Structured Inequality Part 2

Jacob Hacker and Paul Pierson (2010) document
the steady rise of inequality in the United States, beginning in the late 1970s, and relate
this rise directly to changes in the relationship between government and corporate interests: They write: “Government actually has enormous
power to affect the distribution of ‘market income,’ that is, earnings before government
taxes and benefits take effect. Think about laws governing unions; the minimum wage; regulations
of corporate governance; rules for financial markets, including the management of high-stakes
economic ventures; and so on. Government rules make the market, and they powerfully shape
how, and in whose interests, it operates” (44). As we have seen in previous discussions, laissez-faire
capitalism has always been more of an ideology than a reality; states have always set the
conditions of markets, and the conditions set in the US marketplace have changed dramatically
in the past thirty years in ways strongly favoring the elite. This is most apparent
in how the US government has treated unions and the social safety net, and in its failure
to effectively regulate executive pay and financial markets (56). Another way in which government affects the
distribution of income is through the process of drift. “It is the passive-aggressive form
of politics, the No Deal rather than the New Deal,” write Hacker and Pierson (2010, 53).
“Yet it is not the same as simple inaction. Rather, drift has two stages. First, large
economic and social transformations outflank or erode existing policies, diminishing their
role in American life. Then, political leaders fail to update policies, even when there are
viable options, because they face pressure from powerful interests exploiting opportunities
for political obstruction.” Second, drift is made easier in the American
system by the traditional system of checks and balances among the branches of the federal
government: executive or legislative action intended to address new problems—banking
reform, environmental controls, campaign finance reform, health care reform—is often stymied
by another branch. This has become easier still with the expanded use of the Senate
filibuster, which now requires a supermajority of sixty votes for any major policy initiative
(53). A third way in which government facilitates
drift is, of course, through destroying the progressive system by reducing
the rates of those at the top, particularly at the very top (51). How has this extreme inequality happened in
a society that is supposedly democratic where the “have-it-alls” are clearly outnumbered
and could easily be outvoted? Hacker and Pierson (2010, 104) give the same answer that we have
emphasized in previous chapters: bureaucratic organization: “Organizations have formidable advantages,
and modern life is unimaginable in their absence. They can marshal vastly greater resources
than can any individual. Organizations permit specialization and thus the development of
expertise—a critical advantage in a world of staggering and ever-increasing complexity.
They allow many different kinds of talent to be combined and directed toward some big
task. They can operate simultaneously in many different arenas. Perhaps most important,
they are durable, even relentless, where individuals are flighty and, of course, mortal. Organizations
can learn from experience. They can sustain a focus for decades if need be: watching,
waiting, planning, and then seizing opportunity when the time is right.” Citizens have much competing for their attention,
and politics and social issues are not often a high priority; a substantial number are
apathetic and do not vote at all, and, perhaps worse, many are “low-information voters” who
are easily swayed by advertisements, political propaganda, and other forms of manipulation.
Even when aroused and focused, the attention of voters and the press often wanders, while
organized interests press on. Hacker and Pierson (2010) offer an example
of this with regard to the Tax Reform Act of 1986, which sharply reduced tax breaks
for the wealthy while lowering tax rates for the majority of Americans. The reform was
widely hailed as a triumph of the people over special interests. But it turns out the struggle
over the Reform Act was just the initial battle. “Year after year, out of the spotlight, they
[special interests] succeeded in adding back loopholes—one unnoticed provision at a time.
They could do so not because public opinion had drifted rightward (it hadn’t), but because
they were organized and their opponents were not. Backed by organizations, they pushed
politicians to respond to their concerns. And nobody pushed back” (107). Stiglitz proposes that the upper class has
lost the notion that their long-term economic fate is tied to that of the rest of their
society: “The top 1 percent have the best houses, the best education, the best doctors,
and the best lifestyles, but there is one thing that money doesn’t seem to have bought:
an understanding that their fate is bound up with how the other 99 percent live. Throughout
history, this is something that the top 1 percent eventually do learn. Too late.” The separation of the elite from the masses
may be a reoccurring process in sociocultural systems that is again coming to a head in
