Intelligence and The Myth of Capitalism Rationality

S&S Quarterly, Inc.
Guilford Press
Intelligence and the Myth of Capitalist Rationality in the United States

Author(s): Gabriel Kolko
Source: Science & Society, Vol. 44, No. 2 (Summer, 1980), pp. 130-154
Published by: Guilford Press
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INTELLIGENCE AND THE MYTH OF

CAPITALIST RATIONALITY IN THE UNITED
STATES
GABRIEL KOLKO
A CENTURY IN WHICH so manyEuropeanintellectuals

have experiencedrepression,
exile,or war,it is not surpristhinkers
haveembraceda
radical
Marxist
and
that
many
ing
one
modern
of
critique
capitalism, whichexcoriates
pessimistic
entime
sees it as increasingly
the systemand at the same
trenchedand likelyto survive.The eventsof the past 75 years,
the 19thcenturyfaithin theinexorableprogressive
byshattering
condevelopmentof mankind,setthepoliticaland psychological
cura
as
of
textforthe emergence radicalpessimism significant
The keystoneof thisdoctrine
rentin Westernsocialistthinking.
is the beliefthatmoderncapitalismpossessesa growinginner
rationalityand a command of the technicaland intellectual
and its masteryof
forcesessentialto its deepeningintegration
thepolitical,economic,and culturalphasesof humanexistence.
The conceptof capitalistrationality
and durability
caught
the imaginationof Americanthinkers(includingmanywho began, even if theydid not end, on the Left)if onlybecause the
permanenceof U.S. capitalismappearedso obvious.At thesame
timethe absenceof a socialistmovementcastan intellectual
pall
overthoseseekingto remedytheinequitiesand contradictions
of
Americansociety.Switchingfromspecificstudiesof the nature
and developmentof capitalismto abstract
judgmentson thereasons foritsundeniabledurability,
studentswho to some degree
drew inspirationfromEuropean ideas concentrated
on accomof thesystemor on capitalist
plishments
integrative
concepts,but
on
the
of Amerieconomic
limits
failures
and
and
rarely
political
can capitalism.
130

MYTH OF CAPITALISTRATIONALITY
131
of course, a social order that stillexistsis

By definition,
rather
successfulin relativeterms,but to focuson its strengths
ratherthanitsdeficienon itsachievements
thanitsweaknesses,
of a system,
of thestructure
cies,precludesa fullcomprehension
and
its
future
historical
itsrealand potentiallimits,
options.Only
it be the
whether
of
an
the
organism
byexamining problems
- can its totality
be trulyunhumanbodyor a socialstructure
derstoodand thelatentsourcesof itspossiblebreakdownanticipated.If suchan exerciseseemspartialor one-sided,at thisstage
falseoptimism
it can be justifiedas necessaryto counterbalance
- as well
- dependingon one'spoliticalviewpoint
or pessimism
U.S. capias to fullycomprehendthe natureof contemporary
talism.
The real questionis not whetherthe theoryof capitalist
as it is expressedthroughthe state,can
rationality,
particularly
but whetherit is justifiableon the
be explainedpsychologically,
basisof historical
experience.This problemcan be solvedfairly
is
the
since
capitalistrationality
conceptof an integrative
easily
of
the
success
the
on
not
operation
presumed
premised merely
on the beliefthatat
of the privatesector,but, mostcentrally,
everypointin thedailylifeof moderncapitalismthestateitselfis
guided by rationalityand the technicallymost appropriate
detachedreasonratherthan
methods- in a word,bypolitically
hard truthsrather
for
efficient
by a passion
parochialinterests,
fictions.These assumptionsare
than ideologicallycomforting
that
the
on
problems,both large and small,
premise
grounded
and long-run,are approachedin an integratedmanshort-run
ner.It is assumedthattheydo nothave to be testedbyexamining the overallcapitalist"planning"process,whichis ofteneluand thatthereis no need
siveand defiessimplecategorizations,
to determinethe extentto whichsuch "intelligence"is successfully
appliedto theroutinedirectionof theAmericansystem.
between"planning"and "intelligence"
Whilethedistinction
theoristsare
is not whollya sharp one in reality,integrationist
on
reliance
that
in
correct
intelligenceis a
believing
entirely
It is the
forrationalstateadministration.
necessaryprecondition
characterof thisintelligenceprocessin the U.S.
systematic
the sociand
research,
analysis,
predictiveability,
investigation,
of
the
main
focus
this
it
that
is
to
essay.
ety'scapacity apply
Particularattentionwillbe givento stateplanningagencies,re-

132
SCIENCE
AND
SOCIETY
search and directiveboards, and routine and emergencycommissions, in the period after World War I, and the way they
employed intelligencein making key decisions.
For Max Weber, of course, the way in which the capitalist
state of the 20th century operates was indisputable and selfevident. Weber's bureaucratic administrativeorganization was
directed by functionaries whose final legitimation was their
"technicalsuperiority";he argued that the necessaryknowledge
was obtainable and that it could readilybe applied to the direction of the capitaliststateand society.1To Weber, thisbureaucratic organizationalsocietywas not only impersonal; it was, above
all, reliable - and this efficaciousness demonstrated the
superiorityof the bureaucratic process. Neo-Marxist Germans,
such as Rudolph Hilferding,echoed this concept of a capitalism
moving to ever higher, more efficientstages of integrationand
organization.In the next generationHerbert Marcuse expressed
the profound impact of Weber on European socialisttheoryby
endorsing the accuracy of Weber's descriptionof modern capitalistsocietyand itsincreasinglyintegrativeprocesses. If Marcuse
could also excoriate the kind of capitalismthatWeber described,
he still was very much like earlier socialist thinkersin his unwillingnessto come to grips with the historicaland structural
foundationsof the Weberian system,and he too shared the profound pessimismabout the futureof socialismand mankindthat
is inevitableonce the basic Weberian premises are accepted uncritically.2
It is not necessary to review in detail Weber's impact on
American social science, ranging from Talcott Parsons to C.
WrightMills. Both conservativesand "radicals" have applied the
organizationaltheorywhich Weber refinedto the highestdegree
and which then infused American social thought- oftenunwittinglyvia the absorption of a functionalisttheoreticaloutlook.
1 1. Max Weber, Law in Economyand Society(Cambridge, 1954), p. 334.
2 Ibid., pp. 34, 349^-55; Max Weber, The Theoryof Social and EconomicOrganization
Man (Boston,
(Glencoe, 1947), pp. 333-39, 415-21; HerbertMarcuse, One-Dimensional
1964), pp. xii, 9, 17-19, 46, 257; Herbert Marcuse, Negations:Essaysin CriticalTheory
(Boston, 1968), Chap. 6; Paul Mattick,"The Limitsof Integration,"The CriticalSpirit:
Essaysin Honor of HerbertMarcuse, Kurt H. Wolff and Barrington Moore, Jr., eds.
(Boston, 1967), pp. 374-400; WilfriedGottschalch,"Dveloppement et crise du capiD.
talismedans la pense de Rudolph Hilferding,"Histoiredu MarxismeContemporain,
Grisoni,d. (Paris, 1976), II, pp. 35-44.

