The Wealth Explosion and a "Classless" America

One of the pleasures of reading The Wilson Quarterly is that its editorial positions and articles do not fall out neatly along contemporary vernacular notions of “liberal” and “conservative” (it’s more of an “Old School” liberal magazine whose political and economic positions tend to be congruent with 19th Century / early 20th century liberalism and progressivism). Which is to say that I enjoy the pleasures of both agreeing and disagreeing within the same magazine.

The Quarterly’s Winter 2007 issue features a special section on “The Wealth Explosion,” three articles which focus on the recent expansion of wealth in America and elsewhere in the world economy, as well as on some of the effects of this expansion.

The most interesting, and problematic, of the essays is “Lux Populi” by James B. Twitchell. Twitchell discusses luxury goods’ loss of standing as positional goods. One of the things that makes luxury goods markers of class status is and has always been not just their expense but their inaccessibility to the masses. Not only could most not afford luxury goods, but most did not opportunity to acquire them even when being potentially able to afford them. In today’s world, luxury goods are widely available to whoever may afford them (one of Twitchell’s examples is Gucci handbags being sold on the Home Shopping Network), and the middle class, at least, can afford more of them than ever before. Twitchell sees this as a problem for the wealthy. “Ironically, what this poaching of deluxe by the middle class has done is make things impossible for the truly rich.” Alas for the poor rich – what are they to do when the luxury goods, which “have little intrinsic but high positional value,” lose there positional value in marking their status of wealthiness?

I have two main problems with Twitchell’s piece, despite finding it thought-provoking. First is the overall tone of the piece, which seems to imply that the loss of positional marking (to the extent that this has occurred – clearly he’s onto something, but it’s hardly the case that the wealthy [or the blue collar, for that matter] lack any means of marking their class status today) is a bad thing, a tragic loss. Twitchell says, “‘Luxury for all’ is an oxymoron, all right, the aspirational goal of modern culture, and the death knell of the real thing,” but if luxury goods have low intrinsic value but high positional value, what is lost with the greater availability of such markers is not the “realness” of the markers, but simply their restriction to a particular class – not in itself a bad thing (unless you really think that the wealthy deserve to pretend through the display of essentially valueless commodities that they are intrinsically better than everyone else). Twitchell’s reference to the middle class’s “poaching” of luxury goods is a further affirmation of his sense of the impropriety of the spread of luxury items. This is topped in the final paragraph with flippancy: “In a sense, the filthy rich have only two genuine luxury items left: time and philanthropy. As the old paradox goes, the rich share the luxury of too much time on their hands with the very people on whom they often bestow their philanthropy. Who knows, maybe poverty will become the new luxury…”

Second, and more problematic, Twitchell seems to misdiagnose why luxury goods have lost much of their standing as positional goods. His point is essentially that luxury goods are more available to more people because everyone is wealthier. To an extent, this is correct. There is little absolute poverty in the U.S. (or Canada or Western Europe) (though there is some – and more in the U.S. than in Canada or Western Europe). The middle and working classes are able to buy more stuff of all sorts than ever before, though a lot of this purchasing is financed on the continued extension of debt. Another thing that’s really changed, though, is that the purveyors of luxury have changed their selling strategies, marketing somewhat downmarket versions of their goods to much larger numbers of people via shopping malls, cable shopping networks, and the internet.

Further, the realities of the distribution of the current expansion of total wealth are far different from that implied by Twitchell’s article. The editors of The Wilson Quarterly preface the special section with (emphasis added), “Not since the late 19th century has America experienced such a flowering of new wealth. The surge of dot.com whiz kids, handsomely paid CEOs, and lavishly rewarded entertainers is transforming everything from the market for private jets to the nature of philanthropy. A few rungs lower on the ladder, the merely affluent vacation in the Caribbean and cart home big-screen TVs from Costco. But while the money is flowing freely, most of it is flowing uphill. As fortunes large and small pile up, there is cause for celebration, and some healthy skepticism too.” Less cautiously, in another article in the special section, Steven Lagerfeld argues, “…no embrace is unconditional, and there are already signs that the public’s ardor for the new era of riches is flagging. The economic progress of many people on the middle and bottom rungs of the economic ladder – even allowing for understatement by some statistical indicators – is slow or nonexistent. Getting ahead is getting harder, as the costs of health care and a college education to rise faster than the rate of inflation, and the ordinary insecurities of life on the job are magnified by the stresses of globalization, outsourcing, and technological change.”

The extent to which getting ahead is getting harder is made clear in an article in The Nation (February 5, 2007 issue) by Jeff Madrick. Madrick quotes Isabel Sawhill and Sara McLanahan from the journal The Future of Children defining the ideal of America as a classless society as “one in which all children have a roughly equal chance of success regardless of the economic status of the family into which they were born,” before reporting on the extent to which America has lived up to such an ideal. Madrick reports that studies from a few decades ago indicated an America living up to such a classless ideal (at least in Sawhill and McLanahan’s terms), with “only 20 percent of one’s future income…determined by one’s father’s income.” Compare this with a recent study by Bhashkar Mazumder of the Federal Reserve Bank of Chicago that argues “that 60 percent of a son’s income is determined by the level of income of the father. For women, it is roughly the same.” In other words, far from a burgeoning of classlessness, we are seeing an ossification of America’s class system in terms of income – even while the buying habits and markers of class are becoming more homogenous.

The markers of socioeconomic class standing have certainly not disappeared. It is still possible to visit virtually any public space in America and make assumptions (and be reasonably certain about the accuracy of these assumptions) about the class background of a person based simply on such things as clothing or physical bearing. Such class markers have never been purely about economics but also about class subcultures. Just as previously possession of luxury goods marked not just economic wealth but social access to certain milieux, the group of men I observed eating at a barbecue restaurant, each wearing mesh ball caps and button up shirts with patches bearing their names over one breast pocket, were clearly blue collar workers, though some of them might well make as much money as I do as an assistant professor of anthropology at the local university. At the same time that class markers have not gone away, the appearances of class have grown more homogenous. More people, in the United States at least, do have access to more stuff, including luxury and other positional goods, than ever before. That in itself is not a bad thing. The American ideal of a classless society is a worthy one, even if it has never matched economic realities. While I do wish that our consumer goods were produced in more environmentally sustainable ways, the availability of more things to more people is a good thing. While material things and comforts don’t alone bring happiness, the absence of a certain amount of material comfort certainly inhibits happiness, and I for one would be highly hypocritical if I tried to pretend that I don’t enjoy the pleasures of the stuff that I own.

The problem is not the growing homogenization of class markers nor the extension of positional goods such that they mark a classless society. The problem certainly isn’t that the rich can’t distinguish themselves anymore. The problem is that the extension of luxury and other consumer goods to more people is accompanied by burgeoning debt, an increasing precariousness of middle class standing, and the ossification of economic status and loss of the American dream of upward mobility, with the result that we now live in an increasingly rigid class structure which manages to masquerade (and to a greater extent than before) as a classless society.