The Corporate Rich and the Power Elite in the Twentieth Century

How They Won, Why Liberals and Labor Lost

G. William Domhoff

• Publisher: Routledge
• Year: 2019
• Topic: Economics
• eBook ISBN:
  9781000011746
• Subtopic: North American History
• Index: Economics

The Corporate Rich and the Power Elite in the Twentieth Century demonstrates exactly how the corporate rich developed and implemented the policies and created the government structures that allowed them to dominate the United States. The book is framed within three historical developments that have made this domination possible: the rise and fall of the union movement, the initiation and subsequent limitation of government social-benefit programs, and the postwar expansion of international trade.

The book's deep exploration into the various methods the corporate rich used to centralize power corrects major empirical misunderstandings concerning all three issue-areas. Further, it explains why the three ascendant theories of power in the early twenty-first century—interest-group pluralism, organizational state theory, and historical institutionalism—cannot account for the complexity of events that established the power elite's supremacy and led to labor's fall. More generally, and convincingly, the analysis reveals how a corporate-financed policy-planning network, consisting of foundations, think tanks, and policy-discussion groups, gradually developed in the twentieth century and played a pivotal role in all three issue-areas. Filled with new archival findings and commanding detail, this book offers readers a remarkable look into the nature of power in America during the twentieth century, and provides a starting point for future in-depth analyses of corporate power in the current century.

Part 1

The Rise and Fall of Labor Unions

Part 1 pivots on the origins of the National Labor Relations Act in 1935 and its gradual dismantling between 1938 and 1985. The act represents both a major turning point in American labor history and a major theoretical challenge to a corporate-dominance theory. It promised to put the power of government behind the right of workers to organize unions and bargain collectively with their employers about wages, hours, and working conditions. Whatever its shortcomings and long-term failures, it changed the American power structure for nearly 45 years between the mid-1930s and the late 1970s. In telling this story, these chapters show that corporate moderates had a larger role in creating the National Labor Relations Act than is usually understood, even though they fiercely opposed its final form and led the charge against it from the day it became law. These chapters also show the crucial role of the Southern rich in allowing the act to pass, and then making its gradual dismantlement possible by turning against it completely in 1938.

The first chapter briefly overviews the first appearance of unionism and workers’ political parties in the late 1820s and early 1830s, which then fell into abeyance for a variety of reasons. It then turns to the pitched battles between corporations and union organizers from the late 1870s until the late 1890s. It includes a comparison with the more successful unionization efforts beginning in several European countries in the 1880s, which helps to explain why unions had relatively little success in the United States, except for their important role from the mid-1930s to the late 1970s.

Following a detailed chapter on the clashes and precedents that informed specific aspects of the National Labor Relations Act, along with explaining why it passed and the successes of the union movement in the first three years after it passed, later chapters describe the step-by-step dismantling of the act. This dismantlement was temporarily halted by the need for national unity during both World War II and the Korean War. The way in which the increasing white resistance to the civil rights movement in the 1960s contributed to the downfall of the unions is also analyzed. The series of defeats for private-sector unions after the 1970s, which was partly compensated by the growth of public-sector unions, along with a brief analysis of a failed legislative initiative in 2009, provide the conclusion to Part 1.

Some degree of quantitative structure and precision is given by making use of the concept of “union density” as a rough index of liberal-labor power, as measured by the percentage of nonagricultural employees that are members of a union in any given year. Union density is by no means a perfect measure of liberal-labor power because it in part reflects changes in the rate of unemployment. However, no indicators in the social sciences are fully accurate in terms of the concept they are measuring, including in economics (Diener, Lucas, Schimmack, and Helliwell 2009, Chapter 3; Domhoff 2014, pp. 4–8, 193–197; Lazarsfeld 1966; Morgenstern 1963). To provide an indication of its variation, and hence of its possible usefulness, union density was only 1.6 percent when any semblance of a sound estimate could be made in 1880. After gradual growth in the remainder of the nineteenth century, followed by a significant increase over a five-year period to 17.4 percent in 1921, due to World War I, there was a decline to a low point of 11.0 percent in 1933. Union density surged in the late 1930s and reached high points at the end of World War II (34.2 percent in 1945) and the Korean War (33.5 percent). Thereafter it gradually declined to 14.0 percent in 1995, when this invaluable time series ends (Freeman 1998, Table 8A.2). These large variations suggest there was a rise and fall in union power at various times over the span of the 115 years, which is useful in verifying the events that were turning points in union history.

References

1. Diener, Ed., Richard Lucas, Ulrich Schimmack, and John Helliwell. 2009. Well-being for public policy. New York: Oxford University Press.
2. Domhoff, G. W. 2014. Who rules America? The triumph of the corporate rich. New York: McGraw-Hill.
3. Freeman, Richard B. 1998. “Spurts in union growth: Defining moments and social processes.” Pp. 265–296 in The defining moment: The Great Depression and the American economy in the twentieth century, edited by M. Bordo, C. Goldin, and E. White. Chicago: University of Chicago Press.
4. Lazarsfeld, Paul. 1966. “Concept formation and measurement.” Pp. 144–202 in Concepts, theory, and explanation in the behavioral sciences, edited by G. DiRenzo. New York: Random House.
5. Morgenstern, Oskar. 1963. On the accuracy of economic observations Princeton: Princeton University Press.

