Our Divided Political Heart (36 page)

Only “on the edges of liberal thought,” Brinkley observed, were “more radical ideas” that saw the Depression as revealing “the obsolescence of capitalism and the need for a fundamentally new system.”

Each of these tendencies, particularly the first three, found expression in various early New Deal policies. Yet as Brinkley notes in his seminal book
The End of Reform
, the boldness of the early New Deal had largely dissipated as an influence on American liberalism by 1945. When Roosevelt embarked on deep reductions in federal expenditures in 1937—a choice chillingly similar to the moves toward fiscal austerity around the world in
2010 and 2011—the economy turned down sharply. It did not recover again until large-scale military spending, first in preparation for World War II and then in its execution, finally created the jobs and the mass consumer spending that full recovery required. The economy soared, and it continued to do so, with relatively brief interruptions, for nearly seventy years.

There was an irony in the success of Keynesian “pump priming” so vilified over the years by conservatives. It resulted, as Brinkley documents, in a more conservative form of progressive liberalism. “
When liberals spoke now of government’s responsibility
to protect the health of the industrial world,” Brinkley wrote, “they defined that responsibility less as a commitment to restructure the economy than as an effort to stabilize it and help it to grow.” There was less talk about “
controlling or punishing ‘plutocrats’
and ‘
economic royalists
.’” Instead, the new liberal emphasis was on “
providing a healthy environment in which the corporate world
could flourish and in which the economy could sustain ‘full employment’.”

The new Keynesian liberalism was remarkably successful. But in light of the deep economic difficulties of the last several years, it is worth pondering Brinkley’s conclusions about the new liberalism, which he offered in 1995, long before the Great Recession. “
In the end
,” Brinkley wrote, “it was not as easy as many liberals once expected to create a just and prosperous society without worrying about the problems of production and the structure of the economy.” Many of the difficulties that the early New Dealers faced and that later New Dealers thought had been resolved came back to haunt the country in the economic meltdown of 2008 and 2009.

And this led to another irony. In the Obama years, many progressives longed for the president to embrace the aggressively populist FDR of the early New Deal—the man who condemned “economic royalists” while gleefully observing that the “
money-changers have fled from their high seats
in the temple of our civilization.” But the policies Obama pursued were broadly consistent with the New Deal’s
later
Keynesian emphasis on seeking economic stability and encouraging private sector investment and growth. The economic argument among progressives in our time can thus be seen as the playing out of the differences between the rival forms of New Deal liberalism described by Brinkley.

The struggles of the early New Deal itself are also enlightening in relation to Obama’s political strategy. The robust criticisms of business and the “economic royalists” that today’s progressives cite so fondly came late in Roosevelt’s first term. (Roosevelt’s condemnation of the economic royalists was a rhetorical high point of his June 1936 speech before the Democratic National Convention, more than three years after he took office.) Much of the early New Deal was aimed at stabilizing the business system. Initially, with the National Recovery Administration (later declared unconstitutional by a conservative Supreme Court), Roosevelt actively sought to work
with
business to end the Depression. The more adventurous parts of the New Deal—widely known as the Second New Deal—came later, between 1934 and 1936. This is when Roosevelt pushed for the enactment of the Wagner Act, the empowerment of labor unions, the WPA to put the unemployed to work on government projects, and his most enduring legacy, the Social Security system.

Roosevelt acted out of frustration with the failures of some of his earlier measures and from the need for a new program in light of judicial hostility to some of his old approaches. But he also came under pressure from a variety of mass movements that rose after conditions in the country began to improve. He faced an increasingly militant union movement; politicians such as Huey Long, who was championing his “share the wealth” plan until he was assassinated in September 1935; and a variety of organizers and agitators urging the country to go far beyond New Dealism. One of them was Dr. Francis Townsend, who found himself unemployed and nearly broke at the age of sixty-seven. Townsend electrified the country with his proposal to pay all Americans over sixty a $200-a-month pension—provided they retired and promised to spend the entire sum over the course of the month. The idea was to free up jobs for younger Americans and boost the economy with new spending. Townsend’s pressure led to Social Security, a far more modest and conservative program than Townsend had demanded.

