From the Publisher

Foreword by Ralph Nader. In Corporation Nation Derber addresses the unchecked power of today’s corporations to shape the way we work, earn, buy, sell, and think—the very way we live. Huge, far-reaching mergers are now commonplace, downsizing is rampant, and our lines of communication, news and entertainment media, jobs, and savings are increasingly controlled by a handful of global—and unaccountable—conglomerates. We are, in effect, losing our financial and emotional security, depending more than ever on the whim of these corporations. But it doesn’t have to be this way, as this book makes clear. Just as the original Populist movement of the nineteenth century helped dethrone the robber barons, Derber contends that a new, positive populism can help the U.S. workforce regain its self-control.

Drawing on core sociological concepts and demonstrating the power of the sociological imagination, he calls for revisions in our corporate system, changes designed to keep corporations healthy while also making them answerable to the people. From rewriting corporate charters to altering consumer habits, Derber offers new aims for businesses and empowering strategies by which we all can make a difference.

What People Are Saying

Paul Wellstone
....valuable contribution, with concrete proposals for ordinary citizens to effect real change, strengthen our democracy, and reclaim our populist heritage.

Noam Chomsky
It would be difficult to overstate the importance of the issues addressed in this thoughtful and well-informed study of modern corporations. A substantial and very timely contribution.

Ralph Nader
In Corporate Nation, Charles Derber goes beyond documenting the megacorporate power that rules America-which was not what America was supposed to become-and presents a unified agenda for a resurgent democracy that should appeal to progressives of many different causes and some conservatives who not corporatists as well.

David Korten
An invaluable, on-target contribution to redefining the political debate. Corporation Nation provides a depth of data and analysis useful in building a case for change. A guiding beacon for those committed to restoring democracy and economic justice.

Edward M. Kennedy
A rising tide should lift all boats. But too often in our modern society, as Charles Derber skillfully points out, millions of Americans are left out or left behind…. Professor Derber's analysis and recommendations should be read and heeded by all who believe that free enterprise can be fair enterprise too.

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Corporation Nation

St. Martin's Press

Chapter One

The End of the Century

On July 31, 1995, the Walt Disney Company, America's most famous entertainment company, announced it would acquire ABC, America's premier news network. A month later, two of America's most powerful financial institutions--Chase Manhattan Bank and Chemical Bank--decided to merge and become the nation's largest bank. Two months after that, Time Warner proclaimed that it was acquiring Ted Turner's Turner Broadcasting Network, thereby marrying the world's biggest media company and the nation's biggest cable system. Just three years later, those gigantic mergers would look almost puny, dwarfed by the 1998 Nationsbank merger with Bank of America, the Chrysler/Daimler Benz merger, and the merger between Citicorp and Traveler's Group, the biggest in history.

Mergers and takeovers, orchestrated by financiers such as junkbond king Michael Milken, had become the symbol of greed and power in the roaring 1980s. In sheer volume, however, the merger activity of the 1990s makes the eighties look tame. Concentration is a tidal force in banking, insurance, utilities, aerospace, pharmaceuticals, telecommunications, health care, and many other industries. The years from 1994 to 1998 set successive records as the biggest merger years in American history.

While merger mania has periodically seized the American economy, the current frenzy hints at a surprising historical precedent for the current period: the Gilded Age, which extended from shortly after the Civil War to the earliest years of the twentieth century. It was an era when captains of industry and finance such as John D. Rockefeller, Andrew Carnegie, and J. P. Morgan knit American business into national corporate fiefdoms of enormous power. Like today, it was a time of explosive change, fierce competition, and mass mergers, culminating in the famous "trusts" first put together by Rockefeller in Standard Oil.

With the 1990s came a second hint of a new Gilded Age: the revelation that the United States had become the most unequal country in the developed world--with the gap between rich and poor growing disturbingly vast. By the mid-nineties, not only was the gap the largest in fifty years, but as the United Nations reported, "the United States is slipping into a category of countries--among them Brazil, Britain, and Guatemala--where the gap is the worst around the globe."

