Ch. 12. Middle-Stage Modern Transformation and Oligarchic Society

    During the earliest part of the modern transformation in western Europe, agriculture was leading the change to modern society. Prices had remained high. Farmers who had managed to gain ownership of land, or at least long-term leases, were prospering along with the gentry. Skilled craftsmen and merchants were also doing well from increased demand. Thomas Jefferson and some of the other Enlightenment philosophers were even talking about free republics dominated by independent farmers, artisans, and merchants, but that turned out not to be the direction history was going. 1

    In one sense, the French Revolution was the end of an era. Up to this point, the largest revolutionary battles had been fought mostly between the aristocrats of the “ancien régime” and the rising power of the “nouveau riche” merchant class. This kind of revolutionary struggle continued in various places around the world into the 20th century, but on a declining scale. For the last two centuries, the largest revolutionary battles have been waged primarily over the issues of nationalism and second-stage social revolution, the struggle to limit the political and economic power of the oligarchic ruling class. 2

Traditional Commerce and Industry

    Many traditional societies had a group of families that could be called “merchant oligarchs.” These people were important inside the business community, but they were not anywhere close to the rank and social level of the royalty and aristocratic rulers. This began to change after the start of the modern transformation. 3

    The concept of trying to maximize profit turned out to be infectious. It could be applied to more than just agriculture. In traditional societies, most industrial production was controlled by the guilds. We do not know when or where the first craft guilds originated, but they were already old when Rome was young. In the cities of the aristocrat-peasant world, most crafts were organized into guilds that were multi-function social organizations. They also regulated the terms of trade. The system of masters, journeymen, and apprentices was enforced by the guilds. The prices for standard items were set by the guilds. The quality of materials and workmanship was specified by the guilds. Most important, no outside competition was allowed. 4

    It was all very complicated, but the guilds were essentially trying to enforce tradition and stability. Disruptive factors like competitive pricing, innovation, and supply and demand were minimized as much as possible. In the 16th and 17th centuries, the guilds were still able to maintain their restrictive practices, but it was getting harder. In the middle of the 18th century, the guilds lost control and the industrial revolution began. All of the agricultural, religious, and political changes made by the modern transformation up to this point were just a preliminary performance. 5

Industrial Revolution

    Scientific research was generally not a feature of traditional societies. It had a tendency to come into conflict with the “divine order of the universe” and draw the ire of the clergy. After the Protestant Reformation, this was no longer a major problem in northern Europe. The growing market economy was looking for new ideas and better technology. Modern science began to evolve and grow along with it. As with all the other changes, this fusion of markets and technology started out slowly and gradually picked up speed. 6

    In the first decades of the 19th century, all of the necessary ingredients were coming together. There were nation-state governments, which were ready and able to develop the physical and legal infrastructure that was necessary to take the market economy to a new level. Science was making sufficient progress to begin a technological revolution on a scale never before imagined. The financial sector had been developing to keep pace; stock markets and investment banks were in place and capable of mobilizing vast amounts of capital. Successful imperial expeditions had brought a still increasing bounty of gold, silver, and expanding markets for European goods. 7

    Along with the above ingredients, the population of western Europe had been developing, learning, and practicing market economics for the last five centuries. The textile industry had already pioneered the evolution of modern factories. Everything was ready, and it happened, the development of "heavy industry." At the beginning of the 19th century, they were still sailing around in wooden ships lit with candles. At the beginning of the 20th century, they were building HMS Dreadnought and the Titanic. It was like the difference between night and day. 8

    In the mid 19th century, the price of food was declining, and agriculture was no longer in a position to lead the modern transformation. Thomas Jefferson’s dream of republics dominated by independent farmers was not going to happen. In fact, it was completely forgotten that the process of modernization was first initiated when European peasants began transforming themselves into market farmers. 9

    Large-scale economic enterprise and heavy industry became the future of the modern transformation. Once again, it started out slowly. The technology evolved in increments. In the 17th and 18th centuries, they were finding ways to apply more power to the production process. The Dutch were using windmills and the English were using watermills. Powered looms and other kinds of machinery began to perform more of the work instead of skilled handworkers. In the early 1800s, steam power became widely available. The increments of change became larger. Railroads were appearing. In the 1860s, the first steel mills were being developed. 10

