The Myth of the New Deal Triumphant

The conventional wisdom among US historians (and, indeed, among educated Americans in general), holds that Franklin D. Roosevelt's New Deal succeeded in effecting one of the most significant political reorientations in American history. Prior to FDR, the US was effectively run by and in the interests of business (which is really another way of saying: by and for elites). The coming of the New Deal, in this view, effected a near-revolutionary transformation of power relations in the US, whereby the federal government, acting as an honest broker of the competing interests of various social classes, became the dominant power center in American society.

Even if, as is generally acknowledged, the New Deal failed at it's stated aim of ending the Depression (which is generally attributed to the impact of World War II military Keynesianism), most believe that it succeeded in a much broader restructuring that was, ultimately, responsible for the strength and durability of the postwar prosperity. In this view , the postwar period (up to 1980), is seen as an era of the New Deal triumphant, when the basic values embodied therein - - fairness, inclusion, labor rights, the social safety-net, small "d" democracy - - achieved near-universal acceptance from all sectors within American society.

In my view, this conception is seriously flawed. The most significant problem has to do with what seems to me to be a necessary corollary of this line of reasoning: the belief that business elites in the US largely accepted (or, at least, begrudgingly accommodated themselves to) the advent of the "broker state," seeing it, ultimately, as the best means of preserving their wealth and privilege. As I discussed in my last post (see Hoping for a New New Deal),  this view is false: the initial distrust with which elites viewed Roosevelt, rapidly turned to outright hatred as the nature of the New Deal became apparent. By 1934, this contempt was nearly unanimous; extending, even, to pro-business conservatives within the Democratic Party itself (including the party's 1924 and 1928 presidential nominees, John W. Davis and Al Smith). It was these establishment Democrats, after all, who were the driving force behind the formation of the anti-Roosevelt American Liberty League, the public face of their effort to defeat FDR in 1936 and to stop the New Deal in its tracks.

 

 

A political cartoon captures the anti-Roosevelt sentiment.

The election of 1936 reflected the enormous class-based political divide in the US at that time: the nearly unanimous elite contempt for the New Deal was in contrast to its overwhelming popularity among the mass of the populace; the almost monomaniacal elite hatred of Roosevelt, himself, was matched by the ardor of the masses, for most of whom FDR had become a revered figure. Roosevelt's overwhelming landslide, far from causing elites to reconcile themselves to the new societal reality this smashing victory seemed to manifest, simply led to a deepening of their loathing, as well as their despair.

The depth of the enmity toward Roosevelt, even among interests ostensibly aligned with the Democratic Party, is depicted by Robert Caro in the first volume of his excellent biography of Lyndon Johnson (The Path to Power). Caro describes a Texas political milieu in the mid-1930s, in which politicians were forced to posture as fervent supporters of FDR in public, while expressing sneering contempt for the man and his policies in private. Johnson, himself, ran for Congress posing as a committed Roosevelt man, with key backing from Roosevelt-hating ultra-conservative business elements - - in particular, the brothers Herman and George R. Brown of the Brown & Root engineering and construction firm (later Kellogg, Brown & Root, and now part of Halliburton). Once in office, LBJ faithfully did the Browns' bidding, delivering federal construction contracts worth hundreds of millions of dollars to his patrons. The first major contract, for the construction of a hydroelectric dam on the Colorado River in Texas, required the personal intervention of FDR to secure a necessary regulatory change.

The Browns and their element in Texas, at the heart of what would become the "military industrial complex," are often depicted as having developed into an important part of FDR's New Deal coalition by the end of the 1930s. The fact that Roosevelt personally interceded on their behalf to secure lucrative government contracts is seen as evidence of this. The reality is that, although they were more than willing to make a fortune by feeding at the trough of the federal government, they never had anything but contempt for Roosevelt and the New Deal.

Why, then, did Roosevelt help the Browns and others like them? The answer reflects not the strength and durability of the New Deal, but, rather, its weakness and vulnerability. Roosevelt, as we all know, broke the two-term tradition in American presidential politics, winning an unprecedented third term in 1940 (and a fourth term four years later). The conventional notion of why FDR chose to buck this tradition and run again usually emphasizes the looming world war. In this view, Roosevelt is portrayed as having decided that, given his experience and leadership qualities, he was the best person to lead the country into and through the war.

