalstampede in favor of protective measures of restraint forthe sake of the trade as a whole. Where a combination of pro-ducers and large-scale distributors has taken over the task oforganizing the trade and dictates the laws, the small-scaleretailer will sink to the position of a risk-bearing employeewho has to be content with the discount granted to him.12

However, in the absence of clear-cut relations of depend-ence to serve as levers for an effective group, consolidation,organization was sought by other means. Sometimes phys-ical violence was resorted to either by members of the tradethemselves or by professional groups of "practitioners ofviolence," thus performing functions of a management cor-poration in a rather uncivilized way. But combinationskept together by the display of physical force have usuallyproved to be much weaker than creations of more respect-

able brethren. First, their very methods lay them open toattacks from the official bearers of the monopoly of physicalforce. The latter, though unconcerned about the legitimacyof the aims pursued by the groups, resent their intrusioninto a theoretically uncontested reserved sphere. Second,the very scope of retail and service trades and their peculiarpropensity to rapid expansion and contraction have in-creased the cost of private policing to the point of unprofit-

ableness. If the method of violence has proved only par-tially successful in the fight for coordination of small units,it has been singularly ineffective in checking the rise oflarge-scale retail and service operators. Only service or-ganizations like the American Medical Association whichdisposes of an arsenal of "legitimate" weapons, such as theexclusion of non-members from hospitals, have been able tomaintain monopolistic practices over a considerableperiod.13

12 Hermann Levy in Retail Trade Association: A New Form ofMonopolist Organization in Great Britain (London, 1942), reportsthat such is the present situation in a number of retail trades inEngland.

'" It is unfortunate that the interesting book by Oliver Garceau,




Groups and Government. If physical violence and similar

means of coercion fall short of enduring success, the supportof the legitimate purveyors of coercive power may give the"small fry" a better chance to attain the desired goal with ahigher expectancy of success. Trades which, because of thenumber of units present or of any other circumstances, areunable to exercise effective measures of control often attainsome success with the active help of public authorities. Thedegree of governmental assistance varies from reserving

administrative favors to association members to an out-right system of compulsory licensing and banning of newbusinesses.14

Compulsory organizations as well as voluntary agree-ments usually base the intra-organizational distribution ofpower on existing production capacities or sales volumesof individual concerns. They are neither intended norframed to rectify the prevailing distribution of power with-in a trade so as to favor the "small fry." If the consent of

the holders of public power can be obtained, existing powerpositions will get the additional benefit of legitimacy; andresources which otherwise would have to be spent in courtfights, advertisement campaigns, and political horse-tradesmay be put to better use. Even when the government'sinterest in advancing genuine community aims seems to beparamount, as for example, in the land use program of theUnited States Department of Agriculture, the barrie-rs

The Political Life of the American Medical Associatiotn (Cambridge,Mass., 1941) confines itself mainly to the description of practicesthrough which the inner ring of the association perpetuates itself inpower. It remains yet to be shown what makes the association as awhole succeed in enforcing a remarkable degree of conformity to itspractices in spite of the fact that its monopoly position is far frombeing complete.

" For the United States the process has been recently describedby J. A. C. Grant, "The Gild Returns to America," in The Journal ofPolitics, Vol. 4, pp. 302 if. (1942), a detailed account of the practiceand organization of small business on a compulsory basis may befound in the monograph by Arkadius Gurland, Otto Kirchheimer, andFranz L. Neumann, The Fate of Small Business in Germany, printedfor the use of the U. S. Senate Special Committee on Small Business,1943. 78th Cong., 1st Sess.




drawn by existing property arrangements subsist in their

entirety.'5The "small fry's" claim to compulsory organization is

often-especially under non-totalitarian conditions-heededby various national administrations only hesitantly or in aperfunctory way; they shun such a manifest surrender ofthe last vestiges of freedom of commerce. But in the fieldof mass production a high degree of organization respondsquite often to the needs of government as well as of labor

and meets in different countries with spontaneous officialsanction and encouragement. Under prevailing war condi-tions this process, which has been going on for a consider-able time, leads to a wholesome transfer of public authorityto the principal agencies of private self-administration. InGermany, where the private trade groups relatively earlyembraced almost the whole sphere of production, the Nazigovernment transferred to the self-administration of thegroups all the manifold tasks which occurred on successivestages of the policy of re-armament, autarchy, and worldconquest. Gestures outwardly aiming at separating theprivate functions of cartels from the public functions ofself-administration were never meant to be taken seriously.By no means can they be compared with the American Anti-Trust enforcement policy that attained some symbolic vic-tories in the interval between the end of the NRA and thebeginning of the war-preparedness policy and even now

has the validity of an officially avowed ideology.The Reichsvereinigungen which stand at the end of the

long and varied German experience have accentuated thetendency towards transferring public authority to existingtrade organs, the degree of the transfer depending solelyupon the importance of the trade in question. Completecontrol of the sources of raw materials as well as the con-clusion of binding agreements with satellites and foreign

countries have been entrusted to the Vereinigungen which15 That the local committees only reflect the viewpoint of the land-

owners rather than that of tenant elements is shown by John D.Lewis, "Democratic Planning in Agriculture," in American PoliticalScience Review, Vol. 35, p. 232 (1941).




are enabled by their very composition to make an effective

use of such privileges. The "Fiuhrer principle" has beenjudiciously tuned down to secure the preponderance ofthose personalities and oligarchies in every individual in-stance which hold predominant positions in their respectivetrades. 16 The English controller, whose office is mostlyfinanced by the respective trade itself and who works underthe supervision of a -ministry, seems to differ from theAmerican one-dollar-a-year-man inasmuch as the latter be-comes an integral part of the administrative machinery.However, the semi-independency of the English controllermust not lead to the conclusion that the original imper-ium of British trade associations is more extensive thanthat of similar Americain organizations. It is only that thecoordination of governmental and trade association policiesis in a more advanced stage in England than it is in theUnited States.'7 Here the en masse occupation of the direc-tive nerve centers of the administrative machine by repre-

sentatives of the business community has not succeeded inproducing more than partial obedience of business to theroll-call of the united machines of business and government.

Every individual businessman or trade association officialwho has been entrusted with the task of administering re-trictions, quotas, compensations, etc., is, of course, temptedto look out for the advantage of his own business or group,to which he expects to return after the war. This is so,

whether he serves the Government "without compensation,"as "dollar-a-year-man," or as salaried employee, andwhether or not he receives from his old company the differ-ence between his federal and his former private salary.This holds true even if he voluntarily severs, or, is com-

16 Hans Kluge, "Reichsvereinigung," in Die Deutsche Volkswirt-schaft, 1942, p. 567 (1942); Hans W. Singer, "The German WarEconomy VI," in The Economic Journal, Vol. 52, p. 186 (1943).

