Class Warfare from the Mid-’30s until Today

The Power of the Corporate Elite

by Marc Jampole iIlustration by Sarah Glidden From the Winter 2013-2014 issue of Jewish Currents Reviewed in this essay: The Myth of Liberal Acendancy: Corporate Domination from the Great Depression to the Great Recession by G. William Domhoff. Paradigm Publishers, 2013, 278 pages. MANY CONTEMPORARY PROGRESSIVES LOOK BACK at the 1960s and early ’70s as a golden age when the United States was supposedly a much more politically liberal land. Certainly those decades were exciting, as African-Americans, and then women, Hispanics, LGBT, and other minorities began to gain basic workplace and civil rights. The minimum wage had the highest buying power in American history, and labor unions, while not growing, were holding their own. There was a much larger middle class, with a much fairer distribution of wealth, than there is today. Sometime in the mid-’70s, the commonly believed story goes, corporations started working together to move our nation and its leaders to the right, which accelerated when Ronald Reagan assumed the presidency in 1980. After thirty years of union-busting, elimination or privatization of government functions, and lower taxes on the wealthy, we have devolved into a society of rich and poor with a shrunken middle class, inadequate tax revenues, a frayed social safety net, and the most inequitable distribution of wealth since the Gilded Age. Many progressive writers and pundits, including myself, have recently taken to reciting this brief history of class warfare in America with some frequency. But as G. William Domhoff reminds us in his latest masterpiece, The Myth of Liberal Ascendancy, the class war perpetrated by corporations and their owners against the rest of America predates the Reagan Era and, in fact runs all the way back to the New Deal and earlier. In his new book, Domhoff establishes the peak of liberal-progressive influence in the United States not in the 1960s and early ’70s, but during the last two years of Franklin Roosevelt’s first term, 1935-1937. Domhoff, Distinguished Professor Emeritus at the University of California-Santa Barbara, is one of the most important sociologists and progressive thinkers of the past hundred years. His specialty is the sociology of power: who has it in America, how they got it, how they keep it and how they use it. His seminal Who Rules America Now?, now in its seventh edition, builds on and broadens the scope of C. Wright Mill’s classic, The Power Elite, in its analysis of the power structure in America. Domhoff and his collaborators keep the world updated on new research on who has power and wealth in America on his website, WhorulesAmerica.net. IN HIS 1979 CLASSIC, The Powers that Be: Processes of Ruling Class Domination in America, now out of print, Domhoff detailed a model for the policy-formation process in America that showed how the wealthy are able to define the terms of debate and thereby control the outcomes of all policy decisions. The process starts with corporations and the wealthy funding research organizations and university centers that have many of the same corporate leaders serving on their boards in interlocking directorates. The personnel from these research organizations serve on public policy groups, which develop reports that influence government commissions, agencies and congressional committees. Many of the people who conduct the corporate-funded research or serve on the boards of these associations and foundations end up testifying before government committees and helping to write laws and regulations. Put more bluntly, the rich buy experts who dominate policy discussions and write the laws. In The Myth of Liberal Ascendancy, Domhoff applies this policy-formation model to eighty years of government decision-making, from the Great Depression to the Great Recession. His history focuses on the very highest levels of governments: how the power factions in the economy influenced Congress and successive administrations to pursue major economic policies. He tells a stirring tale of class struggle between four power groups: 1) The liberal-labor coalition of lefties and labor unions, formed during the early part of the New Deal years, wanted the government to direct the economy, increase support of the poor, old and ill, institute single-payer universal healthcare, and pass laws to make it easier to unionize and for unions to exercise influence over the economy through collective action. Over the decades, liberals wanted to extend civil and workplace rights to African-Americans and other minorities, while some unions harbored racism among its members and some of its leaders. 2) Corporate moderates, from the New Deal to the oil shocks of the 1970s, believed in using Keynesian techniques to combat recessions, and recognized the value of full employment. After the mid-’70s they turned conservative and began to care more about lower taxes and deregulation than about full employment. Corporate moderates, Domhoff notes, have always consisted primarily of the leaders of large corporations with national and international markets, and the banks and law firms that serve them. 3) Ultraconservatives comprised two groups that always planned and voted together: the rightwing ultra free-marketers, and the Southern, primarily agrarian, racists who were opposed to any kind of desegregation or granting of voting or workplace rights to African-Americans. The Southern wing insisted on limited federal government interference in the affairs of the states so that they could maintain the racial status quo south of the Mason-Dixon Line. IN DOMHOFF’S TELLING, THESE THREE GROUPS have been the major power players on the national level since the mid-1930s. On the local level, however, he points to a fourth group, real estate and development interests, which dominated regional policy decisions and often made deals on a national level with any and all of the three primarily national power players (for example, the real estate deal made with ultraconservatives and corporate moderates under Nixon to turn funding for urban renewal from public housing to institutions for the middle class such as arenas and libraries). Domhoff’s history runs through the formation and passage or failure of major legislation from Roosevelt’s second term until the Reagan years and beyond. He inspects how these three and sometimes four power centers viewed each piece of legislation, and how the legislation developed or stalled based on their push-and-pull. In the end, the corporate moderates win — every battle, all the time. Gradually and inexorably, the power of unions is weakened, taxes on the wealthy decrease, the purchasing power of the minimum wage declines, and the wealthy control a greater share of income, wealth and power. The story of each policy decision comes down to the policy groups, experts and lobbyists who define and discuss the issues, promulgate the solutions and help create the laws. Corporate moderates spend far and away the most money forming these groups and supporting economists and other scholars who formulate the policy and advise the various presidents. DOMHOFF FOLLOWS THE BUSINESS POLICY GROUPS that represented the corporate moderates in policy discussions, focusing in particular on the Committee for Economic