The Myth of the 99%

When I published The New Class War: Saving Democracy from the Managerial Elite in January 2020 (February 2020 in the UK), I naively expected what passes for the intellectual left to engage with my arguments in a respectful if critical way. After all, the targets of my criticism were technocratic neoliberalism and demagogic populism, both of which are harshly criticized by many leftists. My book is a defense of the New Deal and a polemic in favor of organized labor. In arguing that a broad and diverse overclass of university-credentialed managers and professionals is the dominant class in the West today, collectively lording it over the working class majority of all races and origins, I am in a recognizable tradition within left-wing thought that includes Bruno Rizzi (bureaucratic collectivism), the young James Burnham (the managerial revolution), and Milovan Ðjilas (the new class).

To my surprise and amusement, The New Class War has been denounced and mischaracterized in every prominent journal of center-left and radical left opinion that has reviewed it. Despite my hostility in the book to Trump-style demagogic populism, a reviewer in The New York Times and an interviewer in The New Yorker tried to twist my argument that populist voters are not all fascists and racists into a defense of “white nationalism,” as did a dishonest reviewer in Jacobin. Dissent, The American Prospect and The Nation refused to review The New Class War at all.

I should not have been astonished. My mistake was to have paid little attention to peculiar developments in soi disant leftist thought, which seem to have taken place in the decade between the Occupy Wall Street movement and the present. Most of the remnant of the American left which thinks about class at all rather than only race and gender appears to have settled on the view that there is indeed a class war in the US—but it is not between the non-college-educated working class of all races and college-credentialed managers and professionals, a broad class into which most billionaires were born. Rather, the important class division is between the 99 percent and the 1 percent or perhaps the 99.99 percent and the .01 percent. Professionals, such as corporate managers, doctors, lawyers, and professors at prestigious universities who make six- or seven-figure salaries, are “workers” just as much as grocery store cashiers and custodians. The workers must unite against “the capitalists” who apparently are defined as a tiny group of individuals able to live entirely on capital gains—“the billionaires” of Bernie Sanders. And in this class war, the proletarians on the front lines of the class struggle are not steelworkers or fast food restaurant cooks, but public school teachers and nurses.

In case you think my description of the 99 Percent Theory of class is an exaggeration, here is the title of an article by Steve Fraser, a thinker and historian whose work I admire, in The Nation: “Teachers Are Leading the Working Class Insurgency.” A bit further to the left—well, a lot further, actually—here is the International Communist Current: “West Virginia teachers’ strike: mobilizations in the education sector show the proletariat is not defeated.” And here is a tweet by Jamelle Bouie: “Again, ‘working-class’ is a relationship to capital and production. Nurses, teachers, retail workers, food service workers, truck drivers, postal employees, mechanics, professional caregivers, hired hands for a contractor—they are all working-class.”

A cynic might suggest that most “leftists” are really just partisan Democrats and that teachers’ unions—a major source of funding and get-out-the-vote efforts for the Democratic electoral machine—are the last vestigial link to the labor movement in a party that is now dominated by Silicon Valley, Wall Street, multinationals, corporate media, progressive billionaires and college-educated professionals. But for the sake of argument, let us assume that the leftist belief that the professional-managerial class (PMC) belongs to the working class is sincere.

The ruling class is not limited to the elites who actually rule; it comprises the entire social stratum from which they are drawn.

Apart from the focus on teachers, this is not a new argument. Indeed, beginning with Leon Trotsky in the 1930s in his debates with Rizzi and Burnham, many on the left have tried to save nineteenth-century Marxist orthodoxy by denying that bureaucrats and professionals—including those in the civil service and military and the nonprofit sector, as well as corporate management—could constitute a ruling class on their own, rather than being well-paid proles who are mere overseers working for a separate group of capitalists. The Soviet Union, ruled by communist party bureaucrats, was explained away by Trotsky as a “degenerated workers’ state” and by other Marxists as a form of non-socialist “state capitalism.”

My own analysis owes more to Max Weber than to Karl Marx. The realms of coercion (government) and legitimation (culture) are independent of the realm of production in principle, although in practice they are seldom at daggers drawn in any stable society. The term “ruling class” is appropriate when members of a numerical minority of the population with similar family backgrounds tend to monopolize positions of power in all three realms of social power, generation after generation. The ruling class is not limited to the elites who actually rule; it comprises the entire broad social stratum from which ruling elites are drawn.

My argument can be expressed in four theses:

Power in modern societies comes in multiple forms—political power, economic power and cultural power.

The primary basis of power in modern societies is not personal property ownership, but influential positions in powerful organizations—public, private, and nonprofit.

Access to influential positions in powerful organizations depends chiefly on education credentials.

Those who obtain education credentials disproportionately come from families with members who possess similar credentials.

