The social structure of the United States has a shape of its own. It is not a typical industrial society. Nor is it distinguished from others simply by virtue of being more advanced on an evolutionary scale, showing the face of the future to the rest of the world. Its most striking features are its great industrial productivity and its world-leading level of consumption; its rate of educational attainment and its number of institutions of higher education, by far the highest in the world; and its enormous expansion of the credentialed professions and concomitantly of the horizontal, decentralized form of bureaucratic organization. These features have usually been taken as a package, exemplifying the knowledge-based postindustrial society toward which the world is tending. Other features of America—its relatively nonideological politics, its degree of governmental democracy—have been claimed to be further consequences of this evolutionary stage as well. But we have seen that the detailed evidence does not support this model of a technocratic meritocracy; the chain of causality does not run from education-based skills to economic productivity, and the other links among the parts are equally dubious.
Generally speaking, an evolutionary stage theory means a monocausal theory. One factor is assumed to have such overriding importance that changes in it define entire stages of social development. The technocratic—functional theory, in effect, is one such model, placing central importance upon the skills demanded by a particular level of productive organization. More general evolutionary models (e.g., Parsons, 1966), emphasizing a trend toward the natural selection of more efficient organization, also rest upon a single underlying dynamic, which makes the different institutional sectors—economic, political, educational, cultural, etc.—all correspond to each other. Marxist evolutionism as well posits a single factor of such overriding intensity—the trend in the economic organization of production—that all other institutions follow in its wake, and the only major differences among societies are historical ones among levels of development.
This kind of monofactor emphasis is very misleading. To be sure, most models recognize a variety of conditions and variations, but these are left untheorized, regarded as minor elaborations upon the main pattern. In fact, there are major differences among societies even within the great historical and archaeological categories of economic subsistence levels, and it has usually been these differences that have been crucial for the patterns of world history. Max Weber (1951, 1952, 1958), doubtless the foremost exponent of a multicausal view of society, placed great emphasis upon the differing forms of cultural and political organization found in the agrarian societies of China, India, the Middle East, and Europe as the key to the subsequent industrial revolution. At a lower level of economic production, there are major differences among various types of horticultural (and even among hunting-and-gathering) societies.
Hence it should hardly be surprising that industrial societies should differ among themselves, or that their political and cultural institutions are not simply hinged to a common economic pattern. Clearly, the politics of industrial societies vary structurally from centralized-bureaucratic or personal-patrimonial dictatorships to decentralized republics, and political economies vary among communism, capitalism, mixed welfare-state socialisms, and ethnic–racial fascism. Wishful thinking aside, there is no clear trend from any of these to any other. In addition, industrial economies themselves can be diversified or based on a single major product; they can be wealthy or relatively poor, stable or unstable. Similarly, educational systems vary among elitist and mass, sponsored and contest mobility forms.
It is not so useful, though, to go to the opposite extreme and abandon any search for patterns whatsoever, for this means giving up the possibility of explanatory generalization. A long list of causal factors can soon become a burden upon one’s capacity to see any pattern at all. What we need is a multifactor perspective composed of a manageable number of variables. Combining these, we may be able to see a wide range of alternative outcomes as the products of a few distinct conditions.
Some main dimensions of variation, in fact, are implicit in the theory of cultural markets presented in Chapter 3. That model proposed that stratification is determined by the intersection of the material production process and the cultural economy, especially to the extent that culture is produced by specialized organizations, independently of the everyday transactions that make up social life. Hence we have two main sets of causes: the conditions of the material economy and those of the cultural economy. Since the two spheres interact, let us attend to the distinctive features of each by itself. A high production of cultural currency, it was proposed, is determined by the level of material resources invested in it (which is one of the ways in which it is dependent upon the level of material production) and by the development of technologies of communication, which is an independent causal factor. But technologies, especially of this sort, tend to diffuse throughout the world fairly rapidly and hence tend not to differentiate among societies. Where societies do differ sharply in their cultural markets is in the degree of centralization or decentralization of cultural production and hence in the degree of competition among culture producers. It is here that the main dimensions of variation cut across the level of economic production.