Although the approach of war was certainly an important element in FDR's decision, domestic politics seems to have been even more significant: As the 1940 election approached, Roosevelt realized that, should he step aside, no committed New Dealer had a significant chance of winning the Democratic nomination. Rather, the nominee would almost certainly be an anti-New Deal conservative, committed to dismantling FDR's legacy. The odds-on favorite was none other than FDR's vice president - - and bitter political enemy - - John Nance Garner of Texas. Thus, what FDR needed from the Browns and others like them, was their backing for his candidacy in 1940, and, in particular, their commitment to refrain from assisting Garner, with whom they were closely identified. In the end, FDR got the nomination and the Browns got a contract for a huge navy project at Corpus Christi. (An account of the backroom dealings that delivered the Browns - - and Texas - - into the Roosevelt camp in 1940 can be found in The Halliburton Agenda, by Dan Briody at p. 76-79).

In his co-opting of hostile forces like the Browns in the interests of political expediency, Roosevelt was establishing a pattern of behavior that, in my view, would become an essential feature of Democratic Party politics in the postwar era. I like to call this pattern "riding the tiger," after the line from John F. Kennedy's inaugural address alluding to an old folk tale (stated, in that instance, as a warning to post-colonial states): "[T]hose who foolishly sought power by riding the back of the tiger ended up inside." Although Roosevelt, himself, didn't end up in the tiger's belly, I would contend that, after his passing, the New Deal did.

Elite business interests emerged from World War II much wealthier and more powerful than before. Those connected with the burgeoning military-industrial complex - - with weapons contractors, large-scale engineering and construction firms, resource companies (especially oil and gas), and the financial institutions that were allied with them - - did especially well. With Roosevelt having exited the stage, they were free to promote, at the national level, a political agenda in line with their economic interests and values. That is exactly what they did.

In the political realm, containment and, ultimately, rollback of the New Deal legacy has been the primary imperative of US elites throughout the postwar era. This has involved two main thrusts: 1) promoting policy initiatives that have contributed to the containment, or, wherever possible, dismantling of the New Deal, while opposing those that might in any way extend it; and 2) (perhaps even more important) foreclosing, by any means necessary, the emergence of a "new FDR" as president.

As I discussed in a previous post (see "Al Gore, Media Pariah"), in this context, I take a "new FDR" to mean a president who sees his (or her) role as representing the interests of the general populace (of the "commonwealth"), on whose behalf he (or she) is willing to take on entrenched economic interests. In essence, elites have been determined to prevent the reoccurrence of the situation they faced with Roosevelt, in which an independent-minded president became so popular with the general public that, at least to a significant extent, he effectively escaped their control.

This situation was particularly threatening to elite interests, because the very source of FDR's popularity with the masses lay in their perception of his essential fairness. This, then, was the fundamental danger posed by FDR for elites: he took seriously the democratic pretensions of the US system of government.  He acted like a president is supposed to act. And for twelve long years, elites had to grit their teeth and bear it.

The only alternative to this ordeal would have involved taking the enormous risk of tearing the mask off by putting an end to the constitutional order and establishing a dictatorial regime. As I noted in my last post, there is a good deal of evidence that this was seriously considered in 1933-34, as revealed in the so-called "Smedley Butler affair." If accounts of a plot were true, the fact remains that a coup d'état failed to materialize. There may have been any number of reasons for this; the premature public revelation by Butler is a likely one. However, (again, assuming the truth of the plot), one suspects that the sheer danger that an overthrow of the established order - - and all of the myths of American exceptionalism that stand behind it - - could result in a fundamental destabilization of society that might very well spin out of control, would have loomed large.

In my next post, I'll discuss the lengths elites appear to have been willing to go in the postwar period to foreclose the emergence of a "new FDR," and to rollback the New Deal.

Hoping for a New New Deal

Many liberals, including commentators such as Paul Krugman, have expressed hope that the 2008 election will mark a progressive political watershed in the US, like the 1932 election that swept Franklin Roosevelt into the White House, and large Democratic majorities into both houses of Congress, setting the stage for the New Deal. I've suggested in a previous post (see Al Gore, Media Pariah) that the recent "Draft Al Gore" boomlet is reflective of this quite understandable widespread longing for a "new FDR" on the part of the liberal electorate.