MYTH OF CAPITALIST RATIONALITY
133
Among conservatives,as in Alfred D. Chandler's recent rationalization of the modern corporate structureas the logic of impersonal technological and environmentalforces,integrationist
views lead to one set of conclusions. In the hands of criticslike
Marcuse, organizationaltheorieshave produced a historiography
of condemnation suffused with despair. Apart from their common analysisof the bureaucratic,rational nature of societyboth
in its politicaland economic dimensions,what both the apologists
and criticsof American capitalismhave failed to do - as is also
trueof theirEuropean counterparts- is to prove thatcapitalism
does in facthave the capacityto gatherand apply the intelligence
which is so central to integrationisttheories. They are, in brief,
ignorant of the operational mechanisms of capitalist decisionmaking upon which their theorystands or falls.
In the writingof American history,perhaps more than in
any other field today, integrationist,"organizational" theories
unite conservativesand "radicals" around a common analysis of
the modern historicalexperience. Beginning withTheResponseto
1885-1914 in 1958, Samuel P. Hays has done more
Industrialism:
than anyone to argue thattechnicalexpertise,allegedlybased on
an ascendant middle class's masteryof skillsand knowledge,increasinglydominatesan impersonal,hierarchicalsystemof political and economic decision-making.This organizational society,
which constantlyexpanding groups of experts direct on behalf
of an amorphous general public interest,is asserted but by no
means proved in the writingsof Hays and those he has influenced. On the contrary,their evidence, if anything,shows the
primacyof class over "technocratic"criteriain the development
of modern American institutions.In the hands of historiansof
the New Left,who have gone well beyond the muted social criticisms of Hays and some of his followers, the integrationist
theory has been deepened with the concept of "corporate
liberalism,"which argues that capitalism'sdesire to preserve itself has led to a coherent, planned effortto make the society
"more rational and efficient."3Without leaning too heavily on
3 David Eakins, "Policy-Planningfor the Establishment,"A New Historyof Leviathan,
Ronald Radosh and Murray N. Rothbard, eds. (New York, 1972), p. 189. See also
1885-1914 (Chicago, 1958); JerryIsrael,
Samuel P. Hays, TheResponsetoIndustrialism:
ed., BuildingtheOrganizational
Society(New York, 1972), passim;Robert H. Wiebe, The
Searchfor Order,1877-1920 (New York, 1967). Wiebe's book is a ratherdiffuseadaption of this point of view and is the best known- if not the most clearlyargued.

134
SCIENCE
AND
SOCIETY
such an approach in their practical historical writing(if only

because theyhave found the theorydifficultto apply to practice)
historianssuch as WilliamAppleman Williamsand James Weinstein have endorsed this concept.4 The notion that capitalism's
desire to find the most rational, efficientmethods of operation
inevitablyleads to such techniques being discovered and then
successfullyimplemented in the world of practical affairs has
thereforebecome a tenet of radical as well as conservativefaith
- a faithwhich,acknowledged or not, originateswithWeber.
The Theoryin PracticeBeforeWorldWar II
The validityof the integrationistview of intelligence,and
the notion that the decision-makingprocess stems froma desire
for the truth and the abilityto apply it, independent of social
class and political forces, can be tested at random. By citing
criticalissues of economics, politics,and foreign relations,one
can readily demonstratethe diversityof the evidence necessary
to prove the thesis of intelligenceand integration.I propose to
illustratebrieflythe extent to which the process of expertise,
capitalistplanning,and such in sum, the intelligenceallegedly
needed to guide the system- in realityfails to attain its goals,
and to explain some of the factorswhich repeatedlyundermine
such efforts.My choice of destabilizingexamples is admittedly
partial,and does not exhaust the richtextureof historicalreality.
A total view of U.S. capitalismshould show both the integrative
and disintegrativepolitical and economic dimensions of the
modern historicalexperience, though in factthe theoreticalbias
of the integrationisttheoryrarelyleads its adherentsto consider
the problems and institutionalforces I shall outline here.5
Several cases of how the intelligenceand integrativemechanismsof American capitalismresponded to trulyimportantchal4 William A. Williams, in Radosh and Rothbard, A New Historyof Leviathan,p. 3;
William A. Williams,The ContoursofAmericanHistory(Chicago, 1966), p. 432; James
Weinstein,The CorporateIdeal in theLiberalState,1900-1918 (Boston, 1968), pp. xiii,
253. A number of ideas in my The Triumphof Conservatism
(New York, 1963) reinforced thiscurrentof thought,but myviewson these mattershave since matured and
theyare rejected in myMain Currentsin ModernAmericanHistory(New York, 1976).
5 I have tried my hand at a more ambitious overviewof this sort in Main Currentsin
ModernAmericanHistory,and the ideas in this essay are stated in that book in an
abbreviated form.

135
lenges during the interwarperiod will serve to demonstratethe

system'sabilityto solve major dilemmas and indicate the character and resilience of its intelligence. Up to the late 1920s
economic difficultiesfacing the social order had been handled
withan indifferencebordering on apathy. The state had earlier
created the foundationsof the basic federal regulatoryprocesses
in the formsof the InterstateCommerce Commission,the Federal Reserve System,and the Federal Trade Commission- plus
other smaller organizations.During the late 1920s the directors
of these bodies were anything but neutral technical experts.
(There is a considerable consensus on this fact despite general
failureto acknowledge its implicationsfor integrationisttheory.)
Presidentsgenerallyeitherchose commissionor board members
fromthose who had formerlyworked for the industrytheywere
to regulate, or designated political appointees, largelyignorant
and incompetentin the field they were now to manage. This
pattern,which prevails down to our own day, leftkey decisions
in the hands of men who were prepared to make themwithonly
class or narrow politicalconsiderationsin mind.
It is true, of course, that independentlyof the ICC, FRB,
and FTC, men such as Secretaryof Commerce Herbert Hoover
soughtfrom 1921 onward to create what one astutehistorianhas
called the "associativestate"; but in practicethisvisionof rational
economic norms imposed by scientific experts on industry
proved to be politicallyimpossible or in conflictwith powerful
business interests.What is significantabout Hoover's effortson
the margins of the economy before 1929 was not that he attempted them - which has fascinated many historians but
Hoover
no
This
is
rather that he failed so dismally.
surprise.
did not believe that Weberian efficiencyhad come to dominate
the state's mechanisms; rather,"during the war I had observed
the amazing duplication,overlap, waste, red tape, tyranny,and
incompetenceof the governmentbureaucracy."6More important
is the fact that unsuccessfulexperimentspresaged his later attitudesand undertakingsat a timewhen the nation was unable to
affordmany more calamities.
6 Herbert Hoover, Memoirs:The Cabinetand the Presidency,1920-1933 (New York,
1952), p. 71. See also Ellis W. Hawley, "Herbert Hoover, the Commerce Secretariat,
and the Vision of an 'AssociativeState,' 1921-1928," JournalofAmericanHistory,LXI
(1974), 116-40.