The centralization or decentralization of cultural production is ultimately a matter of the intersection of history with geography. That is to say, particular parts of the world, because of local geographical peculiarities and their degree of connectedness or isolation from other places, develop particular cultural patterns. When people carrying these patterns come into contact through migration or conquest, a multicultural society is generated. These separate cultures may eventually assimilate to a common pattern, depending upon various conditions. But this does not happen inevitably, for there are countervailing forces to the forces of cultural assimilation—notably the processes by which history is encapsulated in cultural institutions. Ethnic communities that find themselves in or are forced into particular economic sectors, and especially distinctive positions of domination or subordination, tend to be continuously reproduced by the process of stratification; this is even more so if they have the resources to generate specialized culture-producing organizations, such as in the fields of religion, education, and entertainment. The solidarity of ethnic cultures is a weapon of social domination, which continues long after the initial forces that first stratified those groups have disappeared. Past traditions continue to complicate present societies because groups struggle to carry on institutions shaped in the past. History calls no time out; people living at any point in time continue to use whatever advantages they have inherited, whether in the form of cultural, organizational, or material property.
Thus a decentralized and hence highly competitive cultural market depends, through a chain of causal conditions, upon initial geographical differences and their historical encapsulation by stratified economic factors—that is, on traditionalized cultural bases of economic appropriation—and on specialized tradition-reproducing organizations. The degree to which competitive cultural markets can be active, moreover, depends upon how much the coercive power of the state allows them to do. This leads us again to a chain of causality involving geography and history. For states can strongly affect the pattern of economic stratification among cultural groups (by sheer conquest, as was so prominent in agrarian societies; or by legal enforcement of patterns of ethnic–racial job monopoly, by controlling terms of immigration, etc.). States can also directly act to foster or prohibit churches and schools. But again, the power of the state to do these things is affected by its own geographical setting and by its own encapsulation of prior historical patterns. Strong states have been those whose geography has given them a favorable military situation externally and favorable conditions of transportation and communication for internal unification.1 And the type of state itself—its degree of centralization–decentralization and of democratic sharing of power—often involves the encapsulation of the patterns of a prior period of history. Hence geographical conditions and self-perpetuating institutionalizations of historical patterns are crucial in the realm of the state, making it both a factor in its own right, varying independently of (though interacting with) the economy and also making a causal link by which geographical and historical variants affect the operation of the cultural economy.
In this perspective, every modern industrial society has its own unique combination of factors. None should be regarded as representing an evolutionary stage through which all the others will pass. For although technologies may be exported fairly easily, the other factors cannot. The type of economic production, the degree of activity of a cultural currency, and the structure and actions of the state are independent conditions, and the latter two may be quite locally particularistic. The United States is distinctive because of its geography and historical background. Other technologically advanced societies are different because of the structural forms carried over from their histories: Russia with its post-Czarist despotism, Japan with its clanlike business corporations, France with its Napoleonic centralization, Britain with its lingering gentry, and so on.
Indeed, even the level of economic production is partly determined by local conditions—and in more than the sense that it is affected by its interaction with the local conditions expressed through the cultural market and the state. For a material economy is based not only on a technological type, but also on the natural resources and geographical conditions to which it is applied. Thus the United States has been the wealthiest of all industrial societies, not because it is technologically and organizationally the most advanced, but most importantly because it controls the wealthiest territory upon the earth (Bartholomew, 1954: 20–21). In terms of rich and varied agricultural land, mineral and fuel resources, abundant sources of water power, and inland and coastal waterways for transportation, the territory is an extremely favored one for economic development. Hence the United States’ world leadership in GNP (both absolute and per capita) must be attributed to geographical peculiarities that cannot simply be imitated by other countries.2 This fact has often been lost in discussions of economic development that attribute the observed world patterns to social organization or culture, and which hold out the United States as a stage through which all societies will pass. In explanations of current American social structure, it is important to see that the high level of economic productivity is determined by factors other than the output of the educational system or by the shape of the modern professions; indeed, these appear primarily to be luxuries that a resource-rich society has been unusually able to afford. Thus introducing geographical peculiarities into our view of an economy enables us to see the direction of causality more clearly.