17 The English development, especially the institution of "ex partecontrollers," has often been presented in critical terms in The Eco-nomist: "The Cartelization of England," Vol. 134, p. 551 (1939);"The Economic Front," Vol. 137, p. 362 (1939); "The Controllers,"Vol. 146, p. 417 (1942); see also N. E. H. Davenport, Vested Interestsor Common Pool? (London, 1942).




pelled 18 to sever, his business connections, or even if he

goes so far as to sell his securities. Yet, criticism of recentdevelopments is based less on this set of facts than on theunconsciously biased interpretation of public interest whichsuch administrators are bound to follow in most instances.19Criticism of this kind fails to perceive that there rarely isanother alternative for modern governments - either con-stitutional or fascist-- if only they want to uphold theprevailing property structure of present-day society and toadapt, at the same time, industrial policies to the day-to-day functioning of the administration. We may here foronce use the problematical analogy 20 to feudal society: the

act by which the king confirms the powerful seigneur in the

possessions which the latter has grabbed for himself

through a colonizing expedition effects no change in the

actual power relation between the two. The king assents

to confirm the title, and the seigneur desires such confima-

tion, because both expect it to exercise a favorable influence

on the future development of their relations.

There is another point which critics tend to neglect. In-

dependent experts belong to the past, and available knowl-

18 See the order of the Department of Agriculture (New YorkTimes of January 17, 1943, p. 1.)

19 Besides the already mentioned article of The Economist, seemy paper on "The Historical and Comparative Background of theHatch Law," in Public Policy (Cambridge, 1941), pp. 341-373; the

report of the "Committee of Public Accounts" of the House of Com-mons, 1941, H. C. 105, p. 24, and the "Additional Report of the Spe-cial Committee Investigating the National Defense Program," 77thCongress, 2nd session, Senate Report No. 480, Part 5, 1942, pp. 8-9,which is couched in almost the same phrases as the English report.The attempt of the Department of Agriculture to eliminate, by itsorder mentioned in note 18, the much discussed "divided allegiance,"serves to focus public attention on the fact that, in the boundariesof present-day industrial organization, the problem appears to bewell-nigh insoluble. After all, would it not be superhuman to expecta $50,000-a-year corporation executive to be induced by an $8000-a-

year federal salary to forego in his "public" decisions all thoughtsof whether or not he is jeopardizing his chances of returning to a$50,000-a-year job in his field after the war.

2 The analogy is questionable since the so-called "new feudalism"is singularly free from the penumbra of personalized duties whichform the very core of any feudal tenure.




edge in specialized fields has been monopolized by the in-

dustrial groups themselves. The government thus facesthe alternative either of relying on ex parte advice of thegroup, or of building up independent administrative coun-terparts of its own. But this last feature which has cometo the fore in the United States does not indicate a processof substitution. Though it may involve a threat to thefuture,2' at present it only foreshadows the possibility ofa new equilibrium wherein the controlling or regulatinggovernment agency may fulfill some of the

functions whichthe market mechanism was supposed to exercise in an ear-lier period.

Monopoly Sitution of Trade Unions. If trade unionscould succeed in eliminating the competition between theworkers which takes place in the labor market, their posi-tion would be much more dominating than that of indus-trial monopolies. They would be to a much lesser degreesubject to the threat emanating from the existence of sub-stitutes. A certain minimum of human labor will alwaysbe needed even when entrepreneurs rationalize productionand manpower is replaced by labor-saving machinery to ahitherto unknown degree. Suppose a water-tight monopolycould be ensured covering all available labor supply. Re-lations between employers and employees then may takeforms that so far have been known to occur only in excep-tional cases, as, for instance, in the case of theatrical entre-preneurs on New York's "Broadway," whom the AmericanFederation of Musicians compels to hire a whole orchestraeven if they need only a pianist. Enterprises would thenbe under the compulsion to hire several union members inorder to secure the services of a few whose work cannotbe replaced. The only limitation of the monopoly of laborwould be in the threat of the entrepreneur to retire fromsuch field of production and to invest his capital in fieldsless exposed to labor trouble. But even this limitation is

21 On the policy of duplication and its possible consequences, seeRobert A. Brady, "Policies of Manufacturing Spitzenverbiinde III," inPolitical Science Quarterly, Vol. 56, pp. 515, 527 (1941).




less valid today than it was thirty years ago,22 as the pro-

portion of fixed capital has considerably increased and thepossibilities of shifting capital to another field have be-come more restricted. Should an individual entrepreneurcollapse or a whole line of business have to be abandonedfor some reason or other a labor organization that monop-olizes the labor market would still be able to protect itsmembers and enforce "socialization of losses" in imposingthe burden upon the rest of the entrepreneurs and the

public. Why, then, in the presence of these possibilities, isany relative monopoly of labor infinitely weaker in factthan that of the other participants in the process of pro-duction?

At the outset, efforts to create an effective labor mo-nopoly are substantially hampered by such difficulties asarise from a huge number of small operators as discussedabove. In the sphere of labor the "unit" is the individualworker or, to state it more correctly, every individual who

at a given moment may be under the compulsion to sellhis labor power in the market. It is difficult enough, asa rule, to organize even actual workers. When to acquirethe skill required for operating a machine becomes a mat-ter of hours, everybody can become a worker at a minute'snotice, and the organizing hazards tend to multiply. Apartial solution to difficulties is the sporadic use of vio-lence as a means to enforce monopoly - a situation similar

to the one we found in the sphere of distribution. Butviolence is a scant guarantee of success in an actual labordispute. Internal conflicts arise from the use of violenceand from general difficulties of keeping in check such vasthuman agglomerations. Thus unions often are denied thatdegree of inner coherence which would make them rela-tively immune from outside interference.

If the union takes the aspect of a rational business organ-ization, the individual member is inclined to look at hisaffiliation with the same "business" eyes. He then dissoci-ates his own prospects from those of the union wheneverthis seems advantageous to him. As he usually is less ex-

22 Rudolf Hilferding, Das Finanzkapital (Berlin, 1910), p. 483.




posed to retaliation from the union than the entrepreneur

is to retaliation from his group, the individual feels moreeasily inclined to bolt the orders of the union or even tohave recourse to an outside agency, such as a court ofjustice, to air his grievances. Thus additional possibilitiesfor outside interference are opened. Furthermore, as gov-ernment to an ever increasing degree intercedes in theregulation of wages and labor conditions, the temptationincreases for the individual worker and the union alike tobecome passive

beneficiaries of government sponsored col-lective agreements which automatically become a part of in-dividual labor contracts.23 Of course, government enforce-ment of such clauses presupposes the abandonment of orat least far-reaching restrictions on the use of the veryweapon on which unions have to rely as an ultima ratio,the strike. Deprived of their main arm of combat, unionsdevelop a tendency towards losing their character as inde-pendent institutions within the relationship of the agents

of production. They tend to become administrative de-pendencies of other and more powerful social groups. Im-plications of this development will be discussed below.

