Tuesday Sep 26

Notes Rounding Out the Unproblematic Liberal Social Order The Invention of a Civic Sector


England’s liberal (capitalist) social order emerged slowly over the centuries without conscious intent or design. By the seventeenth century its political claims were being contested at the basic level, civil war. The struggle between feudal monarchy (based on landed property) and the new social order (in which all property groups would share control over society) had erupted into a fight to determine which social order would prevail (and could proclaim itself the embodiment of truth and morality, that is, unproblematic). Out of the Glorious Revolution of 1688, with no apparent leadership or foresight, and occurring helter-skelter over the ensuing decades, an historically unique sociopolitical order emerged, the monarch-in-parliament (government by wealth from whatever source). A key feature of the new political system is that it tackled problems one at a time thus obscuring their origin in the taken-for-granted social order. The monarch-in-parliament polity would last for over two centuries by which time English capitalism was
firmly planted and could rebuff the rising demand for democracy that it itself had made possible.

In the ideological struggle between the social orders, the most revolutionary of the contending positions were the social contract theories of Thomas Hobbes and John Locke. Social contract theories introduced startling new assumptions about human nature and about how society should be restructured. Hitherto, the timeless, perfected hierarchical structure of society, reflecting the perfection of God and the wisdom of the past, had been thought of as prior to individuals and the only source of their identity. The social contract theory reversed the relationship with a sharp, clean stroke, declaring that individuals had identities prior to society and that henceforth society would receive its identity from them.

The idea that humankind is composed of individuals, sharing much in common and existing in their own right, and the accompanying idea that individuals create society instead of being its creatures, was a radical departure from the main current of Western social thought. These ideas, however, were not abrupt, inspired solutions to the conflicts of English society. For centuries, many Westerners had exhibited individualism in behavior and had become accustomed to acting singly and from private motives. For centuries, they had been creating machines for every type of utility, as well as new legal and economic forms (for example, joint-stock companies, credit, double-entry bookkeeping, insurance) to exploit the opportunities presented by their machines. It is not surprising, then, that many came at last to feel that society itself was not beyond their powers of creation.

The social contract theory of John Locke (1632-1704) holds special interest because of the strong influence it had on America’s Founders. His ideas bear the authentic marks of liberalism: individualism, private property, the primacy of economic motives and market relations, utilitarianism, a separate and supreme realm of positive law, and a night watchperson state. Property for Locke came from mixing one’s labor with nature. No individual (male) in the state of nature would have more than he could use, though some would have more than others because of unequal ability. Once these natural individuals agreed on the use of money and trade (owing nothing in all this to the state) substantial inequalities could ensue. Locke declares that those without tangible property can sell the property they have in their own labor (at wages at the taken for granted subsistence level). The landless and the idle, along with poor children, were considered less rational and willfully unindustrious and could be forced to work by the state (a similar attitude emerged in feudal England as early as 1349 and Locke’s version resonated favorably with those who were creating the liberal social order). As for women, they would remain subservient in the now voluntary family.

Locke, like other seventeenth-century liberals, developed the central assumption of liberal social theory— its conception of the individual (male) as essentially the proprietor of his own person or capacities, owing nothing to society for them. The individual was seen neither as a moral whole, nor as part of a larger social whole, but as an owner of himself. The relation of ownership, having
become for more and more men the critically important relation determining their actual freedom and actual prospect of realizing their full potentialities, was read back into the nature of the individual himself. The individual, it was thought, is free inasmuch as he is proprietor of his person and capacities. The human essence is freedom from dependence on the wills of others, and freedom is a function of possession. Society becomes an aggregate of free, equal individuals related to each other as proprietors of their own capacities and of what they have acquired by their exercise. Society consists of relations of exchange between proprietors. Political society becomes a calculated device for the protection of this property and for the maintenance of an orderly relation of exchange (and no more).

Locke’s work goes a long way in explaining how America could minimize the role of the state when it slapped together the U.S. Constitution and wandered into the dead end of microeconomic thinking. It also explains why no one saw the sleight–of-hand that substituted the tyranny of oligarchic markets for that of landlords.

Individual-Centered Society as Ideology

Seen from afar, Locke’s theory is unabashed ideology serving private property interests. Locke could minimize the role of the state in capitalist society because liberalism has a strong streak of anarchism at its heart (self-equilibrating markets, the Tea Party). His explanation of where the unpropertied and poor came from and how to deal with them made it clear that liberalism and democracy were opposing forces. And it went unnoticed at first that his strongly held sensationalist philosophy (asserting the power of experience) contradicted his views of both the poor and the naturally autonomous, responsible individual. Social thinkers would later come to realize that society and history create reality, including individualism and property. Property would come to be seen as conventional, a right bestowed by the state and thus subject to the will of those who controlled it. Politics would be recognized as
a way to create, distribute, and solemnize property rights. The state would be seen (at least by many) as a problem solver, a haven, a developer. But all that lay ahead—for now, the task was to depoliticize society and render it unproblematic.

The struggle to define the liberal nation state got a lift in the next century by the Scottish Enlightenment. Adam Smith’s appealing logic, stressing production, specialization, competitive individualism, and the machine-like whirl of supply and demand went a long way in anchoring the Anglo liberal social order in itself, that is, making it unproblematic. But Smith’s self-sufficient, logical machine of supply and demand was fatally flawed—it overlooked the large role played in the economy by politics and government, a flaw that has muddied Anglo-American economic thought to this day. But the Scots had subtly introduced a change in how the new social order was viewed—it became “society,” something to be investigated and thus possessed more fully. The net effect, of course, was to help make the liberal social order unproblematic, an act of cognitive closure endorsed unconsciously by liberal social scientists to the present. Most effective in this regard was Adam Ferguson’s influential An Essay on the History of Civil Society (1767), a good example of the new interest in understanding “society.” Ferguson recounts the myriad things going on across the social landscape— among the novel features in his account is the absence of a preoccupation with monarchy, nobility, or clergy. Instead, we are given examples of behavior by a constant human nature in all areas of civil life and throughout history. There are warnings about excessive behavior in various social locations and the inadvertent consequences that attend attempts to control and openly guide things. Here we see the liberal world of human nature moving forward, free to be itself, free to be inventive, free to make money, yet warned about breaching standards of decency and moderation. Here is a full, satisfying social universe prompting no thought about what benefits a different social order might bring.

