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Capitalism Destroys Democracy

In The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 the well-known progressive journalist Sam Pizzigati gives us a fine history of an era that we think we know, but whose relevance to us now is a new revelation. The fundamental point is that, as a result of the political struggles of the Progressive Era, the New Deal, and World Wars I and II, the share of wealth and income that accrued to the wealthiest from the 30s to the 70s shrank far below the levels seen in the Gilded Age at the turn of the twentieth century, and far below what we have now, in the early twenty-first century. We had, from the 1930s through the 1970s, a thriving middle class of a size and strength that had no precedent, thanks to political struggles that led to government policies to redistribute the wealth.

Key policies included the graduated income tax, inheritance tax, Social Security, war mobilization, the Federal Housing Administration, the GI Bill, among others. Every one of these policies was bitterly contested; none of them would have been adopted without political pressure from workers, farmers, and activists. Pizzigati makes clear how flawed and contradictory were the major tribunes of reform, such as Teddy Roosevelt, Robert LaFollette, and Woodrow Wilson in the Progressive Era of the early twentieth century, or Franklin Roosevelt and the New Deal in the thirties and forties. They did what they did because of pressure that outweighed the pressures from the opponents of reform.

It seemed, from the vantage point of the late 1950s, that the egalitarian, middle class society would just go on forever.

Defeats were frequent, and victories incomplete. The Progressive Era gave way to the Roaring Twenties, and the return of full-blown plutocracy. The New Deal Reforms were mostly ransomed from the conservative Democrats in Congress by effectively excluding African Americans from their benefits. And yet, Pizzigati affirms, the result after the Second World War was a society substantially more egalitarian than had ever existed in a large industrial country. It was a social order that benefited from a substantial consensus that even included Republicans like Dwight Eisenhower. It seemed, from the vantage point of the late 1950s, that the egalitarian, middle class society would just go on forever.

We now know that it didn’t. The systematic counteroffensive started after World War II, with the anti-union Taft-Hartley Act, intensified with the Cold War and the McCarthy red scare, nominated its first major party presidential candidate, Barry Goldwater, in 1964, and came to political power with Ronald Reagan in 1980. Even the liberals, like John Kennedy, bought into the right wing line about taxes on the rich being too high: JFK’s big tax cut was just the beginning of the erosion of taxes on the wealthy. Reagan only got into the act twenty years later.

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One of Pizzigati’s arguments will not sit well with many progressives today who are veterans of the New Left of the late sixties and early seventies. He argues that the Left of those years largely failed to defend the accomplishments of the New Deal (and Johnson’s Great Society) because leftists didn’t regard those accomplishments as meaningful: America, to them, was just as much a plutocracy as ever. Pizzigati views this failure to stand up to the emerging Right and its agenda as a terrible missed opportunity to preserve the gains of the previous decades.

The right wing counteroffensive, already ascendant, received further impulse in the seventies and eighties as the rest of the industrial countries regained their economic footing and challenged U.S. global economic supremacy. Global competition from lower-wage countries like Japan pushed American business leaders and policy makers toward further undermining unions and moving production off shore. Increasingly exclusive emphasis on maximizing shareholder returns opened the way to the growing dominance of high finance over industry. It would have been a challenging environment for defending the New Deal in any case, but Pizzigati argues that liberals and the Left largely gave up.

The result: we are back to where we were a century ago. Plutocracy reigns. In conclusion, Pizzigati calls us yet once again to push back the tide.

The biggest flaw of this good book is that it takes for granted the very capitalist system that makes inequality inevitable. As long as we do our economy this way, we will tend toward increasing inequality. That’s what capitalism does. It’s not just a matter of evil, selfish people. Democracy depends on the effective equality of citizens, but it is historically joined at the hip to a capitalist system that will destroy it if not resisted.

john peeler

John Peeler