What is the political significance of economic inequality? With what moral wrongs does it resonate? In what ways does the existence of economic divisions in society threaten or put into question our conception, culture, and institutions of democracy? Throughout the history of Western political thought, injunctions against unequal divisions of property, wealth, and power can be found, from the scrolls of ancient Greece to the political philosophy of the mid-twentieth century. The problem of economic inequality has always been tied to the discourse of politics, to the problem of power itself. As the consciousness of political freedom has spread through time, so has the problem of economic inequality been central to this debate. Today, however, even as we witness the ballooning of economic divisions, we are faced with the reality that, as a political concern, economic inequality seems to have lost its place at the center of the debate about democratic life. It is time to remedy this deficiency.
This book seeks to make an argument about economic inequality that has all too often been neglected in contemporary debates; it is an argument that finds its roots deep in the tradition of Western political thought: that economic relations are, in fact, political relations; that the economy is political precisely because it manifests relations of social power. This was taken for granted by thinkers in the past, but it is something that has been sadly lost as we have witnessed the separation of economics from politics in the present age. The existence and the worsening of economic inequality in contemporary America—not to mention globally—therefore constitutes a serious threat to the republican themes that motivated the birth of the American political project from its inception, as well as the democratic themes that broke through to the world during the Enlightenment.
The final decades of the twentieth century witnessed a radical transformation in American economic and political life. The great reaction against the welfare state, which was erected during the New Deal and had its roots in the Progressive Era’s philosophy of an expanded state and a skepticism of laissez-faire economic philosophy, has given way to a new, altogether different conceptualization of economy and society. How this happened and what this transformation means are at the heart of the present study. This book examines economic inequality as it was conceived by political thinkers and social critics throughout American political thought for the purpose of shedding light on the nature of contemporary American politics and its relation to the problem of economic inequality. In the first instance, it will trace the historical development of the ideas that American political thinkers and critics held concerning economic inequality. My second aim is to explain the current acceptance and toleration of economic inequality in America; to examine the change in political ideas and values that have led to the acceptance and sometimes legitimation of economic divisions and inequalities that mark the contemporary American political scene.
My basic argument is that liberal and republican themes were wedded in the American mind at the nation’s founding. Both viewpoints saw an intimate relation between power and property, if not coevality with each other. Liberalism was a doctrine of individual labor and, by extension, property, and it sought to give independence to individuals, smashing feudal relations of dependency that were predominate before the American Revolution. Republican themes emphasized the need for the institutions of the state to ensure that inequalities in property—and by extension, power—were kept in check. Within the context of an emerging commercial society bent on popular government, the theme of economic inequality was therefore central. Both liberalism and republicanism—two doctrines that have traditionally been seen as oppositional in previous literature on American political history—were actually seen as two sides of the same coin. Both sought to confront inequality of property and political power, and each saw that this was a central concern in eradicating the vestiges of feudalism that were at the heart of the birth of the American republic and modernity more generally. But the real essence of the story is that these two impulses begin to differentiate over the course of American history as the economic context develops. The evolution of capitalism begins to chart a course for liberalism at the expense of republican themes. By the end of the twentieth century, liberalism becomes co-opted by capitalism, and republican themes of the past fade into the background. The result is an overall acceptance or at least toleration of economic inequality and the gross differentials in political and social power it engenders in contemporary American politics and culture. I contend that this has led to a reorientation of democratic life in America and that as long as economic inequality and politics are held separate, a more vibrant democratic culture and consciousness will not be possible.
Indeed, the success of neoconservative and neoliberal thought over the last thirty-five years has had the effect of redrawing the boundaries of American liberalism. Nowhere is this more in evidence than in the loss in mainstream American political discourse of one of the most crucial veins of American political thought, which ran, until quite recently, like a roiling river at the heart of American life. This vein is the politics of economic inequality—a subject this book attempts to reclaim for our present. An intellectual history of the politics of economic inequality in American political thought is necessary, I think, to restore to American political culture its more generous and accurate contours after the assault that has been made upon American liberalism by the forces of American conservatism in recent decades.
How and why has an economy that continues to generate and perpetuate such rigid forms of economic inequality and such disparities of political and social power that spring from it not fostered more resistance and critique from within the American body politic? This book contains an attempt at a partial answer to this crucial question. The answer requires, among other things, an analysis of the developmental changes in the way that the concept of economic inequality has been understood down through American history. That understanding must entail, in turn, the recognition that the way the present economic inequality in both the American nation and the world is understood and justified marks a profound departure from the tradition of egalitarianism that dominated American political thought for most of its history. My aim in this book is to retrace the outlines of that American egalitarian political tradition and to locate it within the long tradition of democratic political thought going all the way back to the Greeks. At the end of this effort, it is my hope that the reader will be in a position to see the American egalitarian tradition’s present exhaustion in the national political arena as an argument for—and not against—its resuscitation and rejuvenation as a necessary part of a worldwide democratic politics yet to be realized.
