Inflation, bailouts, and ultra-low interest rates have widened the wealth gap in the United States. This is no natural market phenomenon, but is driven largely by monetary inflation which always benefits some groups at the expense of others. This has become more apparent during our current age of cronyist interventionism which accelerated following the Global Financial Crisis of 2008. The trend was again solidified during the Covid Panic when forced business closures and 40-year highs in price inflation put further stress on the more marginal businesses. Since then, many observers have increasingly noted mounting evidence of a so-called “k-shaped economy“ in which higher-income households see greater gains in wealth and income than do lower-income households.
Through it all, government policy has had a key role in the redistribution of wealth. This is hardly a new phenomenon, however, and we can find many insights into how it all works thanks to “classical liberal exploitation theory.” Decades before the Marxists came along, the classical liberals exposed how some classes exploit other classes. Through taxes and inflation, government regimes transfer wealth from the more productive members of society to the less productive ones.
Class Warfare Is Real
For at least two centuries, political theorists have attempted to identify and understand the ways that various social and economic classes have interacted within this system of state exploitation. In the writings of the liberal theorists who explored this system of “legal plunder”—i.e., Frédéric Bastiat, William Leggett, Vilfredo Pareto, and John Taylor of Caroline, among others—we often find the familiar terminology of class and economic interests. There are the bourgeoisie, the “stockjobbers,” the industrialists, the landowners, and the forces of big business. Some groups, we are told, are more inclined toward production, while others are more often found among the exploiters and parasites.
Among these classes we also find a group that is often ignored, or at least it is infrequently mentioned. It is the class small enterprise: the owners of small factories, the artisans, and the shopkeepers. Or, to use a term more frequently found outside the United States: the petite bourgeoisie.
In this essay, I’ll take a closer look at the petite bourgeoisie and the various ways that political theorists have attempted to describe it and classify it. The petite bourgeoisie has often been placed among the more productive economic classes, and this group has been romanticized to an extent that other social classes have not—with the exception of “the workers.” Ironically, though, the petite bourgeoisie in the United States is rarely among the groups driving significant changes in policy or public debate. When it comes down to actually creating government policy, the interests of small enterprise are often ignored. Rather, we end up with a political debate with a populist focus on wage earners on the one hand, with too-big-to-fail mega-businesses on the other.
Who Are the Petite Bourgeoisie?
Small enterprise has long been central to national economies, including industrialized economies. Even after more than a century of accelerating industrialization and growing economies of scale, the “small business economy” in the United States contributes more than 40 percent of all GDP and small businesses employ more than 45 percent of all private-sector employees. Even into the mid twentieth century, as “big business” greatly increased its role in national economies, small enterprise remained the primary driver of employment and production.
These sorts of statistics, however, raise the problem of defining what exactly is “small business” and what is the class of people involved in small enterprise. The US government generally defines “small business” as firms with fewer than 500 employees. This, however, tells us very little about the broader social characteristics of the world of small enterprise. Or, put another way, what sets this group apart from other economic groups such as the bourgeoisie, the working class, the proletariat, or “the rich”? The answer, in part, is found in the terminology used to describe what sort of work is done by people in the world of small enterprise. However, terms like “petite bourgeoisie“ imply that this is a group of people who have specific social and cultural characteristics, and are not just the people involved in certain lines of work.
One thing that is important to note is that the petite bourgeoisie is not at all synonymous with the term “middle class.” Is is not the case that everyone who is generally considered to be middle class is also engaged in small enterprise or holds to the value system of the petite bourgeoisie. For example, in many times and places—especially in eighteenth and nineteenth century western Europe—work in the civil service was often considered a gateway to the middle class. Yet, government bureaucrats are clearly not working in small business, nor would the values of the typical civil servant reflect those of the petite bourgeoisie. Moreover, someone who is a middle manager at a huge corporation can also be part of the middle class, but is obviously not someone engaged in small enterprise.
Rather, to be in small enterprise means to be engaged in work that is combines the ownership of productive private property with skilled labor performed by the property owner himself, or by those close to him. These owners often work alongside their employees in workshops, small factories, and offices. This is in contrast to larger enterprises where managers often oversee workers through highly hierarchical structures that tend to physically distance the owners from the workers. In many cases, but not all cases, the petite-bourgeois property owner adopts a role as an entrepreneur, investing capital into efforts to adapt to changes in the marketplace and to address unmet wants among consumers.
Artisans, Shopkeepers, Family Farmers, and “Mechanics”
What are the specific lines of work that are common among the property owners of small enterprise? One of the earliest theorists to explore the effects of state redistribution on wealth was John Taylor of Caroline. In some of his earlier works—such as found in Arator (1818)— Taylor repeatedly refers to farmers and mechanics as the foundation of a free economy. In this context, “mechanic” means a small-scale skilled laborer—i.e., an artisan—who likely owns his own tools, and may even have a physical workshop. Taylor routinely places the mechanics alongside agriculturalists as the primary examples of the “productive classes.” In Taylor’s view, the productive classes also appear to include smaller merchants, lawyers, and others we would today call “professionals” and practitioners of “the trades.” These productive classes are then contrasted by Taylor with the those that rely more on a “protecting-duty monopoly” or “bounties” and other government subsidies that advantage the parasitic classes that benefit from “pecuniary privileges” provided by government protection. These include bankers, speculators, and large merchants. Large manufacturing enterprises, protected as they were by protective tariffs, were also counted by Taylor among the unproductive classes of “courtiers.”
