After the Civil War, the American economy began to change rapidly. Especially in the rubble of the South, markets became exploitive and predatory. Because of the attempted secession of the Confederate states, the older sectional constraints on Northern capital were no longer in place to contain the economic interests of the maturing industrial economy. The institutional shifts in American capitalism mirrored the great shifts in European society and its turn to economic and political modernity. However, Europe saw its own ensuing increase in inequality differently than the United States. Nineteenth-century European intellectuals did not see economic activity in such a benign light—for thinkers as diverse as Marx, Matthew Arnold, John Stuart Mill, and Eduard Bernstein, among many others, capitalism was premised on division, exploitation, and immiserization. Whether it was Durkheim’s analysis of industrial society and its atomizing consequences in Professional Ethics and Civic Morals; Marx’s understanding of the ways that modern life was marked by the processes of capital; or Arnold’s critique of economic inequality as demeaning to civilization and humanism, the fundamental tenets were essentially the same: the barbaric effects of modern capitalism needed to be overcome and society transformed in order to preserve it against the forces of economy.
The sharp increase in economic inequality during the latter part of the nineteenth century was concurrent with rise of industrialism.1 What Benjamin Disraeli referred to as “two nations” in England—the rich and the poor—was becoming an increasing social and political problem wherever industrial capitalism was expanding. Inspired by the legacy of Enlightenment moral and political principles, European radicals of the mid- to late nineteenth century were able to see the emergence of capitalism as simply the extension of previous forms of inequality. This resonated with the ideas of American radical critics of the Jacksonian era, but there was little cross-fertilization until the decades after the Civil War. In the American political discourse, economic inequality was intimately bound with political ideas. In antebellum American society, economic life was intimately bound with the understandings of equality and liberty. Through its Protestant work ethic and its secularized variant of a Lockean-inspired understanding of labor, property, liberty, and individualism, American ideas of economics were the necessary counterpart to political ideas of equality and freedom. And it is for this reason that the emergence of economic inequality—and its intensification—became such a political problematic, for without self-sufficient labor, dependency would result and inequality would cause excesses of power in the hands of a few.
But the concentration of economic power alone was not what motivated the radical critics of the first half of the nineteenth century, who took as their central problematic the emerging and intensifying economic disparities of their time. Their central target was the threat of economic dependence—and they thought this would emerge through the control of unequal property and wealth. The new economic order seemed to threaten everything that was unique about the American republic, specifically, its differences from European ways of life that were thought to be outmoded and hostile to the “natural” forms of human liberty embodied in American society. The concern with economic inequality was bound up with every aspect of modernity. There were constant worries throughout the nineteenth century that America would somehow not be immune to the degenerating social effects of industrialism evident in European economies. American travelers that visited industrial cities such as Manchester in England saw them as inherently opposed to America’s republican civilization. The squalid and wretched conditions of the working class in these places was evidence of the brutal economic system that America had left behind. America’s republican virtues were thankfully embraced as a barrier, at least for the time being, to such conditions.2
But despite this, the post–Civil War years witnessed the rise of concentrated economic power, the deepening of economic inequality, and a new, much wider pattern of social and political polarization. This period would see the clash of economic interests in the form of the “war of labor and capital,” and it would also see the clash of ideologies on economic inequality. The rise of the large corporation and the massive transformation of American society had profound effects on the moral weight and political salience of economic divisions. The rise of laissez-faire not only as a doctrine but as an empirical reality in American society caused social convulsions and moral reprobation. Capital was able to operate without restriction, and there were no safeguards for the effects that industrialism was having on the lives and interests of working people. The economic change effected by capitalist development was therefore not only transforming the material relations of whole groups of people; it was also affecting the ways that members of society legitimized these new social and economic relationships. As capitalism was becoming increasingly entwined with legal doctrine and political institutions, it also was changing previously shared conceptions of what civilization and progress actually meant. The market transformation of society was beginning to take root, to proliferate, and to yield its fruit.
The connection between the changing discourse on inequality and the economic context of the time needs to be made explicit. Without question, the doctrine of social Darwinism was spreading just as the Gilded Age began to take off, indicating a tie between economic interests and social theories. Martin Sklar is correct when he argues that capitalist business activity “presupposes, and is permeated by, a complex mode of consciousness, that is by ideas and ideals about deliberate calculation of ends and means with respect to other persons; about the shape of society, its approved goals and moral standards; and about the law and jurisprudence, party politics, and the range and limits of government authority.”3 The arguments against economic inequality in this period therefore began to change, and not simply because a different set of interests were at stake—there was also a fundamental sociological transformation that produced a different sense of what economic equality was, how it related to the activity of the state, and how it related to political ideas more broadly.
In addition to the sociological shift that scholars such as Sklar emphasize, there was also an important change in class structure and the nature of the market as big business grew in size and in scope. Alfred Chandler argues that in addition to a concentration of capital and wealth, there was a simultaneous growth of a “new class” of professionals and managers. The older ideas about Adam Smith’s “invisible hand” and the free operation of the impersonal market were being replaced with decisions made by a more highly complex bureaucratic corporate elite. The old economy was changing, and changing rapidly. It was becoming not only larger in terms of economic concentration—which began with new transportation technologies such as the railroad, more densely concentrated urban markets, and scale economies that were able to produce more and therefore simultaneously stimulate consumption—but in terms of its bureaucratic structure as well.4 This would not only rapidly change the way the market would work, but eventually also undermine the older presumptions about the market as the impersonal distributor of wealth by means of “free labor.”
The labor radicalism of the antebellum period railed against the onslaught of industrial capitalism—specifically the emergence of wage labor and the erosion of smaller, more cohesive economic communities—because it would lead toward conditions of servitude in economic and political life. Economic inequality was not simply an injustice; it meant—at a much deeper, more political level—the material destruction of the very political ideals upon which the American republic was founded. The intimate relationship among economy, morality, and polity in an earlier era began to unravel as capitalism developed and modernization proceeded. Equality of condition and equality of opportunity in this period were still one and the same for the radical thinkers since once everyone was able to enter freely into economic life, a rough equality of condition would result. Inequality of economic conditions was the result of the distortion of equality of opportunity and the concentration of economic power, the emergence of the modern corporation, and the dismantling of smaller economic communities, which were, for the most part, self-sufficient unto themselves.
Economic modernity—modern capitalism itself—was therefore seen as the genesis of a new kind of social stratification that would threaten individual liberty by creating conditions of dependence and control. But the new economic system that made industrialism possible changed the economic preconditions of this argument. The very nature of industrialism was mass employment, which meant the overshadowing of the older, smaller economic communities that Matthew Carey, Orestes Brownson, and others saw as the foundation of American economic life. Moralists such as Henry George and Edward Bellamy called for conquering economic inequality by overcoming the social atomism that modern industrial capitalism had proliferated. But others, such as E. L. Godkin, were not optimistic about the calls for reform or radical change, writing that “when a man agrees to sell his labor, he agrees by implication to surrender his moral and social independence”; workers were “legally free while socially bound.”5
At issue was a change of social cosmology. The economic changes that ushered in the era of industrial capitalism were intimately tied to ideas of progress and innovation that were a function of the rise in technological production. This, in turn, had a profound effect on the goals and interests of the different classes. Inequality was becoming more central to many of the debates that plagued academics, policymakers. and popular writers. But the notion of “equality of condition” would become increasingly utopian in sociopolitical terms, and “equality of opportunity” would be emphasized by those criticizing the inegalitarian effects of industrial capitalism. This shift was not simply a change of emphasis, however; it reflected an acceptance of economic modernity, which was also constituted by the spread and general acceptance of the institution of wage labor. The radical critics of the early nineteenth century reacted against wage labor because it reduced the worker to a mere “hireling,” or one who would serve for wages. As capitalism grew, so did proletarianization, and this acceptance of the wage system would have a deep effect on conceptualizations of economic inequality.
The radical views expressed by Thomas Skidmore’s call for an equal redistribution of property and Orestes Brownson’s call for the elimination of the system of wage labor would change with a new generation into arguments against the monopolistic character of the economy. The older notions of republicanism of the revolutionary generation were eroding, and the liberal idea of labor and the individual was beginning to eclipse republican themes. This tendency in American political culture—one brought about largely by the changing nature and structure of American capitalism—would inevitably serve as the guidelines by which capital and labor would deal with the problem of social divisions spawned by the great age of high industrialism. The liberal economic ethic that had evolved in American political economy and moral thought was being pitted against new and more complex historical conditions: the institution of capital, monopoly, and the nationalization of the economy.
The liberal economic ethos worked so well with the emerging democratic ideas of the nation because the assumption was that once labor was freely able to express itself and individuals accumulated property from their labor, skill, and talent, a rough condition of equality would emerge. Equality of opportunity and condition were therefore conceptually linked, but the new institution of capital—which Marx correctly termed a process, not simply property—would organize society in a decidedly different way, making these older conceptions of liberty and labor, economy and morality, obsolete. It was the task of critics of inequality to come to terms with this. Some did so better than others. In the end they would also have to confront a new argument legitimizing inequality, which derived from Spencerian ideas of social Darwinism but also was consonant with older arguments against equality in American social and political thought. In the end, inequality would only be successfully confronted once policymakers saw that capitalism was here to stay but also that labor as a force in and of itself was as well. With the settling of the industrial order, it was clear that democratic principles were being sacrificed to the workings of capital. In time, the radicalism of labor, on the one hand, and the newer arguments wedding the worsening condition of class inequality with social progress, democracy, and liberty, on the other, would be tamed, subdued, and brought into line. American social and political thought would therefore reflect the fractious nature of class society of the time, but it would move from a general condition of antagonism to one of reconciliation and consensus. These new policymakers and intellectuals—all of whom worked during either the Progressive or New Deal Era—would forge a liberal-capitalist consensus that would hold for decades, finding its apex in the New Deal and the social welfare programs of the 1960s.
