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Full text of "The social-industrial complex"

NO. 10 IN A SERIES OF OCCASIONAL PAPERS 





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THE 
SOCIAL- 
INDUSTRIAL 
COMPLEX 




by Michael Harrington 



The Social-Industrial Complex is excerpted from a chapter 
which will appear in Michael Harrington's new book, To- 
ward A Democratic Left, to be published by the Macmillan 
Company in May, 1968. 

The Author 

Michael Harrington is the author of The Other America 
and The Accidental Century. He is also Chairman of the 
Board of the League for Industrial Democracy. 




PUBLISHED BY THE 



LEAGUE FOR INDUSTRIAL DEMOCRACY 



112 E. 19 STREET • NEW YORK, N.Y. 10003 



Cover design by Eugene Glaberman 






THE 

SOCIAL- 
INDUSTRIAL 
COMPLEX 



by Michael Harrington 








American business has long scrambled 
over the common good in its haste to pursue 
private profit. But now, the corporations 
ernestly threaten a new, distinctive and 
paradoxically dangerous course. Instead of 
creating social problems, they are going to 
solve them. In a strangely optimistic speech 
at the University of Chicago last year, Lyle 
M. Spencer, President of Science Research 
Associates (an IBM subsidiary) , gave an 
apt and ominous name to this new devel- 
opment, the "social-industrial complex." 

Spencer's enthusiasm is puzzling in that 
his phrase is modeled on one of the most 
somber statements Dwight Eisenhower 
ever made: his warning against the sinister 
potential of a "military-industrial com- 
plex." And indeed, the phenomenon is 
quite similar to the united front of execu- 
tives and generals which so alarmed Presi- 
dent Eisenhower. The military-industrial 
complex bases itself on a permanent war 
economy and a huge defense establishment. 
This enormous vested interest in the means 
of annihilation, Eisenhower feared, could 
subvert the democratic process in vital 
questions of war and peace. The social- 
industrial complex also builds upon public 
expenditure and a "partnership" between 
government and business. But its rationale 
is the Great Society, not the Cold War. 
(Much of the massive spending waits, in 
fact, upon the end of the tragic war in Viet- 
nam.) 

As Spencer puts it, "Social causes which 
in the 'thirties were the domain of college 
professors, labor unions and student demon- 
strations are today becoming the new busi- 
ness of business." What is menacing about 
this sudden outburst of corporate con- 
science is that satisfying social needs and 
making money are two distinct, and often 
antagonistic, undertakings. 

Certainly the urgent demands on the na- 
tion for housing, schools, jobs, clean air, and 
plain civility must be met. But will the so- 
cial needs really be met if the central role 
in the solution is given to profit-seeking 
enterprises? To answer this question, it is 
well to begin with a slightly cynical analy- 



sis of earthy motives of the corporatists 
who want to throw the private sector into 
the breach. 

First of all, it is important to understand 
that thought is becoming power to a degree 
beyond the wildest imaginings of a Platon- 
ist philosopher-king. Five years ago, Clark 
Kerr estimated that the production, distri- 
bution and consumption of knowledge al- 
ready accounted for 29% of the Gross Na- 
tional Product and was growing at twice 
the rate of the rest of the economy. In 1966 
the president of IBM declared that the na- 
tion was fast approaching a time in which 
more than half the work force would be in- 
volved in processing and applying data. 
Recently Harold B. Cores, the head of a 
Ford Foundation subsidiary proclaimed, 
"learning is the new growth industry." So 
higher education is no longer the aristo- 
cratic province of a tiny upper-class minor- 
ity. And both practical politicians and hard- 
headed businessmen have noticed this mo- 
mentous trend. 

Second, the executives of the social-in- 
dustrial complex, and the American people 
as a whole, have been tutored by militant 
Negroes, without degrees in Business Ad- 
ministration. In the Eisenhower 'fifties, 
civic virtue was equated with a balanced 
budget. But, beginning with Dr. Martin 
Luther King's Montgomery bus boycott of 
1955, a Negro mass movement rescued 
America's better self. Eventually, the prac- 
tical idealism of black men rekindled the 
spirit of protest on the campus, challenged 
the churches and the unions and, in effect, 
prepared the country to respond to John 
Kennedy's summons to action. In the proc- 
ess, social conscience became a political 
force. Americans suddenly noticed the ra- 
cial ghettos, the black and white poor, the 
polluted air and the squalid facilities of 
the public sector. 

But for all the talk about reform, little 
was done. Three years after the proclama- 
tion of the Great Society the Manpower 
Report noted that the slums had become 
worse, its people more desperate. In the 
series of summer riots which began in 1964, 



LIBRARY 

UNIVERSITY OF TEXAB 

AUSTIN, TEXAS 



America was provided with another mo- 
tive for change: fear. Some, to be sure, sim- 
ply wanted to suppress the social problems 
which gave rise to the violence by brute 
force. If this view triumphs then the entire 
society might stagnate for a generation or 
more. But others were driven by the urban 
upheavals to seek immediate and far rang- 
ing solutions to the evils festering in the 
central cities. 

These trends created, as Herbert Hollo- 
mon put it on behalf of the Department of 
Commerce, a "public market." Hollomon 
urged private industry to go out and build 
colleges and create new cities. Max Ways 
of Fortune called this approach "creative 
federalism." It rested, he said, upon "the 
rapproachment, during the Johnson Admin- 
istration, between government and busi- 
ness. The two still have and will always 
have different responsibilities and aims. But 
they are beginning to use the same working 
language, depend on the same kind of peo- 
ple, and get at tasks and decisions in the 
same way." 

