Cover image for Restoring Democracy to America: How to Free Markets and Politics from the Corporate Culture of Business and Government By John F. M. McDermott

Restoring Democracy to America

How to Free Markets and Politics from the Corporate Culture of Business and Government

John F. M. McDermott

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$30.95 | Paperback Edition
ISBN: 978-0-271-03725-7

496 pages
6" × 9"
2010

Restoring Democracy to America

How to Free Markets and Politics from the Corporate Culture of Business and Government

John F. M. McDermott

Restoring Democracy to America both diagnoses the current stalemate and analyzes the roots of dysfunctional democracy from the 1870s, and especially after the 1960s, to today. This is a pertinent topic given bailouts, lobbyist power, gridlock, global warming, growing income disparities, and the general public’s discouragement with both parties. A great strength of McDermott’s book is his concrete proposals, requiring deep but possible reform for restoring a non-elitist participatory democracy—a government in which the electorate is not isolated from the decisions being made by big institutions that negotiate change with the government as equals. The book is written in the vernacular, and the problems and the proposals for reforms are novel and provocative.”

 

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If the current economic malaise accomplishes nothing else, it should help awaken us all to the realization that our country has been on a path of self-destructive behavior for several decades—a reversal of the progressive path that had made major gains in economic and political equality for a large majority of the U.S. population starting in the 1870s. It is John McDermott’s purpose in this ambitious book to explain why that reversal happened, how society has changed in dramatic ways since the 1960s, and what we can do to reverse this downward spiral.

In Part 1 he endeavors to lay out the overall narrative of change from the 1960s to the present, emphasizing how a novel social structure came to be developed around corporate America to form what he calls “corporate society.” Part 2 analyzes what the nature of this corporate society is, how it is a special type of “fabricated” structure, and why it came to dominate society generally, eventually including the government and university systems, which themselves became increasingly corporatized. The aim of Part 3 is to outline a path of reform that can, if all its parts can be integrated sufficiently to be effective, put us on the path to restarting the progressive movement.

Restoring Democracy to America both diagnoses the current stalemate and analyzes the roots of dysfunctional democracy from the 1870s, and especially after the 1960s, to today. This is a pertinent topic given bailouts, lobbyist power, gridlock, global warming, growing income disparities, and the general public’s discouragement with both parties. A great strength of McDermott’s book is his concrete proposals, requiring deep but possible reform for restoring a non-elitist participatory democracy—a government in which the electorate is not isolated from the decisions being made by big institutions that negotiate change with the government as equals. The book is written in the vernacular, and the problems and the proposals for reforms are novel and provocative.”
“John McDermott’s Restoring Democracy to America is an intriguing social, political, and economic analysis of the United States from the late 1950s to the present, as well as a personal memoir, history, and prescription for change. Erudite, wide-ranging, and not falling into conventional ideological or political categories, this book is disconcerting in its recitation of false paths taken, but it lays out a framework for change without indulging in platitudes or rhetoric. It addresses the question, how can an autonomous working-class political culture be renewed in the absence of trade unionism? At the heart of the prescription is the notion of work as a ‘natural right’ (more timely than ever in an age of double-digit unemployment), linked to a series of radical political and constitutional reforms. This book deserves a wide audience.”
“John F. M. McDermott’s Restoring Democracy to America is a sweeping, powerful political sociology of the conservative reaction that dominated the politics and culture of advanced capitalist democracies after the post–World War II ‘welfare state consensus’ weakened in the 1970s. His book brings social theory to bear upon a nuanced historical analysis of the rise (and now crisis) of deregulated, finance-driven, postindustrial capitalism. He adeptly shows how the Right succeeded (with difficulty) in bringing together the managerial elite’s turn against the welfare state and the ‘antimodernist’ cultural impulses of deindustrialized communities. But McDermott does not simply chart the rise and consolidation of conservative rule; his analysis also illuminates the social dynamics that may give rise to democratic forces that can revive progressive politics.”