The pattern of development in the United States is attributable to several key conditions: Like many other societies today, American society is based upon industrial technology, and hence it shares with them the familiar features of a high level of urbanization, a politically mobilized populace, primarily nonagricultural employment, pervasive literacy, generally bureaucratic organizational style, and so forth. Its geographical resources, however, are especially rich, allowing an unusually high level of production and consumption, great military might, and the possibility of considerable spending on a sinecure sector. The United States is also very sharply distinguished from most other industrial societies because it has been among the most pervasively multiethnic societies in the modern world, especially at a crucial formative period in its institutions.3 This has meant that the United States has had an extremely volatile and competitive cultural market, initially with effects upon religious movements, and then more significantly, producing the largest and most inflationary educational system in the history of the world. The cultural market has been especially volatile because the geographical pattern has also favored government decentralization, and thus state effects have amplified rather than inhibited cultural competition. Finally, the United States is politically distinctive. It has inherited the basic institutions of republican government, and in an unusually decentralized form at that, as the product of the geographical conditions and historically crystallized institutions of the struggles of late medieval England (see Rosenberg, 1958: 1–25; Huntington, 1966). Moreover, the sheer size of the United States and the historical pattern set under the limited conditions of transportation in the institution-forming period of its history have helped extend this decentralized pattern. And in content, American politics has been especially capitalist in its emphasis, whereas its economic conflicts have been centered less on class-wide confrontations and more on smaller ethnic, regional, and limited occupational interest groupings.
Some explanations as to why the United States is the most capitalist country in the world, and why it has had its peculiarly fragmented class struggles, will emerge as we pursue the analysis of the development of the American economy and cultural market and their mutual interpenetration. The expansion of the cultural market will be the subject of the next chapter, especially in relation to the ethnic immigration and conflict that overshadowed its formative period in the late nineteenth and early twentieth centuries. The outcomes of this for the occupational structure and for the political side of the class struggle generally will be reviewed in Chapters 6 and 7. But it is important to keep in mind that the United States has not always been a multiethnic society and that a crucial formative period for the organization of the material economy took place earlier, under different influences. Thus the United States is a mixture of several institutional structures: the structure of the oligopolistic corporations in the productive economy, already formed before the rise of the credential system, and the overlay of credentialism and credential-based occupational enclaves that arose in the succeeding period of multiethnic conflict and an inflationary cultural market. In order to avoid mistaking the latter for the cause of the former—of seeing the educational and professional expansion as the cause of the corporate oligopolies—it is worth examining briefly the rise of the national economy itself. This prelude to the analysis of the rise of the credential system will make up the remainder of this chapter.
The main structures of the American economy are the product of nineteenth-century developments, especially the favorable geographical conditions and the transportation revolution that produced the first waves of industrial growth. These economic forms were laid down shortly after the Civil War and have changed relatively little since then. Only the long decline of small farms has changed the organizational face of the private economy, and their lengthy survival into the twentieth century may be explained by the political effects of geographical decentralization (and partly by the politics of cultural conflict with the immigrants). The national corporate economy and the survival of small-scale local businesses and professions are features of a naturally wealthy, geographically far-flung, politically decentralized nineteenth-century society. The science-based technologies of the twentieth century have not fundamentally changed this structure; they have only contributed to the economic overproduction strains within it and to the expansion of the sinecure sector. The basic economic organization of American society was laid down with a relatively simple industrial technology; the bureaucratic national corporation did not have to wait for the advanced electronic and chemical industries following the 1920s and 1930s to link scientific research and development to the industrial process. And the basic shaping of industrial society in America was carried out with a relatively uneducated work force; the meshing of the extended educational-credential system and bureaucratic employment is something that came later and largely outside of the nexus of technological demand.
