In this diary I covered the origins of the neoliberal movement. Now I want to move on to the complex story of how it achieved a position of dominance in economic and political policy. It is the ethos of the new deal in the US and related forms of social democracy in Europe that has been supplanted by neoliberalism. It is my view that there were two long term trends that contributed to this outcome. One was the very systematic efforts of the neoliberal elite to gain power and influence. The other was an unraveling of the coalitions that had built a structure of social democratic policy. In this diary I want to explore the unraveling. To do that we must go back to the creation of the new deal and the unstable politics that were necessary to accomplish it.
There are two books that I am drawing on for this analysis. I would like to introduce them to you and strongly recommend them to anyone with a serious in US political history.
This work by Ira Karznelson is a very comprehensive history of the new deal.
Jefferson Cowie provides a very engaging history of blue collar America during a period of change and confusion. There is in depth political history and analysis combined with an effort to capture the emotional realities of working class culture.
FDR and the Democrats were brought to power by the wave of national despair and desperation in the pit of the great depression. The Hoover administration had been fundamentally incapable of responding to the crisis. The new deal coalition was not only a big tent, but it was one that contained what was often a three ring circus. The primary common denominator was that they were not Republicans. The Republican had been the dominant political party in the US for most of the 70 years since the civil war. The Democratic base was a disjointed mixture of big northern city political machines drawing on the post civil war immigrant population, the organized labor movement fighting an up hill battle for legal recognition and the white oligarchs of the solid south.
The 73rd congress which took office in 1933 had a strong Democratic majority in both houses, 59 to 36 in the Senate and 313 to 117 in the House. However 30 of the Democratic senators and 137 of the Democratic representatives came from southern and border states. This political arithmetic played a critical role in the crafting of new deal legislation.
The term solid south derives from the monolithic control of the Democratic Party in the region. Republicans were an almost non-existent species. In southern states winning the Democratic primary was tantamount to election. During the long period of Republican domination southern congressional delegations were uniformly Democratic and southern democrats composed a majority of congressional democrats. Southern congressmen and senators were absolutely committed to the preservation of the Jim Crow system of racial segregation. When legislation seemed likely to impact that issue they were prepared to operate as a unified bloc. Without their votes, the new dealers lacked a congressional majority.
One of the early pieces of new deal legislation was the Agricultural Adjustment Act. It's stated purpose was to provide support for highly deflated agricultural prices. It established the basis for the farm program that has been with us ever since by paying farmers to take land out of production thus reducing crop supplies and raising prices. The main beneficiaries of this program were the large land owners in the south. One result of the decreased production was to drive agricultural wage workers and share croppers off of the land.
The new deal adopted various measures for short term economic relief in an effort to put a lid on the economic crisis. It then turned to longer term measures intended to create economic security. The social security act was a historically important step in creating what has become known as the social safety net. In addition to the social insurance program known as Social Security it also established various programs of public assistance that were not tied to employment based insurance. The southern delegations took this legislation hostage until they were able to extract major concessions in exchange for their votes. The south before WW II was still a predominantly agrarian region. Most of the nation's industrial enterprises were located in the northeast and on the west coast. The southern oligarchs were committed to the preservation of a low wage compliant workforce along with preserving racial segregation. They saw government benefits as a serious threat to this system. The compromise was to exclude agricultural workers and domestic servants from the benefits of the act. This impacted the vast majority of racial minorities in the south and the southwest, blacks and Latinos, along with with the poorest white workers.
The same pattern was repeated with the National Labor Relations Act, generally referred to as the Wagner Act. This legislation established legal rights of unions to organize workers and negotiate collective bargaining agreements. Passed in 1935, it made it possible for unions to become established in the major corporations of the industrial sector and their presence resulted in improved wages, benefits and safer working conditions. For those who were its beneficiaries it represented a real step forward. However, once again the south would not tolerate interference in its control of the regional workforce. The same compromise that was used to pass the Social Security Act was used in the Wagner Act. Agricultural and domestic labor was excluded from its provisions. Once again racial minorities were effectively excluded from the benefits of legislation. Organized labor was willing to go along with this because the concentrated environment of industrial production offered the most promising opportunities for successful union organizing.
The great accomplishments that we now think of as the new deal legacy all happened in the first term of FDR's administration. After that the shadow of war began to loom across the globe. Well before the US actually entered the war. European rearmament was stimulating US industrial production. With the US participation in the war, much of domestic politics was put on hold for the duration. The government became bipartisan, wage and price controls were instituted and unions agreed to a moratorium on strikes. At the end of the war FDR was dead and Truman was an unprepared occupant of the oval office. Unions began making aggressive campaigns to increase wages that had been frozen during the war. During the war the south had finally entered the industrial revolution with the spread of defense industries. The workforce and the economy were no longer almost exclusively agrarian. The southern congressional delegations suddenly decided that the Wagner Act that they had voted for no longer looked like such a good idea since its provisions were increasingly likely to impact the region. As a bloc they made common cause with Republicans in 1946 to pass the Taft-Hartley Act which effectively froze the labor movement in its tracks. Their participation provided a majority large enough to override Truman's veto. At the 1948 Democratic convention there was a walkout by several southern delegations and the formation of the Dixiecrat party with Strom Thurmond running against Truman. The long unwinding of the new deal had begun.
The depression and a world war had created many upheavals in traditional American society. The late 40s and the 50s saw a concerted effort by the traditional establishment to shove the lid back on. Women who had experienced new horizons as active duty members of the military and as workers in various aspects in the defense effort were suddenly being shoved back into the kitchen and urged to behave like ladies. The McCarthyite witch hunts used the fear of the international communist menace to fuel a purge of anybody suspected of radical thoughts. Unions and their leadership were a priority target. For a while as white Americans moved to the suburbs and went on a binge of consumerism, it looked as though the campaign was going to succeed. Then along came the 60s.
The movements of the 60s were about many things. In terms of racial minorities and women it was about people who had been shoved to the sidelines demanding the right to participate as full productive citizens. The civil rights movement did manage to drive a stake through Jim Crow's heart. The new left movement had visions of what they called participatory democracy. It all got mixed up with the seriously bankrupt policy of the war in Vietnam. Things came to a head at the 1968 Democratic convention in Chicago. There was open warfare between the various groups under the new left and leadership of organized labor as a key group in the party establishment. The war continued over the next four years with Nixon making a big push to woo if not the active support of labor leadership, at least their neutrality. He was successful in his aims. When McGovern won the 1972 nomination labor refused to endorse and support his campaign and officially sat out the election. At that point the new deal coalition could be pronounced deceased.
I am not trying to trash FDR and the new deal. It got the country through a time of serious crisis and managed to enacted fundamental reforms in several important areas. One could make a plausible argument that it wasn't politically possible to accomplish more than they did. However, that does not change the fact that its scope and impact went just so far. Important groups were left out from its efforts to create a more equitable society. One result was that the unionized industrial workers became branded as the American working class. They were by no means a majority of the people working for a living. The new deal accomplished great things for that group. Many of them were essentially transferred to the middle class in terms of income levels. Yet many other people were left out of the protections and security.
In the early 70s there were numerous conflicts between the groups seeking greater access to political and economic participation and the branded Working Class trying to hold onto their relatively privileged position. The resulting gap provided one of the doors for the rising neoliberals.