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How America Became an Oligarchy

I've spent half a century writing for radio and print—mostly print. I hope to be still tapping the keys as I take my last breath.

Industrialists Jay Gould, Cornelius Vanderbilt, Cyrus Field, and Russell Sage sit aboard their wealth made possible by underpaid workers.

Industrialists Jay Gould, Cornelius Vanderbilt, Cyrus Field, and Russell Sage sit aboard their wealth made possible by underpaid workers.

The last three decades of the 19th century saw the rise of robber barons who became immensely wealthy through shady business practices under the protection of corrupt politicians. It was called the Gilded Age, but it was only gilded for the ultra-rich who controlled all the levers of power in what political scientists call an oligarchy. After a few decades on the sidelines, the oligarchy has made a triumphant return in America.

Questionable Business Practices

Mark Twain wrote in 1871: “What is the chief end of man?—to get rich. In what way?—dishonestly if we can; honestly if we must.”

The capitalist titans that dominated America in the late 19th century were clearly the targets of Mark Twain’s wit. The likes of John Jacob Astor, Marshall Field, and Jay Gould were called robber barons, and they got that nickname for good reasons—it was descriptive of how they amassed their fortunes.

A September 1870 article in The American and Continental Monthly did not hold back in its criticism of the way in which industrialists were becoming rich: there was “a breeding up [of] a race of trading sharks and wolves, which will eventually devour us all. Honesty will go altogether out of fashion, and respectability be associated with a defect of intellect . . . the old robber barons of the Middle Ages who plundered sword in hand and lance in rest were more honest than this new aristocracy of swindling millionaires.”

The tactics employed included:

  • Ruthlessly and violently beating back efforts by trade unions to get a decent wage for workers
  • Floating stock they knew to be worthless that they sold to unwary investors
  • Buying up competitors to create monopolies so as to raise prices
  • Buying the allegiance of politicians to pass legislation favourable to them, based on the dictum of financier Simon Cameron that “An honest politician is one who, when he is bought, will stay bought.”

It's a good thing all that kind of behaviour has been put behind us, except that, for some corporations, it hasn't.

In 1889, cartoonist Joseph Keppler depicted U.S. Senators as subservient to the industrialists, stuffed with money, who bribed them.

In 1889, cartoonist Joseph Keppler depicted U.S. Senators as subservient to the industrialists, stuffed with money, who bribed them.

Extravagance of the Plutocrats

Through cheating and conniving, the robber barons were able to amass immense fortunes and they liked to splash their money around to impress their peers and themselves with their awesome cleverness.

They built summer cottages with 70 rooms on the Atlantic seaboard. They lived in 250-room mansions on the Hudson River. They held formal horseback dinners at Sherry’s Restaurant in New York. They bought their dogs gem-studded collars. They turned up to banquets in gowns adorned with a quarter million dollars worth of jewels. “They” were the Rockefellers, Carnegies, Vanderbilts, Morgans, and other industrialists.

The Breakers at Newport Rhode Island was built as a summer home by Cornelius Vanderbilt.

The Breakers at Newport Rhode Island was built as a summer home by Cornelius Vanderbilt.

Cornelia Bradley-Martin was the daughter of a wealthy Albany merchant who had married into the British aristocracy. She and her family can serve here as examples of gaudy extravagance.

In February 1897, Ms. Bradley-Martin held a lavish costume ball at New York’s Waldorf-Astoria hotel. Among the 700 of her closest friends, 50 ladies turned up dressed as Marie Antoinette and one gentleman wore a gold-inlaid suit of armour.

The dinner had 28 courses with such delicacies as plover’s eggs, duck stuffed with truffles, roast suckling pig, and caviar-stuffed oysters. Four thousand bottles of 1884 Moët et Chandon champagne helped wash it all down.

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The party set the Bradley-Martins back $369,000, roughly $12.8 million in today's money.

Of course, people don’t go in for such vulgar displays of wealth today. That’s if you don’t count the multimillion-dollar mega-yachts that are the must-have toys of today's billionaires. They come equipped with mini-submarines, swimming pools, helicopter landing pads, movie theatres, and many other entertainment frills to keep their owners from getting bored.

There's Abu Dhabi's oil billionaire Hamad bin Hamdan al Nahyan, who has had his name carved into the surface of an island he owns. The letters of the name HAMAD are half a mile tall and two miles long, so as to be visible from space.

And how about Indian industrialist Mukesh Ambani's home. Called Antilia, it rises 27 storeys above Mumbai with 400,000 square feet of living space. Six floors are dedicated to house Mr. Ambani's cars, and there's a “snow room” to help the family endure the city's oppressive summer heat.

Huge Gap in Wealth

As the robber barons flaunted their opulence, the vast majority of people were struggling to feed and house themselves properly.

The Public Broadcasting Service notes that “While the rich wore diamonds, many wore rags. In 1890, 11 million of the nation’s 12 million families earned less than $1,200 per year; of this group, the average annual income was $380, well below the poverty line.”

New immigrants joined rural Americans as they crowded into teeming and filthy tenements where they were harassed by high levels of crime and vermin. They laboured in factories in unsafe conditions and if misfortune befell them in the form of an accident they received no compensation.

Goodness, how things haven't changed.

The Council on Foreign Relations tells us that “In 2021, the top 10 percent of Americans held nearly 70 percent of U.S. wealth, up from about 61 percent at the end of 1989. The share held by the next 40 percent fell correspondingly over that period. The bottom 50 percent (roughly sixty-three million families) owned about 2.5 percent of wealth in 2021.”