In addition to this, I think that the economic egalitarian tradition that I will present here is so crucial because it is at the heart of the American republican project itself. The American idea of a democratic republic had always been premised on an antipathy toward unequal divisions of property because early American thinkers saw in those unequal shares of economic power echoes of what had been historically overturned: a sociopolitical order of rank and privilege; a static society that sought to crystallize power relationships and hierarchical economic and social relations characterized by corruption and patronage; in short, a feudal order where the exercise of power was arbitrary and the prospect of domination pervaded everyday life. The reason I trace the historical development and inevitable dissolution of the discourse on economic inequality in American political thought is to show that the American republican project was, in fact, deeply tied to the issues of economic inequality as a reaction to feudal social relations. Any political community that suffers from severe imbalances between rich and poor is in danger of losing its democratic character, and I will investigate this theme in detail in the pages that follow.
American political thought has therefore been characterized over the centuries by an overriding concern with the problem of economic inequality, and the reason for this should come as little surprise. Students of American political thought and political theory know the Enlightenment foundations upon which the American political project has always rested. Rooted in the political concern for equality and for democratic republicanism, it has also been marked by a liberal economic ethos and the rapid development of a capitalist economy, class conflict, and competing views of the “public good.” The clash between these two impulses in American political history occurs frequently. Perhaps the most salient historical locus for this clash is the subject of economic inequality, and it is one that—at least throughout modern history—has galvanized political movements and social critics to rail against hierarchy, servitude, unfreedom, and the erosion of democratic forms of life. The exhaustion of the once-robust critique of economic inequality therefore coincides with the erosion of political life more broadly and the fate of modern democracies more specifically, since it is within the nexus of economic constraints that most Americans face threats to their well-being, substantive political rights, and a culture of democracy. Even more, the present debates that surround economic inequality need to widen the field of vision, to enlarge the scope of concerns that, in the past, were associated with unequal divisions of property and wealth. The political dimensions of economic inequality can be seen not only in the conditions of the working poor, in urban ghettos, and in the overall stagnation of wages even as corporate profits surge. These debates need to include a discussion of the ways that economic inequality gives undue influence to the business community, transforms the imperatives of education, and fosters a culture of competitiveness and consumerism at the expense of broader political concerns. Any discussion of economic inequality needs to be tied to much more than debates about “fairness” and “opportunity”; it must confront the ways that this inequality shapes the political community as a whole by creating relations of subordination among its members.
Although the concern with economic inequality has hardly faded from the public discourse, it certainly no longer commands the attention it once did. The question, “Should inequality matter?” has become a common one in contemporary debates about American public and economic life. Economic liberalism has provided arguments for justifying inequality just as contemporary political culture also seems to tolerate economic divisions more than at any other time in American history. In the not too distant past, the realities of economic inequality spurred moral outrage. Combating the effects of inequality was the imperative of much of American social policy throughout the twentieth century. Indeed, during the New Deal and through the 1960s, there was great attention paid to the distributional impact of the capitalist economy and its effects on social welfare. Far from seeing markets, as they are seen today, as neutral and natural, the realities of the Great Depression and massive inequalities in wealth and incomes were seen as a detriment to political democracy. The reorientation of government policies has been matched by a similar change in public attitudes toward economic and social inequality. Although Americans still think economic inequality is morally wrong, they have accepted its consequences more than in previous eras in American history. They no longer see the connection between politics and economics, nor do they glimpse the ways that economic constraint interferes with the project of political democracy.
But even more, the problem of economic inequality needs to be looked at afresh in my view because it is no longer an issue that presents itself solely within a national context. Economic inequality is intimately bound up with the global system, with the elaborate networks of markets and capital flows that enmesh the planet. There is no way around the fact that America’s economic egalitarian tradition is something that, although it was born out of a national context, in my view can also reinvigorate the global discourse on economic inequality. What this American tradition privileged was the notion that economic relations were, in fact, essentially political since they could impede or enhance, depending on the institutional context, political freedom and a more substantive, realistic sense of human equality. Not content with the formalism of political and legal equality, this tradition in American political thought saw that economic life was a counterpart of political life and the ability to live without excessive want or dependency on others and with self-sufficiency was an essential element of human liberty. It was not possible for an individual to be in any way free or possess any kind of substantive liberty if he was dependent upon another person or institution for wages or, in any other way, for the means of his existence; if he was forced into near pauperism while others profited off of his labor. These concerns were at the very center of the egalitarian ethos—it was not an absolute equality of property that was sought, but equality in terms of the power that individuals and groups had over others. This ethos was imbued with a concern for the public good but also with a real concern for the individual and the absence of what those who held it saw to be dependence and servitude. For the thinkers in this tradition, the core object of critique was the existence of domination and the lingering of feudal institutions and social relations, which focused their criticisms of the emerging capitalism and the kind of social and economic relations it was beginning to forge. Economics was therefore seen in political terms.
