The relentless revolution: a history of capitalism

by Joyce Appleby

  Seven tailors formed the Noble and Holy Order of the Knights of Labor in the United States before the arrival of the so-called new immigrants. Starting in 1869, the Knights of Labor maintained strict secrecy to ward off government repression. It reached out to skilled and unskilled workers, blacks, and women as well as the mainstream white male laborer. The only groups officially excluded were doctors, bankers, lawyers, producers of liquor, and gamblers. Its agenda included an eight-hour workday, prohibition of child labor, a graduated income tax, nationalizing of public utilities and railroads, equal pay for equal work, and the establishment of cooperatives to offer an alternative to manufacturing with wage labor. Although it originally eschewed strikes, the Knights got involved in the Haymarket Square riot, which pretty much ended its upward trajectory. This ugly incident began when someone among the Chicago marchers threw a bomb toward the police. Seven officers and dozens of civilians died. The public turned sharply against labor organizers, making it relatively easy to convict and execute four anarchists.

  The Knights of Labor plummeted from a membership of close to a million to just a hundred thousand in the last fifteen years of the century. In the wake of this decline, Samuel Gompers, an English immigrant cigar maker, formed the American Federation of Labor in 1886. The most successful union organization in the United States, the AFL recognized the autonomy of its participating craft unions. Gompers, who remained at the head of the AFL until his death in 1924, actually saw the potential benefit for workers in capitalism. Stressing “pure and simple unionism,” the AFL grew steadily as it worked for the immediate improvement of workers’ wages and conditions. Its initial openness to unskilled laborers, blacks, and women closed over time, in part because of the prejudices of the member unions, which forced segregation on black unions. They viewed women at best as part of a pool of labor that, like illegal immigrants today, kept wages down. At worst, they were likely strikebreakers.

  In keeping with its fierce loyalty to the federation’s core membership of white men, the AFL urged Congress to renew the 1882 immigration restriction on Chinese in 1901. Still, the AFL never enlisted more than 5 percent of the work force. It had an uphill struggle because native-born Americans who were moving into the city from the countryside after the Civil War experienced real improvements in their standard of living, bolstered by steady factory work, accessible medical clinics, and free public education.

  Gompers’s “business unionism” offended radicals who wanted to bring down the capitalist system that they saw as unfairly monopolizing the profits from workers’ productivity. The Industrial Workers of the World injected some radicalism into the American labor movement when it began in 1905. Among the crew of unionists, socialists, and anarchists who had had their fill of Gompers were Eugene V. Debs, Daniel De Leon, Joe Hill, Big Bill Haywood, and “Mother” Jones, all major figures in the American radical tradition. As if creating a contrasting mirror image of the AFL, the IWW strove for worker solidarity strong enough to overthrow the capitalist system. With the motto “An injury to one is an injury to all,” the Wobblies, as they were called, insisted that employers had nothing in common with their workers. Displaying the fierce militancy of the miners who formed the initial core of their membership, the IWW recruited lumberjacks, the hoboes of migratory labor, silk makers, and textile workers, many of them in the Deep South and Pacific Northwest. Wobblies participated in 150 strikes in their first two decades. Despite a number of labor actions, the union movement in the United States remained weak, especially when compared with European countries.

  Anarchists, many of them foreign, hoped that the violence would arouse America’s workers to the evils of the industrial system. Two of them, Alexander Berkman and Emma Goldman, plotted in 1892 to kill Henry Clay Frick, manager of Andrew Carnegie’s steelworks after he had crushed the steelworkers’ union. Berkman failed to kill Frick and spent twenty-eight years in prison while Goldman went on to become one of the most effective speakers in radical circles. More successful at assassination was Leon Czolgosz, who shot the newly elected president William McKinley when he was attending the Pan-American Exposition in 1901. The IWW’s aggressive stance toward American institutions elicited strong reactions from state and city governments as well as vigilante groups eager to mete out some rough justice to them.

  After the successful Russian Revolution brought Communists to power in 1917, Americans became exceedingly frightened of the anarchists in their midst. Zealous prosecutors convicted Nicola Sacco and Bartolomeo Vanzetti for the murder of two pay clerks in Braintree, Massachusetts, largely on the basis of their being anarchists. Sacco and Vanzetti became martyrs after their executions, prompting yet one more anarchist bombing, this one on Wall Street, which left thirty dead, two hundred injured, and the office of J. P. Morgan destroyed. Mass deportations followed, including those of Berkman and Goldman. As they were departing, they received word that Frick had died. “Deported by God,” Berkman commented dryly.

  Critical of the AFL for resting on its laurels with 5 percent of the American work force, the Wobblies never gained more than fifty thousand members. Internal dissension along with public dislike halted their forward motion. Nor were the assassinations of the anarchists effective in stirring up American workers. Most radical groups opposed the First World War. One of their great disappointments was that war undermined the solidarity that they had been building for more than a half century among international workers. When the fighting began, each labor group repaired to the side of its own country. The AFL, with its more moderate policies and tolerance of differences among member groups, was better positioned to survive in the United States. Its comeuppance lay in the future, when the Congress of Industrial Organizations pulled together unskilled workers in 1938.