John F. M. McDermott is Professor Emeritus of Social Science at The College of Old Westbury, SUNY, where he chaired the Labor Studies Department from 1981 to his retirement in 1990.

Contents

Preface: A Life of Thought in a Life of Politics

Acknowledgments

Introduction

Part 1: The Historic Advance, ca. 1870–1970

1. The Historic Advance: Setting a Context

2. Interpreting the “Sixties”

3. The Modern Reaction

Part 2: Recapping and Beyond

4. Social Stratification and Social Dynamics

5. Institutional Elites and Social Action

6. The Inner Government Within Liberal Democracy

Part 3: Proposals for a Renewed Historic Advance

7. On Strategy and Organization

8. The Reform of the Police Power

9. Civilizing the Corporation

10. A “Civilized” Employment System

11. International Government and International Chaos

12. Political Reform

Notes

References

Index

The American political process now consists of a negotiation between government and a few very large institutions. It was not designed for that, and as a result it works poorly.1 Its designers imagined a relatively transparent, if noisy, dialogue between government and multiple publics. The latter—in the form of innumerable family heads, small merchants, and farmers—would have a modest number of “interests,” politically represented as distinct “issues” around which the electoral process would pivot. This promised a fruitful interchange between government and voter. Mutual feedback seemed assured because the number of issues was small—tariffs, internal improvements, defense of property and other rights, westward and overseas expansion, slavery of course, and a few others. The system failed over the issue of slavery, as probably it had to, but after the reforms of the Progressive Era it worked reasonably well for perhaps a further half century. However, as business and other institutions continued to grow in size and in the scope of their undertakings, the process has proved less able to discern, much less cope with, even acute problems.

This book characterizes these changes as being of late twentieth-century origin and traces their destructive effects on the political system. It then probes our institutional arrangements to better understand how they came about. It closes with proposals bearing on six major areas, each calculated to contribute to a more viable, more effective democratic political system for the present and into the future.

The study reflects over a third of a century of my thinking about politics. What has become manifest with time is that our political dysfunctions are not really traceable to “the usual suspects,” such as too much money in politics or the religious Right, but to a “negotiation between government and a very few very large institutions.” Avenues for sustained popular political action are few and weak. We still see this disjuncture between institutional perceptions of reality and the actual situation of the governed in the Obama administration’s early response to the economic crisis. The distress of large numbers of our people is viewed as secondary, something to be dealt with more or less in passing, once the “more important” distress of a small number of institutions has been fixed.

This administration may ultimately respond better to popular need than its predecessor, but to date it remains within a universe in which the institutionalized entrepreneur or investor is the key player. In this universe economic recovery equals the recovery of these investor institutions. For all its twists and turns, this administration’s strategy has been to transfer wealth directly to financial institutions in order to restore their fortunes more or less to what they were before the crisis of 2008.2

Well-founded estimates of the restoration range from $2 to $11 trillion, which is to say, to between one-seventh and four-fifths of the value of the entire GDP! It is a staggering transfer of wealth to a tiny fraction of our population when the net benefit to the public is uncertain even in the very long term.

It seems plausible that a smaller shift of wealth, by transfers to threatened and foreclosed homeowners, to laid-off workers with little or no present income, to threatened small business owners, and to students being forced out of school, would more immediately check the recession, lessen the hurt it presently inflicts, limit the number of further victims, and even more quickly restore the health of the financial sector. But that way of looking at things is alien to a world limited to institutional players.

