Welcome to the Second Gilded Age

When we Americans periodically examine our political-economic circumstances, we are often tempted to compare society and political developments to those of our past.  One such period that we have been lucky enough to avoid reliving - until recently, anyway - is the Gilded Age. 

This is the most common name (provided to us by Mark Twain, in his novel of the same title) given to late 19th century America, often associated with the rise of monopolies, robber barons, and corrupt government.  Sound familiar?

Of course, not all of Gilded Age America was negative.  It was a time of great innovation, mechanization, the growth of a truly national market, of entrepreneurship, and of increasing wealth. 

These are all great things.  However, it was also a time of nativism, as a reaction to increased immigration, of Social Darwinism, the breakdown of traditional labor roles, and neo-mercantilism.  The latter were reactions to the era, and some were also drivers of its success, in certain ways.

During the late 19th century, American society lauded its Captains of Industry - men like Rockefeller, J.P. Morgan, Vanderbilt, and Andrew Carnegie.  These industrial giants were given extraordinary leeway to build their empires.  A relatively new idea known as laissez faire capitalism dictated that government should leave business and the market alone to develop itself.  Greed and self-interest were seen as positive drivers of the economy.  The Captains of Industry embraced this idea, and made millions off of it.

The only problem was, they stopped supporting true laissez faire competition once they had established their empires.  Monopolies arose, as the Captains sought to control all facets of their respective industries, and to drive out competitors. 

Thus, the transformation, a la Anakin Skywalker to Darth Vader, from Captains of Industry to Robber Barons.  With the exception of Andrew Carnegie, who truly believed in competition, the rest of the Barons used whatever methods they could to quash competition.  They manipulated the system - including the political system - for their own ends.  Sound familiar?

Thus developed a political system rooted in patronage and back room deals, where money decided policy and politicians were bought and sold.  A re-read of Twain’s classic The Gilded Age provides a scathing satire of this era.  Politicians threw money at pet projects, kickbacks were frequent, and powerful companies and men dictated government policy, from railroad regulation to tariffs.  Income piled up at the top, growing exponentially larger, while it stagnated at the bottom.  Sound familiar?

Meanwhile, immigrants from southern and eastern Europe were flooding into America, seeking work and better lives.  While they solved the problem of America’s eternal labor shortage, nativists - both liberal and conservative - raised the alarm over the arriving hordes of illiterate and suspect immigrants.  They would surely destroy American culture, steal jobs, and breed out our inherent Americanness.  Sound familiar?

How did this not-completely-golden era in America come to an end, you might wonder?  The depression of the 1890s and a generalized recognition of a need for reform led to a Populist revolt, and what is commonly called the Progressive Era, in the early 20th century. 

While these movements were not uniformly positive, in the same way the Golden Age was not universally negative, politicians like Teddy Roosevelt and industrial leaders like Andrew Carnegie recognized that the capitalist system had to be reformed to be saved. 

They browbeat monopolies to either break themselves up, or did it through the courts, in the case of TR; and preached a Gospel of Wealth that prescribed using accumulated wealth for the good of society, in the case of Carnegie.

Roughly twenty years of political, regulatory, and legal reform were required to finally break the system of patronage, monopoly, and social unrest, and to begin to restore American capitalism to a healthier state.  Simply put, the people became fed up, and politicians were finally forced to confront the problems and underlying systemic failures in the country.  Sound familiar (especially the part about being fed up)?

So, if we are living in a Second Gilded Age, have we started moving into a second reform era to correct it?  It might seem so, with the formation of the Tea Party and Occupy Wall Street, the rise of populism on both sides of the political isle, and the overwhelming sentiment in the country against the political and moneyed classes (epitomized by professional politicians and Too Big to Fail Banks). 

However, with Wall Street money continuing to lubricate the halls of Washington, there is still a long way to go to clean up the mess in which we find ourselves.  While we might arguably have our new Carnegies, in the form of Bill Gates, Warren Buffet, and others, where is our new TR?  He or she would get my vote.  Let’s reform our system (again) to save it.