In the fifties and through much of the sixties, the General Electric Company boasted that ‘progress’ was its ‘most important product’. Americans have always had a relentless faith in progress - and they have always seen the history of their nation as the chronicle of a successful effort to universalise prosperity, equality and justice. In American mythology, the Nineteenth Century was a period of widespread poverty, while the Twentieth Century has brought all but the most marginal citizens into the ranks of the middle class.
This attitude reached its fullest expression in the fifties when John Kenneth Galbraith wrote of the Affluent Society and when the benefits of economic growth seemed to be trickling down to almost everyone. Arthur Burns, then an economist for the Eisenhower Administration (and recently chairman of the Federal Reserve Board), declared confidently that ‘the transformation in the distribution of our national income may already be counted as one of the great social revolutions of our history’.
Surprisingly, the turbulent upheavals of the sixties and reawakening of America to the persistence of poverty, malnutrition and gross economic inequality did little to change the common perception that America was still making progress, that the poor were still getting richer and the rich were still getting poorer. Today, most Americans will tell you that taxation of the rich and welfare for the poor continue to reduce the maldistribution of income and wealth in the United States and that we are almost all now more or less middle class.
Unfortunately, the basic American belief in social progress and in a classless society is unfounded. As sociologist Herbert J. Gans puts it, America has always been and still is ‘an unequal society that would like to think of itself as egalitarian’. The truth of the matter is that the distribution of both income and wealth in the United States has not changed significantly in the past 200 years - and that the distribution of both has always been extremely distorted and unequal.
America in the fifties was strikingly similar to Nineteenth Century America in certain respects. Richard Parker writes in The Myth of the Middle Class: ‘Great wealth was concentrated in a few hands at the top while poverty of a significant but not a European kind existed at the bottom. In between ranged not a homogeneous middle class but a stratified group of wage earners … ’
According to the 1968 US Census, the top 20 per cent of the population received 43 per cent of total money income in the United States while the bottom 20 per cent earned only about five per cent. Richard Parker puts it more dramatically: ‘The top one per cent of the American population [about two million people] received in one year more money than the poorest 50 million Americans’.
But more shockingly than the extent of this inequality is its intractability. In 1962 historian Gabriel Kolko, evaluating income distribution in the United States between 1920 and 1959, concluded that although all segments of society earned more income in 1959 than they did in 1910, the proportions of total income earned by the various income levels had hardly changed at all. Throughout that entire half-century; through two world wars and the Great Depression, the income of the top 10 per cent of the population remained consistently larger than that of the entire bottom half. Kolko’s figures revealed an actual regression on the part of the bottom half of the American population: in 1919 the bottom half received 27 per cent of national personal income; but by 1959 their share had shrunk to 23 per cent.
The concentration of wealth in America is even more telling. Between 1953 and 1969, the top one per cent of the American population consistently owned between 23 and 30 per cent of all the country’s privately-held material wealth. In 1965, two statisticians at the Internal Revenue Service concluded that, if anything, the share of the most wealthy had been increased since 1949.
The persistence of this extreme concentration of wealth in the hands of the few belies the myth of America as a classless society. It indicates that there indeed is an upper class in America, one which is remarkably tenacious and which has been able not only to amass great wealth but also to maintain it.
Do they rule America? This question has been posed by many social scientists, especially since C. Wright Mills’ ground-breaking work on The Power Elite. One thing is certain: you will find few women and almost no blacks among the rich and powerful.
Here are two brief portraits which give the reader an indication of the nature of the American upper class.
• John J. McCloy, perhaps prototypical, went to the right schools: Peddie School, Amherst and Harvard. He is a member of the right clubs: Century, Metropolitan. He has been a phenomenally successful and well-connected Wall Street lawyer who, although never elected to a single public office, has determined or influenced most foreign policy decisions since World War 11 in his various capacities as Assistant Secretary of War, chairman of the Ford Foundation, chairman of the Council on Foreign Relations, chairman of the Chase Manhattan Bank and as a lawyer representing all 20 major oil producers. During the Cuban missile crisis, McCloy was one of the first people called in for consultation by President Kennedy. Yet, despite his influence and power, it is likely that most Americans have never even heard his name.
• Walter Wriston, is a different specimen. As chairman of the board of New York’s Citibank, he runs one of the world’s largest and most influential financial institutions. Wriston rose from the upper ranks of the middle class: his grandfather was a minister, his father a professional educator. He had to earn his status but he is now several times a millionaire. His story is an illustration of how certain shrewd individuals are assimilated into the elite as servants of the wealthiest corporate families.
It is always important to remember, however, that the power of the elite rests not on individuals but in the large institutions which they control. The corporations, banks, insurance companies, utilities, broadcasting networks, federal bureaucracy, armed forces, top law firms, foundations, universities - these are the critical institutions of power from which members of the elite assert and maintain their positions and wealth.
Thomas Dye, in his recent book Who’s Running America?, identifies 5416 elite positions (such as corporate chief executive officers and foundation directors) which he felt wielded significant power. Together, those 5416 positions control one-half of all industrial assets; one-half of communications, transportation, banking and utility assets; two-thirds of all insurance assets; 40 per cent of private foundations; and one-half of private university assets. They also involve top military positions and key government posts.
