The New Robber Barons

BILL MOYERS: Welcome. What happened in Washington over the past several days sent me back a century in time to the Gilded Age, when senators and representatives were owned by Wall Street and big business, and did the bidding of their monied masters by passing favorable laws that increased their already fabulous wealth. We’ve just watched the Senate and the House, aided and abetted by President Obama, reward financial interests that poured almost half a billion dollars into the midterm elections. They did it by slipping into the omnibus spending bill, signed this week by the President, a provision permitting Wall Street to resume the predatory practice of making risky bets with our deposits and sticking us the taxpayers with the bill if the gambles fail. And guess what? That provision was drafted by lobbyists for the huge banking conglomerate Citigroup. Lo and behold, the Citigroup language turns up in the final bill almost word for word.

What’s more, Republican and Democratic leaders in Congress, again with a wink from the President, sealed the grip of plutocrats on our political process with yet another provision tucked away in the same bill. It allows big donors to contribute up to one and a half million dollars to political party committees in a single election cycle. As one of the robber barons of the first Gilded Age exclaimed, “…we are the rich; we own America; we got it, God knows how, but we intend to keep it…”

Which brings me to this new book on the Gilded Age then and now by the historian Steve Fraser. It’s titled “The Age of Acquiescence” and will be published early next year. Steve Fraser is a time traveler – an editor, writer, and scholar of American history who shuttles among the centuries comparing our present to our past. His earlier books include “Every Man a Speculator” and “Wall Street: America’s Dream Palace.” Steve Fraser, welcome.

STEVE FRASER: Thank you very much for having me.

BILL MOYERS: It’s become something of a cliché to say that we are living in the second Gilded Age. Are we?

STEVE FRASER: Yeah. I think we are living in the second Gilded Age. It gets that appellation because it is similar to what went on in the first Gilded Age.

BILL MOYERS: Give me a working, everyday definition. A description of the first Gilded Age.

STEVE FRASER: Okay. The first Gilded Age, like our own, was given over to very conspicuous displays of wealth. It was a corrupt age, profoundly politically corrupt. When Mark Twain writes his first bestselling novel, “The Gilded Age,” that’s what he’s talking about. Crony capitalism of the kind that we are all too familiar with in our own times. It was also known for extreme inequality. Great gulfs in the distribution of income and wealth.

BILL MOYERS: The industrial age was bringing on all this technological industrial progress, but people at the bottom were paying the price for it.

STEVE FRASER: That’s right. People were paying the price. It wasn’t merely that poverty lived alongside great wealth. It’s that poverty was being created by great wealth. And that was a stunning shock to people living back then and caused them to rise up in rebellion, something that also distinguishes our second Gilded Age from our first. We have the same inequality, in fact perhaps even more severe measures of inequality today and have had for a last 30 years, but we do not have that enormous resistance to that social fact of life that we had during the first Gilded Age.

BILL MOYERS: Alright. Why?

STEVE FRASER: I think one of the reasons is that people living in, let us say, 1880 or 1890, for them, industrial capitalism, the technological revolution, the market economy was new. And it was shocking. And it was disrupting all kinds of traditional ways of life. In fact, threatening to put those ways of life out of existence, whether as an independent farmer or as a handicraftsman or as a peasant from Sicily or a variety of other ways of life were being existentially threatened by this new capitalist, industrial capitalist order of things.

And so they summoned up a kind of political will and the political imagination to say it need— we are not fated to live this way. And so you had great mass movements like the Knights of Labor or the Populist Party or the labor movement in a variety of forms saying, we can establish a different kind of society. A cooperative commonwealth perhaps. A socialist society. We’re not— there were a variety of alternatives.

Because we’re long removed from that time, people coming of age in the last 30 or 40 years think of— we live in a kind of windowless room of a kind of capitalist society to which there can be no alternatives. A kind of techno-determinism which governs the way we view things. The market is the beginning and end of life so far as we have been instructed and the media have reiterated over and over again. I think that’s one big reason.

BILL MOYERS: Yeah, what about the fact that we, over the period after the first Gilded Age, we did create a basic safety net. A fragile and sometimes shredded safety net, but do they not feel as oppressed as they used to by this industrial machine that was rolling over them?

