Class is back.
Whatever its other accomplishments, the Occupy Wall Street movement that sprouted in New York City in September 2011 focused public attention on the issue of wealth inequality. To the millions of Americans facing unemployment, losing their homes, and racking up student loan debt, the idea of a struggling "99 percent" struck a chord.
U.S. citizens have long fantasized that ours is a classless society with limitless upward mobility. But abruptly, people and politicians have started talking about a class divide. More and more of them detect a serious conflict between the rich and poor in society, as this Pew opinion poll indicates.
Lately, conservatives have invoked the term "class warfare" to talk about President Obama's plans to raise tax rates for wealthy Americans. They frequently use it as an adjective, as in "class-warfare rhetoric" and "class-warfare policy."
There are many ways to envision economic class in America. The term "99 percent" is technically nonsense, as the bottom 99 percent of households in America includes plenty of millionaires.
The Congressional Budget Office offered this analysis of household income shortly after Occupy Wall Street started, showing that "after-tax income for the highest-income households grew more than it did for any other group."
Economists Thomas Piketty and Emmanuel Saez chart income inequality historically, showing the top 1 percent of earners have increased their share of wealth over the past 30 years, largely through increased compensation for the "working rich," such as CEOs.
Billionaire Warren Buffet raised some hackles when he suggested in a New York Times op-ed that taxes on the wealthy are far too low. Obama subsequently introduced the Buffett Rule, a tax plan requiring those with annual incomes over a million dollars to pay a minimum of 30 percent.
Obama responded to criticism of his longstanding plans to close corporate and investment tax loopholes by saying, "This isn't class warfare. It's math." But he has also taken the novel step of embracing the role of "warrior for the middle class." In his 2012 State of the Union address, he said income inequality is "the defining issue of our time."
When Obama makes this argument, he is building on a long tradition. The rhetoric of class tension and income inequality has been a defining discourse in American history for more than a century and a half.
Class Comes to America
The term class warfare is a long-lived popular twist on Marxist jargon.
In 1848, revolutionary socialists Karl Marx and Friedrich Engels famously wrote that "the history of all hitherto existing society is the history of class struggle." When The Communist Manifesto was translated into English in the late 1800s, the original German word klassenkämpfen was interpreted in some editions as class warfare rather than class struggle.
Based on their observations of the effects of the Industrial Revolution on British workers, Marx and Engels theorized that capitalism inevitably created conflict between laborers and capitalists. They saw in England that industrialization increased workers' productivity by dividing and specializing jobs. No longer did a cobbler make a pair of shoes from start to finish; now as a wage worker, he cut one piece of leather to the same shape over and over.
As industrialization and specialization solidified in the early nineteenth century, capitalists and managers pushed down wages, demanded longer shifts, and allowed more dangerous working conditions.
The Industrial Revolution came to the U.S. in earnest after the Civil War with a vast system of railroads as its centerpiece. The federal government made enormous grants of land and money to a handful of businessmen to connect the West and the South to the heart of the Union by rail.
Oil and steel magnates John D. Rockefeller (who single-handedly amassed one percent of the nation's wealth for himself) and Andrew Carnegie capitalized on this development by expanding their reach and selling materials to the builders. Hundreds of thousands of laborers worked in their factories and on the railroads for subsistence wages.
In this period of industrial expansion, politicians talked regularly about the creation of economic classes and the implications such class divisions might have for American democracy and American society.
Amid intense railway construction efforts, a financial crisis in 1873 led the owners to cut wages. In 1877, railway workers went on strike. Violence spread rapidly from city to city as the railway workers' fellow wage earners joined in insurrection against the railroads. For 45 days, crowds burned and looted corporate property, stopped the trains in their tracks, and clashed with authorities.
Despite losing the popular vote in 1876, Rutherford B. Hayes was awarded the presidency through a process many regarded as corrupt (the press often referred to him as "Rutherfraud"). The winner of the popular vote, Samuel J. Tilden, campaigned by excoriating the government's ties to big business. Tilden accused the Republicans of "enriching favored classes by impoverishing the earnings of the people." Hayes campaigned for economic development of the South and currency stabilization, both of which he argued would benefit "all classes of society."
Once installed, Hayes sent federal troops to put down the labor violence and protect the railroads' property, ending the strike.
