Do we live in a “Second Gilded Age,” a reiteration of the late 19th century, when “robber barons” like Cornelius Vanderbilt, John D. Rockefeller, Jay Gould, Andrew Carnegie, Henry Clay Frick, and J.P. Morgan soaked the poor, bought the Senate, and swashbuckled their way into the imagination of Mark Twain, who coined the term in 1873?
The short answer is “no.” Capitalists lost the class struggle of the late 19th century. Sure, robber barons flaunted their wealth, but they ultimately weren’t able to translate their market power into cultural authority — at least not until they were dead or had given their money away to museums, libraries, and universities. Nor were they able to increase their profits at the expense of workers — that came later, with the invention of the large industrial corporation at the turn of the 20th century.
Why then the misleading metaphor of a “Second Gilded Age”?
Don’t blame Occupy Wall Street. It was actually Kevin Phillips — the political operative who devised Nixon’s Southern Strategy — who invented the term 26 years ago, in a book called The Politics of Rich and Poor.
Nobel Prize winners like Paul Krugman and Joseph Stiglitz have since deployed the metaphor of a new Gilded Age to popularize their inquiries into the long-term causes and anti-democratic effects of increasing income inequality. The critic and novelist Stephen Marche has deployed it to explain the fortunes of the characters who populate realist fiction, from Balzac’s Père Goriot to Adelle Waldman’s Nathaniel P. Following this trend, poor Thomas Piketty has become the Jonathan Franzen of economists — the guy who writes big, best-selling books that everybody reviews and nobody reads.
Meanwhile, Naomi Klein has congratulated Steve Fraser for writing yet another earnest book (The Age of Acquiescence) that scolds us for not learning from the pre-industrial past: “What fueled the resistance to the first Gilded Age, [Fraser] argues, was the fact that many Americans had a recent memory of a different kind of economic system. … Having known something different from their grim present, they were capable of imagining — and fighting for — a radically better future. It is this imaginative capacity that is missing from our second Gilded Age.”
And now Glenda Gilmore and Thomas Sugrue, two influential historians, have written a textbook on this same trope, arguing, like everybody else, that we’re back where we started, in another Gilded Age, because we’ve forgotten how the first one ended, with the Populist Revolt of the late 19th century and the long Progressive Era of the early 20th century.
Thomas Piketty is the Jonathan Franzen of economists — the guy who writes big books that everybody reviews and nobody reads.
Why aren’t we in the streets, fighting — or at least marching — for a “radically better future”? That is the question animating every invocation of the “Second Gilded Age.” Why have the American people let history repeat itself?
I’d prefer to ask who owns this repetition compulsion. Whose “imaginative capacity” has gone missing? None of these intellectuals, with the possible exception of Fraser, believe that to know something different from the “grim present” requires the literal experience of the past. All of them write books to restore a memory of events that none of us could have lived, and all of us read books for the same reason.
In principle, the narrative reduction of present to past — the metaphor of a Second Gilded Age — works nicely as an exhortation to political action or aesthetic orientation in the present, because, as Americans, we’re still supposedly committed to the opening stanzas of the Declaration of Independence. But if this is merely the plaint of intellectuals who find themselves on the margins of political discourse, does it constitute a usable past for the rest of us as well?
The metaphor of a “Second Gilded Age” fails as mere history, and therein lies both an intellectual and a political problem. What can we retrieve from the past that might guide us in the present, as we try to cope with the metastasizing crises of our time?
The late 19th century, supposedly the golden age of laissez-faire capitalism, was actually a nightmare for capitalists. They whined incessantly about their falling profit margins and, more significantly, about how the American people didn’t appreciate their contributions to economic growth. “The manufacturers want a greater profit,” as E.S. Meade, the authority on trust finance, put it, “without such a desperate struggle to get it.” By the time the crisis of the 1890s arrived, capitalists figured they had lost the class struggle, and they were right. According to reputable businessmen, journalists, economists, and politicians, the so-called Gilded Age of the late 19th century was one long depression, and workers rather than capitalists were the principal beneficiaries.
The capitalists were, of course, poor-mouthing and propagandizing, but the numbers validate their accounting. Income shares shifted toward labor and away from capital in this period, in an exact inverse of what we have witnessed over the last 40 years (when, not incidentally, wages and median family incomes have stagnated, corporate profits have soared, and executive compensation has skyrocketed). By 1890, this possibly disturbing distribution of income between capital and labor had become so significant a public issue that the Senate Finance Committee commenced hearings to investigate it.
