http://chronicle.com/weekly/v55/i23/23b01001.htm
From the issue dated February 13, 2009
Beyond Economic Revival
Which New Deal approaches are worth emulating?
By CHRISTOPHER PHELPS
His oratorical gifts draw comparisons with Martin Luther King Jr. His
youthfulness and liberal centrism are reminiscent of John F. Kennedy.
His hope is akin to Ronald Reagan's optimism. His gauntness, learnedness
in Constitutional law, assemblage of a team of rivals, and appeals to
our better angels recall Abraham Lincoln, on whose Bible he was sworn
in. This pastiche of parallels, some the result of Barack Obama's own
studied modeling, makes the new president seem as much a composite of
the nation's mythic past as a symbol and agent of change.
The antecedent now looming largest, however, is Franklin Delano
Roosevelt. Unlike the others, FDR is evoked not for his biographical
similarities, although he and Obama do share certain qualities:
considerable charm, level-headedness, reserve, a willingness to
experiment, and degrees from Columbia and Harvard. What drives the
comparison between them is the eerie resemblances of the national
economy at their respective moments of inauguration.
Analogies between the present and FDR's first 100 days, when he began
his New Deal, are entirely understandable. When FDR took office in 1933,
the banking system was on the verge of total collapse. His election
represented a repudiation of multiterm Republican presidential dominance
culminating in a Wall Street crash. Unemployment was high. There was a
desperate need for federal action after ineffective bailouts at the top
of the financial system had failed to produce stability.
Despite all of these contextual similarities, however, FDR's later and
less-remembered Second New Deal is what cries out for emulation and
completion, not his 100 days.
In the 100 days between March and July of 1933, FDR adopted a personable
style of reassurance, from his inaugural proclamation that "the only
thing we have to fear is fear itself" to his fireside chats by radio.
His political feat — 16 major pieces of legislation signed in a few
months' time — was improvisation, not forethought. Nevertheless, FDR set
the bar for vigorous action by future presidents who sought to match the
achievement, regardless of context. (In 1963, Lyndon Baines Johnson
ordered his Congressional liaison to "jerk out every damn little bill
you can and get them down here" so as to have "the best 100 days. Better
than he did!")
The downturn Obama inherits is nowhere near as deep as the trough of
1931-33, but failing banks, plummeting equity values, foreclosures, job
loss, and other deteriorating indicators make the current predicament
disturbingly suggestive of the Great Depression. Little wonder, then,
that Obama supplied his incoming team with copies of Jonathan Alter's
The Defining Moment: FDR's Hundred Days and the Triumph of Hope (Simon &
Schuster, 2006). Roosevelt's 100 days are in many ways a logical
precedent, a time when economic recovery and confidence restoration were
at the top of a new administration's agenda. Alter, however, is a
Newsweek journalist who pays far more attention to the brio of the first
100 days — its legislative blitz and rallying of a demoralized nation —
than its policies.
Were FDR's 100 days really a success?
That depends on whom you ask. Assessors of the New Deal fall roughly
into three groups. Its champions, starting with Arthur Schlesinger Jr.,
view it as a breakthrough in which the federal government for the first
time took responsibility for the economic well-being of ordinary
Americans. By the 1960s, New Left historians disillusioned by the
bureaucratic welfare-warfare state and racial segregation, and
blissfully unaware of the Reagan Revolution on the horizon, faulted the
New Deal as "corporate liberalism," a patchwork that propped up
capitalism at a time when it might have been supplanted. They criticized
it for neglecting large categories of the hardest-pressed, including
domestic workers, sharecroppers, and migrant workers. Finally,
conservatives informed by monetarism, from Milton Friedman to Amity
Shlaes, hold that the New Deal created a nanny state and prolonged the
depression by interfering in a self-regulating market best left to its
own course.
That last perspective ought, by all rights, to be on the ropes. Its
kinder, gentler account of Herbert Hoover and faith in the
self-correcting market are less plausible than ever when viewed from the
ruins left by George W. Bush's reign. Whether in Enron's creative
accounting, the packaging of high-risk subprime mortgages as top-grade
collateralized debt obligations, or Bernard Madoff's $50-billion scam
operation, the recent riot of capitalist irresponsibility has shattered
the fantasy that the free market, left to its own devices, will
automatically produce rationality and prosperity.