Oligarchic Ruling Class

    Master craftsmen and smalltime entrepreneurs could build a blacksmith shop or a small ironworks, but they could not build railroads and steel mills, at least not by themselves. A huge amount of investment capital was needed, and a lot of it was lost pursuing ideas that were not yet ready. Wealthy merchants, gentry, aristocrats, banks, and governments became sources of capital. Governments were also needed to help organize transportation infrastructure and provide permits. You can’t just put up a steel mill or an oil refinery without having some kind of official authorization. 11

    As the capitalist market economy increased and became the dominate mechanism for economic exchange, the merchant class expanded and grew richer. At first, this put them in conflict with the aristocrats who were still trying to defend their prerogative to rule. As the modern transformation continued and aristocratic status suffered an inevitable decline, the titled nobility found that intermarriage with commoners was not such a bad idea after all, as long as they were wealthy. 12

    After the Napoleonic wars, despite the conservative reaction, times had changed. It was sort of like the aristocrats throughout Europe had come to the conclusion that: If you cannot beat them, you might as well join them. By the mid 19th century, aristocrats in large numbers began to intermarry with the wealthy commercial families. The merger of the two groups created a strong unified oligarchic ruling class, which inherited the political power of the aristocrats and the commercial power of the new capitalists. 13

    A new kind of elite ruling class was forming. It was based on talent, education, and money. If you were born into one of the wealthy families, then you had access to the education and the money. All you had to contribute was at least a moderate level of competence. If you were born into a working-class family, it was very difficult to rise by talent alone. Once again, the accident of birth pretty much determined one’s position in society. 14

    The resulting oligarchic ruling class was not the same thing as the previous aristocratic class, but it was similar. Just like the aristocrats, oligarchs were a family based institution. The elite families usually worked together to dominate early-modern society. Many large companies were family owned. Today, oligarchic governments are often dominated by family political dynasties. 15

    In the 19th century, the oligarchic elites were the only people with access to a university education. They still owned vast tracts of farmland with peasant renters. They owned the banks, large businesses, and commercial real-estate. They also retained many of the old aristocratic titles, which still carried some weight. Since the new oligarchic ruling class absorbed the remaining titled aristocrats, they dominated the army officer corps and controlled most upper-level government positions. The new institution of electoral politics required money, and the oligarchs controlled the money. Most politicians were oligarchs or were funded by them. 16

    Not all oligarchs were at the center of wealth and power. Aside from the few at the top, most of them were mid-level or lower-level political and business leaders. In medieval times, knights and squires were not even close to being on a par with the grand dukes and barons, but they were still a necessary and important part of the aristocratic class. During the modern transformation, the oligarchic class also needs lower level leaders who are part of the ruling team. 17

    It has always been common for different oligarchic families to form factions and compete with each other for the highest levels of political power. For the most part, however, oligarchs saw themselves as being on the same side. They lived in the same neighborhoods, went to the same schools, shared the same interests, and considered each other to be suitable marriage partners. They tended to avoid competition in business affairs. That would reduce profits. 18

    In other parts of the world, oligarchs evolved along similar lines, as in: Japan, Turkey, India, Egypt, South Korea, Taiwan, Indonesia, and most developing nations. Latin America has been dominated by its own form of oligarchy ever since its conquest by the Spanish and Portuguese. Sub-Saharan Africa never had aristocrats, but after independence, some families became successful in business, while others became successful in politics. These families intermarried and again have produced an elite ruling class. 19

    Communist revolution was specifically designed to destroy the oligarchic ruling class, but a generation after most such revolutions, the communist rulers and their extended families were starting to look a lot like privileged oligarchs themselves. Since the Soviet Union crumbled, most of the resulting countries are still ruled by oligarchs who are once again capitalist. The Chinese Communist leadership has also evolved into an oligarchic ruling class. 20

