Apart from the chaotic White House, the dysfunctional Congress and the astronomical public debt, American society is becoming dangerously divided as powerful forces continue their relentless concentrations of wealth and power.
This is a far cry from the original American Promise of the young republic as a “Light on a hill.” The present chaos is certainly a great betrayal of Abraham Lincoln’s description of 19th century America as the “Last best hope for mankind.”
What could possibly have gone wrong?
An interesting theory being tossed about is that capitalism and republicanism are – in fundamental ways – incompatible. Industrial-style capitalism, in particular, has been identified as the root cause of the decline of essential republican character of American society.
At the core of the republican experiment in the New World lies the idea of liberty. For U.S. founding father Thomas Jefferson, the source of an individual’s freedom was their active participation in a society in liberty. Liberty is a quality of the group; its unique features facilitate an individual’s freedom.
Needless to say, American liberty was idealized. But even so, the idea of liberty when contrasted with the despotism and degradation of the Old World was welcomed as a great improvement in living conditions.
Importantly, Jefferson went further and described the means of acquiring liberty. Independence lay at the core of Jefferson’s idea of liberty. The republic’s unique social and political independence was predicated on American individuals’ ownership of productive property.
Certainly Jefferson didn’t include southern slave populations in his thinking, nor did he envision the dramatic changes brought about by industrialization. He imagined an ideal America of farmers and artisan producers who “owned their means of production” and “depended on no man for their living.”
Capitalism, on the other hand, makes no bones about its founding principles. It agrees fully with the republican ideal of the individual ownership of property. However, in capitalism, freedom was the priority and not the qualities of social liberty.
Regrettably, at the core of industrial capitalism lies a separation between the owners of the means of production (capital) and the workers, who simply mobilize the productive machines (labour).
The accounting is important here. Capital in this industrial world is an asset that grows with an expanding economy, whereas labour is simply an expense that must be reduced if productivity is to be improved. In industrial capitalism, therefore, wage earners became a form of dependency.
And as industrialism rose to prominence and became the economic establishment in the 20th century, government policy started to align with business interests, condemning labour to decline as it was forced into subservience.
Industrial capitalism tilted the economic playing field, progressively narrowing the estate of ownership in society, undermining an essential quality of republican society.
What’s so strange about this is that the Republican Party in the United States – the party of Lincoln – is today intimately tied to big business, the driving force of the capitalist movement worldwide.
Today, the top one per cent own more than half of the productive assets in the economy. And this concentration of wealth shows no sign of reversing any time soon.
But perhaps the new post-industrial economy offers a glimmer of hope. If saving the republic means widening the estate of ownership of productive assets, what does that mean in a world where assets are intangible, like big data?
For example, at the moment digital giants are expropriating ownership of our personal data. These valuable data resources are being sucked into a vortex owned by a handful of enormous companies like Facebook.
A Jeffersonian response to this undesirable situation would be to focus on the health of the republic as a priority and widen the estate of ownership in personalized data by strengthening individuals’ rights of property.
Strengthening and then extending the existing copyright law to include all digital data and establishing clear legal title would provide individuals with personal ownership of their data and, in essence, an equity stake in the new means of production.
It would only be a first step but it could start to reverse this damaging concentration of wealth and, maybe, renew the republic.
Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.