David Brin/The Other Foe of Free Enterprise
The fall of Communism came at an opportune time.
Few can recall when this militant movement wasn't hammering at the gates... our century's counterpart to the warlike hordes of old. For seven decades, communism spread by conquest, conversion, and subversion, outpacing even the eighth century eruption of Islam or the Mongol expansion of the twelfth. It seemed poised to permanently change the world.
Communism grew out of Karl Marx's fevered notions of how societies ought to work. Millions were convinced by his pseudo-scientific, "if-then" rhetoric. But human nature, for better or worse, never fit old Karl's idealizations. A few seers – Andrei Amalrik, Jean-François Revel and others – understood that nothing long-lasting could ever come of it, neither utopia nor endless terror. Amalrik's forgotten 1970 masterpiece, "Will the Soviet Union Survive Until 1984?" underestimated by a few years the obstinacy of a bureaucracy clinging to power, but otherwise called events with remarkable vision.
Sure enough, after but a single human lifespan, the flame that seemed so dire sputtered. History tells of many nations and peoples going down with their creed, rather than admit its irrelevance, but today we see Russian adults, reared on the catechism of Marx, abandoning the faith and converting en masse to the rites of Adam Smith.
So, all hail the market, revividus! With the great enemy of Free Enterprise fallen, no obstacle blocks our road to capitalistic paradise. Right?
Well, maybe. First, let's ponder a question or two. (Be warned. Some of these will be discomforting to comfy libertarian nostrums.)
Historically, how many free market systems offered promise in their day, only to falter, then fail?
The answer: lots. There have been fleeting episodes of openness in many societies – from Heian Japan, to Ashoka's Indian Empire, to the early caliphate of Baghdad – narrow, blessed periods during which ideas flowed like rivers, when liberated individuals proved their mettle in fair competition and were rewarded less for their connections than for what they produced. These were times of rich culture and rising prosperity for all, not just the most creative or influential. Alas for human progress, every one of these brief experiments withered soon after flowering.
How did they fail?
We have been raised in a world in which the great enemy of freedom was a hulking socialistic juggernaut, somewhere over the horizon. That threat was real, but historically, such movements aren't the instruments which most frequently end a golden age. In none of the cases mentioned above was the agent of downfall anything remotely resembling communism.
Are there other enemies to freedom and open markets? Are there other perils as dangerous as socialism, fully as capable of bringing down our own delicate renaissance?
Obsessed as we've been for seventy years with a bumbling socialist malignity to the East, it's easy to overlook historical evidence that populist revolutionary movements seldom keep steam, however militant their beginnings. Few market systems have been permanently ruined by proletarian or peasant uprisings. A great many, on the other hand, have been destroyed by another nemesis of free enterprise... aristocratism.
Examples range from those already mentioned, to classical Greece, Rome, and Imperial Britain. Each experienced brief epochs when individuals competed somewhat fairly, providing goods and services, leveraging labor through innovation, and creating greater wealth for all. In every case, the same thing happened. A class of enterprising leaders would rise, proud to have done so by their own efforts. But once in power, they conspired to close what had been open, to change the rules so that newcomers would find the same climb harder.
If free markets benefit from one aspect of human nature – honest ambition – they also seem disastrously vulnerable to a darker side of that same trait. Not so much greed, per se, as a tendency to cheat. The aristocratic impulse drives self-made men to use the wealth and power they've attained, to arrange for their sons to start out life as owners, nobles... demi-gods. Choose any epoch to see examples. Coups by the Roman patrician class. Civil service rigor-mortis in Chi'ing China. The pattern grows out of a very strong side of human nature.
(Consider: we are all descended from the harems of kings, who poured their traits into the gene pool at every opportunity. Recent studies suggest that 8% of the present Chinese population is directly descended from Ghengiz Khan. That is a lot of genetic influence in favor of aristocratism. It flows in our blood.)
One final question, then: How have we in the modern West, and especially America, managed so far to buck this trend? For over two centuries we've reaped the advantages of an incentive-market system, the only proven producer of both new wealth and freedom, without seeing it permanently ruined by conspiratorial aristocracy.
It is easier to perceive how we avoided the other menace, socialism. Essentially, Americans don't take to homogenization. All our myths push individualism, love of difference and change. Give or take a few mega-institutions, such as Welfare, IBM, and the Pentagon, we dig in our heels against clearly-perceived accumulations of pushy authority, especially when it meddles overmuch in daily life. Blatant Marxism could never take root here. The soil was too irascible.
(Doubt this? Then name one other civilization that ever produced so many libertarians!)
Aristocratism is another matter. People find fascination in displays of affluence and influence; e.g., Lifestyles of the Rich and Famous. Before the depths of the 1992 recession, opinion polls showed a majority of Americans believed the well-off deserve whatever they have, even if it is orders of magnitude more than ordinary wage-earners could ever hope for. Until very recently, populist soak-the-wealthy campaigns have done very badly among middle class voters, perhaps because each of us imagines we might someday live up there on the hill, given the right breaks.
And yes, this attitude is starting to change. It used to be easy to squelch talk like this by calling it an "attempt to foment class warfare." But we should always be aware that the post-WWII period in America has been unique in all of human history, for the extraordinary flatness of its wealth and power distribution. As this flat profile changes, becoming more like other societies, will traditional class consciousness ... and class rivalry... return?
All right, let's take another of those patented "three-steps-back" and try to put all of this in perspective. A perspective of history and human nature.