  The public construed the strong foreign component in American labor unions as an explanation for union militancy. They found union strikes peculiarly menacing. Antipathy to the new immigrants’ presence in the United States overrode the corporations’ lust for labor when nativists succeeded in getting exclusionary immigration laws passed. The 1921 law set up a quota system that operated against the new immigrants of the 1880–1914 period. The law set a maximum of 357,000 immigrants annually, giving preference to those coming from northwestern Europe. Within another generation the hyphenated Americans had become thoroughly assimilated, but the national origins quota system lasted until 1965.

  The Growing Importance of Consumers

  Instead of the pyramid often used to describe a social structure with its great mass of people at the bottom tapering upward to a narrow elite at the top, American society was shaped more like a tomato with a rich slice at the top and a broad middle narrowing only gradually. With no aristocracy in its past and a working class that until recently had been composed mainly of farmers, the United States nurtured a sprawling middle class. Differences in taste, education, and local prominence persisted, but they lacked the backing of an influential upper class. No doubt refined tastes were cultivated in closed social circles. Snobs existed but, like garden snakes, with little venom. Most Americans liked being like one another.

  The uniformity among the white population in the United States underpinned a new phenomenon of capitalism, the mass market in consumer goods. Rather than seek distinction, most Americans rather enjoyed buying things their neighbors had. “Keeping up with the Joneses” was not a search for distinction but rather for equality. Families took pride in being able to buy exactly the same things that their friends owned. Belonging to a homogenous middle group felt comfortable, an attitude perfect for mass production. Making the shift from an economy concentrating on toolmaking, railroads, and other elements of production in the opening decades of the twentieth century, corporations began churning out standardized home decorations, children’s goods, entertainment items, and popular fashions.

  Department stores sprang up in cities to gather all these consumer goodies under one roof. As if to gild the lily of the new retailing, department store owners
hired famous architects to design handsome edifices to house their cornucopias of wares. Staircases, surrounding a grand foyer, gave a view of story upon story packed with ready-to-wear clothes, cookware, furniture, bedding, appliances, jewelry, cosmetics, and fabrics. Less glamorous than the department stores with their great ground-floor display cases were companies like Sears, Roebuck and Montgomery Ward that pioneered mail-order retailing. As early as 1900, their famous catalogs featured a thousand pages of illustrated items.17 In the inexorable logic of market success, these modern emporiums began the long war of attrition against mom-and-pop stores, the little shops that had long serviced local neighborhoods. Capitalism’s “creative destruction” had found a new battlefield.

  Trains and trolley cars made it feasible to build houses in the suburbs of the cities where people worked. The same streetcars, interurban trolleys, and private automobiles that carried men “downtown,” as the American city center became known, at the beginning and ending of the workday were also available for shoppers, most of them women, in the middle of the day. This became yet another homogenizing force for the great middling class of American consumers. Some families, being too poor to enjoy the goods lining store shelves and pictured in mail-order catalogs, were excluded from this great spending spree, but the goods acted as a mighty incentive for them to join the consuming crowd. Sidewalks, paved streets, and telephone lines announced the connection of outlying neighborhoods to one of the hubs of commerce that stretched across the country.

  Much had happened to make possible the surge of consumer spending. In a certain sense, capitalism had created its own consumers. Workers’ wages had grown. The organization of giant corporations called into being a battery of white-collar jobs—accountants, clerks, stenographers, salespersons, lawyers, and bankers. For reasons more pertinent to social prejudice than capitalist preferences, many firms resisted hiring married women for many of these positions. Instead unmarried women flooded into downtowns to fill the office buildings that rose up alongside the department stores. The national standard of living got better, life expectancy increased, and factories disgorged an endless stream of inventions to delight the senses and minimize drudgery in the kitchen, on the farm, and on the shop floor.

  Women became a new and powerful force in the economy through their buying habits.18 In Europe the emergence of what we now would call a consumer culture dealt the deathblow to aristocratic leadership in style and manners. Instead a wide band of middling consumers emerged to exert their preferences in the marketplace. The plethora of electrical equipment that eased domestic chores—mixers, stoves, refrigerators, washing machines, and mangles—left many women time to shop. They also were charged with preparing their children to choose well in this new world of multiple options. Those who didn’t work had time to develop recreational outlets, pursue high culture, and support philanthropic outfits while the brigades of young female clerks and salespersons sharpened urban fashions, even among men. The wide range of consumer goods provided a rich palette for painting one’s identity.

  These new patterns of consuming behavior created their own challenges to producers. Up to this point capitalist enterprises had responded pretty much to a demand that was steady, what economists call inelastic. People spent the largest part of their household budgets on food, shelter, and clothing. Manufacturing and extractive industries bought machinery and equipment, predicated on calculable needs. All that changed when the important buyer became an ordinary man or, more likely, woman. With the fascinating new items getting cheaper, more people found the money to buy them—if they wanted to. There was the rub: the uncertainty in optional spending, spending out of desire rather than need. By the beginning of the twentieth century, consumers were spending considerable amounts of money on inessentials like fashion accessories, upholstered furniture, electrical conveniences, cars, and entertainment paraphernalia. Demand reflected not just purchasing power but what we might call preference power. Those firms catering to consumers had to deal with tastes or, worse, fads that came and went with dizzying speed.