The essence of this tradition therefore has implications outside of the American context, and this is one of the additional, albeit implicit goals of the present work: to provide an understanding of economic inequality that is capable of moving beyond the national context. Concern with economic inequality is grounded in a political tradition that—although firmly based in ideas and values inherited from Western political thought and shaped by American historical experience—still has a broad relevance for confronting what today has become a dominant neoliberal ideology that places markets and economic imperatives over political imperatives and stresses the need to liberate markets even while enduring some of the most severe social costs. The thinkers that make up the American egalitarian tradition were not concerned, for the most part, with political economy as we know it today. Rather, their concern was to apply what they saw as the living pulse of American political culture, what made America’s republican experiment wholly unique, which was that political and social relations needed to be bereft of all forms of domination in order for any real sense of freedom to be realized. Their aim was to expose the antidemocratic character of economic life that was emerging as capitalism developed. Their views changed over time, and so did their language. But I will argue that there was a consistent concern with economic inequality as a set of power relations. What made these egalitarian critiques and arguments so morally compelling, in my view, was their insistence on a much broader, much richer understanding of democratic life and community than is currently held today. Narrow self-interest and possessive individualism did not pervade this discourse, even though most of the critics in this tradition did embrace a liberal economic ethic. What they saw was that economic relations must be prevented from distorting the qualities of human dignity, equality, and freedom, ideas that they saw embodied in the republican (i.e., nonfeudal) nature of early American politics.
What I present here is a political history of the idea of economic inequality in American thought. The emphasis on ideas is important because it is how political actors think about their material or economic context that has political implications and helps to explain why a once vibrant egalitarian tradition has, in many senses, exhausted itself. But my emphasis is not on ideas alone—rather, it is in the way that ideas have meshed with the economic realities of their particular time that is so important. We cannot simply argue that ideology alone accounts for the changing pattern of ideas about economic inequality in American thought.1 Only by considering the way that egalitarian themes grapple with a particular economic context—say, from small producers to a large-scale industrial economy, or from contract labor to wage labor—can we actually have a fruitful discussion of the mechanism of change in America’s egalitarian tradition. Indeed, when explaining the origins of inequality, Rousseau frames the problem of the relation between material inequality and ideas nicely by tying it to the origins of modern civilization itself and the founding of the institution of private property. He does this by highlighting the link between material interests and the values, conventions (moeres), or prevailing ideas of society as a whole that accompany them. And this only made sense since for Rousseau, the real essence of the problem of inequality was not simply the fact that it existed materially—something that was empirically obvious to any eighteenth-century observer—but a problem of the ways that the ideas legitimated the material divisions of society.
The first person who, having enclosed a plot of land, took it into his head to say this is mine and found people simple enough to believe him, was the true founder of civil society. What crimes, wars, murders, what miseries and horrors would the human race have been spared had someone pulled up the stakes or filled in the ditch and cried out to his fellow men: “Do not listen to this imposter. You are lost if you forget that the fruits of the earth belong to all and the earth to no one.”2
Rousseau’s insight was that it is not the mere existence of inequality in material terms—e.g., in terms of property, income, or class—that is the essence of the problem but the ways that this inequality was in fact legitimated. For Rousseau, the issue is that people were “simple enough” to believe in the legitimacy of the institution of property, which made inequality—and all of its deleterious effects—acceptable and “real” through mere convention and the acceptance of this convention as natural. Rousseau’s insight highlights what the relationship between economics and political ideas actually is: not a simple, direct scenario where one set of interests wins out over another, but a scheme that requires legitimation and therefore a transformation of political culture and values that enables the material forces within society, such as the market or capital, to shape society and its institutions by affecting attitudes, beliefs, and the way that economic institutions are interpreted. The politics of inequality is therefore something that requires a thorough analysis of political ideas and values, those things that frame the ideological field within which politics operates. To do this, I have chosen texts that were highly influential among public intellectuals and the public at large rather than more academic philosophical writings. My choice of texts therefore gets us closer to the broader public mind and the ways that general public conceptions and debates—as exemplified in these writings—transform through time.
There have been other, recent approaches to the problem of economic inequality and its relation to American politics that have focused on the influence of wealth on politics and the subsequent distortion of democratic politics. Kevin Phillips’s Wealth and Democracy documented the “troubling and crippling side effects” of the “concentration of assets, inequality, and conspicuous consumption.”3 Phillips’s work is an attempt to document the way that economic power has outstripped the democratic nature of American politics. But it is also an analysis that fails to take into consideration many of the prevailing ideas that have generated a legitimacy for inequality on a broad scale: the acceptance of inegalitarian market outcomes, the weakening of the sentiment of working people against their sinking economic fortunes, and so on. The economist Edward Wolff documents the expansion of wealth inequality and its long-term effects on quality of life in his book Top Heavy. But what has been missing in much of this contemporary literature is a historical approach that seeks to tease out of American political thought and history the political impulse that treated economic inequality with condemnation and dread.
