Wealth and Power in Pre-World War I Europe: The Danger of Transitional Periods

Vienna's Ringstrasse

Introduction

Most of history has been the story of the struggle for power. Conflicts, wars, conquests, and civil wars among the political and warrior elites. Peasants who worked the fields for the landowning elites and paid taxes to the political elite, did not count for very much in this story.

This narrative began to change with the coming of the American Revolution, the French Revolution, and the Industrial Revolution. New sources of wealth and power were created. The spread of literacy, the expansion of the franchise (right to vote),  and the formation of political parties representing the new middle class and industrial workers in the 1900s, began to challenge the political dominance of king, the governments they appointed, and the landowning aristocracy that supported the status quo. This happened in Russia, Germany, and Austria-Hungary. In England, royalty had already lost most of its political power, and new laws passed by new political parties were undermining the economic base of the aristocracy. In France, unresolved ideological tensions were heightened during this period, culminating in the Dreyfus Affair of 1894-1906 that bitterly divided society.

Some political commentators believe we are returning to a political order similar to that of Europe in the years preceding World War I.

Europe: 1871-1914.

It was a period of tremendous economic development, economic growth, and economic change. Some economic historians call this period the Second Industrial Revolution.  Much of the technology of the modern world was created during this period - electricity, steel, skyscrapers, autos, oil refining, chemicals, telephones, radio, movies, record players, and airplanes. There was a large expansion of railroads and steamships. Everywhere there was rapid expansion of mass production, factories, industrial centers and the modern corporation. To finance this, there was a parallel expansion in the economic role of banking and financial institutions. Also a large increase in international trade in food products that threatened established national economic groups with political power, especially European landowners and farmers (except in Austria-Hungary).

As the Industrial and Transportation Revolutions accelerated after 1871, new socio-economic groups were formed and expanded, collectively creating new economic structures and great wealth. A small group of industrialists and financiers who owned or financed the new corporations became immensely wealthy. The spread of large economic organizations created a demand for a new type of manager. The new technology created a new social group based on scientific, engineering, intellectual and professional knowledge. Professional societies were formed, helping to raise the status of the new technological elite.

The new economic class of industrialists and capitalists were legitimatized by the political philosophies of free-market capitalism and liberal democracy. They lived in an intellectual post-Enlightenment and post-French Revolution atmosphere.  These groups often came from poor backgrounds or from religious or ethnic minorities. 

The new economic order did not go unchallenged. It threatened the wealth, power and status of the traditional elite groups, especially the landed gentry and aristocracy. This social elite often led the opposition to liberal democracy and bitterly opposed the disruptive changes of the Industrial Revolution. They upheld and defended the traditional values of the pre-Industrial Revolution world.

This was a period of great technological and organizational change. These changes created rapid urban growth and disrupted the traditional agrarian social order. It caused great social stress and anxiety, especially among groups who felt they were socially or racially superior. (Philipp Blom, The Vertigo Years:  Europe, 1900-1914, for an insightful analysis)

 

One consequence of the spread of the idea and then policy of more open international trade was that it directly threatened the landed aristocracy who lived off rents. Their incomes declined as the price of agricultural goods fell due to regional and international trade in agriculture products (watch the later episodes of Downton Abbey).  Lower tariffs, less protection, lower prices. The aristocracy relied more on service in government and military to retain power and status. Examples include Junkers (landed Prussian aristocracy and gentry) in Germany and the landed aristocrats in Russia and Austria-Hungary. (Blum's statistic on percent of German officers were Prussian in 1914)

The landed aristocracy controlled the top positions in government and military. 90% of top German military officers at the beginning of World War I were of Junker (Prussian titled nobility) background. They allied with other conservative, reactionary, and anti-modern groups – kings, churches, dispossessed artisans, peasants, and political and intellectual conservatives and reactionaries - who formed conservative political parties and influenced public opinion. Ideology and mythology romanticizing pre-industrial societies were used to denounce liberalism and capitalism.  Related arguments demonized groups that benefited from these trends, especially Jews.  Political anti-Semitism was effective in Austria-Hungary, especially in Vienna (link to Krueger). It was a potent weapon during the Dreyfus Affair in France.  The tsarist regime in Russia promoted deadly pogroms (race riots against Jews) to divert national anger away from the disastrous Russo-Japanese War and failed 1905 Revolution.

Conservatives everywhere tried to divert opposition by appealing to nationalism, racism and imperialism. Bismarck and successor Prussian leaders successfully co-opted large industrial and banking companies, tying them to reactionary Prussian-dominated Germany, partly with large government military contracts. 

A Cautionary Tale: Austria-Hungary Before World War I

Austria-Hungary may serve as an imperfect but suggestive historical analogy to the European Union.

