Over the last 20 years or so, people have begun to talk about a new Gilded Age. They’re saying we had a Gilded Age in the late 19th century: an age of massive economic inequalities, dislocation and rapacious capitalism. We had the New Deal in between, and with Reagan and Thatcher, we went back to market fundamentalism. Again, we see the same types of inequalities that we saw in the late 19th century.
For historians, this type of comparison is an opportunity, but it’s also hazardous. The context is very different. In the late 19th century, the United States was industrialising. It was moving away from being an agrarian society to becoming an urban industrial society.
American society today is de-industrialising. In some ways, it’s actually taking apart the industrial economy that was constructed in the late 19th century and early 20th century. Obviously, we’re living in a more global age today. The technologies are very different. We’re no longer talking about railroads and telegraph; we’re talking about the internet. The context is very different.
Nevertheless, some striking parallels are interesting and important to think about. The late 19th century was particularly a moment of formation for the United States: a reconfiguration with a lot of debates, conflict and engagement over what the modern United States would become. As historians, we have to gratify the emergence of a similar type of conversation today in public life about where we are, where we would like to go, and what ought to be the relationship between States and markets in this new reality.
States and markets
In the 19th century, amid this conflict over the relationship between States and markets, you had a very robust voice arguing for market fundamentalism, for laissez-faire. A lot of people were making that argument. Today, we hear the same voices, in politics and public life, prioritising the market, arguing for the removal of government constraints and regulation, and seeing government programmes as an obstacle.
The analysis that I would like to offer of the Gilded Age greatly complicates this view. Instead of thinking about the late 20th century as a return to a mythical age of laissez-faire, we need to think about it as a moment of reconfiguration of a relationship. We need to examine the role the State has played in the age of globalisation and the age of the internet, rather than writing it out of the story and prioritising and privileging the role of private entrepreneurs.
The role of the State in globalisation
Rather than a technologically driven process – a new age that was created by the internet, new transportation technologies, new modes of communication – we can think about globalisation as a political project, something that was engineered in our legal system, in our regulatory system and in our policies toward trade. These are the policies and the issues that come to the fore when you think about globalisation through this prism.
There’s a lot of research today that shows that globalisation and what we call neoliberal capitalism is not the result of private market forces but was engineered in the political sphere instead. It was put in place through public policies. In some ways, certain institutions that came out of the New Deal were weakened or taken apart, particularly the labour movement and labour unions.
At the same time, rather than thinking about financial institutions as being deregulated, we have to think about them as being re-regulated: given new legal privileges and new legal authority to offer new products, to operate in new markets, to roam around the world. All of this was engineered in the legal code and the legal system over the last 20 or 30 years.
The late 19th century, just like today, was also an age of globalisation. The questions for policymakers and States in both periods are, in some ways, the same: how do you situate yourself in relation to this large-scale process? Do you go along with the voices that argue to secure property rights, to make the world safer and friendlier to business interests, and allow that to drive the process? Or do you impose public priorities and political priorities on this private system?
In the late 19th century, Americans fought very hard to push back against the prerogatives of private investors and capitalists. Through policies such as tariffs, antitrust legislation and other regulations, they worked to make sure that the process ultimately generated broad-based prosperity; that it generated industrialisation; that it did not become a form of rentier capitalism and move toward extraction.
Today we’re again living in the process of globalisation. And again, policymakers and States are debating how to situate themselves in relation to it. The States that have been most successful and have benefitted the most from this process of globalisation have been able to do something similar. These States allow investors to come in, allow private interests and markets to expand. Notwithstanding, at the same time, they discipline them, push back against them, impose public priorities on them in a way that ensures that the process ultimately serves a broad base of the population, that it’s not benefitting a very small group of people.
State policies in the internet age
The political balance of power is very different, and policy priorities have changed over the last few decades. The State is still essential in a variety of ways, especially when you think about the internet and new technologies. Many of these technologies emerged from the defence sector and government investment.
However, the other side of the equation was not as robust. The State was very supportive of corporate interests and private investors, but it was not as effective in demanding something in return. It was not as effective in asking them, for example, to pay taxes so that public services and infrastructure could be provided for the broader population. It was not as good at pushing back against many facets that would enable the public to benefit much more from technological innovation and progress from the new economy that emerged with the decline of the traditional manufacturing economy, such as some financial practices, some copyright protections, all of those types of questions.
The risks of demanding nothing in return
First, I’m concerned about the effects of an economy that privileges and prioritises the needs of a very small group of people. Also, I would be concerned whether that is sustainable in the long term. After all, a lot of the technologies that made the internet age possible came out of government investment, the public sector and the military. If those types of resources are monopolised by a small group of people who are not necessarily reinvesting those resources into further research and technological development, then the internet age is ultimately going to be a fairly short technological breakthrough, and it’s not going to sustain itself.
We already see some signs of that. For both of those reasons, we should take inspiration from the policy battles of the late 19th century and early 20th century. We can understand, just like Americans in that period, that capitalism is great. Still, the public has to assert itself and demand something in return rather than allow the capitalist to run away with all of the rewards.
If we think about comparisons to the US in the 19th century, the great analogy is China today. China is the country that has benefitted the most from globalisation precisely because it has been able to harness private entrepreneurs and market forces while also imposing upon them the priorities of the Chinese State and the public to generate Chinese development and industrialisation. The United States did that differently, using different tools and different methods in the late 19th century.
The analogy for what the United States is doing today, which is catering to the interests of private investors, demanding very little in return, offering them incentives and not taxing them, is what happened in other global peripheries in the late 19th century and early 20th century. In some ways, ironically, the United States is following what Latin American countries did in the late 19th century, which was to protect the rights of British investors, offer them an unregulated environment and ask them for very little in return. The outcome of that was extractive economies that were volatile, unstable, and did not benefit the vast majority of the population.
The United States today is following in the footsteps of some of these highly problematic cases of the late 19th century and early 20th century. These other peripheries failed to industrialise, failed to create sustainable economies and remain to this day very dependent on extraction and agriculture, and were unable to pull their populations out of poverty.
