RULING CLASS CLOWNS / PROJECT SYNDICATE

Ruling Class Clowns

By the end of the 19th-century in the US, it was clear to all interested observers that market power did not automatically or even easily translate into political capital and cultural authority. That is why, unlike the oligarchs of our time, certain Gilded Age capitalists learned how to become a ruling class.

James Livingston

GAUCÍN—“Oligarchy” is by now a familiar name for the billionaire brethren who freely acknowledge the difference, indeed the conflict, between their interests and the general welfare, at least to the extent that the general welfare is assumed to derive somehow from political equality, itself a dividend of democracy. 

They and their accomplices drop any pretense to leadership in society or culture, notwithstanding their purchase of votes, gowns, galas, and news outlets. 

A century from now, most people will remember them as sociopaths whose claims on the future were both ridiculous and ephemeral—childish, in a word—because they wanted power, but not responsibility.

Our would-be overlords are quite candid in explaining how and why their great wealth entitles them to a higher standing and a louder political voice than citizens with less spending power. 

Having decided that political equality threatens their liberty, they are also plain-spoken in claiming that the consent of the governed—the principle of political obligation specific to modern forms of government—is an impediment to progress as they understand it. 

And if we are to take them at their word, progress for them means the socioeconomic and technological development permitted and required by “free markets.”

These oligarchs are often compared to the United States’ robber barons of the late-19th-century Gilded Age, who supposedly swashbuckled their way to vast fortunes by bribing public officials and exploiting workers, widows, and orphans. 

By inventing large corporations, the robber barons replaced healthy inter-firm competition with rent-seeking monopolies—“the trusts,” in the contemporary vernacular—like Standard Oil, American Telephone and Telegraph, General Electric, or US Steel.

But the comparison with the Gilded Age is unfortunate, even misleading, because the late-19th century was not, in fact, a moment of increasing inequality. 

Nor was it a moment of triumph for “big business”—or, to put it in the broader terms on offer from the late historian Howard Zinn, a moment of “the people’s” inevitable defeat at the hands of the powers that be. 

To be sure, the Gilded Age was a period of epic class conflict which sometimes devolved into violent armed struggle between capital and labor; but more often than not, from around 1880–1900, when only 10% of the labor force was represented by trade unions, workers emerged victorious in these confrontations. 

In fact, by every relevant measure, workers were winning the class struggle of this formative moment, at least until the very late 1890s.

According to the official reports of the US Commissioner of Labor, for example, labor prevailed in a majority of the strikes and lockouts between 1881 and 1905. 

Meanwhile, skilled industrial workers retained their control of machine production despite the best efforts of management to replace them. 

As a result, a remarkable shift in income shares from capital to labor took place—non-agricultural real wages increased as profits declined—over the furious objections of management. 

This shift of income shares is the exact opposite of what has taken place in the US and elsewhere in the age of neoliberalism (1973-present.)

All for One

But perhaps the most important difference between that period and ours is the outlook, the emergent world view, of the Gilded Age capitalists. 

Unlike today’s tech bros, they recognized that their profits were not self-evidently justifiable as the product of hard work, shrewd calculation, risk-taking, or superior intelligence. 

They understood, accordingly, that the question was not whether but how to reconstruct the market, which meant, they believed, how to regulate markets so that they would serve the general welfare. 

They had stopped assuming that their freedom was reducible to the natural right of property; as a result, the manipulation of market forces—whether by state regulation or workers’ organizations—no longer appeared to them as an infringement on liberty of contract, thus as a mortal threat to freedom as such.

This emergent worldview didn’t amount to a new enlightened altruism, or “compassionate conservatism.” 

By the mid-1890s, when farmers and workers seemed to have agreed that the capitalists in charge of “the trusts” were parasitic growths on the body politic, they could reach no other verdict. 

Enough capitalists understood that unless they conceded, then acted on, the insight animating the revolt of the masses—that the surpluses generated by modern industry should be shared by all social strata—they would forfeit any claim to legitimacy, and thus leadership, on economic, social, or political matters.

Again, the new dispensation was not altruism enabled by moral epiphanies or new philanthropic urges: it was a realistic assessment of what made for social mobility, and thus social stability, political consensus, and economic predictability, each a crucial component of rational market behavior in the long run. 

It was also a realistic assessment of who would win the class struggle in the short run. 

By the end of the 19th century, it was clear to all interested observers that market power did not automatically or even easily translate into political capital and cultural authority.

Unlike the oligarchs of our time, then, certain Gilded Age capitalists learned to become a ruling class. 

To borrow the lexicon of E. Digby Baltzell, they learned how to extrude from the ranks of both big and small business a trustworthy “goal-integrating elite” that in turn recruited intellectuals, journalists, academics, farmers, and trade unionists to its cause, thereby becoming able to mediate between social classes.

