Against the Current, No. 33, July/August 1991
The Rise and Fall of the New Deal Order, 1930-1980
Edited by Steve Fraser and Gary Gerstle
Princeton, New Jersey: Princeton University Press, 1989, 311 pages, $20.
SOME FORTY YEARS ago, American intellectuals still contemplated the question asked by German sociologist Wemer Sombart at the turn of the century: Why is there no Socialism in the United States? In the wake of World War II, the United States had witnessed few challenges to “free enterprise,” while other advanced industrial countries saw the ascendance of Labor and Social-Democratic parties.
Despite the battering of an extraordinarily long and painful depression, U.S capitalism had reached a new level of social stability on the basis of modest liberal reform and wartime industrial expansion. The left remained marginal.
Today, however, after a decade of01 right-wing administrations and compliant Congresses, Sombart’s question might be rephrased: Why is there no Liberalism in the United States? After the 1988 election, when card-carrying membership in the ACLU bore the load of opprobrium that conventional politics used to heap on suspected Communist affiliation, it seemed even that modest aspiration for reform was extraneous or anathema to the political mainstream.
It is the eclipse of that political current over the last twenty years that gives moment to this volume, which collects ten essays trying to shed new light on the nature of the liberalism associated with the legacy of Franklin Roosevelt’s administration, and on the weaknesses that undermined what once appeared its unassailable supremacy in U.S. politics.
A Succession of Party Systems
The diverse perspectives gathered in this volume share a preoccupation with what the editors call “the New Deal order,” a phrase denoting not merely the specific policies of Franklin Roosevelt but a political formula shaped during his administration and enduring long after it.
In their eloquent introduction, the editors explain the theoretical basis of their project. Rather than seeing politics as merely an ongoing sequence of decisions and controversies among governing elites, they view the history of U.S government since its founding as having a specific rhythm determined by the succession of a few “party systems.” Each of lasts for decades with a relatively stable configuration of political parties, voting constituencies, ideological assumptions and policy dispositions, before reaching a crisis and giving way to a new one.
Innovations introduced at the time of the New Deal—particularly the legal recognition of labor unions and the administrative oversight of collective bargaining, the centralized provision of social insurance, the expanded scope of government as a watchdog of business practices and above all the stature of the Democratic Party as the majority party—seemed by the 1960s to have become rooted in the nature of modern U.S. life.
Then the upheavals of the late 1960s led many to feel that those fundamental were suddenly in question—that the specter of George Wallace and the repressive authority of Richard Nixon, following the great campaigns of the antiwar movement and Black freedom struggle marked the “end of liberalism.” Still, ii was not until the 1980s, with the two terms of Ronald Reagan, that it became perfectly clear—indeed, shockingly so—how dead New Deal liberalism was and how familiar it had become.
As a concerted effort to reassess the nature of this bygone liberalism, the essays collected in this volume might be considered “post-New Left” in character. Clearly, as against the old, self-congratulatory liberal view of the New Deal, the New Left’s critique of “corporate liberalism” seems more to the point: Most of the writers assume that the Roosevelt administration paved the way fora set of social and political relations that were essentially conservative in preserving capitalist property and prerogatives.
Still, no one in this volume holds to a strict analysis of “corporate liberalism,’ except perhaps for Thomas Ferguson, who argues in the opening chapter that New Deal policies, including the Wagner Act, free trade, and deficit spending, emerged as the program of the specific fraction of capital engaged in investment banking and capital-intensive industry geared to the world market.
For the other writers in Rise and Fail, the New Deal order consisted of something more than the self-aggrandizing policy initiatives of far-sighted capitalists, since it depended upon and helped drive sweeping transformation of U.S. social life, its roots lay in deep structural changes of the U.S. economy, which Michael Bernstein shows was undergoing a long-term shift from basic heavy industry toward industries producing for mass-consumer markets.
