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Wednesday, October 3, 2012

A Forgotten Critic of Corporatism

In 1888, at the height of the Gilded Age, a rather prominent American said some startling things. First he observed, “Our cities are the abiding places of wealth and luxury; our manufactories yield fortunes never dreamed of by the fathers of the Republic; our business men are madly striving in the race for riches, and immense aggregations of capital outrun the imagination in the magnitude of their undertakings.”

But this did not mean all was well with America. The speaker went on: “We view with pride and satisfaction this bright picture of our country’s growth and prosperity, while only a closer scrutiny develops a somber shading. Upon more careful inspection we find the wealth and luxury of our cities mingled with poverty and wretchedness and unremunerative toil.”

Has this man forgotten, as many people do, that in market-based societies the growth of wealth, while inevitably uneven, is over time steady and general? That’s not relevant to what he had in mind. He wished to assign blame for the poverty he observed: “We discover that the fortunes realized by our manufacturers are no longer solely the reward of sturdy industry and enlightened foresight, but that they result from the discriminating favor of the Government and are largely built upon undue exactions from the masses of our people. The gulf between employers and the employed is constantly widening, and classes are rapidly forming, one comprising the very rich and powerful, while in another are found the toiling poor.” [Emphasis added.]

“As we view the achievements of aggregated capital, we discover the existence of trusts, combinations, and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be the carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters.”

Who was this man? Progressive politician William Jennings Bryan? Socialist Party presidential candidate and union leader Eugene V. Debs? Neither. It was Grover Cleveland, the 22nd and 24th president of the United States. The occasion: his December 1888 State of the Union address, delivered a month after losing his reelection bid in the electoral college (but not in the popular vote) to Benjamin Harrison.

The source of corporate privilege that raised Cleveland’s ire was the tariff. (Back in the day it was said, “The tariff is the mother of trusts.”) Big business’s successful opposition to reform, he said, is the reason government is seen as the dispenser of privilege. Then, astoundingly, he added:

“Communism is a hateful thing and a menace to peace and organized government; but the communism of combined wealth and capital, the outgrowth of overweening cupidity and selfishness, which insidiously undermines the justice and integrity of free institutions, is not less dangerous than the communism of oppressed poverty and toil, which, exasperated by injustice and discontent, attacks with wild disorder the citadel of rule.” (Emphasis added.)

Note what Cleveland said: The impetus for communism of the masses is not envy of wealth earned in the free market, but rather honest people’s frustration at being exploited through the collusion of capital and State.

Thus Cleveland acknowledged that America in the Gilded Age was no bastion of laissez faire. Rather, it was a neomercantilist corporate state, where government—as only government can—empowered privileged business interests to make fortunes at the expense of regular working and consuming Americans. Cleveland, in this speech at least, echoed the individualist, pro-market, “anti-capitalist” critique of Lysander Spooner, Benjamin Tucker, and their compatriots for whom justice for worker-consumers was the very basis of their seminal libertarian movement.

* * *

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Our book reviewers have been chewing on tomes on FDR at war, legal plunder, paternalism, and dictators behaving badly.

—Sheldon Richman

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  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.