There are two filters through which you must pass, if you hope to be part of the organizational elite in the US and similar Western countries. The first filter is a college education, preferably at a selective institution, sometimes with an additional graduate or professional degree as a prerequisite. Ninety-five percent of members of the US Congress have a bachelor’s degree and 72 percent of the members of the House of Representatives elected in 2018 had a graduate or professional degree as well. 

In 2011 95.1 percent of CEOs and 98.4 percent of directors at Fortune 500 companies had at least a bachelor’s degree. A later study found that in 2015 57.6 percent of Fortune 500 CEOS and directors had at least one graduate or professional degree. 

My third thesis—”Access to influential positions in powerful organizations depends chiefly on education credentials”—could describe a classless society with no correlation between the educational attainments of parents and children. But the pool of likely college graduates itself is narrowed by the second filter of parentage. Although only a third of Americans have bachelor’s degrees, 80 percent of those who received bachelor’s degrees in 2007-8 had parents who had attended college. College diplomas may be keys to opportunity, but in most cases they are also inherited titles of nobility.

Your class is the class of your parents, not the income category or profession you may later join.

This is why my fourth thesis is central to my argument that what passes for a meritocracy in the US is in fact an informal hereditary aristocracy or oligarchy, with some social mobility on the margins. According to my definition, your class is the class of your parents—not the income category or profession you may later join.

My definition of class in terms of the class of parents (including adoptive parents) is the reason why I classify most American billionaires as members of the overclass—or “upper middle class” or PMC, if you prefer—who are simply richer than most of their social peers. Even the college dropouts among America’s billionaires tend to have been born into affluent, college-educated professional-class families. Bill Gates’s father was one of the most prominent lawyers in Seattle and the president of the Washington State Bar Association. Gates owes his fortune in part to a deal between Microsoft and IBM, which came about because his mother served on the board of United Way with John Opel, the CEO of IBM. When IBM was searching for an outside software contractor, Opel suggested the firm consider the startup “run by Bill Gates, Mary Gates’s son.”

For his part, Michael Dell, the son of an orthodontist father and a stockbroker mother, attended one of the “ten most posh [public] high schools” in the US in Houston. (Steve Jobs is the exception that proves the rule; the biological son of college-educated parents, he was raised by adoptive parents who lacked college educations.)

Which brings me back to teachers. Because success in higher education is largely correlated with parental education, a member of Congress, an elite journalist, a foundation executive, or a corporate manager with the right diplomas is much more likely to be the child of a schoolteacher than of a school janitor. 

I am the son of a college-educated public schoolteacher and the grandson of a high-school-educated public school janitor. Both of my ancestors would have been surprised to learn that schoolteachers and janitors alike are “proletarians.” Not only do poorly-paid schoolteachers in every state make substantially more money than all but the best-paid custodians, but also there is considerable social distance within the school between the college-educated teachers and the custodial and cafeteria staff, most of whom have a high school education or less. Schoolteachers may not make as much money as other professionals like lawyers and doctors or corporate managers, but they view other professionals—not janitors and cafeteria workers—as their peers.

The recent “Red for Ed” teachers’ strikes in various “red” Republican states inadvertently illustrated the self-perception of public schoolteachers as professionals. The teachers deserve to be paid substantially more relative to janitors, we were told, because the teachers had college degrees.

But aren’t public schoolteachers in the US being “proletarianized” by low salaries? According to the US Bureau of Labor Statistics, the median annual wage of a food preparation worker is $24,800, that of a retail sales worker is $25,440, and that of a janitor/building cleaner is $27,430. Meanwhile, the median salary for a job as a kindergarten or elementary school teacher, a position which requires at least a bachelor’s degree, is $59,420 per year; the median high school teacher makes $61,660 a year. Registered nurses, another group that Bouie includes in his list of proletarian occupations, make a median annual salary of $73,300, while the median annual income of nurse practitioners is $115,800 per year.

Test question: which of these occupations do not seem to belong with the others in this list?

What about the teachers in the “red” Republican states? In almost every state, teachers make more—sometimes only slightly more—than the median income in that state. This is true even in West Virginia, where the average teacher salary is $46,805—a bit higher than the average annual income of all workers in the state, $43,420.

By professional class standards, this is not much money. But the fact remains that American teachers tend to be in the top half of the income distribution, though only the lower part of the top half. It seems odd for the left to be enraged that a certain group that is already paid better than half of the US workforce is not paid much better than half of the US workforce. If you view teachers as relatively poorly-paid professionals and think their incomes should be comparable to those of doctors, lawyers and corporate managers, the outrage might make sense. But if you are angry about low wages for the proletariat, you might start by trying to raise the wages of janitors, cooks, waiters and waitresses and movers, few of whom, unlike teachers, enjoy the benefits of unionization and, in many cases, government defined-benefit pensions.

