The Power Elite

The chief executives of large corporations and the very rich are not separate groups but are an integral part of “the corporate world of property and privilege” (119). In the mid-20th-century US, the private property system revolves around corporations and is governed by the chief executives of these businesses. Each industry is dominated by a small number of corporations. Without an outright conspiracy, those in the top circles make decisions with the interests of all corporate property, not a particular industry, in mind.

There is a unity-of-class perspective; the top 100 corporations are united by a series of associations and interlocking directorships. A tiny elite group, about 0.2 or 0.3% of the adult population, owns the bulk of stocks or the corporate world. These top leaders informally exchange views and share similar perspectives, making the coordination of policy instinctual. This group commands the American economy. Mills argues that its “private decisions […] determine the size and shape of the national economy, the level of employment, the purchasing power of the consumer, the prices that are advertised, the investments that are channeled” (125).

These top individuals hold the two or three highest positions in the top 100 corporations. The overwhelming majority of them are white, Protestants of the Episcopalian or Presbyterian denominations, male, urban, educated, and from the business and professional classes. These executives do not mix with artists and are not avid readers. There are distinct paths to these positions. Approximately 6% began their careers as entrepreneurs starting a business, 11% started in the family business, and 13% began as professionals, especially lawyers. The other two-thirds, or 68%, began working for a large company, often at the executive level, and made a series of advancements over a long period. They advanced because their superiors, using subjective criteria, selected them for promotion.

There are two top levels in large corporations. The first stratum is comprised of the very rich and the chief executives, and the second is made up of those who are responsible for the operations of units. The latter are specialists with responsibility for outcomes, while the former make judgments about how to maximize profits for the corporation as a whole and do not have responsibility for operations. Individuals in the top circles, who are almost all men, choose to elevate individuals like themselves. To reach the first stratum, individuals must act, look, and think like their superiors; they need not be creative and should not demonstrate intellectual prowess. The chief executive governs and hires others to create and make unpopular decisions. Corporations in the mid-20th century began to introduce recruitment and training programs designed to produce such leaders. Those aspiring to these positions learn never to say anything controversial and to insulate their values from non-corporate people. The goal is to sustain the corporate power structure.

Both the old-fashioned rich—the old guard—and the newly enriched are part of the corporate rich. Mills claims that in the mid-20th-century US, no one can become or remain wealthy without involvement in the world of the corporate rich. The propertied class and those with high salaries reorganized into a corporate world of privilege and prerogative. Yet the economic elite retain the “powers of big property whether they rest legally upon ownership or upon managerial control” (148). The interests of the rich remained consistent over the preceding 50 years, and the US was a hospitable place for the corporate rich.

The wealthiest people, whether an extremely small group of 120 or the 1% of the population, make a greater proportion of their money from property holdings, such as stocks, than from salaries or wages. Mills observes that this ratio of earnings distinguishes the 1% from the 99% and explains why all the members of the upper class are now part of the corporate rich. They depend upon corporate stocks. Despite their earnings, the corporate rich are adept at avoiding hefty tax bills. Instead, they employ the best lawyers and accountants, who find loopholes and other means for them to avoid taxation. For example, the rich establish family trusts and foundations. Mills argues, “For virtually every law taxing big money, there is a way those with big money can avoid it or minimize it” (155).

In addition to property earnings and high salaries, the corporate rich receive fringe benefits or corporate privileges. For example, executives often have club fees paid, free medical care, access to corporate lawyers and accountants, company automobiles, travel opportunities at luxury resorts, and several other perks. These benefits come to the executive at no cost, and the corporation deducts the costs on its taxes. Executives have expense accounts that are used at the best restaurants and hotels and are tax-deductible. These privileges are part of the package for the corporate rich. Essentially, this class has more money than it can spend. As a result, its members have the freedom to do whatever they want, and they stand apart from the economic struggles of other classes. Most, per Mill, use money to gratify their desires and, he assumes, are quite happy.

The corporate rich are not only individually gratified, but they also exercise the institutional powers of wealth. They shape the labor market and make production decisions; they run the privately incorporated American economy. The rich contribute to political campaigns to gain influence and, more importantly, to become “intimately associated” with the most powerful political figures. As a result, they influence or control any political decision that impacts corporate interests or activities. A president who seeks a prosperous country is dependent on this group. The corporate rich do not dictate decisions, but they sit on committees with those from the other hierarchies and are heavily involved in politics.