Finally, credit must be given to Barry 
Goldwater for convincing private enterprise 
to ratify the massive federal presence which 
the social-industrial complex requires. The 
ideological unreality of Goldwater's presi- 
dential campaign forced businessmen to 
choose between the risks of the market and 
the stability of a managed economy. The 
captains of the greatest industries unhesi- 
tatingly chose the latter course and in the 
process endorsed Lyndon Johnson's Great 
Society. 

So the companies have acquired a con- 
science at the precise moment when, for a 
variety of technological, social and political 
reasons, there is money to be made in doing 
good. And in pursuit of their own private 
purposes, the executives are going to have 
much to say about what Americans think 
and how they live. The knowledge industry 
now includes, among others, General Dy- 
namics, AT&T, General Electric, Time Inc., 
Minnesota Mining and Manufacturing, 
Bell and Howell, Philco, Westinghouse, 
Raytheon, Xerox, CBS, Burroughs Busi- 



ness Machines and Packard Bell. The city 
building industry has attracted Goodyear, 
General Electric, Humble Oil, Westing- 
house, U.S. Gypsum and even Walt Disney 
Productions. And this, clearly, is only the 
beginning of the beginning. 

Charles Silberman of Fortune was not 
being extravagant when he wrote recently 
that the knowledge industrialists, in part- 
nership with the government, are "likely to 
transform both the organization and content 
of education and, through it, of American 
society itself." Clearly such a massive con- 
centration of private power in a traditional 
public domain is a disturbing fact. I asked 
one of the top men in the field, Francis Kep- 
pel, about it. 

Keppel, the former United States Com- 
missioner of Education, is now the head 
of General Learning, a knowledge corpora 
tion which has been put together by Gen- 
eral Electric and Time Inc. His social con- 
science long predates the business discovery 
that thinking is a blue-chip occupation. 
There is, Keppel concedes, a danger that 
business will dominate, rather than serve, 
American education. Yet, he argues, per- 
haps the danger has been exaggerated. Of 
the tens of billions of dollars which America 
spends each year on schooling, the largest 
single expenditure is for teachers' salaries. 
After that, the money goes to construction 
and maintenance and only about 4% of the 
total, or less than $1.5 billion a year, is 
devoted to instructional materials of all 
kinds. Therefore, Keppel says, the giant 
corporations have not really discovered 
such a huge market and there really isn't 
a fiscal motive for "taking over" the system. 

Second, Keppel points out that decision 
making in American education is decentral- 
ized, authority is vested in a multiplicity 
of boards, superintendants and principals. 
The only way that the knowledge industry 
can serve a truly public purpose, he be- 
lieves, is by being clearly subordinate to 
the educators. The latter must dictate the 
content of what is to be taught. The corpo- 
rations can then supply them with the serv- 
ices and materials, but they must not im- 



J JLiC ' - 



pose a curriculum which is designed to sat- 
isfy the needs of private profit rather than 
those of students. 

KeppePs second point, it seems to me, 
involves a crucial distinction. For there are 
two distinct antagonistic modes of business 
participation in the solving of social prob- 
lems which often employ an identical rhet- 
oric. On the one hand, the society can dem- 
ocratically decide on what it wants to teach 
and the kinds of cities it wants to live in. 
It can then contract out the preparation of 
materials, the construction work, and even 
certain advisory functions to the private 
sector. This would keep planning and pro- 
gramming clearly under democratic politi- 
cal, rather than corporate, control, and 
make non-profit organizations the pivot of 
the whole system. This is what Keppel ad- 
vocates. On the other hand — here is the 
sinister potential of the social-industrial 
complex — America might unwittingly hire 
business to build a new urban civilization 
on the basis of the very money-making pri- 
orities which brought the old civilization 
to crisis. The contractor would not simply 
execute the contract. He would draw it up 
as well, 

Keppel admits that this second, and 
ominous, possibility exists. He also con- 
cedes that the relative smallness of the 
educational market is cause for pessimism 
rather than optimism. It could mean that 
companies will design machines and pro- 
grams according to corporate specification 
for private use and then, as a careless, 
moneymaking afterthought, unload them on 
school systems as well. Keppel himself is 
clearly determined to fight this tendency. 
And there have been published reports of 
an internal struggle within General Learn- 
ing between the technicians and engineers, 
concerned with knowledge "hardware," and 
the educators. Yet there is disturbing evi- 
dence of powerful elements in the industry 
much less idealistic than Keppel. If they 
prevail, the intellectual formation of the 
American young could be subordinated to 
the pursuit of profit. Enthusiastically, even 
euphorically, the Wall Street Journal has 



reported that Keppel's worst fears are al- 
ready becoming fact. 

"It is clear," the Journal said in one anal- 
ysis, "both government and industry will 
play increasingly active parts in deciding 
what schools will teach and how they will 
present it." A little later, the paper was 
more precise: "... new schools to a consid- 
erable extent have to be built around the 
electronic gear that will cram them." 

There are already signs that this is hap- 
pening. "A lot of schools have been taken 
advantage of by industry," according to 
Dr. Frank Brown, Superintendent of 
Schools in Melbourne, Florida. "There are 
millions of dollars worth of equipment 
stored in schools that just isn't practical." 
And the United States Commissioner of 
Education, Harold Howe II, generalized 
the point: "Like the drug for which there 
is yet no disease, we now have some ma- 
chines that can talk but have nothing to 
say. I would caution the businessman not 
to venture into hardware unless he is pre- 
pared to go all the way into printed mate- 
rials and programming." 

