List of Illustrations



1 What is a Capitalist Class?

The Orthodox Marxist View

The Fabian View

Burnham and the Managerial Revolution

Post-war Revisionism

The Capitalist Class Reconsidered

2 What is a Ruling Class?

Marx on the British Ruling Class

The Orthodox Marxist View

An Unorthodox Marxist View

The Power Bloc and the State

3 The Making of the Ruling Class

The Ancien Régime in Europe

The Old Society in England

The Transition to Modernity

4 Is there still a Capitalist Class?

Who are the Capitalists?

The Development of the Business Class

Contours of the Capitalist Class

Class Reproduction and Capital Reproduction

5 Is there still an Upper Circle?

The ‘Traditional’ Status System

‘Tradition’, Social Networks and Class Reproduction

6 Is there still a Ruling Class?

Power Elites and the Ruling Class

The Changing Anatomy of Political Rule

The Structure of Political Domination





1.1 Karl Marx: Shareholder. The list of shareholders in The Workman’s Advocate, 1865.
1.2 The Intermediate Classes: The feminization of clerical work, c.1900.
1.3 The Capitalist Hierarchy: A radical view.
3.1 A Power House: Blenheim Palace, a gift from the government to the Duke of Marlborough to celebrate his victory over Louis XIV of France.
3.2 King George III: Country Gentleman. Painted by Thomas Gainsborough.
4.1 Capitalist Agriculture. A combine harvester in East Anglia: the mechanization of large-scale agriculture.
4.2 The City of London: skyline of city.
5.1 Oxford’s Dreaming Spires.
6.1 Arthur Balfour: Statesman.
6.2 The Thatcher Cabinet. 1979 Thatcher cabinet at 10 Downing Street.
6.3 The CBI Conference at Brighton.
1.1 The Fabian view of class structure
2.1 Elite boundaries
3.1 Economic locations in the old society
3.2 The eighteenth-century polity
4.1 Capitalist economic locations
5.1 Principal London clubs
6.1 Forms of power elite
6.2 Routes into government
6.3 Educational background of M.P.s and the (1918–1955) cabinet
3.1 Views of patronage
5.1 Manners and rules of good society
5.2 The social calendar
1.1 A Marxist view of British finance capital
4.1 Control of large companies (1988)
4.2 Control of very large companies (1988)
4.3 Britain’s rich (1990)
4.4 Britain’s highest-paid directors (1990)
4.5 Post-war landownership
5.1 Public schools and their fees (1990)
5.2 The Old Boy network
6.1 Civil and foreign service recruitment (1939–1970)
6.2 Military and judiciary recruitment (1939–1970)


The author and publisher are grateful to the following for permission to use and for their help in supplying photographs: the Worker’s Movement Library, Stockholm (Plate 1.3); A. F. Kersting (Plate 3.1); Rodney Todd-White and Son and Her Majesty Queen Elizabeth II (Plate 3.2); Dr John B. Free, Heritage and National History Photography (Plate 4.1); Skyscan Balloon Photography Copyright (Plate 4.2); Mr S. Maybury (Plate 5.1); The Hulton Picture Library (Plate 6.2); Camera Press, London and Jon Blau (Plate 6.3). All other photographs are provided by the author.


The view is widely held that in Britain there is a small minority which holds a ruling position in its economy, society, and political system. This minority has been described in numerous varying ways: ‘the establishment’, ‘the powers that be’, ‘the ruling few’, the ‘elite’, or, more prosaically, ‘them’. Differing terminology reflects, in part, differing political perspectives on the nature and purpose of power. From both the right- and the left-hand sides of the political spectrum, critics and commentators have claimed to have identified a propertied elite whose members, for good or for ill, are able to determine the outcome of political decision-making and so to determine the overall direction of social development.

