One of the most significant developments of the late modern period (post–1750) has been the replacement of ordered hierarchy as a social and political value by equality. Equality can take two different basic forms: equality of opportunity, or competitive equality; and equality of condition.
The major ideological struggles of the last two centuries have revolved around these two types of equality, which are intertwined with ideas about liberty and independence. If individuals are free to pursue their own competitive advantage, some will advance and some will fall behind. To the extent that they are to be maintained in equal conditions, government must intervene to suppress the free actions of individuals or to redistribute the benefits of these actions.
The problem with the second type of equality is that it tends toward an authoritarian denial of individual liberty. The problem with the first is that it assumes a basic equality of condition as a starting point and sees inequality as the result of competition. Even if we could all begin to compete from the same place, the results would put us, and our family and social connections, in unequal places for the future. Changing economies also reshape the nature of the game. In some economies, there are lots of prizes to be won and in others very few.
Competitive Equality and Natural Aristocrats
In the US, the question of how to balance competitive equality with equality of condition has been with us from the beginning. In his magisterial 1969 classic The Creation of the American Republic, Gordon Wood observes that the ideal of equality was a formative part of early American culture. For Wood, this ideal grew out of the unsettling experience of the Revolution, the severing of ties to the English hierarchy, and the rise to political and social power of new individuals, during the bitter struggle for separation from Britain.
American beliefs and concerns about equality coalesced at the turn of the eighteenth and nineteenth centuries in the phrase natural aristocracy. The concept of the natural aristocrat was one of the most widely accepted notions in early social and political thinking about the creation of the American nation. In the Wealth of Nations (1776), Adam Smith attributes the American struggle to the desire of “the leading men, the natural aristocracy” of the colonies to manage public affairs.
One of the most important discussions of the concept of natural aristocracy and the emerging ideal of equality can be found in the letters between Thomas Jefferson and John Adams, written in the fall of 1813, a year after the two political rivals finally renewed their friendship. In the letters, Adams takes a highly critical view of social inequality resulting from individual efforts, even though he regards it as inevitable. When the most able and energetic individuals are able to amass wealth and extend their influence, Adams maintains, they may use these in their own interest and in the interests of their families and associates. Because families pass on social position over generations, natural aristocracy can soon take on a hereditary character. Adams therefore favored setting up institutions that could control and direct the influence of the supposedly best people.
In his reply, Jefferson distinguishes between an artificial aristocracy, founded on wealth and birth, and a natural aristocracy, founded on virtue and talents. The willingness to free the natural aristocrats from constraints was the result of a belief that their superiority stemmed from their personal qualities. Part of Jefferson’s optimism about the power of the natural aristocrats was clearly due to the type of political system he favored. Among independent individual yeomen, even political leadership by people of superior talents would not subordinate the general citizenry because government would be limited and localized.
From Self-Made Men to Corporations
In the years that have followed this interchange, Americans have tended to lean toward the Jeffersonian approach whenever they have seen a wide opening for virtues and talents, especially since opportunity became a greater part of the national understanding of the meaning of equality. The term natural aristocracy fell out of use over the course of the nineteenth century. Rapid territorial expansion provided new opportunities for landownership and helped spur economic growth. Even increasing tensions over slavery—an institution that obviously contradicted any ideal of equality—were connected to a kind of competition for equality between whites in slave states, since the westward expansion of slavery meant a growth in the slave trade. In this setting, the term self-made man came to dominate American ideas of equality as free competition between individuals. As Alexis de Tocqueville observes in Democracy in America, most Americans (and de Tocqueville himself) believed that self-made men would not create an elite class—because of constant churning, i.e. continual upward and downward social mobility.
Adams’ view that competitive equality can undermine itself arose again in the late nineteenth and early twentieth centuries in the face of a distinctly un-Jeffersonian political and economic consolidation. The expansion of federal authority required for the prosecution of the Civil War, as well as the fact that the war had been fought by the victors in the name of a union, encouraged political consolidation and a larger, more centralized government. These were accompanied by economic consolidation, stimulated by war spending, which promoted the development of railroads, the steel industry and big finance.
