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The first class war of the modern era had its origins in the growth of industrial capitalism in the nineteenth and twentieth centuries.
The great merger movement of 1895–1904 in the US created huge firms in many industries, including some that still exist, like DuPont, Nabisco, International Harvester, and Otis Elevator. By 1900, more than four hundred US manufacturing establishments—half of them in the iron or steel and textile industries—employed more than a thousand workers each.2
Unable personally to supervise huge concerns and enormous workforces, capitalists were forced to rely on a new kind of professional, the managers, who increasingly were trained in scientific management at newly founded business schools.
The mechanization of agriculture destroyed the livelihoods and communities of tenants and family farmers. Around smoke-spewing factories, shantytowns of workers grew, spawning crises of sanitation, health, and crime. Migrations of rural natives and foreign immigrants to factory jobs in industrial towns produced ethnic clashes and political backlashes.
IN THE NINETEENTH and early twentieth centuries, five major schools of thought debated the future of industrial society: liberalism, producerism, socialism, corporatism, and pluralism. Economic liberalism has come in several varieties, including the eclectic and flexible “classical liberalism” of Adam Smith, David Ricardo, and J. S. Mill and a more rigidly antistatist ideology, associated with Friedrich Hayek and Ludwig von Mises and Milton Friedman and already called “neoliberalism” by the 1920s. In all its forms, economic liberalism identifies human freedom with commercial transactions in
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Capitalist and managerial elites in the West have often promoted versions of economic liberalism, from the classical liberalism of the early nineteenth century to the globalist neoliberalism of today.
Producerism is the belief that the economy should be structured by the state to maximize the numbers of self-employed family farmers, artisans, and small shopkeepers in society. The moral ideal of this school is the self-sufficient citizen of a republic with a small-producer majority whose economic independence means that they cannot be intimidated or blackmailed by wealthy elites. In the form of Jeffersonian agrarianism, producerism has a rich history in the United States.
Socialists of various kinds—utopian, Christian, and Marxist—denounced capitalism and private property and proposed public ownership of industry and infrastructure.
A fourth philosophy, opposed to free market liberalism and state socialism alike, envisioned a harmonious society of state-supervised but largely self-governing “corporations,” by which was meant entire economic sectors, not individual firms, rather like medieval guilds.
The view of society as a community of self-organized and self-governing communities, under the supervision of a democratic government, is best described as “pluralism,” the term used by the English pluralists of the early twentieth century, like Neville Figgis, F. W. Maitland, G. D. H. Cole, and Harold Laski, and by their late-twentieth-century heirs, including Paul Hirst and David Marquand.9
The members of the national efficiency school included Fabian socialists like Sidney and Beatrice Webb and conservative imperialists like the editor Leopold Maxse, along with the novelist H. G. Wells. Despite their differences on many issues, all believed that social reform along with rearmament was necessary to maintain Britain’s role in the world, which was threatened by the rise of Imperial Germany.10 Arguments like those of the national efficiency school ultimately prevailed in many Western democracies. British prime minister Lloyd George championed social reforms in 1917 in the midst of
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IN MUCH OF EUROPE, World War I was a catalyst for an increased role in economic security and social provision by the state. During and immediately after the war, Britain created ministries of Labour (1916), Reconstruction (1917), and Health (1919).
Although he claimed to be a free market liberal, Hoover supported high tariffs and favored a purely voluntary system of business-labor cooperation known as “associationalism,” under which businesses would maintain high wages and unions would avoid strikes. But wartime trade union gains in the US were reversed by a postwar business offensive against organized labor, and during the Great Depression that began in 1929 many paternalistic employer welfare programs collapsed.
Following his election in 1932, President Franklin Delano Roosevelt, who had served as assistant secretary of the navy under President Woodrow Wilson, sought to revive the US economy by means of a peacetime version of wartime mobilization. The Reconstruction Finance Corporation, created under Hoover and expanded under FDR, was a reincarnation of the War Finance Corporation of World War I, just as the Securities and Exchange Commission was inspired by the World War I–era Capital Issues Committee.
The most important agency inspired by earlier wartime collaboration among business, unions, and government was the National Industrial Recovery Administration, later renamed the National Recovery Administration (NRA), created by th...
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In 1935 the NRA was abolished when the Supreme Court struck down its enabling legislation, on the technical grounds that Congress had delegated too much authority to the president. But the wreckage of the NRA was plundered to construct a system that structured the US economy from the 1930s to the 1970s. NRA industry codes were reborn as regulations in commission-governed industries like aviation, trucking, and coal, which were treated as public utilities.
Instead of the sectoral minimum wages and working hours and pensions that were to have been agreed on in each industry by business and labor and ratified by the NRA, the federal government directly imposed a one-size-fits-all national minimum wage and eight-hour day in 1938, in addition to the federal Social Security program that was enacted earlier in 1935.
The Wagner Act of 1935 turned section 7(a) of the National Industrial Recovery Act into the statute that, as amended, governs collective barg...