For commentators on the right, elite rule is not only natural and inevitable, it is beneficial to society. Rule by an elite is seen as a guarantee of liberty and justice against the threats to those principles posed by the habits and prejudices of the masses. What, from this point of view, is more desirable than that those with the greatest and most substantial stake in British society – those who actually own its land and productive resources – should be in a position to act in the public interest and to exercise a benign stewardship over public life? While property ownership occupies a central position in many of these views, a number of commentators from the right have seen property as a mere secondary feature of the elite. Instead, the elite is defined by its cultural role as a counterbalance to the threat of the mass society. Ruling positions are held by those who are the best-educated and the most cultivated, and it is on this basis that their authority can be justified.

Critics on the left, naturally enough, take a rather different view. Elite rule is deplored as a process through which the sectional privileges of one group are advanced at the expense of the interests of the majority, as a denial of the principles of democracy and citizenship. What, from this point of view, is more objectionable than that those who are least necessary for society to function – those who depend upon the exploitation of others – should be in a position to manipulate public affairs? Among the critics on the left are those who write from a Marxist point of view and see the ruling minority as a ‘ruling class’ rooted in the ownership and control of the means of production.

But such views are not the only perspectives on the distribution of political power in Britain. For many commentators – and not just for those in the centre of the political spectrum – there is no real elite. The language of privilege and division used by those on the left and the language of cultural superiority used by those on the right serve to create the impression of elite rule by reinforcing the image of Britain as a ‘class-ridden’ society. Underneath the rhetoric and the imagery, it is argued, is an open and egalitarian society which is distorted by its own self-perception in class terms. Political decisions are, of course, taken by a minority, but this is not seen as a self-perpetuating elite. In any complex society there will be a division of labour in which some people are involved in decision-making and administration while others are not. The so-called ‘elite’ comprises simply the current occupants of political office. The equality of opportunity which, it is held, characterizes British society ensures that there is easy and open access to these positions for all who wish to take them up. The electoral mechanisms of political democracy, furthermore, ensure that the majority can control the actions of the minority.

These contending viewpoints revolve around two major issues. On the one hand there is the question of whether the elite is a purely nominal category of office holders or a real and active social group. On the other hand there is the question of whether the members of the elite use their power for sectional or for public purposes. These questions have structured the debates which have set one social scientist against another and the research which has attempted to resolve the clash of theoretical positions. But these issues are not, however, matters of purely academic interest. It is, clearly, a matter of the first order to decide whether one’s own society is ruled by a cohesive and self-perpetuating social grouping acting in pursuit of its own sectional interests, or by a temporary coalition of office holders who will act in the public interest and will, in due course, be replaced by another temporary coalition. On such issues revolve all manner of political choices and preferences.

Discussion of these problems has rarely reached any degree of sophistication. Much discussion has been cast in terms of the fate of the aristocracy.1 The ruling minority of the nineteenth century is seen as an elite of large landowners with peerage titles – dukedoms, earldoms, viscountcies, and baronies – which gave them the right to sit in parliament. The break-up of the large estates and the declining significance of the House of Lords have, it is argued, led to a loss of power. The titled aristocracy is no longer an aristocracy of wealth, it is a diverse group of people who happen to have inherited titles but have little else in common with one another. Wherever power may reside today, it is held, it no longer rests with the landed aristocracy. Academic work which has elaborated this view includes the important study by William Guttsman,2 who holds that the twentieth century has seen the decline of the ‘upper class’ and the rise of the ‘middle class’ as the principal source of political power. The recruitment of the political elite has substantially broadened since the nineteenth century.

Even if such views are accepted – and I shall question them at many points in this book – they have little to say about the actual mechanisms of political power in British society. Of much greater value, in this respect, have been the journalistic writings of Anthony Sampson,3 which have been extremely influential in informed public opinion. Sampson accepts the view that the aristocracy can no longer be seen as a ruling minority and adds to this that there is no longer a real social elite at all. Drawing on interviews and on his own observations, Sampson concludes that the various hierarchies of British society have become gradually more open in their recruitment over the course of the twentieth century and that the diversity of hierarchies is such that there is no single centre of power.