RACE, CLASS, AND THE PROBLEM OF INEQUALITY
The aftermath of the Civil War presented the American discourse on inequality with a new set of problems. The debates over the project of Reconstruction revolved around the extent that equality ought to conceived and then extended to the freed slaves of the South. Dominant was the ideology of “free labor,” which was crucial to the ideological core of the Republican Party even before the war.6 Free labor was nothing more than the recognition that the liberal economic ethic was a crucial component to American values of liberty. The debates around Reconstruction centered on the extent to which a propertyless class would be able to achieve any degree of equality and social integration. Radical Republicanism—a civic ideology that encompassed thinkers and politicians such as Thaddeus Stevens, Horace Greely, Charles Sumner, and E. L. Godkin, among others—was primarily focused on the issue of civic and political equality for freed black salves rather than on economic issues. It was standard to distinguish between the natural and political rights that had been denied blacks, on the one hand, and the social and economic rights that were defined simply as the right to labor like any other man and own the fruits of that labor, on the other.7 These radicals’ interest in economic equality was defined by their faith in the liberal economic ethic: namely, that reward would come from the effort and labor of individuals and that equality could be nothing more than the equality of opportunity.
Blacks therefore had to be guaranteed their political rights in order to be integrated into American society, and it was presumed that this was the limit of what government would and could do in order to promote equality between blacks and whites. But economic equality was not something that Radical Republicans advocated in their vision of Reconstruction. Reconstruction, as it was broadly conceived at the time by the most radical in Washington, therefore had little to do with economic change but was wedded to the liberal economic ethic and its liberating impulse. The Radical Republicans saw that through guaranteeing equality of opportunity in politics and the economy, their duty toward racial equality would be complete. Aside from fringe calls for the redistribution of Southern property—Thaddeus Stevens advocated the seizure of plantation lands in order to turn them into homesteads—redistribution and economic equality were nonissues.8
Black writers and thinkers, however, did look into the issue of economics and the essential link between economic power and equality. The idea of economic empowerment became a crucial staple of black political thought during the early years of Reconstruction, in that without economic power—by which was meant the economic development of black communities with some degree of parity with their white neighbors—blacks would continue to exist at the whim of white economic institutions. There were no illusions that civil and political equality could be of any substantive value without economic parity with whites. Alexander Crummell—rector of St. Luke’s Episcopal Church in Washington—was one of the first black thinkers to advocate the construction of black economic communities in order to construct a new force in American society. Without economic power, blacks could look forward to a continued dependence on whites and a re-creation of the conditions that they had suffered under as slaves. This would become a major theme in black political and social thought throughout the late nineteenth and early twentieth centuries. Booker T. Washington emphasized the development of skilled labor and thrift as a means for the accumulation of capital and the development of black communities. Crummell and Washington—despite their differences—both saw equality as requiring an economic dimension. Political and civil rights were one thing, but the reality of the situation was that without some degree of economic parity with white society, political and civil rights would be, at best, a mere pleasantry.
Washington, as Crummell before him, acknowledged that the economic empowerment of black communities was an essential first step in achieving and securing political and social rights and power. Although DuBois would chastise Washington for his “submission and silence as to civil and political rights,”9 the reality was that the latter never accepted any form of restriction on black political or civil rights and that his advocacy for economic empowerment, thrift, and industrial education was primarily an argument that linked economic power with political and social power and equality.10 Crummell and Washington saw that the need for economic development—through the growth of capital in the hands of blacks—would be the only way to achieve social integration and guarantee that there would be no dependence upon the white community. For Washington, the emphasis on economic empowerment and development meant that relations with the white South had to be maintained; it meant that there had to be some degree of accommodation and cooperation with white Southern leadership.
But as the project of Reconstruction went into crisis and terminal decline, many black intellectuals who had supported Washington’s program for black empowerment—which was linked with a conciliation with the white South—became critical of it. DuBois, who had been a supporter of the Washington’s Tuskegee position, began in the early years of the twentieth century to advocate protest and a break with the policy of accommodation and conciliation with the white South. In place of the ideas of economic empowerment, DuBois began to articulate a political-cultural critique of the Tuskegee position and pushed for a focus on civil and political rights and the development of a black cultural-intellectual elite. The move away from the issues of economic empowerment would not return until the 1920s, when DuBois began to look toward socialism as a possible alternative for black liberation. Indeed, DuBois’s concern with politics and civil rights was—in the face of increased Southern violence and the quashing of equal opportunity for blacks in white society that became ever more real with the emergence of Jim Crow—understandable. But it can perhaps be argued that the move away from economic issues may have been a fatal error. Indeed, concern for the consequences of the economic disparities that severely affected the political and social life of black communities would reemerge in the black radicalism of the 1960s.11
What black intellectuals and activists—as well as their white allies in Washington and elsewhere—sought was, therefore, an equality of opportunity rather than equality of conditions. But this should be seen within the ideological context of the time. Blacks, from Reconstruction until the beginnings of the twentieth century, were—not unlike the radical critics of inequality during the antebellum period—concerned with the struggle for equality of opportunity. Although it would later be seen that propertied interests had destroyed many progressive aspects of Reconstruction in the South, taking away even the possibility of equal economic opportunity for blacks—what DuBois would call in the 1930s the “counter-revolution of property”12—during the Reconstruction era, an explicit discussion of economic inequality took a tertiary role to issues of equality of opportunity guaranteed through equal political and civil rights. But the post–Civil War period would also see the recurrence of the theme of economic inequality in America’s critical political and social discourse. It was quickly becoming evident that the laissez-faire industrial economy that expanded rapidly after the war was leading America to economic, political, and moral crisis.
THE MORAL ATTACK ON INEQUALITY AND CAPITALISM
The central premise of the labor radicals’ argument against the effects of economic modernity during the decades preceding the Civil War was that the emerging realities of capitalism were a direct threat to the kind of economic individualism and autonomy that characterized small-scale economic production and exchange. For those early radicals, Langton Byllesby and Thomas Skidmore, among the many others, economic inequality threatened to destroy democracy itself. The ideas of republican virtue that had idealistically characterized the thought of Adams and Jefferson and many others of the revolutionary generation were being squandered, and it was only by fighting against the effects of economic divisions that any semblance of democracy and liberty might be preserved.
In addition, the radicals saw the liberal economic ethic as being not only compatible with republican political virtues but necessary for their realization. Many of the next generation of reformers, radicals, and social and economic critics of the economic polarization of the nation would stick to an idea of liberal individualism but place it within the context of an already transformed culture of economic life and phase of institutional development. The earlier radical critics emphasized that equality of opportunity and equality of condition were essentially the same because opportunity meant the ability to produce your own goods (such as in agriculture) or sell your own labor time as an independent laborer and not a wage-earner. Wage slavery was tantamount to economic inequality and the disruption of the kind of cohesive society where wealth and income were distributed by talent, skill, and effort.
Not unlike the previous generation of labor radicals, many critics of inequality in the industrial age saw firm economic foundations for the generation and perpetuation of economic divisions. For some, progress itself was the cause of inevitable immiserization. Henry George saw that as both technology and productivity increased, the value of land would also increase. As rent rose, it necessarily pushed down wages because industrialists needed to pay for higher rents out of what they paid to labor: “with increase in productive power, rent tends to even greater increase, thus producing a constant tendency to the forcing down of wages.”13 Inequality was therefore tied to the economic foundation of modernity. It was not simply a matter of preventing the amassing of wealth through corrupt means. The new economy, the new industrial civilization that was being forged, would seal the fate of millions. Poverty and progress were inextricably linked.
George’s critique of inequality was in the spirit of the antebellum labor radicals. Indeed, for George political rights were meaningless without economic rights, and economic rights still meant that each individual would have rightful access to an equal share of land—property and power were still linked in his thinking. By leveling a single tax on rents, George argued that, over time, monopoly could be broken down and there would be a return to an economy based on individual effort and skill. This would produce not an absolute equality but, rather, a rough equality that still rewarded differences in effort and skill. At the core of George’s argument remained the ideal of individual economic autonomy. In this sense, George looked back to the past; unable to see the newest phase of capitalism—its national, industrial manifestation. He was unable to see that the old physiocratic notions of land as the source of all wealth was economically wrongheaded. But his moralism was a critique of monopoly and the exclusion of economic autonomy and individualism. Equal political rights are meaningless without economic equality—that is, equality of land—since land is the only source of individual wealth. After quoting Jefferson’s line from the Declaration of Independence that “all men are created equal,” George insists:
These rights are denied when the equal right to land—on which and by which men alone can live—is denied. Equality of political rights will not compensate for the denial of the equal right to the bounty of nature. Political liberty, when the equal right to land is denied, becomes, as population increases and invention goes on, merely the liberty to compete for employment at starvation wages. This is the truth that we have ignored.14
This “central truth,” as George referred to it, was the need to restore an economy and society based on “natural opportunities,” and this meant that the basis of equality was still one grounded in assumptions from America’s economic past.15 The problem with the various theories of equality that were put forth by so many reformers of the period was not that they failed to recognize the barbarism of the new economy; rather, far too few of them possessed a broader understanding of the economic reality of the time. Many writers, such as George himself, were unable to think outside of the economic context and ideas that had defined the early American republic.
The moral revulsion against capitalism’s deepening effects did not lessen as the nineteenth century progressed. Socialist ideas became increasingly prominent—which George was decidedly against—and they injected the idea that individualism and inequality were somehow connected. The problem with what Marx termed “universal egoism” was not only that it would lead to deeper social divisions at levels other than class, but also that this social atomization would inevitably reproduce the same problems that arose under modern capitalism. George wanted to preserve individualism and promote “association,” by which he meant an association of equals—equal in the sense that all had an equal opportunity to work on land from which they could derive the fruit of their labor, something that the state would need to enforce through taxation. This was one of the final gasps of the older liberal republican conception of economic life. George believed that all people had an “equal right to the elements of nature,” and since nature, or land, was the only source of wealth, its redistribution was essential to alleviating the ills of inequality. Discouraging the massive accumulation of property was at the heart of George’s policy alternative and his “single tax” movement. The problem was not with the capitalists, it was with the way that monopoly squeezed out all opportunities for honest individual labor and thereby shattered any hope for equality.
