The Future of the Middle Classes

by LEO M. CHERNE

1

THE middle class in America is made up of those groups whose future will be shaped less by what they themselves do than by what big business, on the one hand, and labor, on the other, achieve.

This characterization may help to light up the road ahead. First, it emphasizes the plurality of the middle classes. Second, it stresses the relative inertness of these groups as a political and economic force in our country. There is a curious and dangerous paradox in this statement; because the very fact that the middle class, as a whole, has no articulate pressure agency to push for its demands leads to such frustrations and tensions as turned the middle classes of many European countries to Fascism.

Actually, both the first and second characteristics are two sides of the same coin. One reason the middle class does not have a definite, conscious program or organization comparable to that of big business or labor is that it is made up of separate segments whose real interests vary— and are often contradictory.

For instance, there is the large gap between the “old” and the “new” middle classes. The first group goes back to the revolutionists of the eighteenth and nineteenth centuries, who rose to power and wealth on the tide of the capitalistic expansion they had made possible. Today’s “old” middle class are the inheritors of the properties and traditions accumulated by those ancestors. This group — large merchants, independent farmers, retired businessmen, and so on — owns property, and lives mostly on its income. The “new” middle class, on the other hand, is made up of people who do not own much property other than household furnishings and automobiles, who live on their wages—when they are working — or on the earnings of their small enterprises.

The farmer who deems himself lucky if he makes $500 a year in cash is middle-class. So is the executive of a fairly large company who earns $10,000 a year. Also placing the badge of this fraternity on their lapels or on the straps of their overalls are the country’s small shopkeepers, its craft and whitecollar workers, most of its manufacturers, those engaged in service enterprises, supervisory employees, government workers, technicians, and professionals — regardless of income. This is the sociological truth against which definitions must be measured.

The usual definitions — which would delimit the middle class in terms of income, function, or social status — seem to cover too much or too little, and for a good reason. Middle-classness is not a matter of income, function, or social status. Middle-classness is a state of mind. It is a system of values, of personal aspirations, which give rise to social, political, and economic wishes that color the thinking of individuals through widely disparate groups. The typical middle-class aspirations are the hope of ownership and the dream of economic security and social position.

How thoroughly the middle-class state of mind pervades the American atmosphere is indicated by the persistent refusal of most white-collar workers, for example, to identify themselves with labor. They frequently earn less than the industrial worker; they have no greater security than he has; and they are perhaps even more dependent upon their employers than he is. But their greater education, training, culture, social veneer, and closer personal relationship to the work they do establishes their middle-class character beyond question.

Even the factory worker, and especially the craftsman, the aristocrat of labor, is likely to consider himself a member of the middle class. The outward signs of middle-class social position are frequently his. He owns a refrigerator and a washing machine. He goes to the same movies, listens to the same radio programs, reads the same newspapers and magazines as his boss. If, dressed in his Sunday best, he were to walk down the street with his employer, an observer would be hard put to it to say which was which. The worker may not have any money in the bank, or a college degree; but he does have an automobile (what if it was bought on the installment plan?) and he dreams of the day when his son will go to college.

The contradictions and conflicts among and within the various middle-class groups tend to be obscured by the overriding compulsion of what is basically the Horatio Alger wish. This is as deeply moving a force in the social organism as psychiatry’s libido or sex drives are in the individual organism. The significant point here is that in pursuing this “American dream” or “myth of direction” the middle class has inevitably run into confusion. It is not surprising to find that it has blindly and frequently fought against its own best interest.

The Populist tradition, which epitomized the most vigorous middle-class action, produced its antitrust laws, its Federal Trade Commission, its Robinson-Patman Act, and the fair-trade laws. Put all these failed to stem the inevitable agglomeration of small property into big property and the evolution of laissez faire into monopoly. Historically, the middle class has been loud in its opposition to monopoly, and it was this class which placed the trustbuster’s halo over Theodore Roosevelt’s head. But the truth is that Roosevelt’s famous “big stick,” his Antitrust Division, consisted of only five lawyers and four stenographers. None of the corporations under attack would have considered retaining for their defense a law firm so poorly staffed.

The antitrust laws were the expression of an inherited political attitude; their uneven enforcement the expression of the conflicting economic ambitions. Actually, all these examples reveal a conflict between the ambitions of the middle class and the realities of its economic position. It is this group conflict which explains the gap between attitude and action that has characterized so much of the history of the middle classes — and which bodes no good for the future.