136
SCIENCE
AND
SOCIETY
Perhaps the most importantdomain to which intelligence

might have been applied during the 1920s was banking and
foreigneconomic policy.Benjamin Strong,the main pillar of the
New York Federal Reserve Bank until 1928 and the mostcritical
American guiding internationalfinancial policy, was a former
J.P. Morgan-affiliatedbanker and by no means a disinterested,
neutral expert. But this fact alone did not produce the Federal
Reserve System'sdilemma. The Board membersin Washington,
to cite one specialist'slater estimate,were "men withlittleunderstanding of central banking theoryand with littleor no experience of central bank administrationexcept that gained on the
spot."7The policyproblem was whetherto serve the needs of the
domesticbanking and economic interestsor those of the groups
primarilyconcerned about the world financial system.By early
1929 this clash in perceptions, as well as conflictingeconomic
interests,produced a strugglebetween the New York Bank and
the Board in Washington- one that gravelyhobbled policy as
the unanticipated Great Crash approached. This deadlock was
exacerbated by the technicalcomplexityof fixinginterestrates so
as to avoid undesirable repercussionseither at home or abroad
- or both.
The integrationof the U.S., British,and WesternEuropean
financial systemshad by 1928 shown a compromise solution to
be unattainable.Justas the ICC had for decades been unable to
fixrates thatsatisfiedall the major interestsamong railroadsand
shippers, so now the Federal Reserve Systemfound itselfimpotent. After 15 years of experience, the intricacyand unknown
dimensionsof the Federal Reserve System,upon whichclass and
political interestswere superimposed, left "1) the errors in the
knowledge of Federal Reserve officialsabout how monetarypolicy works; and 2) the weakness in the technical apparatus of
control."8If internationalcapitalistfinancialintegrationdid anything,it was to intensifythe grave shock which was to produce
the worldwideDepression - and the vast politicaland economic
upheaval that was to emerge fromit.
Once the Depression began, President Hoover tried in di7 Elmus R. Wicker,FederalReserveMonetary
Policy,191 1-1933 (New York, 1966), p. vii.
1924-31 (New
8 Ibid., p. 143. See also Stephen V.O. Clarke, CentralBank Corporation,
York, 1967), passim.

137
verse and unsuccessfulwaysto respond to it,constantly

justifying
himselfin "scientific"and apoliticalterms.Since these effortsare
well knownand bear no relationshipto mydiscussionsave in one
case, there is no point in reviewingthem. Hoover the engineercum-politicalleader was seeminglythe epitome of the Weberian
ideal man, and his universal failure was, to some minor extent,
due to the factthat he made complex, time-consumingresearch
an excuse for inaction- inaction that was also a tacitadmission
of the limitsof existingsocial knowledge. Indeed, as Hoover was
later to admit, he began fewer commission inquiries than his
three predecessors,and in a third of the cases he cynicallyinitiatedinvestigationswiththe explicitpurpose of stavingofflegislation ratherthan of learning somethingessentialfor the greater
efficiencyof the system. His Research Committee on Social
Trends, which was established before the Crash to survey the
national social resources prior to urging any reforms,enlisted
the "best and brightest"of academia - and until theirlabored,
banal, and lengthyreport emerged more than three years later
Hoover found excuses not to act withoutadequate knowledge.
That this became a justificationfor doing nothingat all was not
alwaysintentionaland should not obscure both Hoover's sincerityas well as the larger politicaland economic contextwhich,in
the finalanalysis,was much more decisive.9Hoover's experience
revealed thattechnicalexpertisecould not overcome a structural
problem of any significantmagnitudeand also thatother means
of economic and political problem-solving- which is to say,
integrationbased on intelligence were to fail dismally.
The next major effortto confrontthis generalized crisis in
American capitalismwas the National RecoveryAdministration,
created in June 1933. This most ambitious of the New Deal
measures attemptedto apply a cohesive integrationist
plan to the
overall industrialeconomy. To a vitalextentthe NRA could not
functionwithoutan adequate research and planning apparatus.
While the NRA was to fail for otherreasons too well known to be
9 Hoover, Memoirs,p. 281; Barry D. Karl, "Presidential Planning and Social Science
in AmericanHistory,III (1969), 347--409.
Research: Mr. Hoover's Experts,"Perspectives
This belief that problems were of organizationratherthan of social structurecontinued under the New Deal, which utilized Hoover's Committeeon Social Trends' findings and personnelas part of its own avoidance of reality.See BarryD. Karl,Executive
and Reformin theNew Deal (Cambridge, 1963), Chap. 5.
Reorganization

138
SCIENCE
AND
SOCIETY
repeated here, it is almost certainthatthe NRA would stillhave

been doomed. Staffingof the NRA at all levels came fromthose
industries permitted self-regulationunder the codes, but also
from the Democratic Party faithful- political patronage. Such
partyloyalistswere not so much responsive to class interestsas
incompetent. But ostensiblyqualified economists who fell into
neithercategorywere useless by virtueof an academicallyinculcated theoretical myopia - to which was added an insoluble
penury of essentialdata. On such key issues as the impact of the
NRA codes on employmentthe so-called experts in Washington
remained whollyignorant.The statisticswere never forthcoming
before the Supreme Court outlawed the NRA in May 1935, and
for this and other more importantreasons it is necessaryto concur with the NRA research director's opinion that the "NRA
must,as a whole, be regarded as a sincere but ineffectiveeffort
to alleviate depression."10
By the Depression, the Executive intelligencefunctionhad
been increasinglyaugmented by Congressional investigations.
Sixtysuch investigationswere mounted in 1900-25, risingfrom
an average cost of $30,000 during the first15 years of this centuryto $250,000 by 1920 and twicethatby the end of the 1930s.
The failure of intelligencein the cases of Hoover's numerous effortsand of the NRA was not merelyinadequacy of planif
ning and of available social technology,but also the difficulty,
not impossibility,of marshaling essential facts which were also
politicallyacceptable.
It was not lack of informationthat brought on the Depression; the increasingquantityof knowledgesimplyproved useless
given the systematicmyopia inherentin bourgeois social knowledge. The belief that it was factsratherthan policythat was the
core of the problem provided Hoover withan intellectualescape
valve, and the Roosevelt Administrationemployed it nearly a
decade later when it created the Temporary National Economic
Committeein 1938. That venture,which was more a reflection
on the failureof existingsocial policythan a means for redeeming it, was a vast and costly undertaking that quickly bogged
down. A very conventional Committee engaged a mass of re10 Charles F. Roos, NRA EconomicPlanning (Bloomington, 1937), p. 472. See also ibid.,
pp. 58-67, 150-51; Kolko, Main Currentsin ModernAmericanHistory,Chap. 4.

