Beyond the New Deal Order

U.S. Politics from the Great Depression to the Great Recession

Gary Gerstle, Nelson Lichtenstein, Alice O'Connor, Gary Gerstle, Nelson Lichtenstein, Alice O'Connor

• Publisher: University of Pennsylvania Press
• Year: 2019
• Print ISBN: 9780812251739, 9780812251739
• eBook ISBN: 9780812296587
• Topic: History
• Subtopic: North American History
• Index: History

Ever since introducing the concept in the late 1980s, historians have been debating the origins, nature, scope, and limitations of the New Deal order—the combination of ideas, electoral and governing strategies, redistributive social policies, and full employment economics that became the standard-bearer for political liberalism in the wake of the Great Depression and commanded Democratic majorities for decades. In the decline and break-up of the New Deal coalition historians found keys to understanding the transformations that, by the late twentieth century, were shifting American politics to the right.In Beyond the New Deal Order, contributors bring fresh perspective to the historic meaning and significance of New Deal liberalism while identifying the elements of a distinctively "neoliberal" politics that emerged in its wake. Part I offers contemporary interpretations of the New Deal with essays that focus on its approach to economic security and inequality, its view of participatory governance, and its impact on the Republican party as well as Congressional politics. Part II features essays that examine how intersectional inequities of class, race, and gender were embedded in New Deal labor law, labor standards, and economic policy and brought demands for employment, economic justice, and collective bargaining protections to the forefront of civil rights and social movement agendas throughout the postwar decades. Part III considers the precepts and defining narratives of a "post" New Deal political structure, while the closing essay contemplates the extent to which we may now be witnessing the end of a neoliberal system anchored in free-market ideology, neo-Victorian moral aspirations, and post-Communist global politics. Contributors: Eileen Boris, Angus Burgin, Gary Gerstle, Romain Huret, Meg Jacobs, Michael Kazin, Sophia Lee, Nelson Lichtenstein, Joe McCartin, Alice O'Connor, Paul Sabin, Reuel Schiller, Kit Smemo, David Stein, Jean-Christian Vinel, Julian Zelizer.

PART I
The Nature and Limits of New Deal Reform

CHAPTER 1
From the Labor Question to the Piketty Moment: A Journey Through the New Deal Order

Romain Huret and Jean-Christian Vinel

In the historical narrative that still prevails today, the New Deal years are positioned between two equally despised gilded ages—first, the late nineteenth century, which inspired Mark Twain’s witty phrase; second, the new Walmart-globalized world in which we currently live. What defines these two ages is an important and increasing level of inequality legitimized by hegemonic ideologies—namely, social Darwinism at the end of the nineteenth century, and neoliberalism today. In stark contrast, the New Deal order could be defined first and foremost as an attempt to put an end to inequality in American society. In the longue durée of history, it appears today as a kind of golden age when policymakers and citizens were more willing to find a resolution to both the labor and the social questions.¹

The success of Thomas Piketty’s Capital in the Twenty-First Century has reinforced such a view. Published in English in 2014, Le capital—translated into English as Capital—turned the French economist Thomas Piketty into an international star. But in fact, Piketty’s work had been discussed and cited by pundits and academics since the early years of the twenty-first century, appearing for example in 2002’s “For Richer,” a famous New York Times article by Paul Krugman and in the 2004 report of the American Political Science Association task force, Inequality and American Democracy. This discussion in turn had helped produce a new narrative in which the New Deal is highlighted as a period of decreasing inequality and the years between the 1930s and the 1970s are declared the Great Compression.”²

According to this narrative, something rather exceptional emerged between the 1920s and the 1970s, especially in terms of progressive tax rates. With an impressive set of data, Piketty debunks the idea that income equality can exist in a society organized on the basis of free-market capitalism. With its emphasis on taxes and inheritance, the book offers new terms on which to debate the social question today, but it also emphasizes the ways reformers dealt with inequality in the past. There is little doubt that this “Piketty moment” will have a long-standing impact on the way historians look at the New Deal. Indeed, Piketty’s book reinforces the more positive view that had already emerged over the last few years, as symbolized by political scientist Ira Katznelson’s recent comparison of the impact of the New Deal to the French Revolution’s. While Steve Fraser and Gary Gerstle in their 1989 book intended to make a “historical autopsy” of the New Deal order, many academics today see it as still very much alive, to such an extent that social scientists have described the New Deal order in a variety of ways that demonstrate its ideological diversity and its continuing strength as well as its structural weaknesses.³

The political renaissance of the New Deal order is a consequence of the growth of the historiography on conservatism—historians of neoliberalism, the right to work movement, Walmart, or Goldwater have indirectly restored some unity to the New Deal and its impact on U.S. society by showing the sheer determination of businessmen and corporate leaders to oppose it. Importantly, most of the new literature on conservatism has been produced in a fraught political context. From Hurricane Katrina to the current “Fight for $15” movement, recent debates over the character and prospects of a deindustrialized working class, whether white or multicultural, have begun to shape a new labor question. Along with the economic crisis, this increased focus on the skewed distribution of income and wealth loomed large in the context of Obama’s 2008 election, so much so that two prominent political sociologists called their survey of his first term Reaching for a New Deal.⁴

