Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Can Bernie Sanders save Capitalism from Itself?

For the last few months, this blog has shown some sympathy for the presidential bid of U.S. Senator Bernie Sanders (I-Vermont). Obviously, this has some readers confused; after all, this is a blog largely dedicated to stocks and markets that is operated by a staunch capitalist. Why would such an individual look with some favor upon a self-proclaimed social democrat?

My response to such concerns is that somebody like Bernie Sanders might be necessary to save capitalism from itself – and possibly America from itself. Basically, I believe that income inequality and poverty have gotten so bad in America in recent years that radical measures might be necessary to stave off some sort of revolution or class warfare.


Sanders seems to be the only person in the Presidential race willing to take such actions or at least talk about them. His agenda includes some measures; such as federally subsidized college tuitions and single payer healthcare, that could alleviate some of the causes of class warfare.

Could Sanders Prevent a Revolution?

This idea is hardly new: President Franklin Delano Roosevelt said something similar during the 1930s when the Great Depression caused nearly a million Americans to join the Communist Party USA.

More recently, billionaire investor and political activist Nick Hanauer made a similar observation in a thought-provoking Politico piece entitled The Pitchforks are Coming… For Us Plutocrats. Hanauer’s belief is that inequality is now so bad in the United States, it might trigger some sort of revolution or upheaval.


Like Sanders, he is recommending radical measures to alleviate income inequality. Hanauer also believes that income inequality and growing poverty are undermining the capitalist system and making future economic growth more difficult.

Obviously, Sanders’ agenda, which is similar to Hanauer’s, would be expensive, radical, and disruptive. Therefore, we need to take a closer look at the argument that income inequality leads to political and social instability and revolution. Is there enough historical evidence to justify these concerns or not?

History Teaches Us that Income Inequality can Lead to Revolution

Unfortunately, the answer seems to be yes. Income inequality was one of the underlying causes in a number of history’s bloodiest upheavals. Here is a short list of some of the worst:

  • Collapse of Roman Republic/Roman Civil War, First Century B.C. This was caused by the concentration of wealth and political power in the hands of upper classes that dominated the government. The result was the Civil War, which led first to Julius Caesar’s dictatorship, then to absolute monarchy under Augustus Caesar. The conflict started with social legislation designed to redistribute wealth and the ruling classes’ opposition to it.



  • Reformation Wars of Religion, 16th Century. The Reformation started as the revolt of devout Germans against a corrupt Roman Catholic Church, but degenerated into an all-out class warfare that pitted peasants against the middle class and the nobility. The worst of these was the Peasants War of 1524-1535, in which peasants angry at the concentration power, privilege, and wealth among the upper classes rose against the nobles. One result of this revolt was the slaughter of peasants by both Protestant and Catholic mercenary armies.


  • English Civil War/Glorious Revolution, 17th Century. These conflicts began because the English middle classes resented the domination of the government by wealthy nobles. They eventually led to a Civil War in which King Charles I literally lost his head. Other results were Oliver Cromwell’s dictatorship and the Glorious Revolution, in which the British people stood by and let an invading Dutch army drive out King James III.


  • American Revolution, 18th Century. This conflict can be viewed in economic light as the revolt of an impoverished working class and a rising bourgeois against the elites that controlled the colonies. One major cause of the American Revolution was the control of important economic resources throughout the colonies, such as land and the political system; by a few wealthy families based in England. The result was a destructive war and the formation of a new nation.


  • Dutch Patriots’ Revolt, 18th Century. This conflict; which preceded the French Revolution, started as the revolt of ordinary people, mostly middle class, against the wealthy plutocrats that literally owned the Dutch Republic. It was eventually suppressed by foreign (mostly Prussian) armies that restored the power of the wealthy Orangists (supporters of the Republic’s hereditary ruler, the Prince of Orange). One rallying cry in the revolt was that the rich were unpatriotic and hurting the nation with their greed – sound familiar.


  • French Revolution.18th Century. Triggered by bad harvests and income inequality, it quickly degenerated into an all-out class warfare between the nobility and the middle class and the middle class and the peasants. Results included the guillotine, the Reign of Terror, and Napoleon.


  • The Taiping Rebellion. A bloody civil war in mid-19th century China that began with a peasant revolt, modern historians estimate that 20 million people were killed during the revolt, which lasted for nearly 15 years.


  • American Civil War, 1860s. This can be viewed as class warfare between the northern middle class and southern slave owners.


  • Mexican Revolution, 1914-20.


  • Russian Revolution and Civil War, circa 1920s. This was caused by poverty and hunger among Russian lower classes. The results included Stalin, Great Terror, the Gulag, and up to 50 million deaths.


  • German Revolution – rise of Hitler, 1933. This was caused by income inequality and poverty created by the Great Depression. Led to Nazi Germany, World War II, and Holocaust.


  • Spanish Civil War, 1930s.


  • Chinese Civil War and Revolution, 1940s. This was caused by extreme poverty in rural China and led to Mao’s dictatorship and deaths of over 50 million people.


  • Cuban Revolution and Castro’s dictatorship, 1959.


  • Pinochet Coup in Chile, 1973.


  • Iranian Revolution, 1979.


  • Collapse of Soviet Union, 1991. This was caused largely by extreme inequality between the lives of average Russians and Communist Party members.


  • Arab Spring and Syrian Civil War, ongoing.


These are just a few of the bloodbaths of history triggered by income inequality. The lessons from history are clear: societies that tolerate income inequality are doomed to revolution, class warfare, and dictatorship.


Many of the tyrants of history, including Robespierre, Napoleon, Lenin, Stain, Mao, Hitler, Franco, Pinochet, and Castro, rose to power because of income inequality. Some of the worst crimes in history, including the Reign of Terror, the Holocaust, Stalin’s Great Terror, Mao’s Great Leap Forward and Cultural Revolution, and Pol Pot’s Killing Fields, were launched by political movements that capitalized upon income inequality.

We are right to be worried about income inequality’s destructive effects in America and to demand action against it. If a radical like Bernie Sanders is the only one capable of taking such action, perhaps we should back him. Sanders deserve credit for raising the issue and being willing to talk about it.

That being said, Sanders is far from perfect. There is much I do not like about him, such as his almost childish pandering to Hillary Clinton (she’s part of the problem and needs to be condemned for it) and his class warfare rhetoric. One hopes that a better, more articulate politician who is more willing to challenge the corrupt Democratic establishment and its paymasters on Wall Street would take up the challenge.

If that does not happens we can expect the worst because history teaches us that income inequality leads to violence that can destroy the entire society.