Austria-Hungary was a multinational and multicultural empire. It had 11 recognized languages. It promoted internal free trade, economic development and labor mobility. It greatly expanded the railroad network. Its economy was modernizing but the government bureaucracy, especially in foreign affairs and the military, were controlled by conservative elements – nobility, royalty and the court, landed aristocracy. The political structure of dual sovereignty, both between Hungary and Austria, and between central government in Vienna and provinces, ultimately proved unworkable. The national parliament in Vienna was reduced to a propaganda forum for rival nationalist groups. Every nationality group spoke in its own language. There were no translators. Power still resided mostly in the aging Emperor, the civilian heads of foreign policy, and the military,  all dominated by the upper levels of landed aristocracy.

Economic growth and development generated economic, demographic, cultural and political stresses in Austria, especially Vienna.  Vienna experienced rapid population growth as Slavs, Jews and other non-German groups from the provinces (neighboring countries) moved to Vienna. Vienna’s population increased from 551,000 in 1850 to 2,083,000 in 1910. Budapest also experienced rapid population growth; Hungarian nationalism became increasingly shrill as the percent of non-Hungarians rose.

The liberal, democratic ideals and institutions were attacked from the political right and left. Culturally, the new psychology of Sigmund Freud and a new generation of artists and thinkers attacked the underlying assumptions of rationality. (See the bibliography, especially the books by Schorske and Kandel)

There is an irony surrounding the expansion of male suffrage in Austria-Hungary in 1882. It led to the rise of the Christian Social Party, a right wing populist party that was a political counterweight to the socialist Social Democrats. The party leader, Karl Lueger, appealed to a voting base of mostly German-speaking lower middle class artisans who were losing their economic security and status to a rising liberal capitalist class. He allied his party to conservative, reactionary and religious elements. The party appealed to clerical Catholicism, German nationalism, and traditional values, Mr. Lueger became very popular and was elected mayor of Vienna. As mayor, he initiated and managed new public works projects in Vienna. Eventually, he was reluctantly accepted by the court and the aristocracy.

Mr. Lueger and the Christian Social Party used anti-Semitism as an effective political weapon. Karl Lueger did not create the populist anti-Semitism of Vienna but shrewdly exploited it for political gain. (for an excellent depiction of Vienna in this period, see the Netflix detective series Vienna Blood.

The party advocated racist policies against non-German speaking minorities. It supported a bill to restrict immigration of Russian and Romanian Jews into Austria-Hungary. After World War I, the Christian Social Party would morph into a Fascist party that dominated Austrian politics until the Anschluss with fascist Germany in 1938.

The liberal capitalist order was also attacked by the rise of an industrial working class politically organized by a strong socialist party, the Social Democratic Party.

One person living in Vienna who watched and learned from the success of the political rhetoric of the Christian Social Party and the mass organizing techniques of Social Democrats was Adolph Hitler.

Austria-Hungary was destroyed by social stresses worsened by World War I. Austria and Hungary split apart into separate nation-states. Most of the nationalities in the Austrian-Hungarian Empire also became separate nation-states. They were unstable amidst the chaos and violence that followed World War I. They were new democracies that often quickly became authoritarian. Governments and ultra-nationalist organizations resorted to violent adjustments including killing and forcing out minorities. Instability and chaos made all of Central European countries vulnerable to Communist appeal and then an aggressive Germany. (see Robert Gerwarth, The Vanquished:  Why the First World War Failed to End)

In the end, Austria-Hungary could not resolve the conflict between its dysfunctional multinational political structure and the rising nationalism of the many ethnic groups in the empire. The movement of population, especially religious and ethnic minorities, from the rural areas to cities generated social strains somewhat analogous to the impact today of immigration in Europe.

The Austrian-Hungarian empire was a monarchy containing many ethnic nationalities. The European Union is based on nation-states that freely join and can peacefully leave.  World War I, World War II and their immediate aftermaths were a historical watershed that separated the two political worlds. But the expansion of markets, both industrial and financial, from local to national to regional to global creates new tensions between and within sovereign nation-states. 

These tensions are mitigated by regional organizations such as the European Union. But the European Union is blamed by nationalist leaders for the dislocations and stresses caused by technological and organizational change. If the EU collapses, it will be due to political, social and cultural factors that were similar to those that ripped Austria-Hungary apart.

World War I

World War I apparently shattered the political power of pre-capitalist, reactionary groups in Russia, Austria-Hungary and partly in Germany. It seemed possible that liberal democracy, national self-determination and free market capitalism would triumph in Europe. The war broke up the empires of Russia and Austria-Hungary, creating new states in Central Europe.  But WWI led to chaos and violence in Central Europe, Communism in Russia, fascism in Italy and bitter, and violent opposition to the Weimar Republic in Germany. The Versailles Treaty in Germany was the target of German nationalist rallying cries, similar to those against immigrants in Europe today.

