Good Evening Friends,

We have, very briefly, looked at a couple of examples of how Old Money never really goes away, politically, with the Queen of England in action in suspending parliament in Australia and Canada. The English monarchy is Old Money (none older really, is there?) and supposed to be, as I had always understood, merely titular, merely symbolic, a token of the British imperial past. Though the monarchy is not what it was, the crown is far from voiceless - as the spokesperson of the oligarchy as a whole - in international affairs of the political economy. This reality of the supposedly virtual is fascinating, is it not?

In his book, Wealth and Democracy: A Political History of the American Rich, Kevin Phillips wrote:

"The decline, or seeming decline of the wealth of certain old money families is deceptive: Rockefellers, du Ponts, and Phippses, although well down in the top thirty of 1999, [some kind of Forbes listing, or something of that order] still increased their holdings pretty much throughout the twentieth century (1)."

"In his 1937 book, America's Sixty Families, Ferdinand Lundberg had estimated the combined wealth of these five dozen in the $ 9 billion range. About 60 years later, four of the richest - Rockefeller, du Pont, Mellon, and Phippses had increased their combined $2 to $4 billion of 1937 to roughly $38 billion without owning a dominant piece of any emergent industry. Elaborate trusts, well-staffed family offices, and professional financial management had combined into the U.S. equivalent of the entail and primogeniture that kept landed wealth intact and concentrated in eighteenth and nineteenth century Britain (2)."

Let's keep going. It seems that hedge funds are the preferred investment vehicle of the top one percent. These require an investment of one million dollars (and I heard one has to sign a legal statement saying that you can lose one million dollars without it breaking you or even lowering your standard of living. You have to be able to shrug off a loss of one million). Hedge funds, at least at the time of the publishing of Mr. Phillips's book, were not regulated, unlike mutual funds. At the time, six thousand were thought to be in operation worldwide, with the biggest concentration - over one hundred - in Greenwich, Connecticut (3).

A magazine article had quoted "Wall Streeters" saying that the intellectual capital of New York was moving to the Greenwich area, and senior execs at Fidelity Investments complained that hedge funds, by luring "hot shot" managers away to their firms, was reducing the quality of money management available to middle class investors, in funds like Fidelity's, say (4).

This rather sounds like the richest team in some sports league, vastly outspending everybody else and therefore acquiring a seemingly unfair proportion of the best talent coming out of college, or whatever. And we have known of the way the bourgeoisie gets richer and richer by dispossession, eminent domain, and the like. But the oligarchy dispossesses the middle class of its pool of investment talent, and therefore potential profits. In this subtle way the oligarchy steals talent and therefore, money from the middle class in this way.

Another thing rich families could do to maintain and increase their wealth, in yet another non-capitalist way, was to set up private trust companies. And under laws in states like South Dakota, Wyoming, and Delaware, these operations could pool small trusts into a common trust fund invested collectively, with no regulation to speak of and with access to hedge funds. One 1998 analysis showed the families that had formed such 'captive' trusts included the Bells of General Mills, the grain-trading Cargills, the Ziff publishing dynasty, and the Pratt family of Standard Oil (5).

The Pratts had a family office serving two hundred fifty members. Many of the younger Pratts couldn't access high-quality management - for some reason - and had their money in boorish, middle class mutual funds. A captive trust solved that problem (6). In 2000 Forbes magazine noted that that 137 out of the Forbes 400 - more than a third - had inherited their wealth or built their fortunes from inheritance (7).

Still, I doubt the remainding 263 were "rags-to-riches" cases. To continue.

"The postmillennial crash of the technology-heavy Nasdaq, so devastating to the new Internet, software, and telecom fortunes, had much less effect on old money tied up in trusts and family holdings and widely diversified among investment sectors (8)."

"While technology and communications had taken a huge hit, other categories had come on strong by 2001. Oil was one, along with retailing and another grouping that could best be described as food, beverages, and consumer products like cosmetics and greeting cards. Not only did this favor the old economy (old money), but it favored family holdings, not a few of older money like the Wrigleys of chewing gum fame (9)."

1. Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books. New York, 2002. pp. 114-115.

2. ibid, p.116.

3. ibid

4. ibid

5. Phillips, Kevin. pp.116-117

6. ibid

7. ibid

8. Phillips, Kevin. Wealth and Democracy: A Political History of the American Rich. Broadway Books, New York, 2002. p.124

9. ibid, p.126

Now, remember when I cited the 1999 Wall Street list of the fifty wealthiest people of the last thousand years, which I cited from Kevin Phillips's book? Most were kings, conqueror-rulers, popes (two), high government officials. Others were traders operating under official license. Still others were bankers, especially for kings and popes. Others were involved with commodities like oil.

Only one person on that list - only one! - could be said to have made his fortune by practicing anything like capitalism (making a better mousetrap). That was Bill Gates, head of Microsoft, the only one who could be said to have made his wealth by taking the helm of a leading corporation of an "emergent industry."

My takeaway from the quotes from Phillips is that Old Money is, perhaps actually and certainly perceived to be, sturdier than New Money. Old Money seems to survive the fluctuations of the market better than New Money. Sure, some newfangled invention or fad always comes and goes, the basics, the pillars of human need, remain (you know, like food, beverages, cosmetics, and greeting cards).

Remember the quote: "Elaborate trusts, well-staffed family offices, and professional financial management had combined into the U.S. equivalent of the entail and primogeniture that kept landed wealth intact and concentrated in eighteenth and nineteenth century Britain.

One can't say it any more clearly than that. Financial operations, largely divorced from production, allowed the creation of a literal American aristocracy in real wealth and social terms, going back at least as far as 1937. That is the meaning of "professional financial management had combined into the U.S. equivalent of the entail and primogeniture [of]... landed ["concentrated"} wealth in eighteenth and nineteenth century Britain."

Let's take a look at the ways the New Money bourgeoisie tried to and did transform themselves into the Old Money bourgeoisie.

In his book, Kevin Phillips spoke of the financialization of the American economy during the period of 1980-2000. This dovetails perfectly with what we know to have been a crisis of capital accumulation of capitalism in the mid and late 1970s.

Professor of economics, Rick Wolf - someone else I know of from Internet ("Capitalism Hits the Fan," and so forth) - gives us valuable history. From 1820 to 1970, one hundred fifty years, American capitalism and the American working class enjoyed a totally unprecedented period of success and expansion. For every decade between 1820 and 1970, real wages (the money we earn in relation to the prices we have to pay for stuff) rose, along with unfailing and equally consistent rise in the profits of the corporations, of course.

And there was a sweet spot of a thirty year period of 1945 to 1975. 1945 was the end of the Second World War. Europe and Japan lay in ruins in the Truman years. American industry had no competition, and, indeed, Europe and Japan had to rebuild their societies by buying American goods.

But by the mid 1970s, the good times stopped rolling. Western Europe and Japan had recovered and figured out how to make products either better and/or cheaper than American industry. This was the during the presidency of Jimmy Carter. Remember The Malaise Speech and stagflation [stagnant growth plus inflation]?

American capitalism was just not bringing in the profit levels they had enjoyed in the sixties. And, at this point, the ruling class remembered how much they hated The New Deal (Roosevelt), The Fair Deal (Truman), The Great Society (Johnson), and even the progressive modifications put in by Nixon; and they lamented about it had been these restrictions upon their "freedom" that had spoiled capitalism, cut into their profits, and therefore - since what's good for General Motors is what's good for America- had been responsible for the economic slump of the era.

The conscious, deliberate, programmatic response of the ruling class to the economic crisis - of the nation as well as their own dip in profits - is known as something called neoliberalism. Neoliberalism might be thought of as capitalism squared or cubed with an internationalist orientation.

The geographer and activist, David Harvey defines neoliberalism like this: its neo because its adherents's commitment to neo-classical economics (whatever that is). The 'liberalism' comes because they took the ideas of freedom and liberty of the eighteenth century seriously.

Alright, my eyelids are getting heavy. I'll take this up tomorrow.

wingedcentaur