The Politics of Inequality: A Political History of the Idea of Economic Inequality in America

| THE POLITICS OF INEQUALITY |

The Politics of Inequality

A POLITICAL HISTORY OF THE IDEA OF ECONOMIC INEQUALITY IN AMERICA

With a New Preface

Michael J. Thompson

COLUMBIA UNIVERSITY PRESS    New York

COLUMBIA UNIVERSITY PRESS

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Copyright © 2007 Columbia University Press

Preface © 2011 Michael J. Thompson

Paperback edition, 2012

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E-ISBN 978-0-231-51172-8

Library of Congress Cataloging-in-Publication Data

Thompson, Michael, 1973–

The politics of inequality : a political history of the idea of economic inequality in America / Michael J. Thompson

    p. cm.

Reprint of 2007 edition. Includes new preface.

Includes bibliographical references and index.

ISBN 978-0-231-14074-4 (cloth : alk. paper)—

ISBN 978-0-231-14075-1 (pbk : alk. paper)—

ISBN 978-0-231-51172-8 (e-book)

1. United States—Economic policy. 2. Distributive justice—United States—History. 3. Distribution (Economic theory)—Political aspects.

    I. Title.

HC103.T56 2007

339.2'20973—DC22

2007012874

A Columbia University Press E-book.

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FOR MY TEACHERS

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—MENANDER

| Contents |

PREFACE

ACKNOWLEDGMENTS

Introduction. The Political Dimensions of Economic Inequality

1    The Critique of Economic Inequality in Western Political Thought:

The Continuity of an Idea

2    The Liberal Republic and the Emergence of Capitalism:

The Political Theories of Optimism and Radicalism

3    The Transformation of American Capitalism:

From Class Antagonism to Reconciliation

4    Embracing Inequality:

The Reorientation of American Democracy

Conclusion. Restating the Case for Economic Equality

NOTES

BIBLIOGRAPHY

INDEX

| Preface |

The harsh realities of economic inequality have only increased in intensity since the initial publication of this book in 2007. The gap between economic classes in American society continues to expand and political parties are polarizing, while organizations that secure political power for corporations intensify their influence on policy and elected officials even as unions fragment and dissolve. The results are that the progressive institutions erected during the great decades of reform in the early to mid-twentieth century are being dismantled, and American democratic institutions are now taking on the features of outright plutocracy. But one thing has remained stable throughout: progressive responses to inequality remain weak and ineffectual. In this sense, the central argument of my book retains its salience for contemporary affairs and events: the revival of America’s lost egalitarian tradition must be at the center of a new politics against inequality. The originators of America’s egalitarian tradition were clear in their insistence on anti-hierarchical forms of social organization and the need to prevent the dominance of wealth in order to maintain a democratic republic. They saw economic divisions as inequalities of social power, the very soil from which social domination and relations of subordination and servitude would spring forth. But today, debates about economic inequality are obscured by talk of fairness or of economic efficiency. In some ways, this discourse on economic inequality revives the language of a once-discredited social Darwinism: if taxes rise on the wealthy, the jobs they create will disappear; policies that push for redistribution punish the agents of innovation; and most recently, with the rise of the Tea Party, any governmental interference in economic life is seen as inherently despotic.¹

The Politics of Inequality deals with this question in the most direct way. It argues that the reframing of liberalism that occurred in late-twentieth century American political culture has hijacked our understanding of economic inequality. The history of the egalitarian movements and thinkers that were once vibrant in American history drew upon a reservoir of ideas and values that have since dried up in contemporary political culture, leaving us bereft of crucial framing mechanisms to assist in a critical appraisal of the contemporary social order. Ideas that once placed emphasis on the absence of economic servitude, on reigning in the power of economic elites and social hierarchy, have all eroded. Recent political events give ample empirical justification for this thesis. In contemporary politics, much can be learned from the ways that the business community has been able to assert control over political parties, educational imperatives, the media, and the broader political culture itself. Political ideas serve a legitimating function for any social order. I want to suggest that delving into the historical reserve of political values developed in the course of American political thought can and should help us frame a new politics against economic inequality and toward a more compelling sense of social justice.