The change was also sustained by a new cultural temper, the “intense familism” which, according to Elaine Tyler May’s stimulating contribution, gave emotional depth to the household consumption of goods in post-World War II.(1) The drift of government policy, the function of trade unions, the strains of popular consciousness that together characterize the New Deal order are understood properly only in these contexts.
Social Democratic Influences
The writers in Rise and Fall also give much greater attention to the nuances of liberal policy and ideology in the 19306 and 1940s than the critics of “corporate liberalism” customarily have done. In fact, this volume is distinguished by its sustained examination of the social-democratic ideas that circulated for a time in some wings of the Roosevelt administration and among some of its allies.
The “New Deal liberalism” generally accepted by the 1960s, the contributors seem to agree, achieved its particular form precisely as these incipient social-democratic ideals lost political currency in the 1940s. In his essay, historian Alan Brinkley studies the transformation of liberal thinking in administration circles from the mid-thirties through the war years, taking the second slump of the Depression Decade—the devastating recession of late 1937—as a watershed.
It is a complicated and paradoxical story. While the 1937 slump demonstrated how intractable the decade’s economic crisis was, it also drained the confidence of those young reformers who had hoped, in the early days of the New Deal, that they might build a really new, harmonious economic order surpassing the old capitalist market.
While touting a militant rhetoric hostile to the concentrated economic power of capitalist monopolies, the brash “New Dealers” of 1938 like Thomas Corcoran, Benjamin Cohen, Leon Henderson, Lauchlin Currie, and Mordecai Ezekiel hoped only to establish a state that vigorously policed the marketplace with antitrust and other regulatory tools while priming the pump with deficit expenditures. Even that vision proved overambitious and dispensable once the war set private enterprise humming again.
Thereafter, liberalism shied away from interfering at all with corporate prerogatives and based public policy solely on fiscal stimuli and modest welfare-relief measures. That transformation from “regulatory” to “fiscal” visions of the state brought to an end the kind of reform liberalism, aiming to substantially “reshape” market-based economic institutions that had figured in U.S. political debate since the Populist insurgency.
Social-democratic ideas of reform survived somewhat longer than Brinkley allows, according to Nelson Lichtenstein’s treatment of labor-liberalism during the few years after the end of World War II. From the viewpoint of the CIO and those pro-union liberals who still hearkened to the call of third-party innovations, the war had revealed the possibility of a new political economy guided by tripartite boards of government, business and labor representatives–a system which would give the working class some organized voice in macro-economic policy.
The demands of the 1946 GM strike—to open company books for public inspection and to hold down prices while boosting wages substantially—gave but a taste of what labor-liberals hoped would be a new, paramount policy role for politicized unions. Such hopes were overwhelmed by a number of forces, including the contradictory and deeply bureaucratic impulses of the labor movement itself, the intransigence of the South to the kind of organizing that would make unionism truly a national force, the new vigor and political assertiveness of postwar business, and the devastating schisms the Cold War introduced to the labor left.
By the late 1940s, then, what Brinkley defines as fiscal liberalism had surely carried the day. Consequently, the New Deal effectively buried the “labor question,” as Steve Fraser puts it. That question, long the preoccupation of liberals and radicals alike, had always implied that any long-run program for solving the problems of inequality bound up with the system of industrial labor would demand a wholesale reconstruction of modern social relations, particularly the elevation of labor’s social status and political power. The New Deal managed to allow unions clout while defusing the social significance of labor’s struggle.
Add up all its ingredients—the shift of economic dynamism to the consumer-market sector, the abnegation of government before private corporate prerogatives, the wounded and narrow-minded union concession to firm-by-firm contract bargaining, the cultural move toward lodging self-satisfaction in the home and in tenuous local communities—and the success of the New Deal reveals a great paradox: its promotion of an expanded state, celebrated for championing the public interest, concealed a deep undertow of privatization.
New Deal Disintegration
This picture suggests how the rise of the New Deal order set the stage for its fall. The familism of the postwar years rested grand hopes for intimacy, self-expression, and sensual gratification in an isolated household founded on a traditional gender hierarchy. While the family couldn’t bear the load, the aspirations it nurtured vented themselves in a rebellious youth culture that only piqued the resentment of those traditionalists who had never embraced the secularism of the New Deal order.
