This issue of The American Interest is devoted in the main to an old yet still active question: What is the relationship between the inequality arising from a mixed but predominantly market-based American economy and the equality principle embedded in American political culture? More specifically, the tension to which the question points resides in this standard observation: Individual citizens (and corporate entities) vary so considerably in how much money they can devote to political objectives that it hollows out the practical meaning of the one-man/one-vote principle at the core of American democracy. While each vote is worth the same in theory, in practice the extent to which individuals can influence voting behavior, not to speak of the behavior of legislators once elected, is not even remotely equal. That uneven playing field can be frozen over with strategic infusions of cold cash, affecting political behavior well beyond economic and tax policies. What, then, does it really mean for Americans to say that they live in a democracy?
Again, awareness of this tension, one essentially between political philosophy and political sociology, is not new. Nor is it easily fobbed off with the assurance that the political leverage afforded by wealth balances itself out in the end because the rich constitute a politically diverse group. That assurance did not comfort James Madison, who expressed concern about how an inequality of property wealth drove the formation of “factions”:
From the protection of different and unequal faculties of acquiring property, the possession of different degrees and qualities of property immediately results; and from the influence of these on the sentiments and views of the respective proprietors, ensues a division of the society into different interests and parties.
At a time when the line between political parties and interest groups had yet to be drawn, Madison defined factions as “a number of citizens, whether amounting to a majority or a minority of the whole, who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.”1 While Madison was thinking along what we recognize today as class lines, John Adams opined even more broadly that the commercial way of life itself could harm republican virtue: “Commerce produces money, money Luxury, and all three are incompatible with Republicans.”
Were Madison, Adams and others of the founding generation justified in such worries? Perhaps they fretted too much. After all, the wealthy and propertied have disproportionately influenced American politics from the beginning, ever since George Washington offered hard cider to all comers at Mount Vernon to encourage their votes; yet the Republic and its Constitution have endured. The socio-economic make-up of Congress has never reflected the mean of American society, notwithstanding iconic images of Mr. Smith Goes to Washington and Davy Crockett patching up the crack in the Liberty Bell; yet through it all, the welfare of the common man has not been entirely ignored, nor the fundaments in the Bill of Rights overturned. To the contrary: Not only has the American Republic pushed back, more than once, against abuses of economic power, but it has propelled a near constant expansion of the equality principle into American life—through the Jacksonian era’s expansion of the franchise, the Emancipation Proclamation, women’s suffrage, the successes of the trade union and civil rights movements, and on to the present day.
Nonetheless, the expansion of the equality principle in American culture has not put paid to plutocracy in American politics. These seem opposing, or at least contending, forces, but what seems so is not necessarily so. This becomes clear if we review the winding road from 1789 to today. A pattern seems to emerge, defined by two cycles of plutocracy and two offsetting reactions to it, culminating in the rise of a third wave in our own time.
American society in colonial times was marked by significant social and economic inequality, largely between landowners, whose endowments often originated as royal grants, and those who came to America as indentured servants, slaves or as immigrants from other less well-positioned European lands. Subsequent immigration mitigated average differences to some degree, but the aristocratic habits inherited from British society persisted after the Revolution. The Founders, even those who worried about the specter of factions based on economic interests, were thoroughly patrician even when they were not slaveholders. They assumed that property owners would be more vested in the responsibilities of governing than others, and thought it natural that the states would mandate property ownership qualifications for the right to vote. (Ruth Wedgwood takes up the legal history of this view in her essay on page 57.) But the Enlightenment ideals of the Revolution, further immigration and new wealth production with westward expansion in time had a significant leveling effect that was extended and ratified in law with the expanded franchise of the Jacksonian era.
