Gabriel Kolko and ‘Political Capitalism’

By Robert Bradley Jr. -- May 21, 2014

“Political stabilization … allowed men to relax, to hope that crises might be avoided, to enjoy the bountiful fortunes they had already made.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 285.

“Ironically, contrary to the consensus of historians, it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.”

– Gabriel Kolko, ibid., p. 5.

Gabriel Kolko, a New Left historian who popularized the term political capitalism, and documented the role of business in initiating and furthering government intervention in the free-market economy, died this week at age 81.

I have mixed feelings about Kolko (1932–2014) as a scholar. (I never personally met him.) I grew up taking his work at face value, following my intellectual mentor Murray Rothbard. Kolko also provided a very nice endorsement of my Capitalism at Work: Business, Government, and Energy (2009): “Fascinating, comprehensive … far surpassing my own history of political capitalism in the 1960s.”

But as I studied Kolko more and more, and prodded by my esteemed colleague Roger Donway, I began to find problems in his black-and-white interpretation of applied political economy in the United States. History is a lot more messy than Kolko’s Marxian framework allowed. It was not “big business” that always resorted to the political means (versus the economic means) to success; it could be (and often was in the oil and gas industries) smaller firms that through their trade associations lobbied for, and received, special government favor.

My three iterations of Kolko go from laudatory (main text of Capitalism at Work, pp. 120–21; 160–66); to mild criticism (CAW appendix, “‘Gabriel Kolko’s Revisionism Reconsidered,” pp. 336-342); to serious reservations in this Independent Review essay, “Reconsidering Gabriel Kolko: A Half-Century Perspective.”

Readers of MasterResource who follow the wind and (on-grid) solar industries will find Kolko’s findings about crony capitalism (not his term) common sense. BUT these two industries are government dependent; consumer-driven industries have a much more complex interaction with political bodies. And it is here that Kolko’s rigid theory-to-history rather than history-to-theory approach leads him astray.

Here are some of my favorite Kolko quotations that I can generally support. Buyer beware on some of his specific examples during the Progressive period.

Political Capitalism

“The American political experience during the Progressive Era was conservative….the synthesis of politics and economics I have labeled ‘political capitalism.’”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 279.

“Political capitalism is the utilization of political outlets to attain conditions of stability, predictability, and security—to attain rationalization—in the economy. Stability is the elimination of internecine competition and erratic fluctuations in the economy. Predictability is the ability, on the basis of politically stabilized and secured means, to plan future economic action on the basis of fairly calculable expectations. By security I mean protection from the political attacks latent in any formally democratic political structure.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 3.

“Progressivism in operational reality becomes a political capitalism whereby important economic interests utilize the power of the federal government to solve internal economic problems which could not otherwise be solved by voluntary or non-political means.”

– Gabriel Kolko, Railroads and Regulation, 1877-1916 (New York: W. W. Norton, 1965), p. 239.

Pragmatism/Opportunism>Principle

“The whole of the American political economy…was elliptical, often moving backward and forward in search of solutions to definite challenges….Indeed, its advocates in one field were often stout defenders of laissez faire for others, as men favored political servicing of the components of the economy but not the whole.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), pp. 20-21.

“The advocacy of specific measures was frequently opportunistic, but many individuals with similar interests tended to prescribe roughly the same solution to each concrete problem, and to operationally construct an economic program. It was never a question of regulation or no regulation, of state control or laissez faire; there were, rather, the questions of what kind of regulation and by whom.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), pp. 3-4.

“For established firms in all sectors of the economy, the challenge was how to regularize their markets—price and output included—and for newcomers it was a matter of winning a slice of it. The former tried voluntary means first, and failed, while new entrepreneurs broke all accords that stood in the way of their growth—until success gave some of them also a vested interest in attempts at stabilization.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), pp. 8-9.

“It is extremely difficult to locate business advocates of political regulation who were literal-minded ideologists regardless of time and place, just as few businessmen matched the academics and preachers in their alleged dedication to Social Darwinian doctrines of economic and social competition as a desirable end in itself.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 11.

“No one, in any case, ever advocated national regulation until they saw that their own interests were directly involved, and until then they often opposed regulation for others on principle. Consistency is a quality all too rare among businessmen favoring national political intervention.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p.12.

“Laissez faire provided the businessman with an ideological rationale on an intellectual plane, but it also created instability and insecurity in the economy. The dominant fact of American political life at the beginning of this century was that big business led the struggle for the federal regulation of the economy.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), pp. 57-58.

“The doctrine of laissez-faire or the conservative interpretation of the social implications of Darwinism inhibited very few practical executives; most ignored intellectual issues and concentrated on meeting immediate problems in the most expeditious manner possible.”

– Gabriel Kolko, Railroads and Regulation, 1877-1916 (New York: W. W. Norton, 1965), p. 4.

“Men-of-power as well as their critics have always found it extremely difficult to articulate the goals, ideology, and structure of American politics and power.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 272.

