An Analysis of the Circulation of Elites in America

At the turn of the 20th century, Vilfredo Pareto (1848-1923) was attempting to refute the claim that socialism provided a superior solution to economic problems. Pareto became concerned that if liberalism was superior why wasn’t it being generally practiced. This led him from economics to sociology. He observed that 80% of Italy’s land was owned by 20% of the people. He coined the term ‘elite’ in 1902 in his descriptions of these apparent ‘efficiencies’ in society. Pareto believed that elite behaviors reflected patterned distributions of individual psychological characteristics. He developed from his economic work a coherent and insightful general theory of social stratification and mobility. His theory of circulation of elites claimed regime change occurs when one elite replaces another – not when rulers are overthrown from below. The role of ordinary people in such transformation is not that of initiators or principle actors, but as followers of one elite or another.

The ‘elite’ is key to understanding society as a whole – for whatever value this elite incarnated would be reflected in society. Elites do not automatically adjust to fit changing conditions, rather an entrenched, maladaptive elite eventually emerges and tends to cling to power for years. The question is why this apparent failure of elites happened. Pareto’s theory of elite cycles frames a sobering answer. He theorized that over time a distinct psychosocial propensity – manifested by personality traits, mentalities, beliefs and actions – becomes predominant in governing elites. They are no longer able to detect or recognize risks that matter to decision-makers. This renders them, especially their leaders, prone to bias, closure, rigidity and cumulating blunders. A gradual process of decline or degeneration takes hold and leads eventually to a profound crisis during which groups and persons disposed toward the opposite propensity ascend, only to have a lengthy process of decline or degeneration begin anew.

Pareto conceived of elites as ‘governing classes’ – as complex aggregations of powerful political, economic and social groups, the inner leaderships of which are located in governments. In Pareto’s usage, governing elites encompass opposing parties and allies, rotating in and out of government offices and squabbling endlessly over policy matters. But these rotations and squabbles do not alter basic psychosocial propensities and governing styles. Elite members are disposed to combine the two modes of political rule, force and persuasion, but over time they, and especially their leaders, come to rely primarily on one mode, one style of governance. Elites always rule, leading to the domination of a minority over a majority. Not withstanding, there is a continuous decline of the elite, thereby making way for a new elite.

Cycles of elite circulation and degeneration can never be eliminated, Pareto observed. However, the start of a cycle may provide a temporary respite – an interval of renewal and hope – because the influx of new elite groups and leaders supplies needed flexibility, innovation, talent, and vigour. A measure of temporary equilibrium is achieved, and a honeymoon period for the new elite unfolds. But this is bound to be short-lived, because the new elite tends to attribute its predecessor’s downfall to specific errors and stylistic shortcomings, rather than to more general bias and closure, political mediocrities in high positions and inflexible policies. The lesson learned is less the need for elite openness and a ruthlessly honest internal discourse than for a more conciliatory or confrontational posture. Sooner than later, complacency and hubris again take hold, policies become rigid and doctrinaire, vices replace virtues and ill-advised undertakings mount.1

World War II’s technological advances, pent-up consumer savings and upgraded workforces provided the revamped American governing elites with relatively easy tasks of political management during the early postwar period. Intertwined Keynesian and welfare state precepts formed the intellectual umbrella for the 1945 – 1980 cycle. They taught that smooth economic sailing could be assured by employing fiscal stimuli in times of falling demand and that political peace could be purchased through social compacts – in partnership with unions. Republicans grudgingly accepted the limited welfare state constructed by Democrats during the pre-war depression and wartime years. After a rash of spending during the Vietnam War, there was not enough gold to cover the amount of dollars in circulation. In response the Nixon administration pulled the US out of the Bretton Woods Accord – abandoning the Gold Standard. In addition, countries led by the US, expanded their money supplies concerned that currency values would fluctuate unpredictably for a time. This in turn, led to the depreciation of the dollar and other currencies, followed directly by massive inflation and recession.