Development (CED), which seemed to define the position of corporate moderates from its formation in the early 1940s until at least the mid-1970s, when the Business Roundtable began to take over as the leading organization representing corporate moderates. Among the alphabet stew of other organizations helping to press the views of both corporate moderates and the ultraconservatives in Washington are the U.S. Chamber of Commerce, National Association of Manufacturers, Business Advisory Council, the Ford Foundation, and the Trilateral Commission, to name a few that Domhoff investigates. The protagonists of Domhoff’s history are thus the small number of mostly white, Ivy-educated men who move easily among the private sector, academia, and the government, and seem to be part of whatever group is formulating any key economic policy decision — men like Thomas Lamont, Emilio Collado, Louis Keyserling, Paul Volker, and Kenneth Duberstein. Whether it was running the business end of World War II, or developing approaches to addressing widespread poverty, it was to these men and their organizations that our elected leaders turned time and again. He makes a very convincing case that the liberal-labor coalition reached a pinnacle of power in the mid-1930s and has been losing ground ever since. The high-water mark came in 1935, after Democrats had swept the midterm elections. Roosevelt’s early efforts to end the Depression — like Obama’s, mostly from the Republican playbook — had failed and Roosevelt, with a large Democratic edge in both houses of Congress, was ready to try more progressive and redistributive methods that involved governmental investments in jobs and increased government benefits. Congress passed the National Labor Relations Act, the Social Security Act, and an omnibus tax on wealth that raised rates to 75 percent on income over $500,000 and created a corporate income tax. A year later, Congress passed a tax on corporate profits not distributed to shareholders. According to Domhoff, it’s been all downhill for the left ever since. Even when the liberal-labor coalition got an occasional win, it was incomplete or tainted. Take Medicare: Despite the protests of labor unions, private insurers were allowed to have a large role administering the program. This led to rampant medical-cost inflation, as predicted beforehand by labor experts. If the corporate moderates were going to let taxes pay for medical care for senior citizens, however, they insisted that the private sector be able to enrich itself in the process. THE TURN IN DOMHOFF’S HISTORY COMES IN THE MID-1970s, when the corporate moderates get fixated on curbing the oil shock-induced inflation, improving corporate profit margins, and lowering taxes. Lowering inflation becomes much more important to corporate moderates than seeking full employment. Once supporters of environmental and safety regulations, the corporate moderates begin to listen to the ultraconservative faction on these issues. Two dynamics seem to predict and direct the move rightward that corporate moderates took in the 1970s: First, they have always hated unions as much as the ultraconservatives have, and always have had curtailing the power of unions high on the policy agenda. Second, unions were too often unsupportive of the efforts of minorities to gain civil and workplace rights, and, in fact feared and distrusted minorities and the organizations representing them. Anti-unionism thus drove conservative moderates into the arms of the ultraconservatives, while racism fractured the liberal-labor coalition. Tragically, the left contributed to its own demise. Domhoff’s reading of history leaves out McCarthyism, the civil rights marches and anti-war movement, the many protests in favor of women and gay rights, and all the other manifestations of direct democracy that have occurred since the Depression — except when the power groups and the organizations representing them considered them or reacted to them. (Inner-city riots, for example, do earn some discussion as a factor pressuring corporate moderates and other power groups.) There is also no discussion of cultural trends or technological innovations. In the world depicted by Domhoff, it’s all about the power to pass laws and direct public policy. In a sense, he is presenting a contemporary version of the old-time history that focused on the battles for the crown and the succession of royalty. To the modern reader, those histories often read as a drab litany of battles, decrees and marriages. In today’s version, it’s reports, policy groups, negotiations and legislation. This top-down approach usually underestimates the power of demonstrations, marches, boycotts, voting, and other collective action. In Domhoff’s reading of recent history, the power of public opinion or grassroots action only influences the power centers when it is extreme — the Depression or the race riots. While Domhoff’s narrow interest in the power elites essentially ignores the people’s history, it still produces an exciting and accurate narrative. AFTER CHEWING MY WAY LATELY THROUGH the annoying personal anecdotes and trivializing analogies that clutter many other recent books of social science and science, I found The Myth of Liberal Ascendancy refreshing for its sustained focus on the subject, and its breezy and direct but non-patronizing style. I found no jargon and little if any academic circumlocution. As an electorate, we currently stand at the dawn of what progressives hope is a new day for the United States. Voters seem sick of Tea Party nihilism and understand that the government must get involved to jump-start our economy, provide medical care to all, educate our young and protect our environment. Domhoff’s book is a prescient reminder, however, not to become too enthusiastic about a Democratic sweep in 2014 and 2016 if the Democrats elected are centrists and look to the corporate moderates for legislative direction. While there is always a tiny sliver of the business community that leans left, we must look to unions to supply the counter-balance to the various corporate policy groups and lobbyists. Unfortunately I see in both the Clintons and Obama a willingness to put union issues on the back burner. One lesson we should learn from Domhoff is how imperative it is for all progressives to work to strengthen unions and support progressive union positions. The last eighty years have taught us that the higher the percentage of unionized workers in the workforce, the larger the middle class. Yet it is equally important for unions never to forget that they have to buy completely into the progressive agenda when it comes to advancement of women and minorities, and, looking forward, of immigrants. Unions cannot define their agenda narrowly in terms of salary and benefits for their members, but must be on the forefront of progressive issues. That the AFl-CIO has become one of the strongest supporters for immigration reform is a promising sign that we can rebuild the Roosevelt coalition and perhaps sustain it for more than a few years. Marc Jampole, a member of our Editorial Board, is the author of Music from Words (Bellday Books, 2007), a poetry collection. He is a public relations executive and former television news reporter who blogs regularly at jewishcurrents.org and at his own website, OpEdge.