Diamonds and Pyramids
Ever since human beings discovered metals and agriculture, nearly all complex civilizations shared a common structure, a hierarchy of privilege reminiscent of a pyramid, with a super-empowered few on top, directing the labors of obedient masses below. Across 4,000 years and nearly every continent, aristocracies (and the clerics who preached on their behalf) colluded to ensure that the ruling oligarchy would stay on top.
(Exceptions? Go ahead and find some. I'll wait. The near-utter universality of this pattern – across the globe – is the pertinent fact of history.)
The economic process in almost all of these societies? One of top-down command or "guided allocation of resources" or GAR. And here's a key point. GAR was very little different when the commands came from lords, than it was when the commands were given by a communist nomenklatura. Put aside superficialities. Deep-down similarities vastly outnumber differences.
For most of forty centuries, individuals and markets never had a prayer.
Would we be better off if, say by pressing a button, we could suddenly do without these "bandits?" Clearly there are extreme examples of human monsters, who would not have been missed had they been aborted. And yet, just as clearly, many of the founders of "dynasties" have been otherwise fine people, inventive and keen-minded, who won their initial status through creative endeavor, often to the great benefit of all. Their only crime was wanting their children to be lords. And as we have seen, that inherited genetic drive is hardly their fault.
The so-called "American Dream" represents a radical departure from this near-universal theme. Our ideal of a middle-class society is best pictured as a flattened diamond... with a few people getting rich by providing honest goods and services, but the vast majority living not far below this elite in comfort, education, and even political clout. In such a society, a respected millionaire will have earned his or her wealth personally – by helping engender competitive services, solutions and products – rather than just inheriting it.
Below the middle class, numbers are supposed to narrow again. (Hence the diamond shape.) If we must cynically accept that "the poor will always be with us," then they should be few – sporadic unfortunates who have fallen temporarily, due to bad luck or perhaps bad habits. Either way, society ought to be able to lend a hand so they can rise up again. Or if not them, certainly their children.
Clearly, the social "diamond" is an idealization we have yet to live up to. There are far too many poor to suit Americans of good conscience. Despite the fair-play model of a free market, impoverished children do not always get to compete on an even playing field. All-too often, their environment inflicts them with their parents' disadvantages, passing the blight on to their children, and so on. The diamond-shaped society remains an uncompleted dream.
Yet, consider how incredible it is that we have this dream at all! In no other urban culture has anything but a pyramidal social plan seemed possible, even imaginable over an extended periods. We should notice, and regret, that too many lack middle-class comforts. We should fret that some poverty is inherited by children whose meritocratic talents never get their full chance to compete. At the same time, however, let us recall that ours is the sole civilization in which the comfortable have so outnumbered the unprivileged. The only one in which a majority of children get opportunities to prove themselves, competing openly and zestfully, without undue impediment by accidents of ancestry.
It is no mean accomplishment.
In our myths and movies, we tell ourselves over and over that we can have the diamond. Few of today's arguments between left, right and libertarian dispute this goal, only how to achieve it.
Today, nearly everyone agrees that socialism isn't the way to get there. Pounding a pyramid flat doesn't turn it into a diamond. It just makes everyone poor, and leaves a new set of bullies (commissars and bureaucrats) to begin reshaping another steep triangle.
Unbridled capitalism, then? Recall those examples from history. Aristocrats have a bad habit of continuously trying to sharpen the pyramid, making it narrower on top, broader at the bottom. Across 4,000 years, those with power have all too often used it to grab more, then ensure that their progeny inherited it, without having to compete. (This is the fundamental quandary of laissez faire. Cheating will blatantly happen, ruining every market. Locke and Smith both demanded that it be prevented.)
The best answer may be more complicated than either extreme. (Especially since both socialism and aristocratism are simpleminded cousins, slightly different versions of GAR.)
In fact, it can be argued with some irony that we've not been doing badly, so far.
'Til the next crisis, that is.
Living with an Aristocracy
Much has been written about America's great families... Old Money versus New Money clans, and the power they wield. A cottage industry thrives on silver spoon-watching, tracing their interlocking directorships and efforts to wield influence. Yet, the real point seems to have escaped comment. Somehow, for two centuries, we've managed to prevent a true ruling class in the United States... one able to enforce its will and whim without constraint by due process, or any need to negotiate with other social classes. While some complain about the undue sway of Rockefellers, Annenbergs etc., consider how small is their power in proportion to, say, the noble houses of Bourbon France, or the apparatchiks of Brezhnev's Soviet Empire. A glass half-empty is also half-full.
(Author's note: This article, originally written in the entrepreneurial nineties, may seem naive ten years later, at a time when an aristocratic-kleptocratic cabal seems to be "making its move" to transform our diamond into the more traditional pyramid. And yes, I share the dismay, the concern. After all, it is a dismally predictable pattern, repeated in nearly every other nation and century – the ruination of them all. And yet, I say there are reasons for confidence. Read on.)
This continuing balance and restraint may be one of the most singular traits of American society. The more one ponders it, the more mysterious and unlikely it seems. How was it achieved?
Thomas Jefferson, warning about the danger of self-entrenching aristocracies, prescribed a solution: new "revolutions" every twenty years. This is usually read as exaggeration or polemic, but is it? A historian might argue that America has steered its narrow course between gar-despotisms of left and right by sticking quite close to Jefferson's formula: tweaking and adjusting the rules of the game, each generation or so. Some purifications have been violent, notably the Civil War. Turn-of-the-century Progressive Movements, on the other hand, left an enduring legacy of anti-trust legislation and other reforms, which could also be thought of as "revolutionary." So might the populist revolt of Andrew Jackson, or, in a cultural sense, the Roaring Twenties.
