The Piratical Web: Who Rules America?Adam Wight
Without privileging a Marxist interpretation of America's class structure, Domhoff shows that there exists a discrete social upper class and that it has a disproportionate amount of overt control, to the point that it could be called a governing class. While the upper class does have important divisions among themselves, with effects such as the existence of two substantially different political parties, they also have a high degree of class consciousness and share many values. The tool used to prove this hypothesis is what he calls the "sociology of leadership method," or studying the socioeconomic characteristics of leading members of influential institutions, from 1932 to 1964. This book is one of the most clear-headed analyses I have read of the power structure in America.Domhoff begins his analysis with a generally accepted, politically neutral definition of social class as being a large group of people that freely intermarry (p. 4). He studies institutions that have "elite" membership--people with income and wealth in roughly the top percentile--and finds that they control access very carefully. For example, the Social Register, one of his main indices of "upper class" status, requires several letters of social acceptability from current listees to consider adding a new member. Similar restrictions on gentlemen's clubs, schools, and resorts show that the richest group of Americans treats one another as social equals and several estimates agree that this group's size is about 0.5% of the population.
A crucial aspect of this group's exclusivity is the cohesiveness of values and social circles. Debutante balls, sororities, and fraternities perform the function of what Domhoff calls "corralling the democratic inclinations of libidinal impulses" (p.20), private schools and clubs train individuals in proper behavior and thought. Domhoff further argues that the limited social mobility into this upper class that exists is so difficult to navigate that the aspiring family necessarily adopts the old-rich values (p. 30, 140). The process involves hiring a social manager to arrange dinners with the right people, etc. This social mobility not only exists, but is essential to the survival of the class system. By co-opting "prominent members of dominated classes," the leaders of what might otherwise be resistance are neutralized.
As a short aside, the ideological control exercised by upper-class universities is understated in this book, although the issue of upper-class control of the main universities is touched upon. When Domhoff was writing, the main obstacle he saw to complete control of schools was the tenure system, which has since been dismantled. At the time, control was limited to financial support and service as trustees (p. 77). I suspect that Domhoff wasn't overly concerned with schools acting as a tool of social management because he viewed a "traditional classical education" as being somehow dangerous to the elite, while the real reactionary education was vocational schooling (p. 78).
After we see the integrity (poor choice of words) of the upper class, we need to determine whether or not there are independent pockets of aristocracy in each city, or if it is national in nature. The evidence Domhoff gives for it being national is school enrollment, multiple club membership, and intrastate intermarriage. This seems a bit weak if taken alone, but the further evidence of interlocking directorship of corporations and other entities certainly proves that the upper class is not municipal.
The next step in the argument is not as well researched as I (or he) would like it to be, due to the fact that "the ownership and control of major businesses is the most secret aspect of American society" (p. 38). Still, the information available is scandalous. Apparently, most corporations (and institutions) are controlled by their board of directors, a group of about 10-25 men who meet once or twice a month to make major decisions and select officials (p. 39). These directors are largely upper-class (most of the book consists of lists of these people and their connections), and often sit on an average of seven or eight different boards (p. 54). This is the basic tool with which capitalism defeated monopoly laws--the directors of major corporations and foundations are roughly the same people, and a few rich families hold huge amounts of stock in many different companies, not just one. This actually gives the upper class more of an interest in supporting the economic system as a whole than they would owning just one industry (p. 40).
He documents "interlocking directorates" in extensive detail, showing that major banks, corporations, foundations, and insurance companies have boards that share not only clubs and universities, but in many important cases are actually made up of many of the same people. To show how intertwined these entities are, a study of 311 men directing the major insurance companies found that these men also sat on 1,844 corporate boards as well, including many of the largest (p. 54). The role of insurance companies (and pension or mutual funds) is particularly dubious: many insurance agencies have non-profit status and don't have to pay dividends, allowing them to quickly create huge amounts of capital. These agencies are some of the largest investors in corporations (through banks), and many directors of these corporations and banks are on the boards of the insurance agencies. In yet more areas of American life, this effectively means that corporations use the savings of the working and middle classes to reap enormous profits.