Making the monopoly of labor supply effective on anation-wide scale would presuppose a well knit system ofclose collaboration between local as well as functional laborunits. Personal rivalries, jurisdictional disputes, differ-ence of political tendencies, all sorts of subterfuges a unionmay use to profit from a neighboring labor dispute in orderto advance its own social position - all this would haveto be put aside if the full weight of organized labor wereto be placed behind every important individual dispute.There have been instances where all these conditions weremaximally fulfilled, for example, in recent decades duringthe general strike in England in support of the strikingminers in 1926. Why were such attempts to make use ofthe monopoly of labor supply totally unsuccessful? The

23 As regards the American situation see the recent material in thearticle of William G. Rice, Jr., "The Law of the National War LaborBoard," in Law and Contemporary Problems, Vol. 9, p. 470 (1942).



156 THE JOURNAL F POLITICS [Vol. 6

answer lies in the apparent impossibility to restrict a gen-

eralized labor conflict to the contending parties.A comparison between the operations of industrial and

labor monopolies will explain this thesis. The advance ofindustrial monopoly has nothing of the spectacular, it pro-ceeds by leaps and bounds. The public is neither invitednor in a position to take a stand prior to the consummationof each individual act which affirms and builds up the mo-nopoly position. The individual cartel agreement, the use

or the abuse of a patent, the planning or restriction ofproduction facilities will affect our habit of life, our em-ployment chances, the measure of consumer goods of whichwe will be able to dispose - they may even, as recent ex-perience has shown, ultimately determine a nation's abilityto resist the onslaught of an external enemy. But actionof this kind originates from private decisions. Decisionsare taken over our heads, and nobody has the mission toinform us unless we regard as information the advertise-ment campaigns which build on our absence of knowledge.If any knowledge of such decisions reaches us at all, thisonly occurs post festum and by chance. We may snatcha piece of information during a patent suit, a parliamentaryinvestigation, or through an anti-trust suit. Exact datararely will be at our disposal. The participants will spareno pains or money to prevent us from obtaining informa-tion and piecing together, from the mosaic of individual

impressions, an adequate picture of the industrial land-scape which surrounds us. As a directive, industrial mo-nopoly builders seem to use the successful pattern ofBorden's World's Fair Elsie: show the customer enoughdetails of how milk is produced, and he will forget to askabout essentials. The avalanche of technical informationfreely and liberally forwarded to everybody is likely tobury any doubts as to the difference between the 5 cents

received by the farmer and the 12 cents paid by the ulti-mate consumer.

No such protective devices surround the rise of the labormonopoly. Every individual stage from the first unsuccess-ful attempt to organize a union until the final test, the




organization of a strike, is visible to the whole community.

Meetings in the public square, clashes at the factory gate,the grocery store's waning sales, and the empty pots inthe worker's kitchen are integral parts of its stage. Everystep has its public and publicized aspect which transcendsthe comfortable privacy of the conference room and of theprivate contract. The tenets of the dispute are relativelysimple. Officially they concern only wages and workingconditions. But most members of the community will in-

stantaneously feel its repercussions without having to takerecourse to more involved logical operations and interpre-tations. Strive as the union may to keep the strugglewithin the boundaries of a private conflict, the other partyand the public will have none of it. The public authority,even if formally neutral, is permanently on the alert andhas a thousand ways to throw its weight into the balancein behalf of the one or the other party. Of the many ele-ments which oppose the rise of a trade union monopoly inthe labor market, none seems more insurmountable thanthe rapidity with which the battle for wages and hoursturns into a question of public policy.

What is true of a limited strike action, is true a thousandtimes of a general strike. Whether it be a success or afailure, the very fact of a general strike not only changesthe given equilibrium of the social and constitutional order,but also works a profound change in those who carry onthe movement. No one was better aware of the implica-tions of a general strike than Georges Sorel. He not onlyinsisted on drawing and sharpening the line which separ-ates the parliamentary practitioner from the realm ofsydicalist action, he also emphasized that "la greve generale,tout comme les guerres de la liberte, est la manifestationla plus eclatante de la force individualiste dans les massessoulevees." 24 In the spontaneous action for a common goalwhich in width and scope transcends all individual concern,the worker breaks through the frame set to his action bythe rules of industrial society. This obviously is the ulti-

24 Sorel op. cit. p. 376.



158 THE JOURNAL OF POLITICS [Vol. 6

mate reason why the builders of industrial monopolies,

carefully remaining within the confines of private law,were so much more successful than their trade union an-tagonists. The latter were terrified by the very magnitudeand possibilities of the weapons at their disposal.

The foregoing discussion is based on the assumptionthat the trade union movement is bent upon coming as neara total monopoly in the labor market as possible. Butperhaps insisting on such an assumption would mean un-duly to neglect the process of transformation which labororganizations have undergone during the last decades.Many a union today resembles a business organization con-forming strictly to standard patterns. Union energies oftenare exclusively directed at seizing well-defined strategicalpositions in the process of production -a mode of be-havior which has been furthered by the advancing processof specialization. It is true that "die absolute Disponibilittitdes Menschen fur wechselnde Arbeitserfordernisse," 25

which runs parallel to this process of specialization andsimultaneously conteracts it, must to some extent facilitatereinforced emphasis on the common goals of all individualsections of organized labor. Very often, however, laborprefers to utilize specialization as an easy means for estab-lishing narrow reservations. Far from striving for com-mon action, it often concentrates on, and is satisfied with,restricting the supply of labor within the narrow confines

of one or another particular field.The tangible success which the organizations achieve

seemingly justifies such policies. But in submitting to,and furthering, this practice of "fencing in" of specialfields, labor itself seems to have become a captive of pseudo-objective requirements of technological rationality.26

Foremen appear as experts, supervisors as industrial en-gineers, workers as technical collaborators in a process inwhich the differences

between those at the top and all25 Friedrich Engels, "Anti-Duhring," in Marx-Engels-Gesamtaus-

gabe, Vol. 6, p. 518.26 See Herbert Marcuse, unpublished manuscript, Operationalism

in Actim




others take the appearance of technological distinctions.

