The Upper Class and the Power Elite Chapter 4

The Social-Class Origins of U.S. Elites

Almost all studies of top leaders of government and of corporations conclude that the majority do not reflect the population as a whole in terms of social class. Specifically, they come from upper- or upper-middle-class families and have displayed such backgrounds since the founding of the nation. Charles Beard, in a well-known historical study (1913), found that the members of the Constitutional Convention of 1787 were mostly the economic and social notables of their time. They were professional men, merchants, and landowners who, according to Beard, benefited economically from the adoption of the Constitution as it was written. The privileged status of these early political leaders is evident in their educational backgrounds. Philip Burch (1980) found that at a time when only a tiny element of the population attended college (about 0.2 percent), 87 percent of the major cabinet and diplomatic appointees of the George Washington and John Adams administrations had done so. Studies of government leaders indicate that the predominance of those with privileged backgrounds has not been limited to the early eras of American history. Mills (1956) showed, for example, that the 513 men who occupied the top political offices of president, vice president, Speaker of the House, cabinet members, and supreme Court justice between 1789 and 1953 were mainly from well-to-do professional or business families.. Sociologist Lloyd Warner and his associates (Warner and Abegglen, 1963) studied eleven thousand top federal executives and found that well over half had fathers who were professionals, business owners, or executives; only 15 percent were the sons of laborers. A study of the Supreme Court showed that of the ninety-two men who served in that body up to 1959, only nine were not from families of economic importance,s ocial prestige, and political influence (Schmidhauser, 1960). And a study of 180 members of the U.S. Senate who served between 1947 and 1957 concluded that, with few exceptions, they were selected from "near the top of the society's class system: (Matthews, 1973:44). A later study (Zweigenhaft, 1975) found no basic differences through the mid-1970s. For the past three decades, only a small number of members of Congress, both senators and representatives, have not come from high-status occupations, overwhelmingly in the business world or the legal profession (Amer and Manning, 2008; Marger, 1987). Moreover, with the inflated campaign funds that are now commonplace in national elections, the tendency for the wealthy to attain high elective positions has grown stronger. By the mid-1990s, over one-quarter of the Senate and at least fifty members of the House were estimated to be millionaires (Sim[son, 1994). As to the presidency, the notion that most men who have held the highest office have been of humble origins does not hold up under careful historical examination. In his study of the social origins of U.S. presidents, historical examination. In his study of the social origins of U.S presidents, Edward Pessen (1984) reveals that most were born to families of unusually high social status and economic well-being, quite unlike the socioeconomic circumstances of most American families of their time. Pessen does see some change in recent decades in that presidents born into the upper class have become less common in favor of those born into the upper-middle class. They poor and the lower-middle class, however, continue to be bypassed. "Despite slight changes in the patterns of the presidents' social origins," Pessen concludes, "from one period in our history to another, the central fact, now as earlier, remains the almost total exclusion of man born to poor or modest stations" In short, throughout American history, top political leaders have been drawn from a narrow social base, not typical of the general populace. They have been and remain, as political scientist Donald Matthews put it sixty years ago, "far from common men in either their origins or their achievements" If top-ranking political leaders generally display class origins higher than average, leaders of big business are even more clearly from privileged backgrounds. Knowing the class backgrounds of economic leaders is often a question of judgment, for we must rely mostly on what business executives themselves choose to reveal. Their perceptions of the extent of their upward mobility may exceed their actual experience. The image of the poor boy who has made it ti the top-the Horatio Alger notion-is more publicly favorable than the image of an executive whose place at the op was never in doubt. Hence, business leaders may sometimes exaggerate the humbleness of their origins. Although this is also true of political leaders, their pasts are subject to much greater public exposure than is true of top officials in the business world; it is therefore more difficult to sustain a "born in a log cabin" image if that is not actually the case. Despite these methodological difficulties, it is basic conclusion of most studies of the corporate elite of the United States and other advanced capitalist societies that their members usually come from the top or near the top of the social hierarchy. One important study done in the 1960s concluded that "whatever our national hopes, the business leaders of America are a select group, drawn for the most part from the upper-ranks" Other studies have confirmed the upper or upper-middle-class origins of the business elite since the emergence of the United States as an industrial society. Dye sees U.S. power elites as somewhat more varied in social-class background. He concludes that approximately 30 percent are of upper-class origins, having parents who were high-ranking corporate, political, or other institutional officials. Thus, 70 percent appear to be middle class in family origin. On that basis Dye finds it illogical to conclude, as Domhoff and others have, that the upper class "dominates" the American elite. Nonetheless, Dye recognized that "even those who climbed the institutional ladder to high positions generally started with the advantages of a middle-class upbringing". Moreover, half are graduates of prestigious private universities. Both Bill Clinton and Barack Obama, recall, despite their relatively commonplace beginnings, used attendance at elite Ivy League institutions as a launching pad for their upward climb. It is quite apparent, then, that the top leaders of government and business in the United States are, in terms of social class, not typical of the general populace. Prewitt and Stone (1973) estimated that the wealthiest one-fofth of American families contributed about nine of every ten leaders of the political economy, and the next wealthiest fifth contributed most of the remainder. When elites of education, the military, and the media are combined with those of government and business, the same general pattern is evident. A later study drew a similar conclusion regarding the class origins of American elites. Most, the researchers concluded, "are the sons and daughters of upper-status white-collar workers"