139
- in theend producingwhat
searchersfromfamousuniversities
theTNEC's mostcarefulstudentconcludedcontained"relatively
littlethatis new."11Researchand intelligence
up to WorldWar
II revealeditselfnotas a wayof creatingpolicythroughtheuse
of technical,classlessexpertise,but ratheras a reflection
of the
of theplanningprocessand thesocialtechnology
deficiencies
of
thesystemitself.Ratherthanovercoming
thisfailure,theeffort
at intelligence
moreoftenthannotdeepened it.
EconomicIntelligence
AfterWorldWar II
The inability
of capitalistintelligence
and socialtechnology
to solvetheU.S. interwar
economiccrisis(whichonlyWorldWar
II ended),leftforthenextgenerationthetaskof achievingwhat
theirpredecessorscould not. Their need to do so was all the
moreurgentbecauseof a widespreadbeliefamongleadingcapitalistthinkers
thattheend of thewarwouldwitnessthereturnof
In
depression. 1943 John MaynardKeynes began cautioning
seniorAmericanofficialsof the danger,and a special Senate
on thepostwareconomywarnedin early1944 of the
committee
riskof "economicchaos" if the nationfailed to implementa
fullemployment
act."Conscious,rationalaction"
comprehensive
wouldbe requiredto avoid a postwarstagnationand mass unanotherSenatecommittee
employment,
predictedin September
in
the
end
but
1945,
overwhelming
Congressionalpoliticalconstraints
an
Act
produced Employment (1946) thatendorsedvery
few concreteactionsother than the creationof a Council of
Economic Advisors composed of "exceptionallyqualified"
who wouldpresumably
economists
use theirintelligence
to help
guidethenationthroughthreatening
postwareconomicshoals.12
The UnitedStatesavoideda depression,however,notbecauseof
theapplicationof intelligence
of thesortenvisagedbefore1945
but because of largelyunanticipatedeconomic developments
and, after1950,military
spending.The failureof the 1930sDefor
themostpart,testimony
to
return
to theobjecwas,
pression
tivecharacterof structural
factorsratherthanto the efficiency
11 David Lynch, The Concentration
of EconomicPower (New York, 1946), pp. 356, 378;
Ellis W. Hawley, The New Deal and theProblemof Monopoly(Princeton,1966), passim.
December 1977, p. 17; U.S. Senate,
12 Edward M. Bernsteinin Finance &fDevelopment,
Committeeon Labor and Public Welfare,HistoryofEmployment
and ManpowerPolicyin
theUnitedStates.88:2 (Washington, 1965), VI, 2136, 2391, 2439.

140
SCIENCE
AND
SOCIETY
and rationalitywithinthe system.These structuralforces,as I

have argued elsewhere,were eventuallyto bringwiththemother
unintended challenges and a reordering of political and
economic prioritiesof vast, even decisive, magnitude.13
The intelligenceprocess in the economy was thereforerestrictedlargely, if not wholly, to providing data, analyses and
forecastswhich politiciansand businessmen mighttake into account in calculatingtheir own actions. This calculabilityis a key
assumptionin the thesisof rationalizedcapitalism,as well it must
be, for a systemthat cannot anticipatethe main contours of its
futureis anythingbut stable in the long-run.
Attemptsto rationalize the economic functionsof the federal budget have failed wholly or in large part, even by the
admission of those attemptingit: "Substantialprogresstoward a
rational, consistent, and economic budgetary process in the
executive branch has yet to be made," the JointEconomic Committeeof Congress reported in 1970. The obstacles pointed to
are "privateinterestgroups," "a serious scarcityof analyticalpersonnel," disagreementon the basic issues and alternatives,sabotage, ignorance, and secrecy. In short, the state budget mechanism,the ultimatepoliticalformcapitalismhas forintegration,is
not much differentfrom the jungle Hoover described a halfcenturyearlier.14Under the Nixon Administrationthe effortto
transformthe Executive bureaucracy from one responsive to
special intereststo one whollydominated by the authorityof the
President'sofficehelped produce the most irregularand unstable statemechanismin U.S. history- and the Watergatecrisis.15
Apart from the political and economic constraintswhich
preventedtechnicalinformationfrominfluencingpolicy,thereis
the question of how reliable and useful the existing economic
intelligencefed into the politicaland economic mechanismswas
in any case. Forecasting is a large and increasinglyspecialized
13 Kolko, Main Currentsin ModernAmericanHistory,pp. 310-30 and passim.
14 U.S. Congress,JointEconomic Committee,Report:EconomicAnalysisand theEfficiency
91:2. February 9, 1970 (Washington, 1970), p. 8. And as Edward R.
of Government.
Tufte, PoliticalControlof theEconomy(Princeton,1978), proves, federal spending to a
vital extent is timed to reelect the party in power and is scarcely the outcome of
neutral experts' insights.
15 Stephan Leibfried,"The Bureaucracy of the 'StatistReserve': The Case of the USA,"
(unpublished study,1975); U.S. Senate, Committeeon Foreign Relations,Report:The
in U.S. ForeignPolicy.94:1. April 1974 (Washington,1974).
Committees
Role ofAdvisory

141
functionof governmentaland assorted private agencies. In recent years,primarilybecause of obvious failures,therehave been
a number of officialreviewsof the efficacyof forecasting.Their
main conclusions deserve close consideration, since they raise
basic doubts as to the utilityand precision of existing intelli-
gence.
Assessingthe 1970-75 performanceof the fivemostinfluential forecasts,a Boston Federal Reserve Bank analystconcluded:
"Their record over the early 1970s shows that those errorswere
unprecedented in magnitude, far larger than those before or
since." The degrees of error varied for differentyears, but by
early 1974 all five forecastsunderestimatedthe GNP, real GNP,
and unemploymentby a factorof 3.75 to six timesthe "normal"
errorsfor the entiresix-yearperiod. "These forecastsfailed miserably in warning of the severityof the impending recession,"
concluded the Bank's study.16Such errors, which presaged a
furtherdecline in the intelligencecapacities of the system,were
in part due to the immense problems that inflationaccounting
has imposed on all domains of economic intelligencesince 1967
- a factor,as we shall see, with criticalimplicationsfor many
fields.
In 1961 the President'sCouncil of Economic Advisorsbegan
to include numerical forecastsin their annual reports,though
thesewere confinedto the relativelysimple annual projectionsof
the GNP in current and constant dollars as well as prices. No
more accurate than the American StatisticalAssociation-National
Bureau of Economic Research forecastseries begun in 1969, the
prognosticationswere incorrectby an average margin of about
one percent.Where theyfailed mostseriouslywas in anticipating
the crucial challenges - economic declines. Especially after
1968, the Council erred far more often in presentingoveroptimisticforecasts- suggestingthat the political functionof its
data, whetherintended or not, shaped its views.17
It was leftto the U.S. Bureau of Labor Statisticsto predict
developmentsin the labor force.The consequences of failuresin
this domain were not simplyin misjudgingunemployment,but
16 Stephen K. McNees, "The ForecastingPerformancein the Early 1970s,"New England
EconomicReview,July-August 1976, pp. 29, 39.
17 Geoffrey H. Moore, "The President's Economic Report: A Forecasting Record,"
NBER Reporter,April 1977, pp. 4-12.