During the 1830s the Jacksonians further built upon this idea of “productive” classes contrasted with the exploiter classes of large enterprises that were protected in their positions by subsidies, tariffs, government contracts, and other policies that tended to benefit bankers and the largest firms. As Ashworth puts it:
Jacksonian social theory looked to and hailed the independent farmer. The independent labourer or mechanic was also approved of but there was little respect for manufactuerers. Merchants were recognized as indispensable to an agrarian economy…
As we can see, while farmers may have had pride of place, they were certainly not alone among those considered to be productive and essential. Similarly, in Europe, shopkeepers and artisans were believed to be among the productive classes forming the core of the petite bourgeoisie.
The Petite Bourgeoisie as a Political and Social Class
These are not just economic differences, and there are distinctions here from a sociological standpoint, as well. As Geoffrey Crossick notes, for example, the “combination of the owner’s labour and capital within family-centered enterprises” creates “a distinct position for the petite bourgeoisie within the social structure.” Or, as observed by Jeffrey Fear,
“the fusion of property, family, neighborhood, and enterprise differentiated the petite bourgeois experience from both working-class households and the upper bourgeoisie. … [T]he cluster of values centering on family, local neighborhoods, work traditions, and property formed a distinctive petite bourgeois identity.”
Crossrick also notes that the frequent presence of family-based businesses among petite-bourgeois enterprises further contributed to the romanticization of small enterprise efforts as being especially good for family cohesion and society overall. Later in the nineteenth century, the petite-bourgeois lifestyle was further touted as providing more flexibility and opportunity for women who could enjoy greater leadership roles within the family business.
This idealized version of the petite bourgeoise would prove to be important to a variety of political coalitions in France, Germany, the United States, and in other areas where there was considerable public respect for property owners who were viewed as hard working and frugal, and as contributing to the economic well being of the community.
Thus, not even the Marxists—committed as they were to a focus on a conflict between the proletariat and the bourgeoisie—could deny the existence of the petite bourgeoisie. In the early 1850s, Marx put the petite bourgeoisie alongside the classes opposed to the proletariat, writing in response to the 1851 French coup:
The bourgeois republic was victorious. There rallied to its support the financial aristocracy, the industrial bourgeoisie, the middle class, the petty bourgeoisie, the army, the intellectuals, the clergy, and the rural population. The Parisian proletariat stood alone.
This reflects Marx’s view, later expressed in Capital, that “the small burgher and the middle ranks of society” constitute “an important class in every modern body politic.”
For Marx, this was nonetheless a class that stood opposed to the interests of the workers. This idea continued well into the twentieth century when Murray Rothbard, in a note on modern egalitarianism, suggested that the complexity of modern “grievance politics” means one
almost longs for the good old days of classic Marxism, when there was only one “oppressed class”—the proletariat—and one or at most a very few classes of oppressors: the capitalists or bourgeois, plus sometimes the “feudal landlords” or perhaps the petit bourgeoisie.
Marx’s recognition of the petite bourgeoisie as an “important class” reflects what historian Ralph Raico calls Marx’s “shrewd” abilities in historical analysis. While Marx was a terrible economist, he did not necessarily lack keen observational powers on other areas. And while his third-rate economics skills placed the petite bourgeoisie as an enemy of propertyless workers, he also did correctly see that the petite bourgeoisie was politically at a disadvantage when compared to the “great” or haute bourgeoisie. Marx writes in Die deutsche Ideologie: “Trade and commerce create the great bourgeoisie. The small burgher, who no longer as earlier rules the town but must submit to the mastery of the great merchants and manufacturers, is concentrated in the handicraft trades.”
Marx is not wrong here, as far as he goes, but he lacks the proper analytical tools, which are provided by classical liberal exploitation theory. This theory tells us that if the petite bourgeoisie are at a disadvantage, it is not due to any iron law of economics, but is due to the presence of the sovereign state which taxes, regulates, and inflates to the advantage of certain favored classes. It is in its ability to influence state action that the “great bourgeoisie” is able to exercise its “mastery” over the “small burgher” and the “handicraft trades.”
Indeed, the reality of this political battle between small enterprise on the one hand, and some sectors of “big business,” and the growing financial sector on the other hand, come through in the work of many keen observers among classical liberals. So, we find in the work of John Taylor, and in the work of later Jacksonians like William Leggett, denunciations of the “paper aristocracy” and calls for “the separation of bank and state” in their efforts to rein in the power of large, state-connected enterprises. Taylor and Leggett, and the Jacksonian movement overall, saw in the petite bourgeoisie—a group they identified without using the phrase— a benign social and economic class that was more dedicated to free markets, virtuous competition, and more decentralized political power.
This was far from the Marxist view that the petite bourgeoisie were among the oppressor classes benefiting from the exploitation of the workers while allying with the haute bourgeoisie in turning the state against the propertyless masses. Rather, experience suggested to many in the nineteenth century a more likely scenario in which small enterprise found itself at the mercy of large national interests that routinely turned state policy in favor of a select few industries and firms. In the current age of too-big-to-fail, this would seem to be timely analysis even today.