HISTORICAL ANALOGIES (AND LESSONS?)

We may be returning to the political world of the early 1900s. Reactionary political leaders and groups opposed to the new “liberal” economic and social order, angry at the growing wealth and power of a new elite, often containing despised minority groups. Reactionary elites still controlled their government’s military and foreign policy. They stayed in power by demonizing ethnic and religious “enemies.” After World War I, appeals to nationalism and prejudice by anti-democratic demagoges were used against the “failure” of liberal democracy and capitalism.

After WWI, increased social stress from the war and the subsequent breakdown of the pre-war order led to new, weak democracies of Germany, Central Europe and Italy. They were faced with internal economic problems and an aggressive, expansionist Russia. Everywhere nascent democratic institutions were attacked by both the far left and far right.  Extremist political parties came to power. America’s “New World Order” (Wilsonian democracy) was rejected. America became isolationist again.

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BIBLIOGRAPHY

John Stoye, The Siege of Vienna:  The Last Great Trial Between Cross and Crescent

Detailed account of Ottoman siege of Vienna in 1683. Almost conquered Vienna. Ottoman defeat eventualy led to loss of most of Balkans and reorientation of Habsburg foreign policy from west to east.  Root of later conflicts in the Balkans.  Shows how extremely complicated European politics were.

Carl Schorske, Fin-De-Siecle Vienna:  Politics and Culture

Brilliant, seminal book on how the liberal, capitalistic, upper middle classes lost political and cultural dominance in Vienna.  Their newly-found influence and power was symbolized by the Ringstrasse and the buildings on it.  Rise of mass movements to challenge existing political order, including the use of anti-Semitism as a reactionary political weapon.  (Observed by a young Adolf Hitler.)  Cultural (and psychoanalytic) attack on rationalist and ordered culture of Vienna. In background, gradual disintegration of Austro-Hungarian Empire.  Nice tie-in with Morton’s book.

Eric Kandel, The Age of Insight:  The Quest to Understand the Unconscious in Art, Mind, and Brain, from Vienna 1900 to the Present

Brilliant book by Nobel Prize neurobiologist.  Worthy successor to Schorske.  Attempts to link innovations in thinking in medicine, psychology and art with the theme of looking below the surface.  Origins of one psychology of the mind and influence on later art criticism.  Interesting that Freud didn’t seem to be interested in modern art in Vienna or had more contact with contemporary artists. Author also argues painters seemed to be more interested in the psychology of women than Freud, whose explanations were superficial and stereotyped.

Philipp Blom, The Vertigo Years:  Europe, 1900-1914.  2008.

Despite structure, surprisingly insightful look at the years leading up to WWI.  Attempts at parallels to current (or continuing) society.  Emphasizes psychological stress and social disruption caused by economic change, and their political and cultural consequences.  Like Schorske’s book, does not delve too deeply into causes.

Frederic Morton, Thunder at Twilight:  Vienna 1913/1914

A number of extraordinary stories filled with irony.  How Vienna miscalculated.  Vignettes of famous people in Vienna during this period.

David Edmonds and John Eidinow, Wittgenstein’s Poker:

The Story of a Ten-Minute Argument Between Two Great Philosophers

Interesting book that present the fundamental differences between the philosophies and backgrounds of Wittgenstein and Popper. Another look at the intellectual ferment in pre- and post-WWI Vienna. Friedrich von Hayek was a second cousin of Wittgenstein. Wittgenstein was the son of one of the wealthiest industrialists in Austria.  

Geoffrey Wawro, A Mad Catastrophe:  The Outbreak of World War I and the Collapse of the Habsburg Empire

Excellent history of the combination of unreality, arrogance and stupidity of the military and political leaders of the Austro-Hungarian Empire that led to World War I.  Mostly a military history of the performance of the Austro-Hungarian army during the first year of the war.  Incredible incompetence leading to defeats and horrific casualities.

Simon Winder, Danubia:  A Personal History of Habsburg Europe

Quirky, funny history/travel/personal thoughts on Habsburg Empire.  Last part emphasizes that history of Balkans in 18^th and 19^th  Century (retreat of Ottoman Empire) and breakup of Austria-Hungary led to release of virulent nationalisms and “ethnic cleansing.”  Continued during WWII and after war, into 1990s.

Edmond Taylor, The Fall of the Dynasties:  The Collapse of the Old Order, 1905-1922

Written by journalist turned historian.  Good on details and personalities.  Believes most of the players were idiots, incompetent and/or narrow-minded. Treats Ottoman Empire in depth.

Stefan Zweig, The World of Yesterday.

A literary and moral autobiography.  The tragedy of Europe as seen in the life of a literary intellectual who believed in a European community of intellectuals.  Dreamed of a peaceful, united Europe. Committed suicide in exile.

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