142
SCIENCE
AND
SOCIETY
also in their effecton the unemploymentcompensation system,

which by the end of 1976 was in a deep financialcrisis. Apart
fromits other errors,the main BLS problem,beginningwithits
1960 estimates,was in not foreseeingthe growthof the female
labor force. In 1960 the BLS underestimatedfemale participation rates by 8 percent,and in 1970 by more than 9 percentwhile overestimatingmale labor force participation.The BLS
employmentand economic predictionsfailed to anticipateboth
the 1970 economic downturnand the 1974 recession.18The result was a combinationof consternationand procrastinationon
the part of successiveAdministrationsin the face of unforeseen
developments in such vital areas as employmentand welfare.
Perhaps no aspect of capitalistactivityis more fundamental
than investments,and accurate knowledge of future trends is
presumably essential to fulfillmentof the economic policies of
the integrativestate. Both the federal governmentand private
business agencies attemptto forecastsuch trends,and a recent
Federal Reserve Bank of Boston assessment of the period
1973-76 concludes, "It is clear thatall the models produce substantialerrors . . . ."19
But even these criticalerrors look small by comparison to
the U.S. oil consumption, production, and import projections
Nixon's Cabinet Task Force on Oil Import Control issued in
1970 - the assumptionsof which proved whollyuseless in preparing Washington for shocks that were within four years to
have a profound impact on its global economic position.At a less
dramaticlevel, the federal earlywarningforecaststo detectweak
banks had by 1976 become dangerously inept. While the total
number of banks closing from 1960 to 1976 did not rise greatly,
the deposits in the banks thatclosed rose precipitouslyfromwell
under $50 million annually in the early 1960s to over a billion
and one-halfdollars in 1973. During 1970-71 the early warning
forecaststo detect such banks consistentlyunderestimatedtheir
number, and the forecast's margin of error leaped during
1972-73, particularlyfor banks having assets of $100 millionor
18 BusinessWeek,January24, 1977, pp. 20-21; MonthlyLabor Review,August 1976, pp.
13-26; July 1977, pp. 19-20.
19 Richard W. Kopeke, "The Behavior of InvestmentSpending During the Recession
and Recovery, 1973-76," New England EconomicReview,November-December 1977,
p. 27 and passim.

143
more.20
In brief,the prognosticatingabilityof the capitalistsystem,
and its concomitantcapacity for rational, integrativebehavior
and policies, ranges from the overexaggerated to the nonexistent.Aside fromthe politicalimperativesof state policy and the
economic interestsof those who influence it, the real question
remainswhetheranyone can attributerationalitybased on intelligence to the overall directionof the capitaliststate.
"Rational" action is possible only if forecastingis reasonably
precise, but it also requires that the data on currentrealitiesbe
exact. And in thisdomain, more than any other,the systemoften
operates at a level of ignorance that is astonishing.
The question of the rate of profit and the sufficiencyof
capital accumulation is not merelya matter of proving or disit is essenprovingMarxistanalyses of capitalism.More critically,
tial in providing data both for a rationallyadministered state
policy (ignoring,for the moment,the political constraintson its
doing so) and for corporate action. To the extent that social
technologyis based on accurate social knowledge it can at least
presume to be rationalby itsown ideological criteria.But the fact
is, makingaccurate projectionsof the rate of profitand accumulation has proved as difficultfor a capitaliststate and business
analystsas for anti-capitalistresearchers but with the critical
differencethatthe social consequences of theirmutual ignorance
are entirely different.The difficultyof making correct assessmentsin this area has increased with the sustained inflation
of the post-1966 period and withthe emergence of the need for
a systemof inflationaccountinginvolvingcomplex methodological techniques. There are Establishmenteconomists who insist
thatthe rate of profithas fallen since 1948 and those who argue
thatit has not.21The problem of estimatesboils down, to a vital
extent,to inflationaccounting and the basis for calculating deIntervention
in the
20 U.S. Senate, Committee on the Judiciary,Hearings: Governmental
MarketMechanism[The PetroleumIndustry,
Part 4]. 91:2. March 1970 (Washington,
1970), pp. 1697-99; ComptrollerGeneral of the U.S., Highlights
ofa StudyofFederal
Supervisionof Stateand National Banks. January 31, 1977 (Washington, 1977), p. 7;
Leon Korobow et al., "A Nationwide Test of Early Warning Research in Banking,"
FederalReserveBank ofNew YorkQuarterly
Review,Autumn 1977, pp. 48-52.
21 Brookings
1:1974, pp. 169ff.[W.D. Nordhaus]; 1:1976, pp.
Paperson EconomicActivity,
15-57 Q.B. Shoven and J.I. Bulow]; 1:1977, pp. 224-25 [M. Feldstein and L. Summers].

144
SCIENCE
AND
SOCIETY
preciation,and differingcriteriaproduce very large differences

in profitdata.22 As a consequence, neither the state nor those
who guide it have at the present time any agreed upon basis for
determiningthe direction and health of the general corporate
sector- much less its components.
This ignorance of the statusof the economy extends to the
equally elementary problem of the degree to which existing
manufacturingcapacityis being utilized. Since 1967 the governmenthas funded two such measurements,and thereare also two
private indices. Each uses differenttechnical assumptions,and
these can produce very great differencesin the data. At the
beginningof 1974, to cite one extreme,the Wharton index had
manufacturingproducing at 98 percent of its capacity,the U.S.
Bureau of Economic Analysishad it at 85 percent,and the Federal Reserve Board index at around 88 percent.23
Perhaps as revelatoryas anythingof the alleged abilityof
U.S. capitalismto control its own destinyis the measurementof
the money supply - and all the adjustmentswhich presumably
followfromsuch data - as well as the research role of the over
500 Ph.D.s the Federal Reserve Systememploys.Officialdata on
money supply understate by as much as one-fifththe real
amount, reflectingthe politicizationof the System'sinformation
structureand its systematiccensorship of statistics.Its conclusions "conform,"as BusinessWeekput it in July 1979, "to what
those officialsthink will please the Washington Fed staffand
Paul A. Volcker, president of the New York Fed."24
Facts, as a rule, offerno primafacie basis for any particular
capitalistaction. To argue that the state's economic policies are
derived fromsome technocratically
determined,neutralestimate
of data is merely to obfuscate realityon behalf of ideological
myths.For the system'sleaders respond to the problems they
confront not with prescience and control but very often with
22 Richard W. Kopeke, "Current AccountingPracticesand Proposals for Reform,"New
England EconomicReview,September-October 1976, pp. 3-28; Solomon Fabricant,
"Toward Rational Accounting in an Era of Unstable Money, 1936-1976," National
Bureau Report,December 1976, pp. 1-18; Surveyof CurrentBusiness,May 1974, pp.
19ff.
23 James F. Ragan, "Measuring Capacity Utilizationin Manufacturing,"FederalReserve
Bank ofNew YorkQuarterly
Review,Winter 1976, p. 15.
24 BusinessWeek,July 16, 1979, p. 106.