Baltzell: The Conservative Elitist View

Baltzell's conclusions regarding the interrelations between the upper class and the society's chief power wielders are similar to Domhoff's: Essentially, there exists a ruling class. But in contrast to Domhoff, Baltzell sees a ruling class as socially beneficial and its special privileges as justified. Baltzell distinguishes three groups at the top of the social hierarchy. First, there is what he calls simply the "elite," made up of top functional leaders of various spheres of social activity. These are the important decision makers of the corporation, the government, education, the media, and so on. Second, there is an "upper class," composed of families of established wealth whose members are descendants of elite members of one or more generations ago and who make up a social upper class with a distinct style of life and primary group solidarity. When this class combines its wealth and status with functional power-that is, when its members are simultaneously elite members-there exists a ruling class, or what Baltzell calls an "establishment." This conceptualization of the power structure closely resembles Domhoff's. Baltzell sees the need for a society to maintain a system of power that combines the traditional authority deriving from the past with the infusion of new groups into positions of functional power. "The most difficult and delicate problem faced by democratic societies is that of balancing the liberal need for the continuous circulation of individual elites witht he conservative need for maintaining a continuity of family authority" Ideally, then, the establishment is made up of individuals whose power and prestige are inherited, but it remains open to the newly powerful, those recruited into the elite ont he basis of talent and ability. This requires that members of the elite be accepted into the upper class regardless of ethnic origin or religion,. Baltzell emphasizes that without the infusion of new blood from the elite, the upper class will degenerate into a group that neglects its leadership duties and concerns itself only with its right to privilege. In a sense, Baltzell views the establishment as a "noble aristocracy,: socialized into accepting its leadership role and conscious of its societal obligations. Baltzell finds uch overlapping of the upper class and the elite throughout American history. Those who have occupied positions of power in government, the corporation, and other societal institutions have been overwhelmingly representative of those of wealth and prestige. In recent decades, however, the upper class, Baltzell claims, has become more narrow in its social composition, excluding those of diverse ethnic and religious origins who have penetrated the society's functional elites. Baltzell, them, does not see a close interrelationship of upper class and power elite in modern times. Although it did so in past eras, the upper class, he maintains, no longer constitutes or even necessarily controls the power elite. Those of non-upper-class origin are able to enter into top positions of power and may exercise their power independently of the upper class, which is increasingly concerned only with protecting its status and privilege, not with exercising power. Baltzell views this development apprehensively. A closed upper class creates the possibility that power will be wielded by those who lack socialization to upper-class values and who therefore have little understanding of their larger social responsibilities. Their legitimacy may thus become questionable and force them to resort to coercion and deception to govern effectively.

