WHAT CAPITALISTS NEEDED 49

4 to 1896, it had more than tripled, to $29.6 billion (all figures are in
1892
1929 dollars). The population was growing rapidly during this period,
. still GNP per person almost doubled, from $223 to $434.1
What Capitalists Needed too,GNP 'includes a11 k.m d s of pro d ucuon
· - manufactunng, · agriculture,
. ·ng services, and so on- and all these kinds increased significantly
Illllll '
the Civil War to the end of the century. But about half of the total
f rom
ain came in manuf:actunng,. wh ere th e rate of .mcrease was much faster
~an elsewhere. In ~8?9, the_ value of manufactured goods was $1.9 bil-
. . in 1899, $13 btlhon; th1s value grew two and a half times as fast as
llOll, . d f .
the population. 2 Factones an manu ~ctunng shops multiplied across
the landscape - from 140,000 of them JUSt before the war to 512,000 in
1899. The number of people who worked there increased almost as
pidly and the value of what they produced much more so, as factories
:cam~ larger and machines more sophisticated. Another way to
pproach the same fact is to note that "productivity" was also rapidly
~ncreasing - the output of commodities per person-hour went up 64
~ercent betw~en ~869 and 1899: 3 ~he U~ited States had be~or~e ~
industrial natiOn, m short, and With mcred1ble speed, accomphshmg m
fifty years or so what had taken closer to a hundred in Britain, where the
first Industrial Revolution occurred. In fact, whereas American factories
produced less than those of Britain or France or Germany in 1860, they
produced almost as much as those of the three countries taken together
_I in the 1890s. 4
1
)
One more thing worth noting about this growth: while it generated a
powerful new flow of cheap manufactured goods to people (for exam-
ple, ready-to-wear men's clothing was practically nonexistent in 1860, but
made up 90 percent of all men's clothing in 1890) 5 even more important
in some ways was the development of a national "infrastructure"- a sys-
tem of transportation and communication that made everything else
possible. Railroads came first, far outreaching canals even before the
Civil War, and extending the network from 30,000 miles of track in 1860
,. ; to 200,000 miles in 1900 (creating a need for iron and steel which led
the ~S t? world leadership in that industry before 1900). The telegraph
was m Widespread use by the 1860s, providing the fast communication
necessary not only to operate railroads but to run a far-flung business
enterprise. The telephone was well established by 1890, another boon to
commerce. Electric power developed late, but quickly. It drew even with
steam as a source by 1900, and this was nowhere more important than in
transp~rtation: electric powered streetcars provided 15 percent of urban
~ansit m 1890, and 94 percent in 1902.6 Such developments made it easy
or pe.ople to get to work, for salesmen to travel everywhere, for raw
ma~enals to reach factories, for corporate managers to keep track of
national op erati'ons, and for products to find national markets.
 Produ tion re~ui~es cap~ tal; it also creates capital, w WHAT CAPITALISTS NEEDED
51
well. In a capitalist society that happens in v . hen thing To move still closer to the real-life meaning of th' th .
. f ano~ s~ · h · 1 . lS grow , cons1der
through the reinvestment o profits by busines Ways b e &oh, w that JUSt w en captta accumulation was highest th t f.
ses and th ' ut ll1. ·~g nO d , , e ra e o mcrease
ings of people wh o t h emse Ives are receiving a h rough ailll . "flow of goo s to consumers was lowest: from 1881 t 1896 11 p
· . d . o . eople
salaries much larger than needed for subsistenc: aRre ?f the p the sa~
tn
.. rere on average, eatmg an weanng and using more com d· ..:
. . apid rof1ts •• ear ' but these measurable gams · m . materiall:ce mo lues year
duction, over an d a b ove growth In population im . growth . • or bYY ' . . 11 were most gradual
. I . k. ' p 1Ies ra .
capital too, un ess everyone Is wor tng longer day Ptd grolll"t"rQ.. whl.le gains m productiveh wealth were most rapid · The contrad'tct.lon .
and more furious rates of speed. We can ignore thos ~ Working a~h ill
0 becomes even sharper w en we observe that capital in manufacturin
. creased tenfold from 1859 to 1899; in the 1880s alone 1't more th an g
0
as capital did indeed pile up fast toward the end /~:tt~r Possibi~re 10 . .
d oUb led ' and 1t .rose another
. 50 percent in the 1890s ·12 Ind tr f
us y renet-
tury: it quadrupled from 1869 to 1899, and mo hnineteenth es, ically built up tt~ capaCl~ to make things, but the value of what it
. b f I . re t an d cell
relauon to the num er o peop e In the country_ fr $ oubled. · produced with this capa~tty g~ew less rapidly, and what it produced for
per capita. 7 om 1120 to $ ~~ 25 co
nsumers grew less rapidly sull.
