The New Statesman Essay 1 - A society of broken eggs

Richard Sennett on a growing gulf between the metropolitan elite and the rest

A few years ago, I was doing fieldwork in Silicon Valley, California, when the company I was studying suddenly announced a merger with a competitor. As the company's public address system triumphantly blared out the financial details, the engineers in my office got angry; no one had consulted them, the merger made no sense on the ground, they feared for their jobs. When I asked them what they were going to do about it, the mood suddenly shifted; the angriest person in the room looked down and muttered: "Nothing, I suppose."

That reply - "nothing, I suppose" - sums up not just a response to the immense recent changes in corporate life, but also an attitude among ordinary citizens towards political institutions and politicians, the media and civil society.

Resignation is two-sided. In part, it expresses anger and antipathy to the powers who control institutions. In the course of research into the phenomenon, I and my colleagues have found that, in the health service, doctors' most frequent response to the policy plans of their bosses is "they just don't get it". The other side of institutional resignation is apathy; you can't do anything about it, and so you just don't care. This is the kind of dis-involvement that can produce low voter turnout.

The boom of the past decade made tangible a kind of institutional change much longer in the making, one that will persist even as the boom ends. This change is an effort to replace mastodons with cats: to transform hierarchical bureaucratic pyramids into more flexible organisations, able to move easily and to adapt quickly.

The change began in the private economy as share-buyers, awash with capital and seeking short-term profits, looked to invest in businesses that were agile enough to respond to global changes in the demand for goods and services. Businesses had to respond in two ways. First, they had to become flatter, which meant reducing the links in the bureaucratic chain of command. For instance, IBM, a company that nearly went under in the new economy, had 26 links (that is, 26 bureaucratic layers) in their chain of command during the 1980s; after 1993, when IBM began to save itself, it reduced the links to just nine.

Second, companies had to become shorter, in their time frames. They had to focus on short-term projects and products in order to swim in the shifting global current. They also had to transform the stability of the organisation itself: long-long employment went to the wall, seniority ceased to be a source of privilege, companies outsourced as much as possible to reduce their permanent staff.

During the boom, the companies that most visibly operated flat and short were financial service and hi-tech firms, but the changes cut much deeper. Our research suggests that the bigger a firm, or the more involved it was in the global economy - whatever its product - the more the company came under pressure to organise itself in these ways.

Flat and short came to serve as guides for remaking the public sector as well. It is often said that Margaret Thatcher forced public services to behave like businesses, but these are changes that really became apparent as the first Blair government tried to reform health, education and transport. In the United States, too, Bill Clinton did to public services what Ronald Reagan never dared do.

Flat and short have a paradoxical effect: they energise people at the top, and depress people lower down. "Short" wreaks havoc on institutional loyalty. As in a marriage, you say: if you are not going to commit to me through thick and thin, why should I commit to you? The attack on seniority rooted out time-servers, but at the price of diminishing the loyalty of others; sheer service to the institution lost its value. So disengagement began to appear in the ranks of people who, in the old mastodon organisations, found a stable identity through committing to the places they worked in.

"Flat" also proved a disconnecting force, though this may seem surprising. We might think that a business or public service with few bureaucratic layers is democratic, or at least invites participation. But "flat" proved otherwise. Thanks to technology, a relatively small group of managers can monitor the minute-by-minute operations of a large organisation.

In the wake of the Barings disaster, I visited the chief executive officer of a German bank who proudly showed me the checks he had put in place to control every trade of his far-flung empire. Just-in-time inventories or electronically clocking a salesman's time on the phone have become ways in which the top of an organisation can regulate the most minute activities on the ground. Any doctor or teacher in Britain will complain of the same daily interference. The "flat" organisation is thus one in which people on the ground can lose self-control, becoming more nakedly exposed to electronic regulation from the top.

So short and flat organisations can breed institutional resignation. On the antipathy side, there's anger that the Whitehall mandarin or the chief executive in Madison Avenue regulates and interferes with work that is becoming ever more pressured, work that jerks and shifts erratically from month to month. On the apathy side, there's the feeling that people in the guts of an organisation can't do much about this; it is better to keep your head down and not get involved.