Interestingly enough, the economics fraternity, both policy and academic, appears to have exchanged its belief in a “market” economy, not for “socialism,” as some have witlessly claimed, but for an economics of investor primacy. The “market” is an interactive conception with many, many players, none more important than the others. Investor primacy is a purely linear conception; everything starts and then remains dependent on investor behavior. If those investors are few, as they are, investor primacy equals investor oligarchy. Naturally, economics orthodoxy holds that these big investment firms are creatures of and in the “market.” This sustains their fantasy that the investment function in a modern economy has not been centralized in a few mega-institutions, even though they also—in a separate mental compartment—consider these institutions “too big to fail.” But in a crisis one may be forced by events to disregard the purely cosmetic side of one’s ideas and act on their operative dimensions. Thus the president’s erstwhile devotees of the “free market”—such as Lawrence Summers, Paul Volcker, Benjamin Bernanke, and Timothy Geithner, like Bush’s Henry Paulson—now act on that linear conception of investor primacy, which means investor oligarchy.

The Historic Advance

If the political system is blind to the mounting problems of our people and thus less capable of addressing them, then the path to repair demands more than a handful of reforms. It calls for the renewal of “the historic advance,” whose blockage four decades ago signaled the ability of the institutional players to stave off the democratic polity. This conception of a “historic advance” is the essential counterpoint to the decline of the political process.

It refers to the cumulative changes in the situation of the urban laboring populations of Western Europe, North America, and later, Japan over the century ending in the 1970s. Circa 1870, urban laborers were typically only a minority of the population. They lived at the margins of subsistence and society, suffered high rates of illiteracy and disease, had only a minimal participation in the national polities, if any, and were largely viewed as foreigners by their own societies. One hundred years later that had changed. The urban laboring population had become a numerical majority, and their living standards had leapt upward, not least due to the expansion of schools, social insurance, and the rest of the modern welfare state. Illiteracy and epidemic diseases had been seemingly erased forever; the “lower” orders had gained an influential place in an increasingly democratic political process and participated more or less as equals in the cultural realm.

After the defeat of the tumultuous Sixties, this trend was reversed. Politics went from liberal to illiberal, from relatively open to firmly closed. Unemployment rose, upper income rose sharply, middle income stagnated, and lower income fell. Attacks on the welfare state and on its funding became both common and effective. Among the very poor, tuberculosis and venereal diseases made a comeback-by-neglect. The distribution of good health, like that of housing, education, and cultural opportunity, also tilted against middle- and especially lower-income groups. Unions came under sharp attack, and their weakening further undercut the role of the urban laboring population in the polity. Internationally, détente gave way to an even bigger arms race, arms exports rose dramatically, and the cold war was expanded in Africa and Latin America, to be succeeded in time by an endless “war on terror.”

The historic advance is analyzed as a vector sum, on the one hand, of cumulative, popular, democratic demands and mobilizations that culminated in the mass, multiclass movements of the Sixties and, on the other, of the emergence of modern corporate forms, first of business organization, later of political and cultural institutions, which demanded and achieved a higher-quality labor force. The entry of the lower-class laboring populations, previously excluded and now wanted, into their national societies on an equitable basis took the form of a multiclass social, political, economic, and even cultural agent, here called by its nineteenth-century name, the Democracy.3

But within the improving situation of the urban laboring strata, a new social class was also born and rapidly developed. For the moment and as a first approximation we can refer to the urban laborers as “the workers” and this new “middle” class as “the cadre.” The latter was created and especially nurtured within the developing corporative institutions, becoming in time a relatively privileged class inclined to desert the advance, bring it to a close, and roll back some of its gains.4

To Follow

Part 1 of the book characterizes the advance itself, the emergence and maturation of “corporate society,” and its novel social structure and social players. One cannot view the advance and subsequent halt in mechanical, historicist terms. The Democracy was an ensemble of morally related, mass, multiclass social movements acting over historic time in socially conflicted situations culminating in the Sixties. Then, from roughly 1958 to 1970, across the whole of the developed world, it attempted to continue the historic advance beyond limits imposed by its corporate partners in the historic vector. These movements for modernization were defeated, thus ushering in a period of reaction that continues to the present. The burden of part 1 is to clarify this interpretation of late twentieth-century history and to show how it is plausibly rooted in the evidence.

