In the United States just after independence from Britain, the farmers of western Massachusetts, led by Daniel Shays and still in possession of their muskets, occupied the general courts to prevent bankers from obtaining judgements to confiscate farmers’ property for debt. The bankers in Boston succeeded in getting Continental troops to put down this rebellion, but all at the cost of considerable social upheaval. It is obviously in the interest of those who have power in society to prevent such violent and destructive conflicts, even if, with the police power of the state, they are sure to win.
As such struggles occur, institutions are created whose function is to forestall violent struggle by convincing people that the society in which they live is just and fair, or if not just and fair then inevitable, and that it is quite useless to resort to violence. There are the institutions of legitimation.
He’s speaking generally about equality, power and revolt, but he might as well have been speaking of the current financial crisis and the real function of Obama and the Democratic Party.