Wealth Defense and the Limits of Liberal Democracy

Abstract

Extreme wealth stratification is the single most enduring social pattern across all polities from Mesopotamia to the present – rarely interrupted, and then only for brief periods. Ironically, market democracies have achieved some of the highest degrees of wealth inequality in history, a pattern which stands as an indictment of liberal democracy itself. Sustaining extreme material inequality is neither easy nor automatic. It requires constant and active strategies of wealth defense by the rich, including using their money to hire protective services (which in the 20th century took the form of a specialized Wealth Defense Industry). An important transformation over the centuries was the movement of violence out of the hands of the rich in exchange for their support for impersonal institutions of coercion whose first priority has been the defense of property rights that make great fortunes viable politically. This paper focuses on the changing politics and power that undergird wealth stratification. The analysis takes a deep historical view of the social tensions inherent in wealth concentration, starting with the origins of wealth inequality, and continuing with a discussion of the strategies and politics of wealth defense as personal fortunes grew in scale and as threats and predations multiplied. The second half of the paper focuses on the modern era through an examination of the United States from the 1780s to the present. The emphasis is on material stratification, the wealth threats rich Americans have faced, and how wealth defense has been achieved over the centuries. The U.S. case demonstrates that for democracy and extreme wealth stratification to be compatible, democracy must first be structurally impaired and ideologically reframed to hinder egalitarian impulses from becoming government policy.

Keywords: Wealth, stratification, inequality, oligarchy, democracy, violence, coercion, wealth defense industry, United States, Constitution, Madison, paper money