The Real Deal on the “New Deal”
by Andrew Pollack
In the aftermath of Hurricane Katrina some Democratic Party politicians and even conservative newspapers like the New York Daily News were calling for a “new ‘New Deal’” to deal with the destruction wrought, and with the broader social problems exposed in its wake.
Some pundits even claimed the reaction against Bush’s apathy toward Gulf residents’ needs would help shift the country’s politics back to the left. For instance, the Nation’s William Greider predicted that “[t]he catastrophe…is one of those big moments that jolt public consciousness and alter the course of national history.” He predicted “a dramatic breakdown for the reigning right-wing orthodoxy, the beginning of its retreat and eventual demise.” Greider took as good coin the rhetoric of Democrats who “are doing what they haven’t dared to do for many years, even decades: They are invoking their New Deal legacy and applying its liberal operating assumptions to the present crisis…only the federal government has the resources and authority to lead such a complex undertaking.”
For most working people the phrase “New Deal,” based on the commonly accepted mythology of what happened in the early years of Franklin Delano Roosevelt’s administration, conjures up welcome pictures of public works jobs for all who needed them, of gigantic public works projects rebuilding old institutions and building brand new ones, of government concern for the down and out. Those Democratic Party politicians who were throwing around Rooseveltian rhetoric may even believe this mythology. But the rebuilding packages they put forward fall far short of what FDR was alleged to have achieved, and are instead more in synch with today’s bipartisan consensus that the market is a cure-all for whatever ails you.
The more astute Democratic
politicians, however, know precisely the limits of the New Deal and in some
ways their miserly proposals more accurately match the overall picture of
Barely a month after Katrina even the few Democrats who had early on engaged in New Deal-style rhetoric had largely fallen mute, and by mid-October the New York Times could report that Republicans were once again pressing their plans to save the Gulf and the economy as a whole with even more tax cuts for the corporations and the rich. “We’ve had a stunning reversal in just a few weeks,” said Robert Greenstein of the liberal Center on Budget and Policy Priorities. “We’ve gone from a situation in which we might have a long-overdue debate on deep poverty to the possibility, perhaps even the likelihood, that low-income people will be asked to bear the costs. I would find it unimaginable if it wasn’t actually happening.”
But the inability, in fact the unwillingness, of the Democratic Party to take its own rhetoric seriously made this turn of events predictable. In a future article we’ll go into the nature of today’s Democratic Party. But for historical context let’s take a look at the reality behind the New Deal mythology.
What Really Happened
FDR used the phrase “New Deal” in his 1932 campaign, but the main theme of his thoroughly mainstream platform was cutting the deficit. His secretary of labor, Frances Perkins, later said it was only a “happy phrase” to make people feel better.
The very first task undertaken by
At a time when even some liberal
members of Congress pleaded with Roosevelt to establish a national banking
Yet Schlesinger also cites Senator
Bronson Cutting of
FDR himself testified to his
motivations in this and subsequent policy decisions: “No one in the
Once the system was saved from
But almost immediately the two
programs were decoupled (Schlesinger calls it an “amputation”), and PWA
spending flowed to a trickle. As a result the “NRA had lost its engine of
expansion,” and it was decided that economic stimulus was to come not from
public spending but indirectly through a revived market based on renewed
business confidence, thus yielding greater purchasing power. This was entirely
in keeping with
The NRA was supposedly a trade-off: corporations would enjoy the suspension of antitrust laws in return for voluntary agreements to minimum wage levels and maximum hours. But the wages in the codes—which were written by the corporations themselves—were so low, and the hours so long, that they provoked countless strikes and organizing efforts around the country.
Says Schlesinger: “though the code
authority exercised public powers, it was not a public body. It was, as [NRA
administrator Hugh] Johnson put it, ‘an agency of the employers in an industry.’” The result was just enough renewed
economic activity to keep the biggest corporations from going under. Thus
Maurice Spector could write in the New
International in 1938 that there had been no recovery in the sense of an
expansion of capital, of increasing opportunities for accumulation, which is
the norm for a recovering capitalist economy. Instead “capital secured its
profits by restriction” of production, reviving existing production facilities
to levels still below the 1920s peaks. In fact it’s universally acknowledged,
even by the most ardent mainstream academic defenders of
The Public Works Record
Nancy Rose, author of Put to Work: Relief Programs in the Great Depression, says unemployment, which was at 25 percent in 1933, was still nearly 15 percent in 1940. This despite the various public works programs that came and went, each typically lasting a few months. There was the Federal Emergency Relief Administration, the Civil Works Administration, the Works Progress Administration, the Civil Conservation Corps, and the National Youth Administration (plus the Public Works Administration, which used public funds to stimulate private hiring).
