The declining leverage and status of ordinary people

When the elite was tiny and manual labor drove the economy, working-class life felt different.

Diego Rivera’s murals dramatized the contributions of Detroit’s working people.

Cross-posted from The Permanent Problem.

Discussion of the widening class divide tends to focus on money — the top 1 percent’s share of total income, trends in median income, wealth inequality, intergenerational mobility, and so on. The preoccupation is understandable: Economics is preeminent among the social sciences in prestige and influence, and economists naturally look to economic indicators. But if you examine contemporary socioeconomic inequality through a purely economic lens, you will fail to see the true depths of the problem.

Why? Because although the data show top incomes growing considerably faster than the rest during recent decades, they show median income up as well. Further, the best estimates reveal that poverty has declined sharply. When you translate dollar figures into the stuff that money buys, it becomes clear beyond serious dispute that material living standards have continued to rise, for ordinary people as well as elites. People live in much bigger homes, have many more clothes and other personal possessions, have access to much better food, travel more, and of course enjoy all kinds of goods and services – from smartphones and video games to cochlear implants and mRNA vaccines – that previously weren’t available at any price.

So looking at inequality as just an economic phenomenon leads you to a fairly mild assessment of the impact on human well-being. Yes, progress is skewed toward the top, but still there’s been continuing progress overall.

The class divide, I believe, is much more troubling than that. Its reemergence since the 1970s isn’t just a matter of lopsided progress; it marks a great U-turn away from progress. As I wrote in an earlier essay a few years back:

Outside a well-educated and comfortable elite comprising 20-25 percent of Americans, we see unmistakable signs of social collapse. We see, more precisely, social disintegration—the progressive unraveling of the human connections that give life structure and meaning: declining attachment to work; declining participation in community life; declining rates of marriage and two-parent childrearing.

In this essay I want to focus on the root causes of the new class divide – and what they tell us about our prospects for a more inclusive future. My take, alas, is a sobering one: The conditions of mass affluence push strongly in the direction we’ve been going down, and they constitute formidable barriers against pushing back in a more inclusive direction through public policy.

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Progressives with egalitarian sensibilities are strongly inclined to see the bad effect of inequality as the result of some equally bad cause – namely greed and selfishness enshrined in regressive public policies. At the extreme this can devolve into silliness like “every billionaire is a policy failure,” but more sensibly there’s a focus on specific policy shifts like tax cutting, hostility to unions, and financial deregulation. As a co-author of The Captured Economy, I’m here to say that upward redistribution through policy has absolutely been a contributor to rising inequality. But it’s important to see why policies shifted this way and not in the opposite direction. It’s my contention that deep, strong currents were pushing political economy away from inclusiveness.

In my view, the fundamental reason for the inegalitarian turn – not just in the United States, but throughout the advanced economies – was a qualitative downward shift in the leverage and status of ordinary people. The contributions that ordinary workers are able to make to the organized division of labor are simply less important than they used to be, and as a result those workers and their families have suffered a loss of collective power and a decline in social status.

Economists point in the right direction when they talk about “skill-biased technical change” and “declining relative demand for less-skilled labor.” But their technocratic terminology portrays the issue as dollars on the margin, when really, it’s existential.

Back in the industrial era, technological and economic progress required the mass mobilization of huge inputs of physical and routine clerical labor. As I’ve written previously, this was capitalism’s original sin: All the amazing new machines and their miraculous productivity, all the new goods and services now available, all the immense wealth heaped up in such astonishingly short order, rested on brutal, dangerous, dirty work that broke bodies by the millions, whether in an instant or over decades.

The dependence of progress on domination and suffering was a source of profound conflict and instability. Workers everywhere pushed back against the harshness of factory work, from spontaneous individual protests through absenteeism and occasional sabotage to worker solidarity, unionization, and strikes, all the way to a global socialist movement that sought to do away with the wage system and private property altogether. Revolution and totalitarian rule in the name of socialism killed a hundred million people; the nuclear showdown between the United States and the Soviet Union threatened the fiery destruction of civilization. It’s hard to get more unstable than that.

The dependence of progress on domination and suffering was a source of profound conflict and instability. But its dependence on mass contributions of ordinary people gave them something more than a piece of the growing pie; it also gave them power and status.

Yet this curse also brought with it a great blessing. The need for strong men to work the machines, stoke the furnaces, dig the coal, and load and unload the cargo created unprecedented opportunity: an escape from age-old rural poverty and a slow but steady climb toward material plenty. As the ongoing application of technology and organization led to fantastic increases in output per worker, competition drove wages upward to reflect that rising productivity – and the successes of the labor movement and social democracy in the most advanced economies contributed further uplift.

