The Constitutional Case for Equality

The founders assumed that America would always be a middle-class nation. That makes it particularly important to check the power of plutocrats today.

Political thinkers since antiquity have argued that successful republics must be structured to accommodate the inevitability of class conflict. So, for example, the Romans thought it best to create a senate reserved for patricians and a separate Tribune of the Plebs to represent the interests of the lower classes. British democracy evolved with a House of Lords, to which commoners could not belong, and a House of Commons, from which lords were excluded.

The Crisis of the Middle-Class Constitution: Why Economic Inequality Threatens Our Republic
by Ganesh Sitaraman
Knopf, 432 pp.

But as Ganesh Sitaraman, a law professor and former adviser to Senator Elizabeth Warren, points out in his new book, America’s founders rejected the “class warfare constitutions” of the Romans and the British and, instead, created a “middle-class constitution.” This new order was premised on the idea that America would always be a place where most people were neither rich nor poor, and there would be no need for ruling bodies reserved for one class or another. Sitaraman convincingly argues that the assumption of broad-scale equality built into our very structure of government is what makes the shrinking of today’s middle class and the rising power of plutocrats so politically dangerous.

America’s founders created a middle-class constitution, Sitaraman writes, because they lived in a society that—for white people-—was unique at the time in its degree of economic equality. Fully two-thirds of white Americans owned property at the time, while only one-fifth of British citizens were property owners. “Every man has the opportunity of becoming rich,” wrote Noah Webster in 1787. David Ramsay, a delegate to the Constitutional Convention, said that the U.S. was made up of “free men all of one rank, where property is equally diffused.”

“Throughout the founding period,” writes Sitaraman, “Americans recognized that they were uniquely suited to republican government precisely because the people were relatively equal and the middle class was strong.” So they incorporated this equality into their government. Neither the Senate nor the House, Sitaraman reminds us, included property requirements for membership or stipulated that members come from specific classes. While states had the power to impose their own property requirements for voting, this was not enshrined in the Constitution, and several states relaxed or eliminated these requirements after the Revolution.

The framers also established salaries for members of Congress so the non-wealthy could afford to serve. It was still left to state legislators to elect U.S. senators, but in the context of the times this was a means of empowering the broad mass of Americans, since state legislatures were themselves dominated by ordinary middle-class citizens.

Because the founders were drafting a constitution that assumed broad economic equality, they especially wanted equality to remain a dominant characteristic of American life. Thus they limited the inheritance of wealth by abolishing primogeniture and entail, and they spread property widely by selling cheap, government-owned land via laws like the Northwest Ordinance of 1787.

Yet over time, such measures were not sufficient to ensure the degree of equality assumed by the Constitution, which in turn left generations of Americans particularly vulnerable to plutocracy. “A middle-class constitution is particularly susceptible to elites’ capturing all the levers of power,” Sitaraman writes. The rich can win every election and thus control every branch of government; there is no Tribune of the Plebs in the American system to ensure representation of the poor or to stop oppression by the rich. And without economic equality, Sitaraman warns, American democracy risks a “quiet, gradual descent into oligarchy.”

Sitaraman cites powerful historical evidence for this account and helps to dispel the commonplace notion on the right that the framers were small-government types unconcerned with distribution and equality. At the same time, some readers on the left are likely to be turned off by Sitaraman’s depiction of the founders as radical equalitarians, given that more than a few were wealthy slave owners. But Sitaraman acknowledges this latter challenge and asks his readers “not to conflate two different traditions in American history.” While one tradition—emphasizing the abolition of slavery, suffrage, and the like—has been focused on “who should be included in the political community,” another has been focused “on the distribution of wealth within the political community.” These two traditions have “intersect[ed]” and “diverged” over American history, Sitaraman writes, but he identifies them as distinct, and writes that the purpose of his book is to “recover and trace the middle-class constitutional tradition, the tradition of economic equality within the political community.”