Consider the effects of one simple, well-timed act of Congress, the G.I. Bill of Rights, which took a million returning World War II veterans – sons of farmers and factory laborers – and gave them access to university educations theretofore undreamt of. This one piece of social engineering nearly demolished the functioning class system in America for more than a generation... at least for white people. For others, justice and opportunity had to wait twenty years, for the Civil Rights Movement and other medium-scale social fevers which, largely non-violently, inoculated our nation with steady doses of renewal and change. Whatever other effects these episodes had, from music and culture to law and leisure, and whatever remaining faults they left unsolved for later generations to deal with, each made American culture more open and equal than ever before.
What does "equality" mean? As mentioned earlier, contemporary middle-Americans don't generally regard the upper classes as foes or oppressors. On the contrary, we see them as slightly better-off neighbors, with whom we might catch up, in time. Don't we drive the same streets, after all? Stop at the same traffic lights? Don't we use many of the same stores and restaurants, and send our kids to the same colleges? Don't the rich have to renew their auto licenses at the same crowded windows? Many of the toys that they flaunt grow cheaper rapidly, becoming affordable to the rest of us. The neighborhoods where they live, we hope to move to, someday.
Nor are these total self-deceptions. The dream of upward mobility is fulfilled often enough to hobble the ancient loathing that traditionally divided social strata. Us-versus-them has turned into a mélange containing many textures of us.
But, as recent events have shown, the situation is inherently unstable. This good-tempered equilibrium rests on social bargains that were last renewed more than a generation ago. Today, newspapers and magazines are full of articles sketching disturbing trends: a growing disparity in income and capital, between those on top and all the rest, especially a growing disparity in raw power to manipulate the rules, to manipulate government, to manipulate markets so that they are no longer neutral machines for generating quality goods and services, but rather delivery systems for crony-based cheating.
At no time since the Great Depression has the "upper one-percent" controlled so large a fraction of the property and wealth-generating capacity of the nation. At no point in our lifetimes have so few pulled so many noncompetitive marionette strings. Congressional studies show that those 660,000 families drew over 60 percent of all after-tax income gains in the 1980s. This trend abated a bit, during the Internet boom of the nineties when, ironically, Bill Clinton proved to be a major deregulator (who would've thunk?) But then it accelerated prodigiously under neoconservatism.
Direct symptoms? For the first time in a century, rich families are increasing the number of personal servants they keep, while paying them less. Huge mansions bloom, while ordinary Americans are getting so used to having smaller discretionary incomes – with dangerously high fractions of each paycheck going to obligated payments like mortgages. This is not leftist ranting, but simple symptomology. The diamond is showing signs of slumping in pyramidal directions. Moreover, there are inevitably those on top whose impulse – inherited from kings of old – will be to push this transformation along.
One classic way to forestall anger by workers and professionals is to foster resentment toward those less well off – for example immigrants, or foreigners, or so-called "welfare cheaters" – and using thinly veiled appeals to racism. But although similar efforts have worked in the past, are they likely to succeed for long in contemporary America? A pyramid cannot be hidden by throwing a blanket over it. Inevitably, the "fairness issue" will break past all of the "class warfare" rhetoric and focus on who has won and who has lost during the last few decades, a correlation that – in a true market – should depend far more on individual creativity than upon social status.
When this becomes blatantly untrue, aristocrats may find themselves less well-armed than they imagine, especially against educated masses who are drifting back toward older attitudes of interclass resentment.
In fact, this process may be far less clever than the New Oligarchs think, as they invent new rationalizations for a pattern that is old-as-the-hills. These days, the human instinct to pyramidize is likely to prove suicidal, over the long run. The last thing that a modern clade of aristocrats should want is a return to the radicalized antagonism between social classes that typified nearly every other urban culture. Only stupidity or complete lack of historical perspective could persuade the well-off to imagine present trends can continue indefinitely, without stoking danger to their own positions. Yet, many of them still seem genetically-compelled to pursue that archaic, obsolete goal.
(Note, there are also many in the top 1% who "get it," who know what kind of society they live in: one that fostered and engendered their own rich life opportunities; rich folk who are proud that their wealth was generated personally, through market-delivery of goods or services, and who don't mind continuing to have to earn it; who feel enough gratitude – and have enough perspective – to resist the age-old kingly impulse; who are loyal to a diamond-shaped society in which even most children of the poor get to compete, and in which most children of the wealthy still have to compete.)
Even if we all agree that runaway aristocratism is an age-old failure mode that is bad for free enterprise, solving it can be difficult. Bludgeons won't work. Historical cycles of popular revolt and repression show that brute expropriation achieves little. Chopping heads and seizing estates may seem satisfying for a day or two, but afterward, there is only blood on the ground, and a dearth of capital to use for rebuilding. Historically, whichever side wins an episode of class warfare, most societies never recover.
Jefferson never suggested killing the golden goose. His once-per-generation prescription took into account the need to combat aristocratism with imaginative solutions, unlike those tried in the past. Subtle ways are needed, which don't choke incentive or offend the wild spirit of individualism. Moreover, one decade's solution can burden the next, hence the need to keep deregulating aging bureaucracies.