145
illusions and confusions exceeding the imagination of integrationistsocial theories.The economic historyof the U.S. is one in
which rationalityand intelligenceis more notable by its absence
or irrelevancethan by the degree to which it is employed. And
what is true of the economic limitsof capitalistintelligenceis all
the more so when one turns to the role of politicalintelligence.
and ForeignPolicyAfterWorldWar II
PoliticalIntelligence
The U.S. loss of masteryover its prioritiesin the decades
after World War II, and the generalized military,political and
economic crisis of American imperialism,are topics too vast to
consider here. Since my central concern is with intelligence
below the levels of state policy and planning,it is necessaryonly
to show how the failure of intelligencecontributedto the larger
crisis of American foreign policy - a subject I have discussed
elsewhere.25
structureswere both public
Postwar intelligence-gathering
and private,the latterbeing far less known than the CIA, National Security Agency, and other government intelligencegathering agencies in the foreign and militarypolicies fields.
Privateintelligenceorganizations,consistingof hundreds of consultingfirms,"thinktanks" such as Rand, Institutefor Defense
Analysis,or Mitre,and various conglomerationsof experts, became an increasinglyimportantcomponent of the intelligence
and expertise structureimmediatelyafter World War II, when
the growingtechnologicalcomplexityof militaryequipment gave
rise to a proliferationof government-fundedprivateintelligence
in scientificand even social science domains. By the mid-1970s
the federal governmentwas spending around fivebillion dollars
annually on private sources of intelligencein every area of its
concern, or roughly twice the sum allocated to the NSA, CIA
and similar state organizations.These private bodies arose first
because the governmentbelieved it did not possess adequate
expertise within its own agencies, but later they continued to
flourishas various governmentalorgans became dependent on
25 Main Currentsin ModernAmericanHistory,Chap. 10; Joyce and Gabriel Kolko, The
Limitsof Power (New York, 1972); "The American Goals in Vietnam," The Pentagon
Papers: CriticalEssays,Noam Chomsky and Howard Zinn, eds. (Boston, 1972), pp.
1-15.

146
SCIENCE
AND
SOCIETY
them. The mushrooming private think tanks thus reflected a

tacit acknowledgementof the technicalinefficiencyof the state
bureaucracy.26
The share of the gross national product devoted to research
and developmentrose from0.5 percentin 1946 to 2.2 percentin
1966, clearlya directconsequence of the growthof the militaryindustrial economic sector and the imperialist premises upon
which it was based. These technologicallyoriented premises resulted in mechanical imperativeswhich one Brookings Institution studyhas assessed as "a consistentadherence to what might
be described as a strategyof 'maximum technologicalsubstitution,' the notion that each new bit of technical information
should be incorporatedin a usable weapon and distributedto the
operating forces with the least possible delay."27 This rising
complexitygave the technological fetishismof U.S. capitalism
full scope and absorbed vast numbers of experts, technocrats,
and assorted purveyorsof intelligenceinto the operationsof the
stateapparatus for makingwar. But, as the Brookingsstudynow
admits,those who worked withinthe assumptionsof such a system proposed solutions that proved catastrophicallydysfunctional. Beginning with the Korean War, the use of firepower
increased eight times over World War II as the militarysubstituted munitionsand its supportingtechnologyfor manpower as
extensivelyas possible. By the Indochina War, thiscriticalindex
of technologicalinput reached 26 timesthe 1941-45 level, creating a war that produced a total militarydisaster as well as unprecedented politicalturbulenceat home. Vietnam was so costly
thatthe richestcountryin the world could not affordit,and the
resultingfiasco fundamentallyaltered the relativepower of U.S.
imperialismin the world forthe restof the modern epoch.28The
Washington bureaucracy's belief in the efficacyof technology
helped to undermine the U.S. colossus and expose the mythof
the rationalityof the state. Technology and capitalistrationality
26 Daniel Guttmanand Barry Willner,The ShadowGovernment
(New York, 1976), p. 18;
Time,February6, 1978, p. 10; for general background, Kolko, The RootsofAmerican
ForeignPolicy(Boston, 1969), Chap. 2.
27 William D. White,U.S. TacticalAir Power (Washington, 1974), p. 2.
28 The criterionof increasingtechnologyis tons of munitionsutilized per man year of
combat exposure, as calculated by White,ibid.,p. 5. For the world economic consequences of the war, see Joyce Kolko, Americaand theCrisisof WorldCapitalism(Boston,
1974).

147
combined were not a sign of the system'sstrengthbut a reflection of its increasinglyprofound failures.
A reviewof the work of thisvast privateconsultingapparatus can show that it reinforced predetermined state planning
policies,and thereforewas but a part of its systematicirrationality,or it can concentratemerelyon the consultants'inadequacies
when confrontingshorter term "technical" problems. A survey
of the latter kind, Daniel Guttman and Barry Willner's The
documents the pervasive incompetence of
Shadow Government,
privateintelligence.Politicalpatronage and regional and interest
loyalties often determine the choice of consultants, with
and corruption being commonplace. As a
conflicts-of-interest
the biases and assumptionsof their
reinforce
such
rule,
experts
sponsors, which is a precondition of their receiving additional
contracts,and theyrarely,if ever, provide a check on fundamental errorsof policyand strategy.Beginning withHerman Kahn's
astonishingscenarios on thermonuclearwar for the Rand Corporation in the late 1950s to Rand's whollyfalse predictionsof a
"missile gap" during the same period, the record of
achievementsof such experts lends itselffar betterto satirethan
to the integrationists'panegyrics.29
The CIA, for its part, could defend its reputation for
gatheringintelligencecompetentlyuntil the post-1975 investigations exposed somethingof its record - aspects that its critics
could, untilthen,confirmonlyby deduction. Its operational efficiencyis not the question here, but ratherits capacityto predict
major political,military,and economic events and trends. Both
the Senate and House committeesinvestigatingthe CIA record
in thisdomain have portrayedan organizationthatis pervasively
inadequate and, on many criticalmatters,incompetent.It did
not anticipatethe Korean War, the Czechoslovakia crisisof 1968,
the October 1973 Mideast War, the 1974 Portuguese upheaval,
India's explosion of a nuclear device in 1972, or the Cyprus coup
of July 1974 - to name but a few of the major crises that took
the U.S. by surprise.And it failed dramaticallyto estimateaccuratelythe Soviet defense budget in the early 1970s or in any way
foresee the 1978-79 Iran crisis.30
29 Guttman and Willner,The ShadowGovernment,
Chaps. 2 and 3.
to StudyGovernmental
30 U.S. Senate, SelectCommittee
OperationsWithRespecttoIntelligence

148
SCIENCE
AND
SOCIETY
PoliticalIntelligence:Vietnam
It was in Vietnam, above all, that the role of intelligence
failed most drastically.It was here that the political and policy
constraintson efficiencyand rationalityshowed their decisiveness, and proved that where the policy is a disaster,no amount
of intelligence,in the broadest definitionof that term,can save
it.
America's aggression against Vietnam stemmed from the
logical conjunctionof strategic,political,and economic elements
that resulted from the post-1949 deepening crisis of U.S. imperialism^1 But once the die was cast, the way intelligencewas
used illustratesthe ultimatelimitsof capitalistsocial knowledge
and perception. Rather than mirroringreality,intelligencewas
called upon in the name of the logic of the systemto wholly
distortit.
Two of the primordial issues confrontingthe U.S. in Vietnam were the Revolution'scapacityto mobilize and motivatethe
masses, on one hand, and the size of its popular followingand
militaryforcesin South Vietnam on the other. It takes no capacityof hindsightto realize how fundamentalany errorin eitherof
these two domains would be to American aggression'ssuccess or
failure in Vietnam. There were other, no less importantissues,
but these two were basic. The manner in which American
decision-makersformulated the facts regarding both of these
criticalquestions, and then dealt withthem,reveals the limitsof
rationalityin capitalist social knowledge. Its conjunctural and
structuralcompulsions set the U.S. on an irreversibletrack and led to total defeat.
The Vietnamese CommunistParty'ssuccessfulstrugglefrom
1941 onward was, more than any other single factor,grounded
in its abilityto mobilize the peasants around the issue of inequiActivities,Final Report: Foreign and Military Intelligence.94:2. April 26, 1976
(Washington, 1976), p. 23; U.S. House, Select Committee on Intelligence,Report,
VillageVoice,February 16, 1976,passim;BusinessWeek,February28, 1977, pp. 96ff.In
Iran, one ex-CIA analystobserved, "policy prettymuch determinesreporting."New
YorkTimes,January 7, 1979. See also Ate YorkTimes,November 15, 1978. The best
studyof the mind-andlimitsof the CIA is John Stockwell,In SearchofEnemies:A CIA
Story(New York, 1978).
31 I have discussed these broad structuraldevelopmentsin the books cited in footnote
25.

