The New Class War

by Michael Lind

  Burnham’s theory of the managerial revolution is similar to the economic sociology of the American economist John Kenneth Galbraith. In their politics, the conservative Burnham and the liberal Galbraith could hardly have been more different from each other, despite their shared friendship with the influential conservative editor and journalist William F. Buckley Jr. Yet both believed that a new ruling elite had displaced the old bourgeoisie and aristocracy. In The New Industrial State (1967), Galbraith called the new elite the “technostructure.” In his memoir A Life in Our Times (1981), Galbraith wrote: “James Burnham, partly because he was a stalwart right-winger well out of the political mainstream and partly because he was not a certified academician, never got full credit for his contribution. In early editions of The New Industrial State I was among those in default.”6

  While Burnham and Galbraith included engineers and scientists in the new elite, they were not describing a technocracy like the utopian “soviet of technicians” hoped for by the maverick economist Thorstein Veblen.7 The most important managers are private and public bureaucrats who run large national and global corporations, government agencies, and nonprofit organizations. They exercise disproportionate influence in politics and society by virtue of their institutional positions in large, powerful bureaucracies. Some are independently wealthy, but most are salaried employees or fee-earning professionals. Most of today’s billionaires were born into this university-educated, credentialed, bureaucratic upper middle class, and their heirs tend to disappear back into it in a generation or two. Premodern titled aristocrats who survive in the contemporary West are anachronisms who, for the most part, avoid ridicule by disguising themselves as hardworking professionals and managers.

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  IN MY BOOK The Next American Nation (1995), I used the term “overclass” to describe this group of college-educated managers and professionals.

  How big is the overclass? It’s difficult to measure, but operating on Mark Bovens and Anchrit Wille’s theory that Western democracies are “diploma democracies”—“ruled by the citizens with the highest degrees”—we can count higher education as a market of membership in the overclass.8

  In both Europe and the US, only about three out of ten citizens have college degrees, and that a third of the population provides almost all government, business, media, and nonprofit personnel. Even fewer citizens have the professional or graduate degrees that more accurately correspond with membership in the college-educated managerial overclass—no more than 10 or 15 percent of the population in a typical Western nation, a small minority, though considerably larger than the much-discussed “1 percent.” This credentialed overclass owns roughly half the wealth in the United States, with the rest divided between the superrich and the bottom 90 percent.9

  Are the managers and professionals an inbred, self-perpetuating, hereditary class as well as an educational elite? In a purely meritocratic society, the ranks of university-educated managers and professionals might be refilled completely by upwardly mobile individuals in each generation. In the United States, however, American college students tend to have one or more college-educated parents. In other Western democracies as well, membership in the university-educated managerial class is also partly hereditary, though partly open to talent from below.10

  In the United States and Europe, intergenerational mobility, measured crudely by correlation between the earnings of fathers and sons, is strikingly low. According to Julia B. Isaacs of the Brookings Institution, roughly half of the “parental earnings advantage” is inherited by sons: “If trends hold, it would take an average of six generations for family economic advantage to disappear in the United States and the United Kingdom.” In Canada, Norway, Finland, and Denmark, social mobility is somewhat higher, such that “it would take three, not six, generations, to essentially cancel out the effects of being born into a wealthy family.”11 If only America were more like social democratic Europe, it would take only three generations to make a gentleman.

  The persistence of class in Britain is even more striking. Gregory Clark and Neil Cummins have demonstrated that Britons with Norman French surnames like Darcy, Mandeville, Percy, and Montgomery have been at the top of the British social order for twenty-seven generations since the Norman conquest in 1066, while families with Anglo-Saxon names like Sidwell, Tonbridge, and Goodhill still tend to be poorer and less educated.12

  It may be true that college degrees are tickets out of poverty, but most of the tickets are passed out at birth to children in a small number of families with a lot of money. In the United States, students with math scores in the bottom half who come from families with the highest socioeconomic status are more likely to finish a college degree than students from families with the lowest socioeconomic status who have math scores in the top half of the range.13 In a true meritocracy, the mediocre children of college-educated parents would constantly be tumbling down into the non-college-educated working class, replaced by smarter, upwardly mobile scions of the working class. But overclass families will do anything they can to make sure that their offspring remain in the university-credentialed elite into which they were born, including, in the United States, bribing university admissions officials and reference letter writers.

  The Industrial Revolution did not replace class systems in the West with classless, meritocratic societies. It replaced the old, mostly hereditary class system consisting of landlords and peasants with a new, mostly hereditary class system consisting of managers and proles, in which degrees are the new titles of nobility and diplomas the new coats of arms.

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  IS THE MANAGERIAL OVERCLASS global or national? The new class war, in its international dimension, is not a classic Marxist struggle of postnational capitalists against a global working class. Nor is it the work of rootless “globalists” of the kind sometimes denounced by populists. Today’s Western managerial elites often pretend to be “citizens of the world,” and signal their virtue by disdaining the democratic nation-state as parochial or anachronistic. But most are deeply rooted in their home countries.

