How Roosevelt’s New Deal Saved the West

Roosevelt on Locusts and Financiers

By Gwydion M Williams

The New Right like to claim to achievements of the 1940s through 1970s as capitalist achievements. They also want to blame state control for whatever they didn’t like.

If we follow New Right logic with a strictness that they themselves avoid, we would have to conclude the following:

  1. In the 1940s, capitalism was replaced by capitalism, and this was A Bad Thing.
  2. In the 1980s, capitalism was replaced by capitalism, and this was A Good Thing.

We can restore some sort of logic if we give a different name to the economics of the 1940s to 1970s. It was called the ‘mixed economy’ at the time, but the terms is no longer in circulation, nor does it mean much. People also called it Corporatist, hinting that it was heading in a totalitarian direction, but that too was nonsense. In most of the world, the 1940s to 1970s saw the biggest-ever increase in the freedom of ordinary people to live as they wished. Colonies got their own governments, starting with British India. Another big shift was sexual freedom – before the 1960s, sex between a man and his wife was barely an admitable topic in mainstream Anglo society, never mind other options. Women’s opportunities expanded a lot, though they were far from equality even by the end of the 1970s.

Jocelyn Bell Burnell, born 1943, commented recently that “At my girls’ boarding school, we were told we were being educated to be good wives and mothers (presumably what the school felt our fathers wanted to hear). At one of my first job interviews, the interviewer told me he didn’t approve of women working as it left no one to do the voluntary work.” (New Scientist 2602, page 52). She’s the lady who discovered pulsars in 1967, and then saw the 1974 Nobel Prize given to two male astronomers associated with the same work. They’d done good work, but up to three people can share a prize. Even in the 1970s, many felt it outrageous that she didn’t also get it.

Sexual equality has been a big achievement, a permanent alteration in a pattern that had held since the Neolithic. But the biggest freedom was economic, decent wages and security for anyone who’d do a passable days work. That’s the freedom we’re now told is much too expensive, even though the ‘reformed’ system of Thatcher and Reagan has not in fact grown any faster than the system they replaced.

Call the system Mesocapitalist. Call what came before ‘Classical Capitalism’. Call what came after ‘Counter-Culture Capitalism’, because 1960s counter-culture set the tone for its outlook and world view. Now which looks like the best option?

***

Of course Mesocapitalism or the ‘Mixed Economy’ did not come into being as a speculative social reform. It happened at a time when Classical Capitalism had clearly broken down. A time when much of Europe – not just Nazi Germany – was seriously thinking about rolling back the last two centuries of liberalism and free-thought. Roosevelt was to say in 1941, “There are men who believe that democracy, as a form of Government and a frame of life, is limited or measured by a kind of mystical and artificial fate that, for some unexplained reason, tyranny and slavery have become the surging wave of the future—and that freedom is an ebbing tide.” It was not an unreasonable view in 1941. Even more so in 1933, when Roosevelt came to power with no very definite policies set out in his published manifesto. But it turned out he had a very definite idea of what to do, an idea that worked very well in the New Deal. The country was in a gigantic slump, and he asked why:

“Our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

“True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

“The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

“Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

“Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live….

“If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. This I propose to offer, pledging that the larger purposes will bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in time of armed strife…

“I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.

“But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis–broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.”

This comes from Roosevelt’s First Inaugural, best remembered for the stray phrase “the only thing we have to fear is fear itself”. As he spoke it, the target was clear enough – “nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” Economic caution was widespread, because even a very large business might go bankrupt if it tried to fight a slump. But the government could not go bankrupt – rather, if a government chooses to view itself as bankrupt, it is the creditors who lose out and the government carries on as before, with no one daring to touch its assets. Imperial Spain did this in 1576: several US states had done it in the 1840s, repudiating foreign debts they did not feel like paying. Roosevelt sensibly avoided this option. It was not in the USA’s interest to destroy the global market. It was much wiser to apply tax-and-spend policies and take over Britain’s global role a little at a time.

Roosevelt in 1933 shows no inkling of a future clash with Nazi Germany. Hitler in March 4th was merely Chancellor under President Hindenburg. He became dictator only in August 1934, after Hindenburg’s death. In 1933, Roosevelt said merely “In the field of world policy I would dedicate this Nation to the policy of the good neighbour”. The USA stood neutral in the Spanish Civil War and welcomed the Munich Agreement.

Even at the start of 1939, Roosevelt’s position was still vague:

“A war which threatened to envelop the world in flames has been averted; but it has become increasingly clear that world peace is not assured.

“All about us rage undeclared wars—military and economic. All about us grow more deadly armaments—military and economic. All about us are threats of new aggression military and economic.

“Storms from abroad directly challenge three institutions indispensable to Americans, now as always. The first is religion. It is the source of the other two—democracy and international good faith.

“Religion, by teaching man his relationship to God, gives the individual a sense of his own dignity and teaches him to respect himself by respecting his neighbours.

“Democracy, the practice of self-government, is a covenant among free men to respect the rights and liberties of their fellows.

“International good faith, a sister of democracy, springs from the will of civilized nations of men to respect the rights and liberties of other nations of men.

“In a modern civilization, all three—religion, democracy and international good faith- complement and support each other.

“Where freedom of religion has been attacked, the attack has come from sources opposed to democracy. Where democracy has been overthrown, the spirit of free worship has disappeared. And where religion and democracy have vanished, good faith and reason in international affairs have given way to strident ambition and brute force.

“An ordering of society which relegates religion, democracy and good faith among nations to the background can find no place within it for the ideals”

Note the seriousness with which religion is treated – not the noisy empty chatter of the Christian Right, but a serious creed that Roosevelt must have expected to go down well, whatever he himself privately believed. Something that fitted well with the social concerns of the New Deal, and could easily be transmuted into an anti-Fascist war. He could even say in his First Inaugural:

“In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

“In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things.”

No President after Eisenhower could have used such language without sounding ridiculous. That’s the measure of how far the USA has lost coherence.

 

Sources

Roosevelt’s four inaugurals are found with others at The Avalon Project at Yale Law School, [http://www.yale.edu/lawweb/avalon/presiden/inaug/inaug.htm]

The Wikipedia has links to these and also to the State of the Union Addresses. The one I quoted is found at [http://www.presidency.ucsb.edu/ws/index.php?pid=15684]

A brief account of the 1840 Repudiations can be found at [http://www.answers.com/topic/repudiation-of-state-debts]. (I could find no mention of the topic in the Wikipedia.)

 

First published in Problems of Socialism and Capitalism, 2007

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