American (Mis)Fortunes

Book cover
Wealth and Democracyby By Kevin PhillipsBroadway Books. 472p $29.95.

The debate over the compatibility of wealth and democracy is as old as the republic. With this truism author and political commentator Kevin Phillips begins Wealth and Democracy. From the start we have no doubt where the author stands on that issue. Extreme inequalities of wealth, he is certain, endanger our democratic institutions.

Phillips’s prophecy has commanded special attention because of his personal record. He is a committed Republican partisan, who gained fame as an electoral counselor to Richard Nixon and the author of The Emerging Republican Majority (1969). In those years Phillips analyzed the emergence of the Sunbelt and showed how the Democrats, by embracing countercultural constituencies and their permissive postures on values issues, were alienating their own blue-collar base and making a Republican realignment possible.


But Phillips, like his former boss, relishes his identity as a cloth-coat Republican. He has felt increasingly uncomfortable in his own party, which he fears has itself now abandoned the mainstream by drawing too close to the powerful and privileged.

Phillips marshals a mountain of information, broadly tracing the interplay of economic history, technological development, public policy and great American fortunes from the young republic to the present. This is a big book, and a meandering one. The reader is not so much introduced to an ordered argument as invited to take the author’s hand and walk with him through the fields of data, discovering recurring patterns and themes.

The author surveys America’s economic first families decade by decade, demonstrating how they rise and fall (or don’t fall, if their stewards are nimble) with the nation’s successive leading industries: from the rail, steel and auto baronies of a century ago to today’s financial, media and dot-com empires.

The alarming descent from producing real commodities to imaginary ones does not elude the author and should not escape the reader. But it is Phillips’s extensive documentation of contemporary American social inequality that has attracted the greatest attention from reviewers. Understandably so: the disturbing facts pellet the reader fast and furious, and their presentation is often lively, illustrated by striking tables and charts (usually assembled from other sources). The reader does not just hear Phillips assert that in the 1990’s profit centers from Manhattan to Silicon Valley swayed to Latin American-type wealth disparities, but sees in graphic form the after-tax income of the top 1 percent take off like a rocket, leaving the middle classes behind. It is one thing to learn that despite the popularization of mutual funds and 401(k)’s, stock holdings remain highly concentrated in a few hands. It is quite another to contemplate a sweat equity index showing that at 1960’s wages and market levels a manufacturing employee might expect to work some 30 hours to purchase a share of stock, but that by the year 2000 he or she would have to work well over 100 hours.

These national plutographics do not alone make for a political history of the American rich. After all, Phillips’s (barely) offstage Republican antagonists, the Dick Armeys and the Dick Cheneys, would have us believe that America’s great fortunes have nothing to do with politics. Markets create wealth, they say; government does not. But as Phillips demonstrates, if such a view accords with Chicago School economic theory, it pays scant attention to American historical fact. From the land grants that subsidized the railroads to the tariff structure that nurtured the American steel industry to the Defense Department initiative that spawned the Internet, few of the great American fortunes could have been made without government aid of one kind or another.

Indeed, Phillips contends that there is something singularly perverse about those periods of American history, like the Gilded Age and the present age, in which wealth waxes and commonwealth wanes. Business interests preach minimalist government, but in neither the late 19th century nor the late 20th did government spending decline significantly as a share of the economy. Neither Andrew Carnegie nor Enron’s Kenneth Lay sought to shrink government so much as to bend its policies in their favor. Herbert Spencer was a better spokesman for the Gilded Age than Adam Smith, for the political philosophy of wealth was less laissez-faire than survival of the fittest.

But Phillips is the sort of Republican for whom government is not only a problem but also a solution to the problem. Lacking that hereditary aristocracy to control access to wealth and squelch discussion, the United States has hummed with both: the avid businessman’s pursuit and the populist complaint, he reflects. True, in the Gilded Age, the reigning political and social circles dismissed the idea of a res publicaa public interest apart from individual and group self-interests. But Gilded Age plutocrats’ cavalier attitude toward commoner and commonweal provoked a (small d) democratic and (small r) republican reaction that nourishes the author’s hope for today. Presidents like Woodrow Wilson and Franklin D. Roosevelt crafted a politics to set the nation aright. And Phillips does not hesitate to remind us that it was a Republican chief executive who gave the movement much of its fire. No American president of the 20th century surpassed Theodore Roosevelt in preaching the res publica.

Wealth and Democracy benefited from fortunate timing, hitting bookshelves in the midst of the great corporate crime wave of 2002. Newspaper headlines offered a spectacular advertisement for Phillips’s theses, with a parade of disgraced C.E.O.’smany of them once highflying political campaign donorsmarring the front pages with their perp walks. Yet these scandals already seem to have relaxed their grip on the public discourse, and have taken on the character of a brief interlude between the Sept. 11 tragedy and a march toward war in Iraq. Admittedly, in the annals of villainy Osama bin Laden and Saddam Hussein make the likes of MCI Worldcom’s Bernie Ebbers and ImClone’s Sam Waksal look pretty tame. But in the long run, is American democracy endangered more by rogue states or decadence within?

Politics often lends itself to moneymaking, Phillips argues, but its highest levels of popular respectgenerally missing in the late twentieth centuryare reserved for those who have fought the forces of avarice. Once before our democracy was rescued from extreme concentrations of wealth when an aroused public combined with remarkable political leadership to create a wave of reform politics. Phillips leaves us with the question: will we save ourselves again?

Comments are automatically closed two weeks after an article's initial publication. See our comments policy for more.


The latest from america

The narrator’s voice in Ottessa Moshfegh's new novel is a subtle balance of crisp and curmudgeonly, indulging in dark comedy as a distancing, if not even a coping, mechanism.
Peter MorganOctober 19, 2018
Natalia Imperatori-Lee draws upon a variety of sources to develop an ecclesiology that is shaped by narratives as much as dogmatic theology.
Jennifer Owens-JofréOctober 19, 2018
After a fierce battle for the presidential nomination in June 1932, Al Smith shakes hands with Gov. Franklin D. Roosevelt at the state Democratic convention in Albany, N.Y., Oct. 4, 1932. (AP photo)
Both sons of New York, Alfred E. Smith and Franklin Roosevelt were close political allies. Until the national Democratic convention of 1932.
Maurice Timothy ReidyOctober 18, 2018
Heartland is a chronicle of lives and places; a story of the women and men on the lower end of the working class in rural Kansas who nurtured, challenged and continue to inform Sarah Smarsh's story.
Bill McGarveyOctober 18, 2018