The merits of proposals offered by Townsend, Long, and others need not detain us. What mattered is that they pressed Roosevelt toward the left. So did the results of the 1934 elections, which produced a Democratic
landslide and a Congress that, as William Leuchtenburg noted, “
threatened to push him in a direction far more radical
than any he had originally contemplated.” Over time, Roosevelt developed a working relationship with the left, particularly within the labor movement, that tried to move Roosevelt beyond his instinctive cautiousness, but also gave him critical support against his foes on the right.

The parallels with Obama are not straightforward. The midterm elections of 2010 went in exactly the
opposite
direction from the Democrats’ 1934 triumph. During Obama’s first two years, the biggest mass movements, above all the Tea Party, were to the president’s right, not to his left. The trade union movement was rising in Roosevelt’s time. It had been fading for decades, except in the public sector, before Obama took office. (This makes it all the more puzzling that the Democrats did not make labor law reform a higher priority when they controlled both houses of Congress.) And, of course, assigning responsibility for the economic difficulties to his predecessor was far easier for Roosevelt than for Obama. Hoover had been president for three very long years as unemployment spiraled upward. Obama, by contrast, took office as the impact of the September 2008 market blowup was reaching full force, and unemployment continued to rise after his inauguration.

Nonetheless, the new vigor that the Occupy Wall Street protests injected into the broader progressive movement began to change both the nature of the national conversation—toward jobs, inequality, and the concentration of wealth—and Obama’s own approach. The Obama administration, impatient with critics to its left in its early years, seemed to welcome a counterpoint to the Tea Party, and the president sharpened his rhetoric about economic inequality, most visibly in his 2012 State of the Union address. Given the array of political forces in the country (Obama facing a far stronger right than Roosevelt did), it’s unlikely that the forty-fourth president will be able to follow the same political path as did the thirty-first. Nonetheless, in moving from the center to a position somewhere to its left in response to both the Occupy movement and the intransigence of Republicans in Congress, Obama’s trajectory could prove to be more similar to Roosevelt’s than progressives thought possible.

It has been common in American public discourse—among liberals as well as moderates and conservatives—to speak of the obsolescence of the New Deal and its approaches.

It is certainly true that the nature of the American economy is quite different now than it was in the 1930s and 1940s. The “vision of villages and clean small factories” that Leuchtenburg invoked as emblematic of the New Deal imagination seems sweetly quaint at a time when so much of the economy has shifted toward technology and services—and when the word “village” is most commonly used by developers trying to conjure the warmth of a distant past in their suburban and exurban building projects.

The United States should not resign itself to the disappearance of well-paying manufacturing work—
we can be “neo-industrial,” as Harold Meyer-son has argued
and President Obama has begun asserting—but the new economy cannot be repealed by statute, and there are many reasons why we would not want to do so. The rise of China, India, and Brazil along with a vast new industrial economy across the rest of Asia is transforming the world in ways that neither progressives nor New Dealers envisioned. The prospect of lifetime employment at a single firm, which underwrote the social contract during much of the Long Consensus, is unlikely to be revived.

Nor can the United States again expect to enjoy the degree of dominance in the global economy it gained during World War II and held for years afterward. Even as the war quite literally destroyed the plants and equipment of so many of our global competitors, it left the United States with vastly enhanced productive capacities. And the sheer speed and comprehensiveness of technological change has made national borders more porous, national planning more difficult, and the redistribution of resources more challenging. The very process through which the book you are holding was written, edited, and produced is vastly different from how my first book was created only two decades ago. Indeed, the odds are good that you are not holding a book at all but reading these words on a device that even ten years ago existed only in the imaginations of innovators.

Labor unions, so successful in organizing large industrial plants, reducing inequalities, and mobilizing support for New Deal policies, are vastly weaker
and find themselves under threat from conservative politicians around the nation. The family structure has changed, and so, too, have attitudes toward women, racial and religious minorities, and, more recently, gays and lesbians.