So it was after the first and smallest cycle of American plutocracy that—before the coming of the railroads, the great tides of mid-century immigration and the Civil War—extremes of wealth were relatively modest (particularly if one sets aside the regional exception of the plantation/slave system in much of the South). With the great majority of Americans working as farmers, fishermen, craftsmen and sole-proprietor shopkeepers, the social significance of money as an expression of wealth differed from what it is in our own time. In an economy largely based on family-scale proprietorships, the average size of economic units was not much larger than one man or one family, and money was of but occasional use—in contrast to today, when Americans use money, or more abstract forms thereof, to buy nearly everything they consume. Wealth might be unequal in terms of the land people owned and the surpluses they could extract from it, but that did not translate into a focus on money’s social or political power. As Mark Twain recalled late in life:
Jay Gould was the mightiest disaster which has even befallen this country. The people had desired money before his day, but he taught them to fall down and worship it. They had respected men of means before his day, but along with this respect was joined the respect due to the character and industry which had accumulated it. . . . In my youth there was nothing resembling a worship of money or of its possessor, in our region. And in our region no well-to-do man was ever charged with having acquired his money by shady methods.2
As Twain suggests, however, pre-Gouldian times gave way to a second plutocratic wave in which concentrations of economic power seemed to run roughshod over American democratic ideals in all forms. A cross between class-based and regional warfare seemed ready to break out at any of several tumultuous moments during the last three decades of the 19th century, notably during the three election campaigns in which William Jennings Bryan, clutching firmly his cross of gold, tried to ride populist discontent into the White House. And it is not difficult to understand what produced such tumult from the relative economic tranquility of antebellum America: the creative destruction of onrushing modernity, of which the Civil War itself was partly an expression. As the Industrial Revolution bestrode the North American continent, wealth became more concentrated in tandem with the rise in the average size of economic units. That concentration would have been greater still had it not been for legions of roaming Easterners and new immigrants heading west to establish their own farms and ranches. Economic specialization increased as new technologies rewarded it, and money mattered more in an increasingly urbanized social setting both because there were new ways to earn it and more things to buy with it.
The Civil War itself, to a greater degree than is often appreciated, shaped and accelerated the upsizing of economic enterprises and, with it, concentrations of wealth. The scale of production and provisioning that had been a necessity of war echoed loudly after Appomattox, and some insightful men feared the consequences. One of them was Abraham Lincoln, who, in a November 1864 letter to Col. William F. Elkins, wrote:
I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. . . . [C]orporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed.
Lincoln was not far wrong. The flamboyant hucksterism of the railroad companies was legendary, notably but not only in the way they fleeced farmers with oligopolistic transportation fees and gained possession of lucrative public lands.3 Everyone knew that politicians on the take were facilitating wholesale thievery. The rise and fall of James G. Blaine, who nearly won the presidency in 1884, and the emergence of the Mugwumps (Republicans disgusted by corruption who fled the GOP to vote for Grover Cleveland), have been forever associated in the American memory with the mega-graft typical of the times.
The power of Gilded Age plutocrats did not go unchallenged, however, and the Republic that Lincoln had striven to preserve was not destroyed. But this was only because, by the time the dust finally settled in the years just before World War I, that Republic had been substantially altered. While Bryan failed to win the presidency and the Greenbackers and Free Silver advocates failed to get their way, the ungainly and diffuse movement around him was hardly toothless. The grange movement of the 1870s and 1880s, which promoted government regulation of the railroads, gave rise to the Interstate Commerce Commission in 1887. Populist energies soon found their most voluble expression within the Democratic Party, then the party of small government and small business standing in opposition to the banks and trusts of the North. Southerners, having suffered the carpetbagging outrages of the Reconstruction epoch, flocked to the Democratic banner and often led the charge against plutocracy.4 The Democrats, however, having absorbed populist energies, also provided a comfortable home for the xenophobia that came with them. The party was racist from dimple to duodenum, pointedly anti-Catholic, anti-Semitic and downright anti-intellectual.