STEVE FRASER: Well, let me answer that in a couple of ways. First of all, I think it was important for everybody to remember that that safety net was created. It wouldn’t have existed were people not ready to get their backs up. To stand up against that Darwinian ruthless, relentless capitalism of that first Gilded Age. It wasn’t simply because a series of elite reformers decided to invent a safety net. That was the outcome of bitter and very bloody, very violent struggle lasting over two generations. And they struggled hard maybe to transcend the order that they were living in. And if they didn’t accomplish that what they did accomplish was to civilize capitalism. That’s the safety net you’re talking about. That’s civilized capitalism that protects people against the worst vicissitudes of the free market.

And then something happened in our own time. First of all, beginning at, sometime in the, say the 1970s, the whole industrial order came under assault. America could no longer compete abroad and industries began to fold up. We have the phenomenon of deindustrialization.

Industrial America had given rise to this very powerful labor movement. A labor movement which not only championed the immediate material needs of those working in some particular shop or factory but was the champion of that safety net in general for all working people, whether that was struggling for healthcare or minimum wages or Social Security, pensions and so on. That labor movement began to die with the deindustrialization of the country.

In the ’80s there emerges on the American scene a kind of renegade sea dog capitalist at war with capitalism on behalf of capitalism. I’m talking about the Michael Milkens of the 1980s. The Ivan Boeskys. The Carl Icahns who came on the scene without the sort of social pedigree of the old elite order. They went to war against what they thought of as a kind of ossified, sclerotic, corporate bureaucracy that was responsible for the economy’s stagnation and its inability to compete abroad. And they began to systematically dismantle the industrial— those leveraged buyouts and so on of the ’80s. Begin to dismantle that whole industrial order in order to support a new financial order. The kind of dominant financial economy that we live in today. And—

BILL MOYERS: And an economy of great speculation. Of great rewards for a handful of people who get rich but don’t necessarily make life better for everyone else.

STEVE FRASER: Yes, exactly right. When you look at that civilized capitalism that lasted, say, from the New Deal through to 1970, a half century, you see the compression of that, what once had been that wide gulf of income and distribution in wealth. Because of that safety net, because of progressive taxation and so on.

Then the scissors moves in the opposite direction during the reign of financial capitalism. And that’s the destruction of that safety net, the destruction of unions, is very demobilizing. It makes people afraid. And it makes them— it robs them of the armature to fight back. The mystery is people are always being put upon. Sometimes they fight back. Sometimes they don’t. After all, people faced extremely difficult, even violent opposition in the first Gilded Age and yet found the will to collectively fight back. We’re living in a time now where a lot conspires against that.

BILL MOYERS: Are you saying people today are not fighting back they are afraid? Of what?

STEVE FRASER: I think we underestimate the degree to which the politics of fear operates in our society and in our economy. If you’re living— look at us now. The dominant form of employment, or what is becoming the dominant form of employment in our economy today is contingent, casual, precarious labor, without any protections. No security at the job. No fringe benefits. You’re at the mercy of your employer and an economy that’s in chronic flux. Pensions have been stripped away. The social safety net has been shredded to a very significant degree. When you’re faced with that kind of situation naturally you have to think twice about whether you’re going to fight back.

BILL MOYERS: What about this notion of, you know, I’m an individual. I’m standing against the wave of history. I can, I may have hard luck, I may be oppressed, but I can reinvent myself. And that fable of American life is very powerful.

STEVE FRASER: It’s very powerful.

BILL MOYERS: The business press in particular. Infatuated with these people.

STEVE FRASER: Yeah, and every man was going to be a speculator and make it rich. And do it on his own. Do it on his own is the key thing. How are you going to get collective resistance if everybody dreams instead of their own individual ascent into the imperium, you know, realm of wealth and power? And so that it’s kind of like a fable of democratic capitalism. That is capitalism as a democracy of the audacious who will make it on their own, while in fact most of the people are headed in the opposite direction.

And it allows people whose real life is tied to this highly impermanent, unstable economy think of that as a good thing. As a form of freedom. I’m going to reinvent myself. Okay, I can’t count on my employer to hire me on any permanent basis. I can’t count on that kind of envelope of fringe benefits that’s going to protect me and my family. Good. I’m going to reinvent myself as a kind of freelancing, free agent, you know, mini Jamie Dimon. And this became persuasive to a certain segment of our population. And so it’s also part of the fables of freedom that I think have conduced to acquiescence.

BILL MOYERS: Fables?

STEVE FRASER: Yeah.

BILL MOYERS: Of freedom?

STEVE FRASER: Yes. One of them is this notion of the free agent. That he’s out there and he’s going to reinvent himself. Another fable of freedom is an old one but it’s taken on new and very telling life in our time. And that is the fable that you can escape and be free privately through consumer culture. That that is the pathway to liberation. And that has always offered itself up all through the 20th century as a way of escape.

