The Coming Reckoning of American Elites

American elite power is dependent on the commercial riches of globalization, so what happens when globalization fragments?

Elite power is derived from three primary sources: commercial, political, and cultural. When this power is exercised for the public good, it becomes the foundation of legitimacy for ruling elites. Prestige and recognition are the outcome of legitimacy. However, elites tend to not recognize their legitimacy is gone until it’s too late. This is because elites are often socially insulated which allows for the perception of prestige to persist long after public legitimacy dissipates.

The question is then, how is legitimacy earned? Whether it is commerce, politics, or culture, elites must demonstrate competence and excellence. The ancient Greeks called this arete.

Arete is granted when the actions of elites are deemed as excellent and praiseworthy. This may mean founding a multibillion-dollar company, successfully leading troops in battle, creating great works of art, or acting as an effective political administrator. Regardless of the area in which arete is demonstrated, the actions performed must bring some sort of benefit to the rest of society.

Unfortunately, elites are people, and so they prefer community with similarly minded individuals. The result is elite networks are usually cliquish and isolated from the broader community. When this happens, the society is primed for descent into despotism and tyranny. Thus, it is imperative for society to construct mediating institutions so that there are sufficient channels that provide “the voice of the people” with direct access to the networks of ruling elites.

Liberal democracy emerges out of the need to create institutions that both restrain and harness the popular will. Without adequate mediating institutions, society can quickly degenerate into violent, anarchic mobs followed by oppression to restore order. Properly constructed institutions can maintain a stable balance of power between elite interests and the interests of the people to establish a tolerable justice and a tolerable prosperity. Yet, these institutions must be constantly maintained and reformed so they can address the commercial, political, and cultural problems of the age. Furthermore, as the ability to transmit information increases, so too does the need for mediating institutions.

The hallmark of a successful moderating institution is it provides elites with the desired prestige and social recognition while also fulfilling the desires of the general populace. The surest method to achieve this happy balance is by harnessing elite self-interest to serve the best interests of the people. Ultimately, the people desire what every single human seeks: to live in a safe community capable of providing a decent and continuously increasing standard of living so that one's family may prosper and grow. This means a community must possess an ever-present sense of law and order, educational access for children to better themselves, affordable housing for people to call a home, and vocations capable of sustaining a family.

The great challenge America faces is its social institutions are no longer capable of harnessing elite ambitions for the benefits of the American people. Consequently, elites are actively pursuing their own self-interests at the expense of the best interests of the people. How has this happened? The answer, in part, lies with globalization.

Globalization is not the inevitable outcome of humanity’s evolution as a species. Instead, it is an artificial construct that is the result of convergent geopolitical trends that include advances in transportation and communications technology as well as the emergence of the U.S. as the unrivaled global hegemon. To justify its continued existence, global elites often argue that globalization is a boon to human prosperity and living standards across nations. However, globalization’s legitimacy is increasingly undermined due to the reality that it is fueling rising disparity and inequality within nations. The reason for this dichotomy is due to the Matthew Effect.

Deriving its name from Jesus’ Parable of the Sower in the Gospel of Saint Matthew, the Matthew Effect argues that individuals at the top of a social hierarchy are best positioned to capture the majority of benefits from new opportunities while individuals at the bottom of a social hierarchy are most likely to bear the costs of those new opportunities. This is supported by basic economics.

Macroeconomic theory argues that nations can use international trade to achieve better economic efficiencies by specializing in core competencies. There are, however, tradeoffs when it comes to international commerce. Even though the gains from trade might be dispersed across society, the costs tend to be concentrated in particular segments. For instance, just as the cost of basic consumer goods declined dramatically since the 1990s, so too did the proportion of Americans employed in manufacturing jobs also decline. Some studies suggest that international trade with China alone cost America several million manufacturing jobs.

What the Matthew Effect does is explain why the gains from globalization are more concentrated in the hands of national elites than what is commonly acknowledged. While social-wide benefits do certainly exist, they are not as prevalent as the elite proponents of globalization realize. This is not born out of any sort of malice but out of the simple reality that elites tend to congregate with other elites. As a result, elites fail to recognize globalization’s negative externalities simply because they do not experience these externalities in their daily lives.