. 11
Capital is wealth capable of producing more w Economi.sts c~nve?"t~ona Y. treat these relationships as expressing the
1 "rate of savtngs. This. t.dea, hke so many concepts of mainstream eco-
people's houses (but not other private possessions) sea tllh. It include
. . , ma stor s nomics, calls up the vtston <:>f a homogeneous society, .cooperating and
drawn cabs,. and t?~ hke. ~~~the main wealth-producin ca .es, horse. competing in a s~ared ~roJeCt ~f development. Today we hear of the
manufactunng, mining, utilities, transportation, and agr·1 g PI tal was in thrifty Japanese W1th their very htgh rate of savings (higher, in fact, than
1
on f~ms was a ~teadily declini~g P<;>rtion of the total; ~e~e . Capital it has ever been in the US), and the spendthrift Americans with the
mulation of capital took place In big business. With th . ham accu. lowest rate of .savings among the ~dvanced in~ustrial nations. The pic-
·
railroads ·
continue d as b o th th e 1argest repository of cap'tal eir ead start, ture is of ordmary people choosmg (accordmg to their personalities
1
area In· w h IC
· h most new capita· 1 was accumulating·· in fact ne 1and h the and preferences) to set aside more or less of their paychecks each week.
. · · . ' ' ar Y alf of This picture badly misrepresents the situation today, when the poorest
n~w pnvate I?vestment went tn.to the railroads from 1880 to 1900.s But
fifth of the population has "negative wealth" -that is, owes more than it
this leadership could not continue forever, as rail lines reached e t
owns- and the poorer half owns less than 10 percent of all wealth, and
corner of the country. Investment in them slowed down duringv~~ J about 2 percent of the income-producing wealth. I think it probably
1890s, while it spurted in manufacturing and mining. The wealth of the fi obscures late-nineteenth-century reality even more. One needs to ask,
country flowed into steel, oil, electric power, transportation systems, and Where did the new capital come from? Who was being so thrifty?
factories that mass-produced more and more of what people used. First, it seems that business firms and corporations themselves - not
Furthermore, the rate of increase in capital formation reached its his· private individuals - did most of this "saving." I have not found figures
to ric high in the late 1880s and the 1890s. This seems to be true whether for the years before 1900, but in the first decade of this century corpo-
one considers the amount of new capital added every few years to what rations generated well over half of their new capital "intemalli' - that is,
was there before, 9 or the percentage of the national product plo~ed "" mainly through profits. 13 Every indication suggests that the rate was even
higher before 1900: manufacturing capital grew at a faster rate then,
back into capital. This second way of looking at capital format~on 'i
while banks and other financial institutions had much smaller assets to
deserves closer attention because it captures the decisions a society -!
use in loans, and a securities market for industrials barely existed before
(that is, those with the po~er to decide) makes about what to do with the the late 1890s. So the remarkable enlargement of capital that charac-
fruits of its work. Other things being equal (which, of course, th~y n:~~ terized economic growth in this period came mainly from surplus value
are), the more people consume, the less they put into new c~P ~' as
1
extracted through the labor process by industrialists -in mantian terms,
vice versa. Toward the end of the time when America~ capttab~~ :est capital is "dead" labor, labor from which capitalists and not workers get
growing at the fastest pace ever, it was also putting as1de the ~ent­
1
the return.
proportion of its income for the pursuit of future profits. Th e,t;~ and
age reached 16.1 and 16.2 for the overlapping decade~
8
18 rds are
That is not the whole story. A good deal of new capital came from
a?r?ad: Europeans had begun investing in railroad bonds early on ($L3
1889-98 respectively, the only time in our history (for whtch ~c~ng the ~Il.hon from 1863 to 1873), and they continued buying American secu-
available) during which it was over 15 percent. By con tras:, ~sperous ?ties, which began to include industrials ($1.8 billion came from Europe
In the 1880s; 14 more than 10 percent of all new capital came from
1920s boom it was just over 10 percent, and through th P
decade iust after World War II only 6 percent. 10
 abroad, from 1882 to 1893). 15 We can assume th
. .
derived from the exp1mtatJ.on o f E uropean workerat. rnost of this
. Am . s, certai nly it wlllolley
the savings of ordmary en cans.
Further, ordinary Americans gave a rich mine of as llot
porations, especially to the railroads. Federal and new capital to
granted 180 million acres of public lands to them, ins::~ governrn~or.