The objects of domination seem to have shifted. Special-ized organizations of labor and producers work in combinedconsolidation ;27 labor even serves as a kind of police againstrestive outsiders who disturb the peace of the producerorganization; and a mutually beneficial policy of restraints"passes the buck" to the consumer. Of course, these restrict-ing practices do nothing to alleviate the problems of thosewho remain outside of the sheltered zones. Labor organiz-ations seem to relapse into provincialism - perhaps to ahigher degree still than organizations of producers, sincethe latter at least have learned to think in world-wide termsand develop a certain amount of flexibility under the con-stant pressure of demands for new fields of profitable re-investments. Campaigns for organizing new fields of in-dustrial activity may cause some disruptions. But oncethe task is fulfilled, the quota reached, the organizationssettle down to the routine 28 of government-sponsored agree-

ments, collusive restraints, and jurisdictional disputes.They thrive through specialization but they also suffocatein it.

Racket and Society. In the lawyers' language, always morerestrictive than explanatory, monopolistic practices whichare carried through by physical force, violence in trade dis-putes, or similar objectionable means, have been given thename of "rackets." Restricted application of a term may

have an important function when seen from the viewpointof a sound technique of domination. Singling out particu-larly objectionable methods serves as a convenient tool forbringing the guilty to account and depriving'them of thesympathies of the community at large.29 For it is obvious,

27 See Davenport, op. cit., pp. 45, 60, 88. On prospects of such"consolidation" in the post-war world, cf. Joan Robinson, "The In-dustry and the State," in The Political Quarterly, Vol. 13, pp. 400,406 (1942), and "Future of Politics," in The Economist, Vol. 142, p.

456 (1942).28 On the relation between routine and esprit corporatif see Sorel,

op. cit., p. 369.29 This certainly does not mean that those elements and the appa-

ratus of physical violence they have created will not be kept alive attimes, as "socii" against other groups.




of course, that most of those whose poition in the process

of production or distribution has become unstable will haveto resort to such desperate weapons. But if there is a dif-ference in methods as between "haves" and "have-nots,"firstcomers and latecomers, "decent citizens" and "racke-teers," there is no difference in their aims which are essen-tially the same: establishment of domination over a segmentof the process of production or distribution. Common usageof the language has, therefore, justifiably generalized theuse of the word, racket.30 In popular usage the term carriesa related connotation of apparent significance. If some-body asks another, "What is your racket?," he may intendmerely to inquire about the other's professional status, butthe very form of the question refers to a societal configur-ation which constitutes the proper basis for any individualanswer. It expresses the idea that within the organiza-tional framework of our society attainment of a givenposition is out of proportion to abilities and efforts which

have gone into that endeavor. It infers that a person'sstatus in society is conditional upon the presence or absenceof a combination of luck, chance, and good connections,31a combination systematically exploited and fortified withall available expedients inherent in the notion of privateproperty.

Rackets seem to correspond to a stage of society wheresuccess depends or organization and on access to appro-

priate technical equipment rather than on special skills.32As the number of positions in which organizational or otherspecialized intellectual skills are required becomes ratherrestricted, most aspirants have merely to adapt themselvesto easily understandable technical processes. Privileges

" The justification of the generalization has been acknowledged,and the importance of the difference between the "means" and the"ends" type of racket refuted in one of the monographs of the Tempo-rary National Economic Committee, Reports, Vol. 21, Competition and

Monopoly in American Industry (Washington, 1941), p. 298.3" Cf. Max Horkheimer, "The End of Reason," in Studies in Phi-

losophy and Social Science, Vol. 9, p. 377 (1942): "If the individualwants to preserve himself, he must work as a part of a team."

32 This point has been stressed by George C. Allen, British Indus-tries and Their Organization (London, 1933), p. 303.




that depend on distinctions in individual ability become in-

creasingly rare. In acquiring and maintaining social posi-tions it is not so much special skill that matters; whatmatters is that one gets the chance to find access to, andbe accepted by, one of the organizations that dispose of thetechnical apparatus to which the individual has scant pos-sibility of access.

The term racket is a polemical one. It reflects on a so-ciety in which social position has increasingly come to de-pend on a relation of participation, on the primordial effectof whether an individual succeeded or failed to "arrive".3Racket connotes a society in which individuals have lostthe belief that compensation for their individual effortswill result from the mere functioning of impersonal marketagencies. But it keeps in equal distance from, and does notincorporate, the idea of a society wherein the antagonismbetween men and inanimate elements of production hasbeen dissolved in the image of a free association for the

common use of productive forces. It is the experience ofan associational practice which implies that neither theindividual's choice of an association nor the aims that thelatter pursues are the result of conscious acts belonging tothe realm of human freedom.

Decrepituxde of Traditional Institutions. No generalcartel dominates our society. Beyond the level of tradeassociations and cartels giant corporations working in dif-

ferent industries may be bound together to varying degreesof solidarity through interlocking directorates, services ofidentical financial institutions, and intercorporate stock-holding. The existence of such connecting links may in manyinstances ensure the working of certain directives, accord-ing to which differences between various producer groupswill be settled without any outside interference. Commoninterests with respect to labor policy and similar politicalissues work also in favor of inter-group harmony. In thesefields momentary success which might result from separate

3 This seems to be generally admitted so far as the upper strataare concerned. See e.g., Brady, op. cit., p. 524. Butit is of equal im-portance for non-executive jobs.




action would be outweighed by the permanent damage done

by such procedure to the position of industry as a whole.Manufacturing Spitzenverbdnde have done much to establisha common phalanx and to concentrate divergent interestson common objectives. But all these phenomena taken to-gether fall short of the establishment of a general cartel,of "an agency which determines the amount of productionin all spheres".34 There is no all-embracing super group in-corporating all divergent interests in the economic sphere.

There is, instead, a multiude of groups which occupy anddefend their strongly entrenched respective positions, andeach of these groups operates under special conditions ofits own.