The analysis I present here, by contrast, is meant to shed light not only on the political implications of inequality—such as the distortion of democratic politics that Phillips speaks of or the differences in life chances that Wolff does—but on the way that economic inequality itself is a political phenomenon that is embedded in the way individuals relate to one another, the institutions of the society they inhabit, and the ways that they legitimate the social world around them. By speaking of a “politics of inequality,” I am arguing that the only way to approach economic inequality in contemporary American life is to revive the egalitarian impulse that was an outgrowth of the desire to eradicate social domination, expand the realm of political and social freedom, encourage a more robust sense of civic life, privilege political life over the narrow imperatives of the market, and check the imperatives of the minority of private interests, which were seen to be a threat to the very idea of a democratic republic that America—as opposed to the feudal institutions of Europe—was supposed to embody.
I will argue that economic inequality was central to the political debates that spurred America’s political and social development, that it was a defining strand of American political thought and culture. In addition, I will argue that economic inequality was a central moral and political concern throughout American political history and that American political values of equality lessen in intensity as we follow the discourse on economic inequality throughout American political history. Today it has become customary to exclude class when discussing American political and social history. In its place, the issue of equality has been cast in racial and gendered terms. To be sure, these, too, are central aspects of the development of American political history, culture, and institutions, but the dynamic of class inequality remains a stubborn reality. Clarifying the ways that economic inequality threatened political conceptions of liberty, citizenship, and democracy is therefore a central concern that needs to be probed and explored, for in no other time in American history has the gap between political and economic democracy been so evident than in the present moment.
This analysis does not only make a point about America’s past and the trajectory of American politics. It also points toward new avenues in political and democratic theory. Analysis of the history of the idea of economic inequality shows how the political ideals and expectations of American politics were in time corrupted by the intrusion of venal interests and the emergence of economic modernity. The radical critics of the early to mid-nineteenth century were consistent in their attack on economic inequality for forging permanent political inequalities between owners and laborers. But even when Progressive intellectuals, who were still critical of inequality in the late nineteenth and early twentieth centuries, embraced industrial capitalism, they continued to emphasize the atomizing effects of modern capitalism and the erosion of American democracy that resulted from it. In an age where the market once again is promulgating social atomism and intensifying inequalities, this theme from the past requires attention, and what I will later call a “republican modernity” needs to be explored.
What is in fact consistent about the discourse on economic inequality in American political thought is how intimately bound up it is with the distinct political concerns of freedom and democratic republicanism, or a concern for the elimination of social relations that enforce forms of subservience—conscious or otherwise. Divisions between wealthy and poor, not to mention employer and employee, were seen as distinct power relationships and not simply as a matter of class difference. Politics was deeply embedded in the ways that economic relations were interpreted, and it is in the ways that economic inequality were conceptualized, discussed, analyzed, and debated that we can glimpse an alternative way of relating politics and economics. The privileging of politics over economics was a crucial bulwark against excessive economic inequality and was a crucial source of the economic egalitarian impulse. This is something that needs to be revived if any real progress can be made in combating the contemporary phenomenon of excessive economic inequality. Mere facts and figures cannot do the job in convincing the public and political figures to take the issue seriously once again: what is needed is a repoliticizing of the issue, and history can serve as an important resource for this project. And even though talk of American exceptionalism is still vibrant, this should not be taken to mean that American political ideas have no relevance to political groups and traditions outside of the America. Far from being the case, America’s egalitarian tradition shows a universal relevance for the themes of equality and a rich, deep conception of democratic social and political life, one that has been eroding even within the American national political context.
This tradition and its unique perspective on the relationship between politics and economics is in distinct contrast to contemporary approaches to economic inequality, those dominated by empirical economists and sociologists or moral philosophers. This study wants to show that politics has its own distinct perspective on the problem of economic inequality and a claim on the debate in both its historical and contemporary manifestations. The key to understanding economic inequality as it was viewed by thinkers throughout the development of American political thought is to see it in political terms, and this view retains its salience. Inequalities in the economic sphere are also distinct asymmetrical power relationships that dictate many aspects of everyday life in addition to structuring inequalities in quality of life and access to basic economic goods that enable, or disable, social mobility. Economic hierarchies are not simply the result of differentials in talent and skill between different individuals. They are the result of the activity of markets and the operation of capital, itself a distinct social institution. But in the end, this is not really the issue; rather, what needs to be emphasized is that any movement toward economic equality has been historically achieved by political pressure in the form of social movements that have sought some measure of economic rights, whether in the form of unionization or direct redistribution. The importance of political ideas, of the ways that political actors interpret the material context within which they live, is of primary importance.
Historically speaking, economic divisions within society were a primary lens through which Americans viewed social power in everyday life because these divisions provided the structure of power relations. Central to this argument is the notion that American political ideas about individualism, liberty, and equality—which we broadly term liberalism—have different meanings in different historical-economic contexts. Liberalism was a radical doctrine when it was faced with the encrusted, aristocratic power relationships that characterized social relations during the eighteenth century. The concern with the right of each individual to be paid according to his labor—and not to profit off of the labor of others—was a radical interpretation of the liberal doctrine that wanes in the late nineteenth, twentieth, and twenty-first centuries. With the reconciliation of working people to the wage system and to a broad liberal-capitalist consensus, liberalism would lose its radical edge in arguing for economic equality and become more of an implicit defense of the prevailing system. This becomes a major theme of this study: namely, that as the nature of the economic system changes and becomes more “naturalized,” there is a consequent acceptance of economic divisions in American politics and culture. It is not the fact that political ideas have changed—Americans still embrace economic liberalism, for example—but that the economic context within which those ideas operate changed over time.