I don’t mean to minimize the importance of material wellbeing for people and the need to live a civilized life. To have what you need to live a civilized life. The material things you need. But we have advanced way beyond that. And we deal in fantasy to an extreme degree. And it’s very hard to resist this because the media in all of its various forms presents an image of the country which we’re all supposed to respect, admire and strive for which is at variance with the underlying social and economic reality that millions upon millions of people live.

We’re fascinated by the glitz, the glamor, the high tech. We think of our country as a consummately prosperous one. Even while every social indice indicates the opposite. That we are actually undergoing a process of— we are a developed country underdeveloping. And because what does development mean?

First of all, if it doesn’t mean— how is the general population faring? How— what is the measure of their well being? And if we look at stagnant, declining real wages. If we look at families that can no longer support themselves without multiple jobs. Without both spouses working. If we look at college students deeply in debt in order to, in theory, get that degree which promises them, and that’s an illusory promise to some very significant degree, some upward mobility. It’s that reality which the media often does not portray.

BILL MOYERS: How has the common opinion of elites changed since the first Gilded Age, the days of Carnegie and Rockefeller and the greatest industrialists of that period, and today?

STEVE FRASER: I think elites during the first Gilded Age, the people we sometimes, we used to call the robber barons, were held in great suspicion. Their motives were doubted. They seemed to be behaving in ways that violated the notions of economic justice. Of religious propriety. They seemed to be placing money before all else. They seemed to be threats to the democratic way of life. They were buying Supreme Court justices. They were buying senators and so on. They seemed to be an imminent threat to the American birthright of the democratic revolution.

Elites in our second Gilded Age, in our day, are far less frequently thought to be guilty of that, and on the contrary, as the champions of the free market are thought to be our wise men. Our savants.

BILL MOYERS: Even though the free market fails time and—

STEVE FRASER: Right. Time and again. Right.

BILL MOYERS: Here’s an irony to me. In the recent midterm elections, exit polls showed that 63 percent of the voters believe that the economy works only for the wealthy. Only 32 percent believe that the economy includes everyday people. And yet look how the vote went. Look who the victors were.

STEVE FRASER: Well, there could be nothing more telling that we are indeed living in an acquiescent moment than those kinds of statistics. And those kinds of statistics have been around for a long time. On the one hand, both political parties have run, the Republicans more swiftly than the Democrats, have run far away from the kind of social programs, welfare programs, infrastructure investments, progressive taxation, for fear that they will offend the right, the very powerful and vocal right in American life.

BILL MOYERS: You talk about the vocal right. And there’s a powerful movement that seems to like the way the country is going. That seems to think this is the way it ought to be and that Occupy Wall Street and Steve Fraser, and others, they just represent the malcontents of a system that is really working for them.

STEVE FRASER: Yes. It is the consummate all embracing expression of the triumph of the free market ideology as the synonym for freedom. In other words, it used to be you could talk about freedom and the free market as distinct notions. Now, and for some time, since the age of Reagan began free market capitalism and freedom are conflated. They are completely married to each other. And we have, as a culture, bought into that idea. It’s part of what I mean when I say the attenuating of any alternatives.

BILL MOYERS: Is there any vision of an alternative society to the financial capitalism that’s driving this?

STEVE FRASER: Very, very little. The labor movement itself offers no such alternative. It is trying to defend its own very precarious existence and defend its shrinking numbers. Making valiant efforts to convince other unorganized working people that it might be to their immediate advantage to join the labor movement. But there’s no alternative vision of a different kind of society.

Let me give you a very interesting example, to me anyway. When the Cold War first broke out, and we faced the Soviet Union, we depicted ourselves as the free world, as we all know. And as that, as a slave empire, whatever you want to call it exactly. But actually we talked very little then about capitalism. We talked about freedom and the free world, but not so much about capitalism. Why? Because the country had just emerged out of the Great Depression. Capitalism didn’t have a very high reputation in 1945 or 1950. People were still very skeptical about whether it could indeed serve the general welfare. Right?

BILL MOYERS: It had failed. That’s what led to—

STEVE FRASER: And it failed in the most traumatic way. It’s the second greatest trauma in our country’s history next to the Civil War. Horrible. It ruined millions of lives. It is axiomatic in our current political culture that when we say freedom we mean capitalism. And that is an indication of how we have been, you know, there’s a philosopher who said that language is the house of being. It’s where we live. And if you’re living in a language that’s been denuded of some of its key furniture like certain concepts like that, you’re homeless. You have no way, you have no way to challenge even when you’re faced with wholesale larceny. I mean on the part of the major banking institutions. I mean what— let’s call a spade a spade. These were thieves. And yet the we lack the kind of linguistic wherewithal, which is much more, it’s spiritual, to confront it.

