Chapter Content
Okay, so, like, let's talk about democratizing the Global North. You know, there's a big difference between just the regular old "economic" and what we call the "political economic." Basically, political economy is all about how we, as a group, decide the rules of the game for economic life. It's, uh, how we set up the institutions and make decisions about, like, how things are organized.
So, to see how this really works, let's, like, jump back in time to the beginning of the US federal government. Now, James Madison? He was never, uh, really a fan of democracy. He even wrote in the Federalist Papers that democracies are, like, super turbulent and always fighting, and, uh, that they're not good for personal security or property rights, and that they don't last very long. Pretty harsh, right?
But, honestly, back in the late 1700s, almost nobody rich and powerful was, like, super enthusiastic about democracy. What Madison *was* into was a republic. That's where, you know, a select group of people – mainly the ones with, uh, security and property – would choose a smaller group of wise, thoughtful people to represent them. These representatives would, like, share the values of the people and, um, work for their well-being. But, the hope was, they’d do it, like, without being greedy, you know? Just to show they were good citizens.
Madison really wanted to avoid the, um, "turbulence" of democracy. Remember, under the Constitution they made, states could basically limit voting as much as they wanted, as long as they kept a "republican" government.
It was tough, you know, for America’s Founding Fathers to convince people that even their limited republic was a good idea. Back then, feudal systems, monarchies, empires, they seemed more stable, maybe even better. In fact, Madison and Alexander Hamilton were saying that a republic was worth the risk *because* of "advances in the science of government." Yeah. Even Thomas Jefferson thought Hamilton was, like, just pushing his own agenda because he wanted a monarchy for America secretly. So, democracy’s superiority? Not super obvious back then.
But, over time, democracy – at least the whole one-man-one-vote thing, if you were the right age and race – made, like, huge progress. The feudal systems and monarchies kind of fell apart.
For a while, being rich was seen as a qualification for voting. In Prussia, the top tax payers got to elect a chunk of the representatives. In France, a prime minister basically said, "If you want to vote, get rich!" Yeah, that didn’t work out too well. There was a revolution, and the king got the boot.
So, between 1870 and 1914, expanding democracy became the political idea that offended the least people, so it became widely accepted. Political society would be a place where some or most of the male individuals' preferences counted equally in choosing the government, and government would then, like, control the economy somewhat, but not completely.
But, even that wasn't enough for everyone. There was constant pressure to let even *more* people vote. When liberals were in power, they’d extend voting rights thinking the new voters would support them. When conservatives were in power, they sometimes extended voting rights hoping the workers would be loyal to them. It was, you know, a way to try and get ahead politically. And, when revolution was on the horizon, governments would extend the franchise to prevent a complete uprising.
So, little by little, voting rights expanded. Up until 1914, in the wealthy North Atlantic, things looked pretty good. Rising prosperity made the rich less bothered about their social position, and people lower down felt like things were improving overall. Conservatives and liberals both thought they could win, so they were confident in the direction of things.
Now, even though voting rights expanded, it was slow, and it took a while for women to get the vote. France was the first country to grant all men the right to vote. In the US, the fight for white men to vote happened around 1830. Finland was the first to allow *everyone*, men and women, to vote. Great Britain came later, and it took even longer for women to get the vote.
You know, American suffragettes, they fought for decades! My great-grandmother actually chained herself to a fence and got kicked out of a debutante ball. Eventually, in 1920, the Nineteenth Amendment was passed, giving all women the right to vote. France wasn’t until much later.
And, it took even longer to cross the race line, especially in the US. There were tons of heroic sacrifices during the fight for Black voting rights. My great-grandmother even caused a scandal by inviting Black people to dinner in the 1920s.
But the real change for Black Americans didn't come until 1965 with the Voting Rights Act. Even then, it's been tenuous. You know, even today, many states have created laws to, like, make it harder for Black people to vote. So, from Madison to Rehnquist, democracy and voting rights have always raised more questions than they solved for some people. It’s a long, complicated history.
So, the history of these democracy conflicts is tied to economic history. To understand how, let's talk about two thinkers: Friedrich August von Hayek and Karl Polanyi. We’ll start with Hayek, who believed that the market gives and takes away, and we should be grateful.
In Hayek’s view, it was wrong to even ask if the market's distribution of wealth was fair. For him, “justice” and “fairness” mean you get what you deserve. But, the market doesn’t care about deserving, it gives to those who are in the right place at the right time. Hayek thought if you start chasing "social justice," you’ll end up with a society that’s the opposite of free.
