The Conservative New Deal

Author’s note: “Conservative” in the title refers not to the post-1955 free market/anti-government ideology that rose in response to the New Deal. Rather, “Conservative” in this sense means the preservation, through reform, of society’s institutions- the Burkean sense of the word. In this sense, I seek to convey that the New Deal was neither as radical as the Democratic Socialists wish it were, nor as reactionary as the Neo-Populists wish it were.

 

For the last year and a half or so, there’s been a renewed interest in the recent history and evolution of the Republican and Democratic Parties, as journalists and policy wonks probe the past to explain why things happened as they did. This interest, it should be noted, did not start with the election of Donald Trump to the Presidency- it’s been gaining traction, rather, since at least six months before that election, and in many cases the introspection was festering for far longer.

On the Democratic side, some thinkers have taken pains to deny the legitimacy of all the Democratic establishment’s economic policy from the 1970s forward, at least up Bernie Sanders’s and Elizabeth Warren’s ascents to national prominence. To them, the pre-McGovern Democratic Party- the party of Franklin Roosevelt, Harry Truman, Adlai Stevenson, John F. Kennedy, Lyndon Johnson, and Hubert Humphrey, the Democratic Party of the New Deal– was the real Democratic Party, tainted only by its acceptance of white supremacy. But that sin was absolved in 1965, and certainly by the 1970s these economic progressives would have embraced multiculturalism, if it hadn’t been for those devious neoliberals!

These groups of left-wing economic thinkers- there are two of note- usually make a point of downplaying or rejecting “identity politics” (while remaining strict social liberals, of course!) and conversely emphasizing economic populism, against the supposed “neoliberal” and money-grubbing corruption of such figures as McGovern, Dukakis, Mondale, the Clintons, Gore, Kerry, and Barack Obama himself. Their opposition to perceived corporatist concentrations of power earns these groups the label “the Jeffersonian Left.” There are two interesting groups of them- I call them the Neo-Populists and the Democratic Socialists, and I suspect they would consent to those labels.

“You Shall Not Crucify Mankind…”

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William Jennings Bryan, saint of the Neo-Populists.

The Neo-Populists are not really a popular movement in any sense, but they’ve expressed themselves eloquently in the public discourse- Matt Stoller’s October 2016 article in The Atlantic, and Phillip Longman’s and Barry C. Lynn’s 10-point manifesto in The Washington Monthly, are representative of the whole genre.

Neo-Populists believe that the primary good in American life is democracy- economic, political, and cultural- and that the primary threat to it is concentration of power, anywhere and of any type. Their view of the last 40 years or so is that the deregulation of most American industries allowed dangerous concentrations of power to accumulate through corporate mergers and the like, and that these concentrations of power- which have presumably bought out the government- are the biggest threats to democracy in all its facets. The concentrations, so the thought goes, must be broken up in the public’s defense.

Moreover, Neo-Populists believe that this is exactly the problem that the Populists and the left wing of the Progressives, and later the New Dealers, faced. They believe (and it is particularly evident in Stoller’s Atlantic piece) that Franklin Roosevelt’s primary accomplishment was completing Woodrow Wilson’s New Freedom legacy, generally perpetuating the trust-buster legacy by precluding consolidations of industry and finance. As we will see, the historicity of this claim is shaky at best, but it can’t be denied that the New Freedom influenced the New Deal inasmuch as certain New Deal policies encouraged the formation of thousands of “minibanks” and “ministores” in towns across the United States, promoting local economic democracy and precluding certain concentrations of power that Populists feared.

In truth, the Neo-Populist ancestral legacy was exemplified better by William Jennings Bryan’s speeches and aims than by Franklin Roosevelt’s New Deal policies. Neo-Populists, like their century-old forebears, hope to see a decentralized economy and society devoid of trusts and combinations that could crowd out competition and entrepreneurship. Neo-Populists are certainly on the mainstream left in supporting safety nets, regulatory policy, and consumer protection; but rather than supporting the Obama-Clinton style of technocratic decision-making, they are honest democrats in that they believe local communities and “the American people” are capable of solving their own local problems. They interestingly join forces, unknowingly, with localists on the conservative right, in this respect. They are perhaps the true heirs of Jeffersonianism on the American left today.

“Cursed with the Reign of Gold…”

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Eugene Debs, saint of the Democratic Socialists

The Democratic Socialists generally agree with the anti-monopoly policy prescriptions, and a version of the localist-decentralist prescriptions, of the Neo-Populists, without agreeing with the localistic reasoning behind them. But the Democratic Socialists are even further to the left, supporting the expansion of the social-democratic welfare state and generally speaking- and in some cases believing- the rhetoric of revolution and social transformation. As most any reader can guess, the patron saint of this movement is of course Senator Bernie Sanders, while Elizabeth Warren is a technocratic secondary saint.