The consequences of this conflict were not serious in the days when this country still had the resources of its frontiers to exploit. The Horatio Alger story was less illusory then. The path upward was open; a man could start with nothing but a brain and a good pair of hands and leave his children enormous amounts of property and power. But the history of the last fifty years has been a record of contraction of opportunity, a narrowing of the road upward — if not, indeed, the complete obliteration of that road. The progress of technology, the depletion of natural resources, the rationalization of industry, the organization of distribution and mercantile establishments on a grand scale, the breakdown of laissez faire — all these represented a progressive weakening of the economic and political power of most of the middle-class groups.

2

THE middle class in the United States today stands at the threshold of its greatest challenge. Frustrated by its impractical aspirations, split by the internecine struggles of the various groups that constitute the middle class as a whole, unable to strike a balance between its dr earn-wish and the realities of the new, regulated capitalism, it is hardly in an auspicious position.

The impacts of World War II have weakened its position still further. Many of the burdens of war have fallen most heavily on the individuals and families in the various middle-class groups. The bulk of some twelve million men who will be in uniform by the middle of 1944 will have come from middle-class homes and middle-class jobs. Since the middle class has traditionally been the most jealous guardian of social rules, customs, morals, and relationships, all the dislocations of the war in these spheres will strike with multiplied effect at the homes of these people. The appearance of serious juvenile delinquency in a hitherto “completely respectable” community is a shock from which the community cannot easily recover.

The adventure into war work undertaken by millions of men and women who before the war would have looked down their noses at manual labor will create dislocations when the war jobs are ended. Not the least of these will be readjusting to lower levels of income after the days of fat pay checks.

The millions of soldiers coming back to middleclass homes will bring their own restlessness, their own difficulties of adjustment, to add to the confusion. The casualty lists will strike with deep, unforgettable pain into these groups. The crippled and the wounded will bring their unsettling presence into many an American home that will never again be able to return to normal.

Mr. Babbitt’s son, who has flown at 400 miles an hour and has been trained to hate and kill, will be a disquieting influence when he returns to Zenith. Husbands and wives, living through widely divergent experiences for years, will not soon be able to re-establish the family circle that was broken by an induction notice. The ripped fabrics will not be mended automatically or easily.

All these impacts of the war on middle-class families add up to a critical condition for the future. Insecurity, instability, and maladjustment will replace the security, stability, and social adjustment which have traditionally been the pillars of middleclass position in our society. It is in this state that the middle class as a whole will watch from its sickbed the jockeying for political and economic power of both big business and labor.

The future of the middle classes depends in largest part on the future of big business in the United States. If big business is king, large sections of the American middle class will find shelter, prosperity, and happiness in the king’s court. The low and middle-level executives, the “manager,” the engineers, technicians, and supervisors, the professional attendants — these will all benefit. Tomorrow and the day after are made for the manager. The growth of large enterprise, the complexity of its operations, the trend toward specialization within the administrative activity of business, all emphasize the importance of the new industrial functionary. The stratification and “layering” of intricate modern industrial organisms make inevitable the growth of the specifically trained stewards of power, the new industrial bureaucrats. Here is tomorrow’s aristocracy of the middle class. But the small manufacturer will lead the line of those who are squeezed out by the concentration of economic power and the growth of monopolies.

To determine what is most likely to happen, you must follow the conflict between our idealized attitudes and our daily practice— the gulf between our assertions that little business is the backbone of industry, and the actions we take which stifle its growth.

It is of profound significance that the most articulate voice for free, independent America is becoming more guarded. The vehicles of opinion in America — whose untrammeled expression has traditionally been considered a basic safeguard of democracy and middle-class security— are rapidly being gathered into fewer and fewer hands. Town after town that had three newspapers now has only one. In over 100 cities the owner of the only newspaper is the owner of the only radio station. Of some 850 radio stations in the country, more than 300 are under the wing of a newspaper; and the purchase of broadcasting facilities by papers and magazines is continuing. Add to that the fact that the major networks get 75 per cent of their income from 40 advertisers.

The characteristic American attitude may be all for small business, but the publishers of the country’s small papers — the homespun country weeklies which might be expected to voice that attitude — have frankly declared their admiration for the big fellows. The American Press, a magazine for home town newspapers, surveyed opinion in the fortyeight states. In its issue of January, 1944, it reported this consensus of more than 500 country publishers; —

37 REASONS WHY COUNTRY PUBLISHERS LIKE “BIG BUSINESS”

1. It is the greatest factor in making this nation the best and most powerful on earth.

2. Hitler would be “World Führer” if it weren’t for industry’s amazing job.

3. The people in this country do not want a labordominated government.

4. The products of large industries have won the people’s highest esteem.

5. Big business knows what to do in emergencies and has the capital to keep men on payrolls when things are bad.

6. It is much better to have big business than big government.

7. The capitalistic system is much better than modified socialism.

8. Big business knows it must be worthy of confidence or it will lose its leadership.

9. Businesses get big because of fair dealing, honest products, and a long-view perspective of public demands.

10. Big business makes good business for little business.

11. If it weren’t for big business there wouldn’t be any America.

12. It will be American capital and big business — not academic theorists — who will bring America back to peacetime living.

