Worker Co-ops and the American Dream, part 3

The Industrial Revolutions and the Great Depression

The Civil War ushered in a new American époque. The economy of the nation transitioned from agricultural to industrial as the nation moved from being a producer of raw materials to also providing the finished product from those materials. While the War Between the States brought a partial resolution to the contradiction between the American experience of chattel slavery and the American values of liberty and freedom, it also began a transition within the nature of employment from independent work crews to what labor organizers in the day dubbed the new “wage slavery”.  The Civil War was as much an industrial revolution as it was about ending the practice of slavery and suppressing a political rebellion (Jacques, 1996). It marks a change not only in the broadening of rights to former slaves but marks a switch in focus from agricultural to industrial economies.

The post-Civil War period, often referred to as the Gilded Age, saw a massive growth in the industrial capacity of the United States along with mass immigration from Europe and Asia. As industry developed, the nature of the American worker underwent a transformation. Roy Jacques’ genealogy (1996) of this change details the rise of the employee and the demise of the itinerant worker. During this era, the national labor movement developed as well. The Knights of Labor saw the danger of the deskilling and reassignment of workers into categories (Leikin, 2005). They also saw the reality of industrialization. The nascent worker movement sought not to negotiate with the new class of manufacturers and owners, but to compete with them through worker-owned factories. The ideal of ownership still resonated in the nation as a key part of the American Dream, but that ideal of ownership in the urban communities switched from land ownership to corporate shares with the closing of the frontier.

The primary duality of the American Dream speaks to the materialistic and the social nature of humanity. This duality, along with the rise of the Robber Barons and American industry in the late 19th century created a third aspect of the Dream: the “do-over”. America has always been about “starting over”.  The American naturalist Henry David Thoreau (2003) wrote, “The Atlantic is a Lethean stream, in our passage over which we have had an opportunity to forget our Old World and its institutions.” The first immigrants from Europe arrived as political, religious and, to some extent, economic refuges. While many arrived with only the possessions on hand, all arrived with a fresh start in life. They controlled, promised the dream of America, their future. The drive West, one of the core causes of the American Revolution, was about the ability to find a fresh start to life, to pursue one’s happiness by hitching a wagon and moving into unknown lands. Horace Greely’s admonition to “Go West, young man and grow up with the country” rang out. Eventually, however, the West was closed much as the Commons before it. With this closing of cheap, arable land, the American Dream found new environments in the forms of home ownership and stock ownership that resonate today.

During this period, the American Dream became an international brand. New immigrants often impoverished people from Europe (as my father’s grandparents from Ireland) or political refugees from the increased militarism of Europe or religious refugees from the Pogroms of Russia sought the American Dream. The twin promises of religious tolerance and economic reward for hard work created a beacon in the darkness. There has been much history written on the failure of the United States to live up to this brand, largely beyond the scope of this study, however, it is enough to say that to ensure the blessings of the promise of America, immigrants quickly realized that the new industrial era that they would need to push their demands and make their dream occur through their own efforts.

As discussed earlier, the Knights of Labor were limited in their attempts to unite workers. While there were many successes, the power of the financiers, the new aristocracy of the United States, set against them. The lack of legal regulations of these new industries allowed collusion, conspiracy, and corruption among the ruling class (Leikin, 2005). Many of their tactics to defeat the worker-owned businesses have since become illegal. One such classic tactic was a collusion between mill owners and railway owners to refuse to ship products from Knights of Labor factories (Leikin, 2005), but it is important to understand that worker organized in this way precisely because of their belief in the American Dream and that this same energy would lead them to organize labor unions.