As the 20th century unfolded, capitalism in the Global North offered something entirely unprecedented: mass inclusion of ordinary people in the promise of a better life. What they enjoyed was not what we would call high quality of life; the working class did not “live wisely and agreeably and well.” But they did experience rapidly rising material living standards; they did enjoy comforts and conveniences that in earlier days would have made kings jealous. As Adam Smith once wrote, “The rich man glories in his riches,” while “the poor man, on the contrary, is ashamed of his poverty.” The rise out of poverty not only reduced physical suffering, it also swelled pride and self-respect.

Furthermore, the dependence of progress on mass contributions of ordinary people gave them something more than a piece of the growing pie; it also gave them power and status. Everyone knew that the magnificent machines of industrial capitalism would not deliver their bounty all on their own; they needed workers to tend and maintain them. Everybody knew as well that workers’ willingness to do this vitally necessary work, their consent to endure the dangers and domination they experienced, could not be taken for granted. The risk of a strike was always hanging in the air; the risk of revolution could not be dismissed. The landmark 1950 contract between General Motors and the United Auto Workers, which guaranteed cost-of-living adjustments and productivity-based wage hikes, was referred to (by a young Daniel Bell, then writing for Fortune magazine) as the “Treaty of Detroit” – a turn of phrase that recognized the clout that the working class now possessed.

To quote myself:

At the zenith of working-class fortunes, the combination of law and collective action gave labor leaders powers that extended far beyond the factory floor to matters of macroeconomic and geopolitical significance. This capacity to affect domestic politics and international relations further bolstered the position and influence of the working class. When steel or autoworkers went on strike, the resulting disruptions extended far beyond the specific companies the unions were targeting. Labor unrest in critical industries affected the health of the overall U.S. economy, and any threat to the stability of America’s industrial might was also a threat to national security and international order.

This considerable power translated directly into status. As Yuval Noah Harari has written:

In 1938 the common man’s condition in the Soviet Union, Germany, or the United States may have been grim, but he was constantly told that he was the most important thing in the world, and that he was the future…. He looked at the propaganda posters — which typically depicted coal miners and steelworkers in heroic poses — and saw himself there: “I am in that poster! I am the hero of the future!”

Workers as heroes, workers as the linchpin of the future: Aaron Copland captured this majestic vision in four stirring minutes of brass and percussion, the title of his piece inspired by a recent speech by Vice President Henry Wallace on “The Century of the Common Man.”

The leverage and power of the working class, and its heroic image, were further buttressed by the requirements of war. Just as with industrial production, industrial warfare depended upon the mass mobilization of strong young men willing to place their bodies on the line. From the levée en masse of the French Revolution through the enormous battles of World War II, governments were able to draw on the appeal of nationalism to recruit and command mass armies whose capacity to project power dwarfed that of ancien régime militaries. And as documented by John Ferejohn and Frances McCall Rosenbluth in Forged Through Fire, the dependence of modern states on masses of young men was a major force for democratization: Manpower ultimately translated into voting power.

But just as working-class power had brought about the postwar golden age of social democracy and unprecedented inclusiveness, the continued progress of capitalist development worked to systematically dismantle that golden age’s foundations. Through an ongoing combination of automation and globalization, productivity growth outstripped growth in demand for heavy industries even as supply began to move abroad to take advantage of cheap foreign labor. Employment shifted from manufacturing to services, and the technological frontier shifted from the smokestack sector to microelectronics, telecommunications, business services, and health care. The new high-tech industries employed both offshoring of labor-intensive operations and domestic outsourcing of noncore functions to independent service providers to keep their own payrolls lean and skewed toward white-collar “knowledge workers.” In sum, technological progress weaned itself from dependence on large cohorts of ordinary workers in the home markets of the frontier economies.

Old-style factory work was brutal and dehumanizing; no one should wish it back. But in a grim irony, physical deliverance ended up exacting a heavy spiritual toll.

From the standpoint of purely physical wellbeing, this development was a humanitarian blessing of the first order. Old-style factory work was brutal and dehumanizing; no one should wish it back. But in a grim irony, this physical deliverance ended up exacting a heavy spiritual toll. The result was a new class divide that was a mirror image of the old one: Just as industrial class conflict sprang from progress’s dependence on mass labor, class conflict in the information economy developed out of the growing disconnect between progress and ordinary workers. In the old class war, workers struggled mightily in the face of domination and oppression; today’s workers drift passively in the face of growing irrelevance.