BILL MOYERS: You’ve just said that the— capitalism failed in the 1920s. Led to the Great Depression. Twice in my lifetime, not yours, but twice in my lifetime capitalism has failed. And yet it’s back up on its feet. It’s not only back up on its feet. It’s leading the race. I mean isn’t it just a matter of time before the economy returns to previous highs and capitalism is proved once again, it’s resilient? It’s ultimately triumphant?

STEVE FRASER: In some sense that’s indisputable. It has restored itself. But the system may reproduce itself again at some higher level, but not necessarily at the level it once achieved. It may reproduce itself at a lower level. And that’s what the recovery that’s happening today is about. Most of the jobs that are being created are low wage jobs. Most of the forms of precarious, contingent employment are spreading from one economic sector to another. The social safety net continues to fray. Our public amenities continue to decay. Our infrastructure is a scandal when compared to Western Europe. I mean scandalously decaying and in ruins. So you— so business profits, good. Right? And employment back up a bit. Yes, true. But at lower levels of life.

BILL MOYERS: Not business profits. They’re at an all time high.

STEVE FRASER: They’re back, but at that cost. If they can lower their costs, if you can drive wages down, if you can operate, which many businesses do, outside the boundaries of the law, whether that’s the wage an hour law or very— occupational health and safety regulations. If those bureaucracies that are supposed to regulate them have been stripped bare so they can’t possibly force them even if they wanted to, then what you’re looking at is a society that’s recovering but recovering at some lower level of life for most people.

And that’s why the media says, and even President Obama says, what’s the problem? The economy’s getting better. And people seem to persistently say, well, no it’s not really. They don’t seem to believe those statistics and those headlines. And there’s good reason for that, because for many, many millions of people, life is really not improving.

BILL MOYERS: So is what’s happening today historical inevitability or is it, like the first Gilded Age, class war?

STEVE FRASER: I think it’s class— it’s insipient class war that hasn’t broken out yet as widely as it may. I think people are increasingly fed up. They recognize that the economy and the political system is run by and for the one percent, if you will. That their voices are not being heard. And I think that can only go on so long without there being more and more outbreaks of what used to be called class struggle, class warfare.

We live in acquiescent times, but you never know what’s percolating or simmering or whatever the right word is, beneath the surface of things. I often say to people, I know I’ve said it to you in the past, if you took a picture of America in 1932.

BILL MOYERS: A snapshot.

STEVE FRASER: A snapshot of America, 1932, you would—

BILL MOYERS: Hoover is president.

STEVE FRASER: Hoover is president. The country is in the very depths of the Great Depression. It’s horrible. Millions upon millions of people unemployed. Millions of people evicted from their homes. Millions of people losing their farms. Et cetera, et cetera. And the picture would reflect that. Despair. Demoralization. Demobilization. Nothing happening. Fear haunts the landscape.

Take that same snapshot two years later, 1934, and it’s a different country. And it’s a different country not because Franklin Roosevelt was president. He’s part of that story. But it’s because suddenly there are millions of people mobilizing all over the place. There’s this militant labor movement conducting general strikes in San Francisco and Minneapolis and down South in the textile industry. There are people aiding their neighbors when they get evicted. Stopping that. Gathering up their furniture on the sidewalk and putting it back in their apartment. There are farmers out in the Great Plains dumping milk on the highways in order to preserve the price of milk. There are rent strikes going on all over the place. There are new labor farmer parties forming in places like Wisconsin and Minnesota and elsewhere. The country is electric with social activity and a new ethos of social solidarity. Something nobody would have predicted in 1932. So you never know.

BILL MOYERS: The book is “The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power”. Steve Fraser, thank you very much for being with me.

STEVE FRASER: Thank you for having me.

BILL MOYERS: At our website BillMoyers.com, there’s more about the Gilded Age, including an excerpt from “The Treason of the Senate,” an expose that rocked the country a century ago. In it, muckraking journalist David Graham Phillips condemned campaign contributors as “the interests.” They were, he said, “vastly more dangerous” than an “invading army,” for they “manipulate the prosperity produced by all, so that it heaps up riches for the few…” Same old story, then and now.

That’s at BillMoyers.com. I’ll see you there, and I’ll see you here, next time.

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