Part 2 analyzes the corporation-shaped, or “Intersection,” society created by and within the historic advance, that is, by an emerging collaboration among corporations, government, and the educational system. It contains a new sort of middle class, the cadre, whose advantages and privileges flow from its central productive role within corporate and corporately organized institutions.

Reflecting their work, corporate society is a “fabricated” society in which “spontaneous,” or “natural,” or “traditional” social forms such as the family, dynasty, individual property, and even patriarchy have been subordinated and then transformed. For the most part, “society” is now directly fabricated in the coordinate division of labor and hierarchy that first emerged within the modern corporation in the years between the two world wars—elite, cadre, and worker. That division of labor and its functional hierarchy have since spread to the other two cooperating institutions of the Intersection, namely, government and those cultural institutions which are capped by the modern university system. The leitmotif of “spontaneous and natural” society versus “fabricated” society will be qualified and modified as our analysis proceeds, but the contrast cannot and should not be entirely eliminated, as we will see.

Corporate or Intersection society features a distinct kind of social ordering, called “life courses,” and these differ from the familiar classes. Weberian and Marxian classes are social forms that arise within networks of market relations and merely influence, no more, the identities and social action of individuals and groups. Life courses or courses develop within formal organizations as their constitutive elements. Like classes and other predecessor social orders, they are hierarchically structured but in and over time. A “course” is not primarily a term of static social classification: it connotes substantive, determinate change over time both for social ensembles and for individuals.

Social, economic, and even political advantages and privileges tend to be widely distributed to all of the life courses. Corporate or Intersection society is the child of the democratic impulses that fueled the historic advance. But, as befits a society organized around formally organized institutions, power-political initiatives tend to be centralized within the highest life courses, mainly among the strategic elites of the leading institutions. Thus the paradox: corporate society is at once more egalitarian and democratic than its predecessor society, but its elites also have a greater capacity to induce or block social change potentially hostile to their institutions.

It is this last which undergirds the political problematic revealed in the defeat of the Sixties. Liberal, parliamentary democratic political forms are poorly suited to govern the relations among the highly centralized institutions such as inhabit the Intersection. We know from business history that the corporate form of organization was designed to minimize external influences on its behavior. Its strategic elites enjoy administrative and financial controls that enable them to guide and even to fine-tune the behavior of their organizations: the blunting of external influences is a corollary.

One outcome of growing corporate autonomy has been the decline of the influence of the democratic electorate over the private corporation and over the executive departments of government, which have, not incidentally, aped corporate forms of internal organization. In fact, as I’ll show in chapter 6, the more democratic the political system, in the familiar meaning of the word, the less able is it to govern the institutions of the Intersection.

It is necessary to emphasize that no conspiracy theory of “elites against the democracy” is called for, such as dogged kindred theories of institutional modernization such as C. Wright Mills’s The Power Elite (1956). A major undertaking of part 2 is to propose a theory of elite institutional action that is empirically grounded within the specific nature of contemporary society. The analysis traces the outcomes of social transactions among persons and groups of equal and unequal power. The possession or de facto exercise of socially potent institutional assets is a key factor determining outcomes within corporate society.

Elite “subsocieties” are shown to emerge around the possession of various kinds of socially potent assets. In the logic of this analysis one does not assume that the antecedent recognition of joint interests gives rise to these subsocieties, that is, first the joint interest, then the subsociety as, say, cause to effect. A priori methods, such as employed in some contemporary sociological and economic studies, have been excluded as far as possible.

The analysis proceeds on the basis that in conflicts between individuals exercising assets of differing social potency, the resolution of the conflicts will tend to reflect that inequality. Very crudely, people with more power can impose greater costs in the resolution itself on those possessing less power. And where persons with assets of similar social potency come into conflict, there will be at least some occasions in which a mutual accommodation is reached, as perhaps in something so prosaic as a merchants’ association. Subsocieties of elite persons emerge as the “precipitate” of actual and possible conflicts among themselves, which come to be seen to have zero-sum outcomes and where resolution costs can be imposed on other, weaker third parties. It is out of that analytical matrix, both its straightforward logic and its conformity to what we experience in social conflicts, that I construct the larger social theory of part 2.