Lately, I've noticed that peak oilers, too, are increasingly citing the New Deal as a hopeful instance of the US political system responding constructively to an enormous challenge facing American society (in that case, of course, the Great Depression). It is not surprising that thinking people are groping for a positive historical reference point, given that we are faced with a bleak contemporary reality characterized by 1) more and more experts declaring the apparent arrival of Peak Oil; 2) signs (in particular the 2007 Arctic ice melt) that global climate change may have reached a tipping point, with potentially catastrophic consequences down the road; and 3) the growing likelihood that the resource wars in Iraq and Afghanistan will shortly be expanded to Iran, possibly even involving the first use of nuclear weapons in more than 60 years, and potentially unleashing World War III. In this context, it's no wonder that any sliver of hope that we might be able to find our collective way out of this mess - - and, thereby, avoid Richard Heinberg's apocalyptic "last one standing" scenario - - is eagerly seized upon.

I'm all for hopefulness, if it's warranted. But, when we make use of a historical example to build a case for a hopeful outcome to our current dilemma, it is essential that we have an accurate understanding of that history. In this case, before we can posit the emergence of a new New Deal, we had better understand the nature of the old one. Having spent the past couple of years researching the response of business elites to the Great Depression and the New Deal for a history dissertation I'm currently at work on, I think I can offer some insight in this regard.

Richard Heinberg's current Museletter consists of a thoughtful essay ("Big Melt Meets Big Empty") concerning the alternative realities of science (physical reality) and politics (political reality). Heinberg identifies the opposition between these two as the key cause of the seeming inability of political institutions in the US and elsewhere to constructively respond to the twin threats of climate change and resource depletion. He advocates working toward overcoming this opposition, to whatever degree that is possible. His key suggestion is that interested groups of citizens develop realistic assessments of the efficacy of various potential policy responses, and that they then use these assessments to create an advocacy program to push for the enactment of desired policies.

Looming in the background for Heinberg, however, are two critical and related specters, either of which would likely doom any constructive initiatives that might be developed: 1) resource wars; and 2) implacable opposition on the part of elites. It seems to me that a fruitful way of looking at these twin threats, is to see resource wars as, in a sense, the bitter consequence of elite opposition to ameliorative policies.  That is to say, if, faced with energy scarcity, elites succeed in blocking serious consideration of "powerdown" approaches (like the oil depletion protocol), resource wars become the likely outcome - - the "default" option, as it were. Conversely, if ameliorative policy options are viable, resort to "last one standing" warfare can hopefully be avoided. If this is so, then the question of the potential for elite acceptance of some such policies seems to be the key factor in assessing the possibility of a hopeful outcome to energy transition.

On this issue, Heinberg expresses a measure of hope, based on the example of the New Deal:

Ultimately, power holders must be convinced that [energy transition] policies, if obnoxious to them now, will be far less destructive to their interests than a complete breakdown of society and biosphere - which is the very real alternative. For a historic example of a similar conversion of elites think of the 1930s New Deal: then the titans of industry had to sacrifice some of their financial power in order to keep from losing it all. Many wealthy individuals never forgave Franklin Roosevelt, whom they regarded as a "traitor to his class," but most of them reluctantly agreed that redistribution represented the lesser of evils.

The question is, thus, starkly raised: Is Heinberg's history here an accurate depiction of actual events? Did most "titans of industry" agree (if reluctantly) to New Deal policies as a lesser evil, in view of the potential for utter ruin represented by the Great Depression? Alas, the historical record provides little basis for this claim. This, obviously, calls into question (though it does not necessarily invalidate) Heinberg's conclusion that a similar conversion of elite opinion is possible today. I'll first discuss the actual history of the attitudes of business elites' toward FDR and the New Deal. Then, based upon this history, I'll try to assess whether hopefulness seems warranted with respect to powerdown policy initiatives.

The notion that a significant segment of business elites supported the New Deal is commonly known as the "corporate liberalism" theory. According to this view, forward-thinking business leaders, primarily drawn from the ranks of large-scale Eastern capital-intensive industries, recognized that laissez-faire capitalism was doomed, that flat opposition to unionization and social welfare initiatives risked opening the way to socialism and expropriation of private wealth. As a result, so the theory goes, these corporate liberals made a strategic decision to back New Deal policies, and, in so doing, were able to shape those policies in a business-friendly way, which, ultimately, stabilized capitalism on a new "welfare state" basis, setting the stage for the postwar boom. [Those wanting a more thorough exposition of this theory may wish to consult the essay by Thomas Ferguson entitled "Industrial Conflict and the Coming of the New Deal," in The Rise and Fall of the New Deal Order, 1930-1980, edited by Fraser and Gerstle].