This leads me to a second, not unrelated argument: that the contemporary tolerance of economic inequality is actually the result of liberalism and liberal thought itself. Although the liberal economic ethic was central in combating feudal forms of political and social life, liberalism—defined here as the political philosophy that emphasizes individualism and property rights—has become ascendant at the expense of republican themes in American political culture. Economic inequality needs to be seen not simply in terms of different economic outcomes; I argue that—keeping with the majority of American political thought on this topic—economic inequality must also be seen in political terms: in the ways that it creates new forms of hierarchy, social fragmentation, and constraints on individual liberty. American political thought was, at least through the beginnings of the twentieth century, a mixture of liberal and republican themes. Politically, the emphasis on individual liberty was matched by a concern for a community of equals. Republican themes emphasized the need for the absence of domination, which was itself understood as the ability of one person to arbitrarily interfere with another. This was a more robust understanding of freedom than liberalism offers since it was sensitive to the ways that institutions bound working people to conditions that eroded their substantive freedom and rights.
I highlight the various ways that economic inequality was either problematized or praised (there was, and still is, an inegalitarian tradition in American political thought as well). What writers and thinkers within the economic egalitarian tradition sought to emphasize was the way that the growing disparity of economic power would form the groundwork for distortions in political and social power. New forms of economic life would foster not individual liberty and independence but a new form of economic dependence of working people on others (namely owners) and the erosion of social and political freedom. At the root of the American economic egalitarian tradition is the notion that economic divisions lead inexorably to political and social inequalities of power; that the essence of any real sense of political equality could only be guaranteed by a sensibly equal distribution of property and wealth. This meant that political and economic life were in fact inseparable and that social power was a function not only of political power but of the ways that individuals had the power over their own economic life and the ability to direct their lives independently of others—whether political tyrants or factory owners. Historically, Americans were reacting against the memories and vestiges of aristocracy and feudalism. This formed part of a political-historical consciousness that militated against class divisions. The fear of the aristocracy and the destruction of America’s republican experiment were therefore at the core of early American ideas about inequality. The political moment was therefore always explicit, and this is something that has been lost in contemporary American attitudes toward economic power and class inequality.
Late-nineteenth- and twentieth-century American political history saw the expansion of the role of the state in the economy and the market. For many intellectual elites of the time, the inegalitarian effects of industrial capitalism were in growing opposition to newer ideas and conceptions of democracy that were becoming current at the time. But more important, what the New Deal and the rise of the American welfare state ushered in was a new interpretation of democracy, one that saw, both implicitly and explicitly, that political democracy was untenable without a substantial degree of economic equality as well. The redistributional character of the welfare state was a result of this overall reconceptualization of democracy, but it was precipitated by the reaction against the massive economic divisions of the late nineteenth and early twentieth centuries, as well as a response to the overall crisis of capitalism. New Deal liberalism would eventually evolve into Great Society liberalism, and it would not be until the late 1970s that a successful neoconservative assault on the welfare state and on the doctrine of economic equality began to redirect this political project.
But different historical periods possess different ideas about how equality could be achieved and how inequality was in fact generated. It is usually assumed that eighteenth-century American political ideas about inequality were largely concerned with the problem of political inequality—with the rights of different citizens to participate in the political sphere—more than with the problems of a lack or inequality of property. Politics was the nexus where the dimensions of social power clashed, and, as a result, economic inequalities were seen as bound up with political inequalities in two ways. First, there was an assumption that inequalities in the economic sphere derived from political privilege. With the abolition of this privilege, it was largely presumed, the bulk of oppressive economic inequality would also vanish. But once capitalism began to develop more intensely, it soon became obvious that the political ideals of liberal republicanism were being called into question by the institutional constraints of economic modernity. The central point therefore became the nexus between the economic and the political: the reality of economic inequality itself and its various implications.
But second and, indeed, more important, economic inequalities were seen to have political effects on the political community as a whole. This was a view that began to take distinct shape in the early nineteenth century. Economic inequality did not only deny certain segments of the political community the material means for adequate survival—something that had sparked anger and revolts for centuries on end—it also dispossessed them of their autonomy and robbed them of substantive social and political liberty in the sense that they would be subject to domination, live according to the interests and the power of others, and cease to be self-sufficient—and therefore cease to be free. In this sense, and in contradistinction to today, economic inequality was always seen as a distinctly political concern; it touched on broader themes and ideas deriving from a robust anti-aristocratic sentiment and also a political impulse toward individual self-sufficiency in economic and political terms as a central aspect of what was seen to be America’s “republican civilization.”