Anyway, there is a moral line we should never cross, even for the sake of social peace. The honest rich, those who earn their wealth by providing superior goods or services, deserve their rewards. We all benefit by their creativity, which should be encouraged with the incentive of fortune.
This process of open and honorably competitive wealth-generation is – please note – very different from the method practiced by kleptocrats, who use government largesse and sweetheart regulations to create and enforce artificial sources of what Adam Smith himself derided as rent income, which thereupon flows without any substantial contribution of value by the recipient. No new goods or services and no appreciable addition of useful capital. Or, as critics of capitalism rightly point out, there will always be a tendency for those with influence to use that influence, in order to get the treasury to cover costs while profits are privatized.
(If the taxpayers who financed development of weather and communications satellites had received royalties on those inventions, might the reinvested income have built moon and Mars bases, by now?)
So, can libertarians offer a solution to this problem? One that minimizes coercion, bureaucracy, parasitism or the replacement of capitalist aristocrats with socialist ones?
What appears to be needed is periodic tweaking of the rules of the market game, with the simple, obvious aim that cheaters shall not prosper as well as producers, and that bright young men and women with vigor and ideas should have a decent chance to start off from an even playing field, wherever in life they began. This is not the same thing as social-leveling, which tries to manage all outcomes. It is not a goody-goody fantasy of eliminating all bad luck, or failure. It is, rather, simply an acknowledgement that each generation deserves a chance to play fair, to win or lose based upon the quality of their work, their innovations and their skill.
So far, little revolutions have kept us on a narrow path, maintaining the miracle-working catalysis of a market, with the lure of wealth to spur women and men on. At the same time, we managed what no other society did before – preventing utter dominance by an entrenched ruling class. It is a miracle worth some earnest effort at continuing, even though ideologies of left and right – from confiscation-socialism to laissez-faire entropy – appear to stand in the way of understanding.
The fall of communism came just in time to remind Americans that freedom has another ancient, implacable foe – aristocratism. It is, after all, why we had a revolution in the first place, two centuries ago. The socialist blob was scary for a while, but history shows that a home-grown enemy is just as likely to become a bane of liberty.
The American Answer to Aristocratism
Many earnest men and women around the world have tried to establish societies that they thought would be fair and creative and fun to live in. Most, for all of their sincerity and goodwill, failed terribly. Nearly all the grand experiments succumbed to the feral urge of bandits – that other class of men who seem to have no greater wish than to found dynasties.
Some see no problem in this. "A man has a right to claw his way to the top and leave everything to his children," they say. Well, perhaps. But I have philosophical difficulties with a system which claims to base its justification upon "free competition", and then asks school children to start this race from profoundly uneven starting blocks. That sounds a lot like "pre-picking outcomes," a sin often ascribed to government. As you'll see, this does not make me a socialist. I simply believe in looking at the success-failure rate of a phenomenon. And the harmful aspects of inherited privilege are legion.
America has been, as much as anything, a story of amazing, even miraculous balance. Somehow, for two hundred years, we have maintained a profit-based system – with its incentives for personal risk and reward for creativity – while at the same time keeping the aristocratic imperative under some degree of control. "Yes," citizens seem to be saying. "Edwin Land, Steve Jobs, Jeff Bezos, and Elon Musk ought to be rich. Over the long haul, we all benefit from their enterprise. But that does not mean their offspring have the right to be born into dukedoms. Their grandchildren shall not own their fellow human beings."
So how did we become an exception to the dour historical pattern? I spoke earlier of Jeffersonian "revolutions" and mentioned a few, like the GI Bill. It has been a balancing act trickier than any tightrope, riskier than any trapeze. Yet, the history of wealth in the United States shows a wide array of tools that have been used to achieve this wonder.
Let's go back to the beginning and examine a few more, with an eye to discovering patterns that work.
The Founders were well aware of how aristocracy diminishes competence, fair competition, market creativity and democracy. Wish fresh experience in mind from the English lordly class, they forbade formal titles in the new republic. But whenever "rules" have been set up to prevent tyrannies, they have nearly always failed, for would-be aristocrats are often brilliant at working within – or around – rules to achieve their ends. Witness the elite power structures, the inherited hierarchies that have arisen in the "workers' states" of Eurasia.
(Let us remember that a society that is commanded from above by a narrow elite of inherited wealth is pretty darn similar to one that is commanded from above by a narrow socialist elite. Both are examples of GAR – guided allocation of resources – and friends of markets should find both styles equally worrisome.)
Time for a factoid. At around the time of the 1775 uprising, vast sections (up to half) of the colonies of Georgia, New York, Pennsylvania, and Maryland were owned by individual families under charters granted by the British crown. The great landlords were mostly royal cronies -personal friends of the king - who never even visited their vast new fiefs.
Certainly seizure of some Tory assets had a great deal to do with the breakup of these grossly unfair, unearned estates. Still, confiscation is a bludgeon that historically is at-best unreliable. Fortunately the main rebalancing technique that was used, just after the revolution was far gentler and less socialistic. Over a decade or so, many states passed a series of laws against "primogeniture"... the automatic inheritance of all real property and titles by the eldest son.
Recall that this had been a strong tradition, till then, because it allowed aristocratic accumulations of wealth to remain concentrated, and large enough to translate into great political power. Hence, for a generation, American society (through consensus political action) stepped in and severely limited a landowner's right to decide which of his children would receive what. Instead, for a while, the rebalanced tradition was to demand "equal and fair" distribution among all offspring.
