By Robert
Reich
The parallels are striking. In the last decades of the nineteenth century – the so-called “Gilded Age”— America experienced inequality on a scale it had never before seen, combining wild opulence and searing poverty.
American
industry consolidated into a few giant monopolies, or trusts, headed by “robber
barons” who wielded enough power to drive out competitors. A few Wall Street
titans like J.P. Morgan controlled the nation’s finances.
These
men used their huge wealth to rig the system. Their lackeys literally deposited
stacks of money on the desks of pliant legislators, prompting the great jurist
Louis Brandeis to tell America it a choice:
“We may have
democracy, or we may have wealth concentrated in the hands of a few, but we
cannot have both.“
We
face a similar choice today.
Then,
America chose democracy. President Theodore Roosevelt, railing against the
“malefactors of great
wealth,” broke up the trusts. And he pushed Congress to end the most
blatant forms of corruption.
His
fifth cousin, FDR, went further – enacting social insurance for the elderly,
the unemployed, and the disabled; a minimum wage and forty-hour workweek; the
right to unionize; compensation for workers injured on the job; and strict
limits on Wall Street.
In other words, between 1870 and 1900, American capitalism got off track. Between 1901 and 1937 (the effective end of the New Deal), America put capitalism back on track.
We’re
now in the Second Gilded Age, and American capitalism is again off track. It
takes about three generations for Americans to forget how our system,
unattended, goes wrong. And then to right it.
Inequality
is now nearly at the same level it was in the late nineteenth century. Half of all families are poorer today than they were a
decade-and-a-half ago, the pay of CEOs and Wall Street bankers is in the
stratosphere, and child poverty is on the
rise.
Meanwhile,
American industry is once again consolidating – this time into oligopolies dominated by
three or four major players. You can see it in pharmaceuticals, high
tech, airlines, food, Internet service, communications, health insurance, and
finance.
The
biggest Wall Street banks, having brought the nation to the brink of
destruction a few years ago, are once again exercising vast economic power. And
big money has taken over American politics.
Will
we put capitalism back on track, as we did before?
The
vile election of 2016 doesn’t seem to offer much hope. But future historians
looking back on the tumult might see the start of another era of fundamental
reform.
Today’s
uprising against the established order echoes the outrage average Americans
felt in the late nineteenth century when they pushed Congress to enact the
Sherman Antitrust Act, and when Democratic presidential candidate William
Jennings Bryan fulminated against big business and finance.
One
hundred twenty years later, Bernie Sanders – the unlikeliest of presidential
candidates – won 22 states and 46 percent of the pledged delegates in the
Democratic primaries, and pushed Hillary Clinton and the Democratic Party to
adopt many of his proposals.
At
the same time, Donald Trump – a faux populist – has laid bare the deep
discontents of America’s white working class, which both parties have long
neglected. Not incidentally, Trump has also jeopardized the social fabric of
America and nearly destroyed the Republican Party.
Hopefully
some of America’s current elite will conclude, as it did at the turn of the
last century, that they’d do better with a smaller share of a growing economy
fueled by a flourishing middle class, in a society whose members feel the
system is basically fair, than in one riven by social and political strife.
History
has proven the early generation of reformers correct. While other nations opted
for communism or fascism, Americans chose to make capitalism work for the many
rather than the few.
If
Donald Trump is elected, all bets are off.
But
if Hillary Clinton assumes the presidency, could she become another Teddy or
Franklin D. Roosevelt?
You
may think her too much of an establishment figure, too close to the moneyed
interests, too cautious. But no one expected dramatic reform when each of
the Roosevelts took the reins. They were wealthy patricians, in many respects
establishment figures. Yet each rose to the occasion.
Perhaps
she will, too. The timing is right, and the need is surely as great as it was
over a century ago.
As
Mark Twain is reputed to have quipped, “history doesn’t repeat itself, but it
often rhymes.”
ROBERT B. REICH is Chancellor's Professor of
Public Policy at the University of California at Berkeley and Senior Fellow at
the Blum Center for Developing Economies. He served as Secretary of Labor in
the Clinton administration, for which Time Magazine named him one of the ten most
effective cabinet secretaries of the twentieth century. He has written fourteen
books, including the best sellers "Aftershock", "The Work of
Nations," and "Beyond Outrage," and, his most recent,
"Saving Capitalism." He is also a founding editor of the American
Prospect magazine, chairman of Common Cause, a member of the American Academy
of Arts and Sciences, and co-creator of the award-winning documentary,
INEQUALITY FOR ALL.