Radical criticism of corporate liberalism, meanwhile, has waned, largely
because of the surge of corporate conservatism beginning in the 1970s.
Jimmy Carter, Ronald Reagan, and all subsequent presidents, including
Bill Clinton, hewed to a pattern of austerity and deregulation. Many
left-of-center historians, confronted with this dismantling of the New
Deal legacy, found themselves nostalgic for what now appeared the
fighting, principled liberalism of the 1930s. For all its limitations,
they noted, the New Deal did protect labor and establish an embryonic
social safety net.
With its most ardent critics either discredited or in retreat, one might
think the New Deal would enjoy an exalted historical stature. But
dec-ades of vigorous criticism from left and right have chastened even
the New Deal's defenders. The Cambridge University historian Anthony J.
Badger, in both his exceptionally fine synthesis The New Deal
(Macmillan, 1989) and his new digest FDR: The First Hundred Days (Hill
and Wang, 2008), emphasizes that the New Deal was "circumscribed" by
forces hostile to it, accounting for most of its deficiencies. Badger
concedes, again and again, much of the radical criticism of the New Deal
as woefully insufficient and patchwork, even while faulting radicals for
overestimating the viability of any bolder policy alternative.
In none of these main interpretations do the first 100 days of 1933 come
off as especially inspiring. Aimed mainly at economic recovery, the 100
days began with a bank reorganization that led to increased deposits but
left banking in the same hands as before and did not prompt revived
lending. The 100 days featured some successful ventures — including the
Civilian Conservation Corps, securities oversight, small depositor bank
insurance, and the Tennessee Valley Authority — but it was dominated by
two failures: the National Industrial Recovery Act and the Agricultural
Adjustment Act.
The NIRA, though it included a symbolic concession to labor in its
Section 7(a), had no enforcement powers and did not raise wages. It
primarily served, by suspending antitrust law, as a vehicle for major
corporations to uphold prices, thereby thwarting the New Deal objective
of restoring consumer purchasing power. The AAA, for its part, did
nothing for disproportionately black sharecroppers and tenant farmers,
even worsening their plights by encouraging large landlords to plow
cotton under. When at a time of widespread national hunger the AAA paid
farmers to kill more than six million piglets so as to restore
agricultural prices, moral criticism was rife. Both measures were ruled
unconstitutional in the mid-1930s by a Supreme Court wed to 19th-century
laissez-faire economic dogmas, even though the measures were dominated
by the very interests they regulated — the NIRA by corporate business,
the AAA by prosperous farmers.
The Second New Deal, the ambitious program of social reform begun in
1935, toward the end of Roosevelt's first term, was far more
progressive. Its centerpieces were the National Labor Relations Act (or
Wagner Act), the Works Progress Administration, and the Social Security Act.
The Wagner Act established the National Labor Relations Board, outlawed
a number of unfair labor practices, including yellow-dog contracts and
company unions, and upheld the right of employees to join labor
organizations, bargain collectively, and strike. The Works Progress
Administration provided federal relief to the unemployed, putting them
to work to create roads, bridges, libraries, and schools as well as art,
music, theater, and prose. The Social Security Act established a
federal-state system of unemployment compensation, required employers
and employees to pay equally into a fund for old-age and survivors'
insurance, and authorized other federal grants to the states for relief
of poverty among the vulnerable, especially children and the blind. The
Second New Deal also raised the tax rate on incomes over $50,000
(especially incomes over $1-million dollars) and estates over $40,000.
Such are the measures many historians once criticized as paltry and
limited but which came to seem a virtual social-democratic heyday in
retrospect.
What accounts for the difference between 1933 and 1935? The answer is
twofold.
First and foremost, labor was on the march. In 1934, militant strikes
erupted at the Electric Auto-Lite Company in Toledo, in Southern
California's verdant Imperial Valley, on San Francisco's waterfront,
among Minneapolis truckers, and in textile mills from Massachusetts to
North Carolina. This working-class upsurge, often led by Communist,
Socialist, or Trotskyist militants, was complemented by the United Mine
Workers leader John L. Lewis's decision to push for labor to organize
the most central sectors of the economy by a strategy of industrial
unionism — organizing all workers, including the unskilled, on an
industrywide basis, rather than skilled craft workers alone. By the fall
of 1935, the Committee for Industrial Organization was born.