    There is something very natural in the concept of a relatively small group of powerful families that own or control most of the society’s wealth and political power generation after generation. The top families often changed, sometimes slowly, sometimes more rapidly, but there were always elite families. They exercised an inordinate degree of power and influence through most of the modern transformation. The concept of a ruling class and a subordinate class was just too basic and too ingrained to change quickly. 21

    The new form of class-based oligarchic society was, and is, capable of lasting for centuries, as in western Europe and Latin America. The oligarchs could use their wealth to maintain their political power and use their political power to maintain their wealth. It was not a matter of anyone being evil. In the 19th century, it was entirely natural for the oligarchs to think of themselves as a ruling class very much like the aristocrats. 22

    With the advent of large-scale industry, the average common workers found themselves right back at the bottom of the pile again. In the large corporations that began to dominate modern economies, there were layers of owners, investors, managers, engineers, supervisors, and at the very bottom—the workers. Once again farmers and workers found themselves outranked and subordinated to the elites of the society. 23

    Farmers, laborers, and craftsmen evolved into a large impoverished working class that included most of the population. There was also a small middle class made up of educated professionals and small business owners. Nobody knew that they were headed toward a future where society would be dominated by a large middle class that included a majority of the population. In the 19th century, no one could even imagine such a thing. 24

    The formation of an oligarchic elite has been pretty-much universal in the middle stage of the modern transformation. The oligarchs pioneered the development of heavy industry and large scale commercial capitalism, and made large amounts of money doing so. The important question is not so much how the oligarchic ruling class comes to power, but how they eventually give up their monopoly and begin to share wealth and political power with the working class. In later chapters, we will observe that this can be done relatively peacefully through compromise and economic development. Or, it can be done violently, through various kinds of social revolution, including: communism (extreme socialism), fascism (extreme nationalism), and extremist religious fundamentalism. 25

Political Institutions

    In middle-stage modern transformation, political institutions are almost always controlled by the oligarchic ruling class, but the actual form of government was, and is, highly variable. In western Europe, the absolute monarchs began a long transition from autocratic rule to constitutional reform. Elected parliaments slowly and incrementally began to acquire a share of political power. 26

    In some countries, there was a lengthy period after the last king had been dethroned when they were trying, but failing, to establish successful elected government. Military dictators and political strongmen, like Napoleon III in France, have often been required to fill the vacuum and prevent anarchy. 27

    There have been many different kinds of dictators. Some, like Oliver Cromwell, did a relatively good job of keeping order and helping their countries to get through the revolutionary chaos of the modern transformation. But dictators have always been a chancy proposition. Some have created more problems than they solved. In many developing countries, there have been periods of time when no government was able to keep order and anarchy prevailed. 28

Early Democracy

    European feudal government was originally a joint effort between the monarch, church, and aristocracy. When there were important matters to discuss, the king called together a great council or a parliament, which included the clergy and nobility, to debate the issues and make decisions. The British were the first to take this traditional great council and turn it into a functional, elected parliamentary government. This was a slow evolutionary process that required many centuries. 29

    By the early 1700s, English royalty were becoming ceremonial heads of state, while the House of Lords and the House of Commons were taking over and jointly exercising governmental authority. Members of the House of Commons were elected to office, which made the United Kingdom the first successful elected nation-state government. This was early democracy. Property owners could vote; the electorate was less than five percent of the population. Up until the middle of the 19th century, this form of government was evolving to allow members of the oligarchic ruling class to choose the government leaders. No one imagined that it would ever develop to the point of universal suffrage, which would eventually allow the ordinary common people to dominate elections and control the government. From the middle of the 19th century to the middle of the 20th century, the United States and the United Kingdom led the way in turning early democracy into real democracy, "rule by the people." 30

    Some countries got off to an early start and made good progress toward elected government. Other countries got off to a late start and have made slow progress. It is not a race. Developing a successful modern economy will eventually require the empowerment of all citizens. Democracy will follow as a natural result. It is up to the people of each country to decide for themselves when and how they will implement democratic reforms. 31

