The schism between Hillary Clinton and Bernie Sanders is knit into the DNA of the modern Democratic Party, in two interrelated ways. The first is ideological: the battle of left versus right.

Start in 1924, when the party cleaved nearly in two. That year, at Madison Square Garden, the Democratic convention took a record 103 ballots and 16 days to resolve a fight between the party’s urban wing and its conservative opponents. How conservative? Well, the convention was nicknamed the “Klanbake,” because one of the great issues at stake was—no kidding—whether the KKK was a good or a bad thing. The divide was so heated that tens of thousands of hooded Klansmen held a rally and burned crosses to try to bully the party into meeting their demands.

Eight years later, under Franklin Roosevelt, the party’s urban, modernist wing established what would become a long hegemony over its reactionary, Southern one. But that hegemony remained sharply contested from the very beginning. In 1937, bipartisan opponents of FDR banded together to forge the “Conservative Manifesto.” Co-authored by a Southern Democrat, the manifesto called for lowering taxes on the wealthy, slashing government spending, and championing private enterprise. Hillary Clinton’s eagerness to please Wall Street can be traced, in part, to that ideological split during the New Deal.

Indeed, over the years, many of the most “liberal” Democrats have remained sharply conservative on economic questions. Eugene McCarthy, the “peacenik” candidate of 1968, ended up backing Ronald Reagan. Dan Rostenkowski, the lunch-pail chairman of the House Ways and Means Committee, proposed a tax package in 1981 that was more corporate-friendly than Reagan’s. Jerry Brown of California, long derided as “Governor Moonbeam,” campaigned for president in 1992 on a regressive flat tax. That same year, Bill and Hillary Clinton won the White House with the business-funded support of the Democratic Leadership Council, which sought to downplay the “big government” solutions championed by FDR. ...