But Sampson’s work fails to place political power in its broader economic and social context, and so, in its turn, gives a rather partial view. Those who have attempted to rectify this situation have tended to be Marxist writers, among whom Ralph Miliband has been the most influential.4 According to Miliband, Britain is ruled by a ‘ruling class’ made up of the owners and controllers of capital. While landownership may have declined in significance during the twentieth century, he argues, land remains an important form of capital and there is still a capitalist class in Britain today. Rooted in the ownership of stocks and shares as well as land, this class is a highly privileged social group with a superior standard of living and with the ability to monopolize access to all the hierarchies which make up the structure of power.

I shall agree with Miliband’s view that there is in Britain today a ruling class, but I shall try to avoid a number of crucial theoretical problems which flaw his work. These problems centre around the concept of the ruling class itself. Although this is, in many respects, the central concept in Marxist theory, it has rarely been discussed with any rigour. Indeed, the term is used in such an elastic way that it is often difficult to see it as having any meaning or value at all. I believe that the term can be salvaged and seen for the useful concept that it is, only if its constituent elements are clarified. Unlike the terms ‘elite’ and ‘minority’ that I have used in this Introduction, the Marxist concept roots the exercise of political power in class relations. C. Wright Mills claimed that the phrase ‘ruling class’ combines the economic concept of class with the political concept of rule and that, for this reason, the hybrid term should be rejected.5 My contention, on the other hand, is that this combination of elements makes it an extremely powerful idea.

I shall try to defend the relevance of the concept of a ruling class, but do not wish to defend the whole framework of Marxist theory. My theoretical framework draws on the work of both Weber and Marx. Specifically, I use Weber’s analytical distinctions between class, status, and party as ways of clarifying the Marxian concepts of the capitalist class and the ruling class. ‘Class’, for Weber, involved the determination of life chances through the structure of property ownership and the operations of the labour and capital markets. ‘Status’, on the other hand, involved the determination of life chances through the distribution of prestige and the formation of definite styles of life and patterns of privilege.6 The concept of ‘party’ was used by Weber as a general term to refer to political parties, trades unions, and other bodies which enter into political conflict. It was closely allied with the concept of ‘elite’, which was developed by Pareto and Mosca and was defined through the distribution of the means of organization, surveillance, and violence. Classes, status groups, and elites, therefore, can be seen as different elements in the overall distribution of power in society.7

Marx’s concept of the ruling class was used by him and by his followers in a rather loose way, sometimes being seen simply as an unproblematic extension of the concept of the capitalist class, as a concept rooted in the economic dimension of class relations. But the idea of a ruling class raises crucial and distinct issues concerning the exercise of political power. The concepts of elite and party which were developed in the Weberian tradition are essential means for clarifying this idea. This was recognized by Miliband, who made extensive use of the concept of elite – indeed, he was much criticized for this by other Marxists, who felt that he should not have departed from the narrow framework of Marxist theory. But Miliband failed to distinguish the general notion of ‘elite’ from the more concrete concepts which are required for empirical research. In this book I shall use Miliband’s concept of the ‘state elite’, but I add to this the important additional concepts of ‘power elite’ and ‘power bloc’.

The book gives much attention to the question of social status. The hierarchy of status is seen as an important element in the legitimation of power structures, and the dynamics of status group relations are seen as integral elements in class reproduction and in the formation of power blocs. The status system can be visualized as a hierarchy of social circles, each circle comprising status equals with a similar style of life and, in many cases, privileges. In some circumstances the status hierarchy is headed by a single ‘upper circle’ of status superiors, while in other circumstances there may be a small set of intersecting upper circles. Thus, the concepts of ‘capitalist class’, ‘upper circle’, and ‘state elite’ are analogous terms for describing the advantaged groups in the exercise of power in the dimensions of, respectively, class, status, and politics. It is on this basis that I try to reconstruct the concept of the ruling class.