No doubt, there is much to be said for this rehabilitation of the New Deal order. Yet, we’d like to suggest that there are also downsides to it. Even as we celebrate the New Deal, we need to be mindful of an unfortunate reading of Capital—one that reifies the New Deal as a golden political age characterized by a struggle against inequality. In lieu of this reading, we want to put forward an alternative, more radical reading: namely, the New Deal was more a narrowly defined fight for “security” than a head-on assault against poverty within the capitalistic system.

Social scientists have well described how the quest for security was at the core of New Deal policy. New Dealers strongly believed in the ability of the federal government to build a safety net, from Social Security to labor management, for people who lived in an insecure world as a consequence of the tremendous expansion of laissez-faire capitalism. However, the legal and political safety net that they erected was accessible only to Americans who worked full-time and “earned” the security offered by New Deal programs. It protected millions of Americans, but it also excluded the most disadvantaged citizens. Hence, some researchers have strongly criticized this middle-of-the-road policy, which did not tackle inequality head-on and had limited benefits for the people living on the margins of society. As a result, scholarship remains today divided between those who emphasize the positive aspects of the New Deal and those who, on the contrary, stress its limits. By contrast, we eschew this binary opposition. At times, the quest for security overlapped with the issue of inequality, as it did in the case of labor legislation, but at many other junctures it did not. Indeed, we suggest that to understand the nature of the New Deal, we must see the internal tension between security and inequality—goals that were both complementary and conflicting—as a central feature of the New Deal and its legacy.

To show this, we propose to integrate two different strands of literature—the history of labor, with its focus on employed workers, unions, and political economy; and the history of poverty, the urban underclasses, and race. Although they have much in common, they are, in fact, often kept distinct. The history of the New Deal order therefore narrates a very successful attempt to embed security in the industrial age, a failed effort to bring the poor within the framework of the policy of security, and finally, an inability to adapt that security policy to the postindustrial world. All along, a process of cultural and institutional path dependency constrained the New Deal order and the very elites who shaped major reforms. We contend that the security path was limited not only by institutional constraints but also by cultural and social limitations that blocked alternatives to the security road taken by most New Dealers. Security was the keyword of the New Deal order—a powerful construct that soon became culturally hegemonic. Meanwhile, inequality was left on the margin of New Dealers’ political agenda.⁵

The New Deal Road to Security

In a memoir titled Striking Steel: Solidarity Remembered, the labor scholar Jack Metzgar tells the story of his late father, Johnny Metzgar, a steelworker whose life and standard of living were shaped by the rise of the CIO and the Steelworkers union. Johnny Metzgar was employed at the Johnston Steel Works in Pennsylvania from 1930 to 1969. As the son of a former U.S. Steel employee he could easily have entered that company through connections, but his father had lost both arms to the mill in 1917 and Johnny Metzgar believed that the disability payment offered by the company (thirty dollars a month) and its indifference warranted a different choice. So Johnny Metzgar entered a smaller concern at the age of seventeen, trained as a molder’s helper, and later transferred to the rolling shop, where he remained until he retired at fifty-six.⁶

Metzgar’s story is worth remembering today because he was in many ways the typical New Deal worker. A devoted Protestant raised in a Republican family, he took part in the New Deal realignment, voting for Roosevelt when he cast his first ballot in 1936. That same year, he joined the CIO and the Steelworkers union and eventually became a union griever. From then on, he largely benefitted from the policy of economic security established during the New Deal. From 1936 to 1959 the real wages of steelworkers increased by 110 percent. In 1949 a pension, disability insurance, and health-care protection tightened and strengthened the safety net under steelworkers’ families. When Metzgar retired, he could look forward to a comfortable life on the Steelworkers union pension and health insurance scheme and could plan winter trips to Florida. The breadwinner in a traditional family, he had even managed to put his children through college.⁷

Metzgar’s story fits quite well with the narrative of the New Deal order and its quest for security in an insecure industrial age. The Industrial Revolution had transformed the daily lives of Americans. For millions of workers like Metzgar, the steel age changed the very nature of their daily work. Dangerous working conditions, long hours, and concern over wages and child labor contributed to the spread of the ideology that underpinned the New Deal order: it was necessary to provide security to the male wage earner in order to stabilize his family and to appease social tensions in American society.⁸