6
much as to homesteaders, 17 and even that figure byP ' four titn 1118 ·
many "homestead ers " were rea11y 1an d speculators S asses the fact esthas .
. d h . c. I d . . o Were th at .
companies: they turr~e t eir tree ~n mto capital both b s ~railroad :
by developing the nch _resources It often contained. S~ elhngitand f
lands, acquired partly With tax money, contributed a g d governrnent
growth of capital. This is not to say that it was a bad ide:~o s~ha:e_to the .:~
growth of the railroad system, but only that doing so in thisbsldize the ;o;
ferred wealth upwards. way trans-
The remaining portion of new capital came mainly
. . as 1oans fr 0
banks and msurance compames, and through the sale f 1ll
. o stocks and
bonds. T h e assets o fb an ks an d msurance companies grew fro b
billion in 1865 to well over $9 billion in 1890; 1s this money wam a oilut $2
for Iendmg· to b usmesses
· an d tor
c
stock purchases as well asscava able
,
loans to farmer~ and homeowners, and ~t did represent "savings," in the ··
tor small
common meanmg of the term. But agrun, whose savings? I have no fi :~
ures, but can only suppose that in 1890 as in 1990, most personal savin~ :,
was done by the relatively well-off. Certainly that holds for the private ,·
purchase of stocks and bonds. Even though 4 million people ownedf
some stock before the end of the century, an 1890 study showed that 1
percent of the people owned one half of such wealth. 19
I have tried looking from several angles at the (dubious) statistics that ;:
measure the building of railroads, factories, warehouses, mining opera- ~
tions, and electric power systems - the building of industrial Ame~ica. }
They are spectacular numbers, if you have a taste for that sort of thm?· ·. ~
For those who don't, let me underline my conclusions. The most rapi~ ·;
capital formation in our or anyone's history was not a matter of"people :·
. . by '
choosmg to save rather than spend. Rather it should be seen as saVIng ;
the already rich, in order to become richer; as their appropriation of .:
wea Ith and sources of wealth from people who were not nc · h ; as a con·
centration of the country's productive resources in the hands of a fe~, to .·~
· new in the US (though this hasn't change d m uch
a d egree qmte . smce
ben· ·~"'
900). The success of businessmen in this project brought matenald the :~
1
efits to most people, _at least in time. But most. of th~ ben~fits - ; only
power - went to busmessmen themselves durmg this penod. . d ed
wealth, but income too became more unequal.2° This was success.m e of
but success . th at h1d · dangers to the beneficiaries. Would the tdeasder
demo~racy and equality continue to legitimate the social or~~,c~ntrol
0
&'Uch Circumstances? Who would buy all those products? And dt
over the economic process follow naturally from such growth?
WHAT CAPITALISTS NEEDED
53
Crises
_1
1 have been describing the_ broad movement of capital- a great success
£ businessmen that was simultaneously though less obviously a source
°(trouble. The_ crises that I will now br.iefly m~ntion were far from sub-
0
Al l were evtdent to. the All
t 1e.
leaders of
.
mdustnal capitalism; some were
plain to the whole nation. were Interconnected, though 1 list them
separately.
1. Workers strenuously resiste~ the efforts of businessmen to squeeze
h m in the cause of profit, capt tal formation, and control of the work
t r~cess. At best, the conditions of industrial work were hard and pre-
~arious enough. Most workers had no protection against lay-offs,
~ nothing set aside for ol~ a~e other th_a~ what they could save from their
ager wages, no secunty m case of InJury- and work was very danger-
me h . . d
s for many, with deat s nsmg towar twenty thousand annually and
?~uries to a million, through this period. A sixty-hour week was com-
mon and a longer one not rare. Some rebellions- most notably the May
~ay ~trikes of 1886- organized around this last condition, the one that
workers experienced every day, and the one that excluded them from
the expansion of leisure - human time - that the growth of the economy
might have made available to all.
Periodically, as depressions threatened profits, capitalists sought to
guard their position by pressing workers even harder. The "Great
Upheaval" of 1877 began when the Baltimore and Ohio Railroad cut
wages by 10 percent, the second cut in a year. The battle at the
Homestead works in 1892, through which Carnegie and Frick sought to
break the union (the Amalgamated Association of Iron and Steel
Workers), began soon after they announced a new wage scale that would
cut the wages of the Amalgamated men by 18 percent. Many of the
strikes that erupted in 1894 (for example, those of the coal miners and
the Pullman workers) followed wage reductions.