149
table land distributionand to translatepoliticalissues in termsof

theirimplicationsfor agrarian reformand land tenure. This was
well known for decades to scholars who had studied Vietnam.
AftersuccessivepoliticalfailureswithSaigon regimeswhichchallenged the Revolution on the militaryterrain but not on the
decisivepoliticalor ideological ones, Washingtonplanners finally
turned a brief,furtiveglance in the directionof the land question. In late 1966 Robert L. Sansom, workingas a government
expert,began the research eventuallypublished as TheEconomics
in theMekongDelta of Vietnam,and soon thereafter
ofInsurgency
JeffreyRace began his authorized study on the same topic.32
Both claimed thatthe land question was criticalto the successful
pursuit of anti-Communistpolitical mobilization in the South,
and both also revealed why theirconclusions w^re ignored.
Sansom maintainsthat key U.S. officialsrefused to believe
that the land question was important,and welcomed even the
flimsiestevidence to argue that it was not a central issue. Both
writerscould not concede the Communists the legitimacythat
such an admission implied, for what was true of Vietnam was
also valid for much of the restof Asia - and thatwas a pessimisticconclusionindeed. Next, America'sloyal Saigon puppets were
either landowners themselves or allied with them, and it was
politicallyand ideologicallyinconceivablethat their social order
be criticized- not to say changed. Other expertswere therefore
found who cooked up the social sciencejargon essentialto avoid
confrontingthe truth.33
Race's experiences were more revealing, since he told how
the issue was handled in Washington corridors,where "policy
was founded on and protected by deception and outrageous
lies." When Race expounded his conclusions before those responsible for reviewingthe successes of "pacification"in Vietnam, "the usual response [was] to continue the dialogue as if I
had not spoken or to shiftto a differenttopic." Later he was told
by a general that while he too could easily identifyAmerica's
errors in Vietnam, "the Defense Department will not pay to be
told such a thing, so they cannot permit such subjects to be
32 Robert L. Sansom, The Economicsof Insurgency
in theMekongDelta of Vietnam(Cambridge, 1970); JeffreyRace, War ComestoLong An (Berkeley, 1972); Erich H. Jacoby,
AgrarianUnrestin SoutheastAsia (New York, 1949), pp. 143-48.
33 Sansom, EconomicsofInsurgency
, Chap. 12.

150
SCIENCE
AND
SOCIETY
discussed." The factswhich Sansom and Race reported,suggesting that the structuralsituation in the vital Mekong Delta favored the Revolutionover the long run, were explicitlyand bel- "simplycouldn't get through,"as Race has
ligerentlydenied
put it, to the men at the top.34
This myopia was legitimated in a computerized "Hamlet
Evaluation System" that gave technologicalsanction to an irrational and losing policy. The Systemgave a monthlyassessment
of which side "controlled" South Vietnam's nearly 13,000 hamlets,obtainingits data fromreportssent in by American "pacification" personnel who were to visiteach hamlet monthly.The
Vietnamese villagers,for their part, knew that any exposure of
Revolutionary presence might invite U.S. or Saigon attacks,
population removals,etc.; naturally,theylied to poll takers.The
question of politicalloyalties,whichwas the ultimatebasis of the
Revolution'spower, was not withinthe System'spurview.And if
danger or combat made it impossiblefor the poll takersto reach
a village, the "control" report at the time of the last visit was
simplyrepeated.35
This statisticalhodgepodge, which one Congressman evaluated at the timeas utterlyfalse,was used to claim ever-increasing
Saigon masteryof Vietnam, reaching 95 percent of the population in "relativelysecure" regions by 1971 - with the side that
was destined to win the war only able to contest,but not control,
the remainder. Even during the 1968 Tet offensive,when over
two-thirdsof Saigon's "pacification" teams abandoned their
posts, the Communistswere said to control barely a fifthof the
population.
The astonishingthingabout thiscomputerizednonsense was
thatit was seriouslybelieved by those whose policies had already
been predetermined and who were ready to grasp any reinforcement the "intelligence" process could conjure up. W.W.
Rostow, who had President Johnson's ear perhaps as long as
36
anyone, was brimfulof such optimisticstatistics. As a conse34 JeffreyRace, "The Unlearned Lessons of Vietnam,"Yale Review,LXVI (1976), 16366, 173.
35 U.S. House, Committeeon Foreign Affairs[Rep. John V. Tunney],Report:Measuring
HamletSecurityin Vietnam.90:2. December, 1968 (Washington, 1969), passim.
36 W.W. Rostow, The Diffusionof Power, 1957-1972 (New York, 1972), pp. 438-^b,
516-19.

151
and rationality
became not an influenceon
quence intelligence
it.
of
but
a
caricature
policy
The same processoperatedin regard to the equallyvital
in theSouth.This issue
military
strength
questionof Communist
involvedthe obviouslycentralproblemsof how large an attack
couldbe mountedagainsttheU.S. and itspuppetforces,as well
of escalatoryresponses.The more powerful
as the plausibility
the Communistforces,obviously,the less plausiblethe official
of imminent
Americanpredictions
success,and duringlate 1967
CIA
to
a
head.
Some
came
thisissue
expertson the "orderof
battle"(manpower)were stunnedwhen the Americanmilitary
dropped fromthe categoryof enemytroops those irregular
forcesthatwerein realitythebackboneof theguerrillaphase of
thestruggle- local personnelsuchas women,older men,children,politicalcadresalso able to fight,etc. In November,1967,
such cuts allowedthe Pentagonto announce publiclythatthe
Communistforcesnumberedunder 300,000 - the optimum
At thesame timeCIA experts
permitted.
figuretheU.S. officers
documentedthatthenumberwas closerto 600,000.
convincingly
as Ambassador Ellsworth
The reason for this falsification,
need to demonstrate
Bunkerputit,was"theoverriding
progress
in grindingdowntheenemy."37
Anyotherfacts,itwas believed,
effort
wouldfeeda hostilepressas wellas undercutan imminent
to increasethe U.S. forcesin Vietnam.
withthe truthwas considMoreover,such a confrontation
to optimism,thatcongenital
ered demoralizingand antithetical
Americandisease whichsuffusesits arroganceof power and
eventually
provesfatalto it.In thiscase,however,theNovember
was believedby the verymen who confused
1967 falsification
theirdesireswithreality.Whenadvancewarningcame laterthat
whichbeganJanuary30, 1968,was
monththattheTet offensive,
about to be mounted,the highestU.S. officialshalf-heartedly
preparedfor it on the basis of the assessmentthatthe Communistswouldbe able to mobilizeonly299,000 men to sustain
the effort.Some U.S. officerswere scarcelypreparedfor the
eventsthatwere to lead to large militaryand politicallosses.
Althoughthe Pentagon disputed the charge by Samuel A.
37 U.S. House, Select Committeeon Intelligence,Hearings: U.S. Intelligence
Agenciesand
Activities.
94:1 (Washington,1975), p. 685. See also ibid.,pp. 683ff.

