New Deal Nostalgia




Being the typical inner city type I went to the Wheeler Centre’s festival of dangerous ideas (a wonderful echo chamber) in Melbourne to see the creator of The Wire, David Simon speak.  Now The Wire is one of the finest critiques of modern capitalism that I have seen on a screen in sometime, so I was hoping for some of these incendiary notions to be raised by Simon.  However, what we got was the typical, liberal response to the failures of capitalism: Marx has a decent point, but not really worth a deep reading, what we really need is a New Deal style politics because it is only late capitalism that is the failure.

Now, being the other type of typical inner city type this once again raised issues of what criticisms of capitalism should be focused around today in the broader media. There are plenty of fine ones out there, but much of the current media hegemony seems to focus around this New Deal nostalgia or of the type that George Monbiot for example suggests that corporate interests capturing the state is a relatively new aspect of our liberal democratic system.

I do not want to construct a straw man here, and suggest that everyone on the left suffers from this New Deal nostalgia, simply that it exists as a strong narrative.  And with public men like David Simon, who understands the brutality of capitalism better than most calling for this type of policy to a two thousand person audience, it might be time to correct this historical misreading in the need to think about alternatives to our current system.

A look back in history might reveal some of the problems with this nostalgia. Roosevelt’s New Deal, which developed out of the crisis of the Great Depression, undeniably started a political transformation in the United States as the Democratic Party incorporated popular sectors into its coalition.  It opened a plethora of government bodies to kick start welfare programs and create regulatory bodies. What essentially happened was that the government was transformed from a mildly interventionist business dominated regime into an active ‘broker state’ that incorporated sectors of labour into political bargaining.  But it is important to recognize that the New Deal failed to do what it set out to do.  It did not stimulate full economic recovery, nor implement a social-democratic regime.  It was not until World War II did employment ramp up and national output revive.

What these liberal reforms of the New Deal did not do was transform the American system.  These broker interventions conserved and protected corporate capitalism, occasionally by absorbing parts of threatening programs. There was no discernable shifting of power albeit a recognition of other organized groups.  Not only did the New Deal fail to solve the problems that arose from the depression, the impoverished remained impoverished and income distribution did not improve.  At the same time equality remained a pipe dream and segregation and racial discrimination were still parts of the American landscape.

As we use historical models for inspiration, learning and ways of thinking about modern capitalism, it is important that we be fearless in what we draw from them. As the historian Howard Zinn in ‘The People’s History of the United States’ (p394) has argued, after the New Deal:

‘Capitalism remained intact. The rich still controlled the nation’s wealth, as well as its laws, courts, police, newspapers, churches, colleges. Enough help had been given to enough people to make Roosevelt a hero to millions, but the same system that had brought depression and crisis–the system of waste, of inequality, of concern for profit over human need–remained.’

Adding on to Zinn’s critique he historian Paul Conkin in his book ‘The New Deal’ wrote of the New Deal that it underwrote a vast apparatus of security, but the security for the working class was meager social security, while for that of established business it was large and extensive financial security. The New Deal underwrote sustained profits and continual growth, but with no significant leveling by taxes.  The proportional wealth distribution remained very much the same.  Even relief expenditures were disguised subsidies to corporations, since they were in large part paid by future taxes on individual salaries or goods. Therefore, instead of higher wages creating a market at the short term expense of profits, the government subsidized the businessman.

This would all sound very familiar to us in our modern context.  The only difference back then is that the business capitalist feared the crisis and the communist threat more and failed to fully capitalize. In our times, large business capitalists are not as scared, much of which because they learned in the New Deal that government would protect them. Liberal capitalism has always supported corporate interests, and the state remained a lackey to them.  Even in the highly held in regard Scandinavian nations, this fact remains.

And this understanding of capitalism is not a new one. Ralph Miliband, the father of current UK Labour leader, wrote the influential ‘The State in Capitalist Society’ in the late sixties stated that:

‘In an epoch when so much is made of democracy, equality, social mobility, classlessness and the rest, it has remained a basic fact of life in advanced capitalist countries that the vast majority of men and women in these countries has been governed, represented, administered, judged, and commanded in war by people drawn from other, economically superior and relatively distant classes.’

This is the remains an undeniable tenant of the history of capitalism, and is the future of capitalism.  A New Deal style political system will not do anything significant to change this.

Two additional points should be noted.  Firstly that increased state intervention does not always mean a more benign capitalism, it can work in favour of large interests too.  And leading on from this, that putting capital and labour on ‘equal’ footing obstructs the fact that capital already has a control over labour, so equal footing does not really exist.

Why I write about this is that that nostalgia for the New Deal era during the past decade is perhaps one of the main barriers in the US, and possibly globally to the formation of a true brad left opposition. With the fierce counter-revolution that began in the Reagan and Thatcher era and continues today, once again New Deal nostalgia has arisen. This is in some ways acceptance of defeat, a lowering of expectations.

Of course it is undeniable that The New Deal did move the capitalist order in new directions, but in a way that kept the old order in tact.  Why this nostalgia exists may stem from the huge amounts of positive spinning scholarship on it.  I searched for critiques of the New Deal, and other than the free market ravings, I came up with very little.  Surprising for such a well-known and important event in Western political history. One can never, as Karl Marx warned, evaluate an era by concentrating on the consciousness of an era’s major protagonists, the fact remains that The New Deal was conservative. Its special form of conservatism was the development of reforms that modernized corporate capitalism and brought corporate law to reflect the system’s changed nature. To many, these New Deal reforms seemingly proved that the system had changed its basic essentials. As we move into the era of a fully matured corporate capitalism, whose contradictions are just becoming very clear, it has become easier to see what that New Deal style reforms changed very little and the core essence of relations between the capitalist class and the state remains similar.


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