34 MONOPOLY CAPITAL THE GIANT CORPORATION
There is a widespread impression, and much literature to owners; and because of the strategic positions they occupy,
support and propagate it, that the managements of big corpo-
rations form some sort of sepa1·ate, independent, or ''neutral''
social class. This view we have already encountered in an ele-
mentary form in the ''neutral technocracy'' of Berle and Means
and the ''soulful corporation'' of Carl Kaysen; it is developed
more elaborately in such works as James Burnham's The Man-
i\, agerial Revolution and Berle's The 20th-Century Capitalist
~Revolution. Most of the variants of this theory have interesting
,'J ~ and enlightening insights to contribute, but in our view they all
f share a common defect: the basic idea is wrong.
~ .:,,. The fact is that the managerial stratum is the most active
~ ~ and influential part of the propertied class. Alt studies show
) .1 that its members are largely recruited from the middle and
1--~ upper reaches of the class structure; they overlap with what C.
0 Wright Mills calls the ''very rich''; with few and negligible
exceptions, they are wealthy men in their own right, quite
apart from the large incomes and extensive privileges which
they derive from their corporate connections. 16 It is of course
true, as we have emphasized, that in the typical big corpora-
tion the management is not subject to stockholder control, and
in this sense the ''separation of ownership from control'' is a
fact. But there is no justification for concluding from this that
managements in general are divorced from ownership in gen-
eral. Quite the contrary, managers are among th~ biggest
individual caught in the corporate structure, rather than the public, who
is the victim . . . ." Revie\v of From the Dark Tower by Ernest Pawel,
New York Times (Sunday Book Section), June 23, 1957.
In one important respect, this analysis seems to us not quite accurate.
The crux of the matter is not that ''few American corporations at present
are dominated by a single individual." There are plenty of them, even
among the biggest. The point is that the company man, even when he
ri~es to a dominant position in his company, as often happens, is a very
different type and plays a very different role from the old-fashioned
tycoon. For the tycoon, the company is merely a means, while to the
company man it has become an end.
i-0 By far the best treatment of these subjects will be found in
C. Wright Mills, The Power Elite, especially Chapters 6, 7, and 8.
35
they function as the protectors and spokesmen for all large-
scale property. Far from being a separate class, they constitute
in reality the leading echelon of the property-owning class.
This is not to argue that managers have no distinctive inter-
ests qua managers. Like other segments of the propertied class,
they do. But the conflicts of interest that arise in this way are
between managers and small property owners rather than be-
tween managers and large property owners. The clearest case
in point has to do with dividend policy.
It is generally assumed that the desire of managers, noted
earlier, to generate the largest feasible volume of internal cor-
porate funds leads to an interest in a low dividend payout rate,
while stockholders' concern to maximize their disposable cash
income leads to an interes{in--a high payout rate. Actually, this
is much too simple. Most managers are themselves big owners
of stock (in their own and other companies) and as such have
the same interest in dividends as other big stockholders. This
interest is neither in a minimum nor a maximum payout rate
but somewhere in between: stockholdings should yield a rea-
sonable cash income (for managers this is particularly impor-
tant as a guarantee of family security after they retire or die);
on the other hand, they should also steadily appreciate in
value. The first requirement calls for dividends, the second for
plowing back of earnings. Nevertheless, the special managerial
interest in a low payout rate does exist and is undoubtedly
important. But the point to be emphasized is that this makes
managers the allies of the very largest stockholders for whom a
minimum payout rate is also a desideratum. The reason of
course is that the very rich save a large part of their incomes in
any case, and it is to their advantage for the corporations in
which they own stock to do the saving for them rather than pay
out dividends from which to do their own saving. Corporate
saving results in an increase in the value of their stock. If at
any time they need the cash, either to spend or for some other
investment, they can sell part or all of their shares, realizing the