Anti-plutocratic forces nevertheless counted some scholars and writers on their side. One was the redoubtable William Graham Sumner, who held court at Yale for several decades. Sumner’s views are too complex to easily summarize; suffice it to say in this context that he was simultaneously skeptical of mass democracy and of plutocracy, the two being closely connected in his mind. Modern industrialized states, he believed, were too diverse and populous to be truly democratic in anything but name. Absent strong laws, institutions and public mores—the Burkean sinews of political virtue, in other words—they were bound to be controlled by well-connected capitalists according to what we recognize today as the logic of collective action. The more universal access to the ballot box became, Sumner believed, and the more pervasive the view that democracy mirrored some egalitarian reality—which he insisted had no scientific (or theological) justification—the faster and more pervasively moneyed interests would dominate the polity. Beating Mancur Olson’s 1965 book to the punch by the better part of a century, Sumner wrote in 1877:
A small group . . . who know what they want and how they propose to accomplish it, are able by energetic action to lead the whole body. . . . An organized interest forms a compact body, with strong wishes and motives, ready to spend money, time, and labor; it has to deal with a large mass, but it is a mass of people who are ill-informed, unorganized, and more or less indifferent. There is no wonder that victory remains with the interests.5
Sumner’s anti-plutocratic writings were echoed by the muckrakers of American letters as modern journalism hit its stride as the Fourth Estate. The muckrakers found plenty of muck to rake, and the great Thomas Nast plenty of scandal to turn into cartoons. But holding up the muck to view in time produced a more ambitious reformist aspiration: It impelled efforts to refute Social Darwinist excuses for the status quo in order to get to the bottom of the abuses perpetrated by “the malefactors of great wealth”, as Theodore Roosevelt called them in an August 1907 speech. As populism shaded into progressivism, more Americans blamed a growing political deficit rather than mere human frailty among the rich and fatuous for the country’s woes. The political structure, many came to believe, had failed to keep pace with changes in society. Whereas populism was driven by anger over the control of credit and corruption in high places, progressivism was driven by an ambition to apply what then passed for social science to the remaking of a degenerated American polity.
Progressive energies surged to a head in the election of 1912, in which versions of the new secular gospel suffused both the Democratic Party and the Mugwumpish Bull Moose campaign. With that election, the first Gilded Age and the second wave of American plutocracy came to an end. It was not World War I that turned the trick, as is often supposed, but rather a series of responses to plutocracy that began with the Sherman Anti-Trust Act and the aforementioned creation of the Interstate Commerce Commission, and continued with innovations such as the creation of the Food and Drug Administration, the ratification of the 16th and 17th Amendments, and the establishment of both the Federal Reserve system and the Department of Labor in 1913. That burst of political ingenuity largely redefined the American Republic itself and solidified the success of the liberalism that existed between its original 18th-century and its pre-New Deal meanings—that is, the liberalism of William Allen White, Theodore Roosevelt and Woodrow Wilson.6
…and a Third Wave?
Taking the measure of this pocket history, which could readily be elaborated and extended through the 20th century, it is fair to say that the balancing capacities of American political ideals and institutions at least twice proved themselves a bulwark against plutocracy. But it was not democracy as such that made the difference; it was the space that democratic agitation opened up for creative leadership to redefine the nation’s enlightened self-interest and devise new governmental structures to sustain it. The question of the moment is whether the American spirit can open up door number three.
We once again see agitation against plutocracy because, as in the past, there is good reason for it: A third wave is cresting, its precise amplitude unknown but probably large. One notes books by Kevin Phillips, Robert Reich, Sheldon Wolin, Robert Kaiser and dozens of others.7 Veteran journalist William Pfaff titled a 2009 essay “The United States of Plutocracy.” Jim Hightower’s Texan populism has never been more popular. Grad students are reading C. Wright Mills again. Bill Moyers devoted the final, May 2010 broadcast of his Journal to the theme, “Plutocracy and Democracy Don’t Mix.” In it he noted that in 2005 Citigroup decided to publicly “bang the drum on plutonomy”, its laudatory term for a system in which the rich get richer with a market-friendly government on their side. When some of America’s ultrarich, headed by Bill Gates and Warren Buffet, organized the Giving Pledge last year, they were excoriated for their pains. Some accused them of orchestrating a PR stunt, others of funding reactionary causes, still others of merely reminding us, as Ellen Remmer, chief executive of the Philanthropic Institute, acerbically put it, that “the reason we’ve had this golden age of philanthropy is because we’ve had this incredible concentration of wealth.”8
The capstone of all such signs, however, resides at the very peak of American high politics: Barack Obama defined his presidential campaign for change and hope in 2008 by focusing on the depredations of the “K-Street transactional culture.” His campaign succeeded in part because increasing numbers of ordinary Americans believe the system is corrupt and dysfunctional, though the body politic as a whole can’t seem to quite make up its mind whom to blame.9 But in a stunning demonstration of just how bad the problem really is, the new President, having few chits to play as a popular but in fact politically weak chief executive, soon made a series of deals with this transactional culture through the aegis of Nancy Pelosi and Harry Reid. He concluded, probably correctly, that he had little choice if he wanted to pass anything into law. That certainly includes his signature health insurance legislation, which required, as he saw it, making deferential anticipatory deals with the pharmaceutical industry to purchase its forbearance. So weak (or so meek, according to some critics) is President Obama after the November 2010 midterm elections that he seems unable even to bring himself to support the expiration of the Bush tax cuts for those making in excess of $250,000 per year, something most of his supporters in 2008 would have considered unimaginable. One reason for this is that many Democratic lawmakers, themselves stuck in the plutocratic mire, do not support it.