Inventing the Civic Sector

But the Scottish Enlightenment’s biggest contribution to making the liberal social order unproblematic was its invention of a civic sector. The concept civic sector came from the growing use of the term civil society. Theorists began to refer to all institutional areas outside of the state (the economy, the public sphere or public interactions in various settings, voluntary, nonprofit associations of all kinds, and publicly funded, special-function corporations as the civic sector. The state was considered coercive, the civic sector was defined as free. In the latter, individuals could innovate, engage in commerce, interact spontaneously, and develop their minds and sensibilities. The civic sector was at once the source of prosperity and a public sphere that generated sound public policy. Individuals (males) at leisure formed a public as they interacted in homes and urban settings (taverns, clubs, meeting halls, lodges, reading societies, theaters, and the like). Free economic markets were matched by free markets of symbolic interaction to put society on a rational and progressive trajectory.

The concept civic sector had to be reformulated when the coerciveness of economic life became apparent and laissez-faire economics lost credibility. Over time, it came to be known as the voluntary or nonprofit sector, a sector that became more and more difficult to define as modern populations diversified monstrously, single-issue interest groups proliferated, and politics and the mass media became a multiplicity of dead-end streets. Conventionally defined, a conservative estimate in 2014 put the number of American nonprofits at 1.7 million, making up 10 percent of the labor force, and enjoying the support of billions of hours of voluntary labor. One classification put the number of different types of nonprofits at one thousand with most very small. Most of the revenues of nonprofits come from fees (56 percent) paid by individuals or insurers, secondly from government (35 percent), and only 9 percent from philanthropy.

The civic sector is bewildering in its diversity and reach, nonprofit organizations side by side with their for-profit counterparts (hospitals, schools, private and public water, sewer, energy, etc. organizations), financed in a variety of ways (fees, government grants, tax expenditures, donations, endowment income), hierarchically organized using paid and voluntary labor, and exhibiting low levels of effectiveness (largely because they are not part of a society that is geared to overcoming poverty, providing health care and justice, and so on).

Nonprofits enjoy a reputation as a source of entrepreneurial energy as they respond to various, daily-occurring, unremitting problems. Efforts by government in the realm of problem-solving are larger but just as ineffective and for the same reason—America’s policy makers are not able to link problems to basic American institutions and do not understand how the upper classes benefit from problems—do not understand, in other words that America’s problems are often the solutions to elite problems (where would business be without stagnant and poverty wages, realtors without the shortage of housing, and so on). The civic sector’s show of problem solving hides the fact that it is a skillful de-politicizer or social order protector. Money flows reveal a lot about power relations. Instead of being a society using straightforward, direct efforts to solve problems, that is, a society that understands problems are caused by a malfunctioning economy and a plutocratic polity, the United States funnels large sums of public money to both nonprofits and for-profits in search of nonstructural solutions.

We can assume that nonprofits with members serve their members well while staying inside the liberal paradigm and that the political parties serve their members, if not the nation, by also staying inside the un-problematic liberal social order. Churches are good at talking about fundamentals but we can assume that social-order comparisons do not appear often in Sunday sermons. Are all the one thousand types of nonprofits as easy to understand—the-in-your-face Salvation Army, the invisible storefront health clinics, food pantries, legal aid groups, and so on? Groups such as these give the civic sector a positive image. But does the food pantry, for example, divert people from asking, How come the richest developed country in the world has hunger and the highest rates of all kinds of poverty? Does the local health clinic hide the fact that millions (with or without insurance) do without proper health care? Does legal aid hide the fact that most Americans are unable to exercise their legal rights?

Most Americans think of their society as having an economy at least broadly based on markets and economic principles, a polity anchored in the people, and a civic sector made up of popularly formed, amelioratory, nonprofit organizations. The American (liberal) nation state has little in common with this picture. Its economy, far from being based on markets, is highly concentrated yielding considerable sums of monopoly rent. It is highly dependent on the thousand and one government economic development, welfare, housing, educational, environmental, and health-care initiatives financed with subsidies, grants, tax credits, and tax expenditures (more rents). Few realize that economic growth in the West occurred in fits and starts over many centuries spurred not by principles but by the state, warfare, ad hoc inventions of enormous variety (starting with the horse harness in the eleventh century), cheap labor, adequate rainfall, and so on. The idea of markets and purported economic principles are still routinely evoked, but rightly understood, now function to depoliticize capitalism (see below) and to ward off efforts by a developing democracy to fulfill itself and correct the shortcomings of the capitalism that created it.

The idea that America is anchored in the people is also a fiction. In political discourse, from the ancient world up to and including the founding of the American Republic, the people generally meant the individuals that counted, that is, males, especially those with large property holdings. America’s political definition of people changed during the nineteenth century to mean first large and small property owners (male) and then all white males. Extending the vote to all adults in the twentieth century was a great advance for political liberalism but its significance was overshadowed by the larger fact that elections and public policies continued to reflect the propertied few.

The choices available to Americans and the choices made in the voluntary sector reflect economic and political-legal power. Indeed, the economic, voluntary, and political-legal sectors have so much in common that it is a mistake to think of them as qualitatively different. Beneath the ideology of voluntarism we will find a far-reaching mutual penetration between “voluntary” behavior and the political economy. We will find that the voluntary sector runs parallel to the contours of class and politics contributing to America’s steeply graded stratification of benefits and power. Unsurprisingly, the civic realm is subject to the same growth of rational organization (bureaucracy) and concentration as the realms of class and political-legal power (for example, 5 percent of the many thousands of foundations have the bulk of resources). A shift to bureaucratic “market” behavior is clearly discernible in the fields of entertainment, religion, “high” culture, philanthropy, education, medicine, and the professions in general. Much of the theorizing about how best to invigorate and deploy nonprofits stresses professionalism and the use of entrepreneurial methods. As adjuncts of the political economy, nonprofits are market-oriented and display the defining characteristics of our political economy, concentration, bureaucratization, and nondemocracy.