13. If it weren’t for big business Mr. Roosevelt would take us over.

14. Big business is necessary for the success of newspapers.

15. Big business is the backbone of small business.

16. Big business keeps prices down where its products can be enjoyed by more people.

17. Big business is fairer than labor or any other single group.

18. Big business has saved this country.

19. Big business is simply an aggregation of the capital of numerous and widely scattered stockholders.

20. Big business cannot be held down without holding down small business.

21. The basis of democracy is to protect the right of Small business to become big business.

22. We can’t condemn an organization because it surrounds itself with the facilities to build better mousetraps.

23. A government which opposes big business is heading toward a communistic state.

24. Big industries have brought us most all of the modern conveniences we have today.

25. Competition is the life of trade.

20. Only big firms can afford the research needed to give us better and cheaper products.

27. Good pay by big business gives our middle class a high standard of living.

28. We are fighting this war to save free enterprise — which means big business.

29. We must get back to the day when a poor man with initiative will have the hope and chance of becoming an outstanding leader.

30. We owe big business a debt of gratitude for the luxuries and necessities we all enjoy.

31. It takes big business to make the wheels move.

32. It was ambition that made these organizations so powerful.

33. As big business prospers, so prospers the nation.

34. If we have to be exploited by any group, we prefer big business — they do it with more finesse.

35. Big business is as much a part of American life as hot dogs and Coca-Cola,

30. Take away big business and what is there for the little fellow to strive for?

37. Our country has developed through the capitalistic system of business.

Today big business is growing rapidly, while small business just about manages to hold its own. Under Secretary of War Robert P. Patterson told the story when he said that war orders “had to be placed with companies best equipped to handle them with speed. . . . We had to take industrial America as we found it.”

Attempts were made by the government to cut small business in on war production. But as Vice President Wallace said, “The Smaller War Plants Corporation came into the picture two years too late.” That it came into the picture at all is a tribute to American sentiment. It was ineffective. Argue with General Blitz. He will still insist be would rather deal with one giant corporation and place an order for 10,000 planes than fuss around with a thousand smaller plants handling the bits and pieces from which the planes are made. It was no accident that besfore the country became “reconversion conscious” recently, the chairmanship of the Smaller War Plants Corporation proved a one-way road to oblivion.

Small business did not pass out of the picture completely, of course. As of July, 1943, the total physical output of small plants was still at about the 1940 level. Some 150,000 medium-sized and small manufacturing plants are in operation in 1944 as compared with 170,000 before Pearl Harbor. Small business has survived, but its character has changed. It makes the bits and pieces, but only as one of the thousands of work horses for a General Motors with whom Uncle Sam does business directly.

At the end of the war this reality will be the base from which business organization starts to operate. It will shape public policy and determine the relative position of all the classes in America. The nation may pretend that it does not exist. Indeed, with each wartime increase in the power and influence of large enterprise, prettier bouquets have been thrown in the direction of the little man. With each inhibition imposed on competition, a more effusive paragraph has been written to extol the competitive way.

3

FROM one of America’s important industrial organizations, the New England Council, came the words of its president, accurately describing the conflict between reality and what we think about it — “the great inconsistencies between what is being said about free enterprise and what is being done by owners of the capital that is essential to free enterprise. . . . Everywhere we encounter a reluctance to take risks. Everywhere we find a strong belief in private ownership, and everywhere we see a scarcity of persons willing to become owners when risk is apparent. The demand for security is not confined to the disinherited.”

The implications in this statement are important, for they indicate a distinction between a free enterprise system and a private enterprise system. Free enterprise is competitive; private enterprise merely means privately owned business which may or may not exist in a competitive atmosphere. Free enterprise is inconsistent with restrictive agreements, combinations, monoplies. It calls for a market in which the more efficient producers and sellers are free to set their individual production schedules and their prices. Every small business has at least a chance to grow, limited only by the managerial ability and resources of its owner. This, indeed, is the traditional war cry of the old middle class.

But free enterprise and unrestricted competition began to retreat a long time ago. Even before World War I, it had all but disappeared in some of the heavy industries and in most of mining. During the twenties and thirties, free enterprise began to lose its grip on more and more of the country’s manufacture.