Domhoff's "Governing Class" Theory

Domhoff's concludes that the upper class is essentially a ruling class. Domhoff posits that there is a readily apparent relationship between those who own or control a disproportionate share of the society's wealth, those who exercise control over major corporations, and those who greatly influence the governmental elite. Significant societal wealth is found within the corporation, and those who dominate this key economic institution through ownership or management maintain maximum influence in the public policy-forming process. Domhoff calls this group a "governing class" A governing class is a social upper class which receives a disproportionate amount of a country's income, owns a disproportionate amount of a country's wealth, and contributes a disproportionate number of its members to the controlling institutions and key decision-making groups in that country. Domhoff's essential thesis is that top corporate owners and managers are the major power figures in American society. Their views dominate government, particularly at the federal level. HIs conclusion is that "a corporation-based capitalist class-manifesting itself most obviously as a social upper class-dominates the American government" The federal government, Domhoff concludes, "is dominated (which does not mean complete and total. control) by a power elite as "active, working members of the upper class and high-level employees in institutions controlled by members of the upper class and high-level employees in institutions controlled by members of the upper class, thereby making it the leadership group of the upper class" Domhoff (1998) emphasizes the social nature of the dominant corporate ownership and managerial class. The cohesiveness of this ruling group is largely a product of its members' common upper-class ties. "They belong to the same exclusive social clubs, frequent the same summer and winter resorts, and send their children to a relative handful of private schools. Members of the corporate community thereby become a corporate rich who create a nationwide social upper class through their social interaction". Through these common points of social interaction, the upper class consolidates a consciousness of purpose and effectively controls the power process. The corporate rich, Domhoff explains, sponsor a network of policy-formation groups and think tanks that strongly influence government policy. It is chiefly through elite men's clubs and through policy-planning organizations that the upper class formulates its policy preferences and communicates them to political decision makers. These clubs and organizations thus become major locations of upper-class interaction, not only for social purposes but for functional or working purposes as well. Many of Domhoff's basic conclusions seem well founded. The social interaction of members of the corporate elite and top-ranking political officials is easily verified empirically. Domhoff has also shown that even through political leaders may not be found as frequently as corporate leaders on upper-class club rosters, their presence is felt ino other ways. More important, he demonstrates upper-class participation in influential policy-formation groups as well as the overrepresentation of members of the upper class in significant political positions.

Dye's Institutional Model

Dye defines the power elite as approximately six thousand individuals in seven thousand positions who "exercise formal authority over institutions that control roughly half of the nation's resources in industry, finance, insurance, mass-media, foundations, education, law, and civic and cultural affairs". Though a tiny fraction of the total population, it is still a larger figure than that posited by Mills or Domhoff. Unlike Doomhoff and Mills, Dye does not subscribe to the notion of a close relationship between the wealthy and the powerful. He sees institutional wealth as more important than personal wealth and, thus, control of institutions as most critical. He points to people who are among the society's billionaires who wield little or no societal power: widows, retirees, and other inheritors, as well as independent entrepreneurs, none of whom has ever played a significant role in the corporate world. Dye also does not see the upper class as a key recruiting ground for top political leaders. the link between the corporate elite and the political elite, in Dye's opinion, is tenuous at best. Like Mills and Domhoff, Dye does see a concentration of economic power in American society among a relatively small group of croporate managers. He identifies an "inner group" within the pwoer elite who combine their corporate power with influence among the important foundations, universities, and cultural and civic organizations. He also sees this inner group as socially cohesive. They not only come together at corporate board meetings but attend similar cultural and civic events, foundation meetings, and university trustee and alumni gatherings and are members of the same exclusive social clubs. Also like Mills and Domhoff, Dye sees members of this inner group as links between the corporate world and government. A basic assumption of Dye's model is that :the initial resources for research, study, planning, and formulation of national policy are derived from corporate and personal wealth". And it is within these policy-planning groups that leaders form various societal institutions are able to come together in shaping national policies.