The Gilded Age, likewise, was marked by the accumulation of great wealth in the midst of overwhelming poverty. While Rockefeller and Morgan were becoming the nation's first billionaires, most Americans, including millions of impoverished immigrants and poorly paid workers, worked twelve-hour days just to stay alive. A hundred years later, America was moving again toward a great divide of vast wealth and mass poverty. In 1998, one rich man, Bill Gates, had personal wealth of 50 billion dollars--more than the combined net wealth of the bottom 40 percent of the U.S. population, or 100 million Americans. In 1996, the richest 1 percent of the population enjoyed a median net worth of several million dollars and had accumulated 40 percent of the nation's wealth--the highest proportion since the 1920s. At the same time 40 million Americans--including one of every four children--had fallen into poverty, also the highest percentage in decades.

Building a Bridge to the Gilded Age

When President Clinton ran for reelection in 1996, he told Americans he wanted to build a bridge to the twenty-first century. The nation had to prepare for the millennium, he explained. According to the president, entering a brave new world of burgeoning technology meant that we would all have to get on the information superhighway, and travel together across the millennial bridge.

But in a revealing interview at the end of 1996, Clinton hinted that another bridge that we might cross leads straight back to the Gilded Age. Talking with James Fallows in The Atlantic, the president spoke of remarkable similarities between the end of the last century and the end of our own. Among the striking comparisons the president described were "... labor turmoil, boom-and-bust economies, ethnic changes wrought by immigration of that era and other shocks" that transformed the country. Clinton suggested that just as the Gilded Age saw a shift from an agricultural and craft-oriented economy to an industrial one, today we are "changing our industrial paradigm--we're going from the industrial age to an information-technology age, from the Cold War to a global society." Clinton also observed that, like today, the Gilded Age was a period of contradictions, simultaneously opening up dramatic new economic opportunities while threatening to leave millions of people behind. Then and now, "vast fortunes are being made--people are having opportunities they never dreamed of. But a lot of people have been dislocated."

Clinton's historical speculations deserve serious scrutiny. The great differences between the Gilded Age and the present--including the rise of a large middle class and a vast regulatory state--make clear that we do not live in a clone of the Gilded Age. But the president has hit upon something more fundamental than he was able to flesh out in that Atlantic interview. Some of the nation's defining qualities--its corrupted democracy and social Darwinist thinking--seem to have leapfrogged from the end of the last century to the end of this one.

Historian Arthur Schlesinger, Jr., has written of American political history as cyclical. The political pendulum's swing from Gilded Age conservatism to the liberal reaction of twentieth-century progressives to the counterreaction of the Reagan-Gingrich era is part of the picture. But the historical parallels with the Gilded Age go far deeper. They involve seismic shifts in the organization of markets, shocks to traditional notions of fairness and community, the rise of a new culture of greed, and a radical rewriting of the contract between corporations and workers. In both eras, the balance of power in the nation shifted drastically, with corporations gaining great new power relative to contending forces such as unions. Both periods were golden ages of business.

The Gilded Age brought both hope and tragedy. It ushered in the American century, with the United States emerging as the new industrial power that would replace Britain as the guardian of a new world order. Americans--among them millions of immigrants who dreamed of a better future--were never more hopeful about their prospects for prosperity. The booming new industrial economy created by the robber barons--the popular name given to Gilded Age business leaders--allowed many citizens to realize their dreams, and the Gilded Age showed the remarkable potential of American business to harness the resources of the nation.

Yet millions of Gilded Age Americans worked in sweatshops, and the intensity of economic and social exploitation wrought by the robber barons became legendary. The growth of urban slums, the concentration of new monopoly power in the trusts, and the scandalous corruption of politics made many turn-of-the-century Americans feel their nation was losing its democratic promise.

Today's new Gilded Age order stems from an economy fueled by revolutionary advances in market scale and technology. It is dominated by dynamic corporations larger than any in history, and run by men possessed of power, business networks, and personal fortunes far exceeding those of the robber barons. It is defined by a democracy in which popular sovereignty is eroding. And it features a culture in which old-fashioned "virtues" like laissez-faire economies, social Darwinism, and accumulation of wealth are enjoying redoubled popularity. Despite some central differences, the new order and the old reveal parallels at almost every level.