    Since World War II, the English speaking nations have associated democracy with peace, prosperity, and good government. Dictators have been equated with evil deeds like: aggression, conquest, and ethnic cleansing. This is not actually true. The British instigated dozens of wars to conquer the largest empire known to history, one quarter of the world's land and population. They engaged in ethnic cleansing on an epic scale in North America, Australia, New Zealand, and large parts of Africa, where they were still enlarging "whites only" areas in the 1950s. While they were doing all of this conquest and ethnic cleansing, they were also leading the way in developing modern democracy. When you look closely at the actual data of history, it is not possible to say that democracy, especially early democracy, is virtuous by definition, while dictatorship is always evil. A larger discussion of dictators can be found in Chapter 18. 32

Economic Institutions

    The economies of middle-stage oligarchic societies are also highly variable. In the mid 19th century, it was usually a laissez-faire market economy. In the 20th century, there was a great deal more diversity. This included everything from economic anarchy through various levels of government regulation to socialism, fascism, or communism, where the government controls the economy. 33

    During the modern transformation, the market economy starts off at a relatively low level. Then the agricultural and industrial revolutions kick in, but they run at different speeds in different countries. Progress depends on many factors, including how ready the people are for the modern world and how well the government promotes education and economic development. The first countries to build wealthy industrial economies thought that they were smarter than the rest. There are many variables in the equation, but some kind of “national intelligence quotient” is not one of them. 34

    There was, and is, a basic “Catch-22” for most middle-stage developing countries. They are now using a capitalist market economy. With better education and improving technology, the country will have higher productivity, which means they can create and enjoy more wealth. The catch is: it is the working class that actually creates most of the wealth. In order to increase productivity, it is the workers who have to be educated. As that happens, they are no longer willing to remain an impoverished, subordinate class. They begin to demand higher wages, more respect, and a voice in government. 35


    European socialism started out in the 18th century as a utopian back to the land agricultural movement. This never gained much traction. In the 19th century, socialism morphed into a multi-structured effort to improve conditions for the working class, including: health, education, labor union organization, and political action. As more power shifted to elected legislatures and political reforms slowly moved toward universal manhood suffrage, socialist political parties received an increasing number of votes. 36

    There was a huge amount of revolutionary anti-capitalist rhetoric in these socialist organizations. It is easy to identify why. Early capitalist enterprises were usually run like sweat shops. Workers, some of them children, toiled for twelve hours per day under dangerous and vile conditions. Pay was barely enough to keep a family fed. Living conditions in unheated walk-up tenements varied from bad to worse. Injuries and unemployment were common. 37

    At the same time, the rich capitalists thought that their workers were well off. They compared the factory conditions and worker’s housing to the plight of landless agricultural laborers living in hovels in rural areas and congratulated themselves as great humanitarians. We can call this “Charles Dickens society,” because he portrayed it so well in David Copperfield, Oliver Twist, and many other novels. The working class slums that he described existed, and continue to exist, in most middle-stage oligarchic, developing countries. 38

Standard Pattern of Economic Development

    Modern, economic enterprise requires three things: capital, management, and labor. In the beginning, capital was in short supply, and therefore according to the law of supply and demand, it was well rewarded. Underemployed labor was abundant and therefore received low pay. In the early stage, government did not have the revenue or the expertise to do much about any of this. 39

    After a century or so of growth and development, the economy would have a much better balance. There would be more capital, more and bigger companies, more jobs, and more competition for labor. Pay and working conditions would improve. The government would have more revenue for health, education, and safety-net programs. Entrepreneurial workers would be starting businesses of their own. 40

    With the 20/20 hindsight of history, we can now see that this pattern of modern economic development is fairly universal. Economists call it a “virtuous circle.” In the 19th century, no one could see it. No one had the slightest clue. In any case, this pattern of development did not happen all by itself. It required constant pressure from the working class to make it happen. Socialist organizations provided much of the leadership needed to achieve this improvement in working conditions. 41


    In middle-stage modern transformation, family structure was beginning to change, but it was a slow process. Women’s rights seem to have been something of a lagging indicator. During oligarchic society, arranged marriages began to decline and women had more say in choosing a husband.  During the second half of the modern transformation, women were exercising more freedom in both public and personal matters. Rank was not as important as it used to be, but husbands were often slow to get that message. 42

