By guest author, diogenes (bio below).
There is no better way to describe the progressive activists of 1885-1920 than in President Eisenhower’s phrase for what American democracy requires: “an alert and knowledgeable citizenry.” Because they confronted the Wall Street system when it was new, they saw it naked and with terms for comparison fresh in mind. Its foundations, effects, methods and differences from former practices and conditions were starkly obvious, plainly remarked and often better understood than after its operations began to be taken for granted in the terms proposed by its salesmen. This tended to make progressive analyses and responses penetratingly knowledgeable and ground them firmly in unadulterated contact with primary American civic traditions. “The most important public issues of that day [1900-1914] were … corporate power, finance capitalism, popular democracy, and the rule of the state and federal governments as shapers of public policy.” “Since the seventeenth century, financial questions … [and] differences over currency and the related subject of banking” typically lay at the center of “basic American social and political” contentions. Progressives grasped from the start the legislative character of the Wall Street system’s foundations and its essential basis in corporate and financial law. In accord with traditional American political practice, they judged the proper solution to be rescinding its legal enablements by legislation and replacing them with enactments in the public interest and for the general welfare instead.
Progressive practice and thinking highlights the moral and ethical issues involved in economic and political life as the basis of our general welfare. The key objective is economic democracy, which is to be revived by direct citizen action disempowering predatory wealth by means of law in order to universalize genuine opportunities for middle-class livelihood in an economy that works for everyone, instead of for one in twenty or one in a thousand. As Senator George Norris put it in 1931, “organized wealth has invented a new form of slavery by which the hands of labor are manacled in a new kind of involuntary servitude.” Facing this, the progressive “effort was to find a new equivalent for the old opportunities offered by the frontier, … an attempt to recreate the equality of opportunity that has been lost sight of in the society that was arising.”
From “Populist” times, Progressive economic thought focused on “the middleman,” the toll-taker who inserts his extractive contrivances between the public and public necessities and utilities, and on the legal enablements of this by law and by willful failures of lawless government to enforce law. It sees the “political problem” as essentially an economic problem, an engineering problem. It is practical and pragmatic, intent on appropriate effective action, not abstract analysis or construction of organizational power bases. As Norris said, “We have no partisan axe to grind…. We feel that partisanship is one of the great evils of our government.” In a 1935 interview Wisconsin Governor Philip La Follette told historian of labor Louis Adamic, “theory is necessary, but theorizing, discussions, resolutions are empty, futile, provocative of wasteful dissension if they do not lead to practical, constructive action…. The Progressive movement is dedicated to action.” It believes in the power of experts to analyze economic and societal problems and prescribe pragmatic legal solutions. It is “willing to study the issues carefully to find solutions that would serve the greatest public good rather than the particular advantage of any person or group” and “is characterized by a commitment to bring equality and human dignity to all people and by a resolve to achieve its objectives within the existing social and political framework rather than through social upheaval and revolution.”
Progressive policy favors small business over big and industry and production over business and finance. It realizes that, as Thorstein Veblen points out, “the vital point in business practice is the vendibility of the output, its convertibility into money values, not its serviceability for the needs of mankind.” In The Old Deal and the New (1940) Charles Beard describes the corporate economy that arose after World War One: “With a large part of American resources and industrial plant under the control of large corporations, production and prices had been manipulated privately for years. Thus it happened that only so much would be produced and only such prices would be permitted to prevail as these large companies considered advisable for their profit and interests … They could make money, whether their plants were operated at full capacity or left standing with more than fifty percent unused facilities. That these plants had the capacity to turn out enormous quantities of goods and that the American people sorely needed the goods, were factors necessarily excluded from calculations chiefly concerned with profits and dividends.” “Production for use rather than for profit” — production to serve the needs of mankind rather than to benefit financial predation — is axiomatic to Progressive industrial economics and to its advocacy of ecological stewardship. Conservation of nature was also a Progressive initiative.
