Who Rules America?

Joel Kotkin's new book fingers Silicon Valley as the new elite. Is he right?


The New Class Conflict, by Joel Kotkin, Telos, 217 pages, $29.95.

In The New Class Conflict, Joel Kotkin argues that the socially and politically ascendant groups in contemporary America are the oligarchs of Silicon Valley and a complex of elite journalists, think-tank pundits, and academics that he dubs the clerisy. The nouveaux riches of the tech world are increasingly intent on remaking society in accordance with their own passions, reports Kotkin, an urban studies scholar at Chapman University. The clerisy, meanwhile, promotes and provides ideological legitimation for elite goals. The effect of the two groups' efforts, he concludes, is to concentrate wealth and power in a shrinking number of hands, leaving the middle class stranded and subject to ever more evident economic decline.

Kotkin does not claim that either group is a monolith. Different factions within each class compete for access to wealth and political influence, and they also exhibit some differences in cultural commitment. But overall, Kotkin suggests, there is a persistent pattern: Contemporary elites are socially liberal but relatively blasé about the bread-and-butter impact of a broad range of policies that drive a growing wedge between those at the top and everyone else.

Thus, for example, tech leaders press a green agenda whose elements include support for mass transit and opposition to suburban living. Such policies implement the oligarchs' moral and æsthetic preferences, and sometimes they create business opportunities for the oligarchs' class (as when they invest in and promote putatively green technologies). But the same policies pose risks for the well-being of many ordinary people, by constricting their options and limiting their access to resources.

Similarly, while Bill Gates may call for higher taxes on the rich, many tech firms (Kotkin points to Twitter and Apple) seem quite happy to ensure that tax burdens fall not on them but on the middle class. (Gates's own Microsoft, for instance, has "shaved nearly $7 billion off its U.S. tax bill since 2009 by using loopholes to shift profits offshore.")

Despite its social liberalism, Kotkin suggests, the tech industry is visibly focused on business models in which disregard for privacy is central. Some commercial intrusions (sometimes compatible with contractual and property rights, sometimes not) may be annoying but relatively benign. But the industry has also generally appeared quite willing to facilitate surreptitious state monitoring of multiple facets of interpersonal communication as well.

Kotkin also criticizes the tech industry for business models that disregard people's privacy. These range from annoying but relatively benign commercial intrusions, such as the collection of browsing data to enhance the targeting of on-line advertisements, to cooperation with the National Security Agency's monitoring of our communications. Kotkin also highlights the tech industries' expansion into the broader media world, where their money is being used both to reinvigorate existing media outlets (such The New Republic and the Washington Post) and to create new ones (such Pierre Omidyar's First Look media, home to Glenn Greenwald's The Intercept). In this way, he argues, they create new platforms that allow their allies in the clerisy to enforce environmental and social orthodoxy.

What might a libertarian make of Kotkin's analysis?

Class used to be a significant theme in libertarian political commentary. Though Karl Marx's account of class conflict is better known, Marx acknowledged his indebtedness to earlier French classical liberal theorists of class, such as Augustin Thierry, Charles Comte, and Charles Dunoyer. Class analysis also figured powerfully in the rhetoric of many later libertarians, notably Karl Hess and Murray Rothbard during their alliance with the New Left (and, with a more right-wing populist flavor, in Rothbard's later work as well).

For Marxists, class position is determined by economic actors' relationship with the means of production. The ruling class rules, on this view, because it controls capital, while other classes are subordinate to it because they depend on access to the assets the rulers control. In libertarian class theory, by contrast, class position is a function not of the resources you own but your relationship with the state. Dominant classes are constituted by their relationship with political power. The source of their resources is their ties to the state, and the use to which they frequently put those resources is the manipulation of the state to achieve their goals.

Libertarians and Marxists will frequently identify the same groups as making up the dominant social classes: top elected or appointed officials, for instance, or dominant figures in the military-industrial complex. But while the Marxist might treat a Pentagon contractor as a member of the ruling class simply because of the resources she or he owns, the libertarian would explain the contractor's wealth and class position by stressing the role of the state's war machine and its incestuous ties with the "defense" industry.

Today, unfortunately, you're more likely to encounter class analysis in the discourse of the Marxist left, and perhaps the Tea Party right, than in that of classical liberals and libertarians. Perhaps this is a function of a desire to avoid unsavory associations. Often, I fear, it reflects an instinctive valorization of the successes of those who have made it in today's marketplace, no matter how unfree those markets may be. The worry seems to be that using the rhetoric of class to criticize influential groups in our society will somehow give aid and comfort to those who promote a politics of envy and resentment. But I think this worry is unwarranted. It is possible to acknowledge the creativity and determination of people who actually succeed by contributing to the welfare of others through creativity and peaceful, voluntary exchange while also criticizing social stratification and the abuse of power.

Kotkin is not a libertarian, but his account overlaps helpfully with a libertarian critique of contemporary class relationships. He tends to focus on members of the Silicon Valley elite's attempts to gain political power—for themselves personally and for their class. But it's worth emphasizing that the tech world's ties with the state are much more pervasive than those created by intermittent political campaigns, or even by their campaign donations.