The title of this book, Who Rules Britain?, is a deliberate borrowing from Domhoff’s important and influential Who Rules America?8 Like Domhoff, my aim is to outline the structure of power which determines the overall direction in which British society has developed. I begin in chapter 1 with the economic dimension of ‘class’, and I set out the various meanings which have been given to the fundamental idea of the capitalist class. The chapter reviews Marxist, Fabian, and managerialist theories of class relations in capitalist society. I then turn, in Chapter 2, to the even more complex concept of the ruling class, reviewing orthodox and unorthodox Marxist theories and drawing on the traditions of elite theory to specify the key ideas. Chapter 3 uses these ideas to give a brief historical review of the making of the British ruling class, looking at some of the implications of the transition from the ‘old society’ of the eighteenth century to the ‘modern’ structure of Victorian Britain.9

The three remaining chapters of the book set out to answer the three key questions which arise when asking ‘Who Rules Britain?’ Chapter 4 asks ‘Is there still a Capitalist Class?’ This is of absolutely fundamental importance, as many writers have argued that Britain – like other ‘industrial societies’ – no longer has a capitalist class. In that chapter I review the evidence on this question and argue that it is still possible to recognize an economically dominant capitalist class at the top of the class structure. Chapter 5 asks ‘Is there still an Upper Circle?’, and is concerned with the shape of the status hierarchy. I argue that there has been an important shift in the structure of the status order. The capitalist class is no longer structured around a single upper circle, but comprises a series of overlapping under circles. Chapter 6, asking ‘Is there still a Ruling Class?’ grapples with the central concern of the book. The chapter restates the definition of the ruling class used in this book and shows how the participation of the capitalist class in the exercise of political power can be understood. It concludes that Britain does, indeed, have a ruling class.

I have endeavoured to make this book as accessible as possible to a wide audience. For this reason I have not cluttered the text with detailed footnotes and references. The works cited are, by and large, restricted to the most important and the most accessible sources.10


What is a Capitalist Class?

The idea of the capitalist class is rooted in both Marxist theory and in classical liberalism. In both traditions there is a recognition of a category of economic agents defined by their ownership and control of capital, the driving force of a capitalist economy. The capitalist class, from this point of view, has distinct and opposing interests to those of the other classes. In other theoretical traditions, however, the idea of a capitalist class is less easy to define. For many writers, social classes are hierarchically structured social groups which are defined in terms of their superior and inferior life chances. Max Weber and those influenced by him, for example, see social classes as social strata lying above and below one another in a stratification system. The geological metaphor of ‘strata’ gives meaning to the notion of a hierarchy with upper and lower levels. For Weber, propertied and commercial interests are among those generating ‘positively privileged’ social classes which stand in a superior position in the distribution of life chances.

This contrasting imagery is the basis of different views of class relations and class action. In the Marxist tradition, it is the structured antagonisms and contradictions of interests between class positions, and not any distributive inequalities of income, wealth, or life chances, which define class relations. These structural conditions are the basis of class conflict. According to Weber, however, there is no necessity for overt conflict to exist between classes. There may be various forms of cooperation and consensus, as well as divisions and conflicts.

In fact, the contrast between these two conceptions is not so stark as it appears, despite differences in terminology. Although ‘capitalist class’ and ‘bourgeoisie’ are, perhaps, the most widely used terms for the dominant class in Marxist theory, it is perfectly possible to reconcile these notions with the idea of hierarchically arranged social strata. My aim in this chapter is to expand on this claim and, in so doing, to build on the Marxist conceptualization and to fuse it with a hierarchical view of class. To this end, I shall review the work of some of the more important writers who have tried to use such ideas to document the changes which have occurred at the upper levels of the class system during the twentieth century.

The Orthodox Marxist View

Marx’s own view of class has been hotly debated, owing to his failure to write a complete and comprehensive treatise on class. The concept of class is discussed most fully in The Communist Manifesto, written jointly with Engels, and in the unfinished third volume of Capital. But the discussion in Capital was not completed. Just as Marx began to set out a formal definition of class, his manuscript came to an abrupt end, and his readers are left with merely a few tantalising suggestions. But the concept of class, of course, permeates Marx’s whole body of work, and its most general meaning is clear. Indeed, in many parts of his work, he spells out in some considerable detail the class relations which he believes to exist in particular societies.