The second, twentieth-century, America is the result of massive and ethnically diverse immigration, especially in the late nineteenth and early twentieth centuries. Its earlier outlines may be seen in the response to Irish immigration before the Civil War; the results of the importation of African slaves during the colonial period were largely delayed until their mobilization into urban society in the mid-twentieth century. These cultural conflicts contributed above all to the expansion of the culture-producing sector—and in particular the expansion of the educational system, which was used both as a means of control and of monopolization by the Anglo-Protestant bourgeoisie, and eventually as a path to creating positions and to occupational mobility by many immigrant groups themselves. The credential system became the basis for struggles over the control of occupations by professionalization and the model for other forms of licensing and position monopolizing. Educational bureaucracies themselves led the trend of increasing government employment that has characterized the twentieth-century labor force in response to continuous overproduction pressures and the mobilization of ethnic politics.
Thus we have two sets of factors underlying present-day American social structure. The conditions that we may somewhat glibly refer to as “nineteenth-century America” are those of geographic isolation and political decentralization upon a resource-rich territory. The conditions that may be called “twentieth-century America,” because their main impact was subsequent to and building upon the earlier economic and political structure, are the massive immigration that transformed America into a multiethnic society and the improvements of twentieth-century technology that brought about our economy of overproduction and occupational sinecures.
The Nineteenth-Century Basis
The U.S. economy was already centered on industrial enterprise by the time of the Civil War (Gates, 1960; Cochran and Miller, 1961; North, 1961; Struik, 1962: 175–199, 303–333). Agriculture was being mechanized; the factory system of manufacturing was already extensive; the mining and heavy metals industries had been established; the national railway network was near completion. The 35 years after the Civil War were less a period of industrial foundation than of consolidating a national economy under the control of large corporations. Although the settlement of the trans-Mississippi West continued through the 1880s (with attendant wars on the indigenous Indian population), modern industrial America was clearly established by the last quarter of the nineteenth century. The railway network was complete, providing national marketing for all commodities. Agriculture was not only commercial, but also organized by large enterprises using mechanical equipment; the smaller farmers began to be squeezed out and the rural populace began to diminish as a proportion of the whole.
As Table 4.1 shows, the proportion of the labor force in agriculture has declined steadily since the early nineteenth century. It dropped below 50% of the labor force in the 1880s. Conversely, manufacturing and construction increased, making their biggest leap between 1850 and 1900. The shift is not quite as severe as one might expect, however. Even in 1820, about one-sixth of the labor force was in manufacturing and construction, although mostly in preindustrial craft or small-scale enterprises. This sector increased to about one-third of the labor force by about 1920 and the proportion has stayed approximately steady ever since. Contrary to the expectations of mid-nineteenth-century observers, modern society has not become dominated by industrial workers, but neither have they tended to disappear. The late nineteenth-century pattern, for the core of the industrial system, has turned out to be an enduring one.
Table 4.1 Industrial Distribution as a Percentage of the American Labor Force, 1820–1970
Sources: Historical Statistics of the United States, Series D, 57–71; Statistical Abstract of the United States, 1971, Tables 341 and 342. Figures should be treated as approximations, since not all sources and time periods use the same definitions of enterprises nor do they all have data of equal reliability. Totals may not add up to 100% due to rounding.
NA indicates not available.
This was true with respect to organizations as well. After the 1860s, concentration set in very rapidly. By the end of the century, oil, steel, tobacco, and other industries had become divided among a few large corporations. The national scope of business was crucial in this development (Chandler, 1959: 1–31; 1962). Those firms that organized a national distribution system had a competitive advantage over local business, thus forcing the trend to bigness. The meat-packing industry led the way, with a refrigerated railway distribution system centered in Chicago. Manufacturers of such products as reapers, typewriters, sewing machines, bicycles, and later automobiles, hit on the advantages of vertical integration. Instead of relying on independent wholesalers for their distribution, major companies set up their own distribution and repair networks, driving out their less efficient small competitors as a result. Expansion backward to incorporate sources of supplies added further stability to the enterprises’ production, thus rounding out the bureaucratic structure of American industry. Another reason for concentration was financial; the large national enterprises needed huge amounts of capital, and by the end of the century the elaborate corporate devices of the trust and holding companies were dominated by the major Eastern banks.