Understanding the essentially local character of human needs and desires and that they are better grasped and addressed close-up, rather than controlled from great distances, is elementary for progressive policy. Seventy years before Schumacher, it realized that “small is beautiful,” and acted on the knowledge. It is not opposed to legitimate business per se; it strongly opposes absentee ownership, centralized financial control and predatory extractions, which it sees as working to manipulate, limit and thwart industrious production for use in favor of markets controlled to consolidate private gain and create fictitious financial profit to the detriment of our general welfare and without fundamental respect for the desires or needs of consumers, labor, the community, or the natural world.
Above all, progressive policy favors and aims to promote the public interest, rather than private interests or partisan interests or vested interests or the interests of an absentee plutocratic elite. “Progressives oppose the concentration of vast economic and financial power in a few hands…. The small businessman in Wisconsin [saw] the ‘corner grocer’ go out of business under the fierce competition of the food chains, and the chains were moving into merchandising of clothing, shoes, and other commodities.” Supreme Court Justice Louis Brandeis, a progressive radical, thought that “the United States is too big to be a force for good; whatever we do is bound to be harmful…. The United States should go back to the federation idea, letting each state evolve a policy and develop itself. There are enough good men in Alabama, for example, to make Alabama a good state.” Oregon progressive W.S. U¹Ren, who single-handedly instigated the nationwide campaign that successfully established initiative, referendum and recall in the laws of half the states as basic tools for popular democracy, held that “no plan that transferred private economic decision-making to a distant center of power could be squared with what [they were] struggling for.”
Progressives advocate, in Philip La Follette’s words, “the right of men and women to own their homes, their farms, and their places of employment [as cooperatives]. The curse of our present system is the greed of corporate and absentee owners. Our aim is to restore to those who work on the farm and in the city the ownership that has been wrung from them by the exploitation of private monopoly. In those great utilities of common necessity [e.g. power, water, communications, public transport] which cannot function efficiently except in centralized organizations we recognize the necessity of public ownership. Progressives believe that municipalities and other units of government should be encouraged to own and operate those utilities. We recognize the basic law of the margin of diminishing returns in size. Organizations, whether publicly or privately owned and operated, can be so large that their very size works against their efficient and satisfactory operation.”
As we now understand from biology and ecology, information theory and systems analysis, as well as economics, so-called “economies of scale” are an illusion or a deceit. Absentee control is inherently inferior to local hands-on attention and practice. The longer the feedback loop the weaker the signal and the more noise on the line. The larger a structure becomes, the more it requires in energy and resources merely to maintain its systemic organization and the less able to responsively accommodate local detail, nuance and diversity. A founder of the science of ecology, Eugene P. Odum writes “As the size and complexity of a system increase, the energy cost of maintenance tends to increase proportionally at a higher rate. A doubling in size usually requires more than a doubling in the amount of energy that must be diverted to pump out the increased entropy associated with maintaining the increased structural and functional complexity…. As population density increases and urban-industrial development intensifies, more and more energy, money, and management effort must be devoted to the services (waste, sewage, transportation, and protection) that maintain what is already developed to ‘pump out the disorder’ inherent in any complex, high-energy system. Accordingly, less energy is available for new growth, which eventually can come only at the expense of the development that already exists.” In 1950 Claude E. Shannon, “the ‘father of information theory,’ noted that increasing disorder is a property of all complex systems…. The cost of supporting a network is a power function — roughly, a square. When a city or development doubles in size, the cost of maintenance may quadruple.” Shannon proves that this “diseconomy of scale is an intrinsic feature of networks,” whether natural ecosystems or economic organizations, “and no method of construction, however ingenious, can avoid it.” But the larger and more complex the network the more opportunities it affords for bullies to take tolls.