Even at the
The woes of urban workers were matched by those of poor farmers and farmworkers. The Agricultural Adjustment Act subsidies and crop restrictions helped the wealthiest farmers disproportionately, while pushing poor farmers and sharecroppers and tenants off the land. What’s more, payments for restricting production were made to farm owners who were trusted to pass along to tenants their share, which of course almost never happened.
According to Art Preis in Labor’s Giant Step, the number of the unemployed “never fell below eight million during the entire ‘New Deal,’” and was somewhere between 8½ and 11 million at the peak of “prosperity” just before the August 1937 recession began, and was still at 10 million in 1940.”
Those getting public works jobs
were disproportionately white males, who were typically paid more than women
and minorities (when the latter were admitted at all). The number of jobs was
increased before elections and cut soon afterward. For instance, 400,000 WPA
workers were laid off as soon as
Despite all these limitations the amount of infrastructure built, services provided, artistic activities engaged in, etc., was impressive. Says Rose: “Workers built and repaired one million miles of roads and 200,000 public facilities, including schools, playgrounds, courthouses, parks and athletic fields, swimming pools, bridges, and airports, drained malarial swamps, and exterminated rats in slums. They created works of art, gave concerts, set up theaters throughout the country, even in small towns, set up nursery schools, served over 1.2 billion school lunches to needy children, gave immunizations, taught illiterate adults to read and write, and wrote state guidebooks—classics that are still in use. They sewed 383 million coats, overalls, dresses and other garments, and, using surplus cotton collected by the Agricultural Adjustment Administration, made more than a million mattresses that were given to destitute families, as were the garments.…CCC workers planted 2 billion trees, including many on burned or eroded hillsides, stocked nearly a billion fish, and built a network of fire-lookout towers, roads, and trails.”
Schlesinger’s list adds some crucial infrastructure projects, including sewage and water systems, gas and electric power plants, courthouses, hospitals and jails; dams and canals, reclamation and irrigation projects, levees and flood control projects, bridges and viaducts, docks and tunnels.
Working people can certainly appreciate the need for all of the above. But the labor and radical movements had long been demanding such spending and had no reason to feel “grateful” to capitalist politicians finally granting it only under the twin compulsion of devastating economic crisis and the threat of revolution.
Besides fear of revolt,
And this lack of infrastructure was holding back not only the ability of corporations to make a profit at home, but also the state’s ability to gear up for the coming war abroad—a war which Roosevelt was desperate to be part of in order to secure the global markets which he believed the country’s new economic ascendancy entitled it to.
Thus in the late 1930s public works
programs began more and more to churn out military goods. These programs helped
rebuild the Navy (aircraft carriers, destroyers, submarines, planes, etc.),
helped the Army mechanize, built over 50 military airports, etc. Soon
The public works programs also suffered from being administered by and for a capitalist class wedded to an anarchic market, rather than by a working class with a material interest in rational, coordinated production. Thus farmers were paid for not producing, and crops were destroyed, milk spilled, and livestock slaughtered while millions went hungry. The same illogic—and fear of setting a precedent that would prove public works could outproduce private enterprise—meant the adoption of unnecessarily labor-intensive methods on some sites (for instance, giving road-building workers picks and shovels instead of the grading and paving machinery used by private firms).
One of the most persistent yet
inaccurate New Deal myths is Roosevelt’s supposed fondness for organized labor
, in particular the false notion that he “gave” workers the right to organize
through Section 7(a) of the NRA. Section 7(a) was in fact granted to try to
dampen a huge strike wave. In 1933 and 1934, way before the famous 1937
Frances Perkins admitted that
Section 7(a) was only put in the NRA reluctantly after protests from AFL
officials. United Mine Workers head John L. Lewis told his biographer Saul
The depths of Roosevelt’s actual disdain
for militant workers is shown in an appalling quote which passes with little
comment from his hagiographer Schlesinger. When explaining Roosevelt’s hopes
for the Tennessee Valley Authority, Schlesinger tells the story of an administration
member who, on returning from
Farm workers’ leaders could sense
Racism in the New Deal
In addition to explicit or de facto discrimination in the programs and laws described above, Roosevelt – whose administration rested on an alliance of Dixiecrats and racist Northern urban party machines — also refused to pass anti-lynching legislation, to abolish the poll tax, to desegregate the Armed Forces, or to take any other substantive measures against the country’s rampant, violent racism.
This aspect of the New Deal has
been brought back to light recently in a book by Ira Katznelson. Summarizing
his argument in the Washington Post (“New
Deal, Raw Deal: How Aid Became Affirmative Action for Whites,” September 27,
2005), Katznelson reminds those who would hark back to the New Deal as a
positive example that such “nostalgia requires a heavy dose of historical
amnesia. It also misses the chance to come to terms with how the federal
government in the 1930s and 1940s contributed to the persistence of two
The best-known case of such social exclusion was the exemption of farm and domestic workers from all labor protections, unemployment insurance, and Social Security programs—an exclusion also affecting many Latino workers. Even where not explicitly excluded, local administration of these programs allowed racists to deny benefits to Blacks. In fact by disproportionately granting some benefits to white workers, the economic gap between the races was actually widened.