In many ways, the labor movement of the fin de siècle period (1880-1914) resembles the labor movement of today. Skilled craft labor unions found limited success, but mainly in areas where its leader, Samuel Gompers, could make deals (much in the manner of the strategy of Service Employees International Union (SEIU) today). Social movements by the unorganized pressed for political change such as the eight-hour day (compared to today’s $15 per hour movement), and workers might still form cooperatives to meet their needs (such as the Union Fishermen’s Cannery in Astoria, OR). The movement for an eight-hour day, the rhetoric of Eugene Debs and Samuel Gompers invoke the right of workers to enjoy the fruit of their labor. The turmoil of the labor movement after the demise of the Knights of Labor was in many ways a fight to preserve the American Dream of the Jeffersonian-Lincoln model. Debs and his industrial unionist allies sought for an end to the wage system and the formation of a cooperative economic system that would provide economic and social freedom. In 1904, Debs spoke on The Socialist Party’s Appeal: “The Socialist Party stands for a social order in which every human being in the full enjoyment of economic freedom, shall have full opportunity, in the best possible environment, to develop the best there is in him for his own good as well as the good of society at large.” (Tussey, 1972). The legal status of labor unions and cooperatives provide a key difference. The Sherman Antitrust Act was used against labor unions and cooperatives as both were seen as conspiracies to restrain trade. The Copper-Volstead Act of 1922 granted protection to co-operatives and the Wagner Act of 1926 granted protection to labor unions.

Other part of the labor movement, namely the American Federation of Labor, sought to negotiate for the worker’s share. This movement, led by Gompers, proved less threatening and largely focused on skilled workers leaving the unskilled laborers out in the cold. This competing view from the Industrial Workers of the World presented an American Dream that could be attained through diminished expectations. Through suppression by the government, the more radical labor movements lost sway and the AFL succeeded. Although the AFL still struggled against employers, the significance, for this study’s purpose is that they helped change the definition of the American Dream. By 1928, the presidential campaign of Herbert Hoover, a hero for helping the starving children of Europe after World War I, spoke of this new dream as “a chicken in every pot, a car in every garage.” Likewise, industrialist Henry Ford realized the secret to success was mass-producing a product that his employees could afford and ensured that they had a salary to do just that. This “main street moment” found a voice in the policies of the New Deal that spoke to Americans essentially telling them that they should, as their birthright, expect a better life (McEntee & Saunders, 2012)

The transition of the American worker from a journeyman itinerant laborer to an employee matched a change in the American Dream from ownership and stewardship to consumption and material possession. This process created a system of bubbles and crashes (or panics) resulting in the Great Depression. The aftermath of the economic meltdown included a revived industrial labor movement strengthened by the New Deal legislation of the Wagner Act and Second World War that destroyed industrial infrastructure and tens of millions of people leaving the industrial capabilities of Canada and the United States largely intact.

The outcome of these events was a relative détente between employers and labor that would lead to the creation of the American middle class and relative acceptance the new American Dream. The contradictions of this new American Dream created what some might call the “American Century” and were ultimately an unstable model and a dream in every sense of the word (Porter, 2010). However, it also helped to usher in the Civil Rights Act of 1964 and Voting Rights Act of 1965 that effectively ended the Jim Crow Era. The Dream, as fragile as it might be, expanded its reach in hope even if the reality still remained elusive. The contemporary era has brought people back to the discussion of what the American Dream really means and how it is experienced.

Next: American Dream Deferred


Jacques, R. (1996). Manufacturing the Employee. London: Sage Publications.

Leikin, S. (2005). The Practical Utopians: American Workers and the Cooperative Movement in the Guilded Age. Detroit, MI: Wayne State University Press.

McEntee, G. W., & Saunders, L. (2012). The Main Street Moment: Fighting Back to Save the American Dream. New York: Nation Books.

Porter, G. (2010). Work Ethic and Ethical Work: Distortions in the American Dream. Journal of Business Ethics, 96(4), 535-550.

Thoreau, H. D. (2003). Walking. Fairfield Iowa: 1st World Library-Literary Society.

Tussey, J. Y. (Ed.) (1972). Eugene V. Debs Speaks. New York: Pathfinder Press.


About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
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