Democratic Socialists were perhaps preceded by Occupy Wall Street and are currently institutionally organized into a mass movement at Senator Sanders’s “Our Revolution” page. A cursory overview of the policy positions at “Our Revolution” reveals some of the basic contours of Democratic Socialism, and their marked differences from the Obama-Clinton Democrats. Democratic Socialists would like to break up big banks and corporations, as would Neo-Populists; further, they favor expanded labor protections and consumer protections, to be enforced by standard old-style regulatory mechanisms; they support something like a speedy transition to a carbon-free economy; they support the expansion of Social Security and other entitlement programs, as well as many welfare programs; they support public financing of campaigns and the supposed elimination of money in politics; the list could go on.

If Neo-Populists harken back to William Jennings Bryan, then Democratic Socialists are somewhere near the outright revolutionary socialism of Eugene Debs. Despite being further left than the New Deal, Democratic Socialists tend to claim its mantle. Senator Sanders occasionally argued that his single-payer healthcare and universal college prescriptions were well within the American tradition through the New Deal. An April 2016 piece at the Huffington Post by Tony Brasunas confidently predicted that Millennials’ embrace of Sanders meant a forthcoming repudiation of the relatively right-wing economics and politics of the late 20th and early 21st Centuries, and a return to the true liberal progressivism FDR supposedly exuded.

Both of these movements- the trustbusting Neo-Populists, the trustbusting social-democratic Democratic Socialists- stand at sheer odds with the contemporary corporate Democratic Party. Both harken back to the New Deal tradition as a chief, if perhaps not primary, source of their inspiration.

I won’t comment yet on the utility of their prescriptions. But I will argue something very important: both the Neo-Populists and the Democratic Socialists severely misinterpret the purpose of the New Deal and its legacy.

The Many-Faced New Deal

To understand the New Deal, one must have first some sort of conceptual understanding of where it came from, what it responded to, and how it manifested itself.

To answer the first two of those questions briefly:

The New Deal more or less came, intellectually and policy-wise, from a wedding of Teddy Roosevelt’s New Nationalism, the dominant source of inspiration between 1933 and 1935, with Woodrow Wilson’s New Freedom, the dominant source of inspiration between 1935 and 1938. There were other sources, including Wilson’s War Industries Board and Herbert Hoover’s halfway activist reforms from 1929 to 1932; but Teddy Roosevelt and Woodrow Wilson were the primary influences, and these influences intermingled as FDR forged them experimentally into something new.

In a broad sense, the New Deal responded to the American public’s loss of faith in the libertine big-capitalist system, which had clearly failed to accomplish social goals of any utility by the 1920s and which resulted in the 1929 disaster.

The last of these questions- the manifestation of the New Deal- is complicated. But in short, the New Deal can be understood as a series of pragmatic, experimental reforms in distinct but related policy areas. I count six such policy themes.

Conservationism

Though the least influential and important of the New Deal reforms, conservationism nonetheless held a special place. Secretary of the Interior Harold Ickes presided over the expansion of the U.S. National Parks System. The Civilian Conservation Corps worked closely with National Forests and Parks, building edifices still around today. More importantly, in this time much of the American West was electrified and irrigated through the construction of hydroelectric dams on major rivers, which served multiple purposes in modernizing the rural West.

Hamiltonian Corporatism and Cartelism

Michael Lind notes, in Land of Promise, that “Franklin Roosevelt, like his cousin Theodore, arguably was a progressive nationalist in the tradition of Hamilton, Clay, and Lincoln.” Lind argues that only after “the collapse of his plan for a national unity program based on harmony among business, labor, and government-“ the failure of a veritable update of Henry Clay’s “Harmony of Interests” vision- did FDR shift intellectually from being an apostle of TR’s New Nationalism to practicing the creed of Wilson’s New Freedom, through some trustbusting and anti-monopoly activities.

But Roosevelt’s early activism was based, in fact, on industrial coordination between big government and big business, a national cartelism, particularly with the creation of the National Industrial Recovery Administration (NIRA, later NRA, with the famous Blue Eagle,) and the Agricultural Adjustment Administration. Following the constitutional demise of these programs, sector-specific cartels and associations were formed, usually off of the model of Bernard Baruch’s War Industries Board of the Wilson Administration. This resulted in, functionally, what NIRA and AAA sought to accomplish- the New Deal economy would be based not upon an adversarial and competitive free market, nor a centrally-planned economy, but an “iron triangle” where business, labor, and government would jointly determine wages, prices, regulations, and benefits in the broader public interest.