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In his State of the Union address of January 11, 1944, President Roosevelt called for a Second Bill of Rights, explicitly linking promises of new rights to jobs, adequate wages, homes, medical care, education, and other goods to the wartime effort:
To one degree or another, every economy in Western Europe and North America after 1945 was based on tripartite economic bargaining, of a kind compatible with representative democracy, as opposed to the authoritarian state corporatism adopted by interwar fascist regimes and by dictatorships in Spain, Portugal, and Latin America. In a democratic pluralist system, occupational representation does not replace representative democracy based on free elections of representatives from territorial districts or the country as a whole. But the unregulated labor market is partly replaced by a
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Treaty of Detroit in 1950—a five-year contract negotiated by the United Auto Workers with General Motors—and similar deals, the US had a de facto system of democratic corporatism in its concentrated manufacturing sector, which by means of “pattern bargaining” informally set standards for wages and benefits in many nonunionized sectors. Union membership in the US peaked in the 1950s at around a third of the workforce. Meanwhile, the long-struggling farm sector was stabilized and integrated with government by means of a system of price supports and subsidies.
IN POLITICS, THE equivalents of strong unions in the post–World War II era in North America and Europe were mass-membership parties. Despite the beginnings of suburbanization, national politicians were still connected with local voters by several layers of regional, urban, and neighborhood party officials—urban “bosses” and rural “courthouse gangs” in the United States. Intellectuals tended to sneer at these provincial power brokers, some of whom were indeed ignorant or corrupt or racist. But the existence of this layer of petty tribunes ensured that politicians would not ignore the interests
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Early-twentieth-century American progressives like Woodrow Wilson had combined their contempt for legislators with idealization of altruistic, nonpartisan civil servants, protected from political interference, who would apply expertise in social science to the making of policy in the public interest.
Whether they were supporters or opponents of New Deal liberal policies, southern Democrats and northern Catholics in the dominant New Deal Democratic coalition refused to increase the discretionary power of elite federal bureaucrats who would probably be recruited disproportionately from the educated Protestant upper middle class of the North and Midwest and educated at a handful of Ivy League universities. Successive plans for executive reorganization, which would have put the president in charge of a rationalized continental European–style administrative state, never made it through
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The system that emerged in the US by the 1940s came to be known as “interest group liberalism,” a pluralist system in which public policy emerged from negotiations among economic interest groups, each with its own power brokers, rather than from a technocratic mandarinate of all-wise, altruistic experts insulated from popular pressure, or from the “invisible hand” of the free market.
In the United States, the lesser power brokers who acted as tribunes of the urban white working class—political bosses, trade union officials, and clergy—were disproportionately Catholic.
Paradoxical as it might seem, the assimilation and integration of first- and second-generation European Catholic immigrants into the American mainstream was undoubtedly hastened by the low levels of immigration in the US between World War I and the 1960s. Low levels of immigration and limited opportunities for offshoring were necessary, but not sufficient, conditions for the growth of working-class bargaining power and prosperity in the generation after 1945.
It is merely to point out that it would have been practically impossible to organize and maintain labor unions or mobilize public support for New Deal–style social programs in the middle of the twentieth century, if immigration had continued at the levels that existed in the early 1900s and again today.
legal scholar William Forbath has written: Recalling the Jacksonians’ core anti-oligarchy insight, that the laboring “many” needed mass organizations with the clout to counter the wealthy “few,” New Dealers declared that their labor law reforms would come to the republic’s rescue by finally “incorporat[ing] the industrial workers in the polity of the United States” as a “check upon the power of ‘Big Business.’” Just as Jacksonians defended the invention of the mass party as a structural constitutional necessity, so New Dealers defended the invention of the industrial union.23
Chamberlain contrasted this kind of centralization with the democratic pluralism of the New Deal: The labor union, the consumers’ or producers’ co-operative, the “institute,” the syndicate—these are the important things in a democracy. If their power is evenly spread, if there are economic checks and balances to parallel the political checks and balances, then society will be democratic. For democracy is what results when you have a state of tension in society that permits no one group to dare bid for the total power.
In addition, according to Chamberlain, the New Deal “was designed primarily to even things up between the plutocratic city and the impoverished country, between metropolitan East and plundered West and South.” In this vision of democratic pluralism as an alternative to both dictatorship and plutocracy, leadership was exerted by those whom Chamberlain called “broker-politicians” like FDR who presided over compromises among “bosses” representing various important economic and social groups: “Indeed, the pressure group, far from being the loathsome thing that it is commonly accounted by the
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FOLLOWING WORLD WAR II, free market liberals of the kind called “neoliberals” or “libertarians,” like Ludwig von Mises and Friedrich Hayek, insisted that the West could no longer be considered economically liberal. They were right.