Dependence on the State

Nonprofits have deep links to the state. They do not pay property taxes and the state largely exempts their income from taxation (because they do not generate profits that are distributed to owners) and because their goals are socially valuable. Donations to their income and endowments are also tax exempt tying large parts of the sector to the wealthy rather than the government. Allowing the endowments of universities, hospitals, and other nonprofits to grow untaxed is a sizable contribution to our nondemocratic capital accumulation process. As we see, the nonprofit area has a pronounced tendency to direct attention away from the economy and politics thus helping to sustain our nondemocratic capital accumulation process in yet another way. Allowing deductions for charitable donations also allows taxable money to be used to support the nondemocratic nonprofit system. In addition, the government contracts out to nonprofits many publically funded functions. As government spending rises so does nonprofit spending and vice versa. Not well known, however, is the fact that the major share of the income of nonprofits comes from charges at hospitals, schools, and elsewhere. In an effort to supplement their hand-to-mouth existence, nonprofits have also engaged in commercial activities putting them in an adversarial relation with for-profit companies (for example, gift shops at museums). Nonprofits and their tax-exempt property are often a problem for revenue-short local communities who are demanding and getting “voluntary distributions.” There are also many illegal social welfare groups and internal theft is also common. Some nonprofits reap huge commissions from for-profit companies for endorsing their products (sometimes these products do not match the needs of their presumed clients). Congress has tried to regulate them—for example, it requires foundations to spend so much each year and forbids them to act politically. Given the U.S. Constitution and creative bookkeeping such laws have been ineffective. In effect, there is little monitoring of the sanctified nonprofit realm.

Nonprofits arise when governments are unable to act or are prevented from acting. The ideological use of voluntarism in the United States to forestall public programs is notorious. Nonprofits also arise from market failure, the inability of the private economy to provide all with jobs, shelter, health care, and so on. This sector is prominent only in countries with a tradition of laissezfaire, that is, Great Britain and its offshoots, especially the United States. In Western European countries (and elsewhere), the functions and groups of the third sector are directly tied to the state or the state performs the functions itself.

The nonprofit sector is seen differently by Right and Left liberals, and still more differently by radicals. Right liberals see it as a way to invigorate, exemplify, and achieve America’s ideals, as a yardstick to measure the efficiency of government, and as a way to reduce government. Left liberals also see it as a source of social invigoration but mostly as an inspiration for reform and to derive models for new government functions. They are not above identifying failures but are fully supportive of nonprofits and their record. Seen from outside the liberal paradigm, however, the nonprofit sector is a potent protector of the status quo. Its assumption that important social functions can and should be achieved non-politically undercuts America’s ability to solve problems and become a fuller democracy. Historically, foundations and other nonprofits were established to forestall public programs and to calm public unrest. The futile attempts to alleviate poverty and revive local communities through nonprofits are especially deleterious to democracy. Even the attractive proposal by Gunn, who recommends that nonprofits such as credit unions, colleges, think tanks, and hospitals, locate in depressed areas and become “alternate vehicles of accumulation,” undercuts the needed power of central government without which little can be done. What must never be forgotten is that beyond the minor level of good works performed by nonprofits lies a mountain of chronic deprivation and misery created by other American institutions.

Marching in Place

Foundations have a reputation for fostering path breaking work but the record is different—by and large, foundations support traditional groups and practices in the areas of education, health care, the environment, energy, gender, foreign affairs, and the arts. Foundations suffer from a thorough lack of democracy even though they are using public money. They are essentially secretive, self-perpetuating boards, an oligarchy of white, rich, middle-aged business executives, lawyers, bankers, and other stand-patters. Some like the Pew Charitable Trusts provide useful research on important topics. On the other hand, three major studies by nonprofits, the Economic Forum’s Global Competitiveness Index, the European-American Business Council’s The Atlantic Century: Benchmarking EU and U.S. Innovation and Competitiveness, and the Legatum Prosperity Index help keep America in the dark. These indices compare how countries rank on various measures (economic competitiveness, innovation, political freedom, social progress, etc.). All are seriously flawed when judged on their own terms and badly flawed if considered as accurate comparisons of the world’s societies, their relations, or their inner dynamics. Underlying their failure is their explicit acceptance of a long since discredited economic liberalism. The indices also employ the device that all power groups use to divert attention from their failures while enforcing cognitive closure—they call attention to or concoct threats from outside. In this case, the threat is alleged to be America’s declining international competitiveness. To counter it, America must forego divisive politics and enact economics-based truths. All emphasize competition without asking, is competition really a good thing and do countries actually compete. Doesn’t competition lead to winners and monopolies? Isn’t competition the philosophy of the strong? All fail to notice that some EU countries are effective competitors because they have more balanced power structures (for example, unions and labor participation in management), thus yielding more cooperation and higher productivity. Nowhere is there any acknowledgement of the large and positive role played by government to promote economic and productivity growth and economic justice. There is no mention of government support for research as a major cause of innovation, or of the intellectual property system that clogs research by resulting in knowledge cartels, or of the onerous burden of the patent system on developing nations. There is also no mention of the large role played by government in keeping property owners in check to protect workers and consumers, and only a nod to the government’s role in protecting the environment. There is no mention of the role of government in ameliorating the damages done to citizens by a market economy. The United States ranks fairly high on all indices. The contradiction between its high rank and the fact that America’s standard of living has been stagnant for four decades, that following free enterprise principles leads to severe wealth and income inequality, stagnant incomes, family violence, a plutocratic, corrupt state, and environmental damage is not even hinted at in these comparative studies.