  While many supply chains are now regional or global, the headquarters of the global economy are not only in the triad of North America–Europe–Northeast Asia but also disproportionately in the US, Japan, Germany, and the UK. Of the top ten multinationals by foreign assets in 2016, three were based in the US (Chevron, General Electric, ExxonMobil), two in the UK (the oil companies Royal Dutch Shell and BP), two in Japan (Toyota, SoftBank), and one apiece in Germany (Volkswagen), France (Total), and Belgium (Anheuser-Busch InBev).14 Even when they establish transplant operations in the territories of other developed nations, leading multinational firms, like Toyota, Daimler, and Ford, tend to retain their national identity at the leadership level.

  Nor has a transnational managerial elite replaced national managerial elites. In the United States, foreign-born CEOs in 2015 accounted for only seventy-three, or 14.6 percent, of Fortune 500 CEOs. As of 2014, international revenue made up 37 percent of total revenue for S&P 500 firms, but the share of directors who were foreign nationals was only 7.2 percent.15

  The new class war is not a global class war. It consists of struggles in particular Western nations among local overclasses and local working classes, struggles that happen to be taking place in many nations at the same time.

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  ON BOTH SIDES of the Atlantic, the political divide between the educated overclass and the rest of the country is stark. In the 2016 US presidential election, among counties with a population of fifty thousand or more, Hillary Clinton won forty-eight of the fifty counties that had the highest percentage of voters with at least a four-year bachelor’s degree. Support for her presidential bid “collapsed” (to use the pollster Nate Silver’s term) in the fifty counties with the lowest educational levels. Political differences correlated with education can be found among ra
cial and ethnic minority populations as well.16

  The same pattern is evident in Europe. In Britain, for example, the chief trait predicting support for the Leave side in the Brexit referendum in 2016 was lower educational qualifications—a trait that was more important than others, including race and ethnicity.17 Because the possession of a diploma tends to indicate birth into the economic elite, these figures manifest conflict among largely hereditary social classes, not a clash between knowledge and ignorance or intelligence and stupidity.

  If a united working class voted against the overclass, the latter would lose every election. But national working classes have always been divided in politics by various cleavages—religious, regional, racial, ethnic, and ideological—to the benefit of outnumbered managerial elites. The most important cleavage dividing the working classes in today’s North Atlantic democracies is rivalry for jobs, public services, and status among old-stock natives and recent immigrants and their descendants. To understand this rift within the working class, we must add to James Burnham’s analysis of managerial rule the split labor market theory first proposed by sociologist Edna Bonacich in 1972.18

  According to Bonacich, a split labor market occurs when there are “at least two groups of workers whose price of labor differs for the same work, or would differ if they did the same work.” In the case of some regional or ethnic groups: “Crushing poverty may drive them to sell their labor relatively cheaply.” In this situation, employers will prefer to hire members of the group willing to work for lower wages. In response, higher-paid workers will attempt to maintain their standard of wages by preventing employers from doing so, by excluding the rival group and confining it to certain occupations in a segregated, caste-like system, or by leveling the playing field so that there are no group-based wage differentials. According to the historian Gavin Wright, by eliminating the split labor market that existed under segregation, the civil rights revolution contributed to economic growth and more widely shared prosperity in the American South in the final decades of the twentieth century.19

  Split labor market theory is a great improvement on the simpleminded explanation of the opposition of native workers to immigrant rivals or workers competing with them abroad as the result of preexisting individual prejudice. Bonacich complained that “both Marxist and non-Marxist writers assume that racial and cultural differences in themselves prompt the development of ethnic competition. This theory challenges that assumption, suggesting that economic processes are more fundamental.”

  The description of the new class war here is simplified for clarity. There are many fine gradations and categories that must be left out of a book like this. The university-credentialed overclass contains moderately paid schoolteachers and store managers as well as wealthy corporate lawyers and billionaire entrepreneurs. Workers who did not go to college include prosperous construction contractors as well as high school dropouts who work as janitors or laborers employed by moving companies.

  Even with these qualifications, the pattern of politics in today’s Western democracies is best described as a struggle with three sides—the overclass and two segments of a divided working class. Working-class immigrants and some native minority group members whose personal conditions are improving compete with many members of the native working class, mostly but not exclusively white, who find their economic status, political power, and cultural dignity under threat from below as well as from above. The only winners are a third group: the mostly native, mostly white overclass elites who benefit from the division of the working class.

  “All politics is local,” as the old American saying has it. In modern Western democracies, the division of the national territory into federal subunits and voting districts means that class conflict is manifested by geographic differences in partisanship and worldview. In the next chapter I will explore the geographic battlegrounds of contemporary politics on both sides of the Atlantic—hubs and heartlands.