By 1900, the modern pattern was set. The period of competition among numerous small businesses was largely over, and every major sector of the economy was a controlled market, dominated by a few oligopolistic organizations. The “trustbusting” period of reform politics that followed the turn of the century did not reverse the trend, but it stopped concentration just short of monopoly—in some cases breaking up monopolies such as Carnegie’s in steel and Duke’s in tobacco. The resulting level of concentration has remained constant ever since. The new industries (automobiles, electrical equipment, chemicals, aircraft) have quickly taken on the same pattern. Thus in 1920 (the earliest year for which figures are available), the largest 5% of business companies took in 80% of business income, both in manufacturing and finance; this proportion has held steady since then.4
The basic shape of the national economy was thus established early in the industrialization process. The pressures of technology are not crucial in this development; the monopolistic national corporation emerges in tobacco and other agricultural products as readily as in steel and machinery. Rockefeller’s monopoly in oil was established first in the technically crude market supplying oil lamps and became transferred to the automobile market that emerged fortuitously several decades later. Rockefeller’s strategy was typical in that it drew on financial manipulations in the national arena against locally oriented business, and this was done in explicit alliance with the national railroads. Somewhat similarly, the Dupont Corporation’s dominant position was established first by capturing a commanding position in the manufacture of traditional gunpowders as a result of long-standing government contracts, and then enhanced by financial manipulations such as that which enabled it to acquire temporary control of General Motors during World War I; its position was merely extended by the opportunities created by the chemical discoveries in the 1920s and 1930s.
In effect, the geography of the United States, interacting with its demographic and political structures, was crucial for the shape of industrial society. The fertility of the land and its suitability for large-scale agriculture provided an initial basis of wealth and incentive to commercialization; the favorable conditions for long-distance transportation and the abundance of mineral resources made possible a very rapid and productive industrialization. The main limiting factor was the small population, especially early in the nineteenth century. But in an indirect way, the population problem proved to be an added spur to industrialization. It provided an incentive to mechanize agriculture and craft production, and it also tended to keep wages high (relative to labor-rich Europe), ensuring a large consumer demand and hence a spur to mass consumption industries. And these, of course, are the industries in which American innovations are best known: changing the automobile from a luxury of the European upper class into a mass production item; turning photography into mass-entertainment motion pictures; organizing electric power, telephones, radio, and television for mass consumption; pioneering food packaging for large-scale, long-distance storage and delivery; developing synthetic (plastic, nylon, rayon) substitutes for previous luxury goods (porcelain, silk) and thus opening them up to mass consumer markets.5 The twentieth century has seen a continuous series of such expansions, but the pattern was already established in the more traditional products of the nineteenth century.
The relatively thin population and the geographically far-flung economic resources that developed simultaneously in the nineteenth-century boom gave a special prominence to the national transport system. Itself financed on a national scale (and originally an international one, especially through British investments), the railroads provided the basis for a national financial center, which in turn provided the resources that put national corporations in quasi-monopolistic control over most major industries. The large-scale bureaucratic form followed from this geographic scope and was already in evidence in the late nineteenth century (Chandler, 1968: 220–237).
National finance and business were not only better organized for direct economic competition than other economic interests, but they were better organized to gain political influence as well. American government continued the decentralized traditions of the colonists, and westward expansion in the democratic atmosphere of the early nineteenth century resulted in a large number of state governments. These attracted the attention of local speculative interests, especially in local banking. National business, however, concentrated relatively early on the federal government; in the absence of any well-organized opposition, it won major concessions not only in the form of enormous grants to the railroads, but also in the form of favorable policies on finances, immigration, and labor control.6 State governments were generally left to local interests while the plural structure was turned to advantage in the legal maneuverings to find favorable sites for the financial devices by which monopolistic corporations and holding companies were organized. Centralized business prospered vis-à-vis decentralized government.
