The Second and Final Gilded Age

New data shows that the total wealth of the top 1% of Americans just hit a record $44 trillion. Corporate profits are also hitting record highs, raking in $2.8 trillion in the last three months of 2023 alone. And that’s after taxes. It won’t surprise you to hear, given these massive numbers, that inflation is being driven primarily by corporate greed and these staggering, record profits. By raising the cost of food, housing, and every basic need corporations are facilitating a gargantuan transfer of wealth from the working class to the 1%. In doing so they’re cementing this era’s position as the second Gilded Age.

Via Talmon Smith - NYT

For most of you, that’s probably not new information. Inequality has been soaring since the Reagan era, and even though workers have been creating more and more wealth, we’re seeing a smaller and smaller share of the value we produce. But this Gilded Age is slightly different from the first, and more importantly our remedy for this era should be separate and distinct.

The Gilded Age of the late 1800s is typically defined by extreme inequality and the monopolistic consolidation of industries. A handful of men, the Robber Barons, controlled the railroads, mines, newspapers, and, ultimately, the country. The concentration of wealth was so extreme that one man, John D. Rockefeller, is estimated to have been worth approximately $400 billion at the peak of his wealth, which was about 2% of the entire U.S. economy. Others like Andrew Carnegie, J. P. Morgan, and Cornelius Vanderbilt also pillaged and ruled the country with ruthless business tactics, exploitation of workers, and political corruption.

While this small group of men built up fortunes that beggar belief, the working class fought tooth and nail just to get by. Kids worked long hours, union efforts were violently suppressed, and the Robber Barons were more than willing to use violence to protect and increase their wealth.

Despite the way that the philanthropy of these men and the passage of time has massaged their images, we should be clear about the lengths they went to. In one instance, workers struck at a Colorado coal company controlled by the Rockefellers. Colorado Fuel and Iron was the largest coal operator in the western United States. Despite the corporate refusal to recognize the union, the United Mine Workers of America were secretly organizing workers at the company. In September 1913, they called a strike. As the Zinn Education project details: 

“When the strike began, the miners were immediately evicted from their shacks in the mining towns. Aided by the United Mine Workers Union, they set up tents in the nearby hills and carried on the strike, the picketing, from these tent colonies. The gunmen hired by the Rockefeller interests — the Baldwin-Felts Detective Agency — using Gatling guns and rifles, raided the tent colonies. The death list of miners grew, but they hung on, drove back an armored train in a gun battle, fought to keep out strikebreakers.”

The miners persisted. They refused to give in. In the end, the National Guard was called in to break the strike:

“In April 1914, two National Guard companies were stationed in the hills overlooking the largest tent colony of strikers, the one at Ludlow, housing a thousand men, women, children. On the morning of April 20, a machine gun attack began on the tents. The miners fired back. Their leader, . . ., was lured up into the hills to discuss a truce, then shot to death by a company of National Guardsmen. The women and children dug pits beneath the tents to escape the gunfire. At dusk, the Guard moved down from the hills with torches, set fire to the tents, and the families fled into the hills; thirteen people were killed by gunfire.”

The consensus at the time was that the Rockefellers had coordinated bringing the Guard in, and were ultimately to blame for the massacre itself. They even paid the Guards’ wages. But this was not an anomaly, an aberration. Workers were killed by U.S. troops at the behest of Robber Barons many times, even after the progressive era and the breaking up of their monopolies in the early 1900s. Bosses exploiting children, putting kids to work in dangerous jobs, and child labor broadly weren’t outlawed in the U.S. until 1938. It took the Great Depression and the ruling class’s fear that the impoverished masses would rise up and topple the whole thing to finally pass the New Deal and significantly shift the way capitalism played out, for a while.

Photo by Pedro Henrique Santos on Unsplash

One of my contentions here is that, while much of the New Deal was great stuff, and we could use elements of it urgently for the future we need to build today, an identical approach isn’t a sufficient answer to our current, second Gilded Age. What FDR did quite expertly was save capitalism from itself. The excesses of the Robber Barons, which were only very partially addressed by Teddy Roosevelt and the progressives, lurched into the roaring ‘20s and the ups and then downs of the early stock market. The Great Depression was a natural consequence of the gambling with excess wealth that is a staple of the capitalist system. And instead of letting this exploitative system meet its end, FDR got together enough guardrails and major programs to save capitalists from the full consequences of their actions.