But the socialists did not see it this way, especially the German socialists who were writing in defense of socialist ideas in America. For them, the problem was with monopoly, but monopoly was inextricably tied to capitalism and to egoism. Three years before George published Progress and Poverty, Friedrich Sorge wrote his “Socialism and the Worker,” his only published piece in English. There he chided, “if you are a capitalist yourself, reflect how much nobler it is to help promote the welfare of the many than to serve only your own interest, ugly and hideous Egoism.”16 Sorge was tracing the moral critique of inequality down to the very ethical fabric of a market-based society. Johann Most attempted a more anthropological analysis. What he identified as the “beast of property” was any “man in connection with wealth,” who, still unsatiated after accumulating beyond his needs, desired little more than the expansion of his greed. These “beasts of property” were at the core of capitalism, and capitalism was the source of monopoly, the one great threat to human liberty: “In America the place of the monarchs is filled by the monopolists. Should monopolism in the alleged free United States of America develop at the rate it has in the last quarter of a century, only daylight and air will remain free of monopolization.”17 In Marxian style, Most made clear that inequality was not a transitory condition of economic development; it was, rather, the essence of capitalist exploitation and a permanent feature of the evolving economic system. The immiseration of working people could therefore only be expected to get worse—inequality was not the problem in and of itself; it was the symptom of a greater illness: capitalism, exploitation, atomization, egoism, barbarism.
But early socialists like Most and Sorge premised their critiques on alternatives that were highly utopian, to say the least. They relied on a complete transformation of the economic life of nineteenth-century America: a massive, egalitarian redistribution of property and the common ownership of property. Whereas George held that the solution to the injustice of modern economic inequality was a matter of returning to the economic life of the past—of independent producers associating under conditions of equality—Sorge saw the emergence of associations and an emphasis on the common interests of society over “Egoism” as the key to overcoming capitalism. Most argued for the same end by promoting a war of workers against capitalists and the establishment of a “network of federations” of autonomous and independent communes. Lacking concrete institutional referents, the socialists had little to use in their appeal to those outside of the German-immigrant working community. George’s economic ideas looked back to the ideology of economic liberalism and economic autonomy and independence and therefore had some possibility of resonating with American working people. George did not reject capitalism and did not have a problem with free trade; his aim was to restore equality of opportunity, which itself ultimately sprang from free labor and a single tax that would serve as a permanent barrier to the monopolization of land.
But this, in many ways, was the problem with the critique from the beginning. It is true that the German socialists saw capitalism as a more complete social, cultural, and economic system, but they were unable to pose alternatives outside of a crude collectivism. The socialists rejected capitalism without having a realistic institutional alternative, and their rejection was still, in essence, a moral critique of capitalism. Unlike Marx’s more scientific examination of capitalism and his argument that it would essentially break down under its own internal economic strains and contradictions (such as the law of the falling rate of profit), American socialists were more interested in possibilities for immediate action and in extrapolating from some of Marx’s insights for utopian ends. For his part, George was unable to see—through his highly flawed political economy—that inequality was not caused simply by the monopolization of land but rather by the very dynamics of capital and its need to constantly agglomerate more of itself at the expense of labor. George was unaware of the inequalities that arose from the production process under capitalism and the way this affected the system of labor, and he remained under the trance of an outdated and outmoded Physiocratic doctrine even though his critique was essentially grounded in a moral antipathy to inequality and social divisions.
The socialists differed from reformers such as George, Edward Bellamy, and Henry Demarest Lloyd, in the sense that they espoused an absolute equality of property, which the reformers thought was neither desirable nor possible. For George and Lloyd, the central idea was still to have some form of rough differentiation between individuals based on “natural inequalities.” Property would still correspond to natural inequalities of ability, but this would not lead to great differences. After all, the point of critique for these reformers was the problem of monopoly, not capitalism or competition. True, they all shared a moral aversion to the decline of economic autonomy, of equality writ large, seeing the agglomeration of capital as the primary force destroying equality and freedom. But ultimately their calls for equality were based on the idea that the emerging divisions of society were out of tune with American political and moral ideals. This was an important period in American social and political thought because all three reformers were, in one sense, attempting to come to terms with economic modernity using what they felt were fundamental American ideas about economy and society.
Industrial capitalism was transforming America into a gluttonous society. Political economy was becoming the source of wealth, but it was also and more importantly the result of the abuse of liberty. “Liberty produces wealth, and wealth destroys liberty,” wrote Henry Demarest Lloyd in Wealth Against Commonwealth. The inequalities that plagued America and that were at the core of what was being called the “social problem” by the 1880s were not a result of capitalism itself but rather its excesses: “Our bignesses—cities, factories, monopolies, fortunes—are the obesities of an age gluttonous beyond its powers of digestion.”18 For Lloyd, the “corporate Caesars” were nothing more than the ruinors of civilization. Inequality in wealth was, at its core, the inevitable result of what Lloyd referred to as the anarchy of self-interest. Wealth was destroying the republican virtue upon which the idea of commonwealth had always rested. Lloyd’s critique of monopoly and inequality did not lead him to advocate the destruction of capitalism but rather to call for overcoming self-interestedness that opposed the general welfare and, more pragmatically, for the transfer of private monopolies over to state ownership. Lloyd’s ideas were republican in nature: he insisted that citizenship be based on what amounted essentially to Aristotelian moral and political categories, that is, that the individual realize that he is part of the social whole and that self-interest should be in harmony with the interests of the political community.
The true laissez-faire is; [sic] let the individual do what the individual can do best, and let the community do what the community can do best. The laissez-faire of social self-interest, if true, cannot conflict with the individual self-interest, if true, but it must outrank it always. What we have called “free competition” has not been free, only freer than what went before. The free is still to come. The pressure we feel is notice to prepare for it. Civilization—the process of making men citizens in their relation to each other, by exacting of each that he give to all that which he receives from all—has reached only those forms of common effort which, because most general and most vital, first demanded its harmonizing touch.19
Only through the reconstruction of a social ethic based on a harmonization of self-interest with the public interest could the principles of commonwealth overcome the forces of wealth. But Lloyd, too, was unable to prescribe concrete, institutional alternatives. He railed against monopoly and the unequal distributions of power, wealth, and resources that monopolistic capitalism created, but he was essentially unable to translate these critiques into concrete institutional alternatives—moral revulsion was considerably simpler than political practice. Aside from his idea for state ownership of all large industrial combinations, he was unable to peer into the complexities of economics and institution building. His moral vision lacked the material basis for any kind of viable political translation.
Outside of the more pragmatic politics of the emerging labor movement, the politics of inequality was still largely fueled by moral rhetoric, but it did not lack intellectual substance. Each of the thinkers saw economic equality—or some rough approximation of it—as being the material manifestation of political democracy and political equality. Nonetheless, their lack of social scientific expertise worked against them. Henry George’s economic theories were easily countered, and during a debate at Oxford with the great English economist Alfred Marshall—the founder of modern equilibrium economics—he was decidedly defeated and his ideas discredited in a public setting. George’s significance was in his moral revulsion against inequality; he, like Lloyd, wanted to show that monopoly capitalism and democracy were essentially incompatible and that it was a phenomenon that went heavily against the grain of American democratic principles. Since economic life had always been tied to American political ideals and values of liberty and equality, the disappearance of economic equality meant the imbalance of justice and liberty. The idea of the individual was not a problem for Lloyd, George, or Bellamy, unlike the German socialists. They sought reform—albeit radical reform—rather than radical upheaval and utopian schemes. Radical reform, however, consisted for them, at its base, of the moral regeneration of society, a return to the political ethics that were grounded in what they saw as the foundational principles of American republican civilization. The individual was not a problem, but individual self-interest had to be checked by social interests. Inequality was the result of self-interest unhinged from the moral moorings of political society, and all of society was being affected. It was a descent into anarchy.