A second decisive factor was mushrooming criticism of the New Deal in
1934, as populist figures ranging from the demagogic to the plausible
raised demands for economic and social justice. Francis Townsend, a
California physician who called for federal disbursements of $200 a
month to retirees over 60, organized more than 5,000 clubs to advocate
for old-age pensions. In Detroit, the Catholic radio minister Charles E.
Coughlin, an anti-Semite, formed the National Union for Social Justice,
calling for bank nationalization and denouncing Roosevelt for protecting
"plutocrats." Senator Huey P. Long of Louisiana, voice of the
hardscrabble white farmer, began the Share Our Wealth Society, which
called for confiscating all fortunes over a million dollars and
providing every American family an estate of $5,000. The longtime
socialist Upton Sinclair won California's Democratic nomination for
governor on a program to end poverty by appropriating all idle factories
and farms.
Labor and populist criticism were the core components of a diverse and
widespread social ferment. This rising crescendo of popular unrest
accounts for the social turn of New Deal policy. The Harlem riot of
1935, for example, helps to explain why New Deal public-works hiring
became far more inclusive of African-Americans in the later 1930s.
Demonstrations of the unemployed help explain the expansion of work
relief. As FDR responded to multiple, concerted pressures from below,
seeking to disarm his populist critics in advance of the 1936 elections,
the Second New Deal took on a qualitatively different sensibility from
the first 100 days. Its tenor was of social justice as much as economic
revival.
In the primaries, Barack Obama was given to say that change comes from
below. He was correct. The same proposition applies to the horizon of
his own administration. Energetic organizing and activity will be vital
to prospects for a 21st-century variation on the Second New Deal.
Already the financial and economic crises are pushing Obama to advocate
renewed securities oversight and a vast $850-billion stimulus package
reminiscent of the New Deal, complete with public-works projects on the
nation's roads, bridges, and schools. In such an atmosphere, social
movements may draw on the inspiration of a president proud to have been
a community organizer, just as labor organizers in the 1930s told
workers, with considerable license, "The president wants you to join a
union."
Today labor law and Social Security — the heart of FDR's Second New Deal
— both cry out for strengthening; but only if the labor movement really
moves again, with innovative tactics and forceful organizing, will it be
able to compel Congressional passage of the Employee Free Choice Act, a
measure that would ease union recognition and restore the badly eroded
Wagner Act. The victorious factory workers' sit-in at Republic Windows
and Doors, in Chicago, which garnered nationwide news coverage in
December, illustrates that bold and creative tactics can be effective.
The prospect of staving off Social Security "solutions" that would
actually weaken it, or of achieving universal health care, a goal set
aside by the New Dealers in 1935 so as not to antagonize powerful
medical interests, will likewise depend upon vigorous, innovative public
mobilizations.
It is often said that the Second World War, not the New Deal, ended the
Great Depression, but social legislation was not immaterial to the
wartime and postwar economic takeoff of the U.S. economy. War production
did provide a far greater stimulus than the fiscally conservative
Roosevelt, whatever his Keynesian reputation today, would permit during
the 1930s. Less frequently registered is the fact that high-paying union
jobs, adequate Social Security for seniors, and unemployment benefits —
all fruits of the Second New Deal — helped underwrite the long postwar boom.
Historical comparisons always reach a point of inutility. Ultimately,
Obama is not FDR, and even if historians are experiencing a surreal
feeling of déjà vu, this is not the 1930s. Perhaps Obama's first 100
days may nevertheless, like FDR's, turn out to be only half the drama.
Perhaps a second, more ambitious act is yet to be staged in the streets
and stores and shops by the type of unsung actors who, in the final
analysis, always propel history forward.
Christopher Phelps, associate professor of history at Ohio State
University at Mansfield, has written extensively on intellectuals and
politics in the 1930s. He is author of Young Sidney Hook (second
edition, University of Michigan Press, 2005) and editor of Max
Shachtman's 1933 text Race and Revolution (Verso, 2003).
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