It’s not just President Obama who sees the problem and suffers the frustration. Many thoughtful veterans of American politics now hold that the de- and mis-regulation of the banking and financial services industry, abuses of “too big to fail” liens on moral hazard, and the toleration of tax avoidance-cum-tax evasion by the rich all have their sources in machinations of plutocratic power. (Sebastian Mallaby and Matthew Klein offer a different assessment on page 39.) These machinations, they believe, are not balanced out by political diversity among the ultrawealthy, and they no longer buy mere access to the corridors of power but favorable judgments within their sancta as well. What were once believed to be wild exaggerations of left-wing propagandists during the Cold War now seem to have come true. And how strange is that? Did the West defeat Communism only to prove true one of the latter’s core ideological points?
How does the Tea Party phenomenon, the most energetic citizen insurgency of the moment, fit into this picture? The Tea Party appears to be less anti-plutocratic than anti-government, far more populist than progressivist. Most of its members seem oblivious to the fact that many U.S. government exertions today arose in the first place to limit the depredations of corporate power. (Francis Fukuyama’s essay on page 22 gets at this in his effort to explain the curious weakness of left-of-center anti-plutocratic exertions.) But that might be because today those exertions have become so ineffectual, a sad state of affairs in turn widely, if inaccurately, attributed to Wall Street plutocrats having suborned the government into a virtual marionette of the financial sector. Hence the Tea Party rage against the TARP bailouts. Part of its anti-government animus seems to bear an anti-plutocratic motive nested within. With more than a wisp of “crunchy con” in the air it breathes, it thus approaches, even against its own vaguely conscious ideological will, the anti-corporate, “small is beautiful” critique of the yuppie middle-class “soft” Left.
The Tea Party is a phenomenon whose development bears watching, therefore, as a possible harbinger of a broad-based Bull Moose-like third-party movement. Maybe the second coming of W.J. Bryan or TR is nigh, this time wearing L.L. Bean and drinking cappuccino. Perhaps what will be seen a century from now as America’s second Gilded Age is coming to an end, just as the first fell before a polyglot pre-New Deal liberalism.
Or maybe not. Maybe we’re off the historical charts with no way to plot a course back to port. This is the difference between believing, on the one hand, that the alignment of a still adaptable American political culture with the ways of the 21st century suffices to ensure self-correction from the excesses of the third wave and, on the other hand, believing that rather than self-correction we are spiraling toward systemic collapse. Which is it?
A Lot We Don’t Know
In light of the centrality of this question it is disheartening that American social science lacks a robust model for relating economic behavior to political polyarchy (to invoke Robert Dahl’s famous term for political openness). We have polemics aplenty, ranging from Trotskyite anti-capitalist screeds to comforting but unconvincing assertions that free markets and democratic politics always reinforce one another. We have islands of research into aspects of the subject, for example, about elite circulation and social mobility generally. We have a mountain of data on trends in income inequality, but not as much insight—certainly no consensus—into what those numbers really mean. (Tyler Cowen grapples with this task on page 29.) Lacking a general theory or model of plutocracy we lack consensus even on what we should want to know about it.
We should certainly want to know how to measure trends in income inequality and accumulated concentrations of wealth over time—in other words, a graph of the American Gini Coefficient since July 1776. But since we have seen how technological change can drive and shape social change, as it did between our “era of good feeling” and our virtual civil war after the Civil War, we should want to know a lot more than that. We should want to know about the overlapping relationships among, at a minimum, concentrations of wealth typical of technologically innovative eras, income inequality, social mobility, the average size of economic enterprises and entry costs to new business. Then we should want to know how American democratic politics copes with the sparks thrown off by these socially seismic relationships. We have barely a clue about much of this.