Supreme Court Justice William O. Douglas (former Chairman of the Securities and Exchange Commission) observes that the consolidation of corporate and financial power in New York City from the 1890s forward meant “an increasing flow to New York of the local investment funds from many communities throughout the United States. Frequently … these local savings have been attracted to the great national corporations at the expense of small local enterprises back home….” As a result of this absentee consolidation of finance, “the basic social and economic values in free enterprise disappear. For such reasons one of the chief characteristics of such finance has been its inhumanity, its disregard of social and human values. High finance is interested solely in the immediate profit. Its organizations are not interested in whether our natural resources are wasted, whether we are overbuilding in one direction and underbuilding in another, whether our economic machinery is getting out of balance. Such groups are not concerned with whether our credit resources are being used up too rapidly. A large demand for credit means high returns on money and these men are dealers in money and capital. They are in business only for immediate gain; a long-term view is of no profit and of no interest to them…. The danger of that concentration of power is that it is not accompanied by the assumption of social responsibility.”
The progressive approach to the defects of America’s general welfare (nearly all of them, as Wilkinson & Pickett show, economic in origin) is founded on the understanding that the civic basis of their enablements and the legitimate constitutional means to rectify them are one and the same: the law. As Brooks Adams observes, “the fact that the public [is] subjected to monopoly prices [is] an indication that the government [has] been derelict in its duties. Monopoly prices [are] taxes, and taxation [is] a function of sovereignty.” That is, in a republic, they are a usurpation of the public interest (res publica). “In some form or other,” California progressive governor Hiram Johnson said in his first inaugural address (January 3, 1911), “nearly every governmental problem that involves the health, the happiness, or the prosperity of the State has arisen because some private interest has intervened or has sought for its own gain to exploit either the resources or the politics of the state.” In 1918 Adams told the Massachusetts Constitutional Convention that the interests of consolidated wealth “in the United States were exceptionally privileged not only in comparison with the average American but even in comparison with similar interests in other countries.” Speaking at the 1931 Conference of Progressives, Idaho Senator William Borah said “there is no country in the world, I venture to say, where capital is as free, as unrestrained in its operations, as in the United States. There is no country in the world where capital could do or would be permitted to do what it has done in this country… We have an abundance of food, a surplus of food, a surplus of fuel, a surplus of clothes, and yet we have the stupendous problem of determining how … people may secure sufficient to keep them from hunger and cold.” Today in America there are over 10 million vacant “housing units,” over one million people homeless and millions ill-housed. None of this could exist without legal enablements and government enforcement to maintain the usury-inflated speculative prices of the “real estate industry” for the benefit of investors against a fundamental public interest and against our general welfare. As Adams saw it, “the capitalist, with his insistence on swollen profits and a mercenary legal system, [is] not conservative but incendiary.”
The whole vast structure of corporate and financial law is a fabric of lawyerly devices, created and enabled solely by legislation, judicial fiat, and administrative practice. Efficiently and with lasting profit for a very few, it constructs a system which exerts centralized control over the markets of resources, labor, production, knowledge and craftsmanship, credit and finance, in order to extract maximum tolls at every stage. Upon this, as a superstructure, it erects a towering pile of fictitious paper entitlements to take these tolls in perpetuity (and multiply them exponentially at compound interest), and it contrives, usurping the powers of government by means lawful or lawless, to enforce these operations and to underwrite the key legal pretense that its paper tokens possess material value. As a statutory construct, by nature it is properly subject to abolition, amendment, adjustment, rectification, remediation, etc. through further legislative enactments of law written in the public interest for the general welfare — both negatively, to suppress legalized and prevent unlawful predatory financial, commercial and industrial arrangements and practices, and positively and constructively, in the service of public infrastructure and utilities, public health and welfare, and so on.