Robber Barons of the Information Age

Every year a group of America's most influential men assemble at the ranch of financier Herbert A. Allen in Sun Valley, Idaho. Most are heads of famous global media and technology corporations: Microsoft's CEO Bill Gates, Sumner Redstone, chairman and CEO of Viacom, Michael Eisner, CEO of Disney. They are part of a group of business leaders who have been dubbed the "new establishment." "Call them the swashbucklers of the Information Age," writes journalist Elise O'Shaughnessy, "or the highwaymen of the infobahn: they are the leaders of the computer, entertainment, and communications industries, whose collective power and influence have eclipsed both Wall Street and Washington."

The new establishment actually extends well beyond the elites of Hollywood, Silicon Valley, and the telecommunications world. It includes Wall Street financiers and the chiefs of giant industrial Fortune 500 companies such as GE and GM. It encompasses descendants of the robber barons themselves, including some members of the Ford, DuPont, and Rockefeller families, many of whom remain part of the Forbes 400 list of richest Americans and still run their ancestral companies, banks, or foundations. The new establishment is neither so new nor so exclusively information-oriented as popular accounts have suggested. Today's most powerful corporate leaders from across the economic spectrum have joined forces in such influential groups as the Business Roundtable. The unofficial executive committee of the new establishment, the Roundtable includes the heads of the largest U.S. banks, industrial conglomerates, insurance companies, retail chains, and utility corporations--and together they are closely aligned with policy elites and political leadership in every branch of government.

In matters of personal style, the new elites are hardly the charismatic masters of their age that the robber barons were. Today's corporate leaders tend to be anonymous, gray-suited organization men, absorbed within an institutional system larger and more powerful than themselves. While they have great power, their charisma and personal ownership stakes matter far less than those of a Rockefeller or a J. P. Morgan, and they are to a far greater degree the captives of financial markets they do not fully control and of the interlocked business networks over which they preside. The personal power of the robber barons has been subsumed into a global corporate web. While they speak the language of entrepreneurialism, the new business elites are far from the rugged individualists who strode across the Gilded Age landscape.

And yet these two sets of business barons have much in common. Like the robber barons, today's business elites have radically restructured the economy in ways that promise both dynamic technical progress and frightening social polarization. Despite the current rhetoric of social responsibility, they, like their descendants, are presiding over supercharged corporate systems that will be remembered for their irresponsibility.

Like today's new business leaders, the robber barons saw the possibilities of a new economic order and took dramatic action to bring it about. Carnegie, for example, though ruthless in his cost-cutting and technological restructuring strategies, also deserves credit for almost single-handedly midwifing America's steel industry into becoming the world's dominant producer. Such enduring economic achievements--including laying the economic foundations for a prosperous middle class and a century of growth--help explain why the robber barons are admired by many Americans as icons. Though they came to symbolize greed and power to much of the nation, their legendary business success has nevertheless become part of the American creed.

It is the transformation of their society--not just its economy but its politics and its morals--that is the most important parallel between the Rockefellers and Carnegies and America's new corporate establishment. Beyond their economic exploits, the barons of steel, oil, and pork remade the politics and values of their era. "Like earlier invading hosts arriving from the hills, the steppes, or the sea," a leading Gilded Age scholar wrote in the 1940s, the robber barons "overran all the existing institutions which buttress society...." We must understand "how they took possession of the political government, of the School, the Press, the Church, and how finally they laid hands upon the world of fashionable or polite society . . . as well as over the manners and opinions of the people." The same holds true of business leaders today--and, more precisely, of the great corporations they run. Their economic power is linked to far-reaching political influence, and they have had remarkable success in imprinting pro-business values on our collective conscience.

The Corporate Web, Then and Now

President Rutherford B. Hayes, himself a former railroad lawyer, exclaimed in amazement about the Gilded Age: "Shall the railroads govern the country or shall the people govern the railroads?... This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations and for corporations." In the Gilded Age, and again in our time, the corporation has become the country's economic engine, private government, and holy shrine.

For all practical purposes, late-nineteenth-century leaders invented the modern corporation. They radically changed the pre-Civil War institution they inherited, turning it into one of the world's models of efficiency. In conjunction with the government and the judicial system, Gilded Age elites shifted constitutional powers from the public to corporations and their leaders--a legal and political transformation that continues today in subtle yet alarming ways. The result was a tension between corporate and popular sovereignty that exploded violently in epic riots and strikes at the end of the last century--but is being played out today largely off the public radar screen.

