Ever wondered how some of the world’s most powerful leaders subverted parliaments and over-powered Politburos in their maniacal pursuit of power? Jeff Schubert compares the contemporary CEO to their historical counterparts.
completing economics. However, there were few jobs for historians so he went on to work in
the Commonwealth Treasury and the RBA before spending a decade in the financial markets
working for HSBC as an economist. His interest in history led him to try his luck in business
in the historical transformation of Russia in the early 1990s. In the day he now works in a
normal job, but in the night he is an occassional commentator on foreign affairs and trying to
complete a book on the political dictator as CEO.

GRADUATE MANAGEMENT ASSOCIATION OF AUSTRALIA
Seminar on Wednesday 27 November 2002, Sydney

The Subversion of Boards by Management: Fact or Fiction

“The successfully subversive political CEO has superior will power, the ability to strike ruthlessly when the time is right and the support of a cabal of lieutenants.”

by Jeff Schubert

Introduction

Political dictators, as “Chief Executive Officers”, attained their positions by subversion of a group of people who were at some stage in a position to restrain or exercise control over them – ie a “Board’.

The exact nature of the “Board” they subverted varies. Adolf Hitler, Napoleon Bonaparte and Ataturk effectively subverted parliaments, while Josef Stalin and Mao Zedong subverted others in a much smaller ruling group. Suharto subverted a combination of these.

The subversion took only a few months in the case of Hitler and Napoleon, but closer to a decade in the case of Stalin and Mao. Their subversion was successful because they had superior will power, ruthlessly took advantage of opportunities, and had the support of loyal lieutenants.

I am not going to attempt to describe all their subversive steps. Rather, I will describe some particular steps with the aim of giving you a flavour of how they operated and became so powerful.

I will then give an answer to the question: “fact or fiction”.

When and What They Subverted

In 1922 Vladimir Lenin (chairman of the “Board”) put Josef Stalin in charge of the secretariat of the Soviet Communist Party. No-one else in the 7 member Politburo (“Board”) wanted the (“CEO”) job as it involved large amounts of organisational and committee work. Soon after, Lenin had one of several strokes and by early 1924 was dead. Before his death, Lenin seems to have tried to promote a collective leadership, or at least that of Leon Trotsky as an alternative to Stalin whom he wrote has “concentrated limitless power in his hands”. In fact, this was not yet true. As General Secretary of the Party, Stalin was responsible for organising thousands of official appointments but he did not yet control the Politburo. It was this “Board” which Stalin took another decade to fully subvert.

Adolf Hitler did in a few months in an open arena what Stalin had taken years to do in a secret circle. The Nazi Party secured 33% of the vote in the November 1932 Reichstag election. A somewhat reluctant President Hindenberg (chairman of the “Board”) agreed to appoint Hitler Chancellor (“CEO”) of Germany because he could muster a parliamentary (“Board”) majority with the help of other political parties — and because he was strongly opposed to the feared German communists. Yearning for political and social stability after years of turmoil, the electorate gave the Nazis 44% of the vote in the March 1933 election. The Reichstag then met and effectively conceded all its power to Hitler. In June, 1933 all political parties except the Nazi Party were banned.

Major-general Suharto took his first step to power on 30 September, 1965 after a group of middle-ranking armed forces officers killed most of Indonesia’s senior generals. President Sukarno (chairman of the “Board”) seemed unable or unwilling to act against the perpetrators while Suharto was both willing and able – effectively appointing himself acting “CEO” of Indonesia. Within two and a half years, Suharto had forced the resignation of Sukarno, taken for himself the presidency, and subverted the parliament.

General Napoleon Bonaparte was recruited by a group of conspirators to provide muscle in their ousting of the French Directory in November, 1899. Napoleon was not expected to play the leading role in the new government — the lead conspirator, Sieyes, having earlier said: “I’m looking for a sword”. However, Napoleon almost immediately became First Consul (“CEO”) of France. Soon he had subverted both the new parliament (the “Board”) and Sieyes who was its most prominent member (the “Chairman”) – and was on the road to becoming Emperor.

General Mustafa (later known as Ataturk) set up a nationalist revolutionary government in the Turkish hinterland (in what is now Ankara) in 1918. He wanted an independent Turkey and abolition of the Ottoman Sultan (and Caliphate) in Constantinople. To give the nationalist movement credibility and appeal, he helped organise an elected so-called National Assembly (the “Board”) which in turn appointed him president (“CEO”). In 1922 the National Assembly granted him dictatorial power as Commander-in-Chief. By 1925 there was no remaining opposition to Ataturk.

On paper at least, Mao Zedong had to subvert himself. In 1931, after disagreement over the military strategy of the revolutionary Chinese Communist Party, Mao was effectively kicked upstairs to the nominal position of Chairman of the Republic – but ranked last in the 11 man Politburo (“Board”). However, the Party was having trouble gaining control of China and military success was at a premium. So when the military campaign suffered reverses that suggested that Mao’s views had been right after all, he was recalled in 1935 – although not officially given the “CEO” position. Subversion of the “Board” was then undertaken over an eight-year period. In 1943, Mao was formally named Chairman of the Politburo.