If, as Howe rightly fears, the technical 
comes to predominate over the intellectual 
in American schools, then fundamental de- 
cisions about learning will become a func- 
tion of the corporate struggle for shares of 
the knowledge market. If this happens, 
then each producer will push its own par- 
ticular technology: Xerox its kind of teach- 
ing machines; IBM computer-run class- 
rooms; CBS, television; and so on. Obvi- 
ously machines, computers and television 
may have an enormous contribution to 
make to American education. But how is 
one going to decide among them? If the 
Wall Street Journal estimate is correct, 
there will be a considerable amount of com- 
pany jockeying before the basically educa- 
tional decision is made. At this point, those 
familiar with the military-industrial com- 
plex will be aware of a striking similarity 
between it and the emerging social-indus- 
trial complex. 

Each element in the defense sector (some- 
times in alliance) — particular industries, 



branches of the service, "independent" as- 
sociations for the Army, Air Corps, Navy 
and Marines, and even trade unions — has 
its own special interest ( profit for the com- 
panies, prestige and power for the officers, 
jobs for labor). And each one lobbies for 
strategies which are determined, not by any 
objective analysis of the needs of the nation, 
but by their own stake in the decision. The 
debate over the B-70 bomber during the 
Kennedy Administration was a classic case 
in point. A powerful section of the military- 
industrial complex, led by the Air Force, 
mounted a determined campaign against 
the Administration in favor of proposals 
which had been rejected by three Secre- 
taries of Defense under Eisenhower and by 
Secretary McNamara under Kennedy. 

Something like this pattern is beginning 
to emerge within the social-industrial com- 
plex. "Business," to quote the Wall Street 
Journal once more, "is turning into an im- 
portant force for pushing embattled domes 
tic proposals through Congress." An exec- 
utive of the Department of Housing and 
Urban Development is quoted as saying, 
"Each agency has gradually developed a 
list of firms interested in its field ... we 
don't keep them turned on all the time, but 
we know how to turn them on. . . ."At first 
glance this might seem to portend a happy 
situation in which the corporations are lend- 
ing their political power to a public purpose. 
But, as the experience of the military-indus- 
trial complex demonstrates, such proce- 
dures lead straight to private alliances be- 
tween self-interested executives and ambi- 
tious bureaucrats. This trend is already quite 
developed in the cities industry — where, 
for instance, real estate men support rent 
subsidies as a means of attacking public 
housing — and, as the Wall Street Journal 
realizes, it is going to appear in educa- 
tion too. 

A report in the June, 1967, New Republic 
vividly illustrates what this might mean. 
The Office of Education, it said, was con- 
sidering a grant of $2 million to build a com- 
puter classroom for Menominee indians in 
Wisconsin. Westinghouse Electric was to 



develop the hardware which would even- 
tually serve 60 students. This considerable 
investment would do nothing to help 900 
other children on the reservation who are 
currently receiving inferior education from 
uncertified teachers, and it is proposed at 
a time when mechanized teaching is being 
criticized by some educators as being too 
impersonal. If the New Republic is right, 
the decision makers had focused not on the 
needs of these Indian children but on con- 
siderations of governmental-corporate real- 
politik. "The one substantive reason for fin- 
ancing this project," the article held, "is 
the government's interest in building up 
the education industry; in this instance, 
picking up Westinghouse's developmental 
costs so it can compete with other com- 
panies, like IBM, which the United States 
also finances." So these young Indians 
might be among the very first students in 
the land to have their education designed 
according to the engineering principles of 
the B-70 bomber. 

During the 1967 New York State Con- 
stitutional Convention, there was another 
illustration of how business might put its 
aims first and education second. The elected 
representatives of the people were discus- 
sing adopting the principle of universal 
free college education for the citizens of 
the state. It was not a coincidence that at 
that precise moment all of the major insti- 
tutional investers in New York suddenly 
decided not to bid on $46.6 million in state 
school construction notes. It was widely 
rumored that they were fearful that the pro- 
posed constitutional provision would make 
such an investment too risky and this was 
a rather blunt hint that the members of 
the Convention should back off from any 
radical educational commitments to the 
people. Anthony Travia, the President of 
the Convention, in a not so veiled refer- 
ence to the influence of Governor Rock- 
efeller in the Chase Manhattan Bank, re- 
marked, "Someone has a friend in some 
bank and it certainly isn't Travia." 

As Keppel emphasized, the ultimate out- 
come of many of such alarming trends are 



in doubt. There have been, to be sure, 
minor scandals like the hawking of pro- 
grammed instruction door-to-door during 
the teaching machine vogue of a few years 
back. And Parsons College has shown what 
an aggressive administrator can do when 
he runs an educational institution like a 
business. But the giants in the field have 
been working cautiously with the long run 
in mind. So far they have been most active 
in vocational training, both private and 
public, and the case of the Job Corps may 
offer some hints of things to come. 