The statistical features of this debate are beyond dispute. Despite conservative attempts to mask the issue, economic inequality has continued to surge. The first decade of this century has seen the economic prospects of both the poor and the middle class fall, as wealth and income for the upper ends of the distribution have increased exponentially.² At the same time, American society has seen its average economic well-being outpaced by overall GDP: as Americans work longer and harder, they are paid less for their increased labor time and productivity.³ To protect their gains, economic elites have captured enormous political power in national and state governments, and the problem of oligarchy has now become a concern for mainstream social scientists.⁴ Empirical researchers continue to document how economic inequality has deleterious effects on multiple facets of individual quality of life as well as on personal and public health.⁵ We also have ample evidence that economic inequality suppresses political engagement, weakening democratic institutions and creating an even richer soil for entrenched elite control.⁶

This book attempts to answer the question of why American politics does not evince a more progressive response in the face of ballooning inequality and the emerging oligarchic tendencies in American social and political life. One classic explanation of this problem has been to understand the lessening friction between classes as the result of structural compromise. When the wealthy and the state allow for marginal redistribution and other mild concessions, the result is an attenuation of class tensions and conflict.⁷ Yet another comes from a different perspective. This point of view sees that any system of social institutions becomes legitimate in the minds of its members to the extent that they are adapted to it. Thus, the cultural and educational dimensions of society are able to forge a consensus around the present system and social order, thereby legitimating its consequences. One can argue that the business community has been successful in making certain ideas about our economic life ambient in our culture, rendering them almost second nature. But perhaps the most pervasive among all these explanations is the idea that inequality is the result of reward for innovation. Those that make more are remunerated for what they have been able to produce and create. We all benefit and, the argument continues, the rich have earned their wealth accordingly. This also leads to a sense of fear: redistributional policies will scare off entrepreneurs and businesses, leaving us without jobs or rendering us less competitive. Tax cuts on the wealthy and on corporations are now viewed as logical if not necessary, particularly in a period of economic crisis.

The idea of the market in our culture has therefore been recreated as an entity distinct from its human participants. This new, re-invented market ideology is an individualized economy, one devoid of relations of social power, without political interests: a natural field where only the best suited can survive the bellum omnia contra omnes. It is a market consisting of rational agents, preference sets, and utility curves. It is constituted by iron-clad laws that must not be violated, not without paying extreme social costs.⁸ In this way, Americans have come to see deference to economic elites as being in their own interests—nay, as part of the natural warp and woof of the modern world.

No less of a problem has been the weakening of the progressive discourse on this theme in recent decades. Whereas progressive political thought and theory had once seen issues of class and economic power as the centerpiece of its concerns, late twentieth and early twenty-first century leftist theory has been fragmented by issues such as identity and culture that are now given primacy. The corrosive effects of irrational, pseudo-intellectual fads such as poststructuralism, postmodernism, identity politics, and cultural studies stand as barriers to conceiving ways of combating economic inequality.⁹ The move away from materialist forms of political and social theory has meant a move away from concrete concerns with social power that are crucial for nourishing ideas that counter the hegemony of economistic and neoliberal paradigms of thought. To enliven the discourse of economic justice and equality once again, we need a return to just such concrete understandings of politics, and of economics as well. I remain convinced that this politicization of economic life is the most genuine path toward rebuilding a strong political response to contemporary economic inequality, one in stark contrast to the timidity of contemporary liberalism and the incoherence of academic leftism.

But what would such a politicization of economic life and institutions look like? As I argue in the pages that follow, it means seeing economic relations as relations of social power, subordination, and control; it also means moving away from the liberal structure of thought that has become ascendant and looking toward the republican idea of holding economic institutions accountable to public, democratic ends. Anathema to the assumptions of those that see American politics as exceptional with respect to economic justice, movements against economic elites, oligarchy, unequal economic privilege and property, the emergence of industrialism, and of capitalism were all at the heart of America’s egalitarian tradition. How can a free society be maintained without a fairly equal dispersion of property? How can a state of equals be maintained without preventing the agglomeration of a wealthy minority able to subordinate the entirety of the political community to their interests? Those informed by the egalitarian tradition knew it could not be, and it is this impulse that I seek to tease out of the intellectual debates on economic inequality in American history. The political traditions that have informed previous periods in politics are needed to frame the problems of the present. What I document in this study is the devolution of America’s egalitarian tradition: a tradition of thought that was once held together by its adherence to a conception of democracy rooted in the republican idea that unequal property led ineluctably to unequal political power. The ideal of modern republicanism was to create a self-governing political community, one where elites of all types would be held accountable to the common good.