Against this organizational advantage, labor was especially weak. The peak period of industrialization, the 1880s, was also a period of labor militancy, but the breaking of the strongest union in the Pullman strike in 1894 through the intervention of federal troops symbolized the decisive advantage of national business. The hostility and active intervention of the national government against the unions left the American labor movement relatively weak until the 1930s, a very late period in its industrial history by contrast to European societies.7
Yet the size and natural wealth of the territory, and above all the large consumer markets, left numerous opportunities for smaller business in America; as we shall see, smaller entrepreneurs have held their own in more modest sectors of the economy right up through the present. The “Reform” movement of the turn of the twentieth century was above all a mobilization of the Anglo-Protestant middle class, reacting against the pressures of the new economy and culture, but its greatest successes were against the immigrants in culture and politics, and relatively little was achieved in direct confrontation with the power of the trusts. Middle-class political power was successful primarily on the state level in protecting small entrepreneurs in retailing and services, establishing regulations that favored local price fixing, and giving monopolistic powers to professional associations (Cutler, 1939: 851–856; Gilb, 1966; Wiebe, 1967).
For the shape of economic stratification as a whole, the geographic conditions of America thus had their effects by around the end of the nineteenth century: the power of national finance over major productive processes, its special influence over the national government, the corresponding weakness of organized labor, and the sheltering of small entrepreneurs and professionals within localized enclaves.
Twentieth-Century Outcomes
Early industrialism shows the main patterns of later industrialism. Subsequent increases in the productivity of technology and its linking, for the first time, in a regular fashion to the results of scientific research, produce comparatively minor changes. The developments of the twentieth century do not take place in the basic structure, nor do they greatly change the patterns of class and ethnic stratification, nor the fundamental modes of social selection.
Let us examine what has changed and what has remained the same (see Tables 4.1 and 4.2). The percentage of the labor force in agriculture dropped from 37% in 1900 to 5% in 1970. The proportion in the industrial sector (mining, manufacturing, and construction) has hardly shifted: 28% in 1900, 32% in 1970. The decline in the agricultural sector has been absorbed entirely within the tertiary sector, with transportation and trade and finance growing from 17% to 32%, and services and government from 11% to 33% of the labor force during this period. Since 1950, the only important growth sector for jobs has been in government employment (Table 4.1: a jump from 21% to 33% between 1950 and 1970 in the services and government sector), especially with the expansion of the military, welfare, and educational bureaucracies. The same points may be illustrated with occupational (Table 4.2) rather than industrial breakdowns: The industrial working class (craftsmen and foremen, operatives, and nonfarm laborers) has stayed virtually the same (totaling 35.8% in 1900, 35.4% in 1970), while the largest increases have been in the clerical (3.0% to 17.4%), professional and technical (4.2% to 14.2%), and service (3.6% to 10.3%) categories. In the wealthy industrial society of mid-twentieth-century America, less than one-half of the active adult population engages in the extraction or the production of goods, while the rest are involved either in distribution, administration, luxury services, or the welfare services and sinecures of government employment.
Table 4.2 Occupational Distribution (%), 1900–1970
| Type of occupation |
1900 |
1920 |
1940 |
1970 |
| Professional and technical |
4.2 |
5.4 |
7.5 |
14.2 |
| Managers, officials, and proprietors |
5.8 |
6.6 |
7.3 |
10.5 |
| Clerical |
3.0 |
8.0 |
9.6 |
17.4 |
| Sales |
4.5 |
4.9 |
6.7 |
6.2 |
| Craftsmen and foremen |
10.5 |
13.0 |
12.0 |
13.0 |
| Operatives |
12.8 |
15.6 |
18.4 |
17.7 |
| Nonfarm laborers |
12.5 |
11.6 |
9.4 |
4.7 |
| Service workers, except private household |
3.6 |
4.5 |
7.0 |
10.3 |
| Private household workers |
5.4 |
3.3 |
4.6 |
2.0 |
| Farmers and farm managers |
19.9 |
15.3 |
10.4 |
2.2 |
| Farm laborers and foremen |
17.7 |
11.7 |
7.0 |
1.8 |
Sources: Statistical Abstract of the United States, 1971, Tables 347 and 348; Historical Statistics of the United States, Series D, 72–122.