But what about “the means of production”? Perhaps the most thorough attempt to rescue the dogmatic Marxist binary of proletarians and capitalists has been provided by Erik Olin Wright, in the form of a diagram that portrays three categories of owners and nine categories of employees, mapped against three axes– number of employees, relationship to means of production, and relation to authority—for a grand total of twelve distinct categories. This is admirable in its ingenuity but misguided, like the elaborate “epicycles” that astronomers invented to explain discrepancies in Ptolemy’s earth-centered model of the universe.

What exactly are “the means of production” in the modern economy? The typical multinational manufacturing corporation is an “original equipment manufacturer” (OEM) which has outsourced and/or offshored most production to various tiers of suppliers. The OEM may put its label on the assembled product and lease some intellectual property and branding rights, but if it is a “fabless” manufacturing corporation it may not actually manufacture the products. Which firms in the web of suppliers and contractors and consultants control the “means of production”? And which “capitalists” matter—those who own stock in the umbrella corporation, or those who own various suppliers in the multi-tier supply chain?

You could still argue, I suppose, that high-earning corporate managers in large, publicly-traded corporations, including those with ample stock ownership themselves, are mere agents of the true principals, the small number of capitalists who own disproportionate amounts of stocks and bonds. In some cases concentrated blocs of shareholders or individuals who own many shares do influence corporate decisions. But in many firms corporate boards are packed with the CEO’s cronies and dependent on the CEO for information. While corporate managers may find it useful to claim that shareholders, including mutual funds and other institutional investors, forced them to take measures unpopular with the public—“Wall Street forced me to ask the board to break the union and quadruple my compensation!”—this can be an alibi for self-enrichment by largely-autonomous managers.

Trying to understand relations between the super-rich and merely affluent elites in simple agent-principal terms is as misleading in the realms of government and philanthropy and the media as it is in the realm of business. When a donor gives a politician campaign funds, does that make the politician the donor’s puppet? Or is the donor being shaken down for protection money by a powerful, potentially threatening policymaker? Are donors who pay nonprofit institutions imposing their personal views on intimidated nonprofit personnel—or are they paying to have their reputations laundered by nonprofit personnel who may be influential and prestigious, though not rich themselves? When corporations and lobbies buy ads in publications and media outlets, are they dictating the intellectual content—or purchasing access to the attention of the publication’s audience?

And who exactly are the “capitalists”? Among American households that own equities, the top 1 percent owns 56 percent. The bottom 99 percent own only 44 percent of stocks. This seems to support the 99 Percent Theory.

But let’s look more closely. The 99 percent are divided into two groups. The bottom 90 percent own only 12 percent of stocks owned by households. The rest of the stock—32 percent—is owned by those in the 90th-99th percentile, made up overwhelmingly by college-educated members of the overclass or, if you prefer, the professional-managerial class (PMC).

What is more, the threshold for a household to be in the top one percent in 2020 is $531,020 in earnings. The majority of these 1 percent households—many of them with two earners—are composed of highly-paid professionals, including well-paid doctors and dentists and others in elite organizations such as large corporations, law firms, and financial institutions, rather than “capitalists” who live on capital gains alone. So there is a gradation, with better-paid professionals having a greater share of their net worth in investments and stock options, not a sharp distinction among “managers” and “professionals” who are not capitalists and “capitalists” who are not managers or professionals.

If capital ownership is what defines the ruling class, then surely we should draw the line between the bottom 90 percent who own 12 percent of all stock and the top 10 percent, who collectively own 88 percent of all stock. It is absurd to draw the line between the top 1 percent and everyone below, inasmuch as the top one-tenth of the 99 percent alone owns two and half times as much stock as the other nine-tenths of the 99 percent combined. That’s a pretty top-heavy proletarian alliance. And drawing the line between the 99.99 percent and the .01 percent would make the putative proletarian coalition even more top-heavy. (Since the Fortune 400 correspond to the top 0.00025 percent of US households, perhaps the proletariat can be defined as the bottom 99.99975 percent.)

So the 99 Percent Theory of class in America is simply not plausible. The working class majority in the US in the twenty-first century is indeed oppressed in many ways. But it is oppressed not so much by individual plutocrats, although a few exist, as by a Western version of the premodern Chinese mandarinate, a largely-hereditary class of skilled operatives prepared from childhood by their affluent parents to pass exams and graduate from universities. Western professionals and managers tend to have investments in the stock market, just as Chinese scholar-gentry were often landlords, but to define their social roles in terms of their asset ownership rather than their institutional positions just leads to confusion. Likewise, being “pro-government” or “pro-market” is beside the point, in a society in which college-credentialed overclass mandarins circulate freely among government, corporations, law firms, universities, foundations, think tanks, NGO’s, and media companies, accumulating wealth along the way.

The sooner we accept that the people who appear to be in charge really are in charge, the sooner we can mobilize and organize to check their power.