This theory has been pretty thoroughly demolished over the last decade, for one key reason: notwithstanding the claims of Ferguson and other proponents, the existence of a cadre of New Deal-supporting corporate liberals is not supported by the archival evidence. [The best demolition of the theory is an essay by the brilliant sociologist and political scientist Theda Skocpol, entitled "Political Response to Capitalist Crisis," in Skocpol and Campbell, eds., American Society and Politics: Institutional, Historical, and Theoretical Perspectives].

The reality is that, if FDR saved capitalism from itself through the New Deal, he did so, not with the support of any significant segment of business elites, but, instead, in the face of continuous, nearly unanimous, exceptionally bitter business opposition. Further, what Roosevelt saved, was probably not capitalism, but, rather, constitutional democracy. That is to say, given the state of American society during the 1930s, the US would have been much more likely to have seen a fascist takeover (which would have largely preserved the power of business elites) than a socialist revolution. [For a highly-readable non-scholarly account of a possible 1934 right-wing coup plot, purportedly led by the DuPonts and Morgan interests, see Archer, The Plot to Seize the White House].

This, of course, raises the question of how the New Deal happened, given broad elite opposition. The answer seems to be that the depth of the economic crisis during the 1930s led to an enormous loss of business prestige, which, in turn, resulted in a decline in the ability of elites to exercise decisive control over the political process. The opening thus created was filled, not by forward-looking corporate liberal business leaders, but rather, by government officials like FDR's "Brain Trust" (principally  Raymond Moley, Adolf Berle and Rexford Tugwell), cabinet secretaries such as Frances Perkins at Labor and Harold Ickes at Interior, and Congressional liberals such as Senator Robert Wagner of New York. In addition, into this breach created by the decline in business prestige and authority, stepped a resurgent labor movement, led by John L. Lewis and the CIO.

The key lesson that contemporary would-be "powerdown" reformers should take away from the history of the New Deal, then, is that they are highly unlikely to win the approval or support of any significant segment of business elites. Rather, the probable reality will be bitter and unremitting business hostility every step of the way. "Well," one might ask, "they (the New Dealers) were able to succeed despite business opposition. Can't we do the same?"

In my personal assessment, the answer is: Perhaps, but probably not. First, in the 1930s, business elites were caught by surprise by the relatively sudden, precipitous loss of prestige and decisive influence they suffered. As a result of the (for them) intense trauma of the New Deal, during the intervening decades tremendous intellectual and economic resources have been poured into the development of strategies and social structures intended to insure that it never happens again. These include the massive corporate public relations industry (which, not coincidentally, got its start during the 1930s); the related development of the mass media - - especially television - - and mass advertising, as agencies for shaping mass consciousness; the coalescence of the military-corporate-Congressional complex, with enormous, even decisive influence over government policy in its sphere of interest; the development and implementation, in both the public and private realms, of sophisticated strategies of surveillance and control; and, the capture of the political process, to an unprecedented degree (especially at the federal level), by corporate oligarchic interests.

Second, the US (and the world) faced a very different historical conjuncture in the 1930s, as compared to today. Despite the Depression, the US was the world's supreme financial power, as well as the richest country in resource terms, particularly fossil fuel resources. In this context, the societal "bargain" that we call the welfare state was a feasible alternative to continuous repression of social unrest. All of this changed in the early 1970s (typified by the peaking of US lower-48 petroleum production). The "richest country in the world" is now a good deal poorer (at least relatively) than it was then. It is no coincidence that no new major social welfare programs have been instituted in the US since the 1960s. The willingness of elites to passively accept any significant constraints on the "free market" (such as energy transition-related public policy initiatives) is open to serious question.

One can, of course, posit that the coming catastrophic impact of resource depletion and climate change will lead to a weakening of several of these structures, much as the Great Depression washed away the edifice of business prestige in the 1930s. Let's hope so. However, in my view, it is far more likely that, when the coming crisis hits with full force, we'll see a strengthening of strategies and agencies of repression and control, rather than the advent of a new New Deal.