The common meeting ground where different groups ofproducers face each other as well as all other social groupsis the state. Before organized groups rose to a positionof predominance, i.e., in the epoch which came to an end

at the latest at the outbreak of the first World War, parlia-ment was both meeting ground and decision-forming organfor the national community as a whole. It was the centerwhich forged the general rules to prevail in the competitivegame, out of the multitude of divergent individual inter-ests. Parliament also granted assistance to, and put underits protection, the manifold private interests which themore undertaking citizens acquired in colonial and semi-

colonial countries. The antimony between state and so-ciety, as it appeared to the German social thinkers of thefirst half of the nineteenth century, was no longer valid."The self-contradictory abstract political state," as theyoung Marx had called it, was only artificially kept aliveto be used as a convenient theoretical construction, as anaddressee of the claims which the individual was entitledto lodge against society. Every new procedure which was

opened to the individual in his struggles with society was

3 Hilferding, op. cit., p. 314; for recent criticism of the concept ofGeneralkartell, see Paul M. Sweezy, The Theory of Capitalist Devel-opment (New York, 1942), p. 340.




enthusiastically saluted as a milestone on the way to the

liberal millenium.35Parliament proved an excellent institution as long as

the individual entrepreneur could forge ahead singlehanded, in need only of the general advantages of legalsecurity, a permanently available police force, an adequatearmy, and that minimum of educational and social institu-tions which the lower classes had to have if they were tofulfill their tasks in industrial society. The emergence ofsolid economic blocks broke the political power of parlia-ment as a unified and unifying instiution. In the nowemerging system the economic groups more and more as-sume the functions of selective organs which choose thecandidates whom the general public is invited to endorse.Consequently, parliament is no longer the exclusive clubwhere good people of equal social standing discuss anddetermine public affairs. Its usefulness is restrictedto that of a meeting ground where diverse social groups

find convenient gratuitous facilities for propaganda activi-ties. New devices and institutions must take the place ofparliament.

In the advanced stage of universal infiltration into par-liament, the appeal from parliament to the electorate isprecluded, too. The electorate has been relegated to a rolesimilar to that of the consumer in a system of imperfectcompetition. A few giant corporations conduct a restricted

battle for their relative share in the market. The con-sumers' incidence on this competition is symbolized by ad-vertising campaigns confined to a general and irrelevantpraise of some product or other - so that choice of adver-tising slogans is all that is left of the "consumer's choice."Much in the same fashion the body politic gets presented aselected personnel, out of which favorites may be chosen.The presenting groups acting on tacit understanding uti-lize all the available devices of social and legal pressure toprevent the people from transferring their loyalty to out-siders. Their common interest in maintaining the estab-

"Leon Duguit, Transformations du Droit Public (Paris, 1913),is most characteristic in this respect.




lished groups as going concerns checks at every moment the

motions of competition they have to go through so as tofix their respective shares in the market. An electoratewhose habits have been formed by the mental and socialclimate of industrial society can no more be styled sover-eign on the political than the consumer on the economiclevel. Individual preferences affect the quota of profit orthe number of votes cast for different competitors, butthey do no longer determine either the quality or the price

of services offered to the public. Voters are called uponto air opinions which may furnish pertinent data for groupdecisions, but their utterances lack the elements of pre-cision, understanding, and resolution which alone wouldenable them to become volitional determinants of the finalchoice.36

Among the traditional organs which conceivably mightserve as a body of final arbitration to grant or deny legiti-

macy to actions of the groups, none was more predestinedto success than the courts. Exempt from the sphere ofinfluence of the groups, removed from the temptations sur-rounding the popular politician, vested with the aura ofdisinterestedness, they were trusted to pronounce sentencescarrying such finality and authority as the popular verdictcannot lay claim to. Yet, they failed conspicuously anduniformly wherever they tried to occupy the vacant seatsof authority. To live up to that task they would have had

to exercise constant vigilance and quickly to render orderssufficiently generalized to cover comprehensive areas of dis-pute, instead of narrowly constructed specific rules squeezedout of long drawnout procedures and followed up by anti-quated modes of securing performance.

Authority is best adapted to its task when its very exist-ence causes the parties to mold their behavior accordingto the rules the issuance of which is anticipated. If the

decision to be expected carries lesser weight with the would-

S6 "Under existing democratic institutions the will of the unorgan-ized majority is impotent to assert itself against the domination oforganized economic power." Edward Hallett Carr, Conditions ofPeace (London, 1942), p. 27.




be litigant than the time and cost element involved in a law

suit, courts are bound to lose all vestiges of regulatory in-fluence.37 The extent to which court decisions may pene-

trate and loosen up group structures depends on the degree

of coherence of the groups themselves. Apparently the

ratio of success is inverse to the degree of formalizationof group structures. In certain circumstances a labor

racketeer may get entangled with the formalized statutory

and procedural structure which such organizations usually

possess.But the rules of evidence are of no avail against

those who are sure enough of their power to dispense with

the formalities of written instruments.38

If legal battles actually do occur, even a clearcut victory

won in court by one of the contending parties will have no

lasting impact on the existing institutional framework if

there is no adequate machinery to enforce and police con-formity.39 The anti-trust policy of the United States Gov-

ernment, for example, is comparable to an occasional wan-

derer in a forest,40 who might cut down cobwebs which a

37 See instructive details on the impact of procedural rules on therelation of small and big industrial units in 77th Congress, 2nd ses-sion, Hearing of the Senate Comrmitteeon Patents, part 4, p. 1924(1942).

" "The stronger a cartel is, the less necessary it finds it to applya formal boycott against a corporation, and it is hardly possible toprovide legal proofs that boycott has been in progress. The smallercartel has to place greater reliance than does a closely knit syndicate

upon the visible application of organized discipline within the organi-zation and of the boycott as a measure against outsiders." Ausschusszur Untersuchung der Erzeugungs- und A bsatabedingungen derdeutschen Wirtschaft, I, III, 4, p. 69 (1930).

" Temporary National Economic Committee, Reports, Vol. 16, En-forcement of Anti-Trust Laws (Washington, 1940), pp. 77, 78.

40 Corwin D. Edwards in his article, "Thurman Arnold and the Anti-Trust Law," Political Science Quarterly, Vol. 58, pp. 338-355 (1943),shows that it was not before Thurman Arnold took charge of theAnti-Trust Division that a policy of anti-trust enforcement began tobe worked out as against the handling of isolated cases practicedpreviously. But Edwards has to admit that "circumstances robbedhis [Arnold's] most important programs of their expected effect"(p. 354). The wholesale suspension of anti-trust prosecutions duringthe war forced upon the Department of Justice by way of "adminis-trative agreement," coupled with -the new impetus associational prac-tices take under the war economy, will most probably have a greater




spider was careless enough to build across the path. But

the spider waits patiently until the wanderer disappearsand hurries to spin another web to catch up with the restof his gang.

