The Rockefellers and class warfare.

The history behind current events.
Oct. 19 2007 12:45 PM

The Rockefellers and the Angry Commoners

A century ago, the super-rich had to contend with class warfare.

John D Rockefeller, Jr. Click image to expand.
John D. Rockefeller Jr.

Former Citigroup chairman Sanford Weill thinks that John D. Rockefeller had it good. "I once thought how lucky the Carnegies and Rockefellers were because they made their money before there was an income tax," Weill told the New York Times' Louis Uchitelle in July. "I felt that everything of any great consequence was really all made in the past."

Imagine Weill's surprise, then, to discover himself occupying an economic world that more and more resembles Rockefeller's. According to the most recent statistics, the richest .01 percent of Americans—the almost 15,000 families in Weill's peer group—now take home a full 5 percent of the nation's income. At least the poorest 20 percent, by contrast, some 60 million people, make do with about the same. The last time the concentration of income at the top was this extreme, according to economists Emmanuel Saez and Thomas Piketty, was in the 1910s and 1920s, when tycoons like Rockefeller, J.P. Morgan, and Andrew Carnegie were at or near the height of their power. And most of the recent increase in inequality has taken place in just the past few decades. Sometime between the tech boom and the subprime-lending crisis, according to a growing legion of social commentators and a slew of recent articles (including Uchitelle's), the United States entered a "new Gilded Age."

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Technically, the 1910s and 1920s fall outside what historians describe as the Gilded Age, roughly the period between the end of Reconstruction in the 1870s and Theodore Roosevelt's 1901 ascendance to the presidency (thanks to an assassin's bullet). But the "new Gilded Age" is less a measure of the past than a comment on the present. What it suggests, in its baldest formulation, is that the mega-rich have been growing ever-mega-richer while the rest of us have whiled away our time worrying about health-care deductibles and 3 percent raises.

Viewed purely in terms of the statistics on inequality, the recycling of the Gilded Age moniker makes a certain amount of sense. The term also has a nice political edge for liberal critics: What's next, it implies, the repeal of those pesky child-labor laws? But numbers get us only so far in understanding how inequality actually played out for the first great generation of corporate tycoons such as Carnegie and Rockefeller.

A century ago, the "class question"—who would control industrial profits, who would set wages, whether capitalism was even compatible with democracy—was at the forefront of American politics, the impetus for mass uprisings, partisan warfare, and, for some, the hope of full-blown revolution. Even at the height of Social Darwinism (which, like inequality, seems to be making a comeback), industrial titans lived with an acute awareness that the poor were not altogether pleased with their lot, and that they might one day soon do something serious to change it. Today, by comparison, the inequality debate is positively polite, as if the gap between rich and poor were a minor matter to be considered by statisticians and policy-makers.

The apparent statistical similarity between the two periods often masks what's unique about today's inequality crisis. Take labor organizing, for instance. Today, unions represent approximately 8 percent of the private-sector work force—about the same percentage as a century ago. But labor's political fortunes could hardly be more different. At the turn of the last century, unions were on their way up, a rise that would lead to the passage of landmark federal labor legislation in the 1930s. By contrast, if current trends continue (as they probably will), private-sector unions will be all but extinct in the United States within the next few decades. In the chasm between these two political realities—between an era when class revolution seemed genuinely possible and an era when expanding the Earned Income Tax Credit seems like a pipe dream—lies the answer to that anguished query of today's progressive: How did we end up here?

A century ago, even the richest men in America could not escape concerns over impending class conflict. John D. Rockefeller Jr., son of the original John D., tried mightily—and failed. Largely a philanthropist rather than an industrialist, Rockefeller Jr. worked throughout his early life to tidy up his father's reputation, helping most notably to establish the Rockefeller Foundation in 1913.

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