Social Class and the Power Elite

From Alger's novels came what has been called the Horatio Alger myth, essentially the idea that anyone, regardless of social standing, can reach the pinnacle of wealth and power with enough striving and perseverance. This has become a basic belief, held at least in the abstract, of Americans in explaining how people get to the top.

A Global Power Elite

In a world in which the economies and governments of nations are increasingly drawn together, is ti meaningful to consider the makeup of a "global power elite," one that transcends political boundaries? David Rothkopf (2008) posits that about six thousand people do in fact constitute such a collectivity. As he describes it, this supranational collectivity is uncannily similar in most regards to Mill's power elite: top government leaders, military leaders, and key corporate executives. In addition, Rothkopf sees a few extraordinarily influential artists, scientists, and academics who complement these three key elements of the elite. The single largest component, however, is the leadership group of business and finance. What makes this coterie of leaders distinguishable from U.S. and other national power elites is that they are linked internationally, with common global interests.

Self-Selection

In addition to formal qualifications and social connections, there are less obvious social-psychological factors that tend to narrow the potential elite pool further. These involve a subtle process of self-selection by which those of higher social standing assert themselves and by which those of lower social standing eliminate themselves from the competition for elite positions. For example, a young man or woman whose family has been active in politics, who has attended an elite university, and who has established a network of connections to the economic and political power establishments would not be starry-eyes in aspiring to a high position in the corporate or political world. Sociologist Dalton Conley has referred to this as an "envisioning" process, "the simple familiarity with and demystification of certain social roles that is afforded those in privileged positions" (2008:369). Consider again the case of the Bushes, described earlier. By comparison, consider that a young person from a less prestigious family, who has no connections and has earned only a high school diploma or perhaps a college degree from a second-rate state university, would probably not visualize a future place for himself or herself at the top. As Prewitt and Stone explain, such an individual "has few models to emulate, no contacts to put him into the right channels, and little reasons to think of himself as potentially wealthy or powerful: (1973:140). Thus, self-selection aids in filtering out those of lower social class from the pool of potential elites. MOst eliminate themselves from the competition early in the game.

Mills's "Power Elite"

More than any other social scientist, C. Wright Mills is responsible for generating the study of the structure of power in the United States. Writing in the 1950s, Mills was a maverick among the sociologists of that time, disputing the generally accepted depiction of the American power structure as a plurality of various interest groups lacking social cohesion. He concluded instead that a relatively unified power elite, made up of top political, corporate, and military officials, made key societal decisions: By the power elite, we refer to those political, economic, and military circles which as an intricate set of overlapping cliques share decisions having at least national consequences. In so far as national events are decided, the power elite are those who decide them.

The Power Elite: Patterns and Theory

Phillips has written that "Whether five hundred years ago or now, power and wealth have rarely been far from one another" To examine the wealthy in American society is almost implicitly to examine the powerful as well. Societal power, broadly defined, is exercised by those in critical decision-making positions-together, the power elite-within various economic, political, and social organizations that have wide-ranging impact on the society. In the United States, as in all modern societies, societal power is most essentially a synthesis of the actions of government and the economy. It is within those two institutional spheres that authority and influence are most crucial for the society as a whole and that societal resources are most highly concentrated. To examine the power the elite therefore requires that we look at those in important decision-making governmental and corporate positions.

