Democracy Against Domination: Inequality, power, and progressive politics in the New Gilded Age

Inequality, power, and progressive politics in the New Gilded Age

This essay is adapted from my recent book, Democracy Against Domination (2017).

In these opening months of the Trump administration we have witnessed no shortage of political drama, from the administration’s assault on Muslims and immigrants, to concerns over corruption and conflicts of interest, to its attempts to dismantle the Obama administration’s signature achievements from healthcare reform to financial regulation. At the same time the tremendous upsurge of mobilization, activism, and engagement by so many communities offers hope for the future. But it is also important to understand these battles between the far-right and “the resistance” in a broader context. The future of American democracy — and of our ideals of equality, justice, freedom — will be written in these next few years. Beneath these day-to-day battles, there are three deep issues at stake.

The first theme is the problem of economic power and inequality. Our economy isn’t working for most Americans, as inequality widens and opportunity for so many dwindles. At the heart of this economic crisis is a deeper problem of economic power — whether arising from too-big-to-fail financial firms, new forms of monopoly power, or the transformations of the modern workplace — that helps concentrate wealth, exclude communities, and skew the flow of resources.

The second theme is one of democracy. How can we revive, rebuild, or restore our democratic institutions to ensure a government that is more responsive to these concerns — and capable of developing solutions to these problems? In an era where many of us have rightly lost faith with established political parties and institutions as sclerotic, corrupt, or captured, what does a new democratic revival look like?

Finally, the third theme is about inclusion. If economic inequality threatens our collective prosperity, and if existing democratic institutions fail to represent the needs of “we the people,” we remain divided over the question of who exactly is included in that “we” that, in theory, our government and politics are committed to empowering and serving.

These three questions — economic power, democracy, inclusion — have been fundamental questions of American politics throughout our history. In the rise of Donald Trump and Trumpism we can see a particular response to these three questions. In Trump, we see the specter of what we might call an “exclusionary populism” — a view that in response to these deep economic inequalities and loss of faith in political institutions, we must turn to a singular powerful leader who can sweep away ossified and corrupted “politics as usual”, and restore the promise of opportunity and democracy to all — but do so by drawing a sharp line that excludes “undesirable” communities from the body politic: immigrants, communities of color, Muslims, and various other “Others”. This exclusionary populism is sadly not new; rather it represents a durable and real legacy in American history. Increasingly, the policies emanating from Washington seem to marry this exclusionary view of “we”, with a deference to economic power and inequality, and a blasé or even hostile attitude to failures of democracy.

But we have another tradition as well, one that that has surfaced at various moments of radical change, crisis, and attempts at social transformation. From the cataclysm of Civil War, abolition, and Reconstruction; to the upheavals of industrialization in the late nineteenth century leading to the New Deal; to the Civil Rights movement, we have at times seen a different approach to the problems of economic and social inequality, political unresponsiveness, and the problems of exclusion. In this alternative tradition, the focus is not on reform through exclusion, but rather on the quest for constructing a more genuinely inclusive — and democratic — politics, economics, and society. This is the tradition that today’s explosion of multi-racial, cross-constituency mobilizing — in part provoked by Trump’s actions, but more accurately building on long-term efforts to organize many communities in response to the inequities of the 21st century economy.

Yet the promise of this more radically egalitarian, inclusive, democratic political economy depends not only on counteracting the ideologies of elite-serving privatization of the safety net or exclusionary populism that we see emergent in the new administration. It also requires asking some hard questions about the ways in which modern-day liberalism itself has failed to diagnose, let alone address, these deeper concerns of inequality, exclusion, and democratic failure.