Some foundation initiatives have turned out to be especially bad. For example, the Rockefeller Foundation’s sponsorship of agricultural research to spur food production in developing countries illustrates how “objective” research sponsored by a “public interest”
foundation can create more problems than it solves. The Rockefeller Foundation’s agricultural research centers developed high yield hybrid plants, the basis of the Green Revolution in developing countries. High yield plants require fertilizer (note the connection back to Rockefeller and oil), irrigation, and considerable technology. As a result, the Green Revolution (introducing capitalism into developing countries without careful planning) everywhere led to high land concentration, the displacement of millions of families and massive unemployment, hunger, and dependence in the developing world.

Private voluntary groups exercise considerable influence in foreign affairs: the Council on Foreign Relations, the Committee for Economic Development, and a number of research corporations and institutes. All are basically financed by large corporations, their membership is drawn exclusively from the world of big business along with a few lawyers and university presidents, their members have often served in government foreign policy posts, they recruit candidates for government service, and their research grants and research reports play an important role in shaping America’s foreign policy (an over militarized endorsement of unhampered capital accumulation through international trade). A powerful network of military colleges and giant defense corporations make it very difficult for the United States to view its outer world in any other way. In regard to energy, as in so many other areas, America has been especially let down by its allegedly forward-thinking think tanks and foundations. A more recent Rockefeller Foundation initiative tells us much about how piddling the efforts of America’s foundations can often be. Considered a Left-liberal foundation, Rockefeller responded to the deprivations and insecurities of today’s workforce by launching a 70 million dollar grant program to help build a “new social safety net for the nation’s workers.” Given the failure of the nation’s experiment with free enterprise over the past four decades, one would think it was time to strengthen workers against business, to provide protection against medical bills for all Americans, support families by providing housing and child care, bolster unemployment insurance, establish a meaningful minimum wage, and so on. Instead, and with great fanfare, Rockefeller announced research grants to help workers cope with debt, to provide low cost retirement investment programs and annuities, and to find ways to establish affordable health care for workers under 35.

Social Class and Social Participation

Social participation reflects the American class system—indeed most participation takes place among the upper classes with very little at the lower levels. Overall levels of social participation have declined paralleling the decline of the old middle class (small farmers and business and solo professionals) and the decline of small-town America. Skocpol has outlined the historic shift from largescale federations (based on face-to-face interaction and organized in three tiers to take advantage of America’s open political system) to a world of far-away organizations that deal with members using assorted media (many nonprofits have no members). Corresponding to this change, is a similar transformation of our political system, along with the widespread decline of direct participation in the life of society in general. The basic reason for the decline of social participation was the giant corporation that undermined the small business economy and fragmented the polity of old middle class towns and cities.

The overall decline of political participation has led to the neglect of the lower classes as the powerful, gathered behind the two political parties, concentrate on satisfying (or thwarting) the interests of the politically active. Shrinking political participation and weak community ties magnify the power of the gerrymander (and other forms of voter suppression ) and of money. Public policies that increase economic inequality and mass apathy emerge, leading to more Right-liberal public policies that worsen economic inequality, and so on.

Today’s mixture of producer-oriented incentives, limited government, and low productivity has not only reversed the lower economic inequality achieved between 1930 and 1970 but has sent it to its previous highs. The across-the-board, out-of-touch incompetence of America’s elites is magnified by their trained incapacity to learn from experience or to understand what our long-lasting economic slowdown means. Many American leaders show little evidence that they can learn from history (the failure of the producer-oriented incentives under the Carter, Reagan, and G.W. Bush administrations to achieve those who needed them). America’s leaders have also failed to notice that the economic doldrums persist regardless of which political party is in power. To make things worse, they continue to believe that the economic growth of the past is still possible if only we give capitalism its head. Thus more emphasis than ever has been put on increasing profit making businesses and practices and more pressure has been put on reducing public spending, lowering taxes, and scrapping regulations. In consequence, capital’s share of national income has increased, living standards have dropped or stagnated, and large numbers have dropped out of the labor force. The share of total income held by the middle income group dropped from 62 percent in 1971 to 43 percent in 2014.

The upper classes, identified by occupation, income, and education (either separately or combined) have much higher rates of membership, active participation, and leadership in voluntary groups, especially general interest, career related business and professional, community and service oriented, educational, cultural, and political pressure groups. The working class tends to concentrate its membership in churches, unions, fraternal groups, and sports clubs. By and large, the overall rate of participation
in important power groups is low among the working class and almost nonexistent among the lower class. Given our taken-for-granted power relations, which denigrate politics, America’s socializing agencies have not been able to inculcate positive, informed civic attitudes or behavior, overcome widespread political apathy, or prevent what appears to be a steady erosion of confidence in politics, government, law, other major institutions, and one’s fellow citizens.

The low rate of participation by ordinary citizens in voluntary organizations is far from the full story. Participation in policy making and in the management of voluntary organizations is restricted to very small numbers drawn almost exclusively from the upper middle and upper classes. No effective or meaningful popular participation takes place at hospitals, colleges and universities, charities, public policy research institutes and foundations, rural electric cooperatives , and cultural groups. An analysis of Scouting and the Young Men’s Christian Association (YMCA) has shown biases derived from the upper classes in even these seemingly nonpartisan groups. The United States is not a nation of joiners—excluding trade unions and churches, it is doubtful that even half of the adult American population belongs to a nonprofit organization. And the percent declines a great deal for the lower classes. All in all, the evidence clearly indicates that the American social system tends to restrict and routinize the experience of its lower classes in this as in other ways.

Foreign visitors—for example, Tocqueville and Max Weber—were impressed by how much American society relies on voluntary behavior to handle social functions. European societies also experienced a growth of voluntarism but less so than the United States. The reasons are relatively clear—Europe had established churches and governments to tackle many of the problems that arose with a growing, unplanned economy. Given the conditions of the New World and a constitution that lacks a mandate for the use of government, Americans were forced to do for themselves. Organized private groups initiated reforms across a wide front and gradually took on social problems such as community decay, disease, homelessness, distressed families, alcoholism, battered wives, unmarried pregnant women, and environmental degradation —no real dent in these problems occurred and the same can be said about America’s public welfare programs, both sorry substitutes for social planning aimed at constructing a functional, democratic economy.