Marx saw classes as defined by the ownership and non-ownership of the means of production, which gave control over the process of production and the finished product. This led him to an essentially dichotomous image of class relations: a person either does or does not have property. His reliance on a dichotomous view led him to stress the antagonistic relations of opposed classes. Indeed, he believed that class relations were becoming ever more simplified as the old hierarchies of status, tradition, and privilege gave way under the compelling force of capitalist modernization. He frequently wrote as if capitalist societies were evolving in the direction of a ‘polarization’ between capitalist class and working class, ‘bourgeoisie’ and ‘proletariat’, corresponding to the structural division between capital and labour. In The Communist Manifesto, published in 1848, Marx and Engels held that ‘Society as a whole is more and more splitting into two great hostile camps, into two great classes directly facing each other: bourgeoisie and proletariat.’1

But in the famous, unfinished section of Capital his view is more complex. Marx identified what he termed the ‘three great classes’ of modern capitalism: ‘The owners of mere labour-power, the owners of capital, and the landowners, whose respective sources of income are wages, profit, and rent of land’.2 He also identifies a number of ‘intermediate strata’ in the social hierarchy, although he sees these three classes as central to the stratification system. Each class is defined by the particular economic assets which are possessed by its members: wage labourers own labour, capitalists own capital, and landowners own land. It can easily be seen that the earlier dichotomous view has been modified but not completely abandoned. Both capitalists and landowners are property holders, having possession of the means of production, and the limited assets of wage labourers, their own labour power, are a reflection of their lack of property. Marx seems to be trying to show how hierarchical relations between social classes can be rooted in underlying relations of production, the relations of property ownership.

Plate 1.1 Karl Marx: Shareholder. The list of shareholders in The Workman’s Advocate, 1865.


Marx held that, of the three great classes, the capitalist class – the bourgeoisie – had achieved a dominant position within the social structure. Landowners retained a considerable degree of political power and economic privilege, but it is the industrial capitalists who are the most potent economic force. Indeed, he claimed that landowners in a capitalist society become just as ‘bourgeois’ as the industrial and commercial capitalists themselves. Land is no longer held under ‘feudal’ conditions, but as an integral part of a capitalist process of production. Land is one element in the complex of movable and immovable property that enters into production. A factory with its machinery, for example, must be built upon land, which must either be owned by the industrial capitalist or rented from a landowner. Similarly, farming is a capitalist undertaking which involves either the ownership or the rental of land. The person who simply owns land for rental by others is just as much a part of the capitalist process of production as is the industrial entrepreneur. As a result, there is little substantial difference between land and other forms of capital. Although the life style of landowners may retain certain peculiar and archaic features from their feudal past, these are of secondary importance and will gradually wither away. Capitalist society is, indeed, simplifying into an opposition between the owners of capital – whatever its form – and those who possess only their labour power. Marx concludes that a relatively unified capitalist or bourgeois class, comprising owners of land and owners of industrial and commercial assets, is the dominant economic force in capitalist society and stands at the top of the social hierarchy.

Marx recognized, however, in various parts of his work, that there were certain features of modern capitalism which were not adequately grasped by this view. In particular, he pointed to the growing importance of the joint stock company from the 1860s onwards. Its increasingly bureaucratic organization made the simple contrast between capitalist and worker a less realistic model for actual societies. The proliferation of managerial workers within the joint stock company involved an expanding ‘intermediate’ group within the class structure. Managers and clerks were propertyless, but they were differentiated sharply from proletarian wage labourers by virtue of their role in the service of capital and by the incomes which they were able to command. The rise of the joint stock company was also recognized by Marx to involve a change in the structure of property ownership, a development of fundamental significance for capitalist production. But Marx failed to pursue the implications of this for his conception of the capitalist class.

