Tuesday, September 23, 2014

Who Rules America?

Who Rules America?


Joel Kotkin's new book fingers Silicon Valley as the new elite. Is he right?

In The New Class Conflict, Joel Kotkin argues that the socially and politically ascendant groups in contemporary America are the oligarchs of Silicon Valley and a complex of elite journalists, think-tank pundits, and academics that he dubs the clerisy. The nouveaux riches of the tech world are increasingly intent on remaking society in accordance with their own passions, reports Kotkin, an urban studies scholar at Chapman University. The clerisy, meanwhile, promotes and provides ideological legitimation for elite goals. The effect of the two groups' efforts, he concludes, is to concentrate wealth and power in a shrinking number of hands, leaving the middle class stranded and subject to ever more evident economic decline.

Kotkin does not claim that either group is a monolith. Different factions within each class compete for access to wealth and political influence, and they also exhibit some differences in cultural commitment. But overall, Kotkin suggests, there is a persistent pattern: Contemporary elites are socially liberal but relatively blasé about the bread-and-butter impact of a broad range of policies that drive a growing wedge between those at the top and everyone else.

Thus, for example, tech leaders press a green agenda whose elements include support for mass transit and opposition to suburban living. Such policies implement the oligarchs' moral and æsthetic preferences, and sometimes they create business opportunities for the oligarchs' class (as when they invest in and promote putatively green technologies). But the same policies pose risks for the well-being of many ordinary people, by constricting their options and limiting their access to resources.

Similarly, while Bill Gates may call for higher taxes on the rich, many tech firms (Kotkin points to Twitter and Apple) seem quite happy to ensure that tax burdens fall not on them but on the middle class. (Gates's own Microsoft, for instance, has "shaved nearly $7 billion off its U.S. tax bill since 2009 by using loopholes to shift profits offshore.")

Despite its social liberalism, Kotkin suggests, the tech industry is visibly focused on business models in which disregard for privacy is central. Some commercial intrusions (sometimes compatible with contractual and property rights, sometimes not) may be annoying but relatively benign. But the industry has also generally appeared quite willing to facilitate surreptitious state monitoring of multiple facets of interpersonal communication as well.

Kotkin also criticizes the tech industry for business models that disregard people's privacy. These range from annoying but relatively benign commercial intrusions, such as the collection of browsing data to enhance the targeting of on-line advertisements, to cooperation with the National Security Agency's monitoring of our communications. Kotkin also highlights the tech industries' expansion into the broader media world, where their money is being used both to reinvigorate existing media outlets (such The New Republic and the Washington Post) and to create new ones (such Pierre Omidyar's First Look media, home to Glenn Greenwald's The Intercept). In this way, he argues, they create new platforms that allow their allies in the clerisy to enforce environmental and social orthodoxy.

What might a libertarian make of Kotkin's analysis?

Class used to be a significant theme in libertarian political commentary. Though Karl Marx's account of class conflict is better known, Marx acknowledged his indebtedness to earlier French classical liberal theorists of class, such as Augustin Thierry, Charles Comte, and Charles Dunoyer. Class analysis also figured powerfully in the rhetoric of many later libertarians, notably Karl Hess and Murray Rothbard during their alliance with the New Left (and, with a more right-wing populist flavor, in Rothbard's later work as well).

For Marxists, class position is determined by economic actors' relationship with the means of production. The ruling class rules, on this view, because it controls capital, while other classes are subordinate to it because they depend on access to the assets the rulers control. In libertarian class theory, by contrast, class position is a function not of the resources you own but your relationship with the state. Dominant classes are constituted by their relationship with political power. The source of their resources is their ties to the state, and the use to which they frequently put those resources is the manipulation of the state to achieve their goals.

Libertarians and Marxists will frequently identify the same groups as making up the dominant social classes: top elected or appointed officials, for instance, or dominant figures in the military-industrial complex. But while the Marxist might treat a Pentagon contractor as a member of the ruling class simply because of the resources she or he owns, the libertarian would explain the contractor's wealth and class position by stressing the role of the state's war machine and its incestuous ties with the "defense" industry.
Today, unfortunately, you're more likely to encounter class analysis in the discourse of the Marxist left, and perhaps the Tea Party right, than in that of classical liberals and libertarians. Perhaps this is a function of a desire to avoid unsavory associations. Often, I fear, it reflects an instinctive valorization of the successes of those who have made it in today's marketplace, no matter how unfree those markets may be. The worry seems to be that using the rhetoric of class to criticize influential groups in our society will somehow give aid and comfort to those who promote a politics of envy and resentment. But I think this worry is unwarranted. It is possible to acknowledge the creativity and determination of people who actually succeed by contributing to the welfare of others through creativity and peaceful, voluntary exchange while also criticizing social stratification and the abuse of power.

Kotkin is not a libertarian, but his account overlaps helpfully with a libertarian critique of contemporary class relationships. He tends to focus on members of the Silicon Valley elite's attempts to gain political power—for themselves personally and for their class. But it's worth emphasizing that the tech world's ties with the state are much more pervasive than those created by intermittent political campaigns, or even by their campaign donations.

The concentration of wealth in Silicon Valley would be unimaginable without a patent and copyright regime, created by political fiat, that confers monopoly power on a limited number of actors who can use this power to extract wealth at exorbitant rates from businesses and consumers dependent on their products and services. "Intellectual property" rights shore up Silicon Valley firms' control over software and other elements of their businesses, offering the premiums monopolies always make available to those who hold them. The creativity and drive of Valley entrepreneurs is real, but so is the mark-up that intellectual property laws allow them to charge.

The Valley's links with the NSA, and other profitable government contracts, also concentrate wealth in hands of the oligarchs, who are actively involved in vigorous D.C. lobbying. So do Bay Area land use regulations that dramatically raise the cost of living, limit access to housing and commercial space to the wealthiest people and firms, and route wealth to those who have already managed to gain access to land in the region.
The clerisy obviously depends on the state for influence, too. Elite journalists succeed by maintaining access to key political players, generally secured using fawning coverage and stenographic reporting of official positions. Pundits link the media with political elites and work for think tanks that frequently contract with state entities to provide rationales for the policies the establishment favors. Academics frequently rely on state-proffered grants to conduct research. State-mandated licensing requirements channel people into higher education when they might otherwise be inclined to seek alternate means of training. Tax money funds many academic institutions, and tax-secured student loans feed the wealth of universities.

Thus, the class groupings on which Kotkin focuses are (as I have no reason to think he would deny) creatures of the state. The cultural, political, legal, social, and economic environment misshaped by the oligarchs and the clerisy is a product of government intervention.
Kotkin understandably and rightly challenges the results of this intervention. In stark contrast to many contemporary commentators, he emphasizes that economic growth is crucial if the decline in middle-class and working-class living standards is to be reversed. High-minded talk about "sustainability" often serves as an excuse to leave the wealth of elites undisturbed while refusing to pursue policies with the potential to boost the incomes of everyone else. Kotkin stresses that those who care about reversing class polarization must support growth-oriented policies. He also emphasizes the snobbery and disregard for middle-class preferences and aspirations evident in elite groups' disaffection for the suburbs—though he does not address the ways, such as highway subsidies and the use of eminent domain, in which suburban development has been a function not only of consumer demand but also of policy outcomes designed to benefit developers. Silicon Valley isn't alone in its ability to play the lobbying game.

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