In October 1907, the American financial system seized up; stocks dropped 50% in less than a month; multiple banks collapsed, and the panic metastasized rapidly. There was as yet no Federal Reserve and Washington had limited ability to take action. Instead, J.P. Morgan, the most powerful private banker of the day, corralled the major players on Wall Street to provide tens of millions of dollars in loans in order to halt the slide. The panic ended almost as abruptly as it began, and Morgan was hailed as a savior.
Six years later, Morgan was hauled in front of a special Congressional committee headed by Rep. Arsene Pujo as a hostile witness in order to testify about the pernicious power of “the money trust,” an allegedly secret cabal of bankers who pulled the levers of the American financial system to their own benefit, the public good be dammed. A few months later, Morgan died, having gone from hero to villain in the relative blink of an eye.
Morgan’s vertiginous rise and fall is not unique in American society. It is, in fact, emblematic of ambivalent attitudes about elites, a pattern which is in full bloom today. The more egalitarian and small-d ‘democratic’ we strive to be, the harder it is to reconcile the place of elites at the top of a social, political and economic pyramid. Yet the absence of elites also becomes untenable when it leads to a vacuum of expertise and experience and acumen. Hence the popular trope that even those who disdain expertise don’t want just anyone flying their plane.
In short, we love elites and then we hate them. And the ones who most acutely give voice to that love and hate are often the intelligentsia who are just enough in the same circles but never quite reaping the same rewards. It’s not a populist backlash so much as it is one group of elites against another in the name of “the people.” The same Pujo who hauled Morgan, with one foot in the grave, for a ritual public humiliation was just as much part of the elite class as a well-paid lawyer who (in)famously defended a lumber company for its lethal suppression of a worker’s strike.
One notable backlash happening today is against the Federal Reserve (whose creation in 1913 was a direct result of Pujo’s investigations) as the culprit for ‘out of control’ inflation and for what some believe are the absurd levels of everything from stock prices to home prices to the bewildering phenomenon of NFTs. A just-published book by Christopher Leonard, The Lords of Easy Money, recasts the past three decades of Fed policy as a relentless march towards placating the investor class with successive waves of low rates followed by a smoke-and-mirrors invention of quantitative easing that did nothing to help workers and wage-earners, but which enriched the already rich and consistently drove up the price of assets.
So, instead of Jerome Powell, the current head of the Fed, being seen as a calming presence in a turbulent pandemic time, his policies are now derided as the victory of a small band of technocrats dedicated not to the welfare of average Americans, but to the perpetuation of a system that benefits the privileged few.
Juxtapose that with the cover of Time two decades ago. In the face of a possible meltdown of Mexico and emerging economies that would likely have sparked a global financial contagion, the economic policymaking triumvirate of Fed chair Alan Greenspan, Treasury Secretary Robert Rubin and his then-deputy Larry Summers spearheaded a response that staved off crisis and was heralded as “The Committee to Save the World.” Today, Jerome Powell is increasingly derided as having been tone-deaf to inflation as a “transitory” problem and for having continued (as did his predecessor Ben Bernanke) easy-money policies long after they were needed. And who, in that telling, is the godfather of easy money? Alan Greenspan, the one-time founding member of the committee that saved the world. What goes around comes around, it would seem.
Tech elites are facing a similar backlash. In the late 1990s and well into the early 2010s, tech entrepreneurs were held up as an emblem of what capitalism is capable of. Case in point was Walter Isaacson’s glowing biography of Steve Jobs. While the financial elites were seen as greedily responsible for the meltdown of the 2008-2009 financial crisis and recession, Silicon Valley was lionized as a redemptive example of what capitalism at its best could create. In 2011, the computer industry enjoyed favorability ratings in the mid-50s and the internet industry in the mid-60s; today, those numbers have fallen by half, and about the only consensus that unites Republicans and Democrats is that tech elites are too powerful, too wealthy and too detached from the negative consequences of what they have created. Even someone like Marc Benioff, the founder and CEO of Salesforce who had been spared the type of opprobrium reserved for Facebook’s Mark Zuckerberg or the recently convicted former CEO of Theranos Elizabeth Holmes, is now having his own comeuppance as representative of the tone-deaf, self-enriching class pejoratively dismissed as “Davos Man.”
Perhaps we are simply in a cyclical trend. In the 1950s, the American consensus celebrated companies like General Electric and the wonders of American corporate dynamism, as well as the efforts of Washington leaders to contain global communism. By the mid-1970s, government and industry leaders were in ill-repute, with the voice of that disillusionment given powerful form in the 1950s by best-selling sociologist C. Wright Mills whose book The Power Elite set in motion the seeds of the disillusionment. Action, reaction. In the mid-1990s, Christopher Lasch penned The Revolt of the Elites and excoriated the privileged classes, differentiated by education and wealth, for their betrayal of the promise of American democracy for a fairer society where rewards were widely shared and the circle of security and prosperity expanded. Again, action, reaction.
Oddly, both the lauding and the damming often come from media and intellectual elites who are by education and by their place as gatekeepers of what gets heard and seen partly in the same circles as political and economic elites that they then tear down. For years, Lewis Lapham, the curmudgeonly editor of Harper’s Magazine penned a regular column decrying the absurd attitudes and ideas of the wealthy and powerful, often because he was at dinner parties with those self-same. It’s a fine line, and always has been, between genuine moral outrage and envy.
And the key to our age is that the very demonization of elites as self-serving and perverting “the system” to their advantage masks a deeper problem: the continued belief that someone or some group is at fault for whatever ails us collectively. Blame can feel empowering, but it’s actually the opposite. It’s a sign of a widespread sense of powerlessness in the face of tectonic forces. In that rubric, the pandemic is not out of hand because it is caused by a new and constantly morphing pathogen; it’s because the government failed or disease experts overstepped. Inflation is the result of bad policy, not of an aberrational few years of global shutdowns and lives altered.
The idea that elites are responsible for great things or terrible things speaks to a view of society as governed by the few, and not the responsibility of all of us. It’s an immature response, that we are either beholden to elites who elevate us or at the whim of those who enfeeble us. Having bounced between those poles for generations, maybe it’s time to grow up collectively, look ourselves in the mirror and recognize that we all bear responsibility for what we are collectively, for worse and for better.