Ultimately, the NRA-AAA model of collaborative capitalism led to more sustainable and equitable growth than 1920s-style free markets. It was premised on notions closer to Teddy Roosevelt’s belief that the trusts must be tolerated but regulated in the public interest, than to Woodrow Wilson’s that they must be broken into smaller bits. And this model of collaborative capitalism would be, if not the longest-lasting, then the most historically significant legacy of the New Deal- the institutionalization of Hamiltonian industrial capitalism up until the dawn of the final third of the 20th Century, halfway through the Cold War.

Decentralization and Antitrust Enforcement

The Neo-Populists emphasize antitrust enforcement and decentralization as though they were the core of the New Deal. They were important, yes- but not incredibly so.

The main element of decentralization and antitrust in the New Deal was the provision of the Glass-Steagall law that legally separated commercial and investment banking, undercutting much of Wall Street and opening the door for the flourishing of the thousands of aforementioned community banks.

But aside from that, there was little in the way of the breakups of concentrations that had motivated Progressive Republican William Taft or Progressive Democrat Woodrow Wilson. In The Age of Reform, Richard Hofstadter notes “The New Deal began not with a flourish of trust-busting but rather… a concerted effort to discipline the pricing policies of businesses, not with the problem of size in mind, nor out of consideration for smaller competitors…”

In other words, the New Deal tolerated and even encouraged monopolies- great concentrations of power- so long as they were balanced against other concentrations of power, namely labor and government agencies. Roosevelt’s goal was recovery and reform through industrial coordination, rather than any particular concern for “local democracy.”

State Capitalism and Public Investment

Public Investment- in infrastructure of all sorts- was probably the most memorable portion of the New Deal’s legacy, for it has left behind innumerable roads, bridges, dams, buildings, and other public works for contemporary generations to see and use. In The New Dealers, Jordan Schwarz discusses how the American South and West were built, electrified, and infused with capital and credit through the opportunistic activities of the New Deal statesmen. Indeed, says Schwarz, “The New Deal’s lasting contribution to America’s postwar economic growth is a revolution in expanded credit supported by public capital.”

Through the availability of easy credit and cheap energy, made possible by complicated and ingenious schemes of public-private financing, the New Dealers would expedite and encourage the development and industrialization of rural America, and it worked- today, parts of the West and South are economic and productive powerhouses with first-class infrastructure, a legacy nurtured over the decades that traces its fundamental legacy to the actions of the New Dealers.

Relief

Again one of the well-known parts of the New Deal, relief efforts focused on direct handouts as well as jobs programs like the Works Progress Administration and the Civilian Conservation Corps. Direct relief had been frowned upon in earlier eras, but it now entered the government’s milieu as a tool to fight crisis poverty.

Social Democracy and Welfare

Finally, the New Deal featured the beginnings of the entitlement state, with developments as diverse as Social Security and innumerable other social insurance schemes. The institutionalization of welfare and entitlements was not an unprecedented shift in policy ideas from previous epochs, but was nonetheless an important one.

The Conservative New Deal

Two last notes on the New Deal, before moving forward to contemporary implications.

First, is important to note that, contrary to the Neo-Populists’ ideas, the New Deal was not meant to preserve, Bryan-style, an idyllic agrarian republic. Nor was it meant to usher in, Debs-style, a socialist revolution, as the Democratic Socialists would believe. It was fundamentally the project of liberal conservatives and conservative liberals- the preservation of the American mixed-market system amidst the tumults of aging industrialism and advancing capitalism, and the necessary reformation and advancement of American competitiveness. William Leuchtenberg argues “the New Deal could advance impressive claims to being regarded as “the savior of capitalism.” Indeed, Lind quotes Roosevelt as saying, “The true conservative seeks to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it… I am that kind of conservative because I am that kind of liberal.”

Finally, it is important to note that the New Deal was never a grand, inspired cause, as were the Populist and Progressive Movements, or as was Reconstruction, to a degree. The New Deal was always a more bureaucratic reordering of institutions than a grand attempt to reorder society itself. Whereas Populists and Progressives sought the moral uplift of society, New Dealers sought only its pragmatic restructuring- still a moral cause, but a tempered one. Richard Hofstadter notes, “The key words of Progressivism were terms like patriotism, citizen, democracy, law, character, conscience, soul, morals, service, duty, shame, disgrace, sin, and selfishness… A search of the key words of [the New Deal] yields: needs, organization, humanitarian, results, technique, institution, realistic, discipline, morale, skill, expert, habits, practical, leadership…”

How the Neo-Populists and Democratic Socialists Forget the Real New Deal

I’ll hand them one thing- the Neo-Populists and Democratic Socialists do diagnose two real problems.