I. Populists, Progressives, and the Problem of Economic Power

Over a century ago, in what historians term the Progressive Era (roughly 1880–1920) the country faced a similar confluence of crises. The upheavals of industrialization created new and terrifying forms of inequality, dislocation, and immiseration. They also created new concentrations of economic power, manifest in the rise of oligarchs like Vanderbilt, Rockefeller, and J. P. Morgan — the man, not the company, yet just as powerful and just as widely reviled by reformers as a villain then as now. These economic concerns bled into the political, as many Americans feared the influence that these elites would have on party bosses, legislators, and elected officials. Indeed, finance was at this time the ultimate evil of evils, seen as the puppeteer behind the economic and political inequities of the moment.

In this setting, a variety of thinkers, lawyers, reformers, and activists developed a sophisticated critique of this confluence of economic and political power. First, there was the problem of private power, characterized by the growth of powerful new monopolies, and mega-corporations like Standard Oil. This was the central concern of the antitrust movement that emerged during this time. Second, there was the problem of market power — the “market” itself was not a natural system like the weather, but rather a product of law, policy, and human-made decisions. From “legal realists” like Robert Hale who saw in the formalisms of nineteenth century common law doctrine a pattern of favoring corporations and economic elites over workers and equity, to the emergence of institutional economists like John Commons who founded the American Economic Association (then at the vanguard of progressive social reform), there emerged a robust critique of how seemingly natural forces like low wages and unfair prices for commodities were in fact the cumulative aggregate results of many thousands of micro-inequities — particularly the inequities of bargaining power between laborers and capital owners — which could be redressed by changes in law and policy.

These economic concerns interacted with political ones. Thus the third common thread among these Progressive Era thinkers was a concern about the failure of political institutions to address these economic concerns. Whether because of corruption, elite influence, or ossified machine politics, existing democratic eletions and legislatures were no longer accountable to ordinary citizens — and where they were able to pass social reforms, they found themselves stopped short by a conservative (and business-friendly) judiciary, as in the famous Lochner case where the Supreme Court stalled efforts to provide minimum labor standards for bakers in New York. Fourth, these three dimensions combined to produce what we might term a problem of actionability. In the face of the vast powers of monopoly corporations, the diffuse system of the market itself, and the dysfunction of existing democratic institutions, the idea that “we the people” could in fact reassert control, ownership, and accountability over these powers and systems seemed remote indeed. This was what philosopher John Dewey called the “problem of the public” — that a “scattered, mobile, and manifold public” lacked the means of “effective political action” necessary to organize, assert, and realize their aspirations.[1]

Democracy, then, for these radical reformers was not just about elections and legislatures. Nor was it a distant, naïve, utopian ideal of good faith deliberation and civic virtue. Rather, it was an urgent necessity — a vital means by which communities would have to wrest control over their economic and political destinies back from these powers and systems that had made a lie of the idea of popular sovereignty and self-determination. This is why reformers of this period focused their efforts on a variety of experimental innovations aimed at expanding the political power and capacity of the people themselves. Some reformers emphasized electoral reforms, from the direct election of Senators to the first campaign finance regulations. Others sought to create new institutions of democratic, and corruption-free policymaking, from the creation of “Home Rule” powers for municipal governments to make local-level social and economic policy, to the construction of new regulatory agencies at the state and later federal levels. Still others prioritized the construction of mass-member, federated, movement organizations: organized labor, the consumer rights movement, the women’s rights movement, to name a few.

In other words, this progressive vision rested on two basic elements. First, the central challenge for economic policy is the problem of power and domination — the accumulation of unchecked power whether in the form of concentrated corporate and monopoly power or in the more diffused form of the market system itself. Second, democracy is the primary means we have for organizing a response to this problem of domination. Democracy, on this view means the hard work of building political organizations and institutions that re-balanced power by expanding the democratic agency and voice of “we the people”.

The problem for modern-day liberalism is that it has over the past several decades wandered away from both of these insights. We have only to look at the limitations of progressive politics over the last decade to see that contrast.