New industries have continued to appear. Electricity began to be used for light and power in the late nineteenth century, and later for phonographs, movies, and radio. In the early twentieth century, there was the automobile with its effect on the production of oil, rubber, glass, paint, and highway construction. In the 1930s came the chemical industries with the invention of plastics, nylons, cellophane, vitamins, and drugs. After World War II came the invention of jet planes and military rockets and a second wave of electronic developments, such as transistors, computers, and television, and the continued expansion of national chains into retail distribution of groceries, clothing, and meals.
But the level of business concentration has stayed much the same.8 In some areas, such as automobile production, the industry began with competition among a large number of small manufacturers and eventually concentrated around the few well-financed corporations that achieved vertical integration most swiftly. In others, such as electrical utilities, major financial interests dominated the industry from the outset. In virtually every area, the industry came to be dominated by a few big corporations within two or three decades of the first commercial offering of a product. In the major areas of production, above all heavy industry, the quasi-monopolistic national corporation has been the organizational pattern since the late nineteenth century.
This is not to say that the small independent business has disappeared. In the 1960s there were 11 million businesses in the United States, 90% of which had 20 employees or less (Statistical Abstract, 1971: Tables 710, 720). Most of these were unincorporated and concentrated in retail or services (restaurants, bars, laundries, home repairs, or business services) and in construction and real estate. There also remain a few small commercial farms, although the twentieth century has seen a steady trend toward large-scale concentration in agriculture, virtually completed in the 1960s. Outside of agriculture, however, the proportion of small businesses has held fairly steady since the establishment of oligopolies around the turn of the century.
There are several reasons why the small business sector has been able to maintain itself in an economy overwhelmingly dominated by large corporations. Certain enterprises based on local markets—for example, bars and restaurants—are accessible to very small capital investments, and in the case of bars and liquor stores, are protected by local licensing policies. Other areas—for example, the entertainment world—are highly volatile, marketing a series of continually innovative, short-term projects. Although large-scale corporations dominate distribution in records and movies, the production aspect is often highly decentralized. Such areas of high risk can most economically be externalized by large corporations; thus recording studios and franchise dealers of autos, appliances, or gasoline can survive as independent (or semi-independent) small businesses (McCauly, 1966: Hirsh, 1972: 639–659). Very modern areas of highly technical innovation such as electronics are often pioneered by small businesses, usually by engineers or applied scientists striking out on their own. These new areas have usually been consolidated under the control of a few large corporations in a few decades, but the continual innovativeness of the American economy has constantly produced a certain number of small businesses, however unstable, at any given time.
How do we look at the structural changes that have taken place in twentieth-century America—the decline of agricultural employment, the growth of government, of education, of clerical, professional, technical, managerial, and service sectors generally? The increased productivity of twentieth-century technology operates within the same basic structures laid down by nineteenth-century American capitalism under the new conditions of vehement ethnic struggles. The nationally organized bureaucratic corporation in the major productive sectors, and small business and independent professionals in the local ones, usually state-protected enclaves of finance, distribution, and services—these have been enduring features of American stratification for about a century now. The massive increases in productivity of twentieth-century technology have taken place within this structure. Its effect on the skill and educational levels technically required for maintaining material production has turned out to be rather small. What it has produced is a continuous problem of aggregate demand, a reversal of the chronic labor shortage of the nineteenth century into the chronic unemployment pressures of the twentieth. The growth of the tertiary sector and of white-collar employment has been the response—to the pressures for employment opportunities from the labor force and to industrial demand for a prosperous economy capable of buying its products.9
The mechanism by which the tertiary sector has absorbed technically surplus labor has generally been indirect; WPA-style hiring of the unemployed poor has been the exception. Rather, it has been by going along the path of least resistance—expanding military and welfare expenditures, following the politically popular slogans of equality of educational opportunity and higher technical quality in education (e.g., the Sputnik crisis), increasing the proportions of specialized professional branches, and allowing the proliferation of clerical bureaucracy within governmental and corporate organization—that tertiary employment has been built up. The expansion has been as great at state and local government levels as at the federal level, thus maintaining traditional decentralization, even in a new form; the proliferation of “professional” specializations and of record-keeping complexity itself has contributed to internal organizational decentralization. In this ethos, federal and state government have continued to expand the self-protective privileges of business and professional associations and have continued to support private industry by loosely monitored contracts for equipment, construction, and services. All this has been carried out, against a background of general political approval, through the more immediate activity of the status groups that actually inhabit government organizations, private businesses, and professional communities. Hence it has been the best-mobilized status groups of the upper middle and middle classes that have secured the largest and most immediate benefits from this policy of unconscious Keynesianism. But the effects must have been to reduce the employment problem indirectly at lower levels—by keeping open the market for personal services, spurring industrial employment (now turned increasingly toward essentially luxury goods), and keeping members of higher classes from invading lower labor markets.