Republicans favor a voluntary solution to most social problems. The Reagan Bush administration of 1980–1992 stressed a return to voluntarism to justify cuts in public services and lower taxes on the wealthy. The Bush administration of 2000-08 pushed hard to use private and church-based groups to deliver services to the poor, again using reduced federal funds to justify tax cuts for the wealthy. Radicals argue that voluntarism is an ideology to keep social problems out of the political arena and thus prevent the public from evaluating the behavior of property and professional groups. Voluntarism also allows the wealthy to use tax exempt money in ways that suit them. It also helps to safeguard the remainder of their income against higher taxes to the extent that they can maintain the fiction that the voluntary sector solves problems. Radical critics specifically charge that the nonprofit sector consists of the wealthy spending untaxed income and wealth to shape society in ways they deem best—in effect, a disguised extension of America’s plutocratic polity. Radicals and some Left liberals charge that:

1. the absence of public participation in cultural groups means that only the art of the upper classes is considered art (that is, valuable and uplifting).

2. business and professional interests dominate the boards of hospitals and universities. In consequence, many alternatives to present day health and educational policies are ruled out.

3. the United Way tends to support only traditional, “respectable” charities and discriminates against consumer advocacy, political reform, tenants, feminist, gay rights, and other groups.

4. the voluntary approach to research and development means that many dubious projects are undertaken and that the interests of power groups are served under the cover of academic freedom and objective research.

Prestige as Power and Vice Versa

Participation in nonprofits is an important source of moral, intellectual, and aesthetic prestige for America’s upper classes. It is also a way in which upwardly mobile families establish their claims to full inclusion in a higher social stratum. Large business firms routinely
use charity fund drives to test the abilities of young executives, garnering the public’s favor along the way. The incestuous ties between the upper levels of the business and professional worlds and institutions of higher education are well documented. We also have considerable documentation of the upper and upper middle class base of foundations, prestigious research institutes, cultural groups, and voluntary organizations in general. The class composition of particular organizations varies. It is clear that cultural groups like museum or symphony orchestra boards have different class memberships than parent teachers associations, and that various classes characterize the Rotary, the Kiwanis, the Elks, the Masons, the Young Men’s Christian Association, the Democratic and Republican parties, the Red Cross, the American Cancer Society, the American Bar Association, the American Sociological Association, and so on. There is also wide variation by class in type of church and church membership.

Contracting Democracy Away

A portentous aspect of the new relation between government and the private sector (that began with the “counter-revolution” by business in the 1970s) is the growth of government by grant and contract. In recent decades, federal, state, and local governments have sought to achieve a host of public purposes by contracting with established private groups, such as the National Urban League or the Young Men’s Christian Association, or by financing new organizations to render intellectual, scientific, and other services at home and abroad. “Not for profit corporations” provide advisory and technical services to the military, the Atomic Energy Commission, the Department of State, the Central Intelligence Agency, and so on. This trend has made many traditional voluntary organizations dependent on government for financing, creating a new type of quasi voluntary group. As critics point out, the trend toward government by contract and grant has important implications for the autonomy of private bodies and poses problems of accountability. As has happened with other government programs, contracting helps to hide the large role played by government in keeping America going—for example, almost half of the American public doesn’t know that Social Security is a government program. To cite another example, thirty percent of the American economy consists of government spending but you would never know the import of this by listening to political discourse, attending an elite economics graduate program, or by reading economics textbooks. The Heritage Foundation has helped turn contracting into a flood arguing that it saves money (false) and that it reduces government (true until you realize that nonprofits on the government payroll have a stake in a steady increase in public spending), all the while failing to note that accountability for the use of public and private money suffers and that contracting redistributes income from workers to capital.

In the 1990s the bulk of help for the non-working poor was shifted from cash to services. The reason given was to help the poor prepare for work (there was no work and no real effort to create jobs but it was important to pretend that sloth was a real danger and to sustain the fiction that full employment was compatible with American-style capitalism). These services were contracted out to
nonprofits and to local and state governments. Subject to a multiplicity of political influences and to the deliberate failure to insist on locating services where poor people actually live, the new decentralized welfare state helped the poor more in white, better-off neighborhoods than in minority neighborhoods. And by turning important services over to our nondemocratic states, Right-liberal welfare reform also warded off the threat of democracy posed by the more difficult to control federal government.

The nonprofit sector is funded in other ways. The federal government engages in large scale funding of medical, scientific, and educational undertakings, often funneling public monies through “nonpolitical” conduits like the National Science Foundation. Institutions of higher education (including private and religious schools) have received direct governmental grants for construction,
special programs, research, and even normal operations. The federal government spends $1 billion a year to engage 5 million Americans in volunteer work (AmeriCorps, etc.).

America’s public institutions of higher education along with tax expenditures and inexpensive loans for private education are more ways in which the state serves class values in the so-called voluntary sector. State-sponsored and private education are largely class phenomena—that is, students succeed and fail by social class. This process also characterizes the many areas in which the state endorses the right of private (“public”) organizations to certify individuals for high level occupations and to enforce regulations controlling the behavior of their members (for example, the American Medical Association, the National Association of Securities Dealers, the American Bar Association).

The capitalist societies of the West are characterized by a specialized, changing division of labor openly driven by self interest. In the United States and only in the United States, the fantasy that such a system would be harmonious and self governing if left alone (laissez faire or anarchistic liberalism) continues to contaminate American public policy. The truth is that capitalist society routinely generates conflicts and problems that require explicit public attention and political solutions—hence interest groups and nonprofit political parties and policy groups. Political parties’ financial and voting supports, as well as their staff recruitment (both professional and volunteer), are deeply related to class and the civic sector. And the major interest groups in contemporary society are also related to the hierarchies of class and civic organizations and tend to develop ideologies in keeping with their location in the economy. Politically relevant interest groups include learned societies, civic betterment associations, labor unions, reform movements, groups concerned with particular problems (such as taxation, foreign affairs, racism, abortion, and veterans’ affairs), professional associations, in short, the entire range of pressure groups. Pressure groups are varied and even include governmental units themselves, associations of civil service employees, and even associations of elected officials.