Then as now, corporate elites cooperated to plan joint economic initiatives and worked together to influence legislation. One of today's corporate leaders acknowledges that most of them "talk to each other or have a meal with each other all the time, whether they admit it or not. They are engaged in a constant dialogue." This is more than idle chatter: their intricate network of connections constitutes what is, in essence, a new worldwide corporate web.

Corporations, at base, are legal devices for concentrating capital of the many in the hands of the few. Today as in the Gilded Age, though, capital is concentrating furiously, beyond the limits of any individual corporation. Merger mania is just the most extreme symptom of a much broader dynamic that joins corporations into far-flung networks of economic and political cooperation. The new corporate web has unprecedented, intriguing potential to create a new global family of all peoples. But by turning dominant competitors into increasingly intimate partners, it suggests a Gilded Age-style set of dangers as well.

The corporate web of today is a byzantine mix of interlocking board directorships, strategic alliances, and contracting networks that link virtually every Fortune 500 corporation with every other. John Malone, CEO of TCI, one of the great cable and media giants, describes his relation to Rupert Murdoch as that of variously "competitors or partners or co-schemers." What bonds them, says one veteran observer of America's leading executives, "is a sense of interlocking ventures and relationships. . . they're inextricably tied with one another because of the deals they've made."

The Gilded Age saw the formation of the first great corporate web. Rockefeller sat on thirty-seven corporate boards, Morgan on forty-eight. Railroad barons such as Commodore Vanderbilt and Jay Gould constantly realigned themselves with each other and with financiers like Morgan in shifting alliances to gain competitive advantage, corner the market, and advance their collective power. The trend was toward ever-larger systems of alliance, building toward huge systems of concentrated power. The culmination came with the marriage of the Morgan and Rockefeller corporate families at the beginning of the twentieth century. By 1912, the Gilded Age web involved 341 interlocking directorships linking more than a hundred of America's top corporations, including Standard Oil, U.S. Steel, Chase National Bank, AT&T, Westinghouse, General Electric, and the country's leading railroads.

Today's new corporate web, like the corporate network a century ago, expands economic cooperation while concentrating corporate power. It can increase both efficiency and profits, and has the potential to create a socially useful form of industrial planning. But as in the Gilded Age, it is also an instrument for controlling markets and leveraging political power for business ends.

Executives today, as in the Gilded Age, constantly reshuffle and expand their partnerships in the corporate dance for power and market share. As financier Herbert Allen says, "It's no different than fighting over railroads." A colleague speaks of John Malone as a new J. P. Morgan, driven by the philosophy that "I'm going to have a piece of everything. Some of it may not work out, but I'm going to have a piece of everything." The fallout for the rest of the population, as in the Gilded Age, is more ambiguous. The new entangled giant corporations bring the promise of wealth in the context of permanent economic insecurity and mass poverty.

Economic Insecurity, Poverty, and the Assault on Labor

As outgoing labor secretary Robert Reich was leaving Washington in 1997, he wrote enthusiastically about the 11 million new jobs created during the first Clinton administration. As in the 1890s, America's leaders could take pride in the economic resurgence of America after many had forecast its collapse. Reich argued strongly that the new global order led by American corporations would bring a new century of affluence.

But Reich was clear about the social costs of success. "The unfinished agenda is to address widening inequality. Almost 18 yews ago, inequality of earnings, wealth and opportunity began to increase, and the gap today is greater than at any time in living memory." As Reich commented on the breakdown of the old corporate contract that held that "as companies did better, their workers should as well," he plaintively asked, "Are we, or are we not, still in this together?"

The sad answer is no. The social disuniting of America is the most important parallel between the Gilded Age and today. We may have a much larger and more affluent middle class today, as well as some safety nets that did not exist a hundred years ago. America's class structure and standard of living have changed dramatically. But once again today we are in the grip of a perverse form of economic growth that polarizes America into increasingly separate worlds.

