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Gabriel Kolko Revisited, Part 1: Kolko at Home

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An earlier generation of libertarians was interested in Gabriel Kolko, a historian of the Left. Who was he?

Born in 1932 in Paterson, NJ, historian Gabriel Kolko studied at Kent State, the University of Wisconsin, and Harvard University (PhD: 1962). From 1970 until his retirement he taught history at York University in Toronto, where he remains Distinguished Research Professor Emeritus. In Wealth and Power in America (1962) he reflected on persistent poverty in the United States. Other works in American economic history followed. Thereafter, events moved Kolko increasingly into issues of war and peace. Gifted with a definite independence of thought, he was generally seen as part of the New Left.

Kolko’s vision of American economic history overlapped with, but differed from, that of other New Left historians. William Appleman Williams, for example, divided American history into three ages: Mercantilism (1740-1828), Laissez Nous Faire (1819-1896), and Corporation Capitalism (1882 to present). By the early 20th century a “class-conscious industrial gentry” sought to guarantee the dominance of large corporations by using government (1) to engross foreign markets for goods and capital; (2) to provide market stability and predictability, partly through formal or informal cartelization; and (3) to reduce discontent by recognizing union rights (within limits) and instituting a very minimal welfare state. The New Deal rounded out this system of “corporate syndicalism” (Williams’s term). Other New Left historians, including James Weinstein, David W. Eakins, Martin J. Sklar, and R. Jeffrey Lustig, tended to speak of “liberal corporatism” or “corporate liberalism.” Pursuing this system’s origins, historians ventured back into the 19th century, and Kolko’s early work reflected that journey, so let us begin with his second, more focused study, Railroads and Regulation (1965).

The locomotive of history

In Kolko’s view, all historically existing capitalist systems have relied on the state. Once state-promoted railroads had become the biggest 19th-century investment sector, their subsequent difficulties necessarily called forth further aid from a political system eager to help. Given their origins, American railroads essentially rested on gross over- or malinvestment, a situation made worse by the land speculation they encouraged, as well as watered stock and endless promotional scams. Alas, just enough sharp fellows had scrambled into railroading to create a degree of competition that might ruin or certainly inconvenience the owners once they actually had to transport something and make money on their massive fixed capital. Following regulatory proposals through Congress (and elsewhere) between 1877 and 1916, Kolko concluded that railroads dominated overall and got most of what they wanted. This was the birth of self-conscious political capitalism. (Meanwhile, one could add, the railroad industry had done much harm, economically and socially, by fostering “economies” on a new and artificial scale [“national markets”]; and, as economist Michael Perelman writes, the railroad industry’s seeming immunity to market forces confused economists, who developed new — and not necessarily better — economic theories.)

Political capitalism: Free market and strong state

Railroads had spurred the rise of corporations in other key industries, and the new political capitalism necessarily spread to other sectors. Kolko’s Triumph of Conservatism (1963) takes a grand tour of the late-19th- and early-20th-century American economy, its general trends and exceptions to them, covering steel, oil, automobiles, agricultural machinery, telephone services, copper, insurance, meatpacking, and banking. Broadly speaking, America’s rapidly industrializing economy still displayed much decentralization and considerable (and unwelcome) competition. Now, key businessmen consciously sought political solutions to preserve or improve their positions. (This mattered far more than their subjective or theoretical views, including arbitrarily deployed free-market verbiage.) Above all, they wanted the stability and rationalization that only law and the state could give them.

For Kolko, a conservative consensus shaped the “reforms” of the Progressive Era. Politicians generally put business first. Industry wanted (and got) a veto over regulatory agencies. The outcome, Kolko wrote, was political capitalism: “the functional unity of major political and business leaders,” doing business (as of 1963) as the Establishment, an “interlocking social, economic, and political elite.” This was not entirely new. American economic organization during World War I fulfilled the Progressive program of the eastern elites, and later Herbert Hoover and Franklin Roosevelt worked within the war model.

In Kolko’s view the best European social theorists shed little light on the specifically American experience. Marx’s “purely economic” categories proved unsuited for dealing with American developments. For Kolko, from 1887 on, new U.S. political bureaucracies aimed at shielding the profits of established businesses from both unwanted competition and unpredictable political developments.

Wealth and power further pursued

In his Main Currents in Modern American History (1976), Kolko presented an overall vision of American history and pursued political capitalism well into the 20th century. Here he stated his disagreements with Williams and the Wisconsin school on the relative importance of the Open Door for American exports. Kolko stressed instead American capital’s need (all through the 20th century) for imported raw materials for their industrial processes, a connection that sheds needed light on persistent American interest (and intervention) in rather secondary overseas markets such as Southeast Asia. (Oil of course speaks for itself.) Kolko thus brought subsidized exports together with American control of overseas resources (raw materials) in a more powerful notion of what the Open Door entailed for American planners from at least 1941 onward.

I would add that since 1789 American federal courts and bureaucracies have tended to see the promotion of private business and economic growth as their main job. (See the critiques of this policy that John Taylor of Caroline wrote between 1814 and 1822.) By the late 19th century, key economic and political actors began to see themselves as a central planning board for the American capitalist system as a whole, a project that the New Deal raised to a new level. Broadly speaking, business was happy enough with these new services, and most Americans complied with the ever-changing new order, perhaps because the federal apparatus had already shown its power to crush whole sections of the American people from 1861 forward — whether separatists, labor unions, or dissenters from World War I. (See below.)