    Toward the end of the 19th century, women's liberation movements in Britain and the United States began demanding legal equality and the right to vote. It was a long hard-fought battle. In England, the suffragettes achieved voting rights in 1918; it became standard for American women in 1920. Progress continued slowly. In the Western world, universities and professions were not fully opened to women on an equal basis until the end of the modern transformation and beginning of democratic-market society in the 1960s. Many developing countries today are making much better progress. 43

    The most dramatic change in families during middle-stage modern transformation was an increase in the number of children. The basic elements of modern public health were starting to be implemented. Child mortality was beginning to decline while birthrates remained high. The result was a population explosion. Surplus agricultural families were moving from the rural areas to the cities looking for work. Their new life in the working class slums was very different from their previous experience in the country. Mass migration from rural to urban areas is a major feature of the modern transformation. 44


    Religion is a very complicated subject, and I do not claim to understand everything about it. One thing which is clear is that the “divine order of the universe” and religious orthodoxy undergo major changes during the modern transformation. 45

    Many traditional societies tried to enforce a fairly uniform religious orthodoxy. They felt that it was best to have only one “divine order.” When the modern transformation starts, religious orthodoxy begins to break down. Preachers appeared with new messages, and people were offered choices. Quite often, one of the more popular choices was a fundamentalist return to their original religious roots. 46

    The Christian fundamentalist Protestant movement spread across half of Europe in the 16th, 17th, and 18th centuries. More recently, it has been gathering momentum in Latin America, sub-Saharan Africa, and parts of Asia. Hindu fundamentalism has appeared in India, and Islamic fundamentalism has become a major force in the Muslim world. These evangelical and fundamentalist movements are not identical. There are wide differences between them, but also many similarities. One characteristic element is that their primary strength comes from the ordinary common citizens, especially those with ambition to get ahead in life. They also have a tendency to believe that the ruling class has lost its way and fallen into sin. 47

    This message has often resonated with members of the large working class and the small middle class who were unhappy with the wealth and corruption of the oligarchic ruling class, and were looking for change. These fundamentalist religious movements have often become a major force promoting the modern transformation. The Dissenters of 18th century England practically invented the industrial revolution. Political, economic, and social revolution have often been preached from the pulpit. 48

Revolution, Religion, and Violence

    In traditional society, religion was used as an explanation and motivation for almost everything. This usually continued through at least the first half of the modern transformation. In many cases, the ordinary people had not yet become politically active. Because of this, if you wanted to draw a crowd and promote political and social revolution, one of the best ways to do so was to wrap your message in religious rhetoric. In much of the Arab world, authoritarian regimes have been on high alert to stamp out any hint of political dissidence. When political speech is prohibited, but preaching the teachings of the Prophet is allowed, it is no surprise that the Islamic religion has gotten thoroughly entangled with the political, economic, and social aspects of the modern transformation. 49

    In some countries religion has also been a large part of nationalism; the modern nation state was defined in whole or in part by religion. Israel, Pakistan, Saudi Arabia, and Iran are the most prominent examples of this, but it has happened to a lesser extent in the Netherlands, Ireland, Poland, India, Japan, and many other countries. 50

    The day that Martin Luther nailed his ninety-five thesis to the church door in 1517 is considered by many historians to be one of the defining moments of early-modern Europe. The mixture of religious fundamentalism along with all the other political, economic, and national-identity problems has been a volatile and dangerous combination since the beginning of the modern transformation five hundred years ago. 51

    The Protestant Reformation included a huge amount of religious warfare and general violence. Religion became thoroughly entangled with rebellion and political assassination in the Netherlands, France, Germany, England, Scotland, and Ireland, all of which resulted in massive amounts of violence. The rest of Europe had similar problems with religion and revolution but to a lesser degree. For the last two generations, we have been seeing the same combination of religious militants and political violence in the Islamic world. 52