Dye found that in 1978 only 4000 people held the top 5000 posts, meaning that many of the members of the power elite held two or more of the top positions. In a nation of 240 million people, 4000 had effective control of the economy and the government. It is a reality which does not easily gel with the American mythology.
It is common - and expected - for top people in one power area to move into a similar position in a different field. When John Kennedy became US President, he asked the advice of Robert Lovett, a senior partner in the prestigious investment banking firm of Brown Brothers, Harriman and Company and former Secretary of Defense under Truman, to suggest qualified potential cabinet members. His suggestions: C. Douglas Dillon, son of the founder of the banking firm of Dillon, Read and Company and also former Ambassador to France, for Secretary of the Treasury; and Robert McNamara, head of Ford Motor Company, as Secretary of Defense (a post from which he moved on to the top job in the World Bank).
It is in this way that the elite in America maintains continuity in both the political and the economic spheres and protects its varied inter-related interests.
Few Americans, if any, do not know the story of John D. Rockefeller, the pious son of a Baptist pedlar who, starting with nothing, was clever and hard-working enough to climb to the top, to become a billionaire and to leave his children and grandchildren an inheritance of fabulous wealth and power. His is the archetypical American success story and it is etched deep in the national consciousness along with so many other real and fictional rags-to-riches sagas. According to the mythology of these morality tales, anybody who is smart and diligent can climb the social and economic ladder.
There is a certain amount of truth to the myth: if there weren’t, it could not remain so pervasive and persistent. But, not surprisingly, mobility in America has severe limits. Dye examined the social class background of the 4000 people who were in the top positions he had identified. Thirty per cent of the people at the top of the institutional structure came from the less than one per cent of Americans of upper class social origin. Only three per cent of those at the top came from the poorest fifth of the population. The majority - a full 60 per cent - rose to their positions in the elite from the upper middle class.
For the best and the brightest of the sons of white collar wage-earners, there is some glimmer of hope of access to the power elite. Clearly, power in America does not rest simply with the ‘old money’ families. As C. Wright Mills wrote: ‘Not great fortunes, but great corporations are the important units of wealth, to which individuals of property are variously attached. The corporation is the source of, and the basis of, the continued power and privilege of wealth’. Some individuals with exceptional managerial capabilities can work their way up through the corporate ranks; but it must be remembered that there are not many Citibanks, Exxons and ITTs.
In fact, for most Americans, the ladder of mobility is quite short. The number of Americans who earn over $100,000 a year is extremely small. A family with two professional wage earners might make $60,000 a year while a blue-collar family where both parents work will struggle to move beyond $30,000. Neither, though, has very much chance of actually moving into, as Mills says, ‘the elite who occupy the command posts’. The concentration of power in a limited number of elite positions and the importance of correct social connections and affiliations in aiding one’s climb to the top make the Horatio Alger rags-to-riches stories the exceptions rather than the rule.
In coming years, upward mobility is likely to become even more difficult. As large corporations continue to consolidate their position and power becomes increasingly concentrated among a few giants, the opportunity for any individual American to become economically independent and to make his fortune outside of the existing corporate structure becomes more limited.
Ironically, Horatio Alger - author of so many of the pulp novel morality tales which became central to the American mythology of mobility - understood this reality even when he wrote in the early 1900s. His heroes work hard and rise from lowly beginnings - but they do not advance because they work hard. None of Alger’s heroes become wealthy or powerful from saving their hard-earned pennies. Rather, through one twist of plot or another, the hero finds a benefactor, a kindly member of the elite who takes him under his wing.
Alger understood that it was who you knew and not how hard you worked which was the most important determinant of success. Richard Kazis is with the US
based Institute for Local Self Reliance.
'Blat' without cash
The extent of privilege in the Soviet Union, reports Hedrick Smith*, is disguised by a custom of discreet rather than conspicuous consumption and by a total lack of publicity about the private lives of upper crust society.
Russia's elite, the Nomenklatura, he says, are 'a self-perpetuating, self-selectingfraternity, a closed corporation'.
Outside the 'Party', entry to the Nomenklatura is open only to individuals who have met standards required of those who 'contribute to the power and prestige of the Soviet state in some demonstrable way' such as in sport, science and the arts. They get status but not necessarily power.
The world is told there are only two classes in Russia - the'workers and peasants' but Smith, who was the New York Times correspondent in Moscow for three years, estimates the privileged at 'several million' counting relatives.
A Russian writer told Smith: 'Money in the Soviet system is nothing. You have to be able to spend it. A Central Committee member does not get much pay but he gets all kinds of things free. He can get his children in the best universities... or get them abroad. They (the leaders) are all sending their children abroad now, exporting them like dissidents.'
Soviet elites have access to foreign goods at cut rates. The more senior the elite and the bigger the salary he earns the less he pays for 'unobtainable' luxuries.
The Russian word for influence is blot. As in the West, so too in Russia, blot is a vital and pervasive factor.
* The Russians by Hedrick Smith published by Times Books 1978.