Plate 1.2 The Intermediate Classes: The feminization of clerical work. c.1900. (Author).


When production is organized through a joint stock company, the entrepreneur raises capital through the stock exchange – through the issue of shares – rather than relying simply on his or her personal resources. Capital is provided by a large mass of individual investors who buy shares in the company but have little or no say in how that capital is put to use. The expanding banking and credit system mobilizes this mass of savings and makes it available to capitalist enterprises. The capitalist can draw on a wider pool of money without giving up any control over the business. Bureaucratic managers in the service of the joint stock companies and the capitalists who run them play an increasingly important role in determining the pattern and pace of capitalist production; individual small shareholders play a correspondingly smaller part.

Later Marxists have attempted to work through the implications of these processes for the class structure of twentieth-century capitalism. Writers such as Renner and Hilferding were among the first to document the extremely rapid development of these processes in Germany, and they traced a parallel rise of substantial bank shareholdings. Small individual shareholdings, they argued, were supplemented by the large shareholdings which banks themselves took in large production and commercial undertakings. Banks used money deposited in bank accounts to buy large blocks of shares. Unlike the small shareholders, bank depositors did not even have a nominal title to the shares which the banks bought with their money. The banking mechanism was the culmination of the transformation of property begun in the joint stock company: it centralized massive amounts of money without transferring any rights of control to those who provided it. As a result, enterprises became more and more closely tied together in large and monopolistic bank-dominated groups. The competition of individual enterprises was replaced by the rivalries of competing financial ‘empires’. Those people who ran the banks were able, without substantial personal shareholdings, to control massive conglomerations of capital. The major conclusion drawn by these writers was that the original capitalist entrepreneurs were being supplemented by ‘finance capitalists’ and by a bureaucratic ‘service class’.3

Many non-Marxist writers have identified similar trends, but have seen them as resulting in the demise of the capitalist class. A capitalist class, they hold, is dependent on the personal ownership of business, and large-scale enterprise has broken beyond the bounds of this purely personal ownership. Enterprises can no longer be financed by individual entrepreneurs and must, instead, rely upon large numbers of small shareholders, all of whom play a merely passive role in business. As small shareholdings increase in number, so the personal shareholdings of the capitalists become less significant. Where the capitalist could formerly hold on to a majority of the shares in a company, the increasing scale of production makes this unviable. The shareholdings of the original capitalists become as small and insignificant as all other shareholdings. Shareholding ceases to be a basis of economic power. ‘Ownership’, they argue, is divorced from ‘control’, and the powers of control are exercised by the ‘middle-class’ managers who fill the corporate bureaucracies of the large enterprises. The rigid and conflict-ridden class structure of the nineteenth century disappears, to be replaced by an open and flexible hierarchy centred around the massive and expanding middle classes.4

Plate 1.3 The Capitalist Hierarchy: A radical view. (Reproduced by kind permission of the Worker’s Movement Library, Stockholm.)


The most influential Marxist critic of this position as it applies to Britain is Sam Aaronovitch, who has advocated the continuing relevance of the concept of a capitalist class. Aaronovitch argues that the capitalist class has not disappeared; it has survived and prospered over the course of the twentieth century. The development of the joint stock company and the growth of the banking and credit system have not destroyed the link between ownership and control, they have merely changed its character. Drawing on the insights of writers such as Hilferding, Aaronovitch argues that the growing involvement of banks, insurance companies, and other financial ‘institutions’ as lenders and as shareholders has created a tight fusion of banking and industrial capital, and has led to the creation of great conglomerates and combines which could not have been produced through personal family capital alone. Nevertheless, these huge concentrations of capital are still subject to private ownership and control. Not all their shareholders are small-scale, passive investors. On the contrary, the largest shareholders ‘constitute collectively a decisive owning class’.5 Some are ‘absentee shareholders’, while others are active directors, but they are all part of a propertied, capitalist class dominated by the ‘finance capitalists’ who direct many companies through an extensive system of interlocking directorships.