II. The Financial Crisis and the Limits of Managerial Liberalism

For some, it can be easy to forget now in 2017 the depth of the shock and impact of the 2008–9 financial crisis. But in many ways our current predicament — and our current politics — are animated by the continued repercussions of that cataclysm. In the fall of 2008, as the presidential campaign barreled towards its conclusion, the United States and the world suffered the worst financial crisis and recession since the Great Depression itself — and for several months, we teetered on the edge of an economic abyss that by some accounts could have been as devastating as the crash of 1929. In many ways, we are still living in the hangover of that crisis. The subprime mortgage and foreclosure crisis wiped out whole communities’ wealth and savings — particularly among communities of color. The sluggish recovery in the years since the crash have manifested in the continued shift to low-wage, precarious work.

But there is an equally troubling conceptual and ideological ripple effect of the crisis, and the battles over the bailout and financial reform efforts that ensued. First, for many Americans, the financial crisis crystallized the sense of a “rigged” economy that is extractive, exploitative, and fundamentally unfair. No wonder that “too-big-to-fail” has entered our vernacular as a shorthand for concentrated and unchecked economic power. Second, this concern about a rigged economy is complicated by a sense that government itself has at best fallen short in its response — or at worst, actively contributed to the rigging of the economy. The bailouts of Wall Street firms — critical as it may have been to stave off a deeper depression — nevertheless came without longer-term and more structural transformations of the financial sector, opening up a space for anger at both “big business” and “big government”. Third, these concerns combine into a deeper sense of a loss of faith in politics as a whole — a disaffection and distrust that is very much at the heart of today’s politics. These dynamics are not just a product of Tea Party-style conservative populism and libertarian attack on government. Rather, they are rooted as much in failures within liberal political economy itself.

Seven years ago now, in April 2010, Barack Obama visited the Cooper Union to deliver a make-or-break sales pitch for his financial reform package, working its way through Congress at the time. Seated in the front row of the lecture hall were the heads of all the major Wall Street banks — and outside, throngs of protestors chanting for the heads of those very CEOs. Obama’s pitch was telling: this was no milquetoast speech, and the President outlined an aggressive reform agenda. But it was telling how this agenda was framed. The central problem leading to the crisis, in Obama’s telling, was that financial markets “operated in the shadows, … invisible to regulators, invisible to the public.” As a result, “risks accrued until they threatened our entire financial system.” The financial reform package, Obama argued, was focused on preventing such “reckless risk-taking” — specifically by expanding the oversight and enforcement powers of expert regulators at the Federal Reserve and elsewhere.[2]

The speech represented a familiar and distinctive vision of government and economic policy. On this view, the problems of economic inequality were primarily matters of market failures — failures that needed to be remedied by deploying neutral, scientific, expert regulators to manage the excesses of the modern market system. This idea of managerialism has a long pedigree in twentieth century liberalism. Franklin Roosevelt and his New Dealers established the prestige of the idea of government expertise and regulation as a way to serve the public good — and rework the dynamics of a complex and at times harmful modern economy. To James Landis, one of Roosevelt’s key advisors and the architect of the Securities and Exchange Commission, the expert-based regulatory state represented “our generation’s answer to the inadequacy of the judicial and legislative process.”[3] Courts were hobbled by their adherence to legal formalism, and legislatures by the restraints of politics; regulators by contrast could pursue the public good and tailor policies for the complexities of the modern economy.

More recently, following conservative attacks on the New Deal state in the 1970s and 1980s, pro-regulation liberals reformulated the muscular faith of Landis in top-down regulation in more chastened — but no less technocratic — terms. For these regulatory theorists and policymakers, administrative agencies and expertise still represented a more rational and ultimately public-serving way of making policy, only now this faith was bolstered by a more narrowed vision: instead of transforming and remaking the economy the way FDR did, today’s regulators would focus more specifically on simply closing market failures, plugging gaps, making markets work better — and doing so through an appeal to rigorous cost-benefit analysis and greater commitment to scientific expertise and rationality. Thus, in place of New Deal style technocracy we see appeals not to “big government” but rather “smart government” — the judicious and limited deploying of expertise to facilitate, rather than fundamentally alter, the way markets function. We can see this idea of mangerialism — that public policy should be fundamentally expert-driven, and focused on more limited goals of market-optimization — in a variety of different policy areas. Obama’s operation within the managerialist vision is thus not surprising.