The war hastened the change. In just two years, 1942 and 1943, the share of big business in the nation’s total output grew faster than in the preceding twenty years. By 1943, with the compressing force of war still gaining momentum, the 100 largest firms already controlled about seven eighths of the nation’s war output, with approximately four fifths of all prime war contracts in their hands.

That small group farmed out the nation’s work to subcontractors who, in turn, passed on slices to subsubcontractors. The pattern of American business was being redesigned. The thousands of independent little pieces that used to constitute American industry were linked together by the forge of war into an integrated chain, anchored to the prime contracts held by the giant companies. The small firms that remained in business — and most did — made more profits than they had in a long time. But they were operating as satellites. Initiative, direction, and planning stemmed from the big contractors. The ruggedness of the American businessman may not have diminished, his antipathy to external control has not decreased, but the former individualist has rapidly become part of new gigantic industrial collectives. He has been changing from an old middle-class owner to a new middleclass supervisory employee.

If the future is at best uncertain for the middleclass manufacturer, it is, on the other hand, comparatively bright for the small and medium-sized distributor and retailer. Though the department stores and mail-order giants won’t grow smaller or the chain stores disintegrate, small retail distribution will not be supplanted by big business as manufacture will. It is here, incidentally, that the government surpluses of goods will have their most marked business effect. Bargain counters displaying what were originally government wares will draw crowds and add many an easy dollar to the small distributor’s cash register.

Despite the wartime burdens of rationing, price control, freight and delivery restrictions, the middleclass owners of the country’s shops and stores have come through without too much dislocation. Even dealers in products like automobiles haven’t done badly. The Packard Motor Car Company still has more than 90 per cent of its dealers in business. Fewer than 15 per cent of the tire dealers have gone out of business since Pearl Harbor. Why should they? The large tire manufacturers have supplied them with everything but tires. The Firestone Tire and Rubber Company fed its distributive network with 3000 different items from a catalogue that covers 68 pages—books, paints, wallpaper, garden tools, clothes, and other goods.

In the years after the war, capitalism and government will face in the most acute form the questions that have troubled both most painfully during the last generation: how to make jobs for the most people and how to protect freedom of enterprise at the same time; how to provide security and enlarge the liberties of the most people at the same time; how to win safety without contracting; how to stabilize and grow; how to keep the big from growing bigger and the small from becoming smaller.

Progressively throughout the last fifteen years — and more dramatically during the war—big business’s share of the national dollar has been increasing. And small business faces the reconversion period with many fewer advantages than big business. It will, for instance, benefit less by the “carry-back” tax provisions. Also, although Washington has talked about breaking down government plants so that small firms may have a chance to buy some of the facilities and equipment that will be available after the war, the plain fact is that big business will be best able to take advantage of the opportunities which government disposal of plants will offer.

In the basic contest between the big and the little, the hands of government will be stayed by the most important pressure we shall know in the years ahead — unemployment. Big business makes big units of employment. For the sake of jobs, government will grant many concessions, no matter how hostile to big business its policy may be. Such concessions will involve not only a substantial cut in the tax burden, but also permission to continue some of the wartime agreements between firms in the same industry.

There will be government subsidies in the form of substantial price slashes on government-owned facilities, the careful disposal of government-owned supplies in foreign countries, and controlled, gradual disposal in the domestic market. True, some of these measures will be favored by smaller enterprise, but the consequences will benefit most those in the upper bracket of business. If only because big business is the key to big employment, the average American will applaud such policy. And big business will continue to grow.

That continued expansion will not be due to the “greed of rapacious business.” The truth is that the decisions will be made not by individuals — inside or outside the companies themselves — but by the compelling force of an economy already resting on the foundation of big business.

Neither the public nor Congress will be able to resist this basic fact. There will be many attempts to extend assistance to small business. But small manufacture can be helped only by preferential legislation; only if the government steps in to equalize the odds can the varying types of enterprise play an even game. Yet, with typical middle-class confusion, it will be the small and medium-sized businesses themselves that will he among the first to protest “government meddling” — and will thus resist such efforts on their behalf.

4

ON THE other side of the arena will be labor, meeting the peace with a show of strength. On Armistice Day, organized labor will be able to show on its books a membership of 12,000,000. Actually, that figure will be deceptive. In the first, place, it includes many in the armed forces who will never return to their old jobs or their old unions. More important, as war-expanded industries begin to contract, union members will be squeezed out of jobs and will drop out of their labor organizations. The CIO is likely to suffer a particularly sharp drop because the largest part of its wartime expansion was in precisely those industries, such as shipbuilding and aviation, which will suffer the sharpest cuts when war production ends. This is important if only because the A. F. of L. will certainly take advantage of the CIO’s comparative weakness to press for jurisdictional power. In the wave of jurisdictional disputes that will follow, not only the country as a whole, but small business in particular, will suffer serious dislocations.