The success of Edward Bellamy’s novel Looking Backward was a testament to this moral appeal against the economic complexities of division and depression that plagued the late nineteenth century. On the surface, Bellamy’s novel is one that exploits the well-used literary device of utopia—as opposed to the actual call for utopian social arrangements—to cast a critical glance on American industrial society from the vantage point of the year 2000.20 Its central character, Julian West, wakes up in Boston in the year 2000 after having been in a trance for over a century. But at another level, it is a tale of moral growth and discovery. By the end of the twentieth century, America has overcome the problems of class conflict, social atomization, and poverty, and West’s transition to life in that time is a tale of moral reinvention as he absorbs and learns to situate himself in a futuristic society characterized by abundance, equality, and peace. Social change of this magnitude could only be effected by what Bellamy termed—in an essay of the same name—the “religion of solidarity,” which in Bellamy’s novel and other writings becomes “nationalism.” Inequality was the expression of a deeper cancer pulsing within American culture and society. Economics was not the problem; it was the motives of individuals in a society that was becoming increasingly fragmented, atomized, and unequal. Moral degradation—defined politically as the move away from social integration and toward social atomization, the fetish of individualism, and selfishness—was the cause of material inequality and the decline of America’s republican experiment. Inequality was the ultimate social ill because of its manifold consequences, from human suffering to political imbalances of power. The economic ethic of liberal individualism would therefore need to be called into question.21
Even as George looked back to a kind of agrarian socialism based on individual labor and Lloyd’s critique of monopolies and industrialism and his call for a return of commonwealth smacked of anti-modernism, Bellamy, not unlike Marx, held that the emerging industrial order would usher in a new era of human happiness and prosperity. The new American Jerusalem would be built on the foundations of machinery and technology, and equality and solidarity would be the very stuff of its moral collective consciousness. The key was the elimination of narrow self-interest and the cultivation of unselfishness. Bellamy saw the individual as comprising a “personal” and an “impersonal” self. The former was driven by narrow self-interest, greed, and the dictates of possessive individualism. When suffused by this ethic, society would drift toward inequality, and fragmentation and would produce individuals who had regressed to their most base, animalistic appetites. Bellamy’s ideas had a distinctively Hegelian cast, arguing that a class of social engineers, the bureaucracy, would be responsible for mass economic planning and the maintenance of society economically and technologically.22
The impersonal self would tend toward solidarity, toward social brotherhood. Its ascendancy would mean the elimination of selfishness and a moral consciousness to serve the social whole, of which each individual was an integral part. Inequality was not a result of the institutions of the day, of capital or land-rent prices. It was, rather, the result of the drastic erosion of solidarity, wholeness, and social responsibility, of the turn to self-interest and the neglect of social cohesion and attention to collective welfare. Bellamy has Doctor Leete—Julian West’s guide through the year 2000—say: “Now that industry, of whatever sort, is no longer self-service, but service of the nation, patriotism, passion for humanity, impel the worker as in your day they did the soldier.”23 The transcendence of narrow egoism and possessive individualism would therefore effect a redirection of political, social and economic life. It would enable society, as a whole, to see that what was in the best interest for all was also in the best interest of each. Economic life would shift from the drive toward personal accumulation and move toward the common good. Doctor Leete explains how this social ethic was able to redirect the economic life of industrial America:
Early in the last [twentieth] century the evolution was completed by the final consolidation of the entire capital of the nation. The industry and commerce of the country, ceasing to be conducted by a set of irresponsible corporations and syndicates of private persons at their caprice and for their profit, were entrusted to a single syndicate representing the people, to be conducted in the common interest for the common profit. The nation, that is to say, organized as the one great business corporation in which all other corporations were absorbed; it became the one capitalist in the place of all other capitalists, the sole employer, the final monopoly in which all previous and lesser monopolies were swallowed up, a monopoly in the profits and economies of which all citizens shared.24
The nationalization of production and distribution therefore harnessed the full potential of modern industry, and the concern for the collective whole would create a “Republic of the Golden Rule.” But none of it would happen naturally; the yearning for equality would begin to promote the needed moral transformation, which would result in the system’s collapse. As Edith Leete, Julian’s lover and the Doctor’s daughter, says, recounting late-nineteenth-century history from the vantage point of the twenty-first in Bellamy’s less successful literary sequel, Equality (1897), “the American people began to be deeply and widely stirred with aspirations for an equal order such as we enjoy … very soon the political movement arose which, after various mutations, resulted early in the twentieth century in overthrowing the old system and setting up the present one.”25 Social struggle was an integral part of the move toward social equality, progress and the birth of a new American civilization.
The abstractness of Bellamy’s prescriptions for social change were problematic when it came to translating them into practice. On the whole, the moral critique of inequality was probably correct: the maturation of capitalism and the intensification of modernity were causing massive social fragmentation. But the various moral critics were unable to link their ideas with organized political movements. They shared the political ideal of an integrated political and social community that would be unspoiled by the excesses of industrial capitalism. Each in his own way sought to overcome the social fragmentation that economic modernity and economic inequality fostered and they, like their socialist counterparts, believed that inequality was the means by which they could draw attention to the problems of capitalism and modernity as a whole. Their utopian schemes were extensions of their political interpretation of American republicanism, something that was being eroded by the advance of capitalism and the corrosive effects of laissez-faire individualism. With the move from small economic communities to industrial behemoths and dense urban centers, the sociological shift from Gemeinschaft to Gesellschaft, and the slide of the American economic ethic from individual labor and production to possessive individualism, these moral critics of inequality were the last gasp of the older liberal republican ideology of political integration in the face of a divided America and the modernizing transformation of American capitalism.
The Omaha declaration of 1896 had considerably more pragmatic policy proposals than the regeneration of moral life and its reformation. Although thoroughly populist in nature, it saw its political origins in the older republican notions of common middle-class farmers and small producers—not unlike those that the earlier generation of radicals sought to protect from the implications of a developing capitalism. In their addition to the Omaha Platform originally laid out in 1892, the National Farmers Alliance sought as their primary goal “to restore and preserve these rights under a republican form of government, private monopoly of public necessities for speculative purposes, whether of the means of production, distribution, or exchange, should be prohibited.”26 The theme of republican government was therefore wedded to the liberal economic ethic in the sense that individual labor was to be given primacy at the expense of combines and corporations. This populist strain was not surprising; the economic interests of the agrarian sector had always been opposed to those of capital.
The reformers and socialists all shared the critique of inequality and the yearning to repair the eroding social bonds that were, for some, the cause and, for others, the effect of industrial capitalism. These reformers were outside of the mainstream. More common was the kind of laissez-faire liberalism of people like E. L. Godkin, the essential premise of which was that individualism was the base of American society and that what they termed an “equality of rights” was the only kind of equality that was acceptable. Extending equality to conditions was tantamount to the destruction of individualism through the promotion of collectivism. Laissez-faire liberalism was critical of tariffs and any other special privileges that the government bestowed on corporations, but it was equally critical of the idea of economic equality because this would, in Godkin’s words, “prove fatal to art, to science, to literature, and to law.” The fear of equality as flattening out human distinctions, quashing creativity, and annihilating individualism would go on the offensive during this period. The maturation of a counter-discourse legitimating economic inequality was about to take place.
LEGITIMIZING INEQUALITY
The moral critique of capitalism and inequality was accompanied by a raging war between capital and labor, as Mathew Carey would refer to it in the early 1870s. Rutherford B. Hayes deployed the army to crush the Baltimore and Ohio Railroad strikes, an interstate manifestation of the growing “labor question,” and the Haymarket Riot in Chicago became world news. Both were interpreted by the moral critics of the age as symbols of American decline. The corporate transformation of American capitalism had its apologists as well as its critics. It is probably more correct to say that they were apologists for a certain definition of liberty, or at least of a configuration of liberty and economic inequality. The legitimation of inequality would become, from this point forward, a distinct tradition in American political thought, with deep ramifications for the present. The apologists of inequality accomplished this by linking the economic realities that were unfolding around them with their interpretation of the liberal economic ethic. It was not a return to aristocracy and medievalism that they sought; rather, it was the understanding that inequality was not anathema to human liberty—as the previous generation of radicals had insisted—but rather its ultimate realization. The connection of liberty and economic inequality was therefore tied to the political sphere because it would now become necessary for the state, by and large, to refrain from interference with all economic activity.
More than in the antebellum period, the late nineteenth century saw the emergence of a tradition in social theory and political thought that would buttress arguments for economic inequality through the present. Although it is certainly correct to characterize broadly this school as marked by social Darwinist beliefs and ideas, it is more important to see these ideas in the context of American political thought and their implications for the further development of American political thought.27 Not unlike Alexander Hamilton and John C. Calhoun, these thinkers—ranging from William Graham Sumner to Andrew Carnegie—represent the maturation of an explicitly antidemocratic tradition in American social and political thought. That the rise of these ideas and their purveyors was tied to the nuances of the new economic realities of capitalism should come as little surprise.
The political dynamic of the new social theories that grappled with the progress of industrial civilization fit into the broader transatlantic revulsion at bourgeois notions of democracy and equality. But in America these ideas took on a very specific economic and social flavor. Criticism of equality was, in many ways, inherent in the doctrine of classical liberalism from its inception, based as it was on a political order that protected individualism and a moral one that was skeptical of collectivisms of all kinds, including that of the state. In Europe, equality would be the rallying cry for the burgeoning socialist movements, but for every Marx there was a Nietzsche.
America, too, had its struggle with the question of equality and its relationship to democracy and human progress. But Americans, of course, had a cruder, more brutal tradition upon which the discourse of social inequality could be grounded. Decades of debate about slavery had convinced enough thinkers that any kind of absolute equality was anathema to nature itself.28 Hamilton’s idea about the necessity of economic inequality—that it was the essential counterpart to economic development—was not something that many political economists looked upon with admiration. But Hamilton’s ideas were still in tune with a predominant understanding of liberal thought in the eighteenth century: that the difference between “natural” and “political” equality needed to be delineated. Equality before the law was—when it came to white, property-holding men—taken as a given. But the idea of translating that into the physical and material world—that is, the world of individual effort, skill, talent, and property—was largely condemned as leveling and, in the end, utopian and destructive.
Indeed, although Calhoun’s ideas were primarily aimed at the debate over slavery and the protection of that institution in the South, they also touched upon a much broader notion of the danger of economic equality, or the equality of condition. More than a defender of slavery, Calhoun was also a deep critic of American democracy and the idea of equality itself. He was keenly aware of the changing nature of the American economy and knew that the future of the nation would no doubt see the exhaustion of slavery as an economic order. It was therefore inequality as such with which Calhoun was concerned. Conceding that the essence of popular government was an “equality of citizens, in the eyes of the law,” to move beyond this into the equality of condition would undoubtedly “destroy both liberty and progress.” Inequality in condition—that is, in material terms and economic welfare—was rooted in a kind of natural equality between individuals. Going against this natural inequality would therefore interfere with the realization of liberty:
Now, as individuals differ greatly from each other, in intelligence, sagacity, energy, perseverance, skill, habits of industry and economy, physical power, position and opportunity—the necessary effect of leaving all free to exert themselves to better their conditions, must be a corresponding inequality…. The only means by which this result can be prevented are, either to impose such restrictions on the exertions of those who may possess [ability] in a high degree, as will place them on a level with those who do not; or to deprive them of the fruits of their exertions. But to impose such restrictions on them would be destructive of liberty—while to deprive them of the fruits of their exertions, would be to destroy the desire of bettering their condition … and effectually arrest the march of progress.29
Calhoun knew that inequality would persist even after the present system of agriculture and slavery had been abandoned by the marching advance of the economic system. The coming industrial order that he saw from the vantage point of the late 1830s would pit capitalists and “operatives,” or laborers, against one another. This was not to be seen as unnatural; it was the result of progress. And this conflict was the firm basis of civilization, Calhoun argued; the new industrial order would ensure a “contest between the capitalist and the operatives; for into these two classes it must, ultimately, divide society.”30 Calhoun’s ideas may not have been hegemonic at the time, but they evince an interesting and oddly persistent intellectual linkage between economic or material inequality—grounded in natural distinctions of individual skills and talents—and political liberty. This view would become an ingrained perspective justifying inequalities in American social and political thought up through the present. Ideas in the post–Civil War era about inequality were not so much the intentional development of the older ideas like those of Hamilton and Calhoun; they were, instead, the theoretical articulation of the antiegalitarian impulse that had always been present in American thought.