More than that, we should want to systematize better what we know about how wealth organizes itself to influence law and regulation. Four means of translating money into political (and subsequent economic) benefit seem to exhaust the logical possibilities: persuading Congress and reg-writing bureaucrats to pass on the transactional costs of corporate functioning to the public, as when taxpayers bear the cost of industry regulation instead of the industries being regulated; lobbying to shape tax laws and accounting rules so that their accumulated wealth is maintained and protected, most often at others’ expense; lobbying to ensure maximum leverage in the financing of political campaigns; and, the master stroke, lobbying to ensure maximum feasible freedom to lobby.
What we know about these four phenomena is less than comprehensive. Take lobbying itself. We’ve come a long way from the days when Mark Hanna could work simply by depositing bags of cash in strategic locations. A great deal of coroporate lobbying today is not intended to influence political judgment, but rather to win lucrative government contracts, to be, in essence, an agent of government itself. Lobbying has come to involve a highly sophisticated and professionalized skill set, far outdistancing what passes for a legal regime to regulate it and the social science effort to understand it. (Ellen Aprill and Richard Hasen illuminate the former on page 62).
Similarly, we don’t fully understand the mix of factors that makes government permeable to plutocratic penetration. There has always been some greed, some corruption and usually plenty of hypocrisy in politics, but greed, corruption and hypocrisy, even taken together, do not a plutocracy make. Within bounds, greed can be productive. Corruption can be redemptive of unequal arrangements, and some forms of it indicate deep, if narrow, wells of social capital. Hypocrisy, as La Rochefoucauld’s “homage that vice pays to virtue”, is the mean between the value of high standards and the calamity of no standards at all. Plutocracy is about the absence of adequate boundaries on sketchy behavior. It is about incentive structures skewed in the direction of making legislators vulnerable to entreaties from individual or corporate wealth that can involve many elements beyond the skills and resources of lobbyists: ideology, campaign law and regulation, media culture, the poorly understood connections between levels of social trust and the general propensity to act corruptly, and more. It’s not a simple two-sided phenomenon involving only those who would buy influence from those willing to sell it.
So it matters, for example, that the ideology of market fundamentalism helped midwife a pervasive sense of complacency that enabled otherwise intelligent people, including even some economists, to ignore the difference between risk and uncertainty. (Jessica Einhorn examines this and other key points in her essay on page 50.) It matters that the Supreme Court has so expanded the elasticity of the First Amendment as to grant rights of political voice to corporations—hence the Citizens United decision of January 2010. Less in the news but no less important, the same Court has forced anyone concerned with the power of money in American electoral politics to focus on the supply side of the problem—how to get money to candidates in such a way that it does not produce rank unfairness—and to ignore entirely the demand side. But where exactly has the demand for so much campaign money come from, such that campaign spending has more than tripled on average in just the past few decades? Such questions are for practical purposes off-limits, again thanks to the Court’s interpretation of the First Amendment.10
This is frustrating because the failure to ask certain questions impoverishes our understanding of the larger phenomenon of which the plutocratic distortion of electoral politics is but a part. It is frustrating, too, because it blurs the focus on the core relationships within our political economy—the original term for the intellectual domain wherein questions about plutocracy and democracy were asked. If Sumner was right about the American political economy, then the equality principle cannot save us from inundation by the third wave of American plutocracy—only courageous and skilled leadership can do that. The United States is a mass-participation democracy and a deepening plutocracy, a statement that sums up neatly both the source of Barack Obama’s election and his inability to reshape American politics and society except in the most trivial of ways.
How bad are things really? We don’t know that either, but the evidence is not encouraging. One incident among a great many may best illustrate the point.
In November 2009 it came to light that Genentech lobbyists had provided health care policy talking points to the staffs of several House members that made their way verbatim into the congressional record via the official statements of a clutch of representatives, Democrats and Republicans, who “said” exactly the same things. Genentech had, of course, earlier poured many dollars into these Representative’s campaign coffers. But Evan L. Morris, head of Genentech’s Washington office, claimed (without anyone prodding him to do so), “There was no connection between the contributions and the statements.” Heaped on this insult, another lobbyist commented, “This happens all the time. There is nothing nefarious about it.”11 The fact that, indeed, it does happen all the time is precisely what is nefarious about it. Not that plutocratic machinations explain all that is wrong with American politics today, but that someone could say such a thing with a straight face, and to all appearances actually believe it, well describes the decay of American democracy.