These were massive conflicts. In 1877 there was virtually a nationwide
general strike. In 1886 there were 1400 strikes involving half a million
workers. In 1894, 750,000 workers went out on strike. And these were no
polite walkouts of the sort we mainly know: repeatedly, the bosses called
in Pinkerton guards, the militia, the army, and pitched battles resulted.
The capitalists and the middle class spoke fearfully of anarchy, and o~e
~an't dismiss that as paranoia or scaremongering. In addition, the upns-
mgs of farmers (more and more of whom were driven into tenancy or
bankruptcy) made the new social order seem precarious. Businessmen
could .not moderate the system they had built, nor make it seem to othe~
to be compatible with basic values of justice and dignity. "Robber barons :
that such a phrase should have gained common currency as a label for
the dominant class suggests how deep was the crisis oflegitimacy.21
 .._.ULTDR. .

I
· ~

2. Business was extraordin . E .

hould be so; but that did ~nly risky. Laisse:z-f: .
competition to which they w ot help capitalis:Ire .ideololl'\,
ere theoretically f!17Joy the o, held tL WHAT CAPITALISTS NEEDED
55
com. . un "'<It'
You know how often I h d nl.Itted: testtai It .· exaggerated the cycle. Severe depressions resulted, roughly in the mid-
h . a not an unbr lteu
ow lt was all coming out. All the for oken night's slee . dle years of ea~h decade fro~ the 1~70s through the 1890s. Each
c~mpensate for the anxiety of the tu~e I have lllade p, worrYin eral bust hetghtened the nsk of fatlure for individual businesses
gen fueled work ers ' orgamze. d .
night, week in and week out penod. Work b has llotsegabolit . d resistance to capitalist rule. (As many as'
an percent of work ers ~ere JO· bl. es~, at t:lmes.)
· ~o on top of those risks and
'month after rnonth.22 y day atld w~"edto 20
flicts that charactenzed dally life for the btg bourgeoisie, it lacked the
That's how one of the big winners J h try by ~:ans to re~late ~o_wth and forestall periodic disasters. It is striking, in
ti · ur , o n D R
pe tlon. vve can be assured that wakefi I . . ockefeller s fact, that dunng th1s ?me when the US economy expanded more rapidly
less successful. u mghts were as c~ Poke of collJ. t han
ever before ordsmce, fourteen
.
of the.
twenty-five years from 1873 to
Essenu'ally, Industrialists
. competed b .
nnnon£
or the 1897 were years of epresswn or. recesston.25
more and better machines and incre
. '
r
enblargmg their facton·
asmg oth th es bu ·
Like the suicidal overproductiOn of specific goods such as flour and
stoV '
es economy-wide overproduction was no secret to be exposed only
b h" . 1. . .
nency of production. That was fine wh·l h e amountanct'th Ying by socialists or, later, Y. lStonca mvesttgatwn. c.ongressmen, govern-
. I e t e mark t £ eem nt agencies, and busmessmen themselves decned the vast surpluses
was expan d Ing; but early success drew new e or a new prod .
and led all to expand past the eventual n dcomf petitors into the fi uldct ~:t industry was c.reating. T~e National ~sociati~n ~f Manufacturers
. h . ee s o consum e, made overproductiOn th~ mam theme of 1~ o:gamzat10nal meeting in
costs h Ig , It made sense to keep the m h. ers. With fiXed
. . ac mes runni 1895. Like William McKinley, whom they mVIted as keynote speaker,
un d erse II th e competition: better some inc th ng and try to they saw access to ~v~rsea~ .markets as ~e "only ~~omise of relief," thus
. d . ome an none Th
In us try after Industry, of expansion beyond the b"l· · .e ~esul~ in acknowledging the1r mablltty to restrain competitive excess and resolve
k ets to a b sorb the product was price cutting idl a 1 Ity of ex1stmg the crisis within the confines of the system they had so vigorously built.'26
. mar.