With the rise of industry and the massive social stratification that accompanied it, a new generation of thinkers would deepen this inegalitarian tradition. The great industrialists of the day would see their efforts as entitlements. Inequality could be justified in the name of progress, development, and modernization. Jay Gould’s famous phrase, “We have made the country rich, we have developed the country,” was hardly mere rhetoric. It captured the way that those who wanted to defend and justify the newly stratified society would think. As moral critics such as Bellamy and Lloyd knew all too well, industrial capitalism was an assault not only on the doctrine of equality but on civilization itself. For the apologists of this new social order, the debate on inequality would be a matter not only of protecting their interests in intellectual terms but also—for those who did not have specific capitalist interests—a matter of reconciling economic modernity with notions of progress and prosperity. Capitalism may have begun to exhibit its true face, but it was in the same classic categories of individual effort and economic individualism that these apologists would cast their arguments. Hence, the idea of economic liberalism could be seen to cut both ways—it was now becoming a matter of interpretation rather than a contest between civilization and barbarism.
The ethical and social theories of William Graham Sumner would attain a high degree of intellectual influence in the late nineteenth and early twentieth centuries, and they would come to legitimize economic divisions through a thoroughly developed sociological and moral system. Sumner’s writings were not intended as an explicit apologia for the new industrialized aristocracy, but they were the most coherent and most influential theoretical and moral notions about social divisions and inequality up until that time. Whereas political economists like Henry Carey had seen optimism in the development of the American economy through its inevitable ability to create inequality between various classes and hence a “harmony of interests,” Sumner reversed this notion. He saw economy, polity, and society as grounded in the forces of nature, which Darwin had theorized and which prominent thinkers like Herbert Spencer had transferred over to society, but also as the product of social mores and customs that had set in over time. It was clear that Sumner’s conservatism would prove a powerful defense of inequality and social division, and its resonance would not be lost on contemporary conservative thinkers in America. He would succeed in privileging liberty over equality and show that American society—its economy, legal system, and polity—was, without the meddling interference of the “social doctors” (his term for civil servants), the ideal political and legal system to realize human liberty.
Sumner’s aim was to strip moral and “sentimental” impulses from social analysis and to show that the status quo of American society—and here he specifically meant to focus on the class inequalities of his day—best for the realization of human liberty. Reversing George’s dictum that progress and poverty were opposite sides of the coin of economic development, Sumner also wanted to claim that the interference with the activity of capital was the cause of social misery and poverty, not the reverse. Society as a whole progressed and increased its standard of living as capital was freed to unfold and operate according to its own logic and the logic of its owners. It was only when the economy was allowed to work freely that liberty could be realized since liberty was conceived as a set of laws and institutions that “create great organs of civil life which can eliminate, as far as possible, arbitrary and personal elements from the adjustment of interests and the definition of rights.”31 For Sumner, liberty was to be emphasized over democracy; the former was a greater value than the latter because it accorded with the rational distribution of the fruits of labor, talent, and skill. To assume equality among individuals was sheer nonsense. Just as Jeremy Bentham had mocked the idea of natural law theory in the eighteenth century by calling it “metaphysics on stilts,” Sumner was equally critical of natural law doctrines, preferring a positivist interpretation of political and legal categories.
At the heart of Sumner’s economic and social theory was the notion that interests are grounded in innate human needs such as hunger, love, vanity, and fear.32 This provided him with a naturalistic basis for economic motives, which were matched by innate differences in skill, talent, drive, and intelligence. But also there was the economic idea that the nature of society and politics is governed by the relationship between population and available land. With a low population and abundance of available land, society and government would be less competitive and less savage. The opposite ratio would necessitate intense competition; “earth hunger arises, races of men move across the face of the world, militarism and imperialism flourish, conflict rages—and in government, aristocracy dominates.”33 Inequality was therefore the direct outgrowth of this “natural” Malthusian-Ricardian economic framework: only the most fit would survive the social competition for existence. The fortunate by-product of this was that competition would result in social progress because it would allow the creative and talented to mobilize their skills and abilities, which, in the end, benefit everyone.
Sumner’s ideas were therefore not simply a justification of capitalism, nor was he trying to align the new industrial order with what were seen as American political principles. Instead, Sumner wanted to show that the moral pleasantries of equality were a sentimentalism of the past. The scientific understanding of man’s nature and of modern society made it clear not only that economic inequality was necessary but that interfering with it was essentially an intrusion into liberty itself. The justification for inequality was therefore one that had remarkable affinities with the ideas of Calhoun and other critics of the doctrine of equality on the basis that equality and liberty were not—as Tocqueville had believed—compatible. Modern industrial capitalism therefore required economic inequality; there could be no separation of the two. Hence, a rejection of the reality of economic inequality was not only a lapse into prescientific sentimentalism; it was also a rejection of modernity as well.
Some have said that Mr. Stewart made his fortune out of those who worked for him or with him. But would those persons have been able to come together, organize themselves, and earn without him? Not at all. They would have been comparatively helpless. He and they together formed a great system of factories, stores, transportation, under his guidance and judgment. It was for the benefit of all; but he contributed to it what no one else was able to contribute—the one guiding mind which made the whole thing possible.34
Sumner’s ideas about competition and social progress set the stage for the theories of economic inequality. Although they were to fall out of fashion during the Progressive Era, Sumner still was able to place the inequalities generated by capitalism in a quasi-scientific framework. His ideas rested on the simple dictum that “persons who possess the necessary qualifications obtain great rewards”;35 the legitimation of social stratification was a simple extension of the liberal economic ethic, depoliticized and transplanted into the context of industrial capitalism.
Even though, ultimately, the discourse that legitimized economic inequality was not powerful enough to hold back the massive strains that the system was causing, it provided an important conservative justification for the excesses of capitalism by wedding an antiegalitarian theory with the doctrine of personal liberty and political freedom. Before libertarians would attack the state for its redistributive mechanisms, Sumner was able to ground a thoroughly modern critique of economic egalitarianism, one that preserved political equality by splitting off the economic and political spheres from each other. No longer was it possible to see the relationship between economy and society as it had been interpreted in the post-revolutionary era. Indeed, the crucial transformation of the liberal doctrine during this period reflected the emerging differentiation among economy, polity, and society. Economic liberalism had always been the backbone of theories of social justice and equality because, in the presence of a precapitalist market society devoid of political influence, nepotism, and privilege, it was the only way to critique the kind of encrusted power relationships that were characteristic of preliberal society. But now that the economic context had transformed, the liberal economic ethic was being fused to a new set of social and economic goals, and economic inequality could be justified using the same liberal categories of individual labor, skill, and the right to property.
Sumner’s ideas—as influential as they were—were only an aspect of the way that laissez-faire doctrines was adopted. Sumner’s ideas were explicitly antiegalitarian, but laissez-faire became a serious issue in late-nineteenth-century America as well as England. Herbert Spencer’s work The Man Versus the State, published in 1884, laid out the firm argument that state intervention was opposed to liberal individualism; state interference was inherently opposed to the idea of liberty. The state stood for coercion, and any extension of the state’s role beyond enforcing contracts—what Spencer referred to as “anarchy plus the constable”—amounted to the erosion of liberty in economic affairs and, in the American interpretation of things, the elimination of freedom itself. This apologia for capital and laissez-faire therefore exploited a narrow interpretation of American political categories and transformed Hobbes and Locke from liberal thinkers at the roots of American democratic institutions to radical libertarians. It was an ideology that would rise again, with even greater power, a century later.
In this way, thinkers such as Sumner, and even Calhoun before him, did more than privilege the interest of one particular class over another; this is far too simplistic. What they were able to achieve was the purging of ethical and moral categories from social theory and analysis. They were able to reinterpret liberty and the entire American brand of liberalism itself as a radical individualism that was—when framed in the context of a capitalist economic framework—conducive to progress. It was not an ideology that embraced the past or a conservative ideology that sought to prevent progress and modernity. Sumner and others who followed his ideas were different from George, Lloyd, and even Bellamy in the sense that they saw moral categories as obstructing social progress. Although Carnegie would see the tragedy of the dark side of capitalism, for Sumner there was a natural order that was evidenced not by some static ordering of classes but, rather, in the free dynamic fluidity of society, which meant that the state needed to refrain from concretizing ethical impulses into state intervention. Unlike older conservatives who saw that equality was a threat to a social order of privilege, Sumner and Calhoun saw that the “natural” workings of the economy and of social progress functioned best when moral entanglements were effectively removed. Politics was therefore reduced to its most base Hobbesian elements: freedom was a freedom of contract and safety from a return to the state of nature.