Now, he wasn't saying you should just let the poor starve. Society should provide a little help to those in need. But, beyond that, you shouldn't mess with the market. The market was, like, the best we could do.
The fact that the market can create huge inequality wasn’t the point. To even *ask* about how wealth should be distributed was wrong because it assumed people had rights beyond property rights.
Besides, fixing inequality was impossible, according to Hayek. He thought we could never have enough knowledge to make a better society. Central planning was a disaster. Only "spontaneous order," where everyone pursues their own self-interest, could lead to progress.
So, for Hayek, market capitalism was the only system that could possibly be efficient, because "prices are an instrument of communication and guidance." Attempts to reorder the market would ruin it, and you'd end up on what he called "the road to serfdom." Too much top-down planning wouldn't allow for democracy. Basically, he thought "this is as good as it's ever going to get."
But Hayek knew that people wouldn't just accept this willingly. People thought they had rights beyond property, and that was a problem for him. He saw two enemies to a good society: egalitarianism and permissiveness. Too much democracy made people think they could do what they wanted, without being controlled by the rich.
For Hayek, egalitarianism was just a way to get votes from "the worst." And permissiveness was, like, supporting people who wanted wealth without working for it. So, a good market economy needed authority to protect it.
He thought that overly democratic societies might need someone to seize power and force them to respect the market. It would just be a temporary thing, a "Lykourgan moment," and then everything would go back to normal. This idea made the political right anti-democracy, viewing it as an evil.
Now, that was a harsh view of Hayek. And I'll probably say even harsher things later. So, why even bother with him? Well, first, he represents a super influential way of thinking. Second, he's not completely wrong. Democracy *can* become about taking from one group and giving to another. Hayek's point that focusing on market exchange and ignoring "social justice" can be better than that isn’t completely incorrect.
And third, Hayek was a genius in one way. He understood what the market could do for people. All societies struggle to get information to decision-makers and to incentivize them to do what’s right. The market can push decision-making to the places where the information already exists, and it can reward those who use resources well. He just couldn’t recognize, though, what problems the market *didn't* solve.
Overall, Hayek got right is essential for understanding the 20th century. His ideas influenced a lot of decision-makers, and aspects of his reasoning were definitely at play.
Okay, now let’s talk about Karl Polanyi, who thought, “the market is made for man, not man for the market." Hayek loved that the market turned everything into a commodity, but Polanyi disagreed.
In his book, “The Great Transformation,” Polanyi said that land, labor, and finance were "fictitious commodities." They shouldn't be controlled by profit and loss. They needed to be managed by society and take into account morals and religion. Polanyi wrote that this created tension, a "double movement." The market tried to separate land, labor, and finance from society's control. But then society fought back by limiting the market and interfering when things seemed "unfair." This created a backlash, either from the left or the right.
Now, these were—are—brilliant insights. To simplify what Polanyi was saying: the market economy believes that the only rights that matter are property rights, and only property rights that make the rich have high demand. But people believe they have *other* rights.
With land, people believe they have a right to a stable community. They believe the land they grew up on or made with their hands is theirs, even if the market says it would be more profitable to do something else with it.
With labor, people believe they have a right to a suitable income. They prepared for their job, so they think society owes them a fair income, even if the world market says otherwise.
With finance, people believe that if they work hard, the economy should give them the money to buy things. And financiers shouldn't have the right to decide that this or that part of the economy isn’t profitable enough and shut it down, making your job disappear.
Polanyi said people have these other economic rights that a pure market economy won't respect. So, society will intervene to make sure these rights are satisfied. The economy tries to remove production from society, and then society tries to reassert itself.
These rights aren't necessarily about making everyone equal. And they aren't always "fair." They're just what people expect, given the way society is set up. Equals should be treated equally, but unequals should be treated unequally.
So, what can we do with these ideas? Hayek and Polanyi were brilliant thinkers. Their ideas matter because they capture deep currents of thought that influenced millions. To see how this played out, let's look at economics and politics in Chicago, which was like the Shenzhen of its time.
In 1840, Chicago had a population of four thousand. By 1900, it had two million, and 70% of its citizens were born outside the United States.
In 1886, there was a general strike for an eight-hour workday. At the McCormick Harvesting Machine Company, police and private security guards protected strikebreakers. On May 3, police opened fire on a crowd, killing six. The next day, in Haymarket Square, eight police officers were murdered by an anarchist bomb. The police opened fire and killed perhaps twenty civilians, mostly immigrants. Eight left-wing politicians and labor organizers were convicted of the murders, and five were hanged.