Inheritance, Effort, and Wealth

Studies of the sources of wealth of America's richest individuals and families often seem to diverge. Some find that there is a continual renewal of names and faces among the super-wealthy, whereas others contend that inheritance remains critical. Among the Forbes 400 in 200, 137 attributed their wealth to nothing more than inheritance. Many others on the list, of course, were the scions of successful entrepreneurial families of the past that made the financial success of future family members all but a certainty. On the list of the twenty-five wealthiest in 2012, nine are there through inheritance. In a major study of the effects of inheritance on wealth accumulation, economist John Brittain found that gifts and bequests, on average, accounted for half or more of the net worth of the very wealthy. He concluded that the transfers of wealth from one generation to the next were "a major force in the perpetuation of wealth inequality". Other studies underscore the importance of inheritance in the accumulation of wealth. Some maintain that there is much more mobility at the top than is commonly assumed. Dye asserts that despite the inheritance of much wealth through family channels, such family-based wealth gradually dissipates over the generations. Moreover, the energy and business skills that originally built family fortunes are rarely demonstrated by later generations. Most important, according to Dye, is the fact that each generation produces a new crop of successful entrepreneurs who emerge as self-made tycoons. What is of major significance to Dye and to others who view wealth inequality in America in a similar fashion is not the degree of inequality itself, which has always been evident, but rather the opportunity to enter into the ranks of the rich and the super-rich. Some support for Dye's assertion in Forbes's claim that more than half of the 400 richest Americans in 1997 were self-made, a claim repeated for the 2012 richest 400.

Paths to Power

The Elite Recruitment Process Although the historical patterns of elite recruitment seem to show that ascription is critical, and a plethora of others have risen in class and power indicate that there are opportunities for those who are not born into privilege. In the corporate world, entrance into the elite does not ordinarily occur without merit. This means that an individual cannot step into an executive position simply because his or her father was a elite does not ordinarily occur without merit. This means that an individual cannot step into an executive position simply because his or her father was. a high-ranking official of the company. The Talent Pool The elite recruitment process can be pictured as a system in which individuals are chosen from a potential talent pool. In this reservoir of possible leaders are the people witht he skills, education, and other qualifications needed to fill elite positions. It is here that competition does exist, that the highest achievers do display their abilities, and that the best-qualified do generally succeed. Hence, what is most important is entering this reservoir of qualified people. Many from sub-middle-class origins way have leadership potential, but unless they can gain entrance into the elite pool, their abilities will go unnoticed. Those of higher-class origins enter more easily into this competition because they have been afforded greater opportunities to secure the needed qualifications. They not only acquire college and professional degrees but often acquire them from the most prestigious institutions. Social Connections Following the acquisition of skills necessary to compete for leite places, one must then display them. There is, in a sense, a stage upon which potential elite members must auditions their qualities. Having access tot that stage means not only achieving the formal requirements for entering the talent pool (education above all) but also interacting within social circles when incumbent elites are likely to take notice of a talented individual. There are the social connections that come more naturally to those of higher-class families and that further filter out otherwise qualified persons from the competition. The familiar adage that "it's not what you know but who you know" is quite applicable to the process of elite recruitment. The reservoir of qualified people is larger than the number of positions to be filled. Hence, knowing the "right" people and being able to connect with them becomes critical. IN addition, of course, are other ascriptive factors-race and ethnicity, gender, even physical attractiveness-that further filter out candidates at this point in the selection process.

The Relationship between the Upper Class and the Power Elite

The most wealthy in society, then, is not necessarily also the most powerful. It is true, nonetheless, that the association between wealth and power is strong. Since wealth is the most important resource in a capitalist society, it can be converted into various forms of power. Wealth, power and prestige generally move in a circular flow. Money is the driving force behind the political system, and the wealthy do play a disproportionately major role in the electoral and policymaking processes. Nonetheless, as already explained, wealth and power are not the same, and the relationship between them is not always neat and uncomplicated. We need to examine, therefore, the extent to which the upper class is also a ruling class, that is, a group tha t exerts societal power commensurate with its economic position.

Development of the Old Upper Class

The old-line families of great wealth in the United States emerged during the late nineteenth and early twentieth centuries through the formation of the great industrial empires of that age. The major entrepreneurs of the time--Rockefeller, Carnegie, Vanderbilt, Frick, Morgan, Ford, and others--acquired fortunes that became the basis of their family wealth. These families became the old, established upper class, whose scions inherited their wealth with each succeeding generation. It was these families that formed the core of the American upper class and emerged as the closest the United States has come to an aristocracy. During the Gilded Age, at the end of the nineteenth century, an upper-class lifestyle and class consciousness began to develop, with ostentatious displays of wealth by the new industrial millionaires. New York became the heart of this emergent upper-class society. Great mansions were built, along with opera houses and museums, that catered to the tastes of the nouveau riche. The Social Register, a book listing the families of this would-be aristocracy, was published in New York and other large cities, Having one's family name listed in the Social Register served as a kind of official recognition of upper-class status. Exclusive associations and institutions began to replace the family as important socializing agents and as meeting places for the upper class. Children were sent to New England boarding schools and then to Ivy League colleges, which were financially supported by the wealthy industrialists. Exclusive men's clubs and country clubs became places where business and social affairs of the rich were joined. All of these developments had the effect of creating a national upper class, linking families from various localities.