This great social shift has had little reflection in public discourse. Journalistic reportage on economics in the boom decade seemed to belong more to the history of publicity than research on lived reality. Most workers have not seen their experiences analysed in the press. In 1996, a friend of mine told the editorial board of a major New York newspaper about the 30 million US workers who had been downsized in the previous decade. They listened to him with amazement, as though he were bringing news from an alien planet.

And in the great cities, such as New York and London, the reality is little understood. Oddly, in the global era, geography counts for more than class. A lawyer practising at London's Inns of Court has access to a very different set of informal contacts, services and chances than a lawyer in Bath, so much so that analysts of class now think that living in London is a more important determinant of where you stand in society than it was 40 years ago. American and Continental analysts have come to a similar conclusion.

The US politician Robert Reich refers to the symbol creators - the metropolitan, educated elite who create the mental tools and originate the products that others (the symbol consumers) use. If you think about the computer you will know exactly what he means: it is the great material revolution of our times but only a small elite understands it enough to control it.

This divide also marks politics. When people claim that politicians are "out of touch", the statement can have a peculiarly modern shading. It may be quite easy for a rich man to understand straightforward material poverty, as Disraeli certainly did. But it is harder for someone who spends each day evaluating and massaging events to connect to people who are buffeted by a flexible, short-term society, whose anchors for interpreting everyday life have been cut.

This is not to deny the present-day material reality. In the past decade, the wealth gap between the middle and top of society has widened. In 1980, the top salaries in British corporations were about 20 times those of people in the middle; today, they are about 180 times. The disparity in graduate incomes between those who went to elite universities and those who went to former polytechnics has widened. As a society, we are making real advances in dealing with poverty, but we are losing the struggle to close the gap between elite and mass. The two sides do not readily understand one another. The business manager who appeals to employees to act with more entrepreneurial vigour or to take risks often gets the simple response: "Does this mean I'm fired?" Politicians are seen to be on the side of the elite, at those very moments when they talk of social regeneration or reform; their language supposes a confidence ordinary people often do not feel.

There is a whole list of issues that people frequently talk to us about as interviewers but which they seldom hear politicians discuss. When do I have too much credit-card debt? How should I cope with increased work pressures which threaten my marriage? Is there any future in staying here in a small town, or will my children inevitably gravitate to London? You may think these are not fit subjects for politics. But turn that around. These questions preoccupy ordinary people. If they don't preoccupy politicians, then politicians have lost touch with life on the ground.

It is difficult to repair broken eggs. I have recently concluded a study of an Italian firm that was merged, re-engineered and downsized five years ago, all in a matter of four months; the result of breaking this corporate egg was a disastrous fall in profits. Antipathy was expressed by the workers who quit before they could be fired; apathy was expressed by lower rates of productivity among those who remained. With great difficulty, the company has tried to reconstruct its corporate shell, but it has lost much of its institutional memory, and its legitimacy in the eyes of the very workers for whom it needs to make that extra effort.

This is the same story that Britain knows in its public services, where some examples, such as the railways or the NHS, are notorious. Others, such as the accelerating pace of the scientific brain drain as British universities are "reformed" along business lines, are less well known. The broken egg is a good symbol for what has happened to the public realm in both Britain and the US in the past decade. And the more politicians pursue "reform" policies, such as public-private partnerships, which weaken the social fabric of institutions, the more broken eggs we will have to repair.

The limits of quick-fix policies are even more apparent in the realm of class divisions. The current recession is showing one similarity to the 1930s: the middle and lower-middle of society are losing resources faster than the top. Moreover, the doors are closing to newcomers in those kinds of work that mark the new elite: information technology, stock and bond dealing, the London design industries, and so on. Once any society begins to stratify along new lines there is no quick-fix way to reverse the process, because those who have got in are unlikely to give up what they have gained. The social fabric becomes harder and harder to restore.

Richard Sennett is professor of sociology at the London School of Economics. This essay is based on a talk to a BBC conference