  CHAPTER TWO

  Hubs and Heartlands: The Battlegrounds of the New Class War

  ON A MAP OF the United States color-coded by party, big cities and university towns and a few regions with large immigrant and racial minority populations are a chain of Democratic islands in a Republican ocean. Similar patterns appear on maps of voting for Brexit in the UK and elections in continental Europe.

  Looking at these maps, it is easy to see why scholars and journalists refer to the “urban-rural divide.” But this is misleading. Farm owners and farmworkers make up only a tiny sliver of the population in the typical Western democracy. Most voters in Europe and North America today live in broadly defined metro areas or small communities on their periphery. In the case of partisanship, the most important border is not between city and countryside, but between expensive, high-density urban business districts and inner suburbs on the one hand and, on the other, low-density suburbs and exurbs.

  Rather than use the terms “city” and “countryside,” we can describe the high-density areas as “hubs” and the low-density areas around and between the hubs as “heartlands.”

  The hubs and heartlands are distinguished not only by population density but also by different economic sectors. In the hubs, home to most of the managerial overclass, we see two primary sectors: high-end business and professional services, and luxury services. In the heartlands, we find two other sectors: goods production and what can be described as “mass services.”1

  The high-end business and professional services concentrated in the hubs, which Saskia Sassen has called “global cities,” such as New York and London, include software, finance, insurance, accounting, marketing, advertising, consulting, and others whose clients are often corporations, including global corporations managing supply chains in many countries.2 No matter where they are born, professionals and managers often move to pursue their careers in major hub cities that specialize in particular producer services—software in San Francisco and the Bay Area, finance in New York and London and Frankfurt.

  Much of the discretionary income of elite managers and professionals in the hub cities is spent on luxury services. In Europe and North America, these amenities are provided by the sectors that the economist David Autor calls “wealth work,” a category with formal job titles that include Gift Wrapper, Fingernail Former, Mystery Shopper, and Barista.3 The combination of low wages and high living costs for many workers in hubs like New York, London, and Paris make these occupations unattractive to many native workers of all races, as well as more prosperous immigrants, who often move to suburbs or exurbs as soon as they can afford to escape. Urban service jobs are filled disproportionately by recent immigrants, for whom miserable pay and crowded living conditions in the hubs are preferable to the limited opportunities in the countries they left behind.

  The social liberalism of these high-end service meccas cannot disguise their extreme inequality. The gap between richest and poorest in New York City is comparable to that of Swaziland; Los Angeles and Chicago are slightly more egalitarian, comparable to the Dominican Republic and El Salvador.4

  Meanwhile, in the vast areas of low-density, low-rise residential and commercial zones around and among the hierarchical hubs, a radically different society has evolved. In the national heartlands, apart from expensive rural resort areas, there are fewer rich households and therefore fewer working poor employed by the rich as servants and luxury service providers.

  In the US and Europe, the population of the heartlands is much more likely to be native-born and white. But the heartlands are becoming more racially and ethnically diverse, making the familiar equation of “urban” and “nonwhite” anachronistic. For example, most African Americans and Latinos in the US are neither poor nor urban but belong along with most white Americans to the suburban and exurban working class.5 Over time, the share of the heartland population that is nonwhite or mixed race is growing, as both nonwhite immigrants and native minority-group members are driven by rising real estat
e costs out of hub cities that have grown whiter and richer thanks to gentrification. In the United States, immigrants from Latin America are assimilating to mainstream language and culture and marrying outside of their group at a rate similar to that of European immigrants in the past.6 It is a mistake, therefore, to assume that the hub city ethnic diasporas of today will endure rather than wither away in time as did America’s “Little Italys” and “Little Bohemias.”

  In the heartlands are found almost all of the goods-producing industries that have not been offshored to other countries—factories, farms, mines, and oil and gas wells. In addition to being the realm of goods production, the heartland is the land of mass services. In the somewhat idealized era of mid-twentieth-century industrial Fordism, the workers in mass-production industries earned enough to buy the products they made, such as cars, radios, and television sets. In the twenty-first century, the workers in mass-provision service industries—waiters at inexpensive chain restaurants with working-class clienteles at exurban highway intersections, for example, unlike waiters at prestigious downtown restaurants—often can afford to purchase the services they provide, in a kind of service-sector Fordism.

  In short, the hub-heartland divide that is reshaping politics on both sides of the Atlantic is the geographic manifestation of a class divide. Partisan geographic differences tend to be proxies for class conflicts, with the interests of hub city overclasses and heartland working classes colliding when it comes to environmental policies, trade, immigration, and values.

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  OF ALL OF the self-serving myths that are found in metropolitan overclass propaganda, the most absurd is the idea that the hubs are more “productive” than the heartlands. This makes sense only if productivity is equated with income. By this standard, if all the billionaires in the United States moved to Jackson Hole, Wyoming, the luxury resort community would become the most “productive” area in the US overnight.