The most catastrophic economic crisis in US history took place in 1929, and millions suffered through the early years of its consequences before FDR instituted his New Deal. This major failure of capitalism in twentieth century America is well known. But what I had never learned until recently is how and why the New Deal transpired, what happened after WWII as a long-term consequence of the New Deal, and why, in 2007-08, a New Deal wasn’t instituted along similar lines when the big banks again toppled the national and international economies.
It was listening to a late-August episode of Professor Richard Wolff’s weekly on-line program Economic Updates (also carried by KCEI locally) that finally explained to me the how and why of the crash of 1929 and how and why the nation recovered as it did. So much gratitude was bestowed on FDR for his magnificent and massive relief programs throughout the 1930s that the nuts and bolts of the New Deal’s origins may have been obscured from general knowledge. Here is what I now understand:
At the time of the crash and thereafter, three strong forces were organizing in America that focused on the American working class. (There wasn’t much of a middle class then; that arose later as a gift of the New Deal.) These three organizations were the Socialist Party, and the Communist Party and the labor unions. These institutions had arisen to offer workers protection against unethical practices by employers who were negatively impacting their employees’ safety and wages, and also to investigate and offer alternatives to capitalism’s ills. Both before the crash and as a result of its devastation, more people had enrolled in unions and participated in these two worker-focused political parties because they felt they hadn’t much left to lose and there might be some benefit to them from doing so. Consequently, membership in all three organizations increased significantly, thus increasing the power of all three groups.
To address the increasing collapse of the nation, the unions and the two worker-based political parties joined forces to achieve a common goal: the betterment of their members. They sent their representatives to see newly elected President Roosevelt at the beginning of his first term. And they pointed out to him the devastation suffered by the nation, the joblessness, hunger, homelessness with no relief in sight. They told FDR that if something weren’t done for the people who were bearing the brunt of the crash, he might actually face revolution and be removed from his office as President. So the President assembled his peers from big business and wealthy corporate holdings and laid it out to them: They would have to put up the money to bail out the country with public works projects, construction of infrastructure, support for the elderly and unemployed, etc. Only half of these captains of industry listened—but that was enough. The New Deal was paid for by the wealthy (the 1% of its time); it was the price they paid for no more talk of revolution. Their tax rates rose astronomically.
They complied, but were very angry about it. After WWII, with a prosperous country, a new and dazzling middle class, and a thriving economy that was the envy of the world, we were well able to help shattered Europe get back on its feet. But then America’s corporate giants got together to make sure no expensive rescue package like the New Deal could ever again be demanded of them. But how to prevent it? They soon turned to the growing industries of advertising and public relations to wipe out their “enemies.” Because over the early decades of the twentieth century, the developing advertising and public relations businesses had introduced a secret weapon into the mix.
Shortly after the turn of the 20th century, Sigmund Freud’s nephew, Edward Bernays, had brought his uncle’s radical new study of psychology to America and introduced many of its concepts into those fledgling businesses. Long before the end of WWII, of course, these strategic weapons for opinion-manipulating and product promotion had been in use in America. For example, psychological principles were used to promote the car, pave a million roads, and make rubber tires a booming industry, tear up trolley and tram lines in cities, prevent the then-new catalytic muffler from being attached to motors to prevent air pollution (but decrease efficiency evidently), and cripple railroads further. In their campaign against ever again facing a big expense like the New Deal, they employed these tactics of advertising and public relations to demonize the Communist Party through red-baiting and HUAC hearings, to shrink the Socialist Party by calling it Communism by another name, and to denigrate and cripple unions as anti-capitalist and “dangerous”—“unpatriotic!” By the end of the 20th Century these campaigns had been so successful that there were only two strong political parties left, and unions were in profound decline. The unions were gradually rendered unable to help workers—whether union members or not—in matters of safety and wages.
When Barack Obama won the presidency on a massive wave of enthusiasm just as the economy tanked again in a crash that almost equaled the 1929 crash, who was left to sit down with him and insist on a New Deal for the millions again homeless, unemployed and devastated? Nobody but Wall Street. So, like it or not, Wall Street is who he took care of. (Of course, candidate Obama had seemed like someone who would act heroically on our behalf, but as President, he responded to other pressures.)
He knew all along what he was facing. In his inaugural address and elsewhere he had exhorted the adoring crowds who elected him to make him do what needed to be done, saying repeatedly that he couldn’t do it without them! But 60 years after the prosperous post-New Deal and WWII, and after its mauling through PR and advertising, the left was in tatters. And now, ten years down the road from the 2008 crash, we’re still staggering from its unmitigated consequences. The two-party duopoly holds the field, duking it out on cliff-edges like Western gunslingers. The Dems have sidled away from their old worker base into a neoliberal professional class. The old, negotiation-friendly Republicans have taken the big donations from the 1% and vanished into extremely conservative pockets of radical right-wing policies. A stunning gerrymandering takeover of the nation’s state legislatures—and thereafter the national Congress—has set the nation on a catastrophic downward slide toward demogogery.
The hundreds of millions of Americans who still need a New Deal haven’t found a strategy to organize themselves that will restore their common voice and make it heard. While our present form of government subsists, it is unlikely that non-partisan movements will be able to achieve sufficient numbers and unity of purpose to be that voice. As long as rigged elections and bought legislators of the dominant parties continue to wrestle each other and preoccupy the news media, it is unlikely that relief will come from that quarter. Their media will continue to short-circuit every important measure for citizen relief. Instead of recruiting help from third parties, they will continue to snipe at them savagely and thereby allow people to starve and sink again to the level of tent cities and soup kitchens.
Politics as we now experience it has repelled many voters and vast numbers of millenials, but if the left can’t or won’t climb out of its funk and organize its huge numbers of potential members for nonviolent political action right now, no amount of computer games, TV dramas and non-stop diversionary toys will prevent the revolutionary social upheaval FDR warned the 1% of his day against.
I owe my understanding of these phenomena to Dr. Wolff and to a four-part series BBC filmed some decades ago called Century of the Self (twice shown in Taos by Peace Action NM and soon to be re-aired by the Green Party). I’ve lived in Taos over half of my life, and I’ve observed a pattern of individualism that tends to prevent our neighbors from embracing a common cause and working in unison toward one objective. I’m not free of that tendency, either. But I feel that if we won’t or can’t master that in ourselves, we will not be able to create and become our own New Deal and save ourselves and our country.