Despite the highly visible organizations that represent workers and racial and ethnic minorities, interest groups with direct relevance for political life are overwhelmingly upper middle and upper class in character. Whether measured by rates of participation by members, income, occupation, the credentials of staff members, mode of operation, or consequences for society, pressure groups
basically reflect the interests and power of America’s two upper classes (as do almost all voluntary groups with exceptions for some minority and morality groups). People are complacent about the class nature of our power structure because the knowledge that educational achievement (whether at ordinary or elite schools) has little to do with better performance elsewhere has been unable to penetrate America’s closed liberal paradigm.

The nonprofits have grown significantly in the past few decades and have moved decisively toward becoming market oriented—“they have expanded their fee income, launched commercial ventures, forged partnerships with businesses, adopted business management techniques, mastered new consumer-side forms of government funding, reshaped their organizational structures, incorporated sophisticated marketing and money management techniques even into their charitable fund raising, and generally found new ways to tap the dynamism of and resources of the market to promote their organizational objectives.” The major reason for this growth is the need to do something about burgeoning social problems and the obsessive need by Republicans to prevent the government from being seen as a problem solver (here we also see one of the reasons for using private contractors to perform public functions).

Deep Interlocks between Nonprofits, Class, and the Semi-Pluralistic Polity

Men, and increasingly women, from high class positions find it easy to move into high elected and especially appointed office at both the state and federal levels. The traffic among the upper echelons of industry, finance, commerce, law, medicine, university teaching,
research, natural science, and the upper reaches of government is pronounced. There is considerable traffic, on the one hand, among banks, law firms, universities, and businesses (especially large corporations) engaged in agriculture, transportation, mining, communication, military manufacturing, and the like, and on the other, the various departments (civilian and military) and regulatory agencies of the federal government. Corporate business elites also dominate the little known but important federal advisory committees. Career interchangeability is limited, however, by professional ethics, conflict of interest laws, and technical occupational requirements.

Still another way to examine the interrelatedness of our class civic political-legal systems is to trace the pattern of overlapping personnel and policies in the areas of research, reform, and public policy formation. Presidential and congressional commissions are composed of high level representatives of various segments of the economy and the professions; and private foundations, associations, and institutes (such as the Committee on Economic Development, the Rockefeller and Ford Foundations, the Brookings Institution, the Council on Foreign Relations, and the Twentieth Century Fund). All cultivate images of nonpartisanship while developing highly influential public policy proposals (all within the cognitively closed liberal paradigm) in the realms of business, education, population, foreign policy, medicine, the arts, race relations, and the like.

Nonprofit political parties (created by private and public money) and think tanks (tied to interest groups and private and public money) are hyper active. The so-called free or voluntary sector now openly feeds directly into politics and the state (reflecting the decline of civic participation and mass membership federations). Highly professionalized private groups dominate public discourse without consulting the public at large. Professional groups do research for public bodies with little input by ordinary people. Private individuals and groups feed in tens of millions of dollars to institute changes in public education without scrutiny by public bodies (New York City is a prominent example—for the enormous influence on education of billionaire Bill Gates, who has no particular expertise in education, see The Special Report, Chronicle of Higher Education, Vol. LIX, No. 42, July 19, 2013). Private money in enormous amounts shapes priorities for research in higher education. All in all, the makers and shakers of the civic sector do not include those who actually experience the policies of the powerful, a zone of exclusion that matches zones of exclusion elsewhere, in effect, helping to blind the powerful and undercutting America’s adaptive capabilities.

Americans have traditionally been uneasy about concentrated power, whether public or private. Helping to minimize uneasiness about the political and social impact of private interest groups are various laws, regulations, and ethical codes that seek to limit the influence of those with too much money or too few scruples, or both. Lobbies still flourish and continue to pressure legislators, parties, and the public but now also deal directly and on a large scale with governmental bureaucracies. Actually, legislators do not have to be pressured to abandon independence and objectivity. Legislators are elected because they agree with the views of this or that constellation of pressure or interest groups. Pressure on them is a means of reinforcing prior commitments. The result is a massive intertwining of interest groups and government, or, more exactly, of particular interest groups and particular governmental agencies, bureaus, and commissions. One of the dangerous consequences of direct interest group involvement in government is that it has generated depoliticizing claims of objective, expert, and nonpolitical government. The trend toward nonpolitical boards, commissions, authorities, advisory committees, federally funded research and development centers, university affiliated research centers, and the direct cooperation of interest groups and governmental bodies of all kinds appear to be a significant new development in the American structure of social power. Both the neutrality and the accountability of these bodies are highly suspect. Furthermore, their legal status is hazy, and the scope and volume of their economic activities are very large.

Lobbying also occurs by a large array of “nonpolitical” think tanks and foundations (such as the Carnegie Foundation, Council on Foreign Relations, Rand Corporation, Committee for Economic Development, Twentieth Century Fund, American Enterprise Institute, Heritage Foundation, and Brookings Institution) that are far from nonpartisan. Classic studies have established that these groups are characterized by a narrow class composition, direct ties to specific business and professional interests, and great influence over domestic and foreign policies. In recent years a large array of dubious “social welfare” groups (and thus tax exempt), most of them Right liberal, have appeared as a political force. The attempt by the IRS to weed out phony nonprofits has been blocked by the Republican House of Representatives.