In a 1905 study, John W. Davis describes the growth of large corporate entities as the most distinctive characteristic of his time. The anti-monopoly movement of the end of the nineteenth century and the social reform movements of the early twentieth were responses to the perception that competitive equality no longer extended to a wide range of people, but had become limited to a tiny self-made aristocracy of industrial titans. The varied responses known as progressivism consisted of different strategies for dealing with the corporate concentration of private businesses.
Government Intervention for Control and Equalization
What might be termed regulatory progressivism perceives of society as ideally composed of autonomous individuals engaged in competitive market activities. Regulatory progressivism views the proper role of government as limiting the size and influence of business corporations, through strategic regulations. What we can call corporatist progressivism regards public and private corporate collectives as new, essential structures in American society. The corporatist progressives believed in close cooperation between big business and an emerging big government, with government controlling and directing or even absorbing large-scale business activities. In the 1912 Presidential election, these two streams of progressivism were represented by Woodrow Wilson’s new freedom and Theodore Roosevelt’s new nationalism. Roosevelt essentially argued in favor of a bureaucratic restructuring of political society, aimed more at government direction of an egalitarian citizenry than at promoting opportunities for upward mobility.
Faced with the constriction of opportunity produced by the Great Depression, the programs of the thirties owed much to progressive era plans for governmental intervention in economic life and to practices of governmental economic direction during World War I. In adopting New Deal as the slogan for his administration, Franklin Roosevelt apparently intended to echo the square deal promised by his much admired distant cousin, Theodore, whose corporatist progressivism prefigured much of FDR’s general approach.
The New Deal had at least two important implications that sit uneasily with the Jeffersonian ideals of competitive equality and limited government. The first concerns the political dimension of social citizenship. Under the New Deal, corporate people are primarily members of a centralized political system and they act on the world around them (and on each other) through political action. The second implication is that determining distribution is an essential function of government. People act through government, but they also receive goods and services through government. They are equal, then, in their direct relationship to the state and in their dependence on the state.
Equalization through Structural Mobility and Government Subsidy
In the years following World War II, three trends promoted shifts in Americans’ attitudes toward equality of condition and equality of life chances. First, Americans experienced structural upward mobility in a flourishing, labor-intensive economy of mass production and mass consumption. An increasing number of desirable, relatively high prestige jobs became available. As a consequence, much of the American population moved up the socioeconomic scale. While success continued to be understood as a consequence of individual effort—and individual efforts were indeed usually necessary for success—chances of getting ahead were more widely available than ever before. Second, in the years after the war, the US government launched programs that would subsidize upward mobility. The post-war years witnessed expanded government support for home ownership and education—especially the type of higher education oriented toward white-collar, professional employment, which had previously been the domain of a small number of elites. The third trend was the growing association of the concept of equal opportunity with a large segment of the nation that had previously been excluded from the competition altogether. African-Americans—a separate caste under first slavery and then Jim Crow—increasingly called for their share of equality of opportunity.
The increase in structural mobility encouraged the perception that not only did everyone have the chance to get ahead, but also that everyone should be getting ahead—even though ahead still meant ahead of others. Government support, expanded in the New Deal and during the Second World War, promoted the view that government could and should help Americans beat the competition. While outcomes were still expected to be unequal, the logical implication of government assistance was that the starting places could be equalized. Because winning the socioeconomic race was coming to be seen as the norm, government began to acquire a responsibility for compensating for any disadvantages that could keep people from becoming winners. The competition was no longer a matter of de Tocqueville’s churning—everyone was expected to move forward and upward.
Old worries about elite control over political and economic life did not disappear in the fifties and early sixties. Radical sociologist C. Wright Mills, evoking many of the themes of earlier progressivism, inveighed against what he saw as a power elite. But these worries were peripheral in a nation that had come to expect near-universal upward mobility.
Finance, Technology and the New Natural Aristocracy
By the seventies, the post-war American economy began to stall, as foreign competitors took over more labor-intensive industrial activities and high government spending absorbed capital and acted as a drag on economic life. The answer offered by advocates of supply-side policies in the 1980s was to cut taxes on higher incomes, especially capital gains taxes, in the belief that this would spur investment into re-industrialization. Critics of such policies argued that they would simply enrich corporate elites, without producing a return to an earlier state of widespread improving conditions and mass upward mobility.
