The rise of the Third Estate

"There is little that can withstand a man who can conquer himself." -King Louis XIV

Societies have always put up lines that separate their members into different groups. Traditionally, the group into which a person fell was determined at birth, but in the past 200 years this has become less true (at least in most democracies).

In our modern conversation among the 1% and class divisions, an important historical detail has been lost: namely that the most important divisions in societies up until the late 1700's were not along the lines of class, but along the lines which delineated estates. That is to say, it was not necessarily what amount of resources a person had, but what role in society that person filled (or was born).

(A cartoon depicting the three estates:)

That said, the estate into which most people fell (the commoners) was generally the least powerful, least resourced per capita, and least organized of the three estates. Thanks to technology, the estate of the common person is today gaining more power and autonomy from the other estates. This is one of the largest and best-hidden macro trends of the past five and next twenty years. To better explain how we got here, we should first understand the difference between an “estate” and a “class.”

Classes vs Estates

Estates divide society by role (vertically) while classes divide according to resources (horizontally). The hallmark example of a three-estate system is that of France preceding the revolution, whose society was divided into clergy, nobility, and commoners. Similarly, Principality of Catalonia had a parliament that represented their three estates of military, clergy, and nobility.

These estates held de facto checks on one another’s power and influence. An overreaching military could be checked by nobility and clergy working in league, while an unfit ruler could be unseated by the sword of his displeased generals. Similar to America’s history with their codified system of checks and balances, these estates struggled against one another with large imbalances occasionally being overturned by historic actions. Through this lens, the French Revolution was a reaction to collusion between the first two estates (clergy and nobility) to support one another’s expansion, an expansion that was ultimately checked by a violent uprising of the third estate, the commoners.

There was no aspiration between estates as there is today between classes. Just as a commoner didn’t expect to become a noble if he or she worked very hard, the clergy didn’t think they could achieve enough to one day join the ranks of the military (or vice-versa). In this way, conversations about class in America are historically unique in human history. Even before Horatio Alger, Americans have believed that hard work could improve their circumstances and, to a degree, individuals could determine their own destinies.

Class, by contrast, is best demonstrated by the amount of resources someone has. As such, there have been low-class nobility whose castles are in as much disrepair as their finances. Similarly there have been merchants whose fortunes rival kings who have not been afforded the same rights as even the lowest nobility.

France before 1792

	Clergy	Nobility	Commoners
High Class	Pope/Archbishop	King	Merchants
Middle Class	Bishops	Lords	Workers
Low Class	Priests	Knights	Peasants

In Liberal Western democracies the notion has proliferated that people are created equal and, regardless of lineage or profession, are accorded the rights of their fellow citizens. This, combined with the fluidity of moving between estates, has made it appear as though only class exists and estates have disappeared.

I would argue that, despite their membership being more dynamic than in previous incarnations, today’s modern developed world has three clearly delineated estates:

• Government
• Corporations
• Consumers

If we say that there are classes within these estates (might be a stretch in some places) they might look like this:

America 1945-Present

	Government	Corporations	Consumers
High Class	President Governor Judge Senator	Large Corporations	Disposable income
Middle Class	Representative Regulator Attorney	Small/Medium Corporations	Paycheck to Paycheck
Lower Class	Municipal Civil Servants	Self-employed	Welfare subsistence

From 1800 through today, these three American “Estates” vied with one another over power, generally (but not exclusively) to the benefit of the consumer. When President Teddy Roosevelt at the turn of the 19th century busted trusts, the government grabbed power from the corporations and consumers benefitted from a more competitive marketplace.

For the next 60 years corporate influence waned, leaving a future Supreme Court Justice Lewis Powell to write in 1971 that “As every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of 'lobbyist' for the business point of view before Congressional committees.” His point was that lobbying was a total waste of time and money.

Not true today. Today, lobbying is a solid investment for corporations (or else we have a lot of foolish and irrational corporations). A lot of the lobbying, as it has historically been, results in a better world for consumers (like Uber lobbying a city that’s trying to protect their entrenched taxi monopolies).

Other lobbying is less clearly a benefit to the consumer. If we’re still looking through the lens of estates, some lobbying can be seen as enhancing both the corporate and government estates at the expense of the consumer. When Congress is lobbied successfully to purchase $120 million of tanks that the Army says it doesn’t want, both the manufacturer and the congressmen whose districts manufacture tanks enhance their prospects but the taxpayer foots the bill and receives no increased security as a result of their financial.

America’s estates appear unbalanced to the favor of the government and, to the extent it is captured by special interests, business. The government is larger and more intrusive than it has ever been while regulations create barriers to new market entrants. This cements the place of legacy corporations and hurts consumers.

Checks and Balances: Loyalty, Voice, and Exit

The system that allows estates to check one another isn’t written down in a codified law, but it takes three forms: Loyalty, Voice, and Exit.

• Loyalty is a tolerance of the current system. When consumers pay their phone bill, they are exerting loyalty.
• Voice is an active attempt to change the current system. When consumers sign a petition to break up the Bell telephone monopoly or file a complaint with the FTC, they are using their voice.
• Exit is a departure from the system. When consumers cancel their phone service and use Google Voice or Skype, they are exiting the system.

Over the last century, on the occasions when consumers have found themselves angry with the economic, political, or regulatory apparatus, their response has mostly been to employ their voices to change the system (while for the most part staying loyal out of necessity).

What we’ve seen in the last 5 years, though, is the rise of people using (and being able to use, many for the first time) “exit” as a response to the circumstances they dislike. It is the first time in history that consumers (or commoners) have been able to exit en masse. The result is a movement as transformational as the French Revolution, but a lot less bloody. In part two, I’ll dive deeper into this “Rise of the Third Estate.”