There is no question that very real public benefits came out of these reforms. But they came at a price. Mangerialism may be attractive in its minimalism and appeal to rationality. But it suffers from two deep limitations — each of which represent a departure from the pre-New Deal emphasis on power, domination, and democracy.

First, in focusing on the goal of optimizing market functioning, this managerial vision of public policy tends to overlook the more fundamental moral and political problem of power. Economic issues like the financial crisis or the rise of too-big-to-fail banks aren’t just matters of market optimization; they represent a very real concentration of economic power, that undermines the life chances and agency of communities and individuals — and which expands the ability of powerful corporations and wealthy elites to entrench their economic (and often political) privilege. The popular anger against Wall Street spoke to this deeper sense of injustice and unaccountability of “big banks” and private power more generally — a moral violation that Obama-era reform did little to appease or address.

The second problem with managerialism is that it bases the viability of its substantive policy agenda — those economic regulations aimed at blunting the worst excesses of market forces — on a foundation that is increasingly brittle: a faith in the responsiveness, effectiveness, and expertise of regulators themselves. Yet we have very good reason to doubt that presumption. The fear of interest group capture of regulators is a long-standing concern motivating decades of attack on regulation itself. But capture can also manifest in regulatory inaction a much as action: arguably the financial crisis itself was a product of regulators overly-friendly with financial sector interests, leading to an overly-lax enforcement of already-existing laws on the books.

Consider what Obama era financial reform did not encompass. Calls for “breaking up” too-big-to-fail banks were dismissed. More aggressive structural limits on the kinds of powers, permitted activities, and combinations of financial activities within firms, such as the Volcker Rule ban on proprietary trading, were not mandated by statute, but instead offered as recommended to regulators — where they were subsequently watered-down under pressure from financial sector actors on the regulators themselves. Nor was there a systemic response to the nagging concern about government responsiveness and capture; for the most part, financial reform doubled down on our faith (what little remained) on the expertise and public-mindedness of regulators in agencies like the Fed or the SEC.

Indeed, the most radical element of the post-2009 financial reform effort is distinct on both of these grounds. The Consumer Financial Protection Bureau is in effect (if not in its public rhetoric) tasked with exactly this mission of empowering a politically diffuse and often disempowered constituency of consumers, students, pensioners, and minorities among others to counteract the concentrated economic power of credit card companies, mortgage companies, and financiers who otherwise would have an easier time extracting fees, engaging in fraud, and undermining economic equity. Furthermore, the CFPB has invested much of its expertise in more democratic and participatory modes of engaging citizens in its agenda-setting and policy-making, through online and offline consultations, town halls, and pro-active engagement with grassroots community groups. It is no wonder that the CFPB is one of the top targets of the vociferous financial sector seeking to dismantle Obama-era reforms.

A similar weakness can be seen in the Obama era attempts at reviving democracy too. Consider the recent retrospective looks at why the upsurge of grassroots mobilizing around Obama’s 2008 electoral run fell short of transforming the wider political dynamics of the era. For many critics, the limit of so much of campaign mobilizing in 2008 was its conversion into a more conventional party- and voter-turnout machine, instead of continuing the deep work of building genuine grassroots community organizing and civic power. Similarly, Obama era reforms expanding government transparency and adopting online tools for civic engagement did little to alter such deeper disparities of political power and influence.

This general move away from more structural attempts to dismantle concentrations of economic power and to attempt a more systematic rebuilding of countervailing democratic power. continued to shape the debate among liberals and progressives over the last few years. In many ways, the underlying philosophical debate between the Sanders and Clinton wings of the Democratic Party in last year’s primary was about this question: should economic power and inequality be simply managed by more competent and expert public servants, or do we need a more radical, structural transformation to ‘unrig’ the economy, limit economic power, and restore the sovereignty of ‘we the people’?