When the Corps was first set up under 
the Economic Opportunity Act, it was 
widely hailed as a trail-blazing example of 
uniting Federal idealism and free enter- 
prise expertise. Contracts were awarded to 
corporations like Federal Electric (a sub- 
sidiary of IT&T) , the ubiquitous Litton In- 
dustries, U.S. Industries, and Westinghouse 
Air Brake. In general, the early high hopes 
have been disappointed. For, as Sar Levitan 
summed up the experience in 1967 the costs 
have been high (the contracts are, in ef- 
fect, on a cost-plus basis), and the com- 
panies themselves have lost some of their 
enthusiasm, partly because the escalation 
of the tragic war in Vietnam makes them 
feel they can look toward McNamara rather 
than Shriver for government contracts. The 
most relevant perspectives on the Job Corps 
experience are provided by the members 
and organizers of the American Federation 
of Teachers, one of the fastest growing 
unions in the country. The AFT has con- 
sistently fought to improve the quality of 
education as well as the wages and working 
conditions of its members. Its somewhat dis^ 
illusioned view of the privately operated 
Job Corps camps does not really have to 
do with money. Rather it centers on the 
feeling that the companies treated the edu- 
cators in their employ like so many hired 
hands, that they treated schools as if they 
were factories. 

John O'Leary is a personable young AFL- 
CIO organizer who worked with the AFT in 
their 1966 and 1967 attempt to sign up the 
Camp Kilmer Job Corps. Kilmer was oper- 



ated by the Federal Electric Corporation 
and its contract established a relationship 
with Rutgers University, which was sup- 
posed to evaluate the project. The first 
Rutgers report was a controversial criticism 
of the Camp, charging "flagrant deficien- 
cies." After much debate, the University 
decided that its professors were delivering 
their own opinions and nothing more. 

Originally, as O'Leary tells the story 
of the organizing campaign, 80 academic 
teachers at Kilmer wanted to form a bar- 
gaining unit, and they came to the AFT. 
The management, according to O'Leary, 
reacted with union busting tactics. Labor 
relations experts were imported, group 
meetings were sponsored, everyone on the 
payroll received letters. The company, in 
a classic anti-union maneuver, insisted that 
the bargaining unit should be expanded to 
include vocational teachers and fought the 
issue up through the labor relations struc- 
ture. By the time Federal Electric had car- 
ried its point at the regional level of the 
NLRB, the original union membership had 
either become demoralized or left the Camp. 

At Excelsior Springs, Missouri, Westing- 
house Air Brake fought a similar delaying 
action after AFT members went out on 
strike. Ten months after the original ac- 
tion, the union majority had eroded, the 
election was lost, and management pro- 
ceeded to fire five of the union leaders 
(the AFT submitted unfair labor practices 
charges on this count). At the Parks Job 
Corps Center in California, managed by 
Litton Industries, a 20 day strike led to 
an election in June of 1967. In the course 
of that campaign, one of the complaints of 
the Teachers and Counselors Union at 
Parks was that "Litton bought hundreds 
of thousands of dollars of Litton teaching 
materials of questionable value in the class- 
room from its own educational subsidiary 
with your tax dollars and forced instructors 
to use them." 

As a result of these experiences, John 
Schmid, the State Federation's Coordinator 
of the AFT, concluded that "it is plain that 
private industry feels that teachers deserve 



6 



even less of a voice in the formulation of 
curriculum than do most boards of educa- 
tion/' This judgement has many implica- 
tions but one of them is especially relevant 
here. As the idealistic, education-oriented 
activists of the AFT see the Job Corps ex- 
perience, the private companies have tended 
to impose factory style labor relations on a 
school system. In this case KeppeFs fears 
have been justified: business is here taking 
a commanding, autocratic position, not a 
subordinate one. 

Indeed, David Gottlieb, a top analyst in 
the Office of Economic Opportunity's Plans 
and Programs Division, generalized this 
point in terms of OEO experience. The 
corporate-run Job Corps camps had, he 
said, a "garment of approval," for the con- 
servatives in Congress are always ready to 
attack the inadequacies of a Federal project 
run by Harvard, Columbia or Berkeley but 
they are not apt to question the undertak- 
ings of a good, down to earth businessman. 
Therefore, Gottlieb asserted, the corporate 
undertakings are freer from governmental 
supervision than, say, a Peace Corps train- 
ing institute directed by a University. And 
since social program administrators are al- 
ways looking for industry support, they are 
less able to bring these operations under 
public control. 

Gottlieb does not think that the com- 
panies have abused their freedom. Yet the 
fact that private entrepreneurs in the new 
knowledge industry already have an im- 
munity from democratic criticism denied 
non-profit professors indicates, I believe, a 
dangerous trend in the field of education. 

In his Farewell Address, President Eisen- 
hower expressed alarm that the military- 
industrial complex would come to control 
American education. He was concerned 
about "the prospect of domination of the 
nation's scholars by Federal employment" 
and the possibility that "public policy could 
itself become the captive of a scientific, 
technological elite." In part, Eisenhower's 
fears have been justified. Clark Kerr testi- 
fied to this — perhaps too candidly from 
the point of view of his own career — in 



The Uses of the Multiversity. He said that 
Federal grants and big business needs 
are playing an ever increasing role in de- 
termining the shape and quality of higher 
education in America. But now, with the 
social-industrial complex the danger be- 
comes more pervasive for it extends to the 
kindergarten and Job Corps camp as well 
as to the graduate seminar. There are those, 
like Keppel, who would make the knowl- 
edge industry the servant of the educators. 
But there seem to be many more who follow 
the jubilant philosophy expressed in the 
Wall Street Journal articles: that schools 
shall now be designed to fit machines rather 
than the other way around. 

But the social-industrial complex is not 
simply concerned with how Americans 
think. It may also attempt to decide how 
the nation lives. 

