The Grand Social Coalition and the Middle Class Society
The Age of Trump has been in the making for decades and it has to do with changes in human settlement patterns (urbanization) as well as political economy. In the case of the United States the most important characteristic of this age is the massive growth, urbanization and mobility of the world population, the decline of the middle class and the dramatic rise to power of the techno-managerial elite and the super-rich power elite. Poverty and lack of equal access have been popular urban issues for a long time. However, fundamental structural issues of political economy have rarely been raised in the urban context. Now urban areas are emerging as the battlefields for national struggles to dominate and control the new political economy. It is that struggle that will determine the function and form of urban areas in the years to come.
In my book, Trapped by History, I presented the complex changing character of socio-economic elites vis-a-vis the middle class in the United States. The key findings from that analysis are related to those to those presented in Thomas Piketty’s Capital in the 21st Century, and in Charles Murray’s Coming Apart. Piketty documents how in earlier times elites derived their wealth and income from land or physical assets, lost this wealth due to World War I, the Great Depression and World War II, and in the new economy have hitched a ride to their own restoration through control of management with no connection to fixed assets of place.
Murray takes a different approach to analysis of the same situation from a sociological perspective. Murray presents a picture where in the past elites were somehow bound to the rest of the population, but became aliened from physical place primarily through social and cultural segregation.
As both of those authors explain, elites were limited by the earlier structure at least until the 1960-70 period. Then suddenly something changed. In recent times a techno-managerial elite has emerged which derives its status from management, regulation and technical structures, and which serves a resurgent power elite that dominates through finance rather than investment in localized physical assets.
As observed by Murray Bookchin, feudal, mercantilist and capitalist structures functioned contemporaneously, even as additional trading and industrial elites and then a much larger middle class emerged. The industrial elite was much greater and often had more power and influence than the earlier trading and landed elites. However, the industrial elite continued to be generally bound to local areas and communities, as well as to the broad middle class in a political economy structure that reached its zenith in the United States and which prevented that elite from gaining controlling dominance. From time to time there were examples, such as the robber barons in the United States, where the elite did exert substantial independent power over the political economy, but there was usually pushback against this and it did not seem to be sustained.
For much of the 20th Century labor made substantial progress within the political economy and the majority of labor joined the middle class and the grand industrial-era economic coalition. This grand coalition resulted in a broad national stability in the United States that was threatened only by extreme ideologues, a small underclass and the Cold War communist bloc. In Trapped by History, I reference a number of factors such as the anomalous world political economy after World War II that created conditions that allowed a new elite, the techno-managerial class, to emerge, and to quietly and invisibly strengthen and free itself from the social, cultural and geographical controls that undergirded the grand coalition.
Restructuring of the Grand Social Coalition
By the end of the 20th Century extreme ideology and Cold War threats had apparently faded away, leaving only the underclass as a threat to the grand coalition, giving birth to the unprecedented hubris represented by Francis Fukuyama in his book, The End of History. Over years the historical underclass had been pacified at a level that provided relative peace in the society, but the cost of which continuously increased and was not fully accepted by a large part of the society. However, the new techno-managerial class championed this social buy off and increasingly shifted its cost to the middle class facilitated by increasingly favorable economic conditions. The techno-managerial class also supported development assistance to less developed countries and increased immigration in the guise of sharing opportunities and wealth – but that class participated less and less in the cost of that buy-off and sharing, and more and more in its benefits. After the end of the Cold War the techno-managerial class added to this buy-off and sharing structure an unquestioned promotion of globalization to enrich footloose capital and partner elites in less developed countries (as emphasized by the Latin American dependency theorists).
All these changes represented a betrayal by the techno-managerial class of the national grand coalition, and the establishment of a new coalition of everyone but the historical middle class in the United States – but without a repudiation of the grand coalition. As a result, many members of the middle class still continued to believe that they shared some economic, social and cultural interests with the techno-managerial class, despite their growing doubts about their status in the emerging political economy. In fact, the techno-managerial class rose to be the dominant power in the United States (and also in almost every other country) with a declining need for middle class support. This declining need was achieved because of the miraculous explosion of market consumption from the middle class that masked its declining political and economic power. This market consumption was largely due to the manipulation by the techno-managerial elite of currency exchange rates to keep prices low, to the introduction and massive expansion of future-mortgaging credit, and to the normalization of two-income households. This market consumption system required a global production and distribution system, as well as economies of massive scale. In order to make this a success, it was necessary to transfer technology, knowledge and consumption to less-developed countries, and to financialize the economy.