Importantly, even though FDR had denounced the “money changers of the Temple” in his first inaugural address, the politics of the New Deal put security, not inequality, at the center of American political and economic life. Grassroots movements such as the Townsend movement reinforced this ideology by emphasizing the communitarian norms of solidarity. In such a political climate, Roosevelt launched a new economy of welfare in which the ideology of security proved a powerful construct. In her recent account of the genealogy of what she calls the “sympathetic state,” Michele Landis Dauber captures the long tradition of social security politics and ideas that helped New Dealers to craft a powerful response to the Depression. Thus, for example, as early as December 1930, Senator Robert La Follette Jr. argued that “it makes little difference or no difference to me whether the victims of this economic depression are suffering from a situation caused by the failure of industrial and financial leadership or lack of statesmanship in this country, or whether men and women are suffering from some act of God.” Such a view became so hegemonic that, following passage of the Social Security Act in 1935, it became a trope deployed by corporate America. At the 1939 World’s Fair in New York, Thomas Parkinson, the president of Equitable Life Assurance Society, proclaimed: “Security! The modern world is in constant search of security.” During the fair, Equitable policyholders could relax and find security in a garden and reflecting pool that stood at the foot of the Equitable statue, aptly named Protection. Such a symbolic exhibit embodied the will of both employers and insurers to adopt the language of security, which came to dominate political discourse and cemented New Dealers’ political culture.⁹

Metzgar’s story also fits quite well with another crucial element of the New Deal order and the Great Compression that it brought about: from the 1940s to the 1970s real wages doubled in the United States, and median and mean family income followed on a similar path. The income of the lowest fifth increased faster than that of the top fifth. American cities took on a new face, with suburbs expanding, while American homes, even for the working class, were gradually filled with consumer goods. As Louis Hyman has shown, many of these goods were bought on credit; borrowing on future income, millions of American families were able to purchase goods that Americans who were better off bought for cash. Finally, like Metzgar, many American workers enjoyed vacation days and health insurance paid by their unions.¹⁰

Such security relied on membership in a union. As Fortune editors explained in 1951, unions were the workers’ “tool for gaining and keeping as an individual the status and security of a full citizen in capitalist society. That the union has made the worker to an amazing degree a middle class member of a middle class society—in the plant, in the local community, in the economy, is the real measure of its success.” Indeed, after the 1930s, unionized workers—who never accounted for more than 35 percent of the workforce—claimed wages that were significantly higher than nonunionized ones—10 to 20 percent, according to several estimates. Moreover, one gets a more precise view of the importance of union membership when one looks at the other two pillars of the ideology of security as it stood after the 1930s: the minimum wage and Social Security.¹¹

The minimum wage adopted with the Fair Labor Standards Act (FLSA) in 1938 was far from being a living wage. Pegged at twenty-five cents in 1938 (a little more than four dollars today), it covered 20 percent of the workforce and represented 40 percent of average production hourly earnings in manufacturing. Except with the increase of 1968 (from $1.40 to $1.60), the minimum wage always remained below the poverty line for a family of three, which is surprising if we remember that most New Deal laws were based on the traditional vision of the family with one breadwinner. Most importantly, the other pillar of the security ideology—old age insurance—also paled in comparison to the bargaining agreements signed by unions. In 1949 the contract signed by U.S. Steel offered workers a pension worth one hundred dollars a month—seventy dollars more than the monthly Social Security benefits at the time. Similarly, the 1950 “Treaty of Detroit” collective bargaining agreement signed by the UAW and General Motors put automobile workers’ pensions well above Social Security benefit levels.¹²

Why were collective bargaining and Social Security so central to the New Dealers’ resolution of the labor question? One reason is that although the New Deal order was based on a new electoral coalition, the resolution of the labor question it offered was built on terms established in the late nineteenth century. One of those terms was an emphasis on increasing purchasing power. In turning to collective bargaining to redistribute income, labor progressives responded to what they saw as the main source of the country’s economic ills, “underconsumption.” During congressional debates Robert Wagner and his allies presented statistical evidence of the limited ability of American workers to purchase goods, using a Brookings Institution study that showed that 70 percent of American families lived on an income of $2,500 a year or less, which the study defined as the poverty line. This “pocketbook politics,” in Meg Jacobs’s apt phrase, was the culmination of a much longer trend. Since the 1870s, workers had rearticulated their critique of employment, shifting from the wage slavery argument to the notion that that wages should reflect their needs and should be high enough for productivity and consumption to be held in balance.¹³

Industrial democracy was the other notion undergirding collective bargaining. Even as American workers came to accept that they had to deal with the inescapability of wage work and its economic and cultural consequences, the labor question that emerged in the country was tightly linked to a debate over the survival of democracy in a class-ridden society. The labor question, in other words, was very much a political question. Like “living wage,” the notion of “indust...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Introduction
• Part I. The Nature and Limits of New Deal Reform
• Part II. Intersections of Race, Class, and Gender
• Part III. A New Order Takes Shape
• Part IV. Coda
• Notes
• List of Contributors
• Index
• Acknowledgments