. ' e capaCity, and the 4. Finally, profits were falling, if one judges by the average return on
constant threat of failure. Businessmen understood th1"s Th ·
. . · e JOurnal of shares of common stock. For industrials, railroads, and utilities that
t h e Iro_n and steel makers said, in 1884, "it might almost be rated the return fell steadily, from 8.8 percent (1871-78), to 8.4 percent
.... excepuon for half the works ... to be in operation simultaneously."The ,
·" (1874-83), to 7.0 percent (1879-88), to 6.0 percent (1884-93), and to
president of the stovemakers' organization: ''It is a chronic case of too ', 5.75 percent (1889-98). 27 At the same time, the productivity of capital
many stoves and not enough people to buy them" (1888). And in the ~ was rising, but the general decline in prices from the Civil War to the end
same year, the vice president of the millers' association: "our ambition ) of the century more than offset the increase in output, and the actual
has overreached our discretion and judgment. We have all participated ;~ return on capital fell to the lowest level it would ever attain until the
in the general steeplechase for pre-eminence .... As our glory increased :! depression of the 1930s. This was, of course, good news for workers,
our profits became smaller, until now the question is not how to surpass •1 whose real standard of living improved modesdy through the period
. . .. ''2!1 f even though their money wages stayed more or less level. But for capi-
th e recordb ut h ow to maintain our position.··· h ·~ talists, falling profits were one more indication that in spite of their
And fail ' they did, in large numbers - about 10 percent 0 f them
ti y enterpnses,
.
eac
but '"
i
I great power and dynamism, they were unable to make their system work
year, on average. Of course many ofth ese. were : bankrupt- ! as they would have liked.
larger ones went under, too. In the depressiOn of th 18708 ' 000 in ·.~
. . 500 0 · 1873 to over 10• 1
c 1es among commercial firms rose from . m . and an even ·
18808
1878. There was a similar rate of collapse In the mid times as manY ~ Power and Disorder
greater one in the depression of the 1890s, whe;O th;e;ression. In that .~
commercial houses failed as had failed in the 1~ . s e d 28 percent of : None of this should be taken to imply that American capitalists as a class
· · I f$2 5 bdhon an were weak and vulnerable; in their spheres of daily operation the more
of the 1890s, 156 railroads With capita 0 · b k had failed. 24 th ·,. successful ones had perhaps as much unrestrained freedom of action as
the nation's track went bankrupt; by 1897, 800 'alan sherne ofideas- ses ·.~ any group of men ever, in a market society. They had built a colossal prcr
· h offici sc e 1e ,
Again, business !ailure had a place Ill t e _ but capitalists wer \ ductive system, but, willy-nilly, in the uncoordinated way that Adam Smith
fittest would survive and all would benefit D winian struggle. rpro- · had advocated. Through the increase of their wealth and their aggregate
enthusiastic in practice than in theory .about :~panded and 0 ~ation · power, they had failed to exercise anything like systematic class control
3 · As l'ndx'vidual.
firms and industnes over
. · s stem as
a whole. spec
duced, so, periodtcal1y, did the economic Y
 SELLING L.ULlUK.t.
56
h . environment. That failure is expressed in h .
over t ~tr d· smoldering worker rebellion, frighteningw· at I hav... WHAT CAPITALISTS NEEDED 57
sum mar 1ze · . . fisk " J\ls
bT nd declining profits, as we 11 as m Widespread sk '. g_t'eaqn t
~ ~·l:adership. Nor had the new middle class, fast thouet~ctsrn. absta..
1 limits denied workers the means to buy many products of the machines
. eir t come to stand as an executor of capitalist d ~ lt Was o-,. \lt
0
they ran.
mg, ye d estgns o•Cl'v In short, businessmen were good at seizing the main chance, forging
n bosses and workers, an an encouragement and • a burr · ahead with new enterprises and empires; but they were unable to find
betwee . d f . mod 1 •er
. ·r had in fact, fluctuatmg an o ten negattve attit d
u es to e to tt.. . ,~ ways of cooperating, of stabilizing their milieu, of ruling. I hold with
Iatter, I ' . . . .
business, cul~inatmg m the anti-trust sentt~ent of ~e l890s.2sWarct big Gabriel Kolko on this point, and with Robert H. Wiebe. 29 The institutions
The capitalist class today may be charactenzed by nfts a d . that a national business class needed to carry on its affairs harmoniously
· terests as much as it was in 1890. But consider what mn COnflictin did not yet exist. Two lacks were salient. There was only a decentralized
m 'l bl . d. eans f g and disorderly system of credit and finance;J.P. Morgan was himself the
. ation and control are avar a . e to It an Its allies ' now' by co:rnpo stabi
IIZ . ·
There is a strong central banking system to regulate credit Th anson. closest thing to a central bank, before 1914, and even his considerable
1 h'
array of keynesian an d monetary evers, w tch have work d · ere·
ts the resources of money, allies, influence, and determination were not suffi-
since World War II, even i! less well recently. There is fede;ai ~:etty ~ell
cient. (All the major depressions were owed in part to financial disorder,
and to the speculation and corruption that naturally accompanied it.)