This is no idealization of the past. The writings of the overwhelming majority of those who were critics of economic inequality are imbued with these themes, and they constitute a distinct tradition within American political thought. Thus, the analysis of economic inequality in American political thought needs to be seen as a politics of inequality, as the way that the mechanisms of the market and the developmental logic of the American economy and its effects were countered by a concern with unequal relations of power and how they constituted an assault on prevailing conceptions of democratic community as well as social and individual liberty. Central to this discourse was the problem of servitude and its opposition to liberty; the ways in which economic relations—not simply the differentials in the amount of property that was accumulated—translated themselves into the broader relations of political and social life. For in the end, economic inequality also meant the decline of self-sufficiency and legal and political equality, as well as the re-creation of the barbarity of feudal institutions.4 This had its roots in the commonwealth tradition in England in the seventeenth and eighteenth centuries—itself derived from republican themes—which was then transposed into the American context.5 Economic inequality was not only viewed as dangerous to broader conceptions of the public good and to moral ideas of fairness; the drive to abolish it was also heavily tempered by a political imperative to enhance individual and social freedom.
Today the legitimation of economic inequality has acquired a position of influence as in no other time in American political thought. Of course, America has its inegalitarian tradition as well, beginning with thinkers such as Alexander Hamilton and continuing on through thinkers such as Milton Friedman. Well over twenty years ago the political theorist Philip Green could write that “special advantages for economic elites, as in the United States tax code, are introduced sub rosa, never proclaimed out loud. No one defends legislation by suggesting that the better class should be rewarded more and the inferior less.” This is no longer strictly the case.6 To understand this transition in American political life requires a multilayered analysis of American political ideas. And such an analysis also needs to take into account how ideas about equality and inequality have operated as ideologies with respect to the prevailing economic system that, by its very nature, produces inequalities of wealth.
The historical development of ideas about economic inequality in American political thought has witnessed a transformation from radical criticism to relatively passive acceptance. As the liberal doctrine of competitive individualism became more dominant, calls for equality of condition were replaced with calls for equality of opportunity. As inequality began to worsen during the later decades of the twentieth century, it was these same liberal ideas that were in effect co-opted by a renewed economic libertarianism, which gave justification to inequality not only on the basis of “fairness” but on the basis of the neoliberal argument that inequalities were the product of an efficiently operating economy that would also produce an enhancement in economic incentives, prodding the economy to continuous growth and prosperity.7 The study of political ideas should not be seen as simply an academic enterprise; the way we think has much to do with the various ways that institutions are legitimated and an impact on the future evolution of those institutions and on the ways that political actors respond to and shape political realities.
From the very beginning, issues of economic inequality factored into the debates of the framers of the Constitution, as well as theorists of American republican democracy. To be sure, America’s democratic development has been a result of a confrontation with multiple forms of inequality. The problems of racial and ethnic inequality and issues of gender have been at the forefront of the American democratic project. But the reality and persistence of economic divisions has been a consistent theme of opposition throughout American political history. Even though the problem was persistent, the ways that thinkers approached the problem varied, and it is this history of ideas that requires analysis in order for us to derive political meaning from them. These thinkers generally confronted the problem of inequality from a political and moral position that has been eroded by modern liberalism. But even though this is the case, one of the central themes that runs through this study is that the closer we look at the ideas and writings of the critics of economic inequality, the clearer it becomes that their concern was not for a utopian conception of absolute economic equality. They were critics of the effects of inequality, but they did pragmatically accept the idea that some inequalities would need to exist. Unquestionably, there were utopians among them, but the overwhelming tenor of this tradition was the elimination of inequalities that would create unequal relations of social and political power and that would also lead to social and political fragmentation and the subordination of the public good to the interests of the few.
These ideas were radical to be sure. They rejected the emerging economic order in the early decades of the nineteenth century, and many of them rejected the entire structure of economic modernity itself, seeing smaller economic communities as superior to the trends that were moving toward a nationalized market economy. But as capitalism continued to develop, these themes began to lose their radical edge. The Progressive Era and its thinkers were hardly egalitarians, but they saw that the excesses of capitalism required the state’s intervention and a reconceptualization of the goals of the national economy. They knew that the massive inequalities of the Gilded Age had to be counteracted and a sense of public life needed to be reinvigorated. Alleviating economic inequality and gaining some degree of control over laissez-faire capitalism was therefore one of the key aspects of Progressive philosophy and policy. At the same time, this led to a liberal-capitalist consensus that would reduce inequalities for the sake of preserving the broader economic system as a whole.