Chapter 1

The Uphill Battle for Unionism from the 1820s to 1932

Labor organizations in the early years of the United States were largely mutual aid societies or craft guilds that restricted entry into a craft and enforced workplace standards, as was also the case in Western Europe. This form of worker organization did not generate major opposition because craft workers were relatively few in number and very narrow in their aims, and most of the companies that employed them were small. But the reorganization of the workplace by business owners, in response to new opportunities and increased competition in the growing national economy, widened the gap between employers and skilled workers. By the 1820s, skilled workers were engaging in increasing numbers of protests and strikes over wage cuts, longer workdays, or layoffs, which were threats to both their economic well-being and social standing.

As the first halting steps beyond separate craft guilds began to occur, employers reacted strongly by charging that strikes and related activities were an attack on their own rights as individuals, as well as being subversive and in violation of the workers’ obligations to society (Voss 1993, pp. 30–31). In sharp contrast to the story told by the “free-market” advocates of that era, whose emphasis was already on the way in which market demand was the best regulator of wages and prices, the union activists asserted that they were being dispossessed of rights that their forbears already had earned for skilled workers as patriots and soldiers in the founding of the United States.

Skilled workers knew that the participation of the “middling” classes of yeoman farmers and artisans had been essential to the members of the upper-middle and upper classes that had opted for a Revolutionary War, and that in return they had insisted upon special conventions, based on duly elected representatives, to meet and develop each state’s constitution. Not only had they helped to win the war, but also they feared the potentially onerous property laws and taxation policies that might be written into the state constitutions by those who were known at the time as their “betters.” They were thereby the source of the new idea that “the people” were the basis for legitimate power in the new United States (Palmer 1959; Piven 2006, Chapter 3).

In the end, these middling-level insurgents of the Revolutionary War era only won the right to both a constitutional convention of elected delegates and a vote on subsequent ratification in Massachusetts in 1780. But in 1789 the authors of the new federal constitution did not try to promulgate their new federal constitution, primarily designed to more fully protect private property and compromise some of their basic disagreements, without asking for the consent of the governed. In the process they were forced to add the Bill of Rights to ensure the constitution’s acceptance, and an increasingly high percentage of adult white males won the right to vote between 1790 and 1850, which was often extended to new immigrants as the areas to the west of the original states competed for settlers (e.g., Keyssar 2009, Chapter 2; Starr 2007, pp. 90–92). Based on this cultural and political heritage, the skilled workers of the 1820s and 1830s felt every right to cast any attempts by employers to cut wages or increase the length of the workday as a threat to the new Republic itself. They in effect claimed that the early market fundamentalists were trying to strip them of their rights and independence as free white male citizens. The defense of labor was thereby equated with the defense of American republican government (e.g., Lambert 2005, for a fine account of how the early craft unionists viewed the world; Voss 1993, pp. 26–29, for a succinct overview).

Building on their nascent unions and their republican beliefs, the strikes of the 1820s were accompanied by brief flurries of independent political action in 1829 and 1830 by skilled workers and their higher-status sympathizers in numerous cities in 16 states, led by Philadelphia and New York, the two largest manufacturing centers at the time (Laurie 1989, p. 74). However, the political organizations did not last for more than a year due to a lack of success for most of their candidates and the adoption of key parts of their platforms by Jacksonian Democrats in the early 1930s. Both skilled and unskilled workers, and perhaps especially the recent immigrants among them, who were openly reviled by the new conservative party of Whigs, found it difficult to support pro-worker third parties that might lead to the defeat of the Jacksonian Democrats that were sympathetic to them.

Politics aside, union activity reached new heights between 1833 and 1837, with unions appearing in most sectors of the urban economy, and with the creation of the equivalent of citywide labor councils “in more than a dozen urban centers, ranging from Philadelphia and Boston to Cincinnati and Newark” (Voss 1993, p. 30). In addition, union leaders from several cities met yearly under the name General Trades’ Union, although there was little coordination beyond the city level. However, all of this organizational growth was “destroyed in the nation’s first industrial depression that began in 1837 and lasted for seven painful years,” including most local unions, and in any case there had remained “an enormous boundary between skilled and unskilled workers” (Voss 1993, p. 33, 35). Nonetheless, many skilled workers had won the 10-hour day by 1840, and in the 1840s there was agitation for the 10-hour day for factory workers, which met with limited success until the 1860s.