Progressive action therefore reasonably aims to remove the legislative and judicial enablements of predatory corporate finance and practice and supplant them for public benefit. It envisions the democratic solution to be the passage and adequate enforcement of laws genuinely and effectively written to promote the general welfare — trusting in the rule of law, not men, and believing that law, properly written & justly administered by a government ruled by law and monitored by an “alert and knowledgeable citizenry,” is capable of bringing legal solutions to accomplishment. When administered and enforced with rectitude and justice — instead of sleight-of-hand, charade and collusion, chicanery and deceit, lies and spies — just as law is capable of contriving the steepest plutocratic pyramid in all history, so it is entirely competent and sufficient to abolish predatory corporate finance and practice and replace it with realistic legal and economic conditions suitable to re-reconstruct the American dream on its original basis of egalitarian abundance and civility. There is no question that legislation of financial, commercial and public welfare and utility law is adequate to the purpose. It is the citizenry that must rise to the task and effectively envision this legislation, effectively employ its proper constitutional tool, the vote, to elect representatives committed to our legislative initiatives, and effectively monitor the process to insure their passage and continuing just administration. The progressive approach begins with this understanding. The political problem is a matter of alerting and informing citizens and presenting sufficient reasons and opportunities for appropriate effective action.
For several generations Americans have been taught to regard as “communist” and therefore vile all discussion of the basic economic facts of the distribution of wealth, the ownership of property, the sordid details of finance, etc. But facts are just facts. By definition a communist advocates pervasive state ownership and control of the economy, proletarian values, the dictatorship of the party vanguard of the proletariat, class warfare, the necessity and historical inevitability of revolution, and so on. A Marxist state socialist favors centralized state ownership and management of large industry, utilities and resources and regulatory control over private enterprise to assure that it serves rather than abuses the public interest. Progressives see large corporate and financial entities as conspiracies in restraint of trade whose predatory practices are to be legally disenabled, freeing small business, private entrepreneurs, workers cooperatives, individual enterprise and the public at large to create and maintain the fabric of the economy in the interest of the general welfare of the community rather than of oligarchic wealth.
Marxian solutions are essentially foreign to American tradition. As Philip La Follette put it in 1935, they “look at America with eyes accustomed to pictures in the European pattern.” They envision an essentially working class (“proletarian”) society and propose its “liberation” by means of centralization under the supervisory apparatus of the state instead of corporate-financial auspices — with comparable ill effects — instead of an egalitarian society composed of a broad common class without extremes of poverty and plunder — the American model. As the depression sank toward its nadir, Gilbert Seldes calculated that the per capita proportion of American stock-market investors approximately equaled the proportion of Communist Party membership in the Soviet Union.
Progressive policy aims “to achieve a balance among many powerful interests without arousing feelings of class consciousness, and to advance the whole of society while at the same time advancing its individual parts.” In line with fundamental American ideas and tradition it conceives “of the good society as a classless society in which the [economic livelihood and] conduct of individuals would be governed by such moral qualities as honesty, frugality, and high character,” not by the greed of a hereditary oligarchy ruling a dispossessed population of hypnotized “consumers” aping the status displays of the wealthy with tawdry imitations of their expensive toys and vapid fantasy while lacking their leisure for play.
Progressive economic thought focuses, with Veblen, on the pragmatic facts of usufruct rather than the ownership of the means of production. Marxist theory begins by granting the specious basic premise of industrial business finance, that production and its proceeds by Natural Law are the property of the owner of the tools to distribute as he sees fit (and proposes to transfer their ownership “back to the workman” in the supposed person of the state). As Veblen shows, this idea is a distorted survival in law based on customs “well adapted to the requirements of handicraft and petty trade” in the small-craft workshops and home manufacture economy of three centuries ago and no match for the realities of modern industrial production, workmanship and livelihood.
The essential issue is not the abstract one of the ownership of tools but the practical one of the apportionment of the product. “The current pecuniary organization of industry vests the usufruct of the community’s industrial proficiency in the owners of the industrial equipment,” but a tool without a craftsman possessing the knowledge and skill to use it is worthless; it only exists thanks to the cumulative tradition of tool-making and workmanship that underwrite its design and handling. “This body of technological knowledge … is a joint possession of the community, so far as concerns its custody, exercise, increase and transmission; but under presentday legal customs its ownership or usufruct has come to be effectually vested in a relatively small number of persons … The owners of the community’s material resources — that is to say the investors in industrial business — have in effect become ‘seized and possessed of’ the community’s joint stock of technological knowledge and efficiency.” By virtue of their legal title to “the necessary material equipment” of production they are held to “own also the working capacity of the community and the usufruct of the state of the industrial arts, … and the usufruct of the community’s industrial proficiency.”