A consequence of this new system was the replacement of many of the native-born American middle class in emerging professions by immigrants in the United States and by domestic labor in other countries. That resulted in increased wages, profits and political payoffs for operations in less developed countries, while at the same time reducing native-born middle class wealth, upward mobility and small business profits in the United States. This began a cycle where income and consumption was transferred from the American middle class to an increasing proportion of the population in less-developed countries and to those who emigrated from those countries. As production and wealth were transferred to less developed countries, new opportunities were created for hiding profits generated by foreign operations, and substantial new demand arose for all classes of assets and products that would ultimately compete with that of the United States and other developed countries and result in higher prices and lower standards of living there. This is part of the reason why returns on productive (as opposed to speculative and intellectual property) investments have been steadily decreasing.
An initial weakness of the techno-managerial class was that it broadly shared with the middle class the common national financial and regulatory systems, which were directly felt in daily life and were difficult to change stealthily. However, financial regulation of institutions that was controlled by the techno-managerial elite had been reduced for many years, greatly increasing the profitability of financial activities for the techno-managerial class. By the turn of the 21st Century deregulation made it more possible to de-link local savings from local investment and control, and even to distort the nature and authenticity of financial records, draining resources from communities into the national and international financial system where there was greater opportunity for malfeasance. In the aftermath of 9-11, increased controls and charges on routine financial transactions was mainly targeted at and further weakened the middle class.
But it was the regulatory changes after the financial turmoil of the Great Recession which introduced stealth currency de-valuation that finally put the nails in the coffin of – and subdued – the middle class. This de-valuation was achieved by reducing the value of savings through low interest rates set by the Federal Reserve and the facilitation of various high level financial transactions by the techno-managerial class that provided higher rates of return to them than those available to the middle class. This resulted in the enrichment of the techno-managerial class and opportunities for it to acquire more power over the middle class.
The emergence of the techno-managerial class was made possible by fundamental changes in the political economy which we can consider as a loosening of public and private, formal and informal controls over that class. This loosening was a Janus-faced development in that it provided advantages and benefits to the techno-managerial class to transcend restrictions of the political economy – but at the same time required introduction of compensatory and balancing restrictions on the middle class. At the same time as controls on moving capital across jurisdictions were removed and public subsidies increased for the techno-managerial class, increased and unsubsidized individual educational, professional, liability and technical standards were imposed on the middle class.
The techno-managerial class had managed to grow regulation over the years to the point that only that class or individuals sponsored by it could qualify or bear the cost of participation in a wide range of economic activities largely due to large scales of economy which the techno-managerial class supported. Examples of that regulation include the systems of college education and professional accreditation. Admission to and funding for the most prestigious colleges is now more readily available for the favored non-native and non-middle classes in comparison with the native-born middle class. In contrast, the elite have powerful networks that allow them to avoid the need to compete for college admission and for investment in accreditation.
It was with the capture and manipulation of financial and regulatory systems that the techno-managerial class reached a stage where it was accountable to no one and to no place, and where it could set all the rules. It is still curious that the Great American Middle Class did not resist these efforts by the techno-managerial elite. In my book, Trapped by History, I address this mystery. The reason for the lack of resistance, is in brief, that in addition to the escape of the techno-managerial class from dependence on the Great American Middle Class, communities and local jurisdictions, the Great American Middle Class has been dismembered into a number of interest groups, such as race, gender, language, age, etc. whose individual priority interests now outweigh their common interests.
In addition, in a short period of time, the techno-managerial class has grown as a significant number of the Great American Middle Class have joined it, and at the same time as a similar significant number of the Great American Middle Class have declined into a rootless labor class. As a result, there is no longer a natural un-fragmented Great American Middle Class voting bloc that can oppose the techno-managerial class. Moreover, the Great American Middle Class has been indoctrinated for decades to believe that science, technology, management and so-called merit, as represented and performed by the techno-managerial class, are in their best interests, objective, and prosperity/equity-providing.