Legitimating inequality ideologically went hand in hand with the structural realities of late-nineteenth-century economic life. The ability for working people to organize and make effective demands for higher wages and other improvements in their working life was also contested by what Sanford Jacoby has referred to as the “exceptionally high degree of employer hostility” that was present in the American economy from the late nineteenth century through the turn of the twentieth.36 An ideological understanding of American life was being forged, and it would outlive the structural imperatives of the time. In the late twentieth century, the inegalitarian tradition in American political thought would reemerge, but it would have a very different reality to struggle against: namely, that forged by the ideology and policies of the Progressive and New Deal Eras.
BRINGING IN THE STATE: THE FORMATION OF THE LIBERAL-CAPITALIST CONSENSUS
Whereas both the moral critique of inequality and capitalism, on the one hand, and their pseudo-scientific defense, on the other, were unable to deal with the practical problems of a divided society, the intellectuals and policymakers of the Progressive Era were able to crystallize different ideas and moral impulses into social policy. For Progressives, the late nineteenth century was rightly seen as having left a legacy of economic divisions and an economy that was, for all intents and purposes, out of control. By the time that Edward Bellamy had written Looking Backward, the economist Richard Ely—the teacher of both Woodrow Wilson and John Commons—could write, addressing the “workingmen,” that “[w]hile the majority of you reject socialism, I am certain that most of you agree with me that along certain lines the function of the state should be increased. Government cannot do everything, but it can do much.”37 In essence, this sentence encapsulates the direction that the discourse on inequality took during the Progressive Era, and it is one that was instrumental in forming a liberal-capitalist consensus that lasted essentially until the late 1970s. The turn was against radicalism but also toward the limiting of economic disparities through state mediation. The disasters of the nineteenth-century economy could no longer be denied, and, although there would be broad disagreement among them about specific policy prescriptions, thinkers of the Progressive Era would respond in order to deepen American democracy and preserve industrial capitalism.
The Progressive and New Deal Eras have been the subject of much analysis and interpretation, but one theme is dominant: the excesses of industrial capitalism and the laissez-faire doctrines of the late nineteenth century were viewed by the emerging academic and intellectual elite—not to mention the broader public—with deep suspicion. Critical of the ideas of people like Spencer and of judicial doctrines that upheld laissez-faire, they began to turn to the state to provide more public goods and to question the economistic and libertarian notion of “liberty” that was being privileged. These new thinkers saw what was at stake. On the one hand, the march of social, economic, and technological progress was bound to lead to some degree of social stratification; this was the price of modernization. Business elites were not to be seen simply as monopolists; they were also at the same time unquestionably the engines of economic growth and keys to the progression of a modern civilization. But the new theorists were also fully cognizant of the consequences of industrialism and unrestrained capitalist growth, most importantly economic inequality. And it was this latter realization that makes so many Progressive thinkers crucial in understanding the way that the discourse on economic inequality would change during the beginning of the twentieth century.
Pressure had been building for some time in America over the abuses of capitalism and the ineffectualness of political life to stop its excesses and corruption. In the late nineteenth century the literary and journalistic writings of the Muckrakers had broadened public attention to the worst aspects of American industrialism. Ida Tarbell’s writings on Standard Oil, Lincoln Steffens’s probing of the abuses and corruption of local politics, and the novels of Upton Sinclair and Frank Norris, among others, were all central in creating a new awareness of the abuses of capitalism. Norris’s novel The Octopus focused on the politics and the social effects of railroad monopolization, while McTeague tells the story of greed and individualism that he—not unlike the moral critics of the late nineteenth century—believed were wreaking havoc on American moral and social life. Upton Sinclair’s novels, such as The Jungle, Oil!, and King Coal, were instrumental in not only exposing industrial abuses and scandals but also in nourishing a broader trend that was emerging in American society: a critical discourse on laissez-faire economic life and its political, social, and moral ramifications. Their critical discourse was also being mirrored in intellectual circles, although there it would not tend toward outright radicalism.
The transformation of American society during the first decades of the twentieth century would therefore need to reconcile capitalism with some sense of democracy; it would need to integrate the state into economic and social life in order to mollify inequalities. Progressive intellectuals were by no means egalitarians, but they did see that the excesses of laissez-faire capitalism needed to be counteracted by the institution of the state. As early as 1886, the economist Richard Ely was explicit about this program:
While all the monstrous inequalities of our times can by no means by upheld by good men, while many of those inequalities, the fruit of evil, can beget only evil, remember that nothing more disastrous to you could happen than to live in a society in which all should be equals. It is a grand thing for us that there are men with higher natures than ours, and with every advantage for the development of their faculties, that they may lead in the world’s progress, and serve us as examples of what we should strive to become.38
Progressive thought saw economic inequality as a primary assault on America’s democratic traditions and on any possibility for a democratic future. But more important, Progressive thinkers were able to see that modernity placed new demands on intellectuals and specialists and that the complex ordering of a modern, industrial society would need to be explicitly taken up. Ely was not alone in his view that the state simply had to be brought in and that inequality was an emerging moral as well as political problem. Charles Spahr’s Essay on the Present Distribution of Wealth (1896) was the first major empirical study to show the massive inequities of wealth at the end of the nineteenth century, and it would be cited even a decade later as an empirical source describing a deeply and antagonistically divided America.
Issues about distributive justice would give way to the Progressive vision of the expanded state and to a more complex idea of the relation between the economy and the state.39 But the apology for laissez-faire would still be able to assert itself. Christopher Tiedeman argued that the right to property protected individuals from any form of interference by the state or other organizational bodies who sought regulation or any kind of redistribution. His Limitations of Police Power was a defense of a kind of individualistic liberalism that Progressive thinkers would come to deride. The liberal idea of property rights would not disappear, but its influence would be considerably overshadowed by a newer idea of American democracy and an insistence that the economy had to be steered toward more democratic ends. The Progressive assault on individualistic capitalism would ultimately culminate, during the New Deal, in a political environment sensitive to the interests of organized labor, but it would also forge a consensus between capitalists and workers and the state that would last well into the twentieth century.40 Progressives would hold the laissez-faire impulse at bay while formulating a newer conception of political and even economic rights.
Progressive thinkers began to have a dominant influence on the intellectual discourse in America beginning in the late nineteenth century, and their views would radically transform the way that economic inequality was viewed and the ways in which it would be confronted. In addition to Ely, Henry Carter Adams would attack the notion of laissez-faire in his essay “The Relation of the State to Industrial Action,” and Charles Cooley would put forth a distinction between caste systems and the more dynamic and fluid class systems characteristic of the United States, arguing that the latter provided more impetus for innovation and personal self-expression and was less likely to lead to permanent forms of social inequality. All of these thinkers embraced a faith in market capitalism, but they saw that it was an imperfect system, one in need of regulation and reform. These thinkers collectively would begin a reorientation of American intellectual affairs, and the changed discourse they provided had a decisive impact on the way that economic inequality would be interpreted, viewed, and dealt with in policy.41 But it would also lead to a legitimation of a certain kind of social order that would prevail throughout the twentieth century. In short, Progressive intellectuals wanted to avoid radicalism and, for that matter, egalitarianism, and this was the product of their particularly moral and even religious intellectual and ethical roots.42 They were aware of the dangers as well as the immorality of the way that laissez-faire or individualistic capitalism wreaked havoc on the populace, and all of them saw—to a greater or lesser extent, depending on who it was—that a new understanding of democracy was needed that they would seek to provide. They would build an intellectual framework that would reconcile the fractious relationship between capital and labor into a new consensus and set the stage for a new conception of economy, polity, and society.
Although published well after the intellectual influence of the Progressives within the academy was firmly established, Herbert Croly’s highly influential book The Promise of American Life, published in 1909, was the pivotal text for a set of ideas that emphasized the need for reform—reform which would reestablish and renew a sense of national purpose and democratic realization. First and foremost this meant attacking the problem of economic inequality. For Croly, the problem with inequality was simply stated, and it looked back to thinkers like Adams and Jefferson and their privileging of the political over the economic: “The existing concentration of wealth and financial power in the hands of a few irresponsible men is the inevitable outcome of the chaotic individualism of our political and economic organization, while it is inimical to democracy, because it tends to erect political abuses and social inequalities into a system.”43 For Croly, economic inequality in America was being systemically reproduced. He noted how the divisions of economic power were widening and that closing the gap between rich and poor was also becoming increasingly less likely as long as those that had amassed great wealth sought nothing less than the protection of their own interests at the expense of the public. Conservatives, he argued, put forth a narrow interpretation of rights that existed solely to protect contract and did not conceive of democracy as anything outside of economic utility. Political life was being subordinated to economic life, and since the logic of the market was seeping into the fabric of American life, the only way to combat inequality as well as the “chaotic individualism” of the time was through a reinvention of political life itself.
Croly’s ideas about economic inequality were characteristic of a more advanced conception of democracy that insisted on what Croly referred to as “mutual ties and responsibilities.” Inequality split the interests of individuals into different segments that, in turn, shattered the cohesive, underlying unity that democracy requires. He did not intend a radical overturning of capitalism but the elimination of gross inequalities by taxation and the returning of what he referred to as an “excessive measure of reward” to the community so as to “secure for the whole community those elements in value which are made by the community.”44 Croly’s understanding of the connection between inequality and the erosion of democracy was important, for it pointed toward a more active role of the state (for regulation) and away from older ideas of democracy—what he referred to as “traditional democracy”—which were based on narrow interpretations of rights, individualism, and social welfare. Croly fused the political and economic spheres by connecting the problem of equal rights with that of the maldistribution of wealth under a system of private property: in no way was it possible, under such a system, for there to be both equal rights and equal opportunities for exercising those rights. If left unfettered, the result would be the gradual withering away of national purpose and of democracy itself.