“Pluralism” in Business Demands for Regulation

“Diversity and conflict within the ranks of business and politicians, usually described as a pluralist manifestation, has attracted more attention than it deserves and leads to amoebic descriptions of the phenomenon of interbusiness rivalry in a manner that obscures the much more significant dimensions of common functions and objectives. The critical question for the study of what passes as conflict in American society must be: What are the major positions, and who wins and why? The motives of the losers in the game of politics, or of those who created pressures others redirected for their own ends, is less critical than the actual distribution of power in society.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), p. 6.

“The railroads were a much more constant force for federal regulation than the shippers, and the deeper divisions within the ranks of shippers often meant that their agitation for regulation contributed to the interests of the railroads.”

– Gabriel Kolko, Railroads and Regulation, 1877-1916 (New York: W. W. Norton, 1965), pp. 5-6.

“If powerful economic groups are geographically diffuse and often in competition for particular favors from the state, superficially appearing as interest groups rather than as a unified class, what is critical is not who wins or loses but what kind of socioeconomic framework they all wish to compete within, and the relationship between themselves and the rest of society in a manner that defines their vital function as a class. It is this class that controls the major policy options and the manner in which the state applies its power. That they disagree on the options is less consequential than that they circumscribe the political universe.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), pp. 6-7.

Business Leadership

“Business held the ultimate reins of accepted ideology and defined the outer limits of potential reforms; all major parties paid tribute to the basic institutional rights and interests of business, and to the mythology of social values which allowed it to survive all onslaughts.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 61.

Businessmen Mentality

“Many key businessmen articulated a conscious policy favoring the intervention of the national government into the economy ….important businessmen did not, on the whole, regard politics as a necessary evil, but as an important part of their larger position in society.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 5.

“The history of the relationship between business and government until 1900 was one that could only inspire confidence in the minds of all too many businessmen. The first federal regulatory effort, the Interstate Commerce Commission, had been cooperative and fruitful; indeed, the railroads themselves had been the leading advocates of extended federal regulation after 1887.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 59.

“Social theory, muckrakers, and intellectuals did not and do not influence important businessmen, who have never aspired to have reforming crusaders regulate and direct their affairs. Businessmen have always preferred that their own lawyers and direct representatives play that role in matters of the most intimate relevance to their economic fortunes, though not necessarily in lesser affairs, and it is a fact that the government has ultimately drawn most critical political decision makers from, or into, the higher reaches of economic life.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), p. 10.

Not Conspiracy

“There was no conspiracy during the Progressive Era. It is, of course, a fact that people and agencies acted out of public sight, and that official statements frequently had little to do with operational realities….There was a basic consensus among political and business leaders as to what was the public good, and no one had to be cajoled in a sinister manner.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 282.

Laissez Faire Exceptions—Businessmen

“One can always find some businessman, of course, who opposed federal regulation at any point, including within his own industry. Historians have relished in detailing such opposition, and, indeed, their larger analysis of the period has encouraged such revelations.

But the finding of division in the ranks of business can be significant only if one makes the false assumption of a monolithic common interest among all capitalists, but, worse yet, assumes that there is no power center among capitalists, and that small-town bankers or hardware dealers can be equated with the leaders of the top industrial, financial, and railroad corporations. They can be equated, of course, if all one studies is the bulk of printed words. But in the political as well as in the economic competition between small and big business, the larger interests always managed to prevail in any specific contest.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 283.

Elites

“Political capitalism was based on the functional unity of major political and business leaders. The business and political elites knew each other, went to the same schools, belonged to the same clubs, married into the same families, shared the same values—in reality, formed that phenomenon which has lately been dubbed The Establishment.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 284.

“Under conditions of political capitalism the form of the industrialization process, and of the political machinery of society, take on those characteristics necessary to fulfill the peculiar values, attributes, and goals of the ascendant class of that society.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 302.

Quest for Stability (by Capitalists)

“The desire for a stabilized, rationalized political capitalism was fed by this current in big business ideology, and gave many businessmen that air of responsibility and conservatism so admired by Roosevelt and Wilson.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 285.

“Political stabilization seemed proper for this reason as well. It allowed men to relax, to hope that crises might be avoided, to enjoy the bountiful fortunes they had already made.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 285.

Intellectuals & Business

“Many well-intentioned writers and academicians worked for the same legislative goals as businessmen, but their innocence did not alter the fact that such measures were frequently designed by businessmen to serve business ends, and that business ultimately reaped the harvest of positive results. Such innocence was possible because of a naïve, axiomatic view that government economic regulation, per se, was desirable.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 286.

“Many of the leading muckrakers and academics of the period were more than naïve but ultimately conservative in their intentions as well. They sought the paternalism and stability which they expected political capitalism to bring, since only in this way could the basic virtues of capitalism be maintained.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 286.

“Historical Record of Regulation & Business Benefit

“With the exception of a brief interlude in the history of the Federal Trade Commission, big business gained total support from the various regulatory agencies and the Executive.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 287.

