A Commercial Nation: Back to Basics

When Mikhail Fridman and Pyotr Aven met one day in Washington with American scholars from their Alfa Fellowship Program — a corporate program for professional development exchange — they were given a bottle of wine in recognition for their role as sponsors. Bewilderedly looking at the souvenir, Fridman could not resist asking, “And what is this, one bottle for the both of us?”*

He shouldn’t have been surprised. Frugality is in the blood of Americans. Take a tour of the U.S. Congres,s and they will tell you how during the construction of the Rotunda — “the symbolic and physical heart” of the Capitol, the chief embodiment of the American democracy — the bas-relief initially planned on the frieze under the dome was replaced by fresco due to economical reasons. So the first foreign biographer of the U.S. Alexis de Tocqueville was right, noticing that America is a “commercial nation,” which “repudiate[s] all ornament from their architecture, and set[s] no store on any but the more practical and homely advantages.”

Incidentally, the astute Frenchman warned that materialism is especially attractive and therefore dangerous for democratic nations, because under authoritarian regimes access to worldly benefits is caste-limited. Americans were the first to adopt the republican form of government, removing these limitations. According to Tocqueville’s observations, the mass formation of the middle class, which proclaimed material prosperity to be the ultimate worldly treasure, became a distinctive characteristic of republicanism.

Hence “love of prosperity became the dominant feature of [American] national character” and doomed Americans to perpetual, feverish searches for the shortest path to wealth, wrote the French aristocrat with a touch of arrogance. So were laid the foundations of the notorious “American way of life,” transformed by propaganda into the “American Dream” — and, might we add, to Tocqueville’s 200-year-old ideas.

However, there is no irony in what is spoken of here — there are just things to learn from. The thrust to the foremost positions in the world, perfected in this era by America, speaks for itself. And this thrust, as German sociologist and political economist Max Weber showed during his time, was largely due to Protestant morality, which included the perception of capital as a gift from God that should therefore multiply.

In substantiation of his claims, Weber referred to the authority of people, such as one of the founding fathers of the United States: Benjamin Franklin. This author of the catchphrase “time is money,” who currently is depicted on the $100 bill, is to this day considered to be the patron saint of thrift in U.S. political hagiography.

Within this image, Franklin’s modern followers recall that Franklin was never stingy but, on the contrary, always generously gave his time, strength and resources to the benefit of society. While talking to me about this, Director of the Center for Thrift and Generosity Barbara Whitehead at the Institute for American Values in New York emphasized that thrift and avarice are in essence two different concepts. The first suggests the prudent and long-term use of all available resources (not only monetary but also, for example, intrinsic resources) for one’s own good and the common good. The second is the myopic pursuit of short-term and frequently misleading personal gain. Incidentally, in the English language the word “thrive” is derived from “thrift.”

In general, of course, Franklin’s ideological legacy provided a good service to Americans. But as they say, no man is wise at all times. After the end of the Cold War, it seemed as if they had caught the golden fish, able to fulfill any wish, and they could not resist the temptation. In 2005, according to Pew Research Center data, approximately 70 percent of Americans named greed the inherent trait of their national character. Not one other negative quality is mentioned as often. It is also noteworthy that, according to this poll, in the mirror of their own opinion Americans appeared greedier than in the eyes of other nations.

This obsession ended, as is well known, in ruins in the form of a powerful financial and economic crisis. To stay afloat, America has had to climb into astronomical debt (and Franklin hated debt bondage). Given that the crisis hit not only greedy speculators on Wall Street but, first and foremost, the housing and mortgage markets, it became necessary for the majority of Americans who believed in the mirage to, almost in the literal sense, return from the individual mansions purchased on credit to the former multi-family dwellings and other mud huts (In 2003 the average new home built in the U.S. was 38 percent larger than in 1975 and was intended for fewer inhabitants.).

According to the latest official data, current United States rates of hunger, poverty and income inequality are rapidly growing. Last year one in seven Americans (about 43.6 million people), including one in five children, was poor. This number included more than a quarter of all African Americans and one-third of black children. Approximately 17 million families in the country lived from hand to mouth.

Concurrently, the wealthiest Americans continued to grow richer. The cumulative net worth of the 400 richest people in the United States listed by Forbes has grown by 8 percent. Multimillionaires from the top one percent of the country’s population now control 24 percent of its revenue. America has not known such deep social stratification since the Roaring Twenties, i.e. the dissolute 1920s, which ended with the Great Depression.