One can readily understand that in a society in which large, formal organizations play so great a part, the possession of or the exercise of institutional assets will have particularly strong effect. It is this effect that plays so great a part in the analysis of corporate or Intersection society and that serves to confirm the historical material of part 1.

Part 3 proposes a set of reforms that would, if successfully implemented, renew the historic advance. Because so much of what happens in modern society occurs between and within institutions, the major obstacle to be overcome is not mounting intended reforms but sustaining them to eventual adoption and fruition. Progressive reform faces a terrain notably more hostile today than it did in the past. The “semifabricated” society tends to erase elements alien to itself.

Accordingly, desired reforms must reinforce each other to ensure that none is defeated in isolation. Their mutually supportive advance must have sufficient weight, width, and depth to achieve potentially decisive results. Part 3 develops this idea in six areas, as follows.

First, there is need for an oppositional political organization that can sustain a renewed advance, not over a single campaign or even a generation but over an epoch. The organization proposed in chapter 7 is designed with that ambitious program in mind.

Our historical experience of the twentieth century warns us of the potent and toxic political role of the police power, that is, the so-called law enforcement community of police, courts, prosecutors, and prison officials. I make a number of proposals in chapter 8 to change the police themselves into an ally and not a foe of further social and other democratization.

The forces of late nineteenth-century progressivism and social democracy tried and were ultimately checked in their efforts to subordinate the emerging corporations to society’s purposes. Our task today is more daunting, since they have over time perfected their own and supporting levers of power. Chapter 9 takes up this effort on a new basis that takes conscious account of the unsuccessful attempts of the past.

Fourth, if the Democracy was the popular agent of the historic advance, the urban laboring population was its single most powerful player. That population has today been politically demobilized. A historic achievement, though not, I think, intent, of the welfare state has been to undermine the societies and traditional cultures of the urban laboring population and thus alter its capacity for autonomous political activity. The problem is difficult to address, and addressing it is only hindered by explanations that invoke “consumerism,” “the media,” or any other sort of bread and circus. Chapter 10 does not take up the deeper problem of reviving an autonomous political culture in the urban laboring population, but it does address a necessary condition for such a renaissance, namely, the creation of effective institutional forms of lower-class economic and political resistance that go beyond traditional trade unionism.

There is already an international governing structure that imposes its economic design on most of the countries of the world but avoids taking responsibility for the political and social effects of that “globalization.” There is also an emerging international middle class, advantaged by “globalization,” which accordingly gives it a potent political “constituency.” The burden of chapter 11 is to take the measure of these present political realities.

Sixth, if the reforms proposed in chapters 7–11 can be achieved, they will go a long way toward correcting our current political dysfunctions. In chapter 12, I argue that the modern state form, including that established by the U.S. Constitution, is undermined by the international state system, which emerged out of the Treaty of Westphalia and which has survived more or less intact over the ensuing three-and-a-half centuries. Now, because of the overwhelming, unrivaled power of the United States itself and of its democratic allies, there is a window of opportunity to begin to dismantle that state system and to sow the seeds of a less brutal, more consensual international political system. Proposals are offered to that end.

Our present intellectual and moral situation resembles the one our forebears faced a century and a quarter ago. It was already clear then that the world created by the Congress of Vienna, and later reimposed with such vengeance by the failures of the revolutions of 1848, was dying. It was not clear at all what was to come, but the women and men of that time managed to create a powerful and enduring political culture of change and reform, exerting just enough foresight and force to achieve over time a historic advance in the well-being of the average Western European and American. Then as now, no one could read the future, but the actual situation was then and now is such that no socially conscious person can refuse to act with whatever intelligence, foresight, and learning he or she can muster. The value of what follows in this book lies not, ultimately, in its truth or falsity, but in what it can contribute to our learning about what we should do tomorrow and the next day and the next after that to create a better universal society.