Emerson called it the magician’s wand. It was the greatest leap in transportation technology in history, and by far the largest-scale government investment for most of the 19th century. It kicked off the Panic of 1873, the first systemic depression due to industrial capitalism, and it forged some of the most famous fortunes in American history on the back of a new consumer society. Once an “iron horse” that “made the hills echo with his snort like thunder,” it’s now just the railroad.
With the establishment of the railroad, the door to the West swung open, introducing new resources and markets to an already-simmering American economy. The railroad freed the American market from its geography, “annihilating” space and granting the dominant market forces unprecedented scale and scope: scale because the new transportation allowed more supply, powering more goods to reach more people; and scope because these new markets could be served new products generated from the same industrial processes. The result? The American Gilded Age.
Beginning in the late 1870s, the Gilded Age period was fundamentally a continuation of the Market Revolution of the 1830s, a transition that lay comparatively dormant during the tumult of the Civil War. However, if the Market Revolution represented the simultaneous blossoming of industry, technology, and capitalism in America, the Gilded Age represented the logical end of the Revolution’s philosophy.
With industry stretching its wings, and with laissez faire capitalism embraced to the point of Social Darwinism, America in the Gilded Age produced a dramatic rise in productivity and wealth — and inequality. By the last decade of the 19th century, the wealthiest 2% of American households had amassed more than 33% of America’s wealth; the wealthiest 1% owned 51% of the nation’s property. The bottom 40% had no wealth to speak of.
Sound familiar? The internet is our railroad. Distribution is not just faster, cheaper, and broader; it’s instant, free, and universal. As a result, the American economy is again thriving on the back of staggering income inequality. Inequality is a focus of the most successful grassroots presidential campaign in decades. What’s more, the inequality is not only persisting, nor even just growing, but actually accelerating. One way to measure income inequality is by comparing the median household income to the mean household income; the mean will be influenced by the top earners while the median will not. Here are estimates of the ratios, through the last 4 years of available census data, of the ratio of the mean American household income to the median American household income:
2011: 1.392 2012: 1.397 2013: 1.403 2014: 1.411
If the Gilded Age gave us the giants of the early American economy — Rockefeller, Vanderbilt, Carnegie, Morgan, Mellon — it also, in an inevitable dialectic, gave us the Labor Movement and the rise of socialism. Likewise, we are now feeling the Bern. But this time it’s different. Where the workforce of the late 19th and early 20th century had no option but to commingle in their workplaces, where they might develop a consciousness of their shared plight and muster their strength together, the workforce of today is not only scattered across the globe, but also isolated. Increasingly, today’s worker is covered only by a 1099, a document that signals both a lack of protection and a lack of conference with peers. Freelancing has been a part of the American economy for years, of course, but it is growing; one especially ominous study projects that 40% of the American workforce will be freelance in less than 4 years.
So what will happen and what is to be done? For one, we would be fools not to expect the new monopolies to flex their muscle. Just recently, Uber slashed its rates in its most important markets by 15% in an effort to solidify its dominance. You might argue that the drivers, as independent “driver-partners,” are free to move to Lyft. If only. In an effort to stem the tide of passengers moving to their competitor, Lyft also reduced its rates by 15%, meaning that drivers are left with a reduction in their earnings, or at least their effective wage, and with little in the way of alternatives.
Uber drivers mustered a strike, but these drivers stand little chance against the resources of the platform. The answer, then, is not to repeat the strategies of the 19th century labor movement, but to make sure that we can leverage our new technologies for working protections in a counterbalance to the potential they bring for exploitation. Put otherwise, the communications technology that has atomized the workforce also holds the potential to organize it in ways even more powerful than ever before. It also holds the key to enhance the freedom of wage workers in a number of fields, from personal services to gig economy positions “below the API.” But these opportunities for support and protection must be contemplated, pursued, and accomplished — and with the same assiduousness that has brought fortune to the few.