Will-Power

Superior will-power was crucial to subversion. The political dictator “CEO” explicitly believed in the efficacy of superior will-power, and some often talked about it.

The most definitive statement of this is by Hitler at his trial following the unsuccessful Putsch of 1923: “The man who is born to be a dictator is not compelled; he wills it.”

Hitler left the responsibility for managing the war economy to Hermann Goring and kept saying that any problems could be solved by “will”. He even regarded Goring’s ignorance of economics and lack of industrial experience as assets in creating an alternative economy.

Mao saw will-power as the basis of victory in any contest. In one of his military texts, Mao wrote: “The so-called theory that ‘weapons decide everything’ (is) …one-sided …. Weapons are an important factor in war, but not the decisive factor; it is people, not things, that are decisive. The contest of strength is not only a contest of military and economic power, but a contest of human will …..”.

The political dictator single-mindedly believed in and wanted something – and would not give up until he got it.

In Stalin’s case, it was power – not the money or the glory that might go with it, but simply power. Napoleon also wanted power, but money and glory were equally as attractive. The main motivation for the other four was essentially a vision – although all also had a great liking for power. For Hitler the vision was a triumphant German people, for Suharto it was social stability, for Ataturk it was a modern European orientated Turkey, and for Mao it seemed to be a new type of Chinese person.

How They Subverted

In none of the above cases was subversion of the “Board” inevitable. What ultimately brought it about was a combination of a very strong willed “CEO” and a “Board” which wilted when the going got tough.

In each case, the “Boards” under estimated the will-power of the “CEO”. When they did cede power to the CEO, they often did so after convincing themselves that, as the “Board’, they still retained ultimate control. The self-deception by the “Boards” was often facilitated by a “CEO” who went out of his way to conceal the sheer audacity of his ambitions.

President Hindenberg and some others on the “Board” were not sure that appointing Hitler as “CEO” was a good idea. However, the conservative von Papen who urged Hiter’s appointment as Chancellor was sure. “No danger at all”, he said, “We’ve hired him for our act”.

Despite von Papen’s confidence, subversion was swift. In February 1933 a lone ex-communist set fire to the Reichstag building. Neverthless, Hitler proclaimed a communist conspiracy, ordered the immediate execution of communist parliamentarians, and issued an emergency decree (signed by Hindenburg) that suspended those parts of the constitution dealing with personal freedoms. The decree was seen by non-Nazi members of the government and much of the population as temporary and, indeed, necessary. However, it became the legal basis for the Nazi police state.

After the French coup of November, 1899, Sieyes (who had hired Napoleon as “a sword”) proposed a new constitution which included an appointed Senate which in turn appointed individuals to a parliament from a list put up by electors. Sieyes wanted the Senate to be a “third force” to arbitrate between a strengthened executive (“CEO”) and a weakened legislature. In fact, the Senate became the obvious “Board” target for subversion. Napoleon progressively stacked it with his supporters, while Sieyes (who had himself appointed one of the first and most influential senators) was neutered by his compromising acceptance of a large estate from a grateful country (Napoleon, being interested in wealth, knew how to compromise an opponent).

In 1800, first consul Napoleon survived an assassination attempt. Despite the evidence that “royalists” were responsible, Napoleon insisted that the “anarchists” were at fault and the event became the pretext for settling old accounts and boosting his power as “CEO”. As Napoleon himself told close associates, the event “merely gives us an opportunity for the action we propose to take. It is our duty to profit from the present feeling of indignation”. The Senate, and much of the population, grateful that Napoleon was still alive and fearful of what might happen to France without the “CEO”, then acquiesced as he assumed dictatorial powers.

In 1921, Greek army advances toward Ankara led the National Assembly (“Board”) to ask Ataturk to take direct control of the nationalist army. Ataturk feigned reluctance. A desperate Assembly agreed to give him dictatorial powers (“CEO”) for three months. Later when the emergency had passed, Ataturk fronted up to the National Assembly in his Field Marshal’s uniform. He protested that dictatorial powers should only be granted when a person was above suspicion. He told the Assembly that, in any case, he did not want such powers as there was no need for him to use them. Put this way, it seemed perhaps a small gesture for the Assembly to effectively say “take them” – and neglect to put a time limit on them.

Before September 1965, Suharto had made his mark as a professional soldier rather than as an ambitious political operator. This probably both spared him as a target for the 30 September killers and helped smooth the way for his future accretion of power. While acting “CEO”, Suharto took care to seek advice from a broad range of colleagues and had organised a consultative/discussion group (called “Team Politik”) to give him advice and them a sense of involvement.