With the disappearance of “the labor question,” Ira Katznelson points out, the center of gravity in political debate shifted from class to race, and while that permitted some profound achievements in the civil rights struggle, it prevented liberalism from addressing deep inequities in political economy and ultimately fractured the Democratic party alliance of Blacks and “ethnic” white workers. The narrow bounds of welfare programs and union practices whittled away the support for public services and prepared the ideological ground for the Reaganites’ unalloyed celebration of private economic initiative.
All this leads one to wonder, though, whether Reaganism really mounted “a frontal assault on the institutional foundations of the New Deal order,” as the editors’ epilogue asserts. To be sure, the vicious assault on trade union rights from the highest reaches of the Reagan administration signaled a reversal of the rhetorical solidarity New Deal liberalism offered labor. The partisan rhetoric against “tax and spend” Democrats and the attempt to gut the regulatory apparatus, especially in Environmental Protection and Occupational Safety and Health (though these were late innovations introduced under a Republican, not Democratic, administration), also testify to an attack on the New Deal legacy.
Nonetheless, the Reaganite order has rested on two key elements of New Deal liberalism: “military Keynesianism,” or deficit spending in support of a vast military establishment and worldwide imperial adventurism, and the further development of what Emma Rothschild has called a “semiprivate welfare state”—where government transfer funds fuel private enterprise in healthcare and other services and where the bulk of social provision is arranged through private sources (like corporate pension funds) for privileged elements of the population.(2)
This volume succeeds in elucidating the formation and ideological sources of the semiprivate welfare state, but it more or less ignores the role of military Keynesianism and the anti-Communist patriotism that always accompanied it Its focus on “New Deal liberalism” obscures “Cold War liberalism” from view, and the book suffers from its failure to explore fully the international dimension of U.S. politics in the years of liberal ascendancy.
Surely, the loss by the United States of unchallenged imperial hegemony in the 1970s played a great part in undermining that social and economic dynamism that gave “the New Deal order” its foundation and its strength. When the Democrats lost hold of that nationalist and martial vigor they had once promoted, Reagan’s Republicans seized it, which is why they gained the support of Truman-era Cold War Democrats renamed “neo-conservatives” and why Reagan, with his jingoism, tax cuts, and bombastic rhetoric of renewed national pride, often sounded like no one more than John Kennedy.(3)
How much, then, has changed and how much has remained the same in the wake of the New Deal’s decline? Thomas Byrne Edsall’s concluding essay in Rise and Fall offers some suggestive clues. As a political system resting on Democratic Party dominance, the New Deal order has clearly been finished for the last two decades. But subsequent developments, the Reagan and Bush administrations included, do not signify a new “party system” or a new “political order.”
The Republicans’ electoral base and policy consensus is markedly unstable, preventing them from stepping into the Democrats’ shoes as masters of the polity for the long haul. Meanwhile, for lack of a coherent program, they carry on more of the old order than they know. What remains in the wake of the New Deal order’s decline, then, is continued disarray in essentials of social policy and a sustained ideological vacuum.
With the ideological ballast of the Cold War enemy now removed from U.S. political discourse, Reaganism with its anti-Communist program might appear in retrospect not as the mortician of the New Deal order but as its cadaver.
1. See Albert 0. Hirschman’s Shifting Involvements: Private Interest and Public Action (Princeton University Press. 1982) for an interesting discussion of how privatized consumption spawns its own unique frustrations and dissatisfactions.
2. Emma Rothschild, “The Real Reagan Economy,” New York Review of Books, June 30, 1988, 46-53.
3. Elsewhere, Alan Brinkley has pointed out that fervent nationalism was always an ingredient of mid-twentieth century liberalism. Comments on Dilemmas of Recent American Liberalism, Organization of American Historians, April 8, 1989.
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July-August 1991, ATC 33