The Progressive response to economic inequality spurred a new conception of political rights, one that brought issues of the economy and the inegalitarianism it created together with new conceptions of political democracy and public welfare. It envisioned, as Walter Weyl’s phrase indicated, a “new democracy” that would no longer cling to its older Jeffersonian and Jacksonian manifestations, that is, laissez-faire individualism. The new democracy was emerging out of what Weyl called the “new social spirit,” one that was separating America from its crude past and propelling it into a more democratic future. Weyl was one of the new proponents of a “socialized democracy,” which saw the older individualistic form of society as crude because it halted progress and, more importantly, eroded the social foundations for the deepening and extension of democracy. The maldistribution of wealth was simply the highest form of social ill that this conception of society produced. Weyl was able to perceive that the “individualistic” democracy that had characterized American society from its inception was producing a fragmented, atomized, and anomic society where plutocracy was beginning to erode prospects for any kind of democratic future. What the new social spirit called for was a “socialized democracy, which conceives of society as a whole and not as a more or less adventitious assemblage of myriads of individuals.”45
The foundations of liberal individualism needed to give way for a democracy built around assumptions of the public good to emerge. The new democracy was, in this sense, an interpretation of civic republicanism from the point of view of modernity: state institutions would pick up where the older forms of civic virtue had left off. Progressives like Weyl and Croly, as well as thinkers like Dewey, saw the need to embrace a more democratic modernity in order to overcome the shattering social consequences of the Gilded Age. Plutocracy was, in Weyl’s estimation, merely temporary because it was being effectively counteracted by the emergence of “socialized democracy.” Individualism was therefore no longer what it had been in the late eighteenth century, in its classical liberal guise—it was now little more than an apologia for propertied interests that acted at the expense of the public good.
In the socialized democracy towards which we are moving, all these conceptions will fall to the ground. It will be sought to make taxes conform more or less to the ability of each to pay; but the engine of taxation, like all other social engines, will be used to accomplish great social ends, among which will be the more equal distribution of wealth and income. The state will tax to improve education, health, recreation, communication, “to provide for the common defense, and promote the general welfare,” and from these taxes no social group will be immune because it fails to benefit in proportion to cost…. The political liberties of the people will be supplemented by other provisions which will safeguard their industrial liberties.46
Thinkers like Weyl and Croly would therefore effect a fundamental intellectual reorientation away from the older ideas about inequality and individualism and toward an attempt to halt the nation’s slide toward economic society and away from political society. Weyl, Croly, and Dewey knew that such a slide had a grave impact on political life, morality and ethical life. They knew that, in Weyl’s words, “to-day the chief restrictions upon liberty are economic, not legal, and the chief prerogatives desired are economic, not political,”47 and that the effect of this was nothing more than the erosion of democracy and the sacrifice of human progress.
Unlike George, Bellamy, and Lloyd, the later thinkers were able to translate the critique of an atomized, fragmented society rife with economic inequality and social antagonism into a working alternative that contained institutional concerns and involved a moral redirection of the relationships among economy, polity, and society. Their critique was not merely moralistic; they were able to glimpse the crucial insight that the character of political and economic life was rooted in the particular ethical ideas that members of society held and that ideas could be concretized into political institutions. George, Bellamy, and Lloyd—each in his own way—looked to the past to ground their critiques of the present and their pathways to the future. George’s economics embraced a liberal economic individualism and a variant of an outdated physiocracy; Lloyd’s criticism cast industrial modernity as the source of a socially corrosive individualism; and Bellamy’s notion of a “religion of solidarity” fed off of ideas that were foreign to a modern society marked by class divisions, growing ethnic diversity, and the notion of modern individualism. But this was not what characterized the ideas of Weyl, Croly, and their contemporaries. For them, the emergence of modernity required a reorientation of democracy by expanding what it meant as well as the role of the state in achieving common, public ends. Primary among their concerns were the economy and the amelioration of economic inequality. They were able to link the category of political rights with the problem of economic conditions. As a general movement, Progressivism sought national progress through a moral reinvention of the nation, and this was accompanied by a redefinition of the role of the state and a reconfiguration of polity, economy, and society.
It was this reconceptualization of democracy that would essentially transform the bases American society from economics and social laissez faire, marked by anomic individualism and inequality, to social responsibility and state intervention. The enemies of the Progressives were the familiar coterie—the adherents of the classical economists, especially Adam Smith, and other libertarian thinkers—but in the end this was hardly of any real consequence. What would emerge as a liberal-capitalist consensus was not the product of this struggle of ideas but the admission of Progressive intellectuals—from Ely and Cooley on through Clark, Croly, and Weyl—that capitalism, more specifically industrial capitalism, was one of the key elements of social progress, of human freedom and happiness. Unlike the socialist thinkers of the time, their opposition was not to the system itself but to the effects of the system’s abuses and excesses.
This tendency in Progressive thought would have a deep effect on the conception of economic inequality for most of the twentieth century. There was no rejection of capitalism or even large-scale corporatism. Croly insisted that “the huge corporations have contributed to American economic efficiency. They constitute an important step in the direction of the better organization of industry and commerce.”48 But there was a reformist mentality that gave way to deeper ideas of political and social change. Fighting inequality and social fragmentation did not necessitate, for the reformers, the elimination of capitalism. Socialists like John Spargo, by contrast, would still insist that class divisions and social fragmentation could not be properly addressed without jettisoning capitalism itself.49 But the American radical project would be thwarted by the emergence of the expanded state and its crusade for economic and social security. Progressive intellectuals saw that a reworking of state-economy relations would enable both economic and technological growth and a more just distribution of economic product. Capitalism in and of itself was not the central problem—the entire system of laissez-faire was, and to combat this, the state needed to be redefined, reworked, and brought in.
The erosion of the older labor radicalism, which had centered on the elimination of wage labor, was also a central aspect of the new consensus between labor and capital. The older ideology, which saw wages as an entrée into wage slavery and servitude, was giving way to the newer idea that working people—through labor unionism and activism—could increase their share of wages, thereby evening out the unequal power between labor and capital. The massive expansion of the American economy made the proletarianization of the American working class all but complete, and although this process began in the late nineteenth century, its political effects would begin to appear only in the early twentieth.50 Indeed, the shift in labor ideology from anti-wage to the acceptance of the wage system was, as Lawrence Glickman has argued, “perhaps the most significant ideological development of the late nineteenth-century since it entailed a redefinition of the meaning of freedom, independence, and citizenship.”51 This shift meant an acceptance of capitalism as an institution and way of economic life, something that the radical egalitarian critics of the antebellum period would never have accepted. Now working people who suffered from economic inequality would be forced to confine their arguments to the push for higher wages rather than a transformation of the economic system as a whole. In so doing, they would embrace reform over more radical solutions to economic inequality and the friction-ridden relationship between capital and labor.
This ideological transformation would redefine the very ways that workers saw themselves: no longer were they “producers,” as they had been in the early nineteenth century, but now consumers, primarily of wages.52 The workers could achieve equality not by eliminating capitalism but by pushing for higher and higher wages through labor organization. Ira Steward, one of the main theorists of this shift in labor ideology in America, was direct about this point when he argued that “the way out of the wage system is through higher wages, resultant only from shorter hours.” The emphasis on equality was therefore shifted to a new set of ideas; the improvement of wages was only part of the argument for equality. Working people would be able to improve their overall quality of life by insisting on higher wages and shorter hours. This would soon become the vision of the American labor movement, as Samuel Gompers would point out in 1919 when he argued, “I believe that as time goes on the wage-earners will continue to become larger sharers per dollar of the wealth produced.”53 Gompers wanted to see rights of working people tied to their ability to live according to civilized standards of living—to do this, workers would constantly need to push for higher wages to accommodate their needs. This new emphasis on a “living wage” would come to dominate the rhetoric not only of the labor movement itself but of the broader political debates of the early to middle twentieth century.
As an extension of Progressive thought about the economy, inequality, and the role of the state, New Deal thought became the institutional paradigm for American politics and political and social theory through the 1960s. The philosophy of society that began to emerge with the Progressive thinkers codified a new relationship between state and society even as it served to deradicalize the conflict between labor and capital.54 The scarring effects of economic inequality brought to American political theorists the consciousness of a need for a new conception of the state, one defined against the laissez-faire minimalism of the past century and oriented toward new moral-political goals. The stubborn existence of economic inequality had convinced many American political thinkers that the narrow liberal individualism that was born in the eighteenth century and that had coexisted with the growth of a grotesque social order during the nineteenth had to be reformed, even transcended. Against the older ethos of liberal economic individualism, the move toward conceptualizing the public good came to be cast in social terms rather than individualistic ones. It emphasized the need to abandon the encrusted view of powerful elites that individualism was akin to liberty and that private property and resource ownership were the only paths to efficiency, fairness, and social progress. Thus Thurman Arnold argued in The Symbols of Government, “Those who rule our great industrial feudalism still believe inalterably the old axioms that man works efficiently only for personal profit; that humanitarian ideals are unworkable as their principle aim of government of business organization: that control of national resources, elimination of waste, and a planned distribution of goods would destroy both freedom and efficiency.”55
The older moral critique of capitalism and inequality that was so vibrant in the late nineteenth century was largely seen as utopian, but not incorrect in its perceptions. Then as now, the key concern behind the critique of economic inequality was not a simple concern with distributive justice but a deeper fear that inequality was eroding social cohesion and threatening the ends of democratic social life. What thinkers such as Arnold sought to overturn was the mythos of the corporation and rugged individualism that occupied the American mind. He called these widespread ideas about economic life the “folklore of American capitalism,” and in a book of that title (1937), he argued that this mythic idea of capitalism had led to the destruction of democratic life and ushered in an age of “corporate feudalism.” The interests of capital were inherently opposed to the interests of labor—and where the state did not intervene, the result would be wholesale impoverishment:
This folklore which denied that labor had a moral claim on an industrial organization produced most interesting results. The textile industry in New England had a supply of docile labor which it exploited for years. Then it took the so-called “capital” thus accumulated and invested it in the South where labor was still cheaper. This enriched a few trust companies in Boston but left whole communities impoverished. Nevertheless, under the creed of rugged individualism, primitive-minded conservatives of New England fought to the bitter end to preserve this manner of doing things. The relationship of governmental organization to industrial wreckage of this sort was entirely confused. Necessity compelled government action; theory denied it.56
A new kind of democratic theory was beginning to arise that identified the public as the central locus of democratic accountability, and this would serve as a theoretical and regulative ideal, judging and, in many cases, guiding the institutional reforms of the New Deal Era. But more important, thinkers such as Arnold saw that the institutions of the state had to step in to regulate economic life and curb the excesses of inequality and corporate power. John Dewey’s book The Public and Its Problems was one of the more prominent texts that would provide new normative insights for the understanding of the interaction between state, society, and economy.57 Dewey argued that the “public” was defined as “all those who are affected by the indirect consequences of transactions to such an extent that it is deemed necessary to have those consequences systematically cared for.”58 For Dewey, modern life posed new problems for the older understandings of community and state. Before the modern era, it was commonly seen that deliberate transactions between two or more people were essentially isolated acts circumscribed in and of themselves. But the modern understanding of a “public” meant that the new economic institutions of the time, modern technology, and so on had unintended effects on others; as such, the public interest could not always be served by the activity of self-interested individuals.
