It has become a cliché to say that we live in a new Gilded Age. True enough, up to a point. Money, mostly new money, rules politics and culture. Corporations merge into ever larger corporations. You have to go back to before World War I to match today’s levels of income and wealth inequality.

In some ways, the second Gilded Age is worse than the first. Sure, we live longer now, more of us can read and you don’t have to be a white man to be able to vote. But to prove my point, consider two big parties, thrown 110 years apart.

In February 1897 elite lawyer Bradley Martin and his wife, Cornelia, threw a costume ball at the Waldorf. J.P. Morgan dressed as Molière, John Jacob Astor dressed as Henry of Navarre and brandished a sword covered in jewels, and fifty women dressed as Marie Antoinette. But the hosts were so nervous about “men of socialistic tendencies” that they surrounded the hotel with Pinkertons and had the first-floor windows nailed shut.

In February 2007 Blackstone CEO Steve Schwarzman threw himself a sixtieth birthday party for hundreds of his closest friends. Rod Stewart sang for about half an hour, earning a million for his efforts. The party was at the Seventh Regiment Armory on Park Avenue–just seventeen blocks north of the Waldorf. The building has a rich history. In the second half of the nineteenth century the Seventh Regiment, nominally a state National Guard unit, was a kind of private militia staffed by the men of New York’s upper class; though they didn’t like to fight much, they did put down a strike or two. And the armory itself–decorations by Louis Tiffany–was built at the end of the 1870s (with private funds) as part of an urban-fortress building boom driven by the need to suppress the restive working class. We had populists in the heartland, socialists in the cities and labor radicals everywhere, who wanted to subdue corporate power and redistribute some income. The confrontations were sharp and often violent–but that history is largely forgotten. After the bomb-sniffing dogs had done their work, the biggest security challenge at Schwarzman’s party seems to have been keeping the army of photographers safely penned up and nosy onlookers out. No worries about men with socialistic tendencies climbing in the windows to do their revolutionary mischief.

After the Martins’ party, there was a huge public outcry at its egregious too-muchness, and the couple exiled themselves to England to escape their critics. After his party, Schwarzman got a little bad press, and some unpleasant questions were raised about the low tax rate his private-equity business operates under, but he was hardly driven into exile. In fact, Schwarzman remains comfortably lodged in one of the most spectacular residences in New York City, a Park Avenue apartment that once belonged to John D. Rockefeller Jr.

It’s not just the absence of the socialist threat at Schwarzman’s party that marks the difference between the Gilded Ages, though that’s pretty striking. The contrast in social pretensions is almost as striking. As Sven Beckert shows in his excellent book The Monied Metropolis, the elite of the first Gilded Age dressed as royalty at the Martins’ costume ball because they were consciously trying to project themselves as an upper class in a nominally republican, egalitarian society. Our elite, though obviously not afraid to spend on a grand scale, often affect a “just folks” presentation. So, though Schwarzman has his personal chef prepare him stone crabs that cost $400 apiece for a casual Saturday lunch, he hired the profoundly middlebrow Rod Stewart to croon at his birthday party. And though Schwarzman is usually photographed in a business suit, and occasionally in formalwear, many of his Wall Street colleagues prefer open-necked shirts and khakis as their work clothes. Class conflict was a lot more open, on both sides of the divide, a century ago.

Of course, the style of dress that’s come to be known as hedge-fund casual isn’t bought at your local Nordstrom’s. A couple of years ago, the Wall Street Journal put together a representative outfit that a male hedge-funder would wear to work in Greenwich, Connecticut (the epicenter of the industry): shoes by Cole Haan, $365; trousers by Ermenegildo Zegna, $495; shirt by Armani, $315; messenger bag (no dorky briefcase!) by Tumi, $395. Total, not including underwear and socks: $1,570–not all that much below $1,874, the average household’s annual expenditure on clothing in 2006. But that’s just for the hedge-fund rank and file; for the top guys, who take in a billion a year or more, it’s private jets and even personal submarines.

Still, that just-folks presentation, even if it does come with a high price tag, seems to help encourage aspirational overconsumption by the upper middle class. If they sort of look like you, then maybe you can sort of live like them. So, outfit the kitchen with a Sub-Zero refrigerator and a Wolf cooktop. You won’t have an in-house chef to do the cooking for you, $400 crabs are a little beyond your reach and you may have to tap the home equity line to pay for the appliances–but you, too, can feel like a participant in the new Gilded Age. Or could, until the job market headed south and the credit markets froze up.

And what about the sources of the fortunes that dominated the two Gilded Ages? The elite of the nineteenth century was fresh from building a massive industrial infrastructure, like steel mills and a transcontinental railroad system. Yes, it came with massive amounts of securities fraud (a reminder that financial chicanery is hardly a recent innovation in American economic history), not to mention waste, surplus capacity and shoddy workmanship. But it did result in the transformation of the United States from a relative backwater to a global industrial power.

How did Schwarzman and his colleagues in the private-equity and hedge-fund rackets, probably the most prominent members of today’s overclass, make their money? Mainly by taking over existing assets and milking them for fees, dividends and interest payments. Sure, there are some new fortunes that come from high technology, but the biggest of those are the piles accumulated by Bill Gates and his Microsoft colleagues Paul Allen and Steve Ballmer (respectively numbers 1, 11 and 16 on the Forbes 400 list). Microsoft has made its money mainly from the monopoly status of its mediocre Windows operating system. The encouragement of innovation is one of the most common rationales for the accumulation of large fortunes put forward by the system’s publicists, but it would be hard to name any significant ways Microsoft has been an innovator.

Oh, and there’s the Walton family (three tied at number 12 and one at 16), whose fortune comes from Wal-Mart, whose low prices have helped the working class cope with the downward mobility that Wal-Mart has helped create.

People on the left are always looking to recession or worse as some sort of wake-up call to the masses, who were narcotized during the boom times but will be awakened by harder times. The historical record on this isn’t all that encouraging. There was the great example of the 1930s, but that may be the exception that proves the rule, since it was so extreme. We aren’t likely to see a 25 percent unemployment rate again, as we did in 1933, and it’s hard to wish for a rerun, unless you like the idea of putting 30 million more Americans out of work to make a political point. The 1950s, a decade that saw two recessions; the 1970s, a decade known for a deep recession and persistent stagflation; and the early 1980s, when the economy experienced its worst downturn since the 1930s, are not known for progressive mobilization.

But you do have to wonder what will happen to the political culture now that the second Gilded Age seems to be drawing to a close. (The fact that Schwarzman and his partner, Pete Peterson, took Blackstone public in 2007 suggests that they agree: it looks like they were cashing in at a market top, as I suggested in the July 16/23, 2007, issue of this magazine.) The housing bust will probably be a drag on the economy, and on household finances, for quite some time; and the job market, which turned in its weakest performance of any post-World War II expansion between 2001 and 2007, is now contracting and likely to continue to do so. The first Gilded Age was succeeded by the corporate-friendly reforms of the Progressive Era–but whatever small-p progressive content they had was stimulated by all the political ferment during the boom. It’s likely we’ll see some kind of re-regulation of the economic system in the coming years, but what kind and how much will we see, when the fat years were so politically quiescent?