hyperindustrial societies. The division of labour leads to a division in lifestyles.
Increasingly, the wealthy live in gated communities, go to separate schools, and have their own
security, lifestyle, and increasingly separate values. Globalization (encouraged by technological
changes in transportation and communication) could well be accelerating the process; not
only does it provide opportunities for great wealth, but it also breaks the economic tie
between the elite and the local economy. No longer is it necessary for the elites’
home nation-states to prosper economically in order for their enterprises to do well;
now it makes economic sense in both the short and (seemingly) long term to maximize profit
at the expense of all around (and not around). But it is not simply the top 1 percent who
have benefited the most from the hyperindustrial economy. In the United States, the top one-fifth
(20 percent) with the highest income now control over 50 percent of all the nation’s income,
levels comparable to the top 2 percent of agrarian elites (Phillips 2002, 129). The fact that industrial society appears to
spread the bulk of the income to a broader segment of the population could be attributed
to the need for highly skilled executives, a large class of professionals, and a significant
number of technical specialists to manage the complexity of the industrial-capitalist
state and to more efficiently appropriate the massive surplus produced by all. But this
is not necessarily cause for widespread jubilation. The fact that the bulk of the nation’s income
goes to the top 20 percent as opposed to the top 2 percent would not materially affect
80 percent of the population. Inequality in the distribution of wealth,
as expected, is many times greater in US society than the inequality in income and has been
growing in recent decades. The top 1 percent of the wealthiest households controlled 34.4
percent of the wealth when Lenski was writing in 1965. Their share of the nation’s wealth dropped
precipitously in the 1970s, falling as low as 20 percent during the nation’s bicentennial,
but it began to climb again in the 1980s. By the early years of this century, it had
climbed to slightly over 40 percent of the wealth of the nation! The top 20% control
a whopping 85 percent of the nation’s wealth. This is higher than at any other time in the
twentieth century save 1929, the eve of the Great Depression (Phillips 2002, 123). “Wealth
begets power, which begets more wealth,” writes Stiglitz. A slogan from the Occupy movement of 2011
captures the problem: “The system isn’t broken, it’s fixed.” Given the recent trends since
Lenski tested his original hypothesis and the fact that wealth indeed begets wealth,
it appears that despite short-term reversals, an increase in inequality over the course
of social evolution is still a viable hypothesis. However, it need not be so. Many countries
have expanded their social safety nets to lessen inequality and have thus far largely
resisted the efforts of financial institutions to rewrite regulatory rules; these countries
have been spared both hyper-inequality and the worst of the resulting global financial
meltdown. Resistance is not futile, but it must be organized
and sustained. At the same time, I admit to some uneasiness
regarding the possibilities of reform, at least in the short term. I am haunted by the
notion that social and technological methods of manipulation, monitoring, and control of
individual behaviour now afforded to organized interests are simply too strong to overcome,
that the 99 percent—or the 80 percent who are most exploited—are too disorganized
and powerless for reform to be successful or revolution feasible. While recent deregulation and globalization
have largely gutted democratic control of capital, it is not the case that state power
has been dramatically lessened; rather, it has been fused with the interests of capital.
Public and private bureaucracies now confront the individual as a juggernaut increasingly
serving the interests of the few at the expense of the many. The “iron cage” is closing, and it will not
be easy to dismantle or escape as long as its material foundations remain intact. The
human struggle will be long and hard, and the likelihood of success is not assured.
But this is only one possible future among many, a vision that, while rooted in the preceding
analysis, is strongly influenced by my values and fears. If you are interested in the big picture you
should take a look at Macro Social Theory, a book that reviews the theories of classical
macro social theorists such as Karl Marx, Max Weber, and Emile Durkheim as well as the
work of many who extended their theories to better reflect modern times such as Immanuel
Wallerstein, Gerhard Lenski, and George Ritzer. Also see Sociocultural Systems: Principles
of Structure and Change to learn how these insights contribute to a fuller understanding
of modern societies. These books can be purchased at most online
bookstores or at Athabasca University Press. If you are short of funds Athabasca also offers
a free pdf version of the work. A significant portion of the royalties I receive
for these books go to the Rogers State University Foundation in support of students in the Liberal
Arts. I thank you for your support and interest.

Author: Kennedi Daugherty

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