The first class war in the industrial West between the managerial overclass and the working class ended after 1945 with national class compromises like the New Deal in the US, designed to buy social peace first during wartime mobilization and then in postwar economic recovery by incorporating formerly marginalized workers and family farmers into the national power structure. Democratic pluralism in North America and Europe, an alternative to the extremes of free market liberalism, socialism, and state corporatism, compelled the representatives of national overclasses to share power and bargain
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But the war-inspired class peace treaties within Western democracies would not last. For many members of the managerial overclass, the need to share power, wealth, and cultural authority with petty tribunes of the working class like trade union officials and small-town politicians and religious leaders was an indignity to be endured only under duress, until they could liberate themselves from constraint.
Adam Smith would not have been surprised. In The Wealth of Nations he wrote: “The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country.
IMMIGRATION ALONG WITH offshoring can be used as a form of global labor arbitrage. Instead of bringing jobs to low-wage workers abroad, employers can encourage the importation of low-wage workers to their home countries to suppress wages, deter unionization, and weaken the bargaining power of native and immigrant workers alike.
Whatever the particular regime, in every Western country the low-skilled immigration issue tends to pit the managerial elite against substantial elements of the working-class, native majority. —
IN GOVERNMENT, THE result of the half-century neoliberal revolution from above has been to weaken two institutions that amplified the political power of the mid-twentieth-century working class—mass-membership political parties and legislatures.
of government intervention in markets. On both sides of the Atlantic, the crumbling of mass party federations has created a new politics centered on candidates who are self-funded or adept at raising money or are mass-media celebrities like Arnold Schwarzenegger, Jesse Ventura, Donald Trump, and Beppe Grillo.
Meanwhile, in both Europe and the US, judiciaries insulated from voters have usurped much of the former authority of legislatures. The US Supreme Court, whose prestige had been enhanced by its interventions in the post-1945 civil rights revolution, has set itself up as an unelected superlegislature, decreeing that policies in one area after another, from regulation of abortion and marriage to campaign finance regulation, belong in the realm of inviolable constitutional rights and must be determined by life-tenured, unelected federal judges, rather than democratic legislatures or citizen
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Counter-majoritarian, rights-based liberalism, pushed too far, becomes antidemocratic liberalism. Many of the institutions important to citizens in democracies are subtly altered or delegitimated in a society in which communal interests must be justified exclusively in terms of this or that individual right.
is also difficult for a rights-based philosophy to legitimize the nation-state as a community that can demand loyalty and sacrifice from its members. Reliance on courts instead of legislatures to shape public policy has shifted power from working-class voters to overclass judges.
In the US, appointees to the Supreme Court and the federal judiciary tend to have the most elite social and educational backgrounds of any group in government. They often share the combination of social liberalism and free market economic conservatism that is common in the college-educated Western overclass but unpopular among most voters.
Long-overdue victories ending unjust discrimination on the basis of race, sex, and sexual orientation could have been achieved by electoral coalitions to enact democratic legislation, without the imposition by elite judges of libertarian preferences in all spheres of public policy. Government by judiciary tends to be a dictatorship of overclass libertarians in robes.
Many of today’s so-called community organizations are not so much grass roots as AstroTurf (an artificial grass). A contemporary “community activist” is likely to be a university graduate and likely as well to be rich or supported by affluent overclass parents, because of the reliance of nonprofits on unpaid interns and staffers with low salaries. Success in the nonprofit sector frequently depends not on mobilizing ordinary citizens but on getting grants from the program officers of a small number of billionaire-endowed foundations in a few big cities, many of them named for old or new
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The triumph of technocratic neoliberalism over democratic pluralism is not the work of a conspiracy or a cabal. The libertarian economist James Buchanan did not meet with the Beat poet Allen Ginsberg halfway between Mont-Pèlerin and Haight-Ashbury in the 1960s to plot a transfer of power in all three realms of politics, economics, and culture from working-class majorities to the university-credentialed overclass in the US and other Western nations.
The alternative to simply dismissing populist voters as gullible dupes hypnotized by homegrown Hitlers or Muscovite masterminds is co-optation—attempts to rescue as much of the technocratic neoliberal order as possible, by making selective reforms of trade, immigration, tax, or wage policies to win the support of alienated voters and deprive populist demagogues of their constituents.
But the willingness of Western elites to refrain from imposing their deeply held left-libertarian values on their fellow citizens or to pay higher taxes to bribe the masses below them is undoubtedly limited. And if redistribution of income or assets were not accompanied by redistribution of power, the feelings of powerlessness that drive much working-class anger would remain.
THE IMPLICIT THEORY of technocratic neoliberalism is that the US and other Western societies at this point are essentially classless societies in which the only significant barriers involve race and gender. The people at the top got there purely as a result of their own efforts, on the basis of their superior intellectual or academic skills.
self-idolatry). From the assumption that a nearly meritocratic “knowledge economy” has replaced class-stratified, bureaucratic managerial capitalism follow two kinds of policies. The first are class-neutral, race- or gender-based policies to remove barriers to the advancement of racial minorities and women, including native white women. The second are policies that include skills training or retraining for unsuccessful native white men.