The richest 1 percent of Americans today own more than $4 trillion in assets, enough to pay down the national debt themselves. The bottom 80 percent own only 6 percent of the nation's financial wealth. To find a comparable wealth gap in American history we have to go back before the New Deal era, when new policies were implemented to alleviate poverty and inequality. A leading scholar at the turn of the last century concluded that the poorest "seven-eighths of the families hold but one-eighth of the national wealth, while but one percent of the families hold more than the remaining ninety-nine percent." The 1890 census data suggested that the richest 1 percent of Americans owned 54 percent of national wealth, compared to about 42 percent today.

Wealth became the great corrupting symbol of the Gilded Age, with robber barons, such as the Vanderbilts, Rockefellers, and Fricks, aping the lifestyles of European aristocrats. Their estates were replicas of palaces like Versailles; at their parties one might see "monkeys seated between the guests, human gold fish swimming about in pools, or chorus girls hopping out of pies."

Richard Hofstadter writes that the Gilded Age's wealth and economic dynamism were achieved at "a terrible cost of human values .... The land and the people had both been plundered." In slums like Pittsburgh's Painter Mill, people cooked in dark cellar kitchens in houses without ventilation or drinking water. Neighborhoods in New York City had higher population density than that of Bombay, the most densely populated city in the world. More than 80 percent of the Gilded Age workforce was poor.

Today, while the nation's official poverty rate is only 15 percent, it is much higher than in any Western European country or Japan. The parallel with the Gilded Age is especially notable in the huge scale of child poverty, with a million children expected to become newly poor as a result of welfare reform. Dr. Deborah Frank of Boston City Hospital reports that it has become common in the city to see malnourished poor infants "whose mothers were diluting their formula with water because they couldn't afford more." The main cause of poverty, as in the Gilded Age, is not unemployment so much as very low wages; 70 percent of today's poor have jobs. The corporate social contract, while far more protective today, is moving back, as Reich hints, toward the Gilded Age model. The pattern includes not only low wages but the creation of a disposable workforce, harsh working conditions, and a relentless assault on unions.

The bloody 1894 strike at Carnegie's Homestead Steel, which dealt the labor movement a crushing defeat, rightly became a notorious symbol of the Gilded Age, much as President Reagan's 1981 busting of PATCO, the air traffic controllers' union, came to symbolize a new union-free era a century later. After destroying the Homestead union, Homestead's chief executive officer, Henry Clay Frick, sent an exuberant cablegram to Carnegie: "We had to teach our employees a lesson, and we have taught them one that they will never forget .... Do not think we will ever have any serious labor trouble again." Carnegie, the sometime robber baron idealist who ten years earlier had angered other robber barons by his acceptance of unions, joyously wired Frick: "Congratulations all around--life worth living again."

The aspiring middle class of 1900 was full of hope for the future, but it was also a very anxious class. It could prosper in booms but in other times its members were not even assured of food or lodging. John "Bet-a-Million" Gates--head of the Steel and Wire Trust--introduced the idea of the "disposable worker" a century ago, laying off thousands of workers during periods of prosperity to create fear in his labor force. Gilded Age workers, like millions of employees today, could never feel confident that their jobs would be there tomorrow.

The consequences for workers of the Gilded Age attack on unions were not surprising. Many worked in sweatshops. The life span of a mill worker in Lawrence, Massachusetts, in the 1890s was twenty-two years shorter, on average, than that of the owner. More than 700,000 workers were killed in industrial accidents between 1888 and 1908; "a brakeman with both hands and all of his fingers was either remarkably skillful, incredibly lucky or new on the job." America's working class today is better off by far than its Gilded Age equivalent. But the current assault on unions, the creation of a new contingent workforce, and the tidal wave of downsizing have combined to make contemporary American workers not much more secure than their Gilded Age forebears.

The Best Government Money Can Buy

When President Clinton spoke about today's parallels with the Gilded Age, he did not mention how his own presidency has helped to make his point. Clinton has privately called himself an "Eisenhower Republican," making the balanced budget his highest priority, ending welfare, and announcing that "the era of big government is over." Such Republican goals might seem curious for the Democratic party, but they reflect, as in the Gilded Age, the nature of American politics in a time of corporate ascendancy.