The Mania to Depoliticize

Much has been unearthed about America’s allegedly neutral nonprofits. An in-depth study of the Carnegie Corporation, for example, has shown how it steered policy making away from economic and political issues and reforms, favoring an approach that stressed science, education, and elite culture. And within science and education, it favored certain approaches and fields of knowledge, thus helping to define the knowledge producing elites (not just knowledge areas but also racial, gender, and class attributes of the knowledge elites). The historian Sealander has also shown that the major foundations (from their start in 1903 until 1932) stressed knowledge and professionalism and steered readers away from economics and politics as places to solve social problems. The diversionary, anti-democratic function of foundations (and the entire nonprofit sector) has only worsened since 1932.

One of the more interesting examples of a partisan political stance with partisan consequences by an ostensibly nonpartisan research charitable group is the American Cancer Society. With very little input from the public, the American Cancer Society helped to channel huge resources (far more than could be efficiently or honestly absorbed) into a search for a cancer cure while diverting resources and attention away from the most promising way to curb cancer—direct public action to create healthy natural and social environments. Unable to ignore a rising tide of knowledge connecting cancer to unhealthy habits (for example, smoking, sunbathing), unhealthy diets (for example, the excessive intake of animal fat), and unhealthy air, water, and workplaces, nonprofits and threatened business and professional groups now advocate prevention but not prevention through direct public action but through voluntary changes in personal life style. This is a good example of how Tea-Party thinking and liberal anarchism (or society as an aggregate of solitary, responsible individuals) maintain power relations and help produce an atomized, frustrated population. The fight against cancer reveals how high minded reform is often a way to depoliticize a problem and to protect the status quo (the capitalist economy that is causing the problem).

It is clear that the entire realm of nonprofits is an adjunct to economic and political power. It is through nonprofits that vital moral and intellectual cement is applied to the overall power structure of American society. And nonprofits are as narrowly based, unresponsive, and backward in their procedures and policies as corporate and governmental bureaucracies. The function, largely latent, of nonprofits can perhaps be stated more simply— by deflecting attention from the class and political basis of America’s social problems, such groups help render our haphazardly created social order unproblematic.

Many political leaders at the federal level, both elected and appointed, no longer rise through the ranks of state and local politics and must learn their jobs after acquiring them (the extraordinarily low level of experience by Donald Trump and his appointees are historic highs). The practice of ignoring experience and proven worth is perhaps most conspicuous in appointments to ambassadorships (many of which are actually sold), but it is common practice to appoint amateurs at the apex of the federal government. One of the more damaging results of the practice of filling approximately three to four thousand high administrative positions at the federal level on a political (patronage) basis is that it has helped to prevent the development of a strong civil service tradition at the upper levels of central government (one can expect a major degradation of governance qualifications at this level with the Trump administration). And of course, this practice helps to ensure the general control of public policy, administration, and regulatory discretion by the upper classes.