It sounds invasive and coercive – anathema to libertarian principles. And yet, without such a rule, America would have started out as a true oligarchy. But instead, because of the anti-primogeniture laws, within two generations all of the remaining crown estates had broken down to fair economic units, all without actual confiscature, by simple division of inheritance among large families. The profit motive was retained, and yet a generation of aristocrats was forestalled.
Moreover, this solution was adaptable. Having done its job, it was allowed to wither away. Today, by phrasing a will correctly, a man or woman can bequeath to whichever child he or she likes best.
Every generation of Americans has had to strike the balance in new ways. Entrepreneurs must be encouraged with profits, but not all of them will arrange to have the accumulation disposed of wisely after death, as did Andrew Carnegie. A certain fraction will (until we all mature) always seek a way to cheat and make their grandchildren into barons. And, being creative people, they tend to find ways to turn the previous generation's rules to their own advantage.
Witness what happened to the supposedly "progressive" income tax. An innovation that appreciably limited aristocratic power for a while, but now seems fine-tuned to serve the interests of a newer aristocratic clade – one that grew up knowing every twist in the creaky and arcane and outdated law.
This raises a fascinating point. Suppose that society has a right and duty to keep fine tuning its rules, so that this tightrope walk can keep on going: maximizing market creativity and competition – new business startups and creative products - while limiting the power of big winners to turn themselves into permanent automatic winners.
Well, in that case, mustn't society keep destroying old regulations just as fast as it erects new ones?
Look at this question another way, by reconsidering recent history. Why did the Carter and Clinton administrations push more "deregulating" legislation than any combination of Republican presidents? (More industries were cut free from bureaucratic supervision in Carter's last two years than Ronald Reagan proposed deregulating in the entire eight years he was in office.)
The answer is that those demolished regulations (controlling banking, telecommunications, airlines, trucking, etc) were, in fact, anti-aristocracy measures which had had their day, but were now serving the interests of rent-seekers and monopolists. Likewise, during the Clinton Administration, the net number of federal regulations actually declined, a fact that liberals never mention and both libertarians and conservatives refuse ever to let themselves notice. Yet, the record is clear: during any one year, Al Gore reduced government bureaucracy more than the neoconservatives have even tried to do since 2001, despite the advantage of controlling all branches of government.
By now, the reason should be obvious. Regulations that were born amid good intentions eventually go rotten. They become vehicles for parasitism. It was, and is, always time for a housecleaning. (Good libertarian rhetoric? Ah, but incrementalists are willing to do this step by step. While the purists controlling the LP prefer demanding it be done in vast, righteous, sweeping chops. Chops that never... actually... happen.)
What was the most recent generation's solution to the great balancing act? I referred to it briefly in the last section. A way that was not accomplished through law or confiscation. In the latter part of the 20th Century, the answer seems to have been the modern university. Perhaps the most effective and subtle measure yet.
Gradually, since WWII, the rich discovered a limitation to their inherent family-based advantages. They can and do send their sons and daughters to private prep schools til age 18. However, they cannot do the same with college. They tried, maintaining elite institutions that would cater only to "the best" (meaning those from aristocratic families). Still, nearly all such efforts at status-based collegiate advantage foundered, then collapsed a generation ago.
What happened was that – at the university level, at least – the best teachers migrated to where the brightest middle class youths were gathered in their noisy, vibrant, excited crowds, exploring the adventure of the Twentieth Century. The kids of the GI bill and student loan programs produced a chemistry that could not be duplicated for any amount of money. In order to win back the best teachers and researchers, institutions like Harvard and Princeton (but not Yale) had to change their ways. After World War II they tinkered with scholarship programs, bringing in those very same, bright young middle class students, to raise academic standards. No longer tokens, the scholarship kids are now the majority on most of these Ivy League campuses. (Again, with one or two special exceptions.)
The alternative was a prospect of inevitable decline for the old alma mater.
Of even more significance was the burgeoning of public universities, which have become centers of American life, educating vastly greater numbers than the crèches of the upper crust. For this reason, the offspring of the upper classes cannot avoid spending part of their lives in and among "the people" – or at least the bourgeoisie – living like them, sharing their environments and recreations. It is part and parcel of any decent undergraduate education. In so doing, they cross-fertilize, intermarry, share values, and – most important of all – learn that we are all people... that Daddy's money does not make one automatically superior.
One has to prove one's own self, at least for four years. Supposedly. With glaring exceptions. But far more generally than any cynic would ever have predicted, way back in 1945.
And next? Well, might we see this same effect vitalized by the Internet. Consider how unlikely it was, that a government-industry-university program to link a few big mainframe computers, controlled by classic hierarchs, would suddenly be released from nearly all hierarchical control, unleashed upon the world with only the most rudimentary of rules and supervision? Was this strange – and overwhelmingly liberating – event yet another of those Jeffersonian mini-revolutions? One that released and empowered individual capacity to both cooperate and compete while undermining the power of the few to dominate? If so, it's been a doozy, so far.
Oh, it is a blithe image, this notion of a tightrope act, constantly adjusting, rebalancing, fine turning, using wealth as a market incentive while constantly alert so that it does not become a market-poisoner. Picture a series of forward lurches, punctuated by setbacks in which we either become too lax or too wary. It sure isn't anywhere as neat and round and hypnotically satisfying as the prescriptions of Marx and Rand and their ilk.