Aaronovitch instances the Cowdray, Rothschild, Samuel, and Oppenheimer families, together with the heads of large and impersonally owned groups and banks – Drayton, Bicester, Kindersley, Keswick, and so on.6 The standing and power of the class of large property holders is buttressed by the tendency of banks, insurance companies, and other financial institutions to become major shareholders in companies themselves. The direct shareholdings of the finance capitalists are supplemented by the holdings of the institutions on whose boards of directors they sit. (See table 1.1). The capitalist class of the mid-twentieth century, therefore, comprises a small oligarchy of finance capitalists – the ‘giant sharks’ in the corporate sea – and a great mass of their small and medium-sized propertied dependants.

Table 1.1 A Marxist view of British finance capital

Source: summarized from S. Aaronovitch, Monopoly, p. 56. The data relate to 1951.


The Fabian View

The orthodox Marxist claim that the capitalist class has survived and prospered in the face of the transformation of capitalist production is echoed in the work of the early Fabian writers at the turn of the century. George Bernard Shaw was strongly influenced by Marxist ideas, and he and Sidney Webb worked these ideas into a non-Marxist theory which became the basis of a central tradition in British socialist thought. They saw their central tasks as those of education and the provision of information in the struggle for socialism, and, through the Fabian Society they were centrally involved in the formation of the New Statesman and the founding of the London School of Economics.

Fabian social theory came to comprise the core of the ‘social democratic’ or ‘ethical socialist’ tradition in British social thought, represented most strongly in the inter-war years by Tawney. Through the works of its founders and those influenced by them, and especially through its association with the LSE, Fabian social theory became a major influence on the development of British sociology in the inter-war and post-war period.7

The Fabians saw class relations as permeating the whole gamut of advantages and disadvantages in society, forming a complex hierarchical structure of inequality. In this respect they came close to Weberian ideas. They followed the mainstream of Marxist writing, however, in seeing the foundation of the class structure in the economic relations of private property. The basic division in capitalist society, they argued, was between those who own and control the means of production and those who do not. This is the basis of the division between a privileged class of rich property owners and a proletarian class of routine workers. As Shaw characteristically expressed it, there was a class polarization between ‘large appetites and no dinners at one extreme, and large dinners and no appetites at the other’.8

Since the position of the privileged class of plutocrats was rooted in the structure of private property, it followed that changes in the structure of property ownership would have important implications for class relations. From the late nineteenth century, joint stock businesses had tended more and more to amalgamate into large monopolistic combinations which operated on a national and international scale. These monopolies enabled firms to mobilize other people’s savings in order to increase their own size and to minimize competition in the economy. As a result, the old-style capitalist entrepreneur was giving way to a new kind of capitalist.

The monopoly enterprises had created a separation between those who fulfilled the pure role of capitalist, and those who supplied the organizational and business ability required by the large-scale undertakings. There had emerged a role differentiation from the entrepreneurial capitalist employer into the dual roles of capitalist and manager. The purely capitalist role, moreover, had itself become differentiated into the dual roles of ‘shareholder’ and ‘financier’.

This role differentiation, however, did not enhance the power of managers. Ownership of shares and control over finance remained highly concentrated as a basis for continuing capitalist power. The managers in large-scale organizations were part of a subordinate ‘intellectual proletariat’. Shareholders and financiers, on the other hand, formed the core elements in a transformed capitalist class. Although the capitalists had, in a sense, become unnecessary to the process of. production – which could be operated by the managers – the capitalists remained in ultimate control. The Fabian position gave a characteristic moral evaluation to this: while entrepreneurial capitalists were ‘socially useful’ and received the ‘wages of superintendence’, the new capitalist shareholders and financiers were a ‘useless possessing class’ of ‘idle dividend receivers’. Though unnecessary for the process of production, their power remained entrenched. Unless and until the state intervened to remove capitalists, the useless class would retain their power.