of a host of business practices; corporate leaders periodicaU h gulauan And the "political capitalism" (Kolko) that businessmen later managed
this situation, but they he_Ip~d establish it, and on the whol~ itos~b· . . to achieve, even while some bitterly resisted it, had barely begun to take
their environment and hmtts the sorts of competition to h' thzes shape in 1890, with timid regulation of railroads. Before the end of the
. I' I . . w tch th .
must respond. Th~re ts o t~opo y m many more ~ndustries, and, ey century, capitalists took little interest in the political process, except as a
importantly, there IS the taCit system of_collaborattve pricing (for source of giveaways and a target for bribes. When they did seek political
pie, steel, autos) that has supplanted pnce competition. There is remedies, these were often partial and local, answering the needs of
and horizontal integration of companies, allowing them to one group by frustrating those of another.
internally many processes that were subject to market vagaries in 1 Perhaps this disarray was inevitable in a nation that was not really one,
There are big unions, and there is regulation by the government a society composed of what Wiebe calls "island communities," lacking a
national center and national institutions, only just united physically, with
their conflicts with corporations, so that not only are "labor pro
that unity more a cause of disruption than of coherence. Perhaps a self-
more measured and predictable, but once a contract is settled, the conscious and united ruling class was an impossibility. In any case, it did
does much of management's work in enforcing it. There is (or was?) not yet exist, and for all their power, businessmen had so far been unable
welfare state to keep the worst victims of capitalist inequality from to cope with the disorder they had created, while creating that power.
ing or revolting, and also, along with the military establishment, to
up some of the slack that has weakened American capitalism since 1
There are the mass media, sending myths that justify the status quo A Strategy
every home. And I could go on.
Late-nineteenth-century capitalists understood that they ne One strategy for control lay within the power of businessmen to execute.
broad controls over their world, in order to continue amassing Rather ~an allying themselves with competitors, or swallowing them up,
peacefully. But they had not- could not have - hit upon any . . .,.. ,"irP~~hle!' or maki~g the government their executive committee, the masters of
produ_ction could become engineers of consumption as well. They could,
methods. Concentrating on the immediate sphere of their
an~ did, turn the same kind of attention and energy that had made an
production, they tried a variety of schemes to temper the chaos of ·. · agncultur~l society int? ~n industrial one toward marketing. I am going
·· GentIemen ' s agreements, trade associatiOnS, · · 1
petitiOn. . s,
Pools' carte to be speCific ab~ut this m later chapters. But now, just for the moment,
trusts, outright monopoly: all these and other strategies to restrict
·
pr; . l~t us appro~ch _It c.once~tually and holistically, adopting the useful fic-
d uctwn, sh are mark ets, and keep prices up were repea tedly essayedly·' · tion that capitalists m their various enterprises moved with synchronized
but none succeeded more than fleetingly. And industria~ists were h~an , steps _tow~rd a common goal. In what ways did they address the crises 1
more successful in achieving stable relations with their workerths use have ttemtzed, by bringing sales under their systematic control?
· h th e1r
Wit
· competitors. · Their main weapon was force Itse · lf·' and. eiodi· If they could predict, or even guarantee, sales of a certain volu
of force failed to tame workers more than temporarily, while It pe!ness. they could calibrate production accordingly. There would b me,
. .. f b'1 bUSl . fre ti b - · . e no more
cally shook the faith of others in the legitimacy o g . to 1ts ne c over m 1dmg of flour mills and stove factories in the blind hope
Furthermore, the sometimes brutal effort to push exploitauon
 -- --- ~ '-'ULf'URE

of enough ready customers, and hen

between machines going full tilt and mac~~ no desper
firing large groups of workers, between y Ines idle, be~te aJteth
. ears of ee h· ''<lij
years of loss or collapse. Or If they had overb . great pr 11 'lin ~~
mistake by reaching out to find more custom Uilt, they cou~ct'tabiJi~~d
6
out the frightening vicissitudes of their activi~s. Ideally, thi telitect~~d
it would put them in a position to see everyth·es and their f~0Uld~;,o~e
eyes of all the division heads and middle man Ing at once,~ &ers.~~
porations- the whole of the process they agers of the ne\Vrloughth~
. Is to £actory, wh ere t h e nght
. number must
f organize fargecllt1e
matena
o rna h' ' ro '
would be ready to turn out the right volume of c Ines anct Ill l'a\f
a sophisticated distribution network reaching product; frorn fa\Vorke!l
. fiormatiOn. out to a kn OWn ctoty
The flow o f m wou ld simultaneous}
. Ill lo
these same stages, so that every decision abouty ru? backward thilrket
capital 1 b rollgb
rials would be founded on confident expectatio b ' a or, and Ill
Although this strategy would not end compet~ a ~ut sales.