Competing Bureaucracies. "The experience of genera-tions makes the Cafoni think that the state is only a betterorganized Camorra."41 If the traditional regulatory andsupervisory organs seem out of breath, one turns to themanifold new crystallizations of state power which have

grown up in recent times. Whether we fully agree withSilone's value judgment or not, he is surely right in em-phasizing the identical features of governmental bodies andthe great private bureaucracies. The roots of the statebureaucracy are manifold. A sizable part of it, the wel-fare, labor, and social security bureaucracies, are directoffsprings of modern industrial society and of the dismem-berment of the social fabric which is cut up into differentunrelated segments. As they replaced the church and thelocal community, they had to take all risks shunned by othergroups. They had to take care of all those who were ejectedfrom their positions in the process of production and dis-tribution and of those who never had been accepted by oneof the established groups. To cope efficiently with theirmillions of clients, these bureaucracies had to forsake in-dividualization and take over industrial methods.

A similar kind of technical efficiency is present to the

highest degree when large-scale cut-throat competition isdominant. As competition for power has been going onbetween the states on an ever enlarged scale since the be-ginning of the century, military establishments, the oldestpart of the government machine, by necessity developedmore features of large-scale mass production than other

imprint on future developments than the 5 years of "the new anti-

trust policy."41 I. Silone, "The Things I Stand For," in New Republic, Novem-

ber 2, 1942, p. 582. Similarities between private and public formsof coercion have been discussed by Robert L. Hale, "Force and theState: A Comparison of 'Political' and 'Economic' Coercion," Colum-bia Law Review, Vol. 35, p. 149 (1935).




parts of the machine. Modern industry and the military

machine have much the same characteristics.42 They con-dition each other not only in their material existence, meas-ured by the rate of creative destruction, but they also relyheavily on each other in the formation of the proper mentalattitude.

Until recently, private industries lived under the regimeof formal responsibility to stockholders. Yet, they mayhave been subject to the "overriding power of the state"

as well.43 In fact, supremacy of government over privateindustry modeled on the pattern of spurious stockholders'sovereignty may serve as a protective screen at a time whenprivate titles seem to be losing in public esteem. It makesno difference whether a section of social activity is styledprivate or public as long as its inherent structure, its atti-tudes, and roots of authority, are so similar as are thoseof private and public bureaucracies.

Inthe

lower ranks of both sections the money incentiveof acquisitive society has been brought into harmony with,but has not been replaced by, the category of hierarchicaladvancement. Hierarchical structure presupposes theexistence of rigid rules of conduct which make the lowerdepths of the administration easily controllable from above.In both sections again security of tenure becomes an ap-pendage of the stability of the prevailing social structure;legal norms guaranteeing the individual members' rights

become unnecessary and, in the event of a major socialconflict, inefficacious. Executive office, whose holders oftenchange between both spheres, has successfully resisted allattempts at legal formalization, regardless of whether such

attempts have been made by special legislation or by the

courts. Absence of formalization in the high ranks of

private and public bureaucracy is paralleled by a rigid con-

ventionalism and disciplinarianism in the lower grades.

42 Temporary National Economic Committee, Reports, Vol. 22,Technology in our Economy (Washington, 1940), p. 21.

4 See the proposals of Samuel Courtauld, "Future Relations ofGovernment and Industry," in The Economic Journal, Vol. 52, pp.1-17 (1942).




Skillful use of that well-disciplined force which is the low-

rank bureaucracy enlarges the scope of action open to thegroup of executives. Action moves in accord with the in-stitutional traditions of the organization within materiallimits of disposable means, and in accord with the degreeof respect and inviolability which other groups may be ableto claim for their own protected areas.

Whether individual groups attempt to trespass upon oneanother's province or not,44repercussions of group actions

are bound to be far-reaching. The treaty-making powerof private groups on an international scale is a perfectexample of this kind of unilateral change of data essentialto the community's existence. International organizationsof labor always remained propaganda centers whose appealsmay be heeded, or more often not, by these national groups.Contrariwise, industrial groups began to enter internationalagreements providing for effective sanctions in case ofnon-performance as early as the period preceding the first

World War. Treaty-making as it became universal in theperiod between the two world wars was more often thannot entrusted either to various national cartels united inan international cartel, or to individual companies, in theevent that the latter happened exclusively to dominate themarket. A simple distribution of markets among the dif-ferent partners to the treaty would take place, or the par-ticipants would combine their efforts, beginning with the

pooling of patents, and ending with a common organiz-ation of production centers.

Within the scope of such activities, action of individualgovernments is looked upon as an inevitable source of dis-turbances which should be localized for the benefit of allparticipants.45 As cartelization of industry proceeds on an

4 "The fine art of executive behavior consists in not deciding ques-tions which are not pertinent, in not deciding prematurely and not

making decisions that cannot be made effective, and not making deci-sions others should make." Chester J. Bernard, The Function of theExecutive (Cambridge, Mass., 1938), p. 194. Bernard's is an under-statement, but it adequately describes one side-and not the leastimportant oneof executive activities.

4 Cf. the classical text of the Standard Oil-I. G. Farbenindustrie




international scale, the industrial policy of the state loses,

furthermore, the weapon of the tariff policy. Price andsales conventions of private cartels which supercede tariffsdo not reflect any considerations for non-participating partsof the respective national economies. Moreover, they tendto minimize the efficacy of governmental price or tax policy,as has been amply shown by the experience of the last dec-ades.46

In Quest of Sovereignty. Of course, the unilateral action

of the great estates has its unavoidable repercussions on

agreement of November, 1929. It provided that "in the event the per-formance of these agreements should be hereafter restrained or pre-vented by the operation of any existing or future law, or the beneficiaryinterest of either party be alienated to a substantial degree by oper-ation of law or government authority, the parties should enter newnegotiations in the spirit of the present agreement and endeavor toadapt their relations to the changed conditions which have so arisen."77th Congress, 2nd Session, Hearings of the Senate Committee on

Patents, part 4, p. 1786, (1942). The 1940 negotiations betweenStandard Oil and I. G. Farbenindustria, as well as the special agree-ments made by Dupont and I. G. Farbenindustrie in the same year,may be regarded as special instances of this policy of restricting toa minimum the disturbances in the relations between the partners dueto war conditions. These and similar cases are discussed by CorwinD. Edwards in Economic and Political Aspects of International Car-tels, Sen. Doc. No. 1, 78th Congress, 2nd Session, 1940, pp. 68-69.