Dewey was able to conceive this in Hegelian terms. Economic modernity had created a situation where civil society—which in Hegel’s formulation was defined by atomistic individualism—had overcome moral obligations of individuals toward the public good. Economic inequality was effecting a breakdown of social bonds, but it was also corrupting the ability of individuals to lead creative and free lives. The individualistic atomism that accompanied the economic nature of civil society (Hegel’s bürgerliche Gesellschaft) could only be overcome through the machinations of the state, through institutions that objectified the public good through rational law guided by what best for society as a whole. The problem with American liberalism was not its original existence but its inability to change with the historical context. The early forms of liberalism that had railed against political oligarchies, feudalistic social arrangements, and church authority had also created the ideal of economic autonomy as a means to those ends. But in the modern context, this form of liberal individualism had a corrosive effect on society—economic inequalities were the empirical referent for this breakdown of social bonds and also for the breaking down of America’s democratic political and cultural order. What Dewey termed “social liberalism” was, as he saw it, the most developed phase of liberal philosophy, one that relegated individual autonomy to the realm of thought and free inquiry and expression and placed concerns of the public good and broader social interests into the hands of the state.59 What was needed, in Dewey’s formulation, was a reconstruction of liberal theory to accommodate the complexities of the modern age, but in reality he was tapping into the republican ethos of earlier thought. The “old liberalism”—by which Dewey meant classical liberalism—rested on outdated conceptions of the individual and community, let alone the state. All this had to be reworked in order to create a new republic.
The turn away from individualistic liberalism and toward the institutional construction of the welfare state was therefore a reaction against the economic effects of modern capitalism, but also toward a different vision of the American republic.60 Inequality was foremost among these newly framed concerns because the question of distribution and redistribution—and the role of the state in this activity—was of primary importance before and during the New Deal Era. True, the Great Depression was the primary motivator for the emergence of the welfare state, and the Roosevelt administration was forced to take the interests of labor into account because of the labor movement’s growing influence. But the intellectual environment in which the welfare state was born requires emphasis; without the intellectual and moral reorientation of both the bureaucratic elite and public intellectuals, these new state institutions would have scarcely been possible. A new sympathy toward labor unions, the poor, and the expanded role of the state required a transformation of the moral-political sphere. American political and social theory effected an intellectual and moral-political reorientation away from the crude, atomistic individualism that marked the previous century and a half and toward a new conception of state-society relations. The effects of economic inequality in the late nineteenth and early twentieth centuries therefore had a profound effect on American political thought, leading to ideas that called for the state not only to enter into the activity of redistribution, but to take over where the market was unable to provide. This would remain the active ethic of the welfare state well into the 1960s, when the Great Society programs of the Johnson administration were extensions of this shift in relations between state, society, and economy.
The equality in income and wealth distribution that was achieved during the 1940s and 1950s was not only the result of the sharply progressive tax policies of Roosevelt’s administration. It was more importantly the result of the expanded power given to labor. The Wagner Act, the Walsh-Healy Act and the Fair Labor Standards Act were integral to raising the wages of workers and to combating the systemic inequalities that had been increasing since the middle of the nineteenth century between capital and labor while the Tax Act of 1935 worked to reverse the trickle-down economics of the first three decades of the century. Economic inequality was now on the agenda of American politics and policy, and it was politics more than ideology that limited the expansion of this institutional crusade. Roosevelt’s policies had thoroughly alienated capitalist interests in favor of labor.61 Labor’s radicalism was decisively curbed in the immediate postwar years as conservative forces surged against the growing power and influence of labor. Groups like the National Association of Manufacturers (NAM) and other probusiness organizations mobilized. But the conflict between labor and capital would take on a different flavor than in the late nineteenth century, one contained by the liberal-capitalist consensus created by Roosevelt’s policies. By being given participation in the economic and political process, labor was able to have a hand in raising wages, and the federal government’s progressive income tax provided further redistribution relief. Inequality was by no means eliminated, but it was so attenuated among such a broad section of the population that labor’s reconciliation with capitalism was approaching completion.
But at a deeper level, an intellectual crisis emerged in New Deal liberalism. Although Dewey had called for a “social liberalism” that would accentuate the need to oppose individualistic capitalism, which had created the economic divisions of the recent past, it was not clear that this project would be successful. Indeed, although the institutions of the New Deal would be created and a shift in American politics had been effected, Dewey’s “social liberalism” and the emphasis on the state as the solver of public problems that was current in the late 1930s began to give way. The issue of individual liberty once again became a key topic for liberals as the war progressed and Soviet collectivism was seen for what it was.62 The older liberalism that Dewey had pointed to, its antistatism, its skepticism of collectivism, and the fear that it would quash personal choice and opportunity in the economy would all contribute to counteracting the more radical promises and potentials of the New Deal. The turn toward individualistic liberalism would have deep consequences for economic inequality and the future ability to respond to it.
Of course, the New Deal reforms were contested. Some critics asserted that the New Deal had not gone far enough, others that they had gone too far. Norman Thomas called Roosevelt’s reforms nothing more than “pale pink pills” and castigated Roosevelt’s New Deal for not going far enough to free labor.63 Thomas was not confronting the realities of Roosevelt’s policies—especially that they were giving preferential treatment to labor and allowing its increased power to result in a more reasonable equality of income and wealth. For the most part, liberals and many socialists were won over by this new orientation toward labor. Dewey himself was of mixed view. He saw that the reforms had yet to establish equality as the central political and moral category around which a new socioeconomic order should be arranged: “The means have to be implemented by a social-economic system that establishes and uses the means for the production of free human beings associating with one another on terms of equality.”64
But despite the criticisms, it was clear what the New Deal had accomplished when it came to addressing the problem of economic inequality. For the first time in American political history and thought, it became imperative for the state to enter into economic affairs for the purpose of redistribution. The classical liberal conception of the state had always protected private property rights at all costs; now the state backed labor unions against the larger interests of capital for the purpose of economic justice. And in the end, it was not simply a transformation of institutions that made this possible: it was also—and more importantly in many ways—a reorientation of the intellectual and moral-political dimensions of state-society relations that consisted in an overturning of the older, more entrenched understanding of liberalism and democracy. Moving away from the ideas of economic autonomy and individualism that were championed throughout the long evolution of American political culture, thinkers of the Progressive and New Deal Eras reworked the older idea of a liberal democracy, premised on possessive individualism, into a socialized democracy that recaptured the older republican themes of the public good and social equality.
Of course, the problem with this—as Dewey and Thomas, among others, had seen—was that the reforms did not go far enough in remaking a new socioeconomic order. Inequality was ameliorated and for the remainder of the twentieth century; radical forces that were once active in the labor movement would no longer control the movement’s ideas and programs. What the labor movement was able to accomplish—through their fights in the courts—was the liberalization of labor relations. Collective bargaining became the solution to the age-old problem of master-servant relations in the workplace, but it could not eliminate the problem of inequality.65 The liberal-capitalist consensus was therefore an agreement by labor and capital to accept the terms of the New Deal and preserve—although on contractual terms—the system of production that industrial capitalism had put in place. Ideologically, it would preserve a liberal notion of property and a liberal work ethic; institutionally, the reality of labor’s collectivism allowed workers to share in the growth and expansion of America’s postwar industrial growth. But in time, this phase of capitalism would also pass, and with it the mechanisms for maintaining the modicum of economic equality obtained from the 1940s through the 1960s. But even more, it set the stage for a reified expression of the republican impulse. Whereas in earlier periods, the more radical expressions of republicanism sought to protect against the amassing of unequal property and wealth, now the interests of labor were narrower, moving from the domain of society itself to that of the shop floor. The discourse on economic inequality would therefore operate within very different institutional and cultural constraints.
In the end, the reconciliation between capitalism and corporate liberalism was able to usher in an expanded conception of democracy. The welfare state was an admission that the autonomy of the market would continue to plunge society into chaos, division, and turmoil. In its earliest manifestations, liberalism articulated an ethic of social cooperation against anarchic individualism; in its later, New Deal manifestation, it would turn this into a call for economic and social security, expanding the responsibilities of the state and its powers.66 The desire for equality was tempered by the relative equality brought about by the New Deal and the welfare state. Through the next several decades, until the reemergence of a newly reformed political culture of conservatism in the late 1970s and beyond, the product of reconciliation worked as John Bates Clark, writing in 1905, predicted when he asserted that “the new condition will not put an end to socialistic agitation, but it will reconcile so many classes to the present order that the agitation will have no radical effects.”67