Government Is Whose Problem?

Jon Wisman

No 2013-01, Working Papers from American University, Department of Economics

Abstract: This article addresses the political meaning of President Ronald Reagan's 1981 declaration that "government is the problem." Whereas historically the state had been used by elites to extract as much surplus as possible from producers, with democratization of the franchise, the state became the sole instrument that could limit, or even potentially end, the extraction of workers' surplus. Once control of the state is in principle democratized by the ballot box, the fortunes of the elite depend solely upon controlling ideology. In 1955, Simon Kuznets offered the highly influential conjecture that while rising inequality characterizes early economic development, advanced development promises greater equality. However, rising inequality in most wealthy countries over the past four decades has challenged this hypothesis. What those who embraced Kuznets' conjecture failed to recognize is the dynamics by which the rich, with their far greater command over resources, education, and status, inevitably regain control over ideology and thereby the state. Over the course of history, only the very severe crisis of the 1930s discredited their ideology and led to a sustained period of rising equality. However, by 1980 they had regained ideological ascendancy. This article examines how this struggle over ideology has unfolded in the U.S. since the democratization of the franchise in the late nineteenth century. It concludes with reflections on whether the current crisis holds promise of again de-legitimating the elites' hold on power and ushering in another period of rising equality.

Keywords: Inequality; ideology; class power; democracy; Kuznets' curve (search for similar items in EconPapers)
JEL-codes: B00 N32 N42 O15 Z13 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-his, nep-hme, nep-hpe, nep-pke, nep-pol and nep-pub
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Citations: View citations in EconPapers (4)

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https://doi.org/10.17606/5081-6m53 First version, 2013 (application/pdf)

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