In 1980s, a new elite, the Reagan administration, introduced minimal government and deregulation. The elites’ inner cores consisted of tough-minded leaders and trusted advisors who viewed deregulated markets, reduced interest rates, lower taxes, and trimmed welfare programs as essential for economic growth. Important for the longer run, the Reagan and George H.W. Bush administrations implemented measures enabling homebuyers to obtain mortgages without substantial equity down payments, thus planting the seeds of what eventually became a gigantic housing bubble and a precipitous decline in consumer savings. When these panaceas had costly consequences, as in US bailouts of S&Ls and Long Term Capital, and when large corporations such as Enron, Global Crossing, and WorldCom went bankrupt a short time later, they were treated as instances of mismanagement, not harbingers of crisis. The blithe attitude of the governing elites about these developments was encapsulated by Vice President Dick Cheney’s flip remark, ‘Reagan proved deficits don’t matter.’

In November 2008, voters in the US were reacting to a shattering economic crisis – a failure of the governing elites – defined by the biggest decline in consumption and investment since the Great Depression. John McCain faced an impossible task that election. However, there was little change as President Obama’s election resulted in one elite being replaced with another with similar thinking. Obama signed The Recovery and Reinvestment Act – the boldest counter cyclical fiscal stimulus in American history. It included $787 billion of tax cuts and spending, with the total split roughly one-third tax cuts, one-third government investments, and one-third aid to the people most directly harmed by the recession and to troubled state and local governments. Despite Obama’s public posture has always been that he resents the political influence of special interests and financial elites, he was quite comfortable with appointing bankers to key positions in his government.

According to Pareto, circulation or upward and downward circulation amongst the members of elite and non-elite is a typical characteristic of the elite. Social change occurs with individuals circulating between the elite and the non-elite. This replacement takes place in two ways: either by gradual process of infiltration, or by complete change of the guard. During the 2016 Democratic primaries there was an opportunity for sudden change in one of the major governing elites in America. These potential changes outlined from Bernie Sanders platform include: a new federal minimum wage of $15 per hour, significant plans for an infrastructure bank to lead the renewal of the US’ roads, railways, ports and bridges, to higher taxes on the 0.1% of top income earners, to a public option for healthcare cost reduction, to environmental protection, to greater intra-party democracy. Bernie Sanders remains an important progressive voice in the Democratic Party.2

The elite manipulate overtly or covertly the political power. Donald Trump’s election is an illustration. Following Machiavellian formula of power, Pareto observes elites are able to manipulate and control the masses by resorting to two methods. First, elites adopt flexibility to environmental and situational exigencies. This group prefers materialistic to idealistic goals, but lack fidelity and principles, and use strategies that vary from emotional appeal to unadulterated fraud. The second method encompasses the conservative elite, bound by faith and ideology, who display group loyalty and class solidarity. Today’s Republican Party is an amalgamation of both methods of manipulation and control. The members of an elite will always try to ensure that the non-elites should not influence social, economic and political processes in any way. The present Republican Party, under the control of faith groups and autocracy, is closed to circulation from non-elites. In a perfectly free society there would be constant and free circulation of elites.

In 2018, there is an opportunity for the non-elites to circulate amongst members of the elite. It is presently restricted to the Democratic Party, and the primaries allow these individuals an opportunity to participate. The rate of social change in the US will depend on these non-elites – many who are women embracing many of the progressive ideas espoused by Bernie Sanders – being successfully elected in November. The task is to reverse the decline of democracy. With the moral degradation of the present political governing elites; the lack of virtuous men in power positions, now politics is not a profession, but a profitable part-time job for some seeking to promote and attain certain private advantage. “By the circulation of elites,“ Pareto wrote, “the governing elite is in a state of continuous and slow transformation. It flows like a river, and what it is today is different from what it was yesterday.”

1 John Higley and Jan Pakulski Pareto’s Theory of Elite Cycles: A Reconsideration and Application

2 Inderjeet Parmar (24 Aug 2016) America’s New Normal is Threatening the ‘Naturalness’ of Elite Rule

This entry was posted in economic inequality and tagged , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.