III. Towards a 21st century progressivism?

A 21st century progressivism can learn much from the more radical vision of pre-New Deal activists and reformers. Yet we must not forget that many of the reformers of the Progressive Era, for all their valuable insights, were also conflicted at best (and supportive at worst) of the systematic racial exclusion of the Jim Crow era. In this sense, today’s emerging progressive movements reflect something even more radical and vital: a recovery of this old progressive focus on power and democracy, combined with a commitment to multi-racial, cross-constituency organizing that makes this vision of anti-domination and expanded democracy truly inclusive.

This multi-racial attack on the deep structural roots of power, exclusion, and inequality has animated radical transformative politics only in certain moments in our history. Radical Reconstruction and the fusion of abolition, labor republicanism, racial justice, and political transformation represents one such moment. So too did the radical economic vision of the civil rights movement, and its successor welfare rights movement. Today we face a similar moment of opportunity for forging such a movement once again.

Take the problem of finance for example. A more structural response that addressed the concentration of economic power and influence on the part of interconnected, risk-expanding financial firms. In contrast to the managerial approach, this approach to finance would focus not just on optimizing market functioning and protecting against risk, but more broadly on tackling the problem of domination and economic power. So this might mean more prosecutions for fraud than was the practice among regulators and lawyers leading up to the subprime crisis. It might also mean more structural limits on too-big-to-fail financial firms, limiting their powers, activities, or size — essentially regulating finance as a kind of public-serving utility. These more aggressive measures would necessarily reduce the profitability and size of the financial sector as a whole — but that might well be a desirable and necessary moral judgment for us as a society to make. Indeed, in the years since the financial crisis, a growing body of literature has linked the continuing inequities of our economy — whether in the rise of low-wage work or the geographic concentration of opportunity or the privatization of basic city functions — to an overly “financialized” economy. Financialization and financial power thus lies at the root of disinvestment in underserved geographies, whether urban communities of color or rural areas. It is also a key driver in the concentration of wealth among investors, driving the decline of wages and job security, particularly in low-wage industries from the “gig” economy to the franchised and outsourced work of retailers, domestic workers, hotel workers, and the like.

Finance is not the only example of these intersections of structural inequalities operating along economic, geographic, racial, and gender lines. Consider two quick examples. First, in a variety of areas we are seeing a growing focus by activists, reformers, and progressive policy thinkers on the problems of concentrated power and unequal market structures. We can see this everywhere from net neutrality and the problem of concentrated private power over the control of the internet by giants like Comcast, Verizon, and platforms like Amazon; to the increasing power of “big agriculture” over farmers and rural development, there is a growing interest in the problem of monopolies, concentration, and antitrust. Second, despite the well-noted decline of unions, we are seeing a new “alternative labor” movement on the rise, seeking to tackle the worsening inequities in the world of work and the eroding social contract. The “Fight for Fifteen” has pushed a $15 minimum wage with increasing success across the country at the state and local level. New groups have emerged to mobilize and organize workers in low-wage, highly-insecure sectors like restaurant work, fast food work, domestic work, and on-demand “gig economy” work.

Across these diverse economic and political battles, there is a common thread. The policy problems are not merely technical, but one of concentrated and unchecked economic power. And the remedy requires not just new policies but also more inclusive and durable institutions to represent and empower these affected communities in the policymaking landscape.

It is in these movements and battlegrounds that we see the beginnings of a more radically democratic, egalitarian, and inclusive progressive movement for the 21st century. First, like reformers of the Progressive Era, these movements evoke the focus on deep economic structures, dynamics, and the problem of power. Second, these movements see the task of social change as dependent on a longer-term project of building democratic power and capacity on the part of communities themselves through bottom-up movement-building, and on the part of policymaking institutions by demanding greater participation and representation of these groups in democratic institutions themselves. It also shares a focus not only on elections and conventional arenas of politics, but also looking at the regulatory and administrative institutions that do the day-to-day business of governing our modern economy. Whether it is the Fed or the FCC or the Department of Labor — or state and local regulatory bodies — these are the front-lines of making policies to achieve economic and political inclusion. Finally, these movements offer an opportunity to deepen attempts at multi-racial, multi-ethnic, intersectional organizing that links diverse constituencies in a common project of dismantling the structural roots of power, exclusion, and inequality.