THE “NEW INEQUALITY”
The concern with economic inequality in American political thought and history therefore relates directly to the political concerns of the present. What has come to be known as the “new inequality” has been characterized by the specific pattern in which economic inequality has manifested itself in late-twentieth-century and early-twenty-first-century America. Beginning in the early 1980s, there was a massive increase in income inequality due to “the unprecedented abysmal earnings experience of low-paid Americans, income stagnation covering about eighty percent of all families, and an increase in upper-end incomes.”8 The divergence of incomes was largely attributable to the increase in real incomes for high-income earners and a sharp decline in wages for those at the bottom. Pay differentials increased along the lines of education, age, and experience, the only real exception being gender, which saw a decrease in income dispersion.9 A key aspect of the “new inequality” is a result of the restructuring of American capitalism, that is, its integration into a more competitive world market for production and consumption.10 Indeed, this is the most common explanation behind the rise in income dispersion that has been at the center of the recent surge in social inequality in America. Wages have grown more unequal as a result of macroeconomic causes such as unemployment, inflation, rapid economic growth and stagnation of the minimum wage, the decline in the power of unions and their influence, as well as the exchange rate of the dollar.11 In addition, the emergence of segmented labor markets—which accompanied and was exacerbated by the process of deindustrialization—has also created a situation of spatial and racial/ethnic exclusion as affluent, white suburbs become more economically and socially distant from decayed urban areas. The segmentation of labor markets is therefore accompanied by a segmentation of housing, public goods such as education and environmental standards, and therefore life chances and opportunities, creating an “American apartheid” where separation of racial and class groups becomes all but insurmountable.12
Although this is clearly true, there is also another side to the “new inequality,” one that is decidedly more pernicious in the sense that what we see happening is a change not only in the structure of work and income in a postindustrial order but also the deepening of class divisions along the lines of wealth inequality. Edward Wolff has argued that when discussing inequality we should focus on the inequality of wealth since wealth inequality between households means a disparity in the ability to buy a home, and the wealthier family is more “likely to be better able to provide for its children’s educational and health needs, live in a neighborhood characterized by more amenities and lower levels of crime, have greater resources that can be called upon in times of economic hardship, and have more influence in political life.”13 This trend in wealth inequality is a directional change from the broad secular trend since 1929, which featured was a pronounced decline in the concentration of wealth in America through the 1970s.14
What the economic literature points to is the emergence of patterns of inequality that are both enduring and worsening. These inequalities are also complex in nature, since they are relationships between social classes that affect different dimensions of social life in terms of wealth, income, quality of life, housing quality, and access to public goods such as education, many times in spatial or regional terms as well. They endure partly because of the transition of American capitalism from an industrial to a postindustrial kind, but also because of the pullback of government services throughout the last two decades of the twentieth century. Of course, these are both partly the results of changing economic factors, but the politics behind this new upsurge in inequality needs to be located and analyzed. It is true that many economists have done an excellent job of parsing the mechanisms of the “new inequality,” but what needs to be assessed is the way that political ideas have come to legitimize these economic relations. It is one of the primary assumptions of my analysis that political ideas act as a legitimating force on economic realities. Shedding light on the political assumptions and implications of economic inequality will therefore reveal deeper relations between economic inequality and democracy and pull the current discourse around economic inequality away from mere empirical concerns, placing politics at the center of the debate.
INEQUALITY AT THE END OF HISTORY
Neoliberalism and neoconservatism have occupied a central place in American politics over the past two and a half decades and, in so doing, have radically reoriented American politics and the discourse about democracy more broadly. Whereas politics had always taken precedence over economics throughout American political and social thought, neoliberal ideas represent the reversal of this tradition. The need to foster “free” markets at the expense of their social and political effects, as well as the optimism that characterizes such institutional forms, is spreading beyond America itself. The embrace of the market by so much of mainstream American thought and culture is at odds with the desires of most Americans to have a welfare state that protects their economic interests. One of the defining aspects of neoconservative thought has been its emphasis on the market as an institution that allows for the expression of individual liberty. In this view, politics and economics are linked, but in the most superficial and abstract way. What is ignored is that what actually generates inequality in economic terms is not the market itself but capital, and this is something that was seen from the beginning of the American egalitarian tradition. The critics of economic inequality in America before the Civil War all saw the political-economic relationship between capital and labor, and they saw it as impervious to reform. Today, neoconservative (or neoliberal) ideas and policies have been able to wed American liberalism to the notions of individuality, liberty, and efficiency that markets supposedly embody. By doing this, they are able to draw attention away from what has problematized the relationship between capital and labor for the entirety of American political history: that the interests of these two classes are inherently opposed to each other and generate inequalities in economic and political terms that distort democratic life and re-create class hierarchies that are at odds with what was at the heart of the American political project from the beginning.
At the core of neoconservative and neoliberal philosophy is the notion that equality has extended as far as it will ever be able to extend without endangering individual liberty. Equality is to be realized and contained exclusively in the legal and political sphere, and even then, only in the abstract or formal sense. This differs strongly from the insight that was offered and acted upon by Progressive and New Deal thinkers who saw the role of the state expanding into the economy as necessary for a more substantive conception of democracy to flourish. These thinkers were reacting against the massive inequalities of the late nineteenth century, but, even more, they were reacting against the entire social theory upon which it had been based: laissez-faire individualism. And it is precisely this theory of society and government that has made a triumphant return in contemporary American politics.
