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432 pages, Hardcover
First published March 14, 2017
In 594 BC, Solon adopted 2 major reforms that fundamentally changed the relationship between the rich and the poor in Athens. First, he abolished debt bondage and forgave existing debts. The poor could never be truly equal citizens if they were at risk of needing to sell themselves into slavery. Ending debt bondage meant that over time, poverty would not lead to political inequality. ...
He [Cleisthenes] also introduced the practice of ostracism, by which the assembly could exile a member of the city. In the 5th century, Athens used ostracism 15 times, largely to exclude people who were feared to have grown too powerful and were suspected of wanting to become tyrants. Ostracism ensured that the people writ large had a check on the wealthy and powerful.
Within the Council of 500, which set the agenda for the assembly, a tenth of the members composed the executive body, whose rotating chair was selected by lottery and only served for 24 hours, to prevent the chair from accumulating inordinate power.
Only about 5-10% of citizens were in the highest echelon of economic class where they did not need to work at all. Athens was remarkably wealthy and surprisingly equal in its distribution of wealth. Our evidence of housing patterns corroborates this evidence. If ancient Greece was severely stratified by wealth, we would expect to see archaeological evidence of mansions for the rich and small huts for the poor. But the archaeological record instead clusters around the middle, with few extremely small or large houses. As the classicist Josiah Ober has concluded, "Wealth was distributed realtively equitably across Greek populations; there was a substantial middle class of people who lived well above bare subsistence yet below the level of elite consumption."
To enable the many working middle-class citizens to participate in politics, the people of Athens made a 2nd policy choice. They did not assume that (temporary) relative economic equality would prevent those who were on the wealthier side from dominiating politics. To make democracy work, they paid for widespread participation. Starting in the mid-5th century BC, Athens paid citizens a per diem for attending the assembly and later expanded the per diem to include jury service. Normally, men, women, and children all had to work simply to sustain the family. The payment for political participation offset the losses that accompanied being absent from a day of work. The result was to expand who could govern the Greek city-state to those even of modest means.
Perhaps most important, Athenian democracy did not rely on elections. If leadership was determined by election, the wealthy would be more likely to get elected; they'd have the skills, time, and financial resources to dedicate themselves to public business. Athens solved the problem of the aristocratic advantages of elections through the widespread use of lotteries. Yet, in debates after the American and French revolutions, lottery is almost completely absent.
From the Athens of Aristotle to Republican Venice in the 18th century, political philosophers believed that elections were inherently aristocratic, and lotteries inherently democratic.
However, economically, the American colonies were far more economically equal than European countries. In 1759, England and Wales had a Gini coefficient of 0.522. By 1802, it had risen to 0.593. Holland in 1732 was even more unequal at 0.610, though by 1808 the Dutch were slightly better off at 0.563. To put that in perspective, European countries in this time were about as unequal as Brazil, Haiti, or South Africa in the 21st century. America was substantially more equal in this time, with a Gini coefficient of 0.441. Where the top 1 percent in 1774 America picked up 8.5 percent of income, the top 1 percent in England and Wales in 1759 took more than twice as much -- 17.5% of income. America's middle and upper-middle classes were also doing far better than their English counterparts. The 40th-80th percentile took 39.6% of the income in colonial America, compared with only 30% percent in England in 1759. As Lindert and Williamson conclude, "During that time, there was no documented place on the planet that had a more egalitarian distribution in the late 18th century."
Tocqueville saw a looming threat to the American republic. In a chapter titled "How Aristocracy could issue from Industry", Tocqueville described how industrial change might undermine the Republic. "As the principle of the division of labor is more completely applied" and workers take on narrower, routinized roles in factories, " the worker becomes weaker, more limited, and more dependent." Over time, as employers and employees would become less and less similar, the division between them would grow. The consequences were self-evident. "What is this if not aristocracy?" Tocquevilled asked.
Wage laborers were dependent on other people for their economic survival, and that dependence conflicted with republicanism's requirement that citizens be free and independent. As historian Eric Foner has said, for many late 19th century Republicans, "A man who remained all his life dependent on wages for his livelihood appeared almost as unfree as a southern slave." For citizens to be free, they needed a measure of economic independence, which had generally been linked to ownership.
The second problem was that in an industrial system, economic gains would accrue disproportionately to a small few - the owners. Relative economic equality was at risk in a system in which wage laborers earned little while big profits went to their bosses. Years later, the Supreme Court justice John Marshall Harlan remembered how widespread this understanding was in the 1880s: "The conviction was universal that the country was in real danger from another kind of slavery … that would result from the aggregation of capital in the hands of a few individuals controlling, for their own profit and advantage exclusively, the entire business of the country."
These days, most scholars think the purpose of antitrust law is to promote consumer welfare through efficient markets. Restrictions on trade are evaluated almost exclusively on economic grounds, with a focus on "their overall effect on the efficiency underlying markets." As leading scholar Herbert Hovenkamp has said, antitrust has no "moral content"; its "sole purpose is to make the economy bigger." Brandeis, Wilson, and other decentralizing Progressives would have disagreed. In the Progressive Era, antitrust was focused on the fact that "the vast accumulation of wealth in the hands of conrporations and individuals [could] oppress individuals and injure the public generally." The problem with big corporate entities is that they "threatened self-government in 2 ways - directly, by overwhelming democratic institutions and defying their control, and indirectly, by eroding the moral and civic capacities that equip workers to think and act as citizens." Antitrust was a way to break up these big institutions, enabling democratic control of society and the economy. In Liggett v. Lee, a 1933 case involving a Florida anti-chain-store law, Brandeis recognized that the "concentration of economic power" was so great "that so-called private corporations are sometimes able to dominate the state." He worried that the corporate system was becoming akin to the "feudal system" and that "this 'master institution of civilised life' is committing society to the rule of a plutocracy."