Follow the Money

Steve Fraser and Gary Gerstle, eds. Ruling America: A History of Wealth and Power in a Democracy. Cambridge, Mass.: Harvard University Press, 2005. 384 pp. Notes and index. $45.00 (cloth); $18.95 (paper).

In 1942, Austrian-born economist Joseph Schumpeter published Capitalism, Socialism, and Democracy, a stinging, mournful analysis of capitalism's impending implosion and socialism's inevitable rise. Capitalism was threatened, Schumpeter suggested, not by the new productive arrangements technology brought forth, or by the organization of the working class, but by the political inadequacy of the bourgeoisie. The rise of tremendous corporations and the expansion of the stock market meant the creation of a capitalist class that had no experience directly controlling their property—a class of people with no actual sense of their ability to rule. As Schumpeter scornfully put it, "They talk and plead—or hire people to do it for them; they snatch at every chance of compromise; they are ever ready to give in; they never put up a fight under the flag of their own ideals and interests."¹

Schumpeter's pessimism was a product of his conservatism, his romantic wish that the owners of American industry would behave like insulted aristocrats and fight duels against the New Deal. Yet despite his nostalgic approach, the questions that he raised remain tremendously important as historical matters. How does an economic class translate its power into politics? How, in a capitalist democracy, can the inequality that is ostensibly absent in the political sphere be maintained in the economy? Over the past quarter century, scholars have paid much attention to the question of the process whereby working-class people (and other disenfranchised groups) come to understand themselves as having interests in common. But rarely have historians turned this same attention towards the upper class. In particular, few American historians have looked at businessmen as political actors, who must like any other social group struggle to develop a sense of common identity and a capacity for collective action. Why this neglect?

In the early twentieth century, scholars such as Charles and Mary Beard, confident in the worldview of the Progressive movement, simply took for granted the great power of economic elites in American history. In the shadow of McCarthy, the historians of the consensus school, Louis Hartz and Richard Hofstadter, noted the prevalence of the values of capitalism throughout American history and culture in order to explain the furious popular conservatism they feared, an intellectual move that by presuming consensus had the effect of effacing the power of businessmen themselves. More recently, mid-century pluralism has been the dominant historical worldview. Historians see business as one interest group among others, vying with labor and consumers. Business is internally divided, as different sectors, industries, and regions all have various economic interests. Moreover, unlike other political groups, businessmen are thought to be immune to ideology. They are staid and sober, rational to a fault. Their eyes rarely stray from the bottom line. This leads, above all, to a Babbitt-like political caution. Ruffling feathers and raising a fuss is rarely good for profit margins. One might imagine that business historians would challenge this view. But the opposite is often the case. Many historians of business think that technology or the market move history. Businessmen merely respond to the pressures of these grand trends; they do not shape the world.

Steve Fraser and Gary Gerstle's Ruling America: A History of Wealth and Power in a Democracy seeks to bring the question of how economic elites wield political power to the front and center of American history. The editors were motivated by concerns both historical and political in commissioning the essays in this collected volume, which includes work by young historians like Adam Rothman, alongside essays by veteran scholars like Godfrey Hodgson and Jackson Lears. On one level, Fraser and Gerstle want to turn the attention of historians to questions of wealth and power, in order to supplement the study of the disenfranchised that they...