The Liberal Gilded Age

Review: ‘The New Class Conflict,’ by Joel Kotkin

San Jose skyline
San Jose skyline / AP
September 14, 2014

The vision embedded in the Founding documents of the United States was of a free and equal people. At the time of the nation’s founding, this was not so much a fantasy but—with the obvious and inhumane exception of slavery—empirical reality. Class distinctions were extant, but they were not necessarily pronounced. The same was true of inequality in wealth and status. Northeastern financial families like the Schuylers had an edge over the yeoman farmers of Shenandoah Valley, of course, but it was nothing compared to the rigid class divisions in continental Europe.

The same seemed true for the nation for 30 years after World War II. A broad-based economic boom elevated the working class—especially second-wave immigrants such as the Italians and Polish—into the middle class.

But it was not always this way. The industrial revolution wrought fundamental changes in society and politics and created sharp divisions between classes. This was further reinforced by the seemingly endless waves of penniless immigrants from Southern and Eastern Europe.

And, according to Joel Kotkin of Chapman University, so it goes today. He has just published an important book, The New Class Conflict, which is essential to understanding the "new class order" that is undermining the republican ideals of this nation.

Kotkin asserts that a new ruling class has emerged from the upper echelon of society, one that is starting to rival the oligarchs of the late 19th century. In the Gilded Age, it was the railroad barons, oil magnates, and sundry industrial tycoons who had in their pockets machine politicians. Today, our incipient rulers come from the technology sector, which sprung up in California and Seattle in the wake of the computer and Internet revolutions. Joining them is a new "clerisy" of elites from academia, government, think tanks, and media.

The two camps are united around the concept of so-called "gentry liberalism," which is defined by postwar ideals such as environmentalism, consumer rights, and cultural leftism. This differentiates the new oligarchs from the old ones in important ways. The so-called Robber Barons had an interest in economic growth and, ultimately, a vibrant middle class that could afford to purchase the goods they made. Today’s would-be oligarchs lack such an incentive. As Kotkin notes, one need not be middle class to afford a smartphone. And the new oligarch’s ideological commitment to environmentalism usually means stifling development for the sake of "sustainability."

Arrayed against the oligarchs is a group Kotkin calls the yeoman class, a phrase that harkens back to the small, independent farmers idealized by the Jeffersonian Republicans of the early 19th century. Today’s yeomanry is not on the farm, but is composed of small businessmen and property holders. Often aligned with them are the old industries—oil, natural gas, coal, and other extracted-resource concerns—that share the yeoman’s priority for broad-based economic growth.

The heart of Kotkin’s work is in chapters two through four, where he describes the nature of each of these classes. His best work is really in the discussion of the tech oligarchy, which he dissects. He peels away its inflated self-conception to reveal a hypocritical, self-interested class of billionaires whose interests run contrary to the revolutionary and egalitarian rhetoric they espouse. His chapters on the "clerisy" and the embattled middle class are also strong, but the material has been covered by others, for instance by Fred Siegel in his Revolt against the Masses. Kotkin’s chapters on the geography and demography of these groups are also extremely interesting.

Kotkin is unabashedly on the side of the yeomanry, and his final chapter outlines a program to bring about the broad-based economic growth he thinks is essential to its survival. It is here, though, that his project begins to lose some steam. There are two interrelated problems.

First, the clerisy and the tech oligarchs constitute a minority of society. For them to have a stranglehold on our democratic politics thus requires an alliance with other groups. The 19th century robber barons developed precisely such an alliance.

As Richard Bensel ably demonstrates in The Political Economy of American Industrialization, Gilded Age political economy was the product of a bargain between industrial capitalists, their workers in Northern factories, Civil War pensioners, and wealthier farmers who benefited from targeted tariffs. The progressives of the early 20th century broke this stranglehold on politics, but only by luring these groups away from their bargain (and also by the fact that the Civil War vets had mostly died out). The Woodrow Wilson administration, for instance, provided banking credits to rural farmers and labor protections to railroad workers.

How does the new oligarchy possess power beyond its numbers? The answer inevitably gets back to the class that is often left out of Kotkin’s analysis: the poor, particularly racial and ethnic minorities. The tech elite and clerisy are lodged within the Democratic party, which depends on poor and minority voters for a large share of its vote, and the logroll that exists between the two sides is crucial. The cap and trade bill passed by the House of Representatives in 2009 provided subsidies to the poor that were greater than the energy price increases they would face as a consequence of the bill’s new regulatory regime. Cap and trade was not merely about environmentalism. It also instituted a new welfare scheme.

Understanding the nature of this alliance seems essential to breaking the hold of the new ruling class. There is nothing natural about a top-bottom coalition, after all, and targeted appeals by the yeomanry could pull away a critical mass of lower income and minority voters. Just as Wilson peeled off upscale farmers with government-sponsored access to credit, why can’t white, middle class entrepreneurs win over poor minorities who wish to build a similar life for themselves?

Second, Kotkin seems to begin from the premise that the yeomanry constitutes an honest majority of the nation. I share this starting point, so it’s fair to ask, how is it that the tech oligarchs and clerisy dominate at the expense of the majority whose interests they do not share?

The Progressives asked a similar question of the industrial magnates a century ago. In their 1912 presidential platform, they offered this answer:

Political parties exist to secure responsible government and to execute the will of the people.

From these great tasks both of the old parties have turned aside. Instead of instruments to promote the general welfare, they have become the tools of corrupt interests, which use them impartially to serve their selfish purposes. Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people.

To destroy this invisible government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.

In other words, money from the Robber Barons had corrupted the political process. A fair vote would have squashed their interests, but they made sure a fair vote never was really taken.

The Progressives struck back through structural innovationsto our government. The Tillman Act banned corporate political giving. The 16th Amendment legalized the income tax and thus opened another source of revenue aside from the corrupted tariff regime. The 17th Amendment provided for the direct election of senators, and crippled the machines run by the likes of Nelson Aldrich of Rhode Island and Matt Quay of Pennsylvania.

A new reform program is essential to the plan that Kotkin sets forth in his final chapter. Without foreclosing the corrupt pathways that the wealthy and well-connected use to circumvent the public, you guarantee that any public-spirited agenda will be captured and distorted for private gain. Look no further than the Gilded Age tariff. A perversion of Henry Clay’s original "American Society," which sought to balance the interests of all factions, reformers tried for thirty years to reform it. They failed again and again as the bosses who ran the Senate usually turned it into an excuse to raise rates.

We see something like this with the Senate’s most recent attempt to reform immigration. All sides agree that immigration needs reform, but after "the Interests" (to borrow a phrase from Gilded Age muckraker David Graham Phillips) got their hands on the program, it was perverted into favoring well-connected industries while harming the lower and working classes, which would see its wages reduced accordingly.

There is simply no way to shift the nation’s political economy back to the yeomanry without reforming the structures of government. After all, the yeomanry is a majority, yet it cannot get its way. In a government premised on the republican principle of majority rule, that can only mean that the structures of the government itself have become dysfunctional. Fixing them must precede any policy innovations.

While Kotkin might not follow through precisely on how his various classes interact, his book is nevertheless illuminating. The chapter on the tech class is worth the purchase price alone. Kotkin is to be commended for seeing past the daily bric-à-brac of American politics to perceive the newly emerging class divisions. More work must be done on what to do about these issues, but this book is an enormously important first step.

Published under: Book reviews