Clinton was elected president exactly one hundred years after President Grover Cleveland, arguably the nation's first "new Democrat." Cleveland and Clinton are Democrats who won reelection only by embracing the national political agenda of big business. In 1892, railroad baron Jay Gould telegraphed Cleveland, that "I feel. . . that the vast business interests of the country will be entirely safe in your hands." Cleveland, for his part, assured corporate America that "No harm shall come to any business interest as the result of administrative policy so long as I am President." He proved himself by repeatedly using the Sherman Antitrust Act to outlaw labor strikes, which at that time were the only recourse for workers seeking to negotiate a living wage. In 1894, in the famous Pullman strike, he sent in federal troops to attack the workers. Said the president "to those who pleaded on behalf of the workers: 'You might as well ask me to dissolve the government of the United States.'"

Politics was safe for business, no matter who ruled. A Gilded Age business leader wrote, "It matters not one iota what political party is in power or what president holds reins of office." The barons had no sentimental loyalty to either Democrats or Republicans because both had become parties of business, a pattern increasingly in evidence today.

At Clinton's second Inaugural, a protester carried a sign calling the administration "The best government money can buy." Even before the sexual scandals of his second term, Clinton was mired in multiple financial scandals, from Whitewater to possibly illegal domestic and foreign White House campaign solicitations. In the astonishing $2 billion spent on 1996 campaigns, Clinton had showed that Democrats could hold their own with Republicans, winning contributions from most of America's large corporations.

The Clinton protester could just as well have waved his sign one hundred years ago. "Washington was a bad joke. Congress was 'transformed into a mart where the prices of votes was haggled over, and laws, made to order, were bought and sold.'" President Grant's administration, known as the Great Barbecue, presaged the Gilded Age administrations to come, blatantly doling out favors to the highest bidder.

Gilded Age politics, according to Secretary of State William Seward, had turned the political party into "a joint-stock company in which those who contribute the most direct the action," and as today, the corporations had by far the most to give. The robber barons flooded politics with big money. To elect President McKinley in 1896, GOP chairman Mark Hanna, a business leader himself, raised millions of dollars from corporations--then an unprecedented event and a foreshadowing of the scandalous role of corporate money in politics a century later. Beyond filling the campaign coffers, Hanna also virtually invented the hired lobbyist, who came to assume a defining role in the Gilded Age. Bribery and lobbying allowed the robber barons to write legislation and shape vital commission reports or political platforms. Republican senator Joseph Foraker of Ohio got about $50,000 from Standard Oil during the six-month period he spent preparing the antitrust planks of the Republican party.

The robber barons virtually reinvented politics. Had they been only wealthy captains of industry, they would be today simply a fascinating historical curiosity. But because their economic achievements were based on a political reconstruction of the corporation that eroded the sovereignty of the public, they had a profound and enduring impact on American democracy.

Gilded Age politics can be defined simply: It used the language and machinery of formally democratic government to weaken real democracy. The Gilded Age suffered "a government of Wall Street, by Wall Street and for Wall Street," in the heated 1890 rhetoric of populist orator Mary Ellen Lease. While the robber barons preceded Ronald Reagan in denouncing big government as evil, they quietly expanded the intricate web of connections that linked the corporation and the government, and in the process broke down the barriers between economic and political power on which capitalist democracy presumably rested. Corporations became private governments with quasi-public powers, while government itself became a servant of private interests.

The corporate undermining of democracy was so blatant in the Gilded Age that it gave rise to the Progressive Era and its "clean politics" reforms. While hardly hostile to business, Progressivism and the New Deal restored a modicum of democracy, eliminated the most outrageous corruption, and created a Democratic party not entirely under the sway of business.

"God gave me my money."

We live in a period of moral fervor. The Christian Right, calling for restoration of discipline and faith, wields vast power in the Republican party. President Clinton increasingly uses his bully pulpit to call for V chips, school uniforms, and a general return to "family values."

A new rhetoric of personal responsibility is transforming American politics. The discourse of responsibility has become a central part of President Clinton's lexicon: We all must take responsibility for our own lives, he argues. The focus is on each individual's moral development. This new ethic is seen by many to offer the hope, in this most materialist of ages, of a great moral awakening.