When lobbyists not only put words in the mouths of elected officials but also draft legislative tomes for their staffs that no normal citizen could possibly read or understand, it’s hard to imagine significant legislation that could stand against the riptide of plutocratic influence—or, if one prefers a less emotive phrase, against the logic of collective action. Can we realistically expect to reform any dimension of American government that abuts on such logic? The tax code, and the creative legal chicanery that opens up vast spaces between illegal tax evasion and legal “tax avoidance”? Dealing with the subsidies that benefit agribusiness conglomerates? Getting a handle on rising health care costs, as opposed to merely the health insurance market? Rationalizing our energy infrastructure or regulating our carbon footprint? I’m not holding my breath.
There is another way to think about the matter, which becomes clear as we circle back to Mr. Madison and the Founders to examine their understanding of democracy. If we want to understand plutocracy and democracy in mutual context, variation in the meaning of the latter will matter just as much as variation in the meaning of the former. One example should get us started: Bill Moyers, like most who are unsettled by the specter of plutocracy, thinks the antidote to it is more democracy:
So it is that like those populists of that earlier era, millions of Americans have awakened to a sobering reality: they live in a plutocracy, where they are disposable. Then, the remedy was a popular insurgency that ignited the spark of democracy. Now we have come to another parting of the ways, and once again the fate and character of our country are up for grabs. . . . I am biased: democracy only works when we claim it as our own.
It’s a great applause line; but is it true? As Professor Sumner might have said, it depends on what is meant by democracy.
The Founders, their classical educations guiding them, did not put democracy on a pedestal as most Americans do today. That place was reserved for liberty and republican government, each in its way an expression of fear of excessive concentrations of power (with Samuel I, chapter 8 serving as a proof text for most of them). Liberty meant freedom from the impositions of a cloying state, a definition dating at the least from the clash of Roundheads and Cavaliers in the English Civil War. Republican government à la Montesquieu meant protection against the kind of monarchy that sought to suborn the judiciary, the law being, in addition to the social power of the nobility, a check on concentrated royal authority. Democracy, as the term was understood, embodied a hearty capacity for abuse—for mob rule and the triumph of passion over reason to serve the ambition of the demagogue. Though to the sharp side of this point of view, Alexander Hamilton said it best on June 18, 1787 at the Constitutional Convention in Philadelphia: “Your ‘people’, sir, is nothing but a great beast.”
American electoral democracy as the Founders established it was therefore heavily mediated by the balances inherent in federalism, the indirect election of the Senate, the Electoral College and, above all, a Supreme Court set off at a healthy distance from the citizenry. Perhaps in moral theory the individual was the epicenter of political judgment, but in practice the Founders’ system privileged the political agency of social constituencies (albeit with a uniquely broad tolerance for the rights of minorities). As a light on what really concerned them, note that they spent precious little ink in the Constitution and the Bill of Rights defining citizenship and voting rights. This they left to the states and to the courts of the future to agonize over.
It is important to recall these facts of the American founding because republican government tolerates wide-open political space in a way that democracy, seen not just as method to elect leaders but as the embodiment of an egalitarian ideal, does not. The former accepts a wide swath for politics, defined as the means by which the natural lack of consensus among competing interests is narrowed but never eliminated. The latter, precisely because it posits an ideal, would more tightly bound where politics may lead. Republicanism acquiesces to the reality of hierarchy, to, as Jefferson put it to Adams, the consequences of “the natural aristocracy of talent and virtue.” Democracy qua egalitarian ideal, however, bristles at distended economic outcomes, seeing their source in structural distortions of political economy rather than in any natural aristocracy of talent and virtue. It therefore often presumes to engineer the progressive reduction of inequality if not its ultimate elimination.
It follows that the definition of what is and is not fair is unstable between these two conceptions of democracy. The former is not much bothered by the talented, the clever and even the merely lucky doing very well, and is thus reluctant to shout plutocratic foul when they do so. It is not bothered much either, it seems, by the boom-bubble-bust economic cycles so common to American history. To this day most Americans affirm the free play of the market and the unequal outcomes it allows, as long as those outcomes cannot be locked in by subterfuge to produce an aristocracy that would deny the merit of less well-situated others. The latter conception of democracy, as egalitarian ideal, is bothered, and here we encounter a paradox: Those toward the bottom of the American socio-economic ladder are considerably less likely to express resentment of rich people than those considerably above the middle but below the very top. (Walter Russell Mead elaborates this critical point in his essay on page 16.)