During the hearings chaired by Senator 
Ribicoff in 1966, the country got some idea 
of the enormous dimensions of the urban 
crisis. It is necessary, in President John- 
son's phrase, to build a "second America" 
- between 1966 and 2000, the United States 
must construct more new housing units than 
it now possesses. The official estimates call 
for 2 million additional units a year, with 
at least 500,000 of them designed for low- 
income families. The AFL-CIO says we 
need 2.5 million new units a year; other 
estimates go as high as 3 million. And these 
things can only be done, businessmen like 
David Rockefeller told Ribicoff, if there is 
a Federal subsidy to attract the social con- 
science of profit-makers. So a huge, new, 
tax-supported market may well be in the 
making. 

This is at least one reason why the 
backers of the Demonstration Cities (now 
Model Cities) Act in the fall of 1966 in- 
cluded Rockefeller, Henry Ford, Thomas 
Gates of Morgan Guaranty Trust, Alfred 
Perlman of New York Central, and R. Gwin 
Follis of Standard Oil of California. It also 
helps explain why General Electric is now 
interested in building a city of 200,000 
people from the ground up — using GE 
products where possible, of course — and 



why U.S. Gypsum is demonstrating its 
skills in publicly-supported slum rehabilita- 
tion and hopes to make an eventual 8 to 10 
percent profit from such work. What was 
considered "socialism" only yesterday is 
turning into a sound business investment. 

There is a modest precedent for this pat- 
tern in the activities of the "civic" ex- 
ecutives who appeared in many major 
American cities in the 'fifties and 'sixties. 
These men were primarily bankers, depart- 
ment store owners, office-building landlords 
and others with a strong business stake 
in the central city. They mobilized entire 
communities, used both Federal and local 
funds, and improved the downtown areas 
to meet the needs of banks, department 
stores and office buildings rather than those 
of the black and white poor. In 1967, the 
New York Times reported that Mr. Lewis 
Kitchen, President of the City Reconstruc- 
tion Company, was preparing to spend half 
a billion Wall Street and insurance com- 
pany dollars in repeating this profitable 
error. He proposed to attract the upper 
and middle classes to the city by creating 
"an entire neighborhood screened from the 
blighted areas by wide parks and land- 
scaping. . . ." 

But the real danger today is not that the 
social-industrialists in the city industry will 
repeat the mistakes of the past (though 
some of them will). Nor, with a few ex- 
ceptions, is the trouble that they are greedy 
profiteers engaged in some kind of conspir- 
acy against the common good. The issue 
goes deeper than that. For when business 
methods are sincerely and honestly applied 
to urban problems, with every good inten- 
tion, they still inevitably lead to antisocial 
results. In this area, as in education, only 
the primacy of the democratic political 
authority over economic values and inter- 
ests will make possible the creation of new 
communities. 

There are, of course, some fairly vulgar 
instances of groups simply placing their 
goals over and above those of the people. 
When the National Association of Real 
Estate Boards, a group not noted for its 



social conscience and with much to answer 
for in the area of civil rights, comes out 
in favor of rent subsidies in order to kill 
public housing, there is need for compli- 
cated analysis. The major banks and busi- 
nesses in Pittsburgh which have also ap- 
proved the rent subsidy approach must be 
aware that they will eventually capture a 
good portion of the Federal grant. And the 
number of utility company presidents, de- 
partment store owners and bankers who 
have backed the Model Cities program are, 
like the civic executives of recent times, 
determined that any urban renaissance 
be shaped in accord with their particular 
needs. 

It is exactly when such crass concerns 
are not paramount that the real problem — 
the inapplicability of business methods 
and priorities to the crisis of the cities — 
emerges most clearly. The testimony of 
David Rockefeller of Chase Manhattan be- 
fore the Ribicoff sub-committee is an ex- 
cellent case in point. 

Rockefeller is an enlightened, and liberal, 
banker. Urban problems, he quite rightly 
told the Senators, "are so closely inter- 
related they call for the establishment 
of over-all goals and guidance. Housing, 
schools, transport and pollution are all part 
of the same organic system. Public agen- 
cies, in most cases, must set the over-all 
goals, then provide assistance and in- 
centives to private enterprise to carry out 
as much of the program as possible." In 
order to accomplish this, it is necessary to 
"take steps to make investment in urban 
redevelopment more appealing in compari- 
son with other opportunities ..." i.e., for 
tax subsidies to lure social-industrialists 
into a slum rehabilitation market which, in 
and of itself, is not attractive to money 
seekers. Senator Charles Percy's original 
home ownership plan was most blunt on 
this point and candid about real motives. 
His program, he said, "would be attractive 
to lenders because it promises a compe- 
titive yield and no risk in addition to its 
social and philanthropic appeal." [empha- 
sis added] 



8 



In theory, the Rockefeller approach sub- 
ordinates the businessman to the "over-all 
goals" of the community which are deter- 
mined by democratic process. But, in my 
view, and this is the crucial point, with all 
the good will in the world, Mr. Rockefeller 
proposes in practice to interpret those goals 
according to an economic calculus which 
can have only antisocial consequences. And 
since he is talking in terms of five business 
dollars invested to every Federal dollar 
(Ribicoff hopes for a ratio of $7 to $1) , the 
fact that he will allocate resources and 
order his design on the basis of tried, true 
and disastrous priorities is of some moment. 