The ethos of technocracy is the ideology by which the sinecure society is legitimated. Rising educational requirements for employment, the proliferation of professional and technical degrees and their control over specialized work enclaves, the massive clerical enterprise of personnel management in a credentialized system—all of these are devices whereby the tertiary sector expands upon itself. Being remote from the sectors in which actual material production takes place, outputs in this sector have only arbitrary criteria by which they can be measured;10 the only guidelines for its efficiency come from the contending forces of the political budget, itself balanced between pressures to keep up aggregate demand and the defenses of particular social classes concerning their own taxation. The technocratic ideology favors the forces of sinecure expansion at the same time that it hides their actual nature. The result is an elitist Keynesianism, maintaining a system of stratification that has been quite stable for a number of decades.
But what of the decline in the number of agricultural enterprises? Here we may note that the twentieth century has only brought about the pattern that has existed in other major areas of material production for the national market since the late nineteenth century. The small business sector that has survived throughout this period is at the other end of the economic process, in local enclaves and concentrating in distribution, services, and luxuries. The enduring small business sector has been protected against large-scale economic competition by state protection and other favorable niches; much of it, albeit indirectly, is in the sinecure sector of economic organization, where essentialy luxury consumption and inefficient modes of production are favored as a sort of tax the highly productive core of the economy can afford (and is politically required to support).11
What is remarkable about the concentration of agriculture is not that it has come about, but that it has been delayed so long. What has allowed it to survive, on the national markets for processed and refrigerated foods and against the resources of the national financial establishment, has been essentially its favored status group connections within American stratification and politics. It was the Anglo-Protestant farmers, as we shall see, who were the bulwark of cultural opposition to the immigrant working class from the mid-nineteenth century through the mid-twentieth century; the use of the political ideology of Anglo-Protestant Americanism to hold together the coalition with the big business upper class has required continual political concessions to the farmers. The long-term trend since the early 1800s, though, has been a continuous decline in the agricultural labor force (see Table 4.1) as the market forces of a system of national capitalism have steadily eroded the position of the small farmer. One might guess that without the political alliances engendered by late nineteenth-century immigration, the process would have been pushed to its conclusion half a century ago—or else would have provoked a successful populist revolt to curtail the power of big business.
The hypothetical case is of general significance. The cutting off of non-Anglo immigration in 1860 instead of 60 years later would have made an immense difference in the American social structure of today. Given its geography and its natural resources, America would still be unique among industrial societies (although one difference might be that the United States would be less industrialized). The thought-experiment sharpens a more particular point: the emphasis which a multiethnic society puts on cultural stratification and the uses to which these weapons can be put in the organization of its economy and policy.
Nineteenth-century America is thus the basis of our society of oligopolistic national corporations and a decentralized local bourgeoisie. Twentieth-century America is the overlay of credentialism, government employment, and widespread sinecures that has arisen due to the active cultural market of massive ethnic conflict and the overproduction pressures of an advanced productive technology. The ramifications of the credential process will be taken up in Chapters 5 and 6.