There remained plenty of work for ordinary people without specialized skills, at least when labor markets operated without too much friction. (In Western Europe, stronger protections against dismissal led to weaker incentives for hiring, so deindustrialization was often accompanied by persistently high unemployment.) But no longer were ordinary workers massed at the frontiers of technological change; they were now consigned to the economic hinterlands, providing services that may embellish comfort and convenience but are in no way of comparable social significance to the blue-collar work of old.

Ordinary workers thus lost a hard-won source of great spiritual wealth: their sense of pride and self-respect born of the generally acknowledged necessity and importance of their work. No current-day Diego Rivera is painting boldly colored murals of fast-food workers, Walmart greeters, and delivery drivers striking heroic poses.

Because of the changing nature of work, ordinary workers lost their cohesive identity and sense of solidarity, and thus much of their capacity for collective action to exert power. The labor movement was a product of the unique conditions of the factory: large numbers of workers in close proximity, working with vast and immensely productive accumulations of capital, subordinated to harsh and authoritarian management, and doing exhausting, debilitating work that resulted in frequent maimings and deaths. Workers’ physical concentration facilitated organizing and common action; the oppressiveness and danger of their work gave them the solidarity of the foxhole and the willingness to fight back even against terrific odds; the accumulations of capital made employers especially vulnerable to concerted work holdups.

Mass affluence caused people to shift their attention from physical welfare to spiritual welfare – and then proceeded to create conditions that made the newly salient spiritual values especially hard to attain.

By contrast, what has taken the place of the industrial working class today – what the sociologist Andrew Cherlin calls the “would-be working class – the individuals who would have taken the industrial jobs we used to have” – is now widely scattered among service occupations in relatively small-scale establishments without a great deal of heavy, expensive, specialized equipment: think wait staff, cleaners, retail attendants, and drivers. And while the work may be tedious and demeaning, it’s rarely life-threatening. It’s no wonder that workers’ sense of a cohesive identity, common enemy, and high stakes at issue has faded, and thus that their ability to engage in effective collective action has diminished. In the United States, this has played out with the gradual collapse of unionization in the private sector – a trend that dates back to the early 50s (when U.S. union density peaked) as unions struggled to organize in the expanding service industries. In Europe, unions remain larger and stronger than in the U.S., but the trend has still been in the same direction: union density down, days lost to strikes down.

Ordinary workers also lost the dream of a brighter future. Although the secure, high-paying factory jobs of midcentury were never the norm for blue-collar workers, they were numerous enough to be aspirational. Members of the working class were thus buoyed by the possibility of advancement and “making it” to a standard of living indistinguishable from middle-class standards. Nothing comparable exists in the contemporary information economy. Working life no longer seems to hold the possibility of building toward anything; aspirations for arriving on easy street have given way to a never-ending struggle to keep one’s head above water.

Material living standards continued to rise: more spacious homes, better food, more travel, more captivating entertainment. But the improvements paled in comparison to the skyrocketing ascent in a generation or two from direst poverty to decent comfort. And as a result, they failed to compensate for what was being lost: nobody “glories” à la Adam Smith in their flatscreens, year-round fresh fruit, and Spotify accounts.

Meanwhile, the changing character of the elite in postindustrial society served to deepen the spiritual wounds inflicted on everybody else. As technological progress outgrew its dependence on mass labor, it came to depend on a new mass elite of managers and professionals. Such occupations only constituted about 10 percent of the U.S. workforce back in 1900; they account for 35 percent today. When the elite was tiny, those outside of it took comfort in their numbers; there was no shame in being an ordinary working stiff, and plenty of basis for pride. But as the industrial working class dissolved and the new elite bulked up, being outside the “meritocracy” started to feel more and more like failure.

With the mass of ordinary workers no longer as important to the health and progress of the system, and a new mass elite empowered to push society forward, it seems unsurprising that politics has likewise shifted toward favoring elite interests over worker interests. That’s a whole story in itself – how the socioeconomic marginalization of ordinary workers’ contributions under conditions of mass affluence has been exacerbated by their political marginalization. And that will be the subject of my next essay.

But the roots of capitalism’s crisis of inclusion lie in the changing nature of work. In a pattern we will see play out again and again, as capitalism crossed the threshold of mass affluence it caused people to shift their attention from physical welfare to spiritual welfare – and then proceeded to create conditions that made the newly salient spiritual values especially hard to attain. Economic progress delivered the workplace from physical discomfort and danger, but in so doing robbed work – for most people, anyway – of its greatest spiritual satisfactions.

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Brink Lindsey is Senior Vice President at the Niskanen Center. This essay is cross-posted from his newsletter The Permanent Problem, which he is turning into a book.

Image: Wikimedia Commons user “Carptrash,” https://commons.wikimedia.org/wiki/File:Rivera_frescos_02.jpg