- The new urban paradigm is what Michael Bloomberg, the former mayor of New York, famously labeled a “luxury city,” built around the preferences of his ultra-rich compadres. But within the dominant cities are clear divisions by class, education, and sometimes race. The wealthy live in safe, gentrified areas, while the poor and minority populations are mostly consigned to neglected peripheral neighborhoods. In a distinctly neo-feudal vision of the urban future, the city core naturally attracts the best and brightest, while those living in the suburban periphery or the smaller cities and towns are doomed to struggle.
- —Joel Kotkin, The Coming of Neo-Feudalism: A Warning to the Global Middle Class, p. 131.
Demographer Joel Kotkin, in The Coming of Neo-Feudalism,warns of a redistribution of wealth and power away from the working class and the bourgeoisie that emerged during the Industrial Revolution. Kotkin refers to these two classes as the Third Estate. Instead, in the information age, wealth is accruing to a few technology-oriented titans with a gift for business strategy. Meanwhile, cultural power is accruing to intellectuals who despise the bourgeoisie and toady to the tech tycoons.
Before delving into his thesis, I want to list my complaints about the book. First, it ends with a whimper, not a bang. Although he titles the final part of Neo-Feudalism “A Manifesto for the Third Estate,” instead of suggesting a solution he simply re-states the problem. Anyone looking for a package of policy proposals or a political platform will be disappointed.
Second, Kotkin takes a very one-sided view of the contested issue of middle-income class stagnation. He presents data that fit the narrative that the Third Estate is suffering economic decline. But that narrative has been challenged, by Russ Roberts, Michael Strain, and others with whom Kotkin does not engage. Overall, the case for a loss of well-being or upward mobility among the middle and lower classes is not as clearcut as Kotkin makes it appear.
Finally, Kotkin’s promiscuous use of footnotes makes the book appear more scholarly than is truly the case. Many of the citations are to rhetorical flourishes of journalists and other commentators, rather than to research.
The Rising Powers
According to Kotkin, the rising powers are what he calls the clerisy (culture and media) and the oligarchy (business and technology), or the First Estate and the Second Estate.
- Today’s clerisy are the people who dominate the global web of cultural creators, academia, the media, and even much of what remains of traditional religious institutions. They share many beliefs with the oligarchs… and spread them around to the wider population as a secular orthodoxy. p. 2
- These two classes often attend the same schools and live in similar neighborhoods… On the whole, they share a common worldview and are allies on most issues… they hold similar views on globalism, cosmopolitanism, the value of credentials, and the authority of experts. p. 7
He goes on to describe the declining classes.
- Today’s Third Estate, which I call the “yeomanry,” has two distinct parts. There is a property-owning middle class… being squeezed beneath the oligarchy. Second, there is a working class who are becoming more like medieval serfs, with diminished chances of owning significant assets or improving their lot except with government transfers. p. 3
Kotkin argues that the trend toward wealth concentration is as evident in Europe and Asia as it is in the United States.
- In avowedly socialist China, for example, the top 1 percent of the population hold about one-third of the country’s wealth, and roughly 1300 individuals hold about 20 percent. p. 5
Kotkin sees this is portending class conflict.
- The future of politics… will revolve around the ability of the dominant estates to secure the submission of the Third Estate. As in the Middle Ages, this requires imposing an orthodoxy that can normalize and justify a rigid class structure… The modern clerisy often claim science as the basis of their doctrines and tout academic credentials as the key to status and authority. They seek to replace the bourgeois values of self-determination, family, community, and nation wth “progressive” ideas about globalism, environmental sustainability, redefined gender roles, and the authority of experts. These values are inculcated through the clerisy’s dominance over the institutions of higher learning and media, aided by the oligarchy’s control of information technology and the channels of culture. p. 7
It strikes me that this trend toward a new class warfare has accelerated during recent crises. Kotkin writes,
- Overall, the biggest winners from the largely asset-based prosperity following the Great Recession [2008 financial crisis] were those with large holdings of property or stocks, rather than Main Street businesses or ordinary homeowners. p. 79
More recently, the fears and government orders prompted by the novel coronavirus appear to have boosted the fortunes of some of the leading technology businesses while devastating the Third Estate’s working class and small business owners. Furthermore, the police killing of George Floyd was an occasion for the First and Second Estates to assert their cultural hegemony, as organizations issued proclamations against racism while insinuating that the yeomanry needed to be cleansed of that stain.