As a result of these changes local, regional and national political economies have been superseded in favor of a global scale political economy. With this change the number of economic playing fields of the power elite has been reduced while the scale of their power and wealth has increased dramatically. At the same time, new subordinate levels of global political economy management have emerged. This has resulted in a worldwide increase in the techno-managerial class with members who range from the mildly to the shockingly prosperous. However, this class is not the power elite, but it operates a system that facilitates its status and activities as well as those of the much smaller power elite.
Nevertheless, members of the techno-managerial class may have influence far beyond their personal circles. This class can include individuals ranging from university professors, consulting engineers, actors, journalists and religious leaders to famous individuals, corporate directors, etc. Although the difference in wealth and influence among these individuals can be very great, they are all members of the techno-managerial class, although they are rewarded unequally based on the networking, importance and difficulty of their respective roles in managing the political economy.
It is important to understand that the techno-managerial class is a new class. While the brief Post-World War II middle class was a partial descendent of the late industrial-era middle class with an independent interest in opposition to the power elite and the underclass, the techno-managerial class serves to manage a political economy that includes a public administration and regulation system, a media-entertainment-education propaganda structure and a military-security-industrial-consumption complex that converges with the interests of a small power elite – mainly because of its financial resources, with the underclass and with their counterparts in other countries against the increasingly disempowered and isolated middle class.
It is unclear exactly why the techno-managerial class has allied with these other classes against the great middle class. It is possible that the power elite has so much wealth and controls sufficient structures that the techno-managerial class is powerless to reform or replace those key elements of the political economy that satisfy the power elite. More cynically it could be that the techno-managerial elite has been morally corrupted to the point that it no longer opposes the function of the power elite – but rather now wishes to capture or share that role.
The techno-managerial class has also allied itself with the under and disempowered labor class – a class that has traditionally opposed similar elite classes – against the great middle class. In this there may be some parallel with the Soviet Union elite that sustained and marshaled the labor class to make its privileged position possible, although there was no opposing middle class there. In the current environment, the techno-managerial class can be seen using the underclass as its agents in the volunteer army, the TSA, the government sector, and much of the service sector, in addition to criminal, subversive and civil disturbance activities. The role of the underclass established by the techno-managerial class in this broad range of activities serves to undermine the social, cultural, political and economic status of the middle class by removing any middle class control over those activities and by establishing independent administrative authority over, and disrespect for, the great middle class.
Segregation of the Techno-Managerial Class from the Commons
The global techno-managerial class is increasingly rapidly segregating itself from the bulk of the world’s population at every geographical and jurisdictional level in terms of micro as well as relative location, public/common services and market consumption. This segregation facilitates the withdrawal of the techno-managerial class from general participation and public financial contribution even as it has gained a massive wealth transfer from the middle class. This is one of the key reasons why the quality of public services of previous times is no longer possible. The withdrawal of the techno-managerial class from a broad range of public shared services or market functions also allows the techno-managerial class to avoid the need to interact with its underclass agents as well as with the ordinary middle class, making it possible for the underclass to be used as a direct agent to enforce the techno-managerial power against the middle class.
The techno-managerial class facilitates vast social and economic segregation through various regulations and structures and is rewarded with comfortable positions in the society, and secure jobs in the education, government, corporate and entertainment sectors. The primary job of the techno-managerial class is to exempt the power elite and themselves from public accountability and oversight. The result is the increasing concentration of those classes in a limited number of cities around the world where they organize national and global political economies according to their interests.
The techno-managerial class generally provides no primary wealth generation capacity other than management control from which it extracts commissions. Although the power elite are great beneficiaries of the current political economy this does not mean that they can impose or manage it at the overall system level, even though they may have conceived and promoted it. It is the techno-managerial class that implements all aspects of the middle class-destroying political economy for its own management-commission gain, leaving the greatest benefits to the power elite, even though in addition to self-interest its members may think that they are expanding and enforcing a self-initiated preferred social contract.
The Millennial City 