Those safeguards, combined with a war economy and a short-lived culture of unity and sacrifice, worked well enough for thirty years or so. But then came Reaganomics and neoliberalism. It only took another couple decades for unfettered, rapacious capitalism to lead us into another gilded age. According to Oxfam, just eight men now have as much wealth as the poorer 50% of humanity. And eight of the wealthiest ten people on Earth are tech monopolists.

Photo by Lukas on Unsplash

Where a hundred and fifty years ago it was steel, oil, and trains the Barons of today control Amazon, Tesla, and Facebook. And while newspapers were the channel used in the 1800s to propagandize the masses, today they use Twitter and Facebook and Instagram. Plus, they still own our newspapers, and TV stations, and more. These tech barons and other billionaires are also actively working to undo the work of the New Deal and the Progressive Era. Elon Musk is leading an attack on the very existence of the National Labor Relations Board, and he’s been joined by Trader Joe’s and Starbucks and even the ACLU.

The historic inequality and attacks on workers aren’t the only factors that make this a second Gilded Age. There’s also the anti-democratic effect of massive wealth. In the 1800s the corruption of the Robber Barons may have been more overt, buying seats and stuffing ballot boxes, but the corruption of today is equally clear. Super PACs enable billions to be poured into elections without transparency, and as a result the vast majority of politicians favor the richest members of society over everyone else. Now, we’re seeing something even more sinister. Today’s Tech Barons and other billionaires are increasingly moving towards overt fascism. They’re funding Trump, propping up dozens of other right-wing extremist candidates, and fueling fascist propaganda. Sometimes it’s overt, like we see from Musk, and sometimes it’s (slightly) more subtle like Zuckerburg tilting the Facebook algorithm to favor the far-right.

In both cases, as well as numerous others, we’re seeing how massive wealth is a threat to democracy – such a threat that we should be shouting from the rooftops about how extreme inequality is incompatible with a democratic society. Today we live in a capitalist society where CEOs and corporations have a fiduciary obligation to maximize shareholder value. This legal obligation means that profits are placed above the well-being of individuals, communities, the country, and the planet. In other words they have an obligation that pushes us collectively towards a greater and greater imbalance of wealth. This is where capitalism trends. It is a system that enables greed, legitimizes it, and renders it a virtue rather than the socially destructive and anti-democratic force it really is.

Photo by Joshua Hoehne on Unsplash

I understand why some people want a restricted capitalism, a capitalism with guard rails, and I too would prefer that to our current reality. But if we look at the last 150 years, if we examine the ups and downs of inequality and the successes and failures of the efforts to reform capitalism, we see that efforts to curb the hoarding of the Robber Barons have largely been undone and that we’re once again at record disparities of wealth and power. A system that divides society into capitalists and workers will always enable the former to regain wealth and power, even if the collective can at times come together to briefly restrict their accumulation of both. The very nature of this system allows them to hoard the profits they take from the work of the people they employ. If that fundamental rule remains unchanged, history will repeat itself.

My hope is that we stop that repetition, that we learn enough from history to aim toward radical, fundamental transformation rather than reform. My hope is that we make this the last Gilded Age. The term itself comes from Mark Twain and his book of the same title about an era of inequality and social problems masked by a thin gold layer of economic prosperity for the rich. Today we see glitzy videos of private jets, galas, and shiny new technology. But behind this thin veneer is inequality so extreme that the country’s richest men buy $500 million yachts while the workers who generated that money are forced to pee in bottles. Behind it is the average rent for a 1-bedroom reaching almost $1,800 and the average home cost passing $400,000. Behind it is the “gig-economy” and record food cos and algorithmic pricing.

We’re seeing steps taken to reverse some pieces of the puzzle that have formed this second Gilded Age. The FTC is taking on corporate mergers at a rate not seen in decades. The NLRB is working to help the labor movement, and workers themselves are striking and organizing in a major way. But these reforms both pale in comparison to the fervor of the New Deal, and are functionally band-aids on a gaping wound. The patient needs surgery, and we need it to be radical and decisive. An analysis of both the past and present points us to the importance of moving past an economy of disparity, an economy divided between the hoarding few and the scrambling many, and towards worker ownership and control. We need a system where a handful of people aren’t incentivized to put profit above life on Earth, and we need an approach that doesn’t allow them to undo the progress we make in society. Our planet, life on Earth, and our future all demand that this Gilded Age be the last.

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P.S. While this isn’t a linear series, today’s piece feels to me like the natural culmination of several pieces I’ve been writing over the past month or two about the economic situation we find ourselves in today, and related issues. Here they are:

• You are not the problem

• You need a world without context

• We feel disconnected because we've been forced apart

• The biggest lottery

• Why is everyone sitting in the car?

I hope you find them helpful!