Today, this tradition has almost completely disintegrated. Our culture has been reprogrammed to see equality as a catch-word for tyranny, for social control. Now, for reasons never adequately justified, the belief persists that equality is achieved at the expense of freedom. But this change in the understanding of economic equality in American political culture is at odds with the overwhelming bulk of its past traditions. The critics of economic inequality informed by this republican ideology knew that it would lead not only to exaggerated political influence and power. They also knew it would spell the end of the egalitarian relations that were the very essence of a democratic polity and society. In some ways, this was resonant in the idea—first initiated by Aristotle in Books Three and Four of his Politics—that the nature of a citizen was that he knew how to rule and be ruled: the essence of what it meant to live in a free (i.e., self-governing) and equal political community was that each knew how to give as well as take commands and to accept the rule of what was best for all, all for the purpose of serving the common interest. But inequality in property and economic power creates a different dynamic. It marks off one class of citizens habituated to ruling from another routinized into being ruled. In short, it creates a situation of subordination, of mastery and control, of permanent serfdom. In such a situation, living in a free society, in cooperation with others for mutual benefit and the common good, becomes impossible.

It may seem a long stretch from this insight to the realities of the present, but this would be a mistake in judgment. The inequality we witness today is not only a matter of unfairness, it is a matter of social subordination and is a threat to democratic forms of life. As our common public goods come under attack, as tax burdens become ever more unequally distributed, as production decisions become more centralized and less accountable to democratic and public ends, and the more that political elites come under the direct influence of the power of economic power, we begin to see the erosion of the structure of democratic life. Dispossessed of those goods that were once seen as easily accessible—affordable higher education, decent wages, ample leisure time, and so on—the effects of economic inequality are becoming ever more apparent. This is because economic inequality means an inequality of the most crucial power resource attainable in society: wealth. It is for this reason that the politics of inequality always stirred the deepest passions and democratic sensibilities. The fight for economic equality needs to be seen as a fight for the kinds of social accountability that democracy requires.

Social movements and organizations therefore need to privilege once again this egalitarian tradition, drawing inspiration and conceptual argument from the ways in which egalitarian thinkers in American thought were able to contest the asymmetrical power relations intrinsic to economic inequality. These movements are the crucial agent of progressive, democratic social change. They provide the essential active element that prevents the state and economic elites from binding together to promote the interests of the wealthy.¹⁰ Economic, fiscal, and tax policies today are the direct expression of this. Tax cuts on the wealthiest Americans and corporations, the slashing of public spending, vociferous movements against all forms of regulation and redistribution—all speak to this new reality. New movements that privilege economic equality will therefore also contain within their list of demands a new form of democracy. They will demand the reinvestment of exorbitant profits into socially relevant, public ends; they will push for the democratic accountability of the business community just as they will fight to extend and protect their rights to health care, leisure, and a humane work environment; they will seek to wrest from the minority of society the ability to command the labor and economic resources of society as a whole; they will, in short, insist on the democratization of our common economic life. In a Machiavellian ritorno ai principi, these movements must look to the past, to the values and principles that laid the foundation for the fight for a more just, more democratic society, one devoid of the arbitrary power of the wealthy and their ability to dominate society for their particular ends.

Today’s movements must abandon the liberal mantras of distributional fairness and pick up on the conceptual language of these past thinkers and movements. They must turn their attention to the political valences of the economy and seek to employ politics against economics. They must see that democracy is a style of life that must be extended deep into the domain of our economic institutions. Only in this way will a true politics of equality be able to take root and defend the very substance of genuine democracy conceived as a protector of the common benefits that living in a civilized society of equals can provide. Anything less means a diminution of our collective quality of life, of our ability to control the power and interests of concentrated wealth, and an erosion of our democratic institutions and sensibilities—it means, in short, our political, personal, and cultural debasement. For this reason, I remain hopeful that the ideas of this egalitarian tradition can help us reframe a new politics of inequality and move us away from what looks to be a permanently unequal and unjust social order.

MJT

New York City

Spring 2011

| Acknowledgments |

Many people helped me think about and develop the ideas in this book. Stephen Eric Bronner, Ruth O’Brien, and Frances Fox Piven read various versions of the manuscript with great care, providing me with critical comments and challenging different aspects of my argument. Others gave comments on the manuscript or helped me through our conversations on the subject matter of this book: Sam Aboelela, Stanley Aronowitz, Marshall Berman, Bob Fitch, Philip Green, Dick Howard, Gareth Stedman Jones, Eliot Katz, Antonia Levy, Elena Mancini, John Mason, Charles Noble, Corey Robin, Anne Routon, Joan Tronto, John Wallach, Debbie Wolf, and Gregory Zucker. I would also like to thank my editor at Columbia University Press, Peter Dimock, for his consistent interest in this project and his deeply insightful comments on the manuscript. I would also like to thank Korey Hughes for compiling the index. Of course, it goes without saying that all errors are my own.