But when Sukarno tried to re-assert his authority as President (chairman of the “Board”) in February, 1966, it seemed a natural thing for Suharto to push back. A fearful Sukarno handed over even more power to Suharto in the 11 March Letter of Authority (Supersemar) – and opened the way for even greater “CEO” subversion down the track

In 1923, aware of concerns about his accumulation of power, Stalin offered other members of the Politburo the opportunity to see the “Stalin machine” by taking seats on the Orgburo and even offered to resign as General Secretary. This offer seemed to mollify them as they attended few Orgburo meetings, while his resignation offer was rejected for fear that Trotsky might take the “CEO” job. Indeed, Stalin initially went out of his way to present himself as consensus orientated and moderate. While Trotsky’s bitter enemies in the Politburo virtually ignored him at the beginning of meetings, Stalin would go out of his way to shake Trotsky’s hand and greet him. One of Stalin’s colleague’s wrote about his methods at this time: “He had the good sense never to say anything before everyone else had his argument fully developed. He would sit there watching the way the discussion was going. When everyone had spoken, he would say: ‘Well, comrades, I think the solution to this problem is such and such’ – and he would then repeat the conclusion towards which the majority had been drifting”.

Almost a decade later in 1934, Sergei Kirov – a possible Stalin rival — was shot by a Party member with a personal grudge. While it is unclear if Stalin had advance knowledge of the planned murder, it is clear that it gave him an opportunity to finalise his long subversion. Without consulting the Politburo (“Board”), Stalin issued an emergency decree sanctioning immediate death sentences for those involved in what was now said to be a wide-spread conspiracy. There were few objections from Politburo members as innocents were killed. Only later did they fully understand Stalin’s intentions as he moved on to his “legalised” reign of terror in which most of them perished.

In 1938, Mao finally got day-to-day control of management of the Party secretariat (without the formal “CEO” type title) he manoeuvred and waited. He said: “Mellons ripen. Don’t pick them off when they are not yet ripe. When they are ready, they will drop. In struggle, one musn’t be too rigid.”. When the mellons fell, he crushed them.

Fear was the over-riding reason for “Boards” to wilt and cede power to “CEOs”.

Often it was fear of a force which was external to the “Board” but within the domain that the “Board’ controlled. In the cases of Hitler and Suharto, it was the communists who were supposedly causing social disorder in Germany and Indonesia; while in the case of Napoleon it was disorder caused by French ‘anarchists’ and royalists.

In the cases of Mao and Ataturk, however, it was fear of a force external to that of the domain controlled by the “Board” – ie the non-communist Chinese forces of Chiang Kai-shek, and the foreign Greeks.

Only in the case of Stalin, did the “Board” really lack a particular external force to express immediate fear about – although the USSR had few friends in the world. In this case, the Politburo never ceded power to Stalin – rather, factions of the “Board” ceded power at various times to help fight other factions — only to find that at the conclusion Stalin had kept all the power.

So while “CEO” subversion becomes easier if the “CEO” and the to be subverted “Board” have an immediate common enemy, it is not always necessary.

Cabal of Lieutenants

Political dictators do not subvert alone. There is plenty of work for a cabal of lieutenants.

While they are resourceful and tough, the most important lieutenants are also committed to the political dictator as “CEO” rather than wanting the job for themselves. While they have some fear of the political dictator, they also respect him and believe that he is their best hope of realising their own goals – which, like his, may be power, wealth or the realisation of a vision.

This process of natural selection is reinforced by the strong tendency of the political dictator to brook no close rivals for the “CEO” position. Some are jailed or killed, some are given nice jobs in foreign legations, and some are packed-off to retirement.

The lieutenants provide advice, and watch the back of the subverting “CEO”, undertake supportive actions, and provide administrative ballast when it is needed.

Due to a quirk of the unstable German politics of the time, Hitler’s appointment as Chancellor was accompanied by Goring’s appointment as Prussian Minister of the Interior. This gave the Nazi’s control of the biggest police force in Germany, which they used to both eliminate opponents and persuade others to support the “legal” subversion of the “Board”.

After the overthrow of the French Directory, the new three consuls quickly recruited Jean-Jacques-Regis Cambaceres, who had been the Directory’s Minister of Justice. Cambaceres (who later became arch-chancellor) provided the legal arguments for much of Napoleon’s subsequent subversive activities.

Zhou Enlai, who at an early stage had been a competitor of and superior to Mao in the Party hierarchy, became a Mao supporter and then a lieutenant. Mao was actually recalled to the effective “CEO” position in 1935 when it was clear that he had the right military views — with the formal title of Zhou’s military adviser.

Stalin’s long standing control of thousands of Party appointments since 1922 guaranteed a massive crop of supporters in quick time. They dominated the Thirteenth Party Congress in 1924, and in 1926 Stalin used his numbers in the more senior Central Committee to increase the size of the Politburo from 7 to 9. Not surprisingly, new “Board” members were Stalin lieutenants, including (the famous self-styled “hammer”) Molotov.

In Conclusion

History tells us that the subversion of “Boards” by management is not “fiction” – but “fact”.
A “Board’ in the process of being subverted can easily be in denial. Some parts of it will worry a little, but the “Board” will tell itself that it is still in ultimate control, or that the subversion is temporary, and that things will work out OK in the end.

Once a “Board’ is subverted, it will know it – but may not utter a sound because it knows that its survival now depends on the subverting “CEO”.

The subverting “CEO” will not tell either. A common theme of all political dictators is the pretence of legality – the insistence that they are really doing the bidding of the “Board”. In conclusion, “Board” subversion may be “fiction” in public but “fact” in private.

Peter Fray

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