And yet, compared with so many other human societies, including those who followed elegant prescriptions, this series of incremental tweaks and ad hoc social innovations has been astoundingly successful. The modern university... followed by the Internet... plus a vast mesh of other innovations that stimulate small business and venture capital... have added up (in a messy mélange) into the most subtle and powerful culture ever seen, keeping alive an atmosphere of both openness and perceived fairness. As well as the unprecedented notion that aristocracy is not a heaven-granted license to rule over others.
Until we reach the day of the "explicit social contract," each generation will have to wrestle with the problem of incentive versus accumulated wealth.
I contend that Americans have done it far better than anyone else.
That is... till recently. When even the great University and Internet Experiments began to lose some of their effectiveness at pulling off the great miracle. The miracle of equalizing opportunity while preserving the lure-incentive of wealth inequality derived from competitive delivery of better goods and services.
The reason – alas – is that a proto-aristocracy decided to bypass competition altogether and go to the jugular. The arterial cash flow of government itself. For libertarians, especially, this provokes a crisis of faith.
For when aristocrats own and operate government for their private benefit, shall we continue to defend those aristocrats against the supposed evils of government? It is a quandary all right...
...and the solution will not be found in the dictums of Rothbard and Rand.
What will be the next solution?
If every generation of Americans has somehow found the narrow path – the innovative solution that allowed it to generate maximum market action while minimizing class division – how will we manage it this time? Can we accomplish what our ancestors did, yet again? Honor creativity with wealth, WHILE ensuring that the generations to follow will retain the same privilege? The privilege of succeeding by being better, not because of who your daddy happens to be?
Looking across 200 years, it seems likely we'll come up with something, probably a methodology even more open and individualistic and "libertarian" than all of those that came before.
However, stepping further back and looking across four thousand years, the outlook seems much less optimistic. It may be that the last two centuries were just a fluke, a blip, in the dismal, ongoing tale of the "natural" form of human governance. One form or another of GAR. Call it whatever name you like (depending on the would-be lords.) But it boils down to the same damned thing.
Jean Francois Revel, in his book Without Marx or Jesus, wrote in 1969 that America, even amidst the chaos and crises of those times, was the only place where conditions existed for a "true revolution." This was not a dire warning, as it would have been if said by a Marxist or other typical "revolutionary." Revel was not saying that America was doomed to flames. His notion of "revolution" was unique, Tocquevillean, and so profound that almost nobody noticed, either then or since.
What Revel was proposing was that nowhere else in the world was there a sovereign people so obviously bound and determined on a path of earnest self-empowerment and self-improvement. Nowhere else could he detect such a deep hunger for criticism and change, and a willingness to accept the idea that tomorrow will be different than today. For Revel to have written this in the middle of a time of riots, war and cynicism was a leap indeed. He foresaw the birth of a human renaissance, and it hardly mattered to him that nobody else agreed.
Events since then have shown Revel to be prescient, indeed.
Oh, today, few would use such a word – "renaissance" – and yet, why not? The word connotes a time of dramatic movement, after which no human society will ever be the same. Moreover, for all the many problems on the dark side – including the latest attempted aristocratic coup-by-degrees – one aspect of early 21st Century America emerges: that the game is still being played. And that, in itself, is a miracle.
It is here – in our place and time – that the possibility presents itself for eventual development of true maturity and an end to all coercion. Not in a sudden sweep, but incrementally, the way our parents and their parents took their own grudging steps into the future.
There are signs of progress, new tools and new human talents. Criticism will help get us there.
But we shall also need appreciation, encouragement. For otherwise, how are we to know we have something worth fighting for?
The tightrope is humming, bouncing. Will we make it? I wonder. But there is reason to believe it might be possible. If we only we accept the revolutions of the past, and believe in the small gritty revolutions to come.
If only we give ourselves a chance.
from the original posting at LRC
- Kristan Overstreet wrote at May 18, 2006 1:37 PM
This one isn't bad, but it seems to fall just short of where it needs to go... and spends a lot of words doing it.
The core of your argument is that the freedom of the wealthy to use their power to entrench themselves and exploit the rest of us must be restrained... never gets -stated,- not openly. You go on about the pyramid v. diamond social structures, about the balancing act, about the urge to aristocracy, but you never actually come out and say that there need to be safeguards against concentration of power in private individuals, just as in government.
You do make points about how a free society needs fine adjustment rather than radical change. That's nice, but in this case I think it detracts from the core issue- which, again, you never quite get to. That core issue, the issue that forms the title of the piece, is so contrary to the groupthink of the Objectivists and purists in the LP that it needs to be shouted from the mountaintops. Instead you edge up to it, then edge away, then edge up again.
The ground has been well beaten; now hit the bush.
- Kyle Supe wrote at May 18, 2006 5:50 PM
This is the first one of these essays that has actually kept my attention. I'm not sure why, but the other articles in this series have been too much for my tiny brain to handle. This speaks more at my level I guess.
Also, it has given me the libertarian arguement against the obscenely wealthy that I have been looking for. I have been searching for a way to reconcile some of my left leaning economic opinions with the libertarian philosophy and this article pinpoints what I have been unable to rationalize to myself and others.
Having said that I agree with Kristan in that the article seems reluctant to come out and say what it really wants to for fear of really riling up the purists perhaps.
- David Johnson wrote at May 21, 2006 2:15 AM
I find it odd that someone with such a wealth of historical knowledge fails to understand why aristocracies destroy freedom. The problem with plutocrats is not that they are wealthy, but that they rule. Intrusive government is bad regardless of whether it is run by the rich or by the poor.