"Economic logic," Mr. Rockefeller says, 
"dictates that the use of real estate be in 
some meaningful relationship to its value. 
The projects we have mapped for lower 
Manhattan are massive, and generally of 
commercial, taxpaying nature' 9 [emphasis 
added] Because this is exactly the approach 
which contributed much to creating our cur- 
rent problems, it is difficult to see how it will 
solve them. As the 1966 Council of Eco- 
nomic Advisors Report analyzed the strain 
which the commuters are placing upon city 
transportation systems: "Compounding this 
problem has been the increase in urban land 
values which encourages taller buildings 
with dense occupancy." 

In the 'fifties and 'sixties, the Rockefeller 
conception of land use prevailed dramati- 
cally in Manhattan. The builders made 
quite sure that real estate had a meaningful 
relation to its "value" as narrowly and 
commercially defined. Huge office buildings 
were constructed in the center of the city 
without any regard for other possible loca- 
tions (Harlem, Bedford-Stuyvesant) or to 
alternate use of the resources for abolishing 
ghettos. An intolerable load thus was placed 
upon already crowded and grimy transit 
facilities. And there was, of course, a total 
lack of concern for history, beauty and 
civility. 

A task force told Mayor Lindsay in 1966, 
"Few stores, theatres or hotels can com- 
pete with the arithmetic of office buildings. 
Those sites which have become legendary, 



surrounded by character and convenience, 
often are just the ones the office builders 
want." If this situation continues, the task 
force said, buildings which give New York 
much of its distinctive style, like the Plaza 
Hotel, are doomed. The "massive," "com- 
mercial" and "taxpayer" structures which 
will go up in their place can be easily 
imagined. And if stores, theatres and even 
the Plaza Hotel cannot compete with office 
buildings, it is naive to think that the poor 
of the central city will be able to do so. 

Less than a year after Mr. Rockefeller 
testified before the Ribicoff Committee 
there was an excellent illustration of what 
his words really meant. Eighteen Con- 
gressmen asked Governor Rockefeller and 
Controller Arthur Levitt not to put state 
offices in the World Trade Center but to 
locate them in Harlem, the South Bronx 
and Bedford-Stuyvesant instead. As the 
New York Times reported the story, 
Levitt's refusal to accept this suggestion 
was on David Rockefeller's grounds: "Mr. 
Levitt, whose approval is required on con- 
tracts exceeding $1,000, said that his final 
decision would be based on economic fac- 
tors, not on purported sociological advan- 
tages of locating in poor neighborhoods." 

But taking such "sociological advan- 
tages" into account is precisely what is 
desperately needed if America is to emerge 
from its present crisis. It was both scan- 
dalous and utterly logical for the FHA to 
wait until just after the violent outbursts 
in Detroit to decide to give mortgage in- 
surance to blighted and "economically un- 
sound" neighborhoods. The insurance com- 
panies which pledged $1 billion in ghetto 
rehabilitation waited, of course, until the 
FHA got around to thus insuring their in- 
vestment. Their funds were to be directed 
toward rent subsidy housing, which would 
mean further government support and rents 
beyond the reach of the most poor. And 
finally, even if the entire billion was de- 
voted to creating new dwelling units (which 
is doubtful), the effort would create only 
80,000 new units, or less than 20% of the 
annual need as defined by the government 



9 



itself. In short, the society cannot really 
look to business for the massive instruments 
which it needs. Even under the best of 
Federally subsidized and insured circum- 
stances, the catastrophes of the other Amer- 
ica do not yield commercial rates of interest. 

What the cities need are "uneconomic" 
allocations of resources. Money must be 
"wasted" on such uncommercial values as 
racial and class integration, beauty and 
privacy. And this is not simply a mat- 
ter of some gigantic master plan for it con- 
cerns individual trees in front of individual 
houses as well. "Neighborhoods," the New 
York Chapter of the American Institute of 
Architects has said, "must be planned to 
create environments which offer more than 
mere spartan utility, which have character 
and provide pleasure for those who live 
there." Businessmen, even at their most 
idealistic, are not prepared to act in the 
systematically unbusinesslike way which 
such amenities require. Take, for example, 
the "turnkey" program announced for pub- 
lic housing in August, 1967 (the word comes 
from the construction industry, not the 
prison system, although its use in the 
area of public housing is, to put it mildly, 
stupid). Under this experiment, private 
companies are going to contract, not simply 
to build, but to manage public housing 
projects. 

In discussing this idea, Joseph Califano 
of the White House staff was quoted as 
saying that "once a contract has been 
made under the turnkey process for a fixed 
amount, developers were free to make what- 
ever profit they could within the framework 
of the contract." Under such circumstances, 
any honest and intelligent businessman 
would opt for the cheapest standards ac- 
ceptable within the terms of the contract 
and that could have profoundly antisocial 
consequences. For it was precisely such 
a Congressional insistence on minimum 
amenities in public housing which, as 
Charles Abrams has documented, led to 
the (economical) practice of building seg- 
regated, high-rise monsters. 

But perhaps the most striking illustration 



of what commercial values do to social and 
aesthetic considerations is provided by the 
fate of the new town of Reston, Virginia. 
This project was initiated by Robert E. 
Simon and it originally envisioned archi- 
tectural innovation and even a certain 
amount of social-class integration. These 
goals could not be accommodated on a 
businesslike basis and Simon was even- 
tually forced to turn his dream over to 
the biggest investor, the Gulf Oil Corpora- 
tion. Gulf's man, Robert H. Ryan, was 
quite blunt about the changes he intended 
to make: "Economic feasibility must be a 
part of good planning and design," he said. 
And therefore in building a new town "you 
have to listen to the market." 