Tracing the history of the politics of economic inequality therefore can shed light on the present political situation and the assumptions that currently dominate economic and political life. Freedom has reached its culmination in the institutional matrix of liberal democratic capitalism, and any movement outside of this system is bound to end up in a situation of unfreedom. Taking its cue from Hegel’s notion of the end of history as the speculative realization that human freedom is at the very core of the development of history, this argument—first penned by Francis Fukuyama as a characterization of a post-1989 world with an ascendant liberal capitalism—has had the effect of redefining much of American liberalism. Now, the liberal idea of political equality has been realized, and the true nature of human liberty has manifested itself. This “end of history” thesis in many ways has defended the structure of the politics behind the “new inequality.” The persistence of economic inequality has much to do with the structural transformation of work and the transition to postindustrialism as it does with the new transformation of political ideology. Nevertheless, the ascendance of libertarian ideas about economy and society has not only influenced the elites responsible for public policy but also has affected public sentiment on a whole range of economic issues as well as the way that the public conceives of contemporary economic life. The inverse relation between the rise of inequality and the amount of political aversion to it requires explanation, and I think it can be found in the way that the idea of liberalism, with its emphasis on individualism and its conception of labor and property, has triumphed over broader conceptions of the common good that were espoused by republican-minded thinkers. Bled of its older political implications, a narrow sense of liberalism can no longer provide a robust critique of economic divisions, even among those who suffer most from them.
But if what I have been arguing here is at all true, then an analysis of the developmental changes in how the concept of economic inequality has been understood—as a concept but also as a condition—is required, as is an analysis of the political concerns that served as the backdrop for those ideas. Indeed, contemporary American sentiment on these issues has been shaped not by objective truths or historical experience but by an ideological shift that views economic inequality as valid in pursuit of larger social and political goals. The neoliberal mantra of the rising tide that raises all boats is only marginally seen as a justification for the reduction of the public sphere and the growth of the market as the solution for social problems. There is also the ideology of self-improvement and social mobility that accompanies the liberal economic ethic. This renewed conception of liberalism traces its foundations back to thinkers like Ludwig von Mises, Friedrich Hayek, and Milton Friedman. But today it has become hegemonic in the way that economic life is understood and economic inequality justified, and it marks a reorientation away from the tradition of egalitarianism that had dominated much of American political thought and its emphasis on egalitarian conditions and a broader notion of social solidarity, rather than atomistic individualism.
This can, and should, also be seen as a reorientation of American democracy away from the more substantive ideas about equality that were privileged by the thinkers of the early twentieth century. In this sense, the discussion of economic inequality therefore resonates much more deeply with other dimensions of American political and cultural life. It is, indeed, first and foremost an empirical question of how people respond to unequal divisions of power, but it also brings into question the nature of American democratic culture itself. If Western political thought, from the writings of Plato on through those of John Dewey, saw economic inequality as dangerous, it did so not out of a liberal concern for “fairness” or opportunity but because it marked divisions that threatened a culture of equality and freedom. Conceiving individual liberty outside of the context of economic constraint—as is so fashionable with neoconservative thought and libertarian apologists—is so narrow an understanding of social life that it becomes an absurd theoretical abstraction.
Even more, the rise of neoconservative thought on this topic should be seen as a grave turn against the American egalitarian tradition that railed against economic inequality for its effects on political and social power. There is no denying that the impulse toward equality among Americans has lost its political power to mobilize people against those economic institutions and policies that continue, at least by all statistical measures, to make them more and more unequal to the wealthiest Americans. The consequences have been drastic. This is at core a political problem, and it raises the question of which political ideas, which traditions are being embraced. Investigating the lineage of these ideas is therefore essential, for it will tell us much about the American pursuit of economic equality, social justice, and the realization of a fuller, more robust understanding of democratic life. This is where the ideological, institutional, and political levels of the analysis converge, since ideas are used to justify and to legitimize certain institutions and interests. This story begins at the very heart of American political thought in its earliest generations—from thinkers as diverse as Thomas Jefferson and John C. Calhoun—and stretches through the modern attack on the welfare state. Unearthing the political traditions of inegalitarianism and egalitarianism will enable us to see how politics was always central to the concerns over economic inequality and that it was the issue of politics, of power, that dominated the various debates. For it is only when we begin to move away from the purely moral or empirical understandings of inequality and embrace the political dimensions of the problem that a revival of a more robust debate over the serious problems of economic inequality can be realized.
By seeing economic inequality through the lens of politics, we are confronted with profound questions about the nature and culture of American democratic life and politics. If inequality is seen merely in economistic terms and simply as a debate about “fairness,” then the political implications of inequality have indeed been lost. The critics of inequality that make up the American egalitarian tradition interpreted economic inequality as not only pernicious in and of itself but also as a threat to social and individual freedom. The overwhelming majority of these critics saw that the political institutions of America’s republican democracy could only function once there was a relative absence of unequal wealth. They emphasized an aversion toward plutocracy and neo-aristocratic institutions over plans of social fantasy. Rejuvenating deeper nuances of American democracy therefore hinges upon breathing life once again into this egalitarian tradition, the particular way that it connected social power and economic inequality, its anti-hierarchical stance, and its emphasis on a richer conception of social and individual freedom. Only once political imperatives are placed over the imperatives of the marketplace and the antidemocratic nature of contemporary social stratification is exposed for what it is will it again become possible to expand and enrich American democratic politics.