At the same time, it is the small middle-class enterprise that will find it most difficult either to accede to or to resist labor’s drive to maintain the high wartime level of pay and working conditions. Similarly, smaller companies will find it harder to meet demands for dismissal pay. The return of veterans will also raise many problems that will strike with peculiar impact at the small firm. The large concern, more impersonal in its employee relationships, may be able to avoid serious trouble, but in smaller companies, where rehiring of former servicemen means firing of present workers, the situation will be both unpleasant and explosive.

One of the most significant, wartime developments in the field of labor has been the growth of a new political policy — moving away from the Gompers and A. F. of L. tradition of “rewarding labor’s friends and punishing its enemies.” The new line is articulated in the development of the CIO’s Political Action Committee, led by Sidney Hillman. Although confusions within the house of labor itself and the conflicts between liberal and left-wing groups are almost certain guarantees that there will be no Labor Party in the United States for a long time to come, the wartime drive to mobilize labor as a political force indicates a growing class challenge.

Labor’s future is uncertain. The years immediately ahead will find it in a weakened condition, disunited, fumbling through a difficult economic environment. But in long-range terms labor, as compared with the middle class, presents a fairly well organized, fairly articulate group, moving toward a definite goal.

Both the direction of big business and the direction of the labor groups spell pressure on the middle class. The new middle classes will not feel the resentment and fears of those below them so deeply as the old. The frustration that besets the property owner will not be present. It is more difficult to dislike when you’re moving up or holding your own than when you’re sliding down. For many of the new middle classes, peace will offer the greatest prospect for economic advancement and political control they have ever had. They will enjoy the psychological lift of knowing that they are not declining in the community. Fifteen per cent of all the people gainfully employed in 1870 were independent business operators; by the end of the war that group will be no more than 5 per cent of the community. Wage workers and salaried employees and professionals jumped from 600,000 in 1870 to more than 10 million before the war; from 4 per cent of the community, they have become more than 20 per cent. For them the future is not a fight for group survival.

For America the future of the middle class is in large measure the future of a non-propertied class; more exactly, it is the future of a class that does not own its own means of livelihood. A hundred years ago 16 out of every 20 people in America owned the means by which they made their living; today 17 out of 20 do not. A drastic change in the traditions of liberty and independence will result from this fact alone. America will be as much a middle-class nation as it ever was, but there is a basic adjustment ahead in middle-class aspirations and there will be many conflicts before the adjustments are completed.

This new middle class has been growing much more rapidly than the number of industrial workers. The trend will continue, as Lewis Corey says, because they are at the center “in collective, largescale industry, and in the state, without whose functional services the economic system could not carry on. . . . They now perform the tasks of industrial organization and direction that individual capitalist owners performed in the age of competitive, small-scale capitalism.” The future of the middle class will eventually involve an open struggle to achieve place in America — as the employed managers of big business.

The substantial American middle class in agriculture is another participant in the gradual march away from property. The number of separate, individual owners has been declining. The family farm has been declining.

Three notable trends have left a lasting imprint on the land. The marginal landowner is becoming the farm tenant. The smaller, less secure independent farmer frequently becomes the farm contractor, selling his entire output to a specific food processor. The mechanization of agriculture has enlarged the farm and reduced the number of individual owners. With mechanization calling for ever larger capital outlays, this most important of the trends is unlikely to be reversed. The farm community will continue to look to the nation for subsidies, price support, and similar guarantees against the competitive struggle.

As for the old middle class, it will be increasingly ground between capital and labor, its roots torn from its economic and philosophic soil. It will stand as the major problem of modern society. This traditional middle-class group — whose key incentives and inherited philosophies have revolved around the concepts of property, economic freedom, getting ahead, laissez faire — represents, from the social standpoint, the dynamite of tomorrow.

Tired and confused, the emotional uplift of war removed, these beleaguered middle-class entrepreneurs are the most susceptible to the infections of a post-war disillusionment. Every post-war call for new-style isolationism, every chauvinist appeal, will seek to enlist their loyalties. In every successful Fascist revolution in Europe the basic appeal was directed to just such elements as these—the bewildered, the frustrated, and the embittered. The Fascist line dangled before the middle class is baited with two hooks, the first of which is protection against the pressure from below, and the other the promise of a restoration to the old status of power and unlimited opportunity. Many will swallow the bait. How serious the consequences will then be depends primarily on whether America achieves a high level of employment and prosperity or stumbles into depression after the war.