Normally, national social institutions would redirect elite self-interest to address globalization’s growing problems. However, national social institutions, especially in the U.S., tend to curtail the political and cultural dynamics of elite power. Since globalization is a commercial phenomenon at an unfathomable scale, it overwhelms the mediating social institutions. As a result, the gains from globalization remain concentrated in the hands of elites who use their newfound commercial power to enhance their political and cultural power.

The social institutions that used to mediate elite self-interests and the best interests of the people are now fundamentally broken. The average NYC investment banker has more in common with and feels greater affection for another investment banker in Shanghai than with the American janitor cleaning his building. As America’s schools and infrastructure continues to deteriorate and cities become increasingly dangerous, elites are either indifferent or promote solutions absurdly out of touch with the average citizen. And so, disdain toward elites grows and their arete erodes.

Although the legitimacy of elites is diminishing, they still possess vast reserves of commercial, political, and cultural power. Moreover, the commercial power granted by globalization provides elites with seemingly limitless resources to capture and hold the key nodes of cultural and political power. Traditional social institutions are unable to prevent the further concentration of all forms of power into the hands of elites. Consequently, the U.S. continues to drift from the republican-federalist form of government of its founding into oligarchy.

There’s an insurmountable problem facing American elites though: globalization requires hegemony. The current global trading order isn’t possible except in a unipolar world led by the U.S. It doesn’t matter if the U.S. remains the strongest global power. The declining relative power distance between it and other revisionist powers means that globalization’s days are numbered.

Presently, there are three revisionist powers positioned at key nodes of the Eurasian landmass making plays for regional hegemony. Throughout history, Northeast Asia, Europe, and the Middle East produced some of humanity’s greatest empires. While nowhere approaching a formal alliance, the growing levels of diplomatic, economic, and even military coordination between Russia, Iran, and China is like a DDOS attack on the liberal international order and poses an existential threat to globalization.

This doesn’t just impact the future of great power politics. It also impacts the power of American elites. Without the near-limitless commercial resources granted by globalization, American elites will be unable to fend off challenges to their political and cultural power. It is, therefore, an imperative for American elites to preserve the status quo. Their power and position in the social hierarchy depends upon it.

Unlike in decades past, the U.S. no longer possess the reserves of strength capable of projecting power to every corner of the world simultaneously. Indeed, Russia’s invasion of Ukraine is already revealing the irreparable fractures in the global order. What’s more is America’s historical cultural, ethnic, and economic ties with Europe results in a pathology where American elites are obsessed with making European - especially Western European - elites like them. Since elites drive foreign policy decisions, the U.S. is consequently hyper-focused on blocking Russian territorial expansion while underplaying the growing threats emanating from Iran and China.

It is this obsession with the opinions of Western European elites that best explains the combativeness of American elites towards Russia and their comparatively laissez-faire approach towards Iran and China. From the insistence of a nuclear deal with Iran by the Biden Administration to the inability of Wall Street to divest from China, there is a clear refusal to accept that the foundations of globalization are fundamentally unstable. Instead, American elites are doubling down through appeasement in the desperate hope of preserving the status quo. But globalization cannot be saved. The system will fragment, but it will eventually find a new equilibrium. The question is whether globalization will go out with a whimper or a bang.

The failure of American elites to recognize globalization’s inescapable end is ironically the greatest threat to their power and prestige. If elites wish to preserve their current position at the top of the social hierarchy, they ought to build alternative networks that are worthy successors to globalization. However, such a strategy is ideologically impossible as elites’ legitimizing myths are predicated on the status quo. Elites are thus left with no other choice but to attempt to further centralize power as a means of surviving the coming storm. But without a hegemon to maintain global order, globalization will fragment which, in turn, will cause the commercial, political, and cultural power of American elites to also shatter.

This doesn’t mean the end of American elites as a class though. Power abhors a vacuum, and a new group of elites will eventually emerge to reestablish order and stability. In their pursuit of arete, these new elites will promote their own unique founding myths that will directly clash with the values and myths of the old guard. It’s a process that will take a decade or more to complete. Arguable, the U.S. is in the opening stages of this process as factions of aspirant elites are coalescing.

The combination of intra-elite competition domestically and the return of great power politics internationally will force a dramatic restructuring of commercial, political, and cultural power within the U.S. How America chooses to handle the coming reckoning of elite legitimacy will likely define its trajectory for the remainder of the 21st Century.