What is the political significance of economic inequality? With what moral wrongs does it resonate? In what ways does the existence of economic divisions in society threaten or put into question our conception, culture, and institutions of democracy? Throughout the history of Western political thought, injunctions against unequal divisions of property, wealth, and power can be found, from the scrolls of ancient Greece to the political philosophy of the mid-twentieth century. The problem of economic inequality has always been tied to the discourse of politics, to the problem of power itself. As the consciousness of political freedom has spread through time, so has the problem of economic inequality been central to this debate. Today, however, even as we witness the ballooning of economic divisions, we are faced with the reality that, as a political concern, economic inequality seems to have lost its place at the center of the debate about democratic life. It is time to remedy this deficiency.

This book seeks to make an argument about economic inequality that has all too often been neglected in contemporary debates; it is an argument that finds its roots deep in the tradition of Western political thought: that economic relations are, in fact, political relations; that the economy is political precisely because it manifests relations of social power. This was taken for granted by thinkers in the past, but it is something that has been sadly lost as we have witnessed the separation of economics from politics in the present age. The existence and the worsening of economic inequality in contemporary America—not to mention globally—therefore constitutes a serious threat to the republican themes that motivated the birth of the American political project from its inception, as well as the democratic themes that broke through to the world during the Enlightenment.

The final decades of the twentieth century witnessed a radical transformation in American economic and political life. The great reaction against the welfare state, which was erected during the New Deal and had its roots in the Progressive Era’s philosophy of an expanded state and a skepticism of laissez-faire economic philosophy, has given way to a new, altogether different conceptualization of economy and society. How this happened and what this transformation means are at the heart of the present study. This book examines economic inequality as it was conceived by political thinkers and social critics throughout American political thought for the purpose of shedding light on the nature of contemporary American politics and its relation to the problem of economic inequality. In the first instance, it will trace the historical development of the ideas that American political thinkers and critics held concerning economic inequality. My second aim is to explain the current acceptance and toleration of economic inequality in America; to examine the change in political ideas and values that have led to the acceptance and sometimes legitimation of economic divisions and inequalities that mark the contemporary American political scene.

My basic argument is that liberal and republican themes were wedded in the American mind at the nation’s founding. Both viewpoints saw an intimate relation between power and property, if not coevality with each other. Liberalism was a doctrine of individual labor and, by extension, property, and it sought to give independence to individuals, smashing feudal relations of dependency that were predominate before the American Revolution. Republican themes emphasized the need for the institutions of the state to ensure that inequalities in property—and by extension, power—were kept in check. Within the context of an emerging commercial society bent on popular government, the theme of economic inequality was therefore central. Both liberalism and republicanism—two doctrines that have traditionally been seen as oppositional in previous literature on American political history—were actually seen as two sides of the same coin. Both sought to confront inequality of property and political power, and each saw that this was a central concern in eradicating the vestiges of feudalism that were at the heart of the birth of the American republic and modernity more generally. But the real essence of the story is that these two impulses begin to differentiate over the course of American history as the economic context develops. The evolution of capitalism begins to chart a course for liberalism at the expense of republican themes. By the end of the twentieth century, liberalism becomes co-opted by capitalism, and republican themes of the past fade into the background. The result is an overall acceptance or at least toleration of economic inequality and the gross differentials in political and social power it engenders in contemporary American politics and culture. I contend that this has led to a reorientation of democratic life in America and that as long as economic inequality and politics are held separate, a more vibrant democratic culture and consciousness will not be possible.

Indeed, the success of neoconservative and neoliberal thought over the last thirty-five years has had the effect of redrawing the boundaries of American liberalism. Nowhere is this more in evidence than in the loss in mainstream American political discourse of one of the most crucial veins of American political thought, which ran, until quite recently, like a roiling river at the heart of American life. This vein is the politics of economic inequality—a subject this book attempts to reclaim for our present. An intellectual history of the politics of economic inequality in American political thought is necessary, I think, to restore to American political culture its more generous and accurate contours after the assault that has been made upon American liberalism by the forces of American conservatism in recent decades.

How and why has an economy that continues to generate and perpetuate such rigid forms of economic inequality and such disparities of political and social power that spring from it not fostered more resistance and critique from within the American body politic? This book contains an attempt at a partial answer to this crucial question. The answer requires, among other things, an analysis of the developmental changes in the way that the concept of economic inequality has been understood down through American history. That understanding must entail, in turn, the recognition that the way the present economic inequality in both the American nation and the world is understood and justified marks a profound departure from the tradition of egalitarianism that dominated American political thought for most of its history. My aim in this book is to retrace the outlines of that American egalitarian political tradition and to locate it within the long tradition of democratic political thought going all the way back to the Greeks. At the end of this effort, it is my hope that the reader will be in a position to see the American egalitarian tradition’s present exhaustion in the national political arena as an argument for—and not against—its resuscitation and rejuvenation as a necessary part of a worldwide democratic politics yet to be realized.