He is right to argue that the two “traditions” have collided. Much of the wealth within the American political community has been secured via the exploitation of those outside of it. Programs like the Northwest Ordinance were made possible by land theft and war waged against Native Americans. Similarly, many observers—tracing back to W. E. B. Du Bois—have argued that white Americans have historically felt so “equal” relative to each other precisely because they felt superior to black Americans. The “equality” of those within the political community depended in part on the inequality of those outside of it.

Whether, in light of this and other mechanisms, it still makes sense to speak of two distinct traditions in U.S. history depends on your politics. In any case, Sitaraman demonstrates that the founders, like many generations of Americans since, saw the same link between economic and political inequality. The Jacksonian Democrats, for instance, fought against concentrated wealth and power—in the form of monopolies and big banks,
especially—and for small-holding farmers and laborers, all in the hopes of making the country more democratic.

The Republican Party of Abraham Lincoln fought for equalizing economic policy in the hopes of revitalizing American democracy. Republicans like Thaddeus Stevens saw the destruction of the slave economy as part of a larger project of democratization. “The Southern states have been despotisms, not governments of the people. It is impossible that any practical equality of rights can exist where a few thousand men monopolize the whole landed property. The larger number of small proprietors, the more safe and stable the government,” he said in 1865.

In other words, these men saw concentrated economic power as a threat to democracy and pursued government policies to answer that threat. Sitaraman finds the greatest evidence for this view in the Gilded Age and the Progressive Era. Then, as now, radical economic inequality and concentration threatened American democracy. As Hazel Pingree, a Michigan governor and reformer, put it in 1899, “The strength of our republic has always been in what is called our middle class,” but monopolies and trusts would bring “[c]ommercial feudalism” if left unchecked.

This commercial feudalism was not a theoretical concept. American monopolists hired mercenaries to crush organized workers, as during the Homestead Strike. They exercised enormous control over financial markets and over government at the federal and state levels. In 1903, for example, the Montana mining company Amalgamated Copper closed down all of its operations, putting 80 percent of the state’s working population out of a job. The firm refused to resume production until the state government passed legislation to protect Amalgamated from several adverse court rulings. After three weeks, the government complied with the company’s demands.

This story illustrates a central strength of Sitaraman’s work: his focus on power. Writing about the anti-monopoly movements of the late nineteenth century, he notes that “the problem with monopoly was that it concentrated wealth and power.” Today, Americans are accustomed to thinking about inequality in terms of distribution—what percent of the pie is consumed by the top 1 percent of earners, for instance—but Sitaraman is right to argue that it is also about inequality of power. Gilded Age monopolists had power over workers, whose unions they busted; over other independent farmers and business owners, whom they exploited by colluding and cornering markets; and, eventually, over politicians at every level of government, whom they bribed and corrupted.

During a long era lasting from the late nineteenth century into the 1970s, increasingly aggressive antitrust and other competition policies were used to contain economic concentration and bust up corporate monopolies. Throughout this period, Americans endured the Great Depression and suffered other economic setbacks, but the main trend from generation to generation was a broad expansion of the middle class and a sharp reduction of economic inequality amid dramatically rising living standards, even for out-groups facing systematic discrimination. Yet getting those policies straight was neither easy nor obvious, and many progressives and New Dealers debated strongly among themselves about which course to take. Sitaraman identifies some of these discussions but refuses to take sides, and his analysis suffers for it.

To understand the fault lines of these debates, consider how they apply to a modern example. Walmart is a huge company with an enormous amount of concentrated power; it exploits and pressures its suppliers, drives out small local businesses, and crushes unions. The government could deal with this in a number of ways. It could, for instance, nationalize the company and stop the abuses. Or it could force a similar result by regulation—mandating higher wages, health care coverage, pensions, and such. Or it could take a different approach altogether, and break up the company, which would, at least, reduce its massive power over workers, suppliers, and small businesses, and bring a revival of competition and opportunities for small local business and entrepreneurs.

For generations, reformers hotly debated these different approaches. The landmark presidential election of 1912, for instance, not only featured an honest-to-god socialist, Eugene V. Debs, but also hinged on sharp disagreements between Woodrow Wilson and Teddy Roosevelt about whether it was better to bust up, regulate, or nationalize monopolies. (Roosevelt abandoned his previous position as a trust buster in favor of using big government to manage, if not take over, big business.) Twenty years later, New Dealers fought the same battle among themselves, with one faction initially suspending antitrust enforcement in favor of command-and-
control regulation, and another eventually prevailing with an approach that emphasized breaking up monopolies.