Three centuries before the heyday of the small-craft workshop economy, the fields of medieval English villages were ploughed by teams of four oxen, one each the property of four villagers who hitched them together to work their several allotted fields in rotation. The lord of the manor ‘owned’ their fields (that is, he held them as a feof from the king) and sometimes supplied the seed. The peasant farmer owed his manorial lord “rent” amounting on average to a third of his harvest. The one set of legalized arrangements is no more “natural” or inherently “logical” or “just” than the others, in practical terms. The putative ownership of the tools is peripheral; their use is what matters. Tools in use are by nature community possessions, whatever legal custom asserts from case to case and time to time. Community transmission of traditions of craft and invention, care of fields and tools, and the apportionment of harvests are the key issue — usufruct, not ownership.
Unlike communist and socialist proposals which require drastic changes in the economic foundations and industrial arrangements of society, likely to entail rampant social upheavals, the progressive approach believes that business and financial laws well-written to forward the general welfare can serve just as readily and effectively as laws written to promote the welfare of a plutocracy have succeeded in advancing its aims. Precisely because they are unlikely, threatening and often repugnant — the “bomb-throwing anarchist,” the “Stalinist Commissar” — caricatures of Marxist “alternatives” have been permitted a marginal existence in America’s corporate-manufactured mainstream culture as an official-unofficial scarecrow of opposition, a frightful fake option alternately demonized and romanticized for the public mind. Progressive ideas and history, conversely, have been assiduously erased, because they are reasonable, practical, appealing and in accord with American civic tradition and constitutional practice.
AMERICAN PROGRESSIVE TRADITION:
IDEAS, POLICIES, METHODS, PROGRAMS
OLIN = Spencer C. Olin, Jr., California¹s Prodigal Sons: Hiram Johnson and the Progressives 1911-1917 (Berkeley, University of California, 1968) p.178 quoted (“The most important public issues…”).
Irwin Unger, The Greenback Era: A Social and Political History of American Finance, 1865-1879 (Princeton University Press, 1964) p. 3 & n.1 quoted (“Since the seventeenth century …”). Where I write “contention” Unger writes “antagonism,” a loaded term I wish to avoid. This historical theme is developed on a massive scale in
Joseph Dorfman, The Economic Mind in American Civilization (New York, Viking, 1946-1959) 5 volumes.
GOODWYN passim, p. 83 & 153 (e.g.) on the centrality of “the money question” in Populist thought and p. 113-115 & 519-520 (e.g.) on the “middle-man.”
PROCEEDINGS p. 8 quoted (Norris, “organized wealth …”).
P. LA FOLLETTE 1970 quoted p. 153 (“the progressive effort …”).
Elizabeth Thacher Kent, “William Kent, Independent,” (mimeograph: Kentfield, 1950[?], Bancroft Library, University of California) p. 240: “cut out the middleman!”
STEFFENS = Lincoln Steffens, The Autobiography of Lincoln Steffens (New York, Harcourt, Brace 1931, rpr. 1958) p. 597: “The political problem is an economic, an engineering–it is not a moral problem.” With “moral,” Steffens is refering to his argument from experience that campaigns for “reform” focused on punitive “moral” correction or mandating “moral” virtue (e.g. Prohibition) defeat themselves and their objects.
PROCEEDINGS p. 163 quoted (Norris, “We have no …”).
P. LA FOLLETTE 1935 = Louis Adamic, “A Talk With Phil La Follette,” Nation (February 27, 1935) vol. 140, no. 3634, pp. 242-245), p. 243 quoted (“Theory is necessary …”).
P. LA FOLLETTE 1970, editor Donald Young’s Introduction quoted p. ix (“willing …” & “characterized …”).
OLIN: see p. 41 on “small business over big business” etc.