In retrospect, the critics of supply-side economics were largely right about wealth inequality, but the build-up of capital did arguably contribute to a revitalization of the American economy from the nineties onward. The most rapidly growing sectors of this economy became the domains of a new natural aristocracy: the interconnected nobilities of finance and information technology. These new staple sectors direct vast flows of income to relatively few, highly qualified people—a state of affairs that economist Tyler Cowen has described as a “hyper-meritocracy.”
In his 2013 book Capital in the Twenty-First Century, French economist Thomas Picketty argues that growth in income and wealth inequality was the consequence of an increase in the rate of return to capital greater than the rate of overall economic growth. He is correct in this—but it is the transformation of developed countries, especially the United States, from labor-intensive producers of goods to centers of investment and innovation that has made capital so profitable. This transformation has created a hyper-meritocracy based on economic activities, rather than on inherited position.
In this situation, policy attempts to equalize opportunity by subsidizing upward mobility are often self-deluding and self-contradictory because they entail the belief that more people can be moved into a shrinking number of desirable positions. In a 2010 article analyzing affirmative action, I use the example of an affirmative action case in law schools to illustrate part of the problem. The number of attorneys has been increasing for decades, with most of the proportional growth among women and members of minority groups. But the legal profession has also become vastly over-populated. Opportunities are limited by the positions that exist. One source of the debate over affirmative action is that—absent significant structural mobility—upward mobility is a zero-sum game: one person’s or group’s gain is by definition another’s loss.
The role of finance in the economy of our new natural aristocracy has posed some particularly interesting quandaries for those who wish to simultaneously equalize opportunity and condition through government policies. The growing role of the finance, investment and real estate sector has made the United States vulnerable to speculative bubbles. An over-extension of mortgage loans touched off the most recent major crash, in 2008. This over-extension had two major sources. First, the fact that the American economy had become so heavily involved in finance meant that markets were filled with foreign and domestic capital looking for places to invest. Expanding the availability of mortgages and developing new financial instruments for turning mortgages into tradable assets provided an outlet for that capital. At the same time, an ideology of promoting mass upward mobility encouraged the federal government to loosen restrictions on mortgages and increase subsidies for lower-income home-buyers, in the belief that homeownership would move people into the middle class. Both the dominance of the financial sector, with its concentration of wealth among a relatively small number of new aristocrats, and a government commitment to spreading equality through subsidizing upward mobility contributed heavily to the unwise extension of home loans to risky borrowers and to heavy market reliance on trading in those loans.
By the second decade of this century, a new version of the old natural aristocracy debate—with the addition of ideas about self-made individuals and the equalization of opportunity through government subsidization of mobility—moved to the center of American political controversy. The administration of President Trump promised a combination of free market corporate tax cuts and deregulation to stimulate hiring, together with a distinctly non-free market executive intervention that would somehow re-create the labor-intensive factory economy of the fifties and sixties. Major Democratic political aspirants, on the other hand, aimed to varying extents at mixes of purely redistributionist policies—taxing wealth for the sake of greater equality of conditions through expanding government benefits—and new attempts to subsidize mass upward mobility, particularly through more publicly funded access to higher education.
I don’t have a crystal ball, but I suspect that none of these solutions can simultaneously lead us toward competitive equality and equality of outcome. Like it or not, the comparative advantage of the United States in the world system is dependent on its status as a center of investment and innovation. Because these are knowledge- and capital-intensive areas, this means that more rewards are concentrated in fewer hands. It also means more intensive competition for a shrinking proportion of positions. Even if policies could equalize opportunities, including more individuals or categories of people with previous competitive disadvantages would not mean upward mobility for everyone. It would simply increase the number of competitors and ratchet up the competition. To echo John Adams, once people make it into the elite—regardless of the demographic composition of that elite—they will use their own advantages to increase those of their children and descendants. Equality is a troublesome goal.