Their cause was “reform” in the broadest sense, because it began but could not end with the reconstruction of markets and the reorganization of the labor process, both made possible by the invention of new corporate legal forms. 

The cause of reform in this sense was social, ideological, political, even cultural, not merely economic, and was understood that way by all parties to the cross-class coalition responsible for the achievements of the Progressive Era during the first two decades of the 20th century. 

It entailed a renegotiation of class relations, a redefinition of work, a reorientation of liberalism, a realignment of parties, and a revision of gender roles (to begin with, a shift from the woman movement to feminism as the name of observable or desirable changes in women’s social roles and standing).

The administrative state that was the legacy of this era (now sentenced to death by both the enemies of expertise and the friends of “free markets”) was predicated on the shared assumption that markets were not self-regulating and that, if left unattended, market forces would destroy a society held together by commodity production and exchange. 

These unruly forces would be regulated, or managed, therefore, in the name of the general welfare.

The new institutions that served this purpose included the Federal Reserve System, the Federal Trade Commission, and the Food and Drug Administration. 

They were not subject to “elite capture” because they were, in part, the handiwork of a new goal-integrating elite that had a vested interest in the general welfare.

Democratic Riches

The ruling class that came of age in the Progressive Era was up against the robber barons of the Gilded Age. 

Like the oligarchs of our time, the robber barons understood market society as the site of plunder. 

The enlargement of their fortunes—and with it, their freedom—would, they believed, require the extraction of wealth from the majority, globally as well as locally, and would almost certainly mean the demise of democracy as the servant of the general welfare. 

Their reincarnation appears in the Patagonia-vested form of Silicon Valley oracles like Marc Andreessen, the billionaire venture capitalist who plagiarizes early 20th-century fascist manifestos because, as he gladly explains, he prefers not to inspect the contents of his own cranium.

The capitalists who understood that the promise of American life was not written on the bottom line knew what they were up against in the Gilded Age. 

Henry Lee Higginson, the Civil War veteran, investment banker, and tireless philanthropist, summarized that knowledge in 1915: “From 1868 until 1898 there were these constant frights and uncertainties, which gave gamblers a great chance if they could guess right, and which kept decent men in doubt and often in agony. 

They could not do business in a proper way, and I look back on all those years with horror.”

The evident yet unacknowledged truth residing in the idea that we inhabit a new Gilded Age is not that the capitalists have again convened an all-powerful oligarchy bent on plunder, or that we, the people, are bound to lose to this malevolent cabal, in accordance with the iron historical logic espoused by leftist stalwarts like Zinn and the economist Thomas Piketty. 

It is that the robber barons of our time—“broligarchs” like Peter Thiel, media moguls like David Ellison, useful idiots like Curtis Yarvin, or omnicompetent buffoons like Elon Musk—now face the kind of anger, derision, and contempt that discredited the oligarchs of the Gilded Age and permitted the achievements of the Progressive Era.

The polling around the issue of AI is only the latest indication of contemporary revulsion against what today’s robber barons say they want—more money, more power, more respect, and, ultimately, enough resources to secede from planet Earth. 

In fact, every poll taken since 2016, when US Senator Bernie Sanders entered the presidential primary, indicates that a cross-class, multiracial majority of Americans favors what Sanders himself calls democratic socialism. 

That majority is still too centrifugal to recognize itself as containing the elements of a new progressive coalition, but it is the unmistakable reality of our time.

This state of public opinion and electoral possibility would suggest the need for a new goal-integrating elite representing this variegated majority. 

It would proceed on assumptions similar to those that grounded its predecessor from the Progressive Era: that the general welfare is best served by a more generous democracy; that the conflict between oligarchs’ interests and the requirements of the general welfare is therefore irrepressible; that markets are not economic externalities to which we must adjust our lives, but are rather cultural constructs subject to our social goals; that the question before us is not whether but how to reconstruct markets so that they allocate goods efficiently and equitably; and that the surpluses generated by such markets should be shared by all social strata.

At a time of unprecedented wealth concentration—when a single person’s assets equal 1% of world GDP—providing for the general welfare becomes impossible. 

But the growing electoral salience of “affordability” reflects a widely shared concern that cannot be addressed without enlarging the scope of democracy. 

For that to happen, the new oligarchs will have to go the way of the robber barons—quietly or not.

James Livingston, Professor Emeritus of History at Rutgers University, is the author of six books, including No More Work: Why Full Employment Is a Bad Idea (The University of North Carolina Press, 2016), and the forthcoming The Intellectual Earthquake: How Pragmatism Changed the World, 1898-2008 (University of Chicago Press).