152
SCIENCE
AND
SOCIETY
Adams, the CIA expert who later quit in protest, that 1,200
aircraftwere destroyed or damaged as a consequence of the
surprisingmagnitude of the attack,its concession of 300 confirmsthe element of surprise.
There can be no doubt thatTet 1968 marked the beginning
of the end for the Americans,and thattheyhad again exhibited
their habit of substitutinga deductive policy for an analytic
search for the truth.Such a policybased on distortionwas essential because to accept the factswas to admit the defeat that was,
in any event, only postponed. To report the truth about the
failureof "pacification"or the size and power of the enemy was
considered by Rostow and those like him to show an "unwillingness to support your Presidentin his time of need."38The intelligence apparatus consciously reported falsehoods that the
decision-makersoften believed. This capacity for self-delusion
was not occasional but systemic,involvinglarge issues and small,
touching all dimensions of the conflict,and lastingdown to the
final hours of America's defeat in Vietnam.39
The Mythof CapitalistRationality
The notion that American capitalismpossesses some higher
rationalityinformed by intelligenceand insight remains pure
ideology. It would be possible to writevolumes illustratingcommand decisions similar to those I have only brieflycited here.
While one can demonstratethat the bureaucraticpoliticalmechanisms of modern American capitalism expand in absolute
terms,the tasks theymust performand the problems theymust
solve increase much more rapidly than the solutions they can
conjure up on the basis of intelligence.This growth and immenselyincreased complexitypresent new difficultiesand challenges that the regulatory and intelligence organisms cannot
adequately respond to, resultingin a decline rather than an in38 VillageVoice,February 16, 1976, p. 77. See also House Select Committeeon Intelligence, Hearings,pp. 686-89, 1652-55, 1659.
39 House Select Committeeon Intelligence,Hearings,pp. 693, 1656-57; Frank Snepp,
DecentInterval(New York, 1977), passim.The constraintson the use of social science,
particularlyin Vietnam, are autobiographicallyassessed in Seymour J. Deitchman,
The Best-laidSchemes:A Tale of Social Researchand Bureaucracy(Cambridge, 1976),
StatesespeciallyChaps. 1&-20. See also, in thisconnection,Richard K. Betts,Soldiers,
men,and Cold War Crues (Cambridge, 1977), Chap, 10.

153
as guidesin theexerciseof
and intelligence
creasein integration
not
The
new
are
peripheralbutcentralto capiproblems
power.
to resolvethemhaveeventually
talism,and pastefforts
produced
theirown negations,even thoughtheymayhave appeared to be
and capacityfor
in theshortrun.The self-confidence
successful
and capitalist
critical
theorists
which
pessimistic
mastery
apologistsalikeattributeto it are merelyillusionand falseconsciousness.
of whomMarcuseis the
In theviewof theradicalpessimists,
or
first
the
means
no
bestknownbut by
last,the societyis condemnedwhileitspermanenceis asserted.They do notconsider
the mannerin whichintelligence
operatesbut look onlyat the
- of whichtechnically
finalsocial outcomeof integration
preconis implicitly
information
neutral
and socially
cise,efficient,
sideredthe firststep.Americanpowerdisarmssuchcritics,who
structural
less about capitalism's
knowinfinitely
operationsthan
to
them
about its banefuleffects,causing
ignorethe historical
processes,bothin the U.S. and in the world,whichare shaped
morebyAmerica'sfailuresthanbyitssuccesses.To comprehend
thebasis of thesefailuresrequiresa conceptionof the limitsof
and, of course,the largerand more complexprobintegration
of U.S. capitalism.
lem of the structure
of the state'sintelligencemechanismsis
The functioning
and bytheinherenvironment
a
constrained
by largerstructural
to base action
effort
entire
the
foredooms
which
entirrationality
on informedinsight.Even whenthe insightis exact,and ignorance is not greaterthan knowledge,politicaland social limits
on theapplicationof "rationality"
oftenplace decisiveconstraints
For
the
in thehistorical
problemsare notsimplymatters
process.
of a generalconsensus,buttouchupon questionsof thestruggle
betweenelitesin the divisionof materialgains or controlof
policyand power.The politicalimperativesof powerinterests
basicallydefinethe natureof "relevant"truthin Americansociof integraincludetheutilization
ety.These politicalimperatives
tivebureaucraciesforpoliticalpatronage,but muchelse as well.
and organizational
Prevalentintegrationist
theories,of boththe
cannot
and radicalvarieties,
conservative
anticipatethe breakdownsand challengessuch limitsimpose.
Neitherdo the purveyorsof conventionalwisdom'sintelligence admitthattheiranalysesare both finiteand fragile,for

154
SCIENCE
AND
SOCIETY
and social science

the mystiqueof prognostication,infallibility,
well
as the success, of
as
to
the
is
essential
self-confidence,
magic
those who pay them.
Bourgeois intelligence's objectivism becomes ideologically
reinforcingbecause those parts of it that do not reconfirmthe
power structure'sinterestsand predetermined policies are discarded. It generally,though not always,bears sufficientdistance
useless. Its termsof reference
fromrealityto become effectively
are defined by its function- whichis to say, its sponsor. Policyoriented research systems,including those in the universities,
cannot in the social sciences permitmore than tokeniconoclasm,
not only fromthose on the Left but also fromthose in theirown
ranks who confusedlythinkthattruthmust prevail even when it
is not utilitarian.This exclusionarybias produces one paradoxical weakness to add to those already confrontingcontemporary
capitalism- the chronic and repeated inabilityto recognize the
system's weaknesses and challenges before their emergence.
Bourgeois intelligence,in a word,is mediocre or worse. Useful as
legitimationfor decisions arrived at for reasons of interestor
habit, such intelligenceat the same time deprives capitalismof
insight.The technicaland ideological cadres that purveyintelligence, ratherthan becoming a source of rationalityand integration,burden the already insupportablecomplexityof the system
withworthlessdata. These personnel transformthemselvesinto
peddlers of just one more useless economic activity,and they
never transcendthe policylimitsthatthe non-technocraticruling
elitesimpose. They generallyaccept the constraintsof the system
for after all it pays their salaries. If intelligence
quite willingly
practitioners claim the nearly magical power which the
Weberian-influencedintegrationisttheoristsattributeto them,
theirpast capacityto controleventsshows thatwe have no cause
to believe them.
YorkUniversity
Toronto,Canada


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