When he says "For when aristocrats own and operate government for their private benefit, shall we continue to defend those aristocrats against the supposed evils of government?", the libertarian answer is simple: no man, rich nor poor, may own and operate government for their private benefit.
- Kristan Overstreet wrote at May 21, 2006 4:23 PM
The problem is that, in the absence of a government, the wealthy and powerful shall create a new government- one wholly subservient to them.
- John Shuey wrote at May 22, 2006 10:03 AM
The problem is well stated.
Unfortunately, in stopping there, we are left to imagine solutions, as can be seen in the responses above. Each political philosophy can and will offer or impose their own solutions, and NONE are perfect...even the Libertarian one.
The closest I can come to an outline for a solution is that government must be left strong enough to thwart abuses, transparent enough that abuses and abusers are exposed, democratic enough that complaints and solutions can come from any part of the populance, and libertarian enough that the freedoms essential to prosperity, creativity, and liberty are not shackled.
See how easy it can be? I will, however, leave it to someone far brighter than I to design and implement the means to reaching this Shangri-La.
I would add one caveat, however - Real danger lies, as it always has, in the concentration or power, not necessarily in the concentration of wealth. The two are not synonymous. Don't forget, our Constitution and Bill of Rights are the products of America's earliest economic aristocracy.
- Michael Coffee wrote at May 22, 2006 11:05 AM
In the absence of government, the people who can mobilize the most force to impose their control, will rule. Kinda like an ideal democracy. In other words, there is no such thing as 'the absence of government'. It is a vacuum which will always be filled. The idea, and the challenge, is to HAVE a government which -prevents- that kind of abuse from happening.
I agree; wealth is not a social evil, as long as transactions between honest, peaceful people is voluntary.
- David Johnson wrote at May 25, 2006 1:38 AM
Who said anything about an "absence of a government"? This is the Libertarian Reform Caucus. We are not the diehard anarchists. Besides, if we ever did get an absence of government, there's no one with the power to regulate wealth. As long as we have a government kept small and firmly reined in, I fear no concentration of wealth.
- Michael Coffee wrote at May 25, 2006 4:21 PM
Does anyone have the right to 'regulate' the wealth of someone else?
I've tried to read this several times. All my little brain sees is a tangled mess.
Is it saying that it is wrong for an 'independently' wealthy person to leave their estate to anyone? If the owner doesn't have the right to determine who gets their estate, then who does have that right?
Is it saying that it is wrong to 'retire' on the income of ones' investments? That is; to live on the income from investments? I mean; if I have figured out a way to invest my wealth and arrange things entirely through voluntary transactions and contracts in such a way as to not have to work any more; what is my crime?
All the hyperbolic rhetoric about people 'owning' people is just a red herring. Of course it's wrong to forcibly deprive anyone of their rights and liberty. Slavery is already illegal.
Apparently the author subscribes to the 'property is theft' philosophy. I subscribe to the idea that all rights are based on property rights, and you can only steal from someone that which they owned in the first place.
I hope we don't sign on to the idea of 'protecting' people from the possibility of other people prospering through voluntary transactions.
I mean; Sure, I'ld like to get my hands on rich peoples' money! But I haven't found a way to seize their wealth without it being theft to do so.
- Kristan Overstreet wrote at May 26, 2006 12:51 PM
The key is not to reduce or redistribute wealth, but to limit the ways in which wealth may be translated to power.
The Libertarian traditional strategy here is to reduce the power of government to benefit the wealthy, but this may not be sufficient in some cases- especially in cases of monopoly.
- Carl Milsted Jr. wrote at May 26, 2006 4:39 PM
It was a similar, much shorter essay in LP News that inspired me to look around for ways which increase liberty while evening the wealth distribution. You can find many of them at www.HolisticPolitics.org (contemporary archive). Look at the red buttons on the left.
Most of the ideas have been around for a while. Some go back to the earliest books in the Bible. Some are in Adam Smith's writings. Others are found in the conspiracy literature. (That there are laws on the books that benefit "The Insiders" does not prove that "The Insiders" have a coherent conspiracy going. However, I will give the conspiracy theorists credit for cataloging many instances of supposedly progressive programs which actually subsidize the rich.)
- Michael Coffee wrote at May 26, 2006 5:36 PM
It starts off sounding like you want the government instituting regulation which would be better left as business decisions of the companies themselves. I don't think government should make business decisions for businesses. It -should- stop imposing artificial conditions which cause them to make decisions different from those they would have made without interference.
I don't think concentration of wealth is itself a problem. If it is caused by the coercive opposition, or support, of government then that is the problem; and the problems associated with it are the result of the interference, not the wealth.
You make a good case for the idea that huge conglomerates are often such, even when they would not be so under a real free market; That they made decisions which made them bigger, under government 'duress', that they might not have made otherwise.
I agree wholeheartedly with the idea of simplifying the legal system. It was mostly produced by lawyers who were elected to legislate. I really see no good reason to justify the fact that you have to be able to afford a good lawyer in order to get justice in our courts.
The 'fair tax' would address most of the problems with the current very biased, corrupt and complicated tax system. Including improved savings and investment of smaller entities while reducing the tax advantage of both excessive reinvestment and excessive salaries for executives.
I don't like any kind of property tax. It isn't right for the government to just come along every year and skim a percentage of your holdings. If all I was doing was hanging on to my property; not making any money; then, the cut they repeatedly take would eventually transfer all my property to them. A consumption tax, paid on every transaction, is much preferable.