As a result, the limitations of the New Deal itself are also more obvious. Leuchtenburg notes that the New Deal “
achieved a more just society by recognizing groups
which had been largely unrepresented—staple farmers, industrial workers, particular ethnic groups and the new intellectual-administrative class.” But he also pointed to the many Americans left “outside of the new equilibrium,” among them “sharecroppers, slum dwellers,” and (he was writing in 1962) “most Negroes.”

Yet for all the changes in the country and for all the New Deal’s shortcomings, ours is still a nation shaped by the New Deal’s legacy. If some of its core commitments are under challenge as never before, its moral basis still galvanizes not only progressives and liberals but also many who do not think of politics in ideological terms.

New Dealism accepted and fostered a cooperative connection between government and the private economy. It understood government’s role as constructive, and assigned government a moral responsibility. “
Governments can err, presidents do make mistakes
,” Franklin Roosevelt famously declared in 1936, “but the immortal Dante tells us that Divine justice weighs the sins of the cold-blooded and the sins of the warm-hearted on different scales. Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.”

Roosevelt explicitly broke with the view dominant in the Gilded Age, and still popular among orthodox conservative economists, that the economy operated according to laws as “natural” as those of science. “
We must lay hold of the fact that economic laws
are not made by nature,” Roosevelt said. “They are made by human beings.” This view was no less controversial in his day than it is in ours. “
Two more glaring misstatements of the truth could hardly have been packed into so little space
,” the conservative Boston
Transcript
grumbled. Roosevelt, however, was closer to the American tradition of viewing economic questions through a pragmatic lens.

The New Deal wrote the basic rules that allowed the United States to become the most powerful economy in the world while avoiding a major meltdown for more than six decades. The social and labor policies Roosevelt
championed laid the groundwork for the growth of the American middle class after World War II, for an increasingly prosperous working class, and for the creation of a nationwide system of social insurance for widows, orphans, the aged, and the unemployed. Large-scale spending on public buildings and public works—undertaken initially to relieve mass unemployment—permanently affirmed the national government’s role in investing in the nation, a commitment Eisenhower reaffirmed.

The New Deal’s philosophical eclecticism aroused criticism from the left and right alike. But the New Deal shared both John Dewey’s goal of building a “Great Community” and a vital interest in constructing (and reconstructing) thriving local community. “
Hardheaded, ‘anti-utopian,’ the New Dealers nonetheless
had their Heavenly City,” wrote Leuchtenburg, “the greenbelt town, clean, green, and white, with children playing in light, airy, spacious schools.” Its most adventurous experiment in community building was the Tennessee Valley Authority “
with its model town of Norris
, the tall transmission towers, the white dams, the glistening wire strands, the valley where ‘a vision of villages and clean small factories has been growing in the minds of thoughtful men.’” When the New Dealers looked abroad for models, they turned primarily to Scandinavia, Leuchtenburg noted, “
because it represented the ‘middle way’ of happy accommodation
of public and private institutions the New Deal sought to achieve.” The balance and inherent moderation of the New Deal may have stunted the development of a bolder American left, as historians such as Bernstein have argued, but it also prevented the rise of the anti-democratic and fascist movements that swept through Europe in the 1930s.

And if it was war spending that ultimately pulled the United States out of the Depression, the government’s domestic policies during World War II advanced many of the New Deal’s goals, including—thanks to the rise of unions, progressive taxation, and various wartime regulations—a more equal distribution of income. “The
sharp contraction in income inequality
during the 1940s,” noted the economists Carola Frydman and Raven Molloy, “was the largest and fastest compression of the distribution of income in the US of the twentieth century.” This was part of a broader egalitarian surge that led the historian Geoffrey Perret to conclude that the war brought about “
the closest thing to a real social revolution
the United States has
known in this century.” Developments on the home front, Perret concluded, swept away “
barriers to social and economic equality
which had stood for decades,” ended the “old pyramidal class structure,” and created a “genuine middle class nation.” It was during the war that “
access to higher education became genuinely democratic
for the first time,” and it was also the period when “the modern civil rights movement began.”