In 1889, Samuel Gompers, the president of the American Federation of Labor, asked the world socialist movement to remember victims of police violence in Chicago by setting aside May 1 every year as the day for a great annual international demonstration in support of the eight-hour workday.
In 1894, President Grover Cleveland created a national holiday on the first Monday of September in recognition of the place of labor in American society. But not on the International Workers’ Day, May 1.
In 1893, the new Democratic governor of Illinois, John Peter Altgeld, pardoned the three still-living Haymarket Bombers. He thought they were innocent and that the real reason for the bombing was the violence of the Pinkerton guards hired by McCormick and others.
So, who was this guy who pardoned anarchists and blamed violence on the rich? And how did he become governor?
Altgeld was born in Germany. He fought in the Union Army during the Civil War. After the war, he became a lawyer. By 1872, he was the city attorney of Savannah, Missouri. By 1874, he was county prosecutor. In 1875 he showed up in Chicago. By 1884 he was an unsuccessful Democratic candidate for Congress.
He won election as a judge in 1886. And he also became rich. He was a real estate speculator and a builder.
As governor, Altgeld supported child labor and workplace safety laws, increased funding for education, and appointed women to senior positions. And he pardoned anarchists.
The press condemned him for the Haymarket pardons. To middle-class newspaper readers, especially on the East Coast, Altgeld was the foreign-born alien anarchist, socialist, murderous governor of Illinois.
Consider the Pullman Strike to see the consequences. In 1894, workers of the Pullman Company went on strike rather than accept wage cuts. Clarence Darrow, Altgeld’s friend and fellow attorney, became the lawyer of the strikers, the American Railway Union, and their leader Eugene V. Debs. Darrow had been a railroad lawyer, but he quit his job to defend Debs.
He sided with the strikers because the railroads were bringing the force of the government in on their side. "I did not regard this as fair," Darrow later wrote. "I saw poor men giving up their livelihood."
The railroads were successful in bringing in the government. President Cleveland decided to grant their request. He attached a mail car to every train, making blocking any train a federal crime. The US attorney general got the courts to stop the strikers. Cleveland then ordered the US Army to deploy in Chicago.
Governor Altgeld protested. He pointed out that the Constitution only allowed the president to use troops against domestic violence "on application of the [state] legislature, or the executive." Altgeld protested that neither he nor the Illinois legislature had applied. Cleveland dismissed it. It was more important to protect property against rioters, anarchists, and socialists.
Debs and the other union leaders were arrested, and the strike collapsed.
This was a breaking point for Altgeld and for many others. They decided it was time for the Democratic Party’s presidential nominee to be a truly Democratic candidate, not a centrist like Cleveland. They wanted the fairness and justice that Hayek would decry. They also wanted the United States to abandon the gold standard and permit the free coinage of silver.
Cleveland and his supporters, many of them businessmen and bankers, wanted to maintain the value of the dollar by adhering to a strict gold standard. Altgeld and his supporters, many of them laborers or farmers, wanted the opposite: an expansionary money policy to ease their credit burdens and raise prices for their crops. Both views were reactions in part to the Panic of 1893.
At the 1896 Democratic National Convention, Altgeld seized control of the platform and changed it to condemn the gold standard, denounce the government’s interventions against labor unions, support federalism, and call for an income tax amendment or a Supreme Court that would declare an income tax constitutional. The platform also supported the right to unionize and called for expanded personal and civil liberties.
Altgeld sought to get the Democratic Party to nominate Richard P. Bland. However, William Jennings Bryan, politician from Nebraska, wowed the convention with a speech that damned the gold standard and a parade of moneyed interests. He headed a presidential ticket, with the unprepossessing Arthur Sewall as his running mate.
In response, President Cleveland and his supporters abandoned the Democratic Party and formed the National Democratic Party, in hopes of syphoning votes from Bryan and Sewall.
The Republican ticket of William McKinley and Garret Hobart won.
Before 1896, popular vote totals in presidential elections had been narrow. You might think that the Democrats would have a sweeping victory after nominating a populist like Bryan, but no. Bryan lost by a lot. McKinley won in an electoral landslide. It wasn’t just that swing voters went to the Republican side; it was a huge countermobilization against Bryan. There were many who formerly weren't too interested to show up at the polls, but this time they voted and they definitely didn't want the sort of Democratic candidate that Altgeld and his allies favored.