Democrat Grover Cleveland did the same thing during the Pullman strike in 1894. However, his use of federal troops to support employers sat ill with his party, and he lost re-nomination in 1896 to William Jennings Bryan, one of the most eloquent speakers to articulate the divide between the haves and the have-nots in American society.
Bryan won the Democratic party's nomination in 1896 after delivering his "Cross of Gold" speech to a thrilled convention crowd in Chicago.
He railed against the "few financial magnates who, in a back room, corner the money of the world." The definition of a "business man" should be enlarged to include workers of all stripes, he thundered, and together the people had every right to craft policies in their own favor. The question at hand was "upon which side shall the Democratic Party fight. Upon the side of the idle holders of idle capital, or upon the side of the struggling masses?"
Bryan spoke about "two ideas of government" that, in hindsight, sounds like the popular notion of trickle-down economics: "There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below," he said. "The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them."
In the campaign of 1896, McKinley defeated Bryan with two tactics that will sound familiar. Republicans raised and spent an unprecedented $4 million—more than 10 times the amount Democrats spent and roughly $100 million today—primarily donated by wealthy industrialists such as Cornelius Vanderbilt and John Rockefeller. And McKinley's handlers played on popular fears about Bryan by connecting him to socialist and anarchist movements.
Once in office, McKinley upheld the gold standard, ignored labor, and ushered in a long era of Republican rule and prosperity. But that prosperity did not trickle down; the wealth gap grew into the next century.
Roosevelts: "Traitors" to their Class
The ensuing age of Republican dominance was not exactly corporation-friendly. When McKinley was assassinated in 1901, his vice president, Theodore Roosevelt, assumed office. Roosevelt was a progressive reformer who wanted to curb corporate control over wealth. Although from an upper-crust family himself, he rallied the working class against the accumulated wealth and power of large trusts, groups of business interests cooperating to evade competition.
As president, Roosevelt won a legal suit against J.P. Morgan's Northern Securities Company, a behemoth railroad trust, and moved against trusts in oil, sugar, tobacco, and more. While in office, he espoused a "square deal" for workers and warned against the "evils" of concentrated capital, including the possibility of an actual class war.
While Roosevelt preferred federal regulation to rein in big business, his successor, William Howard Taft, pursued legal action against trusts even more vigorously. In 1911 he successfully broke up Rockefeller's Standard Oil Monopoly.
At Osawatomie, Kansas, in 1910, Roosevelt outlined the main ideas of his "New Nationalism," on which he would run again for president—this time as the Progressive party candidate—in 1912.
The speech is considered one of the most radical ever delivered by a former president. Roosevelt compared contemporary struggles between labor and capital to the Civil War, and "special privileges" accrued by big business to slaveholding. He acknowledged the tension between the wealthy few and the working many, framing it as a contest between property rights and human rights.
But he exhorted the crowd to use democratic means to curb the power of the trusts, warning that "ruin in its worst form is inevitable if our national life brings us nothing better than swollen fortunes for the few and the triumph in both politics and business of a sordid and selfish materialism."
He heaped scorn upon the ability of magnates to purchase political power and called for tax reform: "I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective—a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate."
Roosevelt continued as a popular speaker but would never again occupy the White House. However, a federal income tax soon became constitutional law with the ratification of the Sixteenth Amendment in 1913.
During his first term (1933-1936), Franklin D. Roosevelt cut income taxes for 99 percent of American families (those earning less than $26,000 per year), but raised them for the wealthiest 1 percent. He talked about this policy while stumping for reelection in 1936, saying that "less than one percent of the heads of American families pay more than they did [in 1932]; and more than 99 percent pay less than they did, for more than 99 percent earn less than $26,000 per year … . Taxes are higher for those who can afford to pay high taxes. They are lower for those who can afford to pay less. That is getting back again to the American principle—taxation according to ability to pay."
Also born to great wealth and privilege, Teddy Roosevelt's genteel fifth cousin faced the Great Depression by experimenting frenetically with economic programs and federal spending. His "alphabet soup" of agencies (AAA, CCC, WPA, FHA, NRA, etc.) created jobs and offered outright relief to struggling Americans. FDR increased federal spending to unprecedented levels and helmed an astonishing expansion of presidential authority.
FDR displayed an exceptional sympathy for struggling Americans, crafting a populist message that pitted the "economic royalists" of an "industrial dynasty" against the mass of citizen laborers.