    I cannot explain how and why this mixture of religion and the modern transformation contains the seeds of savage violence that can readily include car bombs and suicide vests. One thing that is clear is that the problem extends much wider than the Islamic world. Any attempt to research the issue of fundamentalist religious militancy should concentrate more on understanding the modern transformation than on religious doctrine. 53

Conflict and Military Institutions

    Creating nation states has usually been a process that includes war, either national rebellion or a civil war. Then, there were border wars, efforts at national expansion, maybe some identity cleansing, and in the old days, imperial conquest. Early and middle-stage oligarchic societies generally had, and still have, a lot of violence and military activity. 54

    There were many reasons for these wars. Emerging nation states were in the formative stage. Borders were being determined, and there was booty to be gained. In the 16th century, the English fought a piratical naval war in the Caribbean to seize a share of the new-world gold and silver from Spanish treasure fleets. They had a civil war at home, fought many battles with the Irish and Scots, and then began to conquer their overseas empire. The British also participated in numerous wars across the channel in Europe. Early and middle-stage developing nations were just as eager to fight as their aristocratic ancestors. 55

    The problem was not just with the governments. In traditional society, aristocrats were the warriors, which meant they were in charge. Peasants and commoners were usually not supposed to carry or use weapons. During the modern transformation, this distinction comes to an end. Many young men believed that violence could help them to get ahead in the world. Even the lowest commoner, if he was tough enough, could get a gun and set out to find a better life. Some of these men were willing recruits for the army. Others preferred to operate as freelancers. There were armed mobs arguing politics in the streets, company bulls assaulting union strikers, criminal gangs fighting openly for control, and various groups of armed adventurers and religious militants. 56

    Only a very few middle-stage oligarchic governments were strong enough to maintain the rule of law most of the time. When Horace Greeley advised Americans to “go west” to seek their fortune, he did not intend that they should go unarmed. There were, and are, a lot of guns and a lot of violence in most developing countries during the modern transformation. 57

Destroy the Old, Make Way for the New

    Conflict and warfare have always been an important part of the modern revolution, especially in Europe. The violence started with the Wars of Religion and the Eighty Years War for Dutch Independence in the 16th century. There were more Wars of Religion, the Thirty Years War, the English Civil War, and the border wars of Louis XIV in the 17th century. The 18th, 19th, and 20th centuries had even more war. It just went on and on. 58

    Warfare is a destructive process, but usually new shoots are able to grow from the ruins. That is what was happening. Layer after layer of traditional society was swept away by regular bouts of warfare and violence. Local and provincial aristocratic dynasties went down by the hundreds. The way people worshiped was radically changed. The requirement for more and better weaponry supported the development of industry and technology. 59

    Huge amounts of everything old were destroyed in these wars. Just as much was deliberately abandoned because it was not helping to achieve victory fast enough. Victory required modernity. Lots of European aristocrats found that out when Napoleon and his army came calling. Aristocrats all over the world discovered it when the European imperialists arrived. “Strong nations conquer, and weak nations suffer” was a common expression of the time. The more modern a country was, the stronger it was. With the development of heavy industry and modern armaments, the wars became larger and deadlier. This process culminated in the first half of the 20th century with two gigantic World Wars. 60

    Over the last fifty years, the Western world has been watching the endemic violence in emerging and developing countries on the television news and wondering why people are behaving so badly. Deep down, Americans and western Europeans know that their own countries had even more violence back in the years when they were emerging and developing nations. For some reason however, Westerners ignore their own history and see the violence in today’s developing world as some kind of monstrous aberration. They do not make the connection to the universal modern transformation. This is because the historians have never properly described and explained the modern transformation. 61

    The emerging-nation violence that we have been watching on television includes: border wars, identity cleansings, political repression, and religious warriors. The Arab world is currently going through a lengthy period of intense revolutionary violence, especially in Libya, Syria, and Iraq. This is the same general kind of violence that featured heavily in the modern transformations of the Western world starting five centuries ago. The only difference is that now it is happening in the rest of the world. The overall level of violence diminishes greatly during the last stage of the modern transformation. In the second half of this century, the world will be much more peaceful. 62

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