Los Angeles and the Bi-Polar Economic System Explained

Introduction: Los Angeles as an American Microcosm

Los Angeles serves as a microcosm for the rest of the United States. Its cultural beginnings are a mixture of competing ideologies overrun by the same human failing that eats into the heart of all cultures: greed and excess. As Fogelson notes in The Fragmented Metropolis, such was the case from the days of the early missionaries to the rancheros who secured for themselves huge tracts of land following Mexico's independence from Spain. Throughout the early 20th century, Los Angeles became a place ruled by a criminal underworld, where vice was available around the clock and where people routinely bought their way to the top.

In effect, the divide between rich and poor in Los Angeles has always been the result of a moneyed class ensuring that it stayed moneyed while the poor grew poorer. As the wealthiest 1% in America continue to grow even wealthier at the expense of a shrinking middle class, Los Angeles may be seen in hindsight as a vision of what was to come across the entire country. L.A. truly represents a bi-polar economic system drained of any genuine capacity for economic fairness. This paper explains the evolution of this skewed system and shows how Los Angeles offers a revealing glimpse of the contraction of the middle class in America.

The Rancho Economy and the Foundation of Inequality

From the beginning, the "Californians based their economy and society on vast estates known as ranchos" (Fogelson 8). The same was true across all of America — not just the West Coast. One might just as well call the Founding Fathers the original land barons. It was a system of haves and have-nots set up by the haves in order to exploit the land and the labor of the have-nots. This was the foundation in California, and that labor was exploited first by slave-owners, then by bosses employing immigrants and the desperate. This was certainly the case in California, where "the Indians, not the Californians, made up the labor force" (Fogelson 8).

This pattern of land concentration and labor exploitation established the structural template that would persist throughout Los Angeles's development. The rancho system was not a regional curiosity but a localized expression of a national economic logic in which a propertied elite extracted value from those with no land and no political voice.

California as Capitalist Dream and Commodity

California was promoted as a place where the American Dream could be realized. In this sense, California itself became a commodity, as Davis suggests. It became "a mirror of capitalism's future" (Davis 21) — a sign of the times and of things to come, a destination for dreamers not just within the state but across the entire nation. If capitalists were driven by a need to exploit and the capacity to enforce exploitation through the law, then California was a capitalist's dream — which is exactly why figures like Bugsy Siegel and Mickey Cohen thrived there. They were capitalists-extraordinaire, taking what they wanted, or at least what they could get away with.

The promotion of California as a land of opportunity thus served a dual function: it attracted labor and investment while simultaneously obscuring the power arrangements that ensured wealth would flow upward. The dream was real enough to draw people in; the machinery behind it was designed to keep them in their place.

Privatization, Political Machines, and Reform Failures

Over the years, Los Angeles was transformed from a place of rancheros into a mega-sprawl — a Manhattanized construct with a Manhattanesque "cultural super-structure" (Davis 22). This transformation was the result of a series of booms in oil, banking, and the military-industrial sector. Los Angeles represented "dream machinery" that devours all, including the commentators and analysts who would have us understand it from a certain perspective (Davis 24). The reality is that L.A. cannot be defined simply, even though one can trace its evolution through the dreamscape.

By the 1880s, Los Angeles had essentially been privatized: "domestic water, street railways, public utilities, and real estate" had all passed into the hands of a select and powerful few (Fogelson 41). Still, the bond between private and public interests was evident as contracts were awarded and municipal positions were bought and sold. Thus began the political machine that facilitated the dream machine, its mechanics greased by the exploitation of the have-nots by the haves.

Reforms swept through at the beginning of the 20th century, but "reform" has always been short-lived. The 1909 election was just one example of the reality underneath the reform dream: the city's mayor, police chief, and crime lord were all implicated in a scheme to "monopolize the city's prostitution trade" (Fogelson 213). It was, on one level, all organized crime — from the bankers' financing of railroad expansion to the underworld's financing of political campaigns. Caught in the middle was the middle class, which bought into the dream only to be served a dish of cold reality instead.

Conclusion: The Bi-Polar System as the American System

This is L.A. — a place where a bi-polar economic system originated in an overall bi-polar American desire to both "help" and "hurt" the natives, the middle class, the underlings, and the have-nots. This system evolved over many decades but is most clearly seen in Los Angeles. The early missionaries set out to "help" but, as critics like Fogelson argue, their "help" functioned more as a "hurt" in terms of power structure and economic equality. After the Republic set out to "help," the rancheros took over, which "hurt" the locals. After the rancheros came the heavies — backed by foreign and domestic banks — the monopolists, whose policies were promoted as beneficial for all but which actually hurt the majority and benefited only the wealthy class.

This was a bi-polar system through and through. It was the American system, and Los Angeles was simply its most obvious expression.