Ample data testify to the fact that the professional classes, often enough those with liberal arts educations and liberal views, are far quicker to take umbrage at inequality, and to see the machinations of aristocracy in those of a higher station, precisely because they connect it not to differences in “talent and virtue” but rather to corruption born of structural distortion. This has a lot to do with acquired habits of mind. Whereas the less formally educated hear abstractions but see actual people and behaviors, the more formally educated hear actual people and behaviors but see abstractions. That is largely why advanced levels of education track with the impulse toward meliorism, and why those with graduate degrees or higher tend to vote overwhelmingly Democratic.
This is not to say, of course, that Jefferson, Adams and Madison were wrong about natural aristocracies or that meliorism undertaken by government actually works as intended; Tocqueville addressed that point 175 years ago in his Memoir on Pauperism (1835). But lest conservatives smile too broadly, in truth it is not easy to distinguish the sources of inequality in a rapidly changing socio-technological context, to know whether natural differences in virtue and talent or exploitation explains unequal outcomes. Even the Founders, after all, as forgiving of human foibles in political life as they were, recognized the capacity of factions to act in ways “adverse to the rights of other citizens, or to the permanent and aggregate interests of the community.” They would not have looked fondly on Mark Hanna, Boss Tweed or Jack Abramoff.
The essence of the problem comes down, perhaps, to this: By construing democracy as we do today, we simultaneously lower our tolerance for the outcomes produced by the logic of plutocratic collective action and nurture the environment that enables that logic to flourish. It doesn’t help that the potential for plutocratic abuse is, if anything, greater at a time when its excesses are no longer as ostentatious as they were in Mark Twain’s day. They have rather been routinized, institutionalized and even bureaucratized like so much else, as a look into the subculture of the major Washington lobbyist-for-hire firms would show. Obsessed with vacuous celebrity, Americans make it easier than ever for plutocrats to sail under the radar. Corporate heavyweights and bankers may be suborning Congress and ripping off “we the people” left and right, but we’re too busy dancing with the stars to notice. On this point, at least, Professor Sumner was really on to something.
The more one ponders the interplay of plutocracy and democracy the less straightforward it seems. An endless sea of questions now stretches out before us, whereas in the beginning there was only one. Sorry about that. And, alas, this issue of The American Interest can sail toward only some of them, amid some disagreement among our authors as to which course to take. We wish you fair winds and calm seas as you journey forth; adventure awaits you.
1The Federalist (No. 10), emphasis added.
2Autobiography of Mark Twain, Volume 1 (University of California Press, 2010), p. 364.
3This and other plutocratic outrages were described by former South Dakota Senator R.F. Pettigrew in the widely circulated Triumphant Plutocracy: The Story of American Life from 1870 to 1920 (Academy Press, 1921).
4Two Southern Congressmen wrote popular screeds against plutocracy: Milford Wrairson Howard of Alabama and Thomas M. Norwood of Georgia. See Howard, The American Plutocracy (Holland, 1895), and Norwood, Plutocracy: or, American White Slavery (American News Company, 1888).
5Robert C. Bannister, ed., On Liberty, Society, and Politics: The Essential Essays of William Graham Sumner (Liberty Fund, 1992), pp. 84-5. Sumner, in turn, depended on an earlier source for this insight: Condy Raguet, Principles of Free Trade (1835).
6On White, see Stephanie Abbajay, “What’s Right with Kansas”, The American Interest (May/June 2009).
7Phillips’s most recent book, written before the collapse of Lehman Brothers, is Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (2008). See also Reich, Supercapitalism (2008); Wolin, Democracy, Inc. (2008); and Kaiser, So Damned Much Money (2009).
8Quoted in Stephanie Strom, “Pledge to Give Away Fortunes Stirs Debate”, New York Times, November 11, 2010.
9As Reich argues in “Reading America’s Tea Leaves”, The American Interest (November/December 2010).
10The American Interest covered the campaign finance aspect of plutocracy in its July/August 2010 issue: “Campaign Finance after Citizens United”, with contributions from Mark Schmitt, Richard L. Hasen and Michael J. Malbin.
11Robert Pear, “In House, Many Spoke With One Voice: Lobbyists’”, New York Times, November 14, 2009.