Fortunately Americans no longer have to work in hideously unsafe factories. Such deathtraps have been closed and moved to places such as Bangladesh where the Rana Plaza building collapsed in April 2013 killing 1,129 garment workers.

Or, the work has been shuffled off to places such as China, where some of it is done by forced labour.

UNICEF reports that “One in every ten children is a victim of child labour globally.”

UNICEF reports that “One in every ten children is a victim of child labour globally.”

The American Oligarchy

What has been described above is an economic system in America that favours the few at the expense of the many. It has been tinkered with over the decades with anti-trust laws and protection for union organizers but the basic structure remains the same as it was during the heydays of the robber barons. It's what political scientists call an oligarchy.

We get the word from Ancient Greece where “oligos” means “the few” and “arkho” means “to govern.” Comedian/social commentator George Carlin was in no doubt about what that meant.

Warning: Strong language

In 2014, two American academics, professors Martin Gilens and Benjamin I. Page, concluded that the United States is an oligarchy. Commenting on the professors' study, The Guardian noted they “argued that the influence of economic elites and big business far outstrips that of ordinary citizens. In their view, America is less a bastion of representative democracy than a nation trammeled by the desires of the hyper-wealthy.”

In April 2014, the U.S. Supreme Court ruled that the size of campaign donations cannot be limited. Former President Jimmy Carter responded by saying: “It violates the essence of what made America a great country in its political system. Now it's just an oligarchy, with unlimited political bribery being the essence of getting the nominations for president or to elect the president . . . So now we've just seen a complete subversion of our political system as a payoff to major contributors, who want and expect and sometimes get favors for themselves after the election's over.”

Will This End?

Thom Hartmann is a radio host. He has written that “Some democracies fall apart because of invasion by a neighbor, terrorism, or a natural disaster, but most are taken down by their own own greedy oligarchs.”

Once the oligarchy takes hold, Hartmann argues, it moves inexorably towards autocracy and strongman rule, something that former President Donald Trump clearly wished for and was moving towards.

Hartmann writes that “Our best hope for stopping a further slide into oligarchy and ultimately strongman autocracy is to pass legislation that will regulate money in politics.” But, what are the chances that legislators are going to enact laws that will weaken the system that sustains them?

There is another way to end the shift to oligarchy/autocracy; we are seeing it at work in several countries and it isn't pretty. Unscrupulous politicians are appealing to the basest instincts of the electorate.

They are called populists and the BBC tells us that “In political science, populism is the idea that society is separated into two groups at odds with one another—'the pure people' and 'the corrupt elite,' according to Cas Mudde, author of Populism: A Very Short Introduction.

So, the populist tells followers “Don't trust experts, don't trust the media, don't trust the current system, and, by the way, the reason ordinary folk have troubles is because of immigrants. I alone can fix it.”

This kind of rhetoric won the 2016 referendum in the United Kingdom to leave the European Union, and it won the U.S. presidency for Donald Trump.

It has confirmed hard-right Viktor Orban in power in 2022, and it won 41 percent of the popular vote for Marine Le Pen in France's 2022 presidential election. It sustains Philippine President Rodrigo Duterte and Indian Prime Minister Narendra Modi in power.

The ugly side of populism is that it tends to lead to authoritarianism, the crushing of opposition, and the loss of human rights. It also cheats ordinary people out of the benefits they were promised they were going to get.

In 2017, the University of Cambridge in England declared that “populism” was its word of the year.

In 2017, the University of Cambridge in England declared that “populism” was its word of the year.

Bonus Factoids

  • The term robber baron comes from the German word Raubritter (robber knights). These were people in the medieval era who extracted illegal tolls from people who crossed their land. It was first used in 1859 to describe the business methods of railroad and shipping magnate Cornelius Vanderbilt.
  • Bruce Judson is a lawyer who teaches at the Yale School of Management. In his 2009 book It Could Happen Here: America on the Brink, he warns a revolution is possible in the United States because of income inequality. He points out that at the start of the Great Depression of the 1930s, a time when the income gap was similar to today's, “people were seriously concerned about revolution.” To counter the possibility of turmoil, U.S. President Franklin D. Roosevelt embarked on a program of massive government spending and the break-up of large business empires. On National Public Radio, Bruce Judson related “It was widely reported that a visitor to President Roosevelt said ‘Mr. President, if your program succeeds you will go down in history as the nation’s greatest president.’ And, Mr. Roosevelt replied, “If not, I will be the last.’ ”

America's Political Environment

Sources

  • “Gilded Age.” American Experience, PBS, undated.
  • “Mr. Hardhack and the Sensational in Literature and Life.” The American and Continental Monthly, September 1870.
  • “The Bradley-Martin Ball.” Evangeline Holland, Edwardian Promenade, March 30, 2009.
  • "Plutocrats." Krystia Freeland, Doubleday Canada, October 2012.
  • “The U.S. Inequality Debate.” Anshu Siripurapu, Council on Foreign Relations, April 20, 2022.
  • “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” Martin Gilens and Benjamin I. Page, American Political Science Association, 2014.
  • “America's Super Rich: Six Things to Know.” Natalie Jones and Alastair Gee, The Guardian, September 26, 2018.
  • “The 'Doom Loop' of American Oligarchy.” Thom Hartmann, commondreams.org, March 21, 2022.
  • “What Is Populism, and What Does the Term Actually Mean?” David Molloy, BBC, March 6, 2018.

This content is accurate and true to the best of the author’s knowledge and is not meant to substitute for formal and individualized advice from a qualified professional.

© 2022 Rupert Taylor

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