The concentration of wealth in Silicon Valley would be unimaginable without a patent and copyright regime, created by political fiat, that confers monopoly power on a limited number of actors who can use this power to extract wealth at exorbitant rates from businesses and consumers dependent on their products and services. "Intellectual property" rights shore up Silicon Valley firms' control over software and other elements of their businesses, offering the premiums monopolies always make available to those who hold them. The creativity and drive of Valley entrepreneurs is real, but so is the mark-up that intellectual property laws allow them to charge.

The Valley's links with the NSA, and other profitable government contracts, also concentrate wealth in hands of the oligarchs, who are actively involved in vigorous D.C. lobbying. So do Bay Area land use regulations that dramatically raise the cost of living, limit access to housing and commercial space to the wealthiest people and firms, and route wealth to those who have already managed to gain access to land in the region.

The clerisy obviously depends on the state for influence, too. Elite journalists succeed by maintaining access to key political players, generally secured using fawning coverage and stenographic reporting of official positions. Pundits link the media with political elites and work for think tanks that frequently contract with state entities to provide rationales for the policies the establishment favors. Academics frequently rely on state-proffered grants to conduct research. State-mandated licensing requirements channel people into higher education when they might otherwise be inclined to seek alternate means of training. Tax money funds many academic institutions, and tax-secured student loans feed the wealth of universities.

Thus, the class groupings on which Kotkin focuses are (as I have no reason to think he would deny) creatures of the state. The cultural, political, legal, social, and economic environment misshaped by the oligarchs and the clerisy is a product of government intervention.

Kotkin understandably and rightly challenges the results of this intervention. In stark contrast to many contemporary commentators, he emphasizes that economic growth is crucial if the decline in middle-class and working-class living standards is to be reversed. High-minded talk about "sustainability" often serves as an excuse to leave the wealth of elites undisturbed while refusing to pursue policies with the potential to boost the incomes of everyone else. Kotkin stresses that those who care about reversing class polarization must support growth-oriented policies. He also emphasizes the snobbery and disregard for middle-class preferences and aspirations evident in elite groups' disaffection for the suburbs—though he does not address the ways, such as highway subsidies and the use of eminent domain, in which suburban development has been a function not only of consumer demand but also of policy outcomes designed to benefit developers. Silicon Valley isn't alone in its ability to play the lobbying game.

Kotkin emphasizes that it misses the point to try to deal with social polarization through expansive redistribution of wealth rather than promoting growth. Growth is crucial, and an expanded state social welfare system runs the risk of increasing unemployment and underemployment. Liberating markets to foster growth need not be linked with social conservatism, anti-immigrant hostility, and calls for a return to an imaginary pre-1960s past. As Kotkin hints, there is room, in response to the new class conflict, for a new alliance of seemingly disparate groups on the right, on the left, and off the spectrum. (He points, for example, to implicit commonalities between the Tea Party and Occupy movements.) Redistributive taxation, he emphasizes, might not do much for the middle class and the "technologically obsolete." And he acknowledges the potentially debilitating effects of state income transfer programs.

Still, Kotkin urges the adoption of a pro-growth agenda that involves ongoing state action. Infrastructure spending, for instance, figures prominently in his approach. Similarly, Kotkin's call for increased investment in education runs the risk of increasing the power of the clerisy. And whatever one might say about the differential rates between income and capital gains taxes, the response surely should not be to increase the latter.

Meanwhile, a libertarian agenda to expand growth and reduce the ruling class's power could be expected to treat as central a variety of ideas on which Kotkin does not focus. A genuine concern for the poor and the socially marginal would mean removing a much broader range of regulatory constraints, ones that currently propel people into often demeaning jobs and deny them opportunities to craft fulfilling lives for themselves. Licensing requirements, land-use and zoning rules, and similar kinds of regulations profoundly limit people's options and frequently leave them few legal choices other than conventional employment. Eliminating these regulations would not just undermine Kotkin's class structure but would increase the viability of self-employment, particularly in the tech sector. This would increase workers' control over their work-lives, both by allowing more to be their own bosses and by making it more likely—through competitive pressure and the provision of alternatives—that the other firms were flatter, more participatory, and more responsive to workers' concerns.

Silicon Valley and its enablers in the clerisy aren't the only players on the contemporary economic and political scene. (Kotkin doesn't claim that they are, though he focuses on them.) Wall Street, the enthusiastic recipient of bailout largesse, continues to be hugely influential, as do military contractors. The entertainment industry, powerfully enabled by intellectual property protection, overlaps with Kotkin's clerisy, but isn't identical with it—and it certainly makes an enormous difference culturally and politically. And politicians themselves have their own independent interests in power, prestige, and wealth. So a full-blown story of class conflict in contemporary America would need to include more sectors of the economy, more political and economic machinations.

Despite these caveats, libertarians should welcome The New Class Conflict. Kotkin appreciates how markets can contribute to social betterment, and he understands the suspicion many contemporary people feel about elites' attempts to plan their lives. While he is obviously not a market radical, he rightly focuses on genuine challenges that ought to be deeply troubling to observers across the political spectrum. He helpfully urges libertarians to think long and hard about the future of the family as a crucial social institution. And his emphasis on the importance of growth, in tandem with his rejection of corporate and academic paternalism, should make his approach particularly appealing to defenders of freedom and prosperity.

The result is a provocative and useful contribution to the literature on class. Libertarians should happily join Kotkin in his challenge to the tech oligarchs and the clerisy, even while pressing for solutions still more radical than his.