  Anything as important as the new consumption tastes had to develop its own experts. Soon they appeared in the form of advertising agencies devoted to spreading information and inciting desire. The need to advertise arrived simultaneously with popular magazines and radio shows that became the means for paying for both media. Print advertisements and radio commercials, since they involved grabbing the public’s attention, put a premium on colorful pictures, persuasive voices, and psychological savvy. A popular magazine, Good Housekeeping, established an experimental station to test new household items in 1900. Soon it was giving a “seal of approval” to its advertised products. Electric outdoor signs had become visible in big cities by 1910. Promoting products and producing entertainment worked interactively to create a popular culture in which people were as likely to whistle a commercial jingle as a romantic ballad.

  Marketing too became important as firms competed with one another to get their soap or shampoo, medicine or road maps, handbags or hosiery at “the point of sale” in department stores, pharmacies, and grocery stores. Brand names vied for buyers’ loyalty. Some became so well-known that people turned them into common nouns like “hoover” and “kleenex.” Ad campaigns lobbed new lines into public discourse like “I’d walk a mile for a Camel” or descriptions of soap as being “99&44/100th percent pure.” Whole new industries emerged to give advice about what to buy. Catering to customers’ tastes became imperative, as did extending credit through charge accounts and installment plans. Chain stores appeared at the beginning of the twentieth century, often enticing customers with extended credit. Schools even helped train children to become wise consumers with programs that encouraged savings for spending.19 An inconclusive debate raged throughout the twentieth century on whether advertising manipulated buyers by implanting fake needs and false expectation or whether consumers used their purchasing power to get the market to give them what they wanted.

  Despite the activism of a whole generation of labor organizers, the labor market in the United States remained pretty much unfettered by regulations, though a convergence of interests in the 1910s led states to pass workers’ compensation laws. These took conflicts over on-the-job accidents or illnesses out of the courtroom and created prepaid insurance to take care of workers’ losses.20 Employees and employers shared costs and accepted limited liability. Even though unions picketed plants, went out on strike, and campaigned vigorously for the eight-hour workday and a decent wage, they rarely triumphed. Most companies had difficulty seeing their employees as citizens or prospective buyers of their goods. Much more to their liking were company union, towns, and company-run stores, where they could control their work force.

  The United States moved into a consumer-dominated economy a decade or two before other capitalist countries.21 Typical of his probusiness bias, AFL president Gompers was quick to see an opening for labor in industry’s new capacity to turn out goods, especially when they produced more goods than demand registered in the market. Mass production, after all, was profitable just because it produced so many of the same things. Gompers saw that workingmen and women had an unexploited potential as buyers rather than as mere elements of production. The prevailing view about how wages were set, propounded in the early nineteenth century, argued that employers would always push wages down to the minimal amount a family needed for subsistence. This “iron law of wages” operated that way through much of the nineteenth century, but if wages rose, it was possible to see that this could stimulate the whole economy.

  Marx had seen the downward pressure on wages as central to the industrial system and part of the reason why it could not sustain itself. Marxist labor leaders in Europe and the United States confidently believed that capitalism was doomed to extinction. Gompers, no theorist, took a different tack about the frequent layoffs and long workweeks endured by laborers. Working men and women, he said in 1887, needed “more”: more money, more leisure, more freedom. He cl
early had caught the spirit of capitalism when he emphasized, “We do want more, and when it becomes more, we shall still want more. And we shall never cease to demand more until we have received the result of our labor.”22

  Gompers’s “more” campaign explained that treating laborers as the cultural and social creatures that they were would solve businesses’ central conundrum of being able to make more goods than there were buyers for them. Younger economists agreed with Gompers as they deserted the labor theory of value for one that highlighted demand. Wages, if still sporadic, did in fact go up; the eight-hour workday was becoming common without a drop in the average wage rate. Gompers was not alone in recognizing that the economy had fundamentally shifted from a basis in scarcity to one driven by plenty. The American economist Simon Nelson Patten in his 1907 study New Basis of Civilization added intellectual firepower to the notion that the age of abundance had arrived.

  This question brings to mind economic debates in late-seventeenth-century England, when the idea that popular spending might have an impact on the economy first surfaced. Then those in foreign trade actively stimulated new tastes with their imports of colorful calicoes. They waxed eloquent about the unlimited wants of human beings. It was not the inelastic demand of food and shelter that was going to drive the economy forward, they said, but the elastic demand for superfluous goods like a third or fourth blouse. Standing fiercely against this cheerful commentary were the manufacturers for whom ordinary people appeared as lazy, improvident, tardy, accident-prone, and surly laborers. Three centuries later the tension between these two groups of capitalists plays out in battles over protective tariffs, minimum wage laws, and expanded social benefits. Yet the ever-growing productive capacity of capitalist economies makes it even more imperative to choose between keeping wages down or enhancing the purchase power of workingmen and women.