Center for a Stateless Society
A Left Market Anarchist Think Tank & Media Center
The New Oligarchs

If America has any characteristic that does not so much define it as it is, but defines it as it aspires to be, it’s offering upward mobility. Class struggle which gets anyone anywhere could be understood as meritocracy against a permanent oligarchy. Beginning with the rise of the merchant class and ending with the rise of the first true middle class, the globe has undoubtedly shifted against nobility and towards meritocracy. However, replacing a rigid caste system with oversimplified notions of hard work, culture, and bootstraps have veiled the shifts which have not just arrested, but reversed, the expansion of the middle class.

Essentially, there’s a new oligarchy in town. The landed gentry got their asses kicked by the captains of industry. But a new “can of whoop ass” has been opened by the financially literate on the ignorant and struggling.

It’s Been Real, Middle Class

Wealth, throughout history, was never about income from labor. It has, until pretty recently (14th century, give or take) been about income from land. The first challenge to agricultural economic hegemony came from a plucky little upstart called international trade. Goods crossing borders enabled people to build wealth from labor alone for the first time. It created the merchant class.

Then came the Industrial Revolution, which expanded both the number of people who could build wealth from labor, and the scope of the wealth they could build. It gave black-lunged, coal-covered birth to the first real middle class in human history, and completely remade the makeup of the 1%.

This middle class grew and grew, with increased standards of living and a deliciously tumultuous upper crust. Fortunes were won and lost by each generation.

Then, in the 1970’s, the gap between rich and poor in America began to take off. As incomes steadied in the middle, so did the shakeups in who constitutes the richest of the rich. Three-quarters of America’s one-percenters will still be one-percenters next year.

Every year in America, fewer and fewer people can move into a higher class than their parents. Today, there are many other wealthy countries where it’s easier to move up in class.

From the Economist, “America’s meritocracy is… in danger of calcifying into a caste, decorated with a few members from favoured minorities, but cut off from the great mass of the population. The social hierarchy is getting both steeper and harder to climb.”

Oh Hai, New Oligarchy

In 1979, just under 8% of the 1% were rich from finance-related occupations. In 2005, the percentage had grown to 13.9%. Within the 0.1%, the percentage grew from 11% to 18%. And in that time, the top earners went from getting their wealth from wages and bonuses to financial instruments. Interest, dividends, capital gains and rent make up a quarter of income for the average one percenter. These households control nearly half of all stocks and mutual funds and more than 60% of securities.

Here’s Wikipedia: “As of 2002, there were approximately 146,000 (0.1%) households with incomes exceeding $1,500,000, while the top 0.01% or 11,000 households had incomes exceeding $5,500,000. The 400 highest tax payers in the nation had gross annual household incomes exceeding $87,000,000. Household incomes for this group have risen more dramatically than for any other. As a result, the gap between those who make less than one and half million dollars annually (99.9% of households) and those who make more (0.1%) has been steadily increasing, prompting The New York Times to proclaim that the ‘Richest Are Leaving Even the Rich Far Behind.’”

The Myth that Won’t Die

I’m in Liberty Tavern, eating a tres fancy brunch. There’s caviar on the buffet in the fifth highest income county in the country, in a city least likely to fuck around with the meal that combines breakfast and lunch. One of my two friends says something arresting about herself.

“I make rich people uncomfortable.” She doesn’t mean she’s a threat to the income inequality, though that could be somewhat true, as she does sometimes write about economic justice. What she means is she’s loud and, (not her word) uncouth. Rich people don’t know what to do with her. I want to argue with her and crawl under the table at the same time. Instead, narcissist that I am, I think about how I make rich people feel.

Class is fascinating to me. My parents are both second-generation members of the middle class. Both my grandfathers fought in Vietnam, having escaped poverty via the expansion of officers in the Air Force. I grew up in Alabama, where my mother read me Shakespeare and we had burglar bars on our windows and trailers on 3 sides of our rented house.

Conservative poors confound liberals. They are extremely likely to believe America is a meritocracy, where the wealthy and high-status individuals are that way because they earned it by providing value. You can see it in their opposition to affirmative action and anti-poverty programs and their refusal to accept impediments such as structural racism as material contributors economic inequality.

The assumption that America is a meritocracy means, by extension, that people who are poor are poor because they’ve not put forth enough, or the right kind of, effort. From Bill O’Reilly blaming black fatherlessness for poverty, and not say, decades of housing discrimination, redlining, failing public schools. Or recognizing mass incarceration’s role, particularly for non-violent offenses, in fatherlessness.

The right calls this a culture of accountability. The left calls this victim blaming.

Liberals don’t understand why poor people believe they’re poor in a system which rewards merit. But I get it. For me, aspiring to a lot meant I wanted to graduate from college by 22 and get and keep a full-time job which supported me. It wasn’t until I’d done all that that I realized what low aspirations those were for me. Let’s just say that applying to an Ivy League school literally didn’t occur to me. But once I had a degree and a good job at 22, I realized that if I worked hard, I could be rich. And I assumed I would. And if I could do it, anyone could.

There may be no more effective way to throw someone off the search for a victimizer than to blame victims for their own oppression.

I didn’t realize that no one gets rich from wages.

A Bloomberg National Poll found that more than three-quarters of Americans felt no effect on their financial well-being from the five-year bull market in U.S. stocks. That’s probably because only half of Americans own stocks, and most of those are in retirement accounts.

Confession: I am still not exactly sure what a stock is. Getting rich in America requires two things the poor don’t have: financial literacy and surplus wages. I don’t want to say that poor Americans believe in a meritocracy because they are ignorant of how the rich get rich. But it certainly helps to believe in a meritocracy when you don’t understand how the rich get rich.

Owning land isn’t hard. It doesn’t help anyone else, in and of itself. Building a ship is hard. Sailing to another continent without satellite navigation is hard. Building a factory is hard. These are all activities, and they help the doer by helping other people.

Perhaps in theory thriving financial markets produce wealth across the board. But not ours. A thriving market requires risk and reward be private. America’s financial markets only privatize reward. And the rewards are flowing. The rich are getting richer. And the poor? They’re paying for the failures of the rich. To look at just one recent example, we can examine the sub-prime mortgage lending crisis. Middle class wage stagnation itself belies trickle-down economics. Stagnant wages and rising individual household debt make saving enough to invest impossible. Americans are paying more in taxes to fund golden parachutes for banking executives than they’re saving for stocks and bonds.

Overcoming the obstacles to upward mobility requires acknowledging them. Meritocracy blinds people to the structural barriers to their own success. We’ve built a new oligarchy with financial instruments the average American can’t afford and doesn’t understand.

Citations to this article:

Markets Not Capitalism
Organization Theory
Conscience of an Anarchist