· m
1t · two ways. F'Irst, th roug h mark et research, sales on, Ith'could llJ.odera~
differentiation, companies could divide custome~a:s i~· ~d produq
the market, and develop brand loyalties among the p to shares"
· wou ld no Ionger b e a voracious
tion · in tso that --··J"m-•••
struggle ending m,
· · S d 1
or extmction. econ , e companies in any field th ota
th t fi -~ ...u,~.non·'J•
. . d . a Irst
mtegratwn an rationa1 management would squeeze outJ- -··u"'~:n--
. 1
petitors an d rna k e It
' h ardfior new ones to gain entry. Thatsmaer would
a more stable environment with known dangers. And eventually it
lead to collaborative pricing, and the tacit agreement that prices
regularly go up but rarely go down (thus, in the fullness of time·
would be a permanent feature of capitalism, but that's another
Clearly these new arrangements also promised to stop the
rate of profit and allow for accumulation at a satisfying pace.
Also, an emphasis on sales and consumption would gradually put
italists in a new relationship with workers. They would of
continue to extract labor and surplus value from them at the work
but in realizing that value through a vastly expanded sales
would approach those same workers on the other side of the
gate, as consumers. They would urge workers -first those of ~e
class, then aU workers - to bring more and more commod'lUes · mtoh
homes, and to share in the vision of a good life conducted throuldg .
use and display of these products. For decades the rearIty wou ible
good deal short of the vision, but slowly rising wages (made.p.os; .•
all that capital formation and the consequent rise in producUVItyJ've
··on a1 ·
support enough growth in consumption to keep the VlSI the ·•·
th at, a Iong With · the softening posture of bosses to wo rkers at ciasseJ.·
0
place, would temper the harsh antagonism between theh~evastP~
With luck, and in time it would help enlist workers in thew 'th bell~
0 accumulation. That language and that abstraction suggest affinities
· o fAm encan
Ject · '
capitalism, winning hearts and mm · ds alongWl
59
WHAT CAP ITALISTS NEEDED
Wh'le easing the contradictions oflate-ninetee~th-century :apitalismd
th tu~n toward marketing and its integration With prod~ctio? woul.
.e 'talists an olympian scope of action and saturate hfe With their
gJVedcap~d interests Not only would they colonize the leisure of most
n.e~ s a as they had previously dominated work time; they would also
c1uzens,t the nation into one huge market and market cu1ture, seizm
· · g on
.
mtegra e ated systems of transport and commumcation . . 1.0r" th'IS pur -
recen tly Cre · li · all
ose. Before the people of the Un~ted States were .a. n~?~n po tJ.c. y,
p · ssmen had gathered their "Island communities Into a nation
busme· ed around markets money relauons, .
and commodifite d cu1ture.
orgamz '
That is the narrative whose early episodes ground the m~re ~articul~r
· I plan to tell in subsequent chapters. As I have outlined
stones _ It here,
. 1t
ate., is at best bold, at worst crude and monolithic. I have excised all chotces
and actions except those of businessmen, as if.the rest of th; peop~e h.ad
roiects and needs of their own, but were mert matter 1.0r captta1tsts
no shape.
to p J I have compresse d mto . one "strategy" an uneven, com!?lex ,
and contested process that took decades to work through. I have wntten
as if all capitalists hit on this strategy (they didn't): and as if~ey pursued
it in harmonious collaboration (!). I have made 1t seem as rf they had a
conscious, broad, social design for the 1950s and after, which they began
to effect in the 1890s with a prescience that no capitalist ruling class has
so far exhibited. And I have made it sound as if the sales effort were the
single solution to manufacturers' dilemmas.
That last stroke of Occam's razor answers to purposes of this study,
which must keep marketing and advertising in the foreground because
of their causality in the success of monthly magazines, my home ground.
It responds also to my interest in those regions of the hegemonic process
where historic agency is least coordinated, most widely dispersed among
participants from different groups seeking different ends. Thus, I privi-
lege the choices of businessmen in that sphere of their activity where
each must look to the survival and profitability of his own company, in
competition with other companies, and apart from conscious designs of
class rule or social transformation.