First, the conquest of the Democratic Party by Neoliberals.

Second, the imbalanced domination of our economy and society by large concentrations of economic power.

This, of course, does not imply that their solutions are the right ones. But more importantly, I think it’s improper that either of them look the New Deal as their actual legacy. Rather, the Neo-Populists should look to William Jennings Bryan and perhaps Woodrow Wilson; the Democratic Socialists should look to Eugene Debs and other far-left socialist figures of the early 20th Century.

The main reason for this is that the Neo-Populists and Democratic Socialists each only take two components of the six that defined the New Deal- Antitrust enforcement, and Social Democracy- while ignoring or explicitly rejecting the rest. It’s similar to contemporary Tea Partiers’ worship of “the Founding Fathers” while rejecting most of the Founders’ beliefs on mixed-market economics, the role of religion in public life, loose construction of the Constitution, and restraint in foreign policy (diverse though the Founders’ beliefs were on these topics!)

This is important, because this selective historical misinterpretation of the New Deal legacy in its entirety leads the Neo-Populists and Democratic Socialists to promote policy agendas and strategic concepts far removed from anything Franklin Roosevelt, Hugh Johnson, Thomas Corcoran, and all the rest of the New Dealers would have dreamt up.

As mentioned before, the Neo-Populists want a return to the pre-corporatist, pre-consolidated economy of small communities and independent entrepreneurs. Doubtless, this sort of vision would appeal across party lines, to certain breeds of libertarian and the Kirkian sort of social conservative.

But for the same reasons Bryan’s calls for the same return to Jeffersonianism were, in his time, idyllic, nostalgic, and reactionary, so are the calls of the Neo-Populists similarly idyllic, nostalgic, and reactionary today. For better or for worse, we aren’t going back to preindustrial arrangements of economic power, and the attempt to make such a return would be detrimental to the very real economic progress millions of people have enjoyed in the last eight decades since the New Deal.

The Democratic Socialists, meanwhile, make all the same mistakes as the Neo-Populists, in their call for the breakup of big banks and corporations. But they make even more. Their Gaia-worshipping environmentalism stands in stark contrast to the New Deal’s conservationist heritage. Their knee-jerk opposition to big infrastructure projects- in practice, if perhaps not in doctrine- is a symptom of this. Their opposition to “capitalism” as a whole, and disregard for very healthy market impulses, is incompatible with the New Deal’s legacy of state capitalism and cartelism. In short, Democratic Socialism is a movement of the far left- New Dealism was certainly in the center and to the left.

The real legacy of the New Deal is multifaceted and complex, but was oriented around three main subconscious goals at every point, through both experimentation and conscious planning: to restore the American people’s faith in their system of political economy, to better organize the American economy for productivity and competition in an industrial world, and to forestall the influence of radical ideologies and preclude the growth of socialist and fascist movements on American soil.

In all three respects, the New Deal succeeded radically. We live in the America the New Deal made, and though its institutions are perhaps in need of repair and rejuvenation, they are still very much with us.

Towards a New New Deal?

The pragmatism of the New Dealers may not be quite all of what we need today, given the spiritual exhaustion and cultural division in contemporary America. It may well be that an energy not unlike that of the Civil Rights movement or the Progressive Era would be useful in restoring the national spirit.

But in a pragmatic policy sense, a new generation of New Dealers capable of stewarding our institutions through a new age of reform would be useful and welcome. The problems with the entitlement systems, the ravages of our financialized political economy, the uncertainty of information technology’s influence on legacy industries, the stagnation of our administrative state’s bureaucratic agencies- all these are areas where creative pragmatism would be helpful, where we could use new ideas in government premised not on building a new and better world, but on making our world run a little bit more smoothly.

The basic goals of the New Dealers, mentioned above- restoring the American people’s faith in the justice of our institutions, reorienting our institutions towards greater efficacy and utility, and forestalling the rise of radical movements within our borders, both domestic and foreign- are all, in their own ways, as relevant now as they were at the onset of the Great Depression, though perhaps in a slower sense.

In any case, wherever these new New Dealers are, they’re not writing in the pages of the Washington Monthly or organizing over at Our Revolution. They may well be disenfranchised moderate Republicans, or excommunicated conservative Democrats. Wherever they are, they would be wise to remember the multifaceted nature of the spirit of the New Deal, and in the New Deal’s style, adhere not to a rigid ideology, but to a pragmatic pursuit of particular political and social goals. That’s the real New Deal.

 

Luke Phillips

The Hamiltonian Republican

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