There is an interesting table on p. 45, which is an analysis of the share of personal wealth held by the wealthiest 1% of adults, broken down by type of asset. It emphasizes one of the conclusions of Doug Henwood's recent book Wall Street, that the stock market is insignificant relative to the credit market, and that the economic elite is really making its money off of the ownership of bonds, especially against the government. In some areas (like real estate) the richest 1% only owns about between 12.3% and 18% of the total amount, but for most bonds the figure is around 77%, sometimes above 100% (?!). This demonstrates the simple observation that "the nature of capital is to accumulate." Our regressive taxation system heavily penalizes the poor for their poverty and uses the earnings to pay interest on government bonds to the elite. It's no accident that our national debt has grown astronomically.
Additionally, stock ownership is extremely uneven--the richest .2% own 65% of publicly held stock (p. 45). This book makes the argument that the insignificant amount of stock owned by the public serves two much more important and sinister purposes than democratically distributing corporate profit. It was a public relations victory, "proving" that capitalism really was working for the common man, and created new consumers, causing tens of thousands of otherwise intelligent people to pressure their friends to buy certain products, knowing that what was good for their company was good for their wallet (p. 46).
Domhoff has two arguments for those who say America is becoming more equitable because of the apparent shift in power from elite boards of directors to middle-class hired managers. First, he says that after a university indoctrination and hand selection by the board, the managers have the same values and priorities as an upper-class manager would have. Second, the increase in hired management isn't due to an ideological shift, but is only happening because the upper class is too small to produce enough people able and willing to handle the daily operation of an institution.
In addition to insurance companies, Domhoff blasts on other influential organizations that are supposed to be at least nominally separated from traditional power, "charitable" foundations and regulatory agencies. He shows that the foundations are little more than tax shelters that mold our culture by explaining that the foundations don't even give away the interest on their huge corporate endowments, act as holding companies for the elite, pay huge salaries to their officers, and are controlled by the same upper-class directors as everything else (p. 64). These foundations control "educational television," arts programs, and schools, creating opinion. regulatory agencies (FTC, FCC, ICC, SEC, FPC) are run by officers appointed by the Executive branch of the government, which he later explains is shamelessly run by the upper class (p. 108).
When this book was written (1964-1967), apparently the mass media wasn't primarily owned by the ultra-rich, so Domhoff said that the main apparatus through which the elite control media is through advertisements. These keep publication costs of favorable papers and magazines down, keeping the subscription fees artificially low and making it impossible for new magazines to get started without commercial sponsors (p. 81).
Demonstrating upper-class control of education, the media, corporations, banks, and foundations would seem like enough to prove that something was wrong, but Domhoff wants to show that "the American upper class is a governing class" as well.
Today it seems trivial to argue that the president and entire Executive branch is selected by the upper class and consists largely of upper-class people and what Domhoff calls the "power elite," people that might not be fully accepted into lofty social circles, but are working in the interest of the upper class, sharing their values. The mechanisms through which this takes place are unsurprising, mainly campaign donations. Control over the Executive branch indirectly leads to control over Supreme Court justices, the military, CIA, and FBI, which he documents in depth.
The glimmer of hope this book gives us is the idea that, although the upper class seems to quite concretely control every major institution of power in the country, there are important philosophical differences among members of this class that have real effects such as a two-party system. The author admits that both parties are controlled by the same class, but adds that crucial differences exist between the parties' leaders and constituents. In his words, "the leaders of the two parties have intra-class differences; the followers have inter-class and professional differences" (p. 86). Also, due to the lower campaign costs, at the time the Congress wasn't controlled by the upper class, and the only way influence was exercised was through the standard lobby channels.
As a brief illustration of the incestual web of power that this book is documenting, here are short biographies of two directors of the Ford Foundation:
Stephen Bechtel is head of the little-known, but very large, Bechtel Construction Corporation of Oakland, California. Mr. Bechtel is also a director of Morgan Guaranty Trust, Southern Pacific, Continental Can, Bechtel-McCone Corporation, and Stanford University, among others.
Henry Ford II (Hotchkiss, Yale) is a director for General Electric, General Foods, and Philco. He runs the Ford Motor Company. (p. 67)
Also of interest, the McCone who owned a company with Bechtel was a special deputy to the Secretary of Defense in 1948, an undersecretary of the Air Force, chairman of the Atomic Energy Commission, a member of the "Special Group," a super-secret entity that controlled the CIA and more, and became the third director of the CIA. Another member of the Special Group, McGeorge Bundy, later became the president of the Ford Foundation (p. 127-8).