While this emphasis directs attention to innumerable specific deci-
sions s~ch. as that ofN~bisco in 1898 to brand, package, and nationally
advertise Its crackers, It also lends itself to the most abstract under-
stand~~gs of historical change, by seeking to identify deep and general
conditions that drove the myriad specific decisions and determined
which ones would have a chance to succeed. Such conditions include
overproduction, constraints on the realization of value, distortions and
excess~s in ~he formation of capital, falling rates of profit, and attendant
fin~ncml crises, ~1 of which periodically stall the normal work of capi-
talist accux:nulation and force a tectonic plate shift, a new regime of
 - ~~"Ul{£

between my argument and the theo f

capitalism put forward by Michel ~. 0 regular tran f, ·
From their perspective, a new "social Ietta and the "rs ortnatio
...mscn'be d" m . mechanized producti' norm of consulhe8Ul . ll.S~.~·•tth,
. <l.tion. WHAT CAPITALISTS NEEDED
61
on and "F . ·•tPtio11 , sch0''14
process, so that collectively, businessmen h ordtst" contr wa8 aq. 1lb vigorously with small _Proprietors: T.hey collaborated through such orga-
1880s and 1890s as they did, even thou h had to llleet thol Ofth ea~ nizations as the NatiOnal AssoCiation of Manufacturers, the National
. ~~h.'
· d d'
Ize Isarray. The law of accumulatig t . ey could do 8 e crisis Of "'lt Civic Federation, trade associations, and government commissions as
Smith's invisible hand.3o on 18 a marxist c0011lyin.a well as in political parties, especially the Republican. They sat on ~ne
• IS• JUSt
• 0 llnt tt>ll another's boards. And of course they mingled in social organizations cul-
B ut It one character in the he e . ~tpa~t '
tural circles, private schools, elite suburbs. The ensemble of ~heir
human hands WOrked together in a CO g .monte Story: ll1 Of
activities, as Sklar says, amount~d to a s?ci~l movement, one that in my
solidify the new social order. The very c~s~?~s effort toes~~· view produced a new hegemomc class wtthm a transformed social order.
laid down by concerted legal and politicanl Iti~ns of its Poss'b·l~sh Having granted ~he vision ~d sol~darity of that class in the political
th roug h t h e turn of the century. A series of action ' f rorn the I lhty . arena, I want to retterate that m da~ly work businessmen pursued no
. . . h d court cas 111id vision beyond the usual one of survtval and accumulation, and acted
Institution, t e mo ern corporation· dete . . es enabled.
. · rmmmg th Its more in antagonism than in concert. But their improvisation and oppor-
was legally a person With attendant contractual and . ~t a tunism in that sphere were no less consequential than their
lishing the shareholder form of ownersh. _Poh~cal self-organization in the other. A shift of their energy and resources to the
redefining property to include a right of re~ With ~Irnited selling of products helped mightily to ease the crisis of the late nine-
sue h as goo d WI'II ; 1.aCIc. '1'Itating
. the market in ind rntri'al on Intang,'ble teenth century and recreate American life on a new foundation.
New state aws (most notably in New Jersey) gave t 0 stocks: and so
I us
era1 pnv1 · 'I eges, mo b'l' I Ity, and powers previous! corporationsm ·
'I d F d 1 I I · ·
ra1 roa s. e era aw egi tlmated the corporation d · Y granted
. . . an Its
across state I1nes - Its national scope - while mild! . ·
Company lawyers and their allies fought for these ne: regulating ·
which prepared the way for the mergers of 1898-1904 that
resolve the crisis of competitive capitalism and brought the
poration into secure command of the economy.
Corporate leaders acted purposefully and collaboratively, along
political allies, to extend that command and negotiate the conflicts
regulation and trusts that marked the first decade of our century. In
sphere of activity they did enact a vision of social transformation
new kind of class rule - political capitalism. In cooperation and
with "professional-managerial class" reformers and with leaders of the,
old upper class such as Roosevelt, they established what Mar?n S~ar
calls an "anti-competitive consensus," pushing aside both the tdeoo~
. . . Th hammered out an
and many practices of the latssez-faire system.
ideology of order and efficiency, imagining the corpor~ti: vanguard
through natural evolution, to the old entrepreneur, ~n t factory gateS,
ey .
:e
successor,

of progress. They fought in the political arena, no~ JUSt a .. to enlarge

· · penal powe., •1:or
against unions. They agitated for Amen.can tm All this is fanll~~"'
and protect international markets and tnvest~en.ts .. h .t by setting f1l'l
knowledge, and I do not mean to d tsmiss . ' or diffillllS 1 ~
inquiry on other hegemonic terrain. 31
ted consciously~e
Furthermore in such matters corporate leaders ac transcendillg.ing
' . · they were tesw
class- or reallv, as a class-in·formauon, s1nce urs and co11
former position ' ' of some among them as en treprene • ,