Interestingly, Kolko laments the defeat of the southern and western populism of the 1880s and ’90s, which he calls “the most truly libertarian social force” of its time. The movement’s eclipse was assured when close to a million American populists departed for the farming provinces of Canada (an emigration that American historians mostly ignore). Where labor history is concerned, Kolko sketched the history of an ethnically divided working class, immigrant and native, sold out (as it were) by business-oriented union leaders. He comments,

Violence was used in America more than in any other country that bothered preserving the façade of democracy, but what was clear from this, apart from the fact that the threat to constituted order evoked a response all out of proportion to the real danger, was the readiness to employ yet far more if it were required.

Unlike populism, eastern progressivism was all about sustaining the going order through political capitalism. Referring to World War I, Kolko writes, “The national government had built a vast administrative structure which businesses had defined and guided from its inception, and they might yet do so once again.” Later, New Deal banking legislation reflected the same purpose: “Using political means, big banking could now impose its norms in a national banking structure….”

In chapters 7 (“The Accumulation of Power”) and 8 (“Politics and the Foundations of Power”) of Main Currents, Kolko zeroes in on the workings of the American political and economic structure. Given the selection of key state officials (especially for foreign policy) from the ranks of big business, big banks, and top law firms, policy is inevitably subservient to the interests of commerce broadly conceived. Even those recruited from other strata receive training in this received outlook. The resulting leadership class exhibits a collective myopia, only made worse by the serial crises that this class manages to produce. Given the higher policymakers’ shared (and fixed) worldview and class ties, conformity, promotion, and fear of losing influence are all that counts. In recent times almost no one has resigned from office over a matter of principle.

The elite proceeds with complete contempt for the wishes of the governed: “‘Freedom’ thereby becomes a posture the powerful tolerate among the powerless, and those in power make certain they will remain ineffectual.” At the same time, consensus “becomes an ideological phrase which wholly obscures the real basis of authority in United States society since the Civil War — law and the threat of repression.”

Kolko paints a gloomy picture of a banal, empty culture with no real community at any level. The early, unconditional, and violent victory of the American elite, along with its inability ever to feel really secure, has led to unhappy results: “Having fulfilled their desire to break the possibility of opposition, they also destroyed, as well, social cohesion and community.” Further, in American political life, “charlatanism, infantilism, cynicism, apathy, and gangsterism have all merged in ever-changing ways with the regulatory functions of the political mechanism and its responsibility to perform essential and predictable tasks.” Deliberate exclusion of the people from any effective participation in political life — or even their own lives — caps the whole edifice.

Inside the American whale

Two recent critics, Robert L. Bradley Jr. and Roger Donway, fault Kolko for not approving of any phase of American capitalism, laissez-faire or corporatist. This is a fair point: He does not approve. But if Kolko stands convicted of not being a libertarian, it is not clear how this invalidates his historical work. History is not theory, and back-and-forth leaps between facts and theory (ideology) may not avail. And the little matter of “laissez-faire” needs another look: A fairly minimal state was quite strong enough in England to clear peasants off the land and (later) to remove sundry traditional rights that blocked rapid industrialization. In the United States, governments undertook similar projects of bourgeois social engineering chiefly in aid of already wealthy or (sometimes) rising interests.

As Kolko knows, big business is not ideologically naïve; its embrace of the state is rational and interest-driven. Like Hobbes and Locke, big business knows that the kind of market society it desires absolutely requires a strong state. The trick is to have such a state while publicly demanding the opposite. Accordingly, big business subsidizes free-market ideas (which retain some mass appeal) and enrolls petty-bourgeois (small-business) elements as defenders of the corporate sector. The authoritarian populist style of Thatcher and Reagan, combining a strengthened state with much free-market rhetoric, showed that this formula sometimes works. It is surely an exercise in futility for anti-imperialists, decentralist conservatives, agrarians, libertarians, etc., to serve such causes.

But to return directly to Kolko, it seems fair to say that his accounts of progressive reform down into the early Cold War have held up rather well. Perhaps Elizabeth Sanders is right to say that big business, while dominant, did not completely control the progressive reform process. Yet Nancy Cohen’s work on the remoter origins of the new federal bureaucratic state allied with corporations reinforces Kolko’s main conclusions.

Running all through Kolko’s important and informative historical work is a consistent critique of (and contempt for) the activities and claims of America’s ruling elite. (They have earned it.) His turn toward the history of wars, American or otherwise, led him to focus on the autonomous power of states, and therewith to an even higher level of criticism.

This article originally appeared in the September 2013 edition of Future of Freedom.

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    Joseph R. Stromberg is an independent historian and writer who was born in Fort Myers, Florida. He received his B.A. and M.A. from Florida Atlantic University and his further graduate work was completed at the University of Florida. Mr. Stromberg was a Richard M. Weaver Fellow from 1970-1971. His work has appeared in the Individualist, Libertarian Forum, Journal of Libertarian Studies, The Freeman, Chronicles, Independent Review, Freedom Daily as well as in several books of essays.