Women Get a Raw Deal
Another pro-Roosevelt liberal
historian, Blanche Wiesen Cook, has detailed the discrimination facing women
workers under the New Deal: “FDR’s First 100 Days did nothing for an estimated
140,000 homeless women and girls who wandered
The programs set up to accommodate a fraction of the female unemployed suffered from the same spending restrictions as those employing men, compounded by gender discrimination. Relief projects were forbidden from competing with private businesses, and women were barred from work outdoors.
The 300,000 women employed in the first program were slotted into special “women’s work”: canning and gardening, public libraries, schools, and social services. Women were employed as teachers, athletic directors, artists, photographers, librarians, nurses, performers, musicians, technicians, and administrators. But the vast majority of women in the new programs were employed in domestic services, mattress and bedding projects, surplus cotton projects, or sewing and craft projects—and at lower wages than men on public works.
As with the new construction going on as “men’s work,” this was all work that sorely needed to be done, and in many cases provided opportunities previously not available. But the numbers put to work and the pay received were low here as well. Says Cook: “Women’s reemployment was slow, sporadic, inadequate. By 1938, 372,000 women had WPA jobs, but over three million women remained unemployed; almost two million women suffered the insufficiency of part-time work.”
The New Deal prioritized re-employment of male “breadwinners.” And whereas under the new Social Security Act, mostly male job titles were deemed worthy of old-age pension and unemployment insurance coverage, needy women and children were largely relegated to “relief.” Even after being amended in 1939 the Social Security Act set up a maddening maze of restrictions for wives, spouses and widows, limiting the conditions under which women could qualify. And as with Black workers, in addition to formal exclusion from programs, women faced discrimination by local administrators denying them even what they legally had coming to them.
From New Deal to War Deal
By his second term
The turn to war production thus
coincided with a turn away from the “New Deal.” The New York Times observed in 1937 that
The turn can be clearly seen in the
evolution of what was the New Deal’s most extensive and famous project, the
Tennessee Valley Authority, originally set up in 1933 as a way to provide jobs
and electricity to the impoverished Appalachian region. Once war preparation
began, the electricity from its dams, as well from the new publicly-built
Preis summarizes the switch thus: “The
‘New Deal’ proved to be a brief, ephemeral period of mild reforms granted under
pressure of militant mass action by the organized workers, both employed and
unemployed. By late 1937,
One of the most treasured gains of this period—and one now under heavy attack—are the old-age pensions provided by Social Security.
The foremost proponent of liberal reform in this area, Abraham Epstein, analyzed the Act in the pages of The Nation. Epstein had in fact coined the term “social security” to highlight the need not just for old-age pensions and unemployment insurance but also health insurance, care for the dependent and disabled, etc.
Epstein wrote that “the present law seems doomed from the start by its complex, slovenly, and mangled character” because of its unintegrated character and the dependence on its various parts of a mish-mash of federal, state, and local programs, laws, and administrative agencies.
Epstein also noted how far behind the U.S. was compared to other capitalist nations: “For more than half a century social-insurance programs have been keen political issues throughout Europe, but here there has not been even academic interest; our newspapers gave the subject no notice until a year ago and have given it very little since. Everywhere abroad social-insurance measures have been championed chiefly by organized labor. Our labor movement has either opposed them or given half-hearted and uninformed support.” (By labor movement he obviously meant the trade union leadership, such as AFL head William Green—who even opposed unemployment insurance!—and in this regard as in most others hardly reflected the needs and sentiments of his members or of the millions ignored by the Federation.)
Epstein also decried the financing of Social Security by payroll taxes. In other countries, he said, the “well-to-do…have shared in the maintenance of the aged poor since the establishment of the Elizabethan poor-law system three centuries ago.” But the new bill “transfers the entire burden…to the backs of the young workers and their employers… Since industry will make every effort to pass on its levy to the consumers, it means that the young employees—in their dual role of workers and consumers—will bear the major cost…No other nation has ever put into operation a plan of this nature without government contributions derived from the higher-income groups…in placing the entire burden of insecurity upon the workers and industry, to the exclusion of the well-to-do in the nation, the present social-security bill violates the most essential modern principles of social insurance.”
In fact most of the imperial rivals
A New “New Deal”?
Bush’s plans to dismantle Social Security have met fierce opposition, primarily because working people treasure the gains made under the program, just as we treasure the housing, schools, hospitals, levees, roads, and other public works built in the 1930s. But we must remember, as Art Preis said, that these precious gains were granted “under pressure of militant mass action by the organized workers,” and not as gifts from benevolent rulers. That’s the only way we can see through the false claims of today’s politicians claiming to be “New Dealers” and fight independently for all that we need and deserve.