It is frustrating that Sitaraman equivocates between these positions. He writes that these various thinkers all “recognized that economic reform was constitutionally significant”—meaning that they all believed that defending democracy required fighting inequality. But he refuses to say which side of the corporate power debate had it right in which instances.

Nonetheless, Sitaraman looks to the past as his inspiration for tackling today’s increasing political and economic inequality, and not without reason. Rising inequality and increasing corporate concentration have again corroded American democracy, he writes, making it “more and more likely with each passing day that modern America is losing its character as a republic.”

In 2016, for example, Aetna threatened to pull out of the Affordable Care Act exchanges if the Obama administration blocked the company’s merger with Humana. Internet firms like Amazon and Facebook use their power to control what Americans read and write. Giant internet service providers lobby and spend aggressively to kill publicly supported broadband plans. And companies across the economy use lobbying money, the funding of think tanks and advocacy groups, and seemingly independent policy experts to shape policy and debate in their favor.

The American campaign finance system is another example of this transformation. Because American politicians must spend so much time fund-raising, and because the most money comes from the biggest donors, they overwhelmingly hear the opinions and ideas of the rich and successful. This “means that [leaders] naturally start thinking in a way that serves special interests,” Sitaraman writes. This “intellectual capture” is itself a result of the concentration of so much wealth in the hands of so few.

Moreover, Sitaraman continues, “[a]s inequality increases, economic elites want to preserve and expand on their wealth. Because they are no longer part of the middle class, the policies that will preserve and expand their wealth now diverge from the policies that help the middle class.” While an average middle-class worker would have a material interest in a tax-funded affordable college plan, for instance, the wealthy would prefer lower taxes or tax-advantaged college savings accounts.

But these problems—campaign finance and the diverging interests of the rich—are challenging to fix. Campaign finance reform, for instance, can only go so far, because, Sitaraman writes, “any regulatory effort to restrict the flow of money through one channel . . . will inevitably result in money flowing through another channel.” Without addressing the structural inequality of the American system, regulatory efforts like campaign finance reform are likely to falter.

Sitaraman argues for revitalized antitrust law because monopolization undermines equality, thereby concentrating not only economic but political power and threatening democracy.

Sitaraman integrates this fact into his policy section. While some of his ideas are standard liberal fare, his best recommendations are those that would actually reorganize power in the American economy and address the structural problems of the entire system. He makes a pitch for revitalized antitrust law because monopolization “concentrate[s] power in just a handful of companies.” And he argues for another common anti-monopoly idea as well: public utility and common carrier regulations. Under this system, companies that provide the infrastructure of the modern economy—for instance, railroad transportation during the Gilded Age, or internet service today—are made subject to democratic control or particular rules to ensure that they do not exploit or abuse their customers.

These anti-monopoly ideas are uniquely powerful because they change the distribution of economic power. Antitrust laws, utility-style regulation, and similar anti-monopoly policies break up concentrated economic power and spread it broadly, among workers, businesses, and entrepreneurs. Robust enforcement of U.S. antitrust law during the 1940s and ’50s helped de-concentrate the manufacturing industry. And long-standing anti-monopoly policy helped distribute economic power, independence, and opportunity across all regions of the United States.

This breakup of concentrated power is essential to reversing the rising inequality in the U.S., just as it is also essential to revitalizing American democracy. As Woodrow Wilson put it during the election of 1912, “If monopoly persists, monopoly will always sit at the helm of the government.” Sitaraman realizes that economic equality, like democracy, is impossible without a reorganization of economic power. This insight distinguishes his policy proposals from those of other liberal and center-left figures, and elevates The Crisis of the Middle-Class Constitution above other standard liberal stories of inequality in America.

Kevin Carty

Kevin Carty is a reporter-researcher with the Open Markets Program at New America, where he covers the tech industry as well as other competition and concentration issues.