- Well-educated managers of major companies and their technical staff are naturally attracted to the idea of a society ruled by professional experts with “enlightened” values—that is, by people much like themselves. This trend among corporate leaders brings the oligarchy closer to the elements of the clerisy—lawyers, academics, the media—that have looked down on the middle orders. p. 92
Kotkin offers florid descriptions of contemporary urban life.
- Few sights are more thrillingly suggestive of artful modernity than the Chicago skyline. The city center along Lake Michigan is one of the most vibrant business districts in the nation, boasting numerous corporate headquarters and drawing affluent, highly skilled people…
- … Minutes from the affluent neighborhood… Gangs proliferate in the decayed and rat-infested environment, and murder rates are among the highest for a large city in the high-income world. Chicago’s crime is heavily concentrated in the poorer districts…
- … one-third is what the local analyst Pete Saunders calls “global Chicago,” which is something of a Midwestern San Francisco, while the other two-thirds is more like Saunders’s hometown of Detroit as it is today, much of it a depopulated ruin or a dangerous netherworld of crime. p. 129
Of San Francisco itself, Kotkin writes,
- Two decades into the tech boom, nearly 40 percent of families in the city of San Francisco are “struggling” to make ends meet. Wages and job opportunities soared in the affluent, predominantly white precincts but dropped in the minority-dominated areas. Hugely inflated housing prices have chased many working-class and even middle-class people away to locations hours distant. Increasing numbers of residents sleep on friends’ couches, in their cars or to a shameful extent in homeless encampments. San Francisco also suffers the highest rate of property crime per capita of any city in the United States. p. 132
Overall, Kotkin’s thesis that the bourgeoisie is in decline is persuasive and disturbing. It is persuasive because the importance of education in social status is everywhere evident. In the 1950s, there were many corporate leaders who had only a high school education, and there were few with graduate degrees. Today, that is reversed.
“The consolidation of economic power in Facebook, Apple, Amazon, Microsoft, and Google has… confounded those of us who looked at the Internet revolution as a phenomenon that would empower smaller enterprises by decreasing the importance of physical capital.”
The consolidation of economic power in Facebook, Apple, Amazon, Microsoft, and Google has been sudden and striking. It has confounded those of us who looked at the Internet revolution as a phenomenon that would empower smaller enterprises by decreasing the importance of physical capital.
The first wave of the Internet boom, in the late 1990s, was characterized by feverish entry and vigorous competition in the realms of Internet search, on-line shopping, and the hardware and software that consumers would use to access the World Wide Web. In contrast, the current tech boom seems to have entrenched the leaders in their respective positions.
Deirdre McCloskey has argued persuasively that bourgeois virtues raised the status of innovation and commerce, paving the way for our modern economic and political systems. If, as Kotkin argues, the status of the bourgeoisie is in the process of decline, can the demise of democracy and free markets be far behind?
*Arnold Kling has a Ph.D. in economics from the Massachusetts Institute of Technology. He is the author of several books, including Crisis of Abundance: Rethinking How We Pay for Health Care; Invisible Wealth: The Hidden Story of How Markets Work; Unchecked and Unbalanced: How the Discrepancy Between Knowledge and Power Caused the Financial Crisis and Threatens Democracy; and Specialization and Trade: A Re-introduction to Economics. He contributed to EconLog from January 2003 through August 2012.
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