Contract law should be as straight-forward as possible. I shouldn't need a degree in contract law just to buy a home or business.
Zoning is one of my pet peeves. You're right on there.
Current law makes it very difficult, sometimes impossible, for someone to start a small entrepreneurial business. There are a lot of ways we could reduce government interference in a way which would make the situation better in a natural way.
A lot of good ideas, there!
Gregory Southworth wrote at June 4, 2006 10:49 PM
This hits on the big elephant in the living room. My name is Greg and I am relatively new and this is my first post. This article is hopefully the first of many to acknowledge the emperor may have no clothes. Many of you raise another important part: the monetary and tax policy of the State is "rigged" to favor insiders. Personally, I, too, would be willing to go with a higher consumption tax on almost everything in lieu of abolishing property and other taxes. At least, it would be open and more transparent. I also have no problem with those who earn their way to wealth and applaud them for their efforts. One group has proposed an idea which starts to move in that direction and that is Capital Homestead Accounts (CHA) for all Americans. This builds on the ideas of the late Louis Kelso of the Employee Stock Ownership Plan and the Capitalist Manifesto. The CHAs are the brainchild of the Council for Economic and Social Justice--check their website. Don't let the name fool you. This is not your daddy's 1960s social justice group. These folks want to change the Fed to allow people to have capital accounts which can be invested into employee owned and community based businesses. But, it DOES NOT call for redistribution of wealth, just opening the doors to regular folks. Libertarian purists will not like it beacuse they believe the current system is at least "about right." CHAs also talk about ways to limit the power of the state. I think there is room for dialogue. We may not be able to undo all the evils of the past and present, but we can start a healing process which moves us toward a free and open society.
- Eric Downes wrote at August 25, 2006 9:31 PM
These CHAs sound very interesting. Unfortunately I cannot find a website for the Council for Economic and Social Justice you mention. Could you point it out? Thanks. -Eric
- Eric Downes wrote at September 15, 2006 5:37 PM
If anyone else didn't find the CHA stuff Greg was talking about, it's here:
- Tim Crowley wrote at February 1, 2007 9:42 PM
Show me a social system without 'insiders'.
- Michael McNeil wrote at May 5, 2007 3:17 PM
These evil aristocrats cheat the system through the avenues of government. If we shrink these paths to cheating,(instead of widening them into wasteful 8 lane highways with taxpayer funds) the aristocrats will have no unfair advantage.
The issue of birthright wealth is something natural, part of human nature, like you said. Therefore, it's not our duty to get involved. Imagine Molly, a girl born to a poor single mother who never finished high school living in a trailer somewhere in southern Mississippi. (my old stomping grounds) In our society, she begins attending public school at age 5, taken to and from it by bus. She gets older, but since her mother has to work two jobs, she doesn't have much time to be responsive or authoritative with her daughter, and is what psychologists would call a "negligent parent." In the third grade, Molly fails with a low D, but since schools are not allowed to retain kids, because it's "discriminatory," Molly continues on. She realizes very quickly that academic success means nothing, and that she will continue to slide through the system regardless of how much effort she puts out in school. A lower than average IQ caused by negligent parenting in combination with a family of low socioeconomic status puts Molly at very high risk for dropping out of school. During her second go at 9th grade, (the first time she's ever actually been held back a grade, though she's failed almost every year) Molly decides to drop out of high school. She gets a job at a local laundromat and becomes addicted to nicotine and alcohol. Because of a life that never held her accountable, Molly becomes pregnant at age 15. Her mother pressures her to get an abortion. She does. Meanwhile, Molly's mother has bore two more fatherless sibling for Molly. During her third childbirth, Molly's mother dies. Molly inherits all of her mother's money. We'll end the story there.
Gary is the son of a two older, wealthy traders. He is nine years older than his only brother, Mark. At age 16, his father dies from a heart attack, and at age 24, his mother dies from a stress-related stroke. Enormous societal pressure urged his mother to divide her estate equally in the will she made shortly before her death, but in the style of traditional aristocrats, she passed her entire estate to her first son.
Both of these children face the problem of raising younger siblings. Gary's parents did have a huge advantage, with education, better parenting, and money for their children's education, but this advantage does not inherently hurt people of lower socioeconomic status.
How does Gary's higher socioeconomic status hurt Molly?
Solutions like government schools and universities, death taxes, and other advantage-restribution tactics are too invasive and go about solving the problem in the wrong way.
A pure market system is not flawed- it's just unattainable. When you're buying a car, how can you know about every listed car and price? Same thing goes for auto insurance, loan rates, and any other product. Perhaps this is one thing we should regulate. With prices easily available, prices would drop across the board and companies would be forced to be more competitive. When an item is pulled up on the service, it would be listed by price, with random listing for equal prices. Any vendor could put her product on the government service.
This would be a step to help everyone- across the board. However, in any free system, there will be casualties. Molly's family will be cursed by her past. However, with the same strong work ethic of her mother, perhaps aided by a freer and more incentive oriented school system, (i.e. private schools) and unhampered by government religious interference like abstinence only sex education, Molly will have the opportunity to better the lives of her children.
And slightly better lives of her children will set off an infinite chain reaction of better and better outcomes for all of her descendants.
When Thomas Jefferson imagined slight tampering in the future America, I'm sure that he couldn't fathom the huge interference of federal government that has occured. Even if you believe that government interference is the solution, is should occur at the state level.