46 Those writers who start with the assertion that internationalcartelization furthers international cooperation have taken a favorableattitude towards international activities of industrial groups. See, e.g.,

Alfred Weber, Europas Weltindustriezentrum und die Ildee der Zol-lunion (Berlin, 1926), p. 130, or the memorandum submitted to theLeague of Nations by the French Government in May, 1931, quotedby Alfred Plummer, International Combines in Modern Industry(London, 1934), p. 127. On the other hand, writers anticipating thatsuch agreements might be profitably used by specifically imperialisticcountries have rejected what they call "the tendency to a world plan-ning by a central body;" cf. Albert Prinzing, Der politische Gehaltinternationaler Kartelle (Berlin, 1938). Both assertions seem equallyunfounded. In the measure that international cartels contribute to-wards disturbing the economic equilibrium of individual countries,

social tension results which intensifies nationalist attitudes and largelyoffsets all tendencies towards international cooperation on a largerbasis. There is no world planning, either. Cartels and combinationsare restricted to limited fields and do not any more constitute aGeneralkartell on an international plan than they do on a nationalplan. Cf. also the cautious statements of Herbert von Beckerath,Modern Industrial Organization (New York, 1933), p. 233.




the body politic as a whole. So our previous question has to

be taken up again: Is there no supreme body which maytake the place of parliaments, courts, and people as thefinal authority of last resort? Has no procedure developedto alleviate and control the constant pressure and counter-pressure exercised by the different organizations, publicand private alike, to anticipate the repercussions of eachindividual action and thus to balance them? Does thepresent organization, as Silone contends, really differ from

private organization only by a higher degree of efficiency?The relation between the state and the economic group

as the prime agency of societal activity has often been re-traced. One of these discussions, which dates back to theend of the first World War, stands out by its incisivenessand originality. Rejecting the idea of the state as a bigcoercive machine with exchangeable machinists, Wolzen-dorff tried to draw the border line between the functionsof the state and those of other social organizations. Socialorganisms develop their own customs and usages and formtheir own rules. The specific province of the state is thepolitical order and nothing but the political order. Tomake clear the difference between the all-embracing socialstate, which he rejects, and the state as mere guarantorof the existence of various free group activities, Wolzen-dorff calls his conception "der reine Staat." 47 The state'slaw making activity with respect to individual spheres could

certainly not be dispensed with in its entirety, but it shouldbe restricted to a minimum required for the maintenance ofstate power. The state should in the first place represent"a responsible and lastly decisive guarantee" of the lawdeveloped by the groups themselves. On the other hand,Wolzendorff adds, "the state can only administer law whichis compatible with its existence and its will." 48 His formu-las seem not to be too distant from those of a modern

theory of state sovereignty as developed, for example, byDickinson. Sovereignty, according to Dickinson, consists

47 Kurt Wolzendorff, Der reine Staat (Tilbingen, 1920).48 Ibid., p. 24.



1944] IN QUESTOFSOVEREIGNTY 171

not so much of exercising a "creative influence" as of ef-

fecting the "final choice." 49

Both discussions emphasize the form element, the neces-sity of decisions transcending group relations. Implicitly,both "the last decisive guarantee" of Wolzendorff's andthe "final choice" of Dickinson's presuppose the existenceof group-transcending organs able and willing to grantbenefits of delegated powers or withhold them from recalci-trant groups, to decide on their inter-relationships and -

which is still more important-

to enforce decisions againstparticular groups if need be.Permanent coordination presupposes the compatibility of

diverse group aims or the suppression of "undesirable"groups or both. But whether it is agreement on coordina-tion or agreement on suppression, in both cases the holdersof supreme political power - be they a court, a parliament,or an oligarchic group of politicians and practitioners ofviolence - must have enough residual power to make the

necessary common arrangements and to create the generalconditions for group approved purposes. Once the gen-eral agreement in existence and the private and publicagencies imbued with the spirit of the common purposes -

whatever ideological make-up be used to create that spirit-decentralization and delegation of power may proveeminently useful devices for upholding the authority ofthe holders of supreme political power. If, however, dele-

gation takes place without agreement on fundamental is-sues, it only involves an additional reinforcement of di-vergent group structures. It then "strengthens a systemstrong in the parts, weak in the center." 50

The history of the NRA is an example. The NRA wasconceived by the first Roosevelt administration as a gen-eral move to restore prosperity by improving industrialrelations and trade practices. The National Recovery Actitself shows that fundamental agreement

on purposes wasconspicuously absent at its inception. Administrators

49John Dickinson, "A Working Theory of Sovereignty," PoliticalScience Quarterly, Vol. 43, pp. 32, 47, (1928).

" See "The Controller," in The Economist, Vol. 141, p. 417 (1942).




taken from the ranks of interested producers' groups were

entrusted with the elaboration of codes designed to attainthe self-contradictory aim of stamping out unfair tradepractices without permitting monopolistic devices. Prac-tically, the task was thus transferred en bloc to organs ofindustrial self-administration, with the only reservationbeing executive correction of the proposed codes. The wayfor any revision of existing inter-group relations was bar-red from the outset.

Individual codes were shaped with exactly as much laborparticipation as was warranted by the actual strength ofthe interested labor organizations. The consumer repre-sentatives with no bargaining power at all were leftstranded in the same social vacuum in which they findthemselves under the present wartime economy. Differ-ences between industries applying for codes and other in-dustries fearing competitive disadvantages were ironed outwithout any regard for community interests "by inter-in-

dustrial diplomacy and even informal coercion." 51 Therewere no administrative agencies disposing of adequate en-forcement devices. Criminal prosecution of code violatorswas restricted to a few selected cases and had a purely sym-bolic character. In consequence, the effectiveness of thecodes depended on the strength of the trade associations inthe respective fields. The degree of compliance was smallestin small-scale industries and economically backward re-

gions,52 that is, those very sections where public interestin compliance was greatest. Group conflicts had been ac-centuated, and the pursuit of public ends, the sovereigntyof the community over its particular divisions, had beenthwarted by the Government's inability to prevent specificcommunity objects from being submerged in the strugglefor position by the individual groups,53 when finally theSupreme Court ended the impasse which the administra-

"' See the interesting commentary, The National Recovery Admin-istratio-n: An Analysis and Appraisal, published by the BrookingsInstitution (Washington, 1935), p. 120.

"2Ibid.)p. 260.13 See the concluding observations of the Brookings publication,

ibid., pp. 881-885.




tion of the codes had created and struck the NRA from the

statute book.This is but a particular instance of individual group in-

terests' superseding the (real or alleged) sovereignty ofthe community. Now, some modern theories on sovereigntyhave given characteristic expression to the absence ofbodies or persons able to concretize the political will ofterritorial communities. Pluralistic theories, for example,have tried to make a virtue out of the fact that the realrulers of society are

undiscoverable; they discovered, in-stead, a multitude of various organizations which theycredit with the gift of having their conflicts "cleared" ina kind of cooperative superassociation.54 Everything is allright as long as the divergent interests do the "clearing"themselves, or are so homogeneous as to make arbitrationby the "super-clearinghouse" a mere technicality. Butwhat if the group conflicts are much too great and intenseto be "cleared away" without a basic agreement between

the contending parties? And if there is fundamental di-vergence of interests, what makes the groups enter intosuch agreements which then insure the execution of thestate's "final choice"?