What Ryan heard on the market was to 
abandon even the ultimate aim of any kind 
of integration and to make the architec- 
ture much more conventional. 

So businessmen are understandably 
loathe to make anti-profitable and pro-social 
decisions on their own initiative. It does not 
pay. But even if they were willing to do 
so, they really do not have the right. The 
uneconomic values of community are, or 
should be, in the public domain and must 
be subject to democratic determination. In 
this area, even more than in education, the 
social-industrialists must be subordinated 
to popular planning institutions. 

Some people, of course, think we can get 
around this problem by uttering the magic 
word "rehabilitation." A great many of 
the social-industrial complex proposals on 
housing — ranging from HEW's Urban De- 
velopment Corporation to Senator Percy's 
home ownership plan — pretend that the 
current problem will be solved if existing 
slums are refurbished. In this way, one is 
absolved from exercising any imagination 
in creating the second America. All that is 
necessary is to spruce up the first America. 
The only difficulty with this solution is that 
it will not work. 

There are, to be sure, neighborhoods in 
big cities which could be rehabilitated and 
thus preserve variety and sometimes even 
beauty (Georgetown in Washington, D.C. 



10 



is an ex-slum) , But in almost every case 
this involves removing about three quarters 
of the present residents. In an area like 
Harlem, for instance, the trouble is not just 
that people pay exorbitant rents for de- 
lapidated quarters, but also that three, four 
and five humans have been crammed into 
spaces adequate to the needs of a single 
individual. 

Rehabilitation will only work if it is part of 
a program to build millions of new housing 
units for the poor and the deprived (Sena- 
tor Ribicoff estimates that, in reality, it 
takes a family income of about $8,000 a 
year to qualify for current Federal sub- 
sidies for housing — which omits the ma- 
jority of the American people) . And second, 
if the nation is going to pay more than lip 
service to its goal of integration, then even 
the most prettied up, but racially segre- 
gated, ghetto will not do. Finally, both the 
problems of density and integration obvi- 
ously require massive planning at the Fed- 
eral, regional and local level if they are to 
be solved. 

It is from this perspective that I would 
criticize Senator Robert F. Kennedy's anti- 
slum program. Kennedy has been one of 
the most compassionate and conscientious 
of men with regard to the ghettos. He un- 
derstands that decent housing is utterly 
central to both the war on poverty and the 
struggle for civil rights. Yet his $1.5 billion 
of tax incentives to lure investers into the 
slums would produce only 400,000 units in 
seven years according to the New York 
Times. That is 100,000 fewer units that the 
yearly rate of low-cost housing advocated 
by the 1966 White House Conference on 
Civil Rights. Indeed, none of the various 
proposals to get business into the low-cost 
housing field which were being circulated 
during 1967 was designed to help the poor. 
In Kennedy's scheme, as in the suggestions 
of Senators Percy, Clark, and Mondale, the 
units are intended to rent to families with 
incomes between $4,000 and $6,000. Now it 
is certainly true that this group has been 
effectively excluded from the post- War fed- 
eral subsidies and has a right to govern- 



mental help. But it is a matter of some 
moment that these programs offer nothing 
to the poor (the poverty "line" in 1967 was 
set at $3,200 for an urban family of four) 
and therefore would not even touch the ma- 
jority of Negroes in the United States. 

Moreover, the Kennedy approach could 
result in subdividing the design of a neigh- 
borhood into a myriad of 100-unit parcels. 
The Senator proposes that the Federal 
Government insist on minimum standards, 
but surely they are no substitute for the 
creative planning of a new urban environ- 
ment. 

And neither is the philosophy expressed 
by John Notter of the American-Hawaian 
Land Company, an enterprise spun off by 
the American Hawaian Steamship line, 
which creates New Towns. "The secret," 
Notter told Fortune, "is getting other peo- 
ple to spend their money instead of you 
spending yours. Most of our office space is 
devoted to bookkeepers. In New Town de- 
velopments that's the real name of the 
game!" And Fortune added admiringly, "As 
American-Hawaian and Humble [Humble 
Oil] are proving, that's one game large cor- 
porations can understand." What kind of 
new urban civilization will such a game 
produce? 

In short, even the most good-hearted 
social-industrialism will aggravate, rather 
than resolve, the urban crisis. It is precisely 
the de facto planning authority which has 
been conferred upon commercial values 
that has brought us to our present plight. 
Business cannot play the dominant role in 
the attempt to rescue the cities from the 
mess which business methods and priorities 
have created. And it is impossible to get 
around this embarrassing fact by talking 
about rehabilitation. There is simply no 
substitute for a creative exercise of the 
social imagination and massive public in- 
vestment. 

At this point it is possible to synthesize 
various aspects of the social-industrial com- 
plex and to identify a new, and dangerous, 
American philosophy. It is the ideology of 
anti-ideology. 



11 



The notion that Western society is com- 
ing to an "end of ideology" was first arti- 
culated by academics, almost all of them 
liberals, some of them socialists. As Daniel 
Bell developed the idea, the advanced 
economies had achieved such material af- 
fluence and political consensus that "the 
old politico-economic radicalism (preoc- 
cupied with such matters as the socializa- 
tion of industry) has lost its meaning , . ." 
The result was a "post-industrial" society 
in which the "new men are the scientists, 
the mathematicians, the economists and the 
engineers of the new computer technology." 