The opportunity — and the stakes — for this alternative vision of 21st century progressivism couldn’t be higher. The specter of exclusionary populism of the resurgent far-right raises the costs of the failure to develop a cross-constituency vision and movement that takes seriously the problems of a rigged economy and a sclerotic government — but does so with a commitment to values of inclusion, equality, and democracy. Without this alternative, we leave too much of a moral vacuum for the misguided appeals to exclusion and upheaval. Conventional liberal politics in the New Deal and post-New Deal vein are no longer compelling enough to meet either the challenge of 21st century inequality or of right-populism. The New Deal order has collapsed — and it is not coming back. Decades of conservative assault on the idea of government, combined with very real technological and structural changes to the economy mean that our social contract has eroded and frayed to the breaking point. But the limits of Obama era reform indicate that doubling down on a kind of “New Deal-lite” vision that emphasizes managerial, technocratic expertise, in the service of judicious market-optimizing reforms will also not be enough. Instead we need a new, robust, and mobilizing vision of inclusion, equality, and democracy. A progressive populism — in the spirit of the reformers of a century ago, tempered and reformulated through today’s bottom-up movements for economic transformation that wed these themes to a more radically inclusive and multi-racial vision — represents a potential future for American democracy in the 21st century.

Indeed, for a country that counts democracy as its birthright, we have so rarely met the highest ideals of that concept. “We have frequently printed the word Democracy,” intoned the great poet Walt Whitman in 1871. “It is a word the real gist of which still sleeps, quite unawakened… a great word, whose history…remains unwritten because that history has yet to be enacted.”[4] In 1905, Louis Brandeis, a key intellectual leader of the Progressive Era response to economic power as a lawyer, activist, and later Supreme Court Justice, echoing this spirit of innovation and urgency in his speech celebrating the worker-friendly Filenes Cooperative in Boston:

One hundred years ago the civilized world did not believe that it was possible that the people could rule themselves; they did not believe that it was possible to have a government of the people, by the people, and for the people. America in the last century proved that democracy is a success. The civilized world today believes that in the industrial world self-government is impossible; that we must adhere to the system which we have known as the monarchical system, the system of master and servant, or, as now more politely called, employer and employee. It rests with this century and perhaps with America to prove that, as we have in the political world shown what self-government can do, we are to pursue the same lines in the industrial world.[5]

The ferment and struggles of Whitman’s and Brandeis’ era made possible the New Deal — even if they failed to counteract the erosion of abolitionism into the racial subjugation that was Jim Crow. Now in 2017, we face a similar moment and turning point of economic transformation and political upheaval — a moment that will set the terms of inclusion, equality, opportunity, and democracy for decades to come. The stakes are enormous. Whether we can do better than our Progressive Era forbears remains to be seen.

An earlier version appeared in the Spring 2017 edition of Brooklyn Law School’s BLS Law Notes.

[1] John Dewey, The Public and Its Problems (Athens: Swallow Press, Ohio University Press, 1954 [1927]), 134–5.

[2] Barack Obama, speech on financial regulation, Cooper Union, New York, April 22, 2010.

[3] James Landis, The Administrative Process (New Haven: Yale University Press, 2008).

[4] Walt Whitman, Democratic Vistas (New York: Smith & McDougal, 1871).

[5] Louis Brandeis, “Industrial Cooperation,” address before the Filene Cooperative Association, Boston, May 1905, in Osmond Fraenkel, ed., The Curse of Bigness: Miscellaneous Papers of Louis Brandeis (New York: Viking Press, 1935), at p. 35.