Now in the circumstances of unemployment, which is officially approaching 10 percent — and in reality is nearly twice as great — Americans are tightening their belts. Both hands are holding onto existing work, downsizing one’s (or going to one’s parents’) living space, celebrating weddings more rarely and having fewer children, studying at neighboring colleges and not at distant, prestigious universities, traveling less, shopping less, eating out in restaurants less often, and in general using credit far more prudently. In this case, according to the observation of authoritative columnist Dan Kadlec of Money Magazine, many people try out the relief of returning to age-old values.

In an indicative poll from the company Northwestern Mutual, participants were asked to define success in life. In a majority of 86 to 88 percent of the votes, U.S. residents named the main terms: a strong family and good relationships with one’s spouse or partner.

Their social activism also climbs the list. They are always proud of how their country originally grew from grassroots efforts, i.e. local and voluntary associations. In September, the first official survey of its kind about civil society in the United States was distributed, which showed that even during a crisis, grassroots relations do not break down but instead strengthen. According to the document, the number of civic volunteers increased during the past year by nearly 1.6 million people. It emerged that during the crisis years of 2008 and 2009, nearly 58 percent of Americans helped a neighbor at least once a month.

According to data from Parade Magazine, in 2009 Americans on average donated $400 to socially useful causes that were close to their hearts. The amount donated by elderly Americans aged 65 years and older on average exceeded $700.

Another sign of the time is the change of behavior of the wealthy. In principle Americans are inclined to be proud of honestly earned money but do not splurge. By Tocqueville’s curious observation, “a lush, brilliant depravity” is characteristic of caste societies, while in a democracy the wealthy “are contented with the achievement of the majority of their modest desires.”

Modern American oligarchs walk the path of social responsibility even farther. Recently, two of the most famous of them — founder of Microsoft Bill Gates and legendary investor Warren Buffet — appealed to colleagues to give no less than half of their wealth to social needs during their lifetime or immediately after their death. The “Giving Pledge,” begun by Gates and Buffet, already has collected 40 signatures — its potential output valued at a minimum of $150 billion. They are trying to promote this initiative outside of the United States as well, primarily in China.

In general, according to specialists, massive philanthropy is becoming the new status symbol for the American uber-rich. And for the people who are merely well-to-do, in the words of Kadlec, it became fashionable to drive prestigious brand-name cars but models that are three or four years old. Against the background of a general slump in sales, a market for such secondhand cars is growing.

How sustainable the changes in the behavior of American consumers will be is a debatable question. Many believe that their appetite will return as soon as the country’s strong economic growth resumes. But not everyone thinks this way. Psychologists recall that a person surviving a state of clinical death, as a rule, changes drastically or indeed is entirely reborn. Now the entire national economy of the United States exists in such a state. And the footprint in the public consciousness and the population’s subconsciousness may turn out to be indelible.

Barbara Whitehead is sure that the experience of the Great Recession influenced her living compatriots no less than the drama of the Great Depression influenced their forefathers. Especially vulnerable, in her opinion, is the younger generation, already forced in practice to master lessons of moderation and diligence. She recalls that the anti-crisis financial reforms set by the country’s authorities are also designed for the long term. As a result, from her point of view, “institutions will discipline the people.”*

Sociologists confirm that Americans already make conclusions based on what has happened. In a survey commissioned by Money Magazine, seven out of 10 respondents stated that their life priorities are changing, nine out of 10 said that because of the crisis they began to manage money in a new way and as many as 94 percent of respondents are confident that they will maintain this kind of relationship in the future.

As for greed, people will most likely never entirely escape this fatal sin. It is inherent in Americans, but, in my opinion, it constantly fights with the idealism in their soul. A quarter century ago, in Texas, I asked students which was more important in their future career: interesting and socially useful work or money. They all answered identically: Personally I choose ideals, but I am sure that the rest will prefer the cash.

A few days ago a middle-aged businessman, with whom I began a conversation on this topic, started talking about U.S. aid to the outside world and then made this unexpected but logical conclusion, “Of course, in order to help others, we need money. That is why we need to be greedy at first, and later — generous.”

*Editor’s Note: Quotes could not be verified.

**Editor’s Note: All quotes from Alexis De Tocqueville are referred to in his text “Democracy in America,” but the exact translations could not be verified.