This theory was adapted to corporate 
purposes by business philosophers like Max 
Ways. For the proclamation of the end of 
ideology provided an excellent rationale 
for the social-industrial complex. (Bell and 
his colleagues had not, of course, in- 
tended this use of their thesis). If the 
public market were still a 'thirties-like 
battleground where antagonistic classes 
and groups fought for dominance, then 
business, as a minority special interest, 
could hardly be trusted with the social fate 
of the majority. But if, as Ways argued, 
"U.S. politics is making a major turn from 
the politics of issues to the politics of prob- 
lems," then all is changed. The old, ideo- 
logical debate over "issues" in which the 
radicals proposed to take from the rich and 
give to the poor is no more. Problem-solving 
is the order of the day. And the corpora- 
tion, as a neutral association of qualified 
experts, will, for a reasonable fee, promote 
the public good in an absolutely impartial 
and scientific way. 

The evidence assembled here indicates 
that Ways and the other philosophers of 
the social-industrial complex are wrong. In 
producing a knowledge technology, running 
Job Corps camps, improving downtown 
areas, proposing priorities for revitalizing 
entire cities, or suggesting panaceas of slum 
rehabilitation, the social-industrialists are, 
at every point, pursuing private interest 
and ideology. 

What is at stake is nothing less than 
how the Americans of the twenty-first 



century are going to think and live. The 
tragedy of this new and profitable business 
conscience with which they may have to 
deal is already foreshadowed in the actual 
history of one of the first industries to adopt 
the pretense of unselfishness and anti- 
ideology: television. 

In the mid-'thirties, William Paley of 
CBS appeared before the Federal Commu- 
nications Commission. He was a sort of 
premature social-industrialist. His com- 
pany, he said, was not primarily a "busi- 
ness organization, except to the extent that 
economics are a necessary means to social 
ends. Surely any stress on economics as an 
end in themselves would betray a lack of 
understanding of the role which broadcast- 
ing plays in every plane of American life." 
A generation later, after broadcasting 
had become totally commercialized, New- 
ton Minow described the "wasteland" 
which had resulted. The Kennedy Admin- 
istration then exhorted the broadcasters to 
live up to their social responsibility. In 
March, 1965, after four years of this con- 
centration upon ethics, the FCC reported 
that public service hours had decreased by 
15 percent. 

Walter Lippmann summed up the impli- 
cations of this particular experience and his 
words apply to the social -industrial com- 
plex as a whole. "The regulatory method," 
he wrote, "runs counter to the facts of life. 
It supposes that broadcasters can function 
permanently as schizophrenics, one part of 
the brain intent on profits and another of 
that same brain based on public service and 
the arts." 

In the debate over public television, the 
Ford Foundation corroborated Lippmann's 
point. It had proposed a non-profit corpora- 
tion which would utilize the revenues from 
domestic communications satelite service to 
finance an uncommercial network. The big 
companies in the field were, of course, op- 
posed. But then the Ford Foundation ar- 
gued that in the case of Comsat, a public- 
private corporation, the private interest had 
a disturbing habit of prevailing (six of the 
15 members of the board are nominated by 



12 



LIBRARY 
UNIVERSITY OF TEXAS 

AUSTIN. TEXAS 



the commercial carriers, and the majority 
of the rest of the directors comes from busi- 
ness). Comsat, the Foundation said, had 
delayed orbiting facilities in the sky be- 
cause such progress might jeopardize ex- 
isting, and highly profitable, relay functions 
on the ground. 

The Foundation made a succinct state- 
ment of why it opposed a private corpora- 
tion in this particular part of the public 
domain. It told the Federal Communica- 
tions Commission that such an enterprise 
"would be bound by law to serve the inter- 
ests of its stockholders — which may not be 
that of the nation at large." The moral of 
this story is not confined to television. 



The knowledge and the cities industries 
— and the entire social-industrial complex— 
suffer from this very same schizophrenia, 
and they are quite capable of making waste- 
lands of the schools and cities. Like CBS 
in the 'thirties, their ceremonial rhetoric 
disdains the "stress of economics" even 
while their daily practice is based upon a 
self-interest. America, whether it likes it or 
not, cannot sell its social conscience to the 
highest corporate bidder. It must build new 
institutions of democratic planning which 
can make the uneconomic, commercially 
wasteful and humane decisions about edu- 
cation and urban living which this society 
so desperately needs. 



T 1 ^i^M^j 



13 






HTHE 
TWHIT1EIH 



MICHAEL HARRINGTON 




t«^ju# ter WwM Xxmcuimy / 50e 



ALSO FROM THE LID 

Michael Harrington brilliantly probes 
the question: can the United 
States pursue a democratic foreign 
policy or does its politico-economic 
structure dictate a conservative 
course in world affairs? 50c 



The Urban School Crisis . 750 

Essays by Paul Goodman, Christopher Jencks, Nathan Glazer and others. 

Which Way Out? 250 

by Bayard Rustin 

The Pathos of "Black Power" 250 

by Paul Feldman 

To Build A New World: A Brief History of American Labor 350 

by Thomas R. Brooks 



Quantity Rates: "The Social-Industrial Complex 

1 or more — 350 per copy 
10 or more-300 per copy 
100 or more- 200 per copy 
500 or more— 150 per copy 



#f 



For publications or additional information about the LID write 

League for Industrial Democracy 

112 E. 19 Street/ New York, N.Y. 10003 

(212) AL 4-5865