Carl Schmitt's "decisionism," too, as early as 1922 hadgiven up the hope of finding a permanent subject of sov-ereignty that would be intent on, and capable of, balancingthe interests and volitions of different groups and factions.55

He then proceeded to attribute sovereignty to those personsor groups that would prove able to exercise political domi-nation under extraordinary circumstances. But Schmitthimself pointed out that his concept of sovereignty wasstructurally akin to the theological concept of miracle-which makes his subject of sovereignty a rather problemat-ical one. Emergencies, like miracles, may take place ininfinite number. In order to be recognized as such theyhave to be authenticated. "II y a des miracles qui sont despreuves certaines de verite. If faut une marque pour les

" See the discussion on p. 2 above.6 Die Iktatur (Munich, 1921); Politische Theoklogie (Munich,

1922).




preuves certaines de verite. II faut une marque pour les

connaitre; autrement ils seraient inutiles." 56 Emergenciesas well as miracles are exceptions to rules that prevail in"$normal"situations. Their contours are determined bythese rules of "normalcy" which they "confirm" throughbeing exceptions. In the absence of an authentic rule,emergency in permanence becomes the genuine symbol ofthe very absence of that system of coordination to whichhistory traditionally affixes the attribute of sovereignty.

"Emergency" theories merely indicate that society hasreached a stage where the equilibrium of group forces isutterly unstable; there is no automatism of coordinationwhich may insure the operation of the "final choice" on thebasis of the equilibrium system. But when the mechanismof coordination does not function any longer so as to guar-antee fundamental agreements between the groups thatcontend for the power to make final decisions, the mostpowerful ones among them are compelled to resort to build-ing a machine of violence that would enable them to sup-press "undesirable" groups and restrict competition amongthe "desirable" ones. Agreement among a few groups isthen reached through the medium of a paramount commoninterest in suppressing or restraining many others. En-forcement of the agreement is of necessity entrusted tothe newly-built machine whose operators, "practitioners ofviolence," form new groups themselves, groups linked with

each other through clusters of rackets. Old groups mustshare power with new groups. Initial agreements whichoriginally insured coordination must be revised and a newcompromise looked for. Inter-group relationships are influx once more, and unstable equilibrium is preserved onlythrough common interest in the suppression of undesirablegroups.

Of the forces which have been at work to produce changes

in the relations of the group empires, fascism is the mostcharacteristic one. It thoroughly destroyed the organiz-ations of all "undesirable" groups, labor being the first.

" Blaise Pascal, Pensees, Seconde partie, article XVI, ii.




It then set out to extend the sphere of control exercised

by organizations recognized as "legitimate" ones. The au-thority of the state was tremendously widened and enlargedto be vested in these very groups on the basis of compulsoryinclusion of non-members. The last vestiges of societalfreedom precariously preserved through co-existence ofrival organizations with a wide margin of inter-group fric-tion were definitely annihilated. In addition, coordinationof the legitimate groups for the common imperialist enter-

prise brought large areas of former group conflicts to pro-visional disappearance. As in the frame of this substantialagreement controversies that arise have but secondary im-portance for the time being, avenues for informal com-promise, or if need be even for formalized adjustment ofgroup differences by the charismatic fountain of authority,were not difficult to design.'

Within the large-scale competition that is going on inthe realm of inter-state relations the policy of coordination

of major group aims, as operating in Germany, was boundto secure a differential rent to the country that was thefirst to effect it. Incidentally, this was the case in theprovince of international trade relations. The policy of im-perialist coordination has made the fascist government asilent partner to private international business agreementsand enabled it to insert clauses into private contracts whichwere seriously to weaken the war potential of the country to

which the other party to the contract belonged.57 Yet,

Cf., e.g., the destruction of the Jasco acetylene plant in BatonRouge at the request of the I. G.-Farbenindustrie in 1939 (77th Con-gress, 2nd Session, Hearings of the Sernate Committee on Patents, part3, 1942, p. 1363). Here the German Government had no difficulty inpursuing its strategic and military aims through private claims of aprivate concern. In democratic countries the coordination of govern-ment and industrial interests so far has functioned on a much lowerlevel, if it has functioned at all. When there was already war inEurope, embassies of the United Nations still carried mail for repre-sentatives of American business corporations negotiating with Ger-many and presented them with certificates of patriotic behaviorwithout even making any attempts at getting information on, orsupervising such negotiations between their nationals and representa-tives of enemy countries (ibid., part 6, 1942, p. 2608). A typicalexample of differences in the behavior of business groups in a forcibly




under the impact of the war the policy of central coordina-

tion of group aims spreads all over the world. As mattersstand now, the differential rent which ruling groups inGermany were able to secure through being the first comersin the field is bound to disappear. The foundations of theagreement between the group empires, enforced by the"practitioners of violence," again become unstable. Theyare no longer held together but by the common interestof the legitimate groups in suppressing the illegitimate or

"undesirable" ones, and it is rather doubtful whether sup-pression can be maintained when the system that insuredit has been substantially shaken. It also remains to beseen whether the differential rent accruing to victoriouscountries will be sufficient to insure a group compromise,as unstable as it may be, without further recurrence toeliminating and suppressing those major group interestswhich might endanger the functioning of coordination.

coordinated and in a noncoordinated system is offered in the historyof the "private business relations" between the German I. G.-Farben-industrie and the American Sterling Products, Inc., as related byWalton Hale Hamilton, "The Strange Case of Sterling Products," inHarper's Magazine, Vol. 186, pp. 123-32 (1943). Says Hamilton:"A corporation [meaning Sterling Products], beset on all sides byhazards, sets out to exploit and to secure its estate. To hedge in itsmarkets and guard its frontiers, it commits itself to an internationaltreaty. It acts without regard to the interest of the nation to which itbelongs; it accepts no duty to report its acts to its own government.

It binds itself to an ally overseas which is subject to the will of ahostile and revolutionary state. The Nazi party commands and itsorders are imposed upon the American ally through the obligationsof contract" (p. 130). The obvious conclusion is: "Concerns likeSterling are led by the desire for gain into situations where they arepowerless to help themselves; only resolute and drastic surgery by thegovernment can break the shackles of their bondage" (p. 132). But"resolute and drastic surgery by the government" presupposes adifferent mechanism of coordination of group empires.

in quest of sovereignty kirchheimer

Documents