With few exceptions, such as the longshoremen’s union organized in Boston in 1847, any post-1837 efforts at unionization were not successful until skilled workers were able to take advantage of a short-lived Civil War boom to revive past craft unions and start some new ones as well. In their first 15 years, some of the activists built a national labor organization that promised to have some staying power. This national labor organization, the Noble and Holy Order of the Knights of Labor (usually shortened to the Knights of Labor), was founded in 1869 as a secret society by a handful of Philadelphia garment cutters, after they gave up on their own craft union because they did not think it had any chance to succeed. Their credo emphasized citizenship rights, action in support of general social progress, cooperative forms of organization for the society as a whole, and, significantly, the inclusion of workers of all crafts and races in one union for the first time (Voss 1993, pp. 73–82). They also started reading rooms, held parades, and supported local labor parties.

Based on their understanding of the importance of organizational survival, the older and more seasoned leaders were ambivalent about strikes due to their past experience. They worried that disruptive actions alienated both employers and the general public, and made unions vulnerable to collapse. They therefore tended to focus on education, persuasion, and legislative changes. Although they emphasized their openness to unskilled as well as skilled workers, to women as well as men, and to African Americans as well as whites, they were in fact mostly white male craft workers when the union grew to a few thousand members nationwide in 1877.

In 1877 a major political bargain between Northern and Southern political leaders, memorialized in history books as the Compromise of 1877, handed the disputed 1876 presidential election to the Republicans. The Republicans agreed in return to help subsidize the reconstruction of the Southern infrastructure and to remove the remaining troops from the South, which gave the former slaveholders an opening to regain their ascendancy by any means necessary. Four months after the bargain, and just weeks after the last remaining federal troops were removed from the former Confederate states, labor relations in the North suddenly took a violent turn. This violence turned out to be the start of a new era that lasted for decades and reshaped the nature of the American union movement. It began when the Baltimore and Ohio Railroad announced in mid-July that it would impose an immediate 10 percent pay cut, the third for that year. In the face of an ongoing depression that had lingered since 1873, other railroads had already made draconian wage cuts without major protest. But the announcement by the Baltimore and Ohio led to a spontaneous strike in the company’s rail yards in Martinsburg, West Virginia, which did not end quickly.

City officials called out the local militia, but its members were reluctant to use force against workers who were part of their own community. The governor asked for federal troops, leading to a clash in which workers stopped trains and destroyed railroad property. The strike rapidly spread to other nearby cities. The violence was especially extensive in Pittsburgh, already a growing industrial center based in the iron and steel industry. When militia brought in from Philadelphia fired at the demonstrators, killing several people, the angry mob burned down 39 buildings and destroyed 104 locomotives and 1,245 freight and passenger cars. The strike became national in scope, drawing in nearly 100,000 workers, and at one point had stopped half the nation’s rail freight from moving (Bruce 1959; Foner 1977). In all, governors in seven different states had to call out their militia, which is a clear demonstration of how important it is for business owners to ensure that there are government officials who are supportive of their property rights (pace Lindblom 1977; Lindblom 1978, who ignores class conflict and violence in claiming that elected officials must perforce cater to business, lest they lose the next election because people suffering from unemployment or inflation will vote them out of office).

Traveling from city to city via trains, government troops finally quelled the uprising after two weeks of effort. In the process, over 100 people were killed and many more were imprisoned (Stowell 1999, for a thorough account). Based on the traditional, more tolerant responses to strikes, the extent of the violence came as a shock to both workers and employers. Up until that time, Americans generally had viewed strikes as a legitimate form of action because employees had an independent stature that reflected both their valued work skills and their belief in republican values (Lambert 2005). Courts had sometimes condemned strikes as conspiracies or restraints of trade, but fines were usually small and there were no imprisonments. In addition, the Massachusetts Supreme Court had rejected the conspiracy and restraint of trade charges in a case that came before it in 1854 (Dubofsky and Dulles 2004, pp. 59–61). The only previous known deaths from strike activity—two in number—had occurred in New York City in 1850 when police shot into a crowd to break up a strike by tailors, who were protesting wage cuts (Lambert 2005, p. 22).

Since 1877, though, the United States has had “the bloodiest and most violent labor history of any industrial nation in the world,” with the exception of Russia (Mann 1993, p. 644). The strongly held American belief in the right of business owners to have complete control over their property, along with business dominance of both political parties, provided the starting point that led to an ideological appeal to classical liberalism and then to moral justifications. Moreover, the history of violence in dealing with Native Americans and slaves, not to mention the horrendous casualty rate in the Civil War, made the pitched labor battles seem as normal and expectable to most Americans as they were to Russians, with their totally different history. Between 1877 and 1900, American presidents sent the U.S. Army into 11 strikes, governors mobilized the National Guard in somewhere between 118 and 160 labor disputes, and mayors called out the police on numerous occasions to restore order (Archer 2007, p. 120; Cooper 1980, pp. 13–16; Lambert 2005, p. 44)...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface, Acknowledgments, and Stylistic Notes
• List of Acronyms
• Introduction
• Part 1 The Rise and Fall of Labor Unions
• Part 2 How the Corporate Moderates Created Social Insurance Programs, and Later Tried to Undermine Them
• Part 3 The Rise of an International Economic System, 1939–2000
• Part 4 Conclusions
• Archival Sources Consulted
• Index