 End Notes

1. .C.B. Macpherson, The Political Theory of Possessive Individualism: Hobbes to Locke (London: Oxford University Press, 1962), 3.
2. Lester M. Salamon, The Resilient Sector Revisited, 2nd ed. (Washington, DC: The Brookings Institution, 2015), chap. 2.
3. Eduardo Porter, “With Competition in Tatters, the Rip of Inequality Widens,” New York Times, July 13, 2016, B1.
4. Lawrence R. Jacobs and Theda Skocpol, eds., Inequality and American Democracy: What We Know and What We Need to Know (New York: Russell Sage, 2005); Martin Gilens and Benjamin I. Page, “Testing Theories of American Politics: Elites, Interest Groups and Average Citizens,” Perspectives on Politics, Fall 2014.
5. For comparative case studies among selected developed, developing, and post-socialist societies, see Lester M. Salomon and Helmut K. Anheier, eds., Defining the Nonprofit Sector: A Cross-National Analysis (Manchester, UK: Manchester University Press, 1997).
6. For example, see Joel L. Fleishman, The Foundation: A Great American Secret (New York: Public Affairs, 2007). Chapter 12 recounts a variety of major failures by foundations in an otherwise laudatory account.
7. Christopher Gunn, Third Sector Development: Making Up for the Market (Ithaca, NY: Cornell University Press, 2004). This book also provides a good overview of the American nonprofit sector.
8. Dennis McIlanay, How Foundations Work (San Francisco: Jossey-Bass, 1998) and Mark Dowie, American Foundations: An Investigative History (Cambridge, MA: MIT Press, 2001).
9. Robert Buchele and Jens Christiansen, “Labor Relations and Productivity Growth in the Advanced Capitalist Economies,” Review of Radical Political Economics, 31, no. 1 (1999): 87-110. Robert Buchele and Jens Cristiansen, “Measuring Worker Rights in the Advanced Economies” in E. N. Wolff, ed., What Has Happened to the Quality of Life in Advanced Nations? (Northampton, MA: Edgar Elgar, 2004), chap. 11.
10.Mark Dowie, America’s Foundations: An Investigative History (Cambridge, MA: MIT Press, 2001), chap. 6.
11. For an analysis from a radical conflict perspective, see G. William Domhoff, Who Rules America Now? (Englewood Cliffs, NJ: Prentice Hall, 1983), chap. 4. Also see Jack Snyder, “Imperial Temptations,” The National Interest, Issue 71, Spring 2003, 29-40.
12. Jerry Harris, “The Military-Industrial Complex in Transnational Class Theory” in Richard P. Appelbaum and William I. Robinson,
eds., Critical Globalization Studies (New York: Routledge, 2005), chap. 14. For a focus on think tanks affiliated with arms manufacturers and the many defense executives serving in high federal office, see William Hartung and Michelle Ciarrocca, “The Military-Industrial-Think Tank Complex,” Multinational Monitor, January/February, 2003, 17-20.
13. For the support of free market principles in the field of energy and disinterest in democratic processes (a characteristic of the entire range of voluntary groups), see Mark Dowie, American Foundations: An Investigative History (Cambridge, MA: MIT Press, 2001), chap. 7.
14. Steven Greenhouse, “$70 Million Effort Seeks New Safety Net for Workers,” New York Times, July 31, 2008, A17.
15. Zachary Roth, The Great Suppression: Voting Rights, Corporate Cash and the Conservative Assault on Democracy (New York: Crown, 2016). Pew Research Center, “The American Middle Class no Longer Dominates in the U.S.”, December 9, 2026.
16. For a comprehensive guide to voluntary behavior, see David Horton Smith and Jacqueline Macauley, eds., Participation in Social and Political Activities: A Comprehensive Analysis of Political Involvement, Expressive Leisure Time, and Helping Behavior (San Francisco: Jossey Bass, 1980).
17. Michael Oreskes, “Alienation from Government Grows, Poll Shows,” New York Times, September 19, 1990, A26; U. S. Census Bureau, Statistical Abstract of the United States: 2004-2005), Washington, DC, Table 404 (not in later editions); “Distrust, Discontent, and Partisan Rancor,” Pew Research Center for the People and the Media, April 18, 2010; Connie Cass, “Poll Reveals Americans Don’t Trust Each Other Anymore,” Huffingtonpost, November 30, 2013. The same lack of interest and distrust of government appears regularly in polls of college students.
18. See Wade Rathke, Rural Cooperatives Need Democracy and Diversity!, Social Policy, Vol. 46, No 2 ((Summer 2016).
19. David I. MacLeod, Building Character in the American Boy: The Boy Scouts, YMCA, and Their Forerunners, 1870–1920 (Madison: University of Wisconsin Press, 1983).
20. There is also evidence that, in addition to relying on family and friends for most of its interaction experience, the working class does not travel as widely as the classes above it, and that its participation in the thought life of the nation is qualitatively lower than the classes above it. The amount and quality of moral, intellectual, and artistic enrichment is even lower among the lower class.
21. For an early indictment of the federal government’s use of advisory bodies and private consultants, see Daniel Guttman and Barry Willner, The Shadow Government: The Government’s Multi Billion Dollar Giveaway of Its Decision Making Powers to Private Management Consultants, ‘Experts’, and Think Tanks (New York: Pantheon, 1976). For the heavy use of private-profit contractors for military and foreign policy tasks, see Alison Stanger, Our Nation Under Contract (New Haven, CT: Yale University Press, 2007).
22. Scott W. Allard, Out of Reach: Place, Poverty, and the New Welfare State (New Haven, Ct: Yale University Press, 2009).
23. Lester M. Salamon, The Resilient Sector Revisited, 2nd ed. (Washington, DC: The Brookings Institution, 2015), 92.
24. The interchangeability of careers leads to conflicts of interest; thus there are extensive tie ins between members of Congress and professional (especially law) firms and businesses of all kinds. Some tightening up to prevent conflict of interest among legislators has appeared in recent years but whether abuses will stop remains to be seen. Though not strictly their careers, note should be made of the upper-middle and upper class individuals who serve on presidential or congressional commissions and advisory groups or as special appointees to the United Nations and other bodies. This general type of activity is now so widespread and routine that it should be considered “public office,” and some individuals serve in these capacities so often that such service should be considered part of their careers.
25. Given Moore, Sarah Sobieraj, J. Allen Whitt, Olga Mayorova, and David Beaulien, “Elite Interlocks in Three U.S. Sectors: Nonprofit, Corporate, and Government,” Social Science Quarterly 83, no. 3 (September 2002): 726-44. 26. For a pioneering set of essays on the political nature (corporate liberalism) of foundations, see Robert F. Arnove, ed., Philanthropy and Cultural Imperialism: The Foundations at Home and Abroad (Bloomington: Indiana University Press, 1980). For a focus on the foreign policy impact (corporate
liberalism) of three powerful foundations, see Edward H. Berman, The Influence of the Carnegie, Ford, and Rockefeller Foundations on American Foreign Policy: The Ideology of Philanthropy (Albany: State University of New York Press, 1983).
27. William Domhoff has studied the latter phenomenon closely as part of his argument that the United States is ruled by a small upper class; see his The Higher Circles: The Governing Class in America (New York: Vintage, 1971), esp. chaps. 5 and 6. Also see Thomas R. Dye, “Oligarchic Tendencies in National Policy Making: The Role of the Private Policy Planning Organizations,” Journal of Politics 40 (1978): 309–31. Domhoff has also written “Where Do Government Experts Come From? The Council of Economic Advisers and the Policy Planning Network,” and Dye has also written “Organizing Power for Policy Planning: The View from the Brookings Institution,” both in G. W. Domhoff and T. R. Dye, eds., Power Elites and Organizations (Beverly Hills, CA: Sage, 1987). Two studies have clearly established that the right liberal and moderate conservative think tanks are funded by a national corporate elite: J. Craig Jenkins and Teri Shumate, “Cowboy Capitalists and the Rise of the ‘New Right’: An Analysis of Contributors to Conservative Policy Formation Organizations,” Social Problems 33 (December, 1985): 130–45, and David Stoesz, “Packaging the Conservative Revolution,” Social Epistemology 2, no. 2 (1988): 145–53.
28. For a full analysis of the Carnegie Corporation, see Ellen Condliffe Lagemann, The Politics of Knowledge: The Carnegie Corporation, Philanthropy and Public Policy (Middletown, CT: Wesleyan University Press, 1989).
29. Judith Sealander, Private Wealth and Public Life: Foundation Philanthropy and the Reshaping of American Public Life (Baltimore: The Johns Hopkins University Press, 1997).
30. Ralph W. Moss, “The Cancer Establishment: Whose Side Are They On?” The Progressive 44 (February 14, 1980): 14–18. The
CEO of the Cancer Society received $1,045,887 in salary in 2008---high salaries and lush benefits are common among nonprofits.
31. For a participant observation study of the social process whereby elite white women, anchored in exclusive (invitation only) voluntary groups, help to buttress the power of wealth by sponsoring well publicized events that raise money for community causes, see Diana Kendall, The Power of Good Deeds: Privileged Women and the Reproduction of the Upper Class (Lanham, MD: Rowman & Littlefield, 2002).

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