The crucial center of the white males who voted chose property because they had it, or thought they would have it. They feared that too many of those who would benefit from redistribution were unworthy of it. Even the very weak-tea leveling associated with pardoning those railroaded after Haymarket and supporting the Pullman strikers was too much for start-of-the-twentieth-century America to bear.
Altgeld lost his governorship, lost a bid to be mayor of Chicago in 1899, and died in 1902. Darrow lived longer and more successfully, partly because he was willing to defend large corporations, among other things.
Among those idealistic workers who passed through Jane Addams’s private social-welfare agency, Hull-House, was the young Frances Perkins, who was to become President Franklin Delano Roosevelt’s secretary of labor and the principal author of America’s social security system.
Despite concessions, Darrow shared Altgeld’s opinion of the Democratic politicians, as his 1932 memoirs explained: “I had always admired Woodrow Wilson and distrusted [his successor] Republican President [Warren] Harding...still, Mr. Wilson, a scholar and an idealist, and Mr. Palmer, a Quaker, kept [Eugene V.] Debs in prison; and Mr. Harding and Mr. Dougherty unlocked the door.”
Darrow spent the 1920s defending the teaching of evolution and attacking social Darwinist eugenicists. He died in 1938.
In the mid-1920s Scopes Trial, he had faced off against his old political ally, William Jennings Bryan. Bryan had added anti-evolutionism and tolerance of the Ku Klux Klan to his 1920s causes of an equal rights amendment for women, agricultural subsidies, a federal minimum wage, public financing of political campaigns, and Florida real estate.
The Democratic Party of around 1900 was against plutocrats, bankers, and monopolists. It was for rough equality, but for a certain kind of person. Socialist-pacifists didn't belong. And neither did Blacks. Woodrow Wilson, despite being a Progressive, segregated the US federal government’s civil service.
W. E. B. Du Bois was born in 1868. His white neighbors took up a collection to pay for him to go to Fisk University, a historically Black university in Nashville. He then went from Fisk to Harvard and then to the University of Berlin, where he found himself "on the outside of the American world, looking in." He then returned to Harvard and earned a PhD in 1895.
In 1895, there was a Cotton States and International Exposition held in Atlanta, Georgia. At the same time, there were all the lynchings of Blacks—at least 113 of them in 1895. Attempts to stop the violence ended when President Ulysses S. Grant left the White House.
At the exposition, Booker T. Washington gave a speech proposing his "Atlanta compromise": Blacks, he said, should not seek the vote—or integration, or, indeed, equal treatment; instead, they, and white northerners seeking their uplift, should focus their attention on education and employment. In return for this submission, they should receive the protection of the rule of law and the guerrilla-terror campaign should end. They should concentrate on education—seeking an overwhelmingly vocational education—and then work, save, and let the wheel of history turn.
Du Bois disagreed with Booker T. Washington and took the leadership of those arguing and agitating for full equality—social, political, economic—now. Yes, there had been progress since the days of slavery, but no, the progress was not sufficient. Meanwhile, he noted, the white supremacist campaign of terror was not ending.
Four years after Washington’s speech, in the same city, a Black man, Sam Hose, was accused of killing his white employer. A mob of at least five hundred took Hose away from the sheriff; cut off his testicles, penis, fingers, and ears; chained him to a pine tree; and then lit the pine tree on fire. It took Hose more than thirty minutes to die. Members of the mob then cut off more of his body parts, including bones, and sold them as souvenirs.
Du Bois later said that when he saw Hose’s burned knuckles in a storefront display, he knew he had to break with Booker T. Washington. Blacks needed to make demands for equal rights, equal treatment, integration, and parity.
Du Bois believed in the promise of education to solve the problem, but not just technical and trade education, like Washington. For Du Bois, the answer lay in a full liberal arts college education for the potential meritocratic elite he called the "Talented Tenth": "Education must not simply teach work—it must teach Life."
But Du Bois and company were rowing against a very strong current. Segregation and discrimination continued. Politicians and interest groups redirected anger at rich urban eastern plutocrats into anger at lazy Negroes.
Whatever else constituted American exceptionalism, marked caution toward "utopian" overhauls of social relations and social hierarchies was very high on that list. And the United States was not alone. Once European society was no longer a contest of a closed aristocracy of wealth, honor, and blood against everybody else, once upward mobility was possible, anything that was or could be misrepresented as full-fledged leveling socialism proved broadly unattractive.