Stuart Chase, The Economy of Abundance (New York, Macmillan, 1934) quotes Veblen in his epigraph.
BEARD & SMITH p. 144 quoted.
E.F. Schumacher, Small is Beautiful: Economics as if People Mattered (New York, Harper & Row, 1973).
P. LA FOLLETTE 1970 p. 137 quoted (Progressives oppose …”).
GRAHAM = Otis L. Graham, Jr., An Encore For Reform: The Old Progressives and the New Deal (Oxford, New York, 1967) p. 125 quoted Brandeis (“The United States is too big …”).
PINCHOT p. 139: “Brandeis had a thoroughgoing distrust of ‘largeness,’ and foretold before 1912 the havoc which the merger epoch would cause in finance and industry alike.”
M. KENNEDY p. 88: “We must also find our way back to smaller organizational units, decentralizing the power that currently rests in the hands of the few. That’s the only way to transfer responsibility to a group of democratically elected decision-makers large enough to move us forward.”
GRAHAM p. 68 quoted on U¹Ren. See also:
Lincoln Steffens, Upbuilders (New York, Doubleday, Page, 1909) p. 285-326, “W.S. U’Ren, The Lawgiver.”
P. LA FOLLETTE 1935 p. 244 quoted (“the right of men and women …”).
WILKINSON & PICKETT: See p. 244-264 on cooperative possibilities.
Eugene P. Odum & Gary W. Barrett, Fundamentals of Ecology, 5th ed. (Thomson, Brooks/Cole, Belmont, CA 2005) quoted p. 126-127 (“As the size …”) and p. 371-372 on C.E. Shannon.
William O. Douglas, Democracy and Finance (New Haven, Yale University, 1940) p. 6, 9 & 11 quoted (my italics, “the basic social …;” his, “power”). His chapter “Regional Finance” (p. 18-31) discusses these defects of consolidated finance and the virtues of decentralized finance.
ANDERSON p. 151 quoted on Brooks Adams (“The fact that the public …); see further:
Brooks Adams, “Education for Administration,” The Leader, a Magazine for Modern Education (October 1903) vol. 1 p. 472-478; and
Brooks Adams, “Problem in Civilization,” Atlantic (July 1910) vol. 106 p. 26-32.
ADAMS 1919 p. 631-633.
OLIN p. 33 quotes Hiram Johnson.
ANDERSON p. 137 quoted (“in the United States …”).
PROCEEDINGS p. 35-36 Borah quoted. WILKINSON & PICKETT confirm his point.
CHALABI as cited above on “housing units.”
ANDERSON p. 206 cited (“the capitalist, with his insistence …”).
WILLIAMS 1964 on facts being facts.
SELDES p. 307-308 cited. He puts the proportions at about 5% — including petty investors and party rank and file, respectively.
P. LA FOLLETTE 1935 p. 243 quoted (“They look at …”).
OLIN p. 175 quoted (“to achieve a balance …”).
Thorstein Veblen, The Instinct of Workmanship and the State of the Industrial Arts (New York, Macmillan, 1914; 4th rpr. 1943) passim; p. 340, 355 & 220 quoted.
VEBLEN 1919 passim esp. p. 27-31. 56-69 and 41-49 on Adam Smith; quoted p. 57-59 (“This body of technological …”). This usurpation of the community’s usufruct is reflected in the transfer of the proceeds of the great increases in productivity of the past 40 years entirely into the hands of the investor class — see, e.g.:
Lawrence Mishel, “The Wedges Between Productivity and Median Compensation Growth,” Economic Policy Institute Issue Brief #330 (April 26, 2012) www.epi.org/publication/ib330-productivity-vs compensation/.
SEEBOHM on medieval English village agricultural practices.
Diogenes is an over-educated landless American peasant. His great-grandfather, a co-operative orchardist, helped California progressives topple Southern Pacific’s corporate political machine in 1910. He thinks advance should be re-established and greatly extended, not reversed, nationally, and regards progressive successes in many states during this era as a recommendation for their non-partisan grassroots methods of public information and action.