The new politics of responsibility has both liberal and conservative poles. Among liberals, it is associated with personal growth, the revival of civil society, and a grassroots renewal of blighted neighborhoods and a return to community-level democracy. Among conservatives, it takes a more traditional focus on religious revival and a new entrepreneurship. The almost messianic quality of this vision among mainly conservative officials in Washington invests their efforts to cut off welfare with a sense of moral rectitude: The poor should take responsibility for themselves, the argument goes; America's great social programs, including Social Security, should be privatized. Now it will be each person responsible for herself or himself.

Such moralism is hardly new in American life. It has roots in American Puritanism, and is strongly linked to rugged individualism and the American Dream. The rags-to-riches success story is one of America's most enduring myths--it was already familiar by the time the Horatio Alger stories codified it during the Gilded Age--and it constitutes one of the common threads between the new politics of responsibility and the old politics of business. Particularly in its conservative manifestation, the new morality is linked to broader philosophies of individualism and social Darwinism dominant in the Gilded Age.

Gilded Age culture saturated Americans with the morality of business and individual responsibility, equating wealth with virtue. Robber-baron morality might seem an oxymoron; the greed and corruption of the nineteenth-century industrialists set a new low standard in American life. Yet the robber barons were among the nation's most moralistic leaders. They draped themselves in the lofty rhetoric of social Darwinism, which framed the workings of the free market as a blessing from God and subjected the unwashed poor to a religion-fueled moral indignation. John D. Rockefeller, for example, readily used Darwinist language: "The growth of a large business is merely a survival of the fittest. . . it is merely the working-out of a law of nature and a law of God." Rockefeller could conclude that "God gave me my money."

Social Darwinism dominated the thinking of the Gilded Age. It made poverty, competition, and exploitation all part of the natural struggle for existence. Said one railroad baron, "Society as created was for the purpose of one man getting what the other fellow has." Social Darwinism and rugged individualism intertwined to create a theology that gave spiritual meaning to the terrible gulf between rich and poor. The robber barons' conversion of their own ill-begotten wealth into a symbol of God's favor, and reading of God's mysterious purposes into the misery of the poor, was the great spiritual accomplishment of a passionately commercial and otherwise notably nonspiritual age. It helped engender the public worship of wealth and acceptance of poverty that is among the cruelest of the robber-baron legacies.

Social Darwinism comes to us today in far more nuanced terms. President Clinton is more communitarian than rugged individualist. His "I feel your pain" style of moralism has little resonance with the robber-baron approach. Clinton's style is therapeutic rather than punitive. He urges responsibility for one's fate as a means of personal growth, not as divine retribution.

Even the Gingrich Republicans, the most militantly social Darwinists of contemporary politicians, are careful to blame poverty not on God but on the welfare system. Republican representative Dan Mica of Florida brought this transformation home in a single image: Hailing the looming demise of welfare, he nodded to the familiar sign "Don't feed the alligators," suggesting that any poor family, like a family of zoo-bound alligators, should be able to feed itself when left to fend for itself. The open view of many social Darwinists in the Gilded Age had been that the poor would simply die off; today, more politically canny figures such as Mica exhort the poor to liberate themselves from their politically created dependency to exercise their God-given potential.

Today, as in the Gilded Age, we live in a world where a morality of personal responsibility rubs shoulders with a culture of greed and of flagrant social irresponsibility. Now as then, business has shed its collective responsibility for employees--just as government has for its citizens. Yet this threat to the common good is organized in the name of nurturing responsibility itself. The politics of personal responsibility offers a public moralism that does not disturb the culture of greed or existing relations of power. Making money is again a sign of personal responsibility while the failure to do so suggests a moral lapse.

The specter of moral breakdown that permeates our own times also lingered nearby during the Gilded Age, a sure product of the cynical rhetoric of personal responsibility and the erosion of public hope for social change. Yet such demoralization never gripped much of the population in the Gilded Age, an era of explosive rebellion by labor and populist movements. The populist and labor movements of today are quieter, less incendiary--yet they are resurfacing, and they are, once again, a source of hope.

Continues...

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Excerpted from Corporation Nation by Charles Derber Copyright © 2000 by Charles Derber. Excerpted by permission.
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