Consider France in June 1848. Those who thought a truly just, equitable utopia beckoned were to be disappointed. The overwhelming majority of Frenchmen did not want to be taxed to provide full employment for urban craftsmen. It turned out they valued their property more than they valued opportunity for the unemployed.
The politicians of the French Second Republic were terrified and abandoned the worker movement. In the heated conflict, an estimated 4,500 died, and thousands more were injured.
Tocqueville later wrote that he saw “thousands… hastening to our aid from every part of France.” He noted that peasants, shopkeepers, landlords, and nobles “rushed into Paris with unequalled ardour...The insurgents received no reinforcements, whereas we had all France for reserves.”
The same principle was at work in the United States in 1896 as in France in 1848.
In succession after 1791, France experienced many different forms of government, including a socialist commune. And yet land reform stuck. Dreams of past and hopes of future military glory stuck. And for those on the left of politics, the dream of a transformational, piratical political revolution stuck as well. Regime stability did not.
This was true elsewhere in Europe as well. Increasingly, in those parts of the world without colonial masters, politics became a game without rules—except those the players made up on whim and opportunity. Nearly everywhere and at nearly any moment, the structure of a regime, and the modes of political action, might suddenly shift, perhaps in a very bad way. Representative institutions were shaky, and partial.
In the end, the regimes held until World War I.
The expectation and fear that revolutions were on the agenda proved to be wrong. One reason was that left-wing—even socialist—parties in pre-World War I Europe wanted parliamentary representation, but once they had that, they pressed immediately for only relatively weak tea.
They also sought in the long run not incremental advance but the complete reordering of society and economy into a real utopia. But they could not decide if they were revolutionary overthrowers or improvers of a going concern, and so found themselves falling between the two stools.
And that brings us to one of the major turning points of the 20th century. The tensions between the market and those who believed that the market is made for man were already there, and everybody, one way or another, had a faith of some sort in the market.
Karl Marx had no illusions about what the market taketh, but he had a grand illusion as to what the market would eventually giveth. Earl Grey and other right-wingers understood that the market is made for some men, but not all. Finally, centrists attempted to hold the tensions at bay with many reforms and a few bayonets. It mostly worked—until 1914.
While the center was holding and the left was falling between two stools, the right was thinking up new justifications for its basic principle: “What I have, I hold!” Charles Darwin’s On the Origin of Species had set intellectual waves in motion: ideas that turned into social Darwinism. The social Darwinists justified economic inequality by claiming that inherent racial traits accounted for their economic success and justified existing economic inequalities. They were proposing that the superior races should be encouraged to breed, and others should not.
Social Darwinists justified economic inequality within societies as part of a progressive struggle for existence that, via evolution, improved the gene pool. “I am better than you” became, all too easily, “We are better than they.” And “we” had to have the weapons to prove it, should it come to a fight.
Alarm at the growing size of the German battle fleet was mounting, and Britain needed control of the seas to tie its empire together. As Winston S. Churchill said, to appease the navy and the press, the Liberal Party government offered to fund four new dreadnought-class battleships a year to defend against the growing German fleet. The navy demanded six. And, Churchill said, “We compromised at eight.”
Sir Arthur Conan Doyle had Sherlock Holmes comment on rising international tensions as World War I approached. "There's an east wind coming all the same," Holmes says. "It will be cold and bitter, Watson, and a good many of us may wither before its blast. But...a cleaner, better, stronger land will lie in the sunshine when the storm has cleared."
Doyle wrote those words in 1917, when World War I was more than half done. But he placed them in the mouth of a pre-1914 Holmes. He had Holmes prophesy that, in spite of all the blood, global war should not be avoided, for it would, in the end, turn out to have been worthwhile. The political, social, cultural, and economic barometer was dropping. The warning signs were abundant: a right-wing upper class had lost its social role; politicians were increasingly anxious to paper over class divisions with appeals to national unity; a social Darwinist ideological current advocating struggle was growing. These issues were storing up trouble as 1914 approached. The unleashing of unprecedented economic growth had shaken the world and transformed politics. And at the end of that transformation was a pronounced imperial and militaristic turn.
In 1919, John Maynard Keynes would write, bitterly, that he, his peers, and his elders among the well-thinking, self-confident establishment had all shrugged off the warning signs and passively sat by.
As 1914 approached, there was no intellectual or organizational antimilitarist countermobilization to speak of to try to head off catastrophe.