The Systemic Nature of Elite Recruitment

The penetration of a few from lower social ranks, however, should not be mistaken as commonplace. On the contrary, such cases are clearly exceptional. The outstanding fact of elite recruitment in the United States is that leaders are chosen overwhelmingly from socially dominant groups and have been for many generations. The entrance of the few from more humble backgrounds, however, reinforces the traditional belief that the process of leite recruitment accommodates all, regardless of class and status.

Summary

The upper class of past generations consisted of families that acquired their wealth through the burgeoning heavy industries of the late nineteenth century. Most of today's new rich derive their wealth from the emergent knowledge/information industries of postindustrial society. Although the upper class are those at the top of the class hierarchy in terms of income, wealth, and. lifestyle, the power elite consists of those who occupy the society's most important institutional positions of authority. It is particularly in the corporate world and in gove. that these positions are found. Although the relationship between the upper class and the power elite is very strong, the two are not the same. Therefore, some individuals may be past of the upper class but not the power elite, and vice verse.

Wealth

The value of assets is perhaps the best indicator of the division between the rich and the remainder of the population. For this reason, the upper class has been referred to by some as the capitalist class. Industrialists and entrepreneurs own capital, that is, shares in companies, which typically grow in value over time and produce income in the form of dividends. To comprehend the rich in American society, therefore, we need to look more closely at wealth, that is, the ownership os assets, not simply income. It is primarily through assets-stocks and bonds, real estate, cash accounts and other financial instruments, and business investments- that the rich have acquired their high economic status. "the truly rich are still separated by their wealth rather than their income" The richest 1 percent of American families own over one-third of all assets, and the richest 10 percent own three-quarters, It is important to also recall the relative stability of the unequal distribution of wealth in American society. Although wealth inequality has accelerated enormously in the last three decades, it has been a fundamental characteristic of the United States since the mid-nineteenth century.

The New Rich

Where as the old rich have a long line of money that extends back over several generations, the new rich are, if not self-made, people who have made their money in a rapid fashion in new industries, such as oil, aerospace, and discount merchandising, that have become predominant in the U.S. and global economies. A more recent element of the new rich attirubutes its wealth to the emergence of the knowledge and information industries. Computers and related technologies and telecommunications and other media are more typical sources of wealth of the most recent rich. Looking back, we can see that almost one-third of the twenty-five wealthiest derived their fortunes from technology, computer software, or media. Many of the newly wealthy have benefited from the surging values of their companies' stock, which they acquired through stock options. The process by which the new rich have amassed their fortunes is comparable to the way in which fortunes were made in the past: Radical changes in technology--steel, railroads, electric power, for example, in past ages, computers in the present--create opportunities for great wealth to emerge. Much of the new wealth in American society today is highly volatile, given the fact that, increasingly, it derives from financial investments that are subject to extreme vacillations of booma nd bust. As a result, Robert Frank explains, starting in the early 1980s, many of the elite wealthy became "more manic in their earnings and spending, and they were bi-products of a new system of financial incentives that rewarded extreme risk-taking, borrowing, speculation, and spending". He calls these new wealthy "the high-beta rich." Financial windfalls can make them fabulously rich, but their wealth is unstable and vulnerable. As Frank writes, many families among the high-beta rich lost much of their fortunes in the Great Recession of the late 2000s. Still, those among the top one percent were able to recover quickly, unlike middle- and working class families, whose losses were more devastating and long-term.