Myth of Laissez Faire

“The federal government was always, involved in the economy in various crucial ways, and that laissez faire never existed in an economy where local and federal governments financed the construction of a significant part of the railroad system, and provided lucrative means of obtaining fortunes.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 4.

Competition>Monopoly

“Ironically, contrary to the consensus of historians, it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 5.

“The first decades of this century were years of intense and growing competition.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 26.

“If economic rationalization could not be attained by mergers and voluntary economic methods, a growing number of important businessmen reasoned, perhaps political means might succeed.”

– Gabriel Kolko, The Triumph of Conservatism (New York: The Free Press, 1963), p. 58.

“Political Means” to Solve Competition

“The phenomenon described in this study was not an effort to democratize the economy via political means, but a movement to establish stability and control within the railroad industry so that railroads could prosper without the fearful consequences of cutthroat competition. It was, in fact, an effort to use political means to solve economic problems while maintaining the essential theory of social priorities and values of a capitalist economy. National regulation of the railroads, from 1887 until 1916, was an attempt to create a political capitalism for the sake of the railroads, and the railroads supported it for precisely this reason.”

– Gabriel Kolko, Railroads and Regulation, 1877-1916 (New York: W. W. Norton, 1965), p. 238.

Interventionist Dynamics

“The main tendency within American capitalism since the Civil War has been to require ever more comprehensive political, economic, and social solutions to the challenges it has confronted, even as the political and intellectual conditions both for articulating precisely and implementing these answers have become increasingly elusive and transcended the system’s capacities.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), pp. 1-2.

“Political capitalism—the merger of the economic and political structures on behalf of the greater interests of capitalism—was incremental rather than comprehensive during its origins.

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 12.

“Because there were precious few business advocates of political capitalism preaching over time, and never a general theorist in the true sense of that term, reform became an incremental process intended to compensate for the failure of traditional means to cope with new problems.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 20.

“The whole of the American political economy…was elliptical, often moving backward and forward in search of solutions to definite challenges…. Indeed, its advocates in one field were often stout defenders of laissez faire for others, as men favored political servicing of the components of the economy but not the whole.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), pp. 20-21.

“All theories of regulated capitalism…ignored the intrinsically mercurial and reciprocal, and inevitably unstable, framework in which American capitalism was now fixed: there were the dilemmas of the uncontrollable international context of any national economy, the profound limits of social knowledge and comprehension in defining solutions, the unavoidably fluctuating character of politics and personalities essential to regulation, the divisions within business ranks affecting both politics and policy, the inherent structural dilemmas of the economy at a given stage, and the endless possible configurations among all these factors.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 149.

“The whole of the American political economy…was elliptical, often moving backward and forward in search of solutions to definite challenges….Indeed, its advocates in one field were often stout defenders of laissez faire for others, as men favored political servicing of the components of the economy but not the whole.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), pp. 20-21.

“It is….unpredictability that is perhaps [political capitalism’s] greatest weakness, and makes modern American history a sequence of events few could precisely predict during the first four decades of this century.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 22.

“Even before the 1929 crash the economic and organizational limits of the ‘associative state’ had been reached, and voluntarism proved a chimera in dealing with price competition, market shares, and overproduction.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 116.

“Men-of-power as well as their critics have always found it extremely difficult to articulate the goals, ideology, and structure of American politics and power.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 272.

Non-Neutrality ~ Business Support for Regulation

“The Northern cotton-textile industry long advocated the passage of national child labor legislation not because of philanthropy or even some abstract pecuniary theory but purely and simply to strike a blow at their Southern rivals, who, enjoying a lower-cost labor supply, were beginning to dominate the market.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 14.

Losers: Small Business

“Small business, which had opposed the NRA more than any other group and numerically comprised the vast majority of businessmen, gained least from the new order.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 151.

“The bulk of the war’s economic gains still fell predominantly to big business and reinforced its relative control over the economy.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 312.

Business as First Order of Society

“Political power in the United States always responds to power and influence in the hands of businessmen, who often have more leverage over politics, given the consensual nature of the seriously considered social and economic priorities in America, than over their own business affairs—and are ready to use it.”

– Gabriel Kolko, Main Currents in Modern American History (New York: Harper & Row, 1976), p. 16.

“At every level of the administration of the American state, domestically and internationally, business serves as the fount of critical assumptions or goals and strategically placed personnel.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), p. 26.

Bureaucracy = Political

“Politicians create bureaucracies for specific purposes, and that these structures develop their own administrative codes and techniques, or complex mystifying rationales, is less consequential than their objective and functions. Congress created such bureaucratic power in the United States first during the era 1887-1917 as a result of class-oriented elements seeking to rationalize via political systems the unpredictable elements of economic life in a modern technology.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), p. 5.

“After the turn of the [20^th] century the political parties cultivated bureaucracy purely as an instrumentality serving and reflecting class interests—bureaucracy with no independent power base and nowhere to find one with in the American power structure.”

– Gabriel Kolko, The Roots of American Foreign Policy: An Analysis of Power and Purpose (Boston: Beacon Press, 1969), p. 5.