In addition to this, I think that the economic egalitarian tradition that I will present here is so crucial because it is at the heart of the American republican project itself. The American idea of a democratic republic had always been premised on an antipathy toward unequal divisions of property because early American thinkers saw in those unequal shares of economic power echoes of what had been historically overturned: a sociopolitical order of rank and privilege; a static society that sought to crystallize power relationships and hierarchical economic and social relations characterized by corruption and patronage; in short, a feudal order where the exercise of power was arbitrary and the prospect of domination pervaded everyday life. The reason I trace the historical development and inevitable dissolution of the discourse on economic inequality in American political thought is to show that the American republican project was, in fact, deeply tied to the issues of economic inequality as a reaction to feudal social relations. Any political community that suffers from severe imbalances between rich and poor is in danger of losing its democratic character, and I will investigate this theme in detail in the pages that follow.

American political thought has therefore been characterized over the centuries by an overriding concern with the problem of economic inequality, and the reason for this should come as little surprise. Students of American political thought and political theory know the Enlightenment foundations upon which the American political project has always rested. Rooted in the political concern for equality and for democratic republicanism, it has also been marked by a liberal economic ethos and the rapid development of a capitalist economy, class conflict, and competing views of the public good. The clash between these two impulses in American political history occurs frequently. Perhaps the most salient historical locus for this clash is the subject of economic inequality, and it is one that—at least throughout modern history—has galvanized political movements and social critics to rail against hierarchy, servitude, unfreedom, and the erosion of democratic forms of life. The exhaustion of the once-robust critique of economic inequality therefore coincides with the erosion of political life more broadly and the fate of modern democracies more specifically, since it is within the nexus of economic constraints that most Americans face threats to their well-being, substantive political rights, and a culture of democracy. Even more, the present debates that surround economic inequality need to widen the field of vision, to enlarge the scope of concerns that, in the past, were associated with unequal divisions of property and wealth. The political dimensions of economic inequality can be seen not only in the conditions of the working poor, in urban ghettos, and in the overall stagnation of wages even as corporate profits surge. These debates need to include a discussion of the ways that economic inequality gives undue influence to the business community, transforms the imperatives of education, and fosters a culture of competitiveness and consumerism at the expense of broader political concerns. Any discussion of economic inequality needs to be tied to much more than debates about fairness and opportunity; it must confront the ways that this inequality shapes the political community as a whole by creating relations of subordination among its members.

Although the concern with economic inequality has hardly faded from the public discourse, it certainly no longer commands the attention it once did. The question, Should inequality matter? has become a common one in contemporary debates about American public and economic life. Economic liberalism has provided arguments for justifying inequality just as contemporary political culture also seems to tolerate economic divisions more than at any other time in American history. In the not too distant past, the realities of economic inequality spurred moral outrage. Combating the effects of inequality was the imperative of much of American social policy throughout the twentieth century. Indeed, during the New Deal and through the 1960s, there was great attention paid to the distributional impact of the capitalist economy and its effects on social welfare. Far from seeing markets, as they are seen today, as neutral and natural, the realities of the Great Depression and massive inequalities in wealth and incomes were seen as a detriment to political democracy. The reorientation of government policies has been matched by a similar change in public attitudes toward economic and social inequality. Although Americans still think economic inequality is morally wrong, they have accepted its consequences more than in previous eras in American history. They no longer see the connection between politics and economics, nor do they glimpse the ways that economic constraint interferes with the project of political democracy.

But even more, the problem of economic inequality needs to be looked at afresh in my view because it is no longer an issue that presents itself solely within a national context. Economic inequality is intimately bound up with the global system, with the elaborate networks of markets and capital flows that enmesh the planet. There is no way around the fact that America’s economic egalitarian tradition is something that, although it was born out of a national context, in my view can also reinvigorate the global discourse on economic inequality. What this American tradition privileged was the notion that economic relations were, in fact, essentially political since they could impede or enhance, depending on the institutional context, political freedom and a more substantive, realistic sense of human equality. Not content with the formalism of political and legal equality, this tradition in American political thought saw that economic life was a counterpart of political life and the ability to live without excessive want or dependency on others and with self-sufficiency was an essential element of human liberty. It was not possible for an individual to be in any