From the standpoint of capitalists, why did income shares perform so badly in the so-called Gilded Age? It’s all about the relation between real wages and productivity. If real wages are rising and productivity isn’t, labor’s share of national income will rise at the expense of capital’s share. That’s what happened in the late 19th century. If real wages are stagnating and productivity is increasing, capital’s share of national income will rise at the expense of labor’s share. That’s what happened in the late 20th century.
In the so-called Gilded Age, real wages increased dramatically but labor productivity didn’t, so capitalists suffered. Extraordinary economic growth happened, no doubt about that then or now, but workers were, as the capitalists complained, the principal beneficiaries. For example, real wages in the nonfarm sector increased roughly 30 percent between 1884 and 1896 (unemployment wasn’t rising), but productivity flatlined. The opposite is true of our time.
Why, then, did workers win the class struggle of the late 19th century? Not because they were represented by trade unions. Only 10 percent of the labor force belonged to such a thing. And not because they weren’t militant — between 1881 and 1905, when the Bureau of Labor Statistics kept meticulous records, the number of strikes, lockouts, establishments affected, and participants increased at a rate that would panic contemporary observers. With almost no union representation, workers won — they were the victors in the majority of strikes and lockouts measured in the late 19th century by the BLS.
They won because skilled workers, not bosses, controlled machine production in the factories — until the late 1890s, they had the decisive voice on hours, conditions, even compensation — and refused to cede that control. They won because they shared their gains with unskilled workers, who then followed their lead when bosses tried to enforce new work rules and push came to shove.
And most important, workers won because the labor movement of the so-called Gilded Age was a cross-class construction. Like the larger socialist movement, then as now, it was never the exclusive property of “the” working class, just as the pro-capitalist movements of our own time aren’t the exclusive property of people with the unlikely pedigree of Donald Trump. Workers won those strikes in the late 19th century because the local middle class — farmers, journalists, lawyers, merchants, shopkeepers — stood with them in defiance of what it perceived, correctly, as a threat to its own existence: the distant leviathan (usually a railroad company) that would cut any cost and gut any custom in the name of the bottom line.
In sum, it was a cross-class cultural consensus on the political problem of large capital, not a powerful trade-union movement or an aggressive regulatory state that kept the bosses at bay, that made them retreat and rethink — to the point where, from the standpoint of capital and labor alike, the total reconstruction of the market system began to look like the only way to salvage its civilizing force.
That’s why corporate executives were leaders in what we call the Progressive Era, from the Food and Drug Administration to the Federal Reserve System — unlike their contemporary counterparts, they knew the market system needed saving from both its most ardent admirers and its most vociferous critics. They didn’t co-opt reforms initiated by workers and farmers — by 1898, just about everybody knew the existing system was so far beyond repair that it needed replacement rather than reform. Like the populists and the socialists of their time, the question these businessmen addressed was not whether, but how?
That is our question as well, because the globalized market system created in the late 20th century is unsustainable, in either economic or environmental terms.
History doesn’t repeat itself. We learn from the past only insofar as we can acknowledge the differences between then and now. But if the metaphor of a Second Gilded Age fails as mere history because it reduces the present to the past, what is to be learned?
Capitalists aren’t the bad guys, they’re just doing what they can to make a profit, make a living. They’re not all-powerful, and they know that markets aren’t ends in themselves. To characterize their behavior as criminal is to reproduce the fallacy of political or diplomatic history as it was conducted long ago — what did one great man say to another? — and thus to let Henry Kissinger have the last word. And to assume that capitalists will always use what power they do have to protect “free markets” and to stymie “reform” is to ignore the historical record. It is to submit ourselves to what we suppose is their already inordinate power.
The distribution of income in the late 19th century United States was no more predictable, and no more inevitable, than the political valence of capitalism in the 20th century — liberal, authoritarian, fascist, statist, whatever, it all turned on the balance of social power. But the balance of social power depended, then as now, on an ideological configuration that mapped where and how people could place themselves in relation to what they understood to be the sources of political power.
That is what we can learn from this failed metaphor. What we do about capitalism is what we think about it.
James Livingston teaches history at Rutgers University at New Brunswick. He is the author of Against Thrift: Why Consumer Culture Is Good for the Economy, the Environment, and Your Soul (Basic Books, 2011).
