Sunday, February 1, 2009

Attacking the New Deal to Attack the Obama Program

by Norman Markowitz

An old student of mine and a progressive activist sent me an excerpt for CNBC's"splash page" trivializing the New Deal's role in the great depression. The excerpt, aptly, was from Money magazine, but it reflected in a simplistic and factually inaccurately way what conservative historians have sought to argue about the New Deal, namely that it made the depression worse by its intervention in the economy, from the conservative perspective, but undermining business confidence and preventing a revival

The excerpt states that "The New Deal was actually a combination of socialism and cartelization of industry with price controls. These policies failed to stimulate growth and actually helped plunge the economy into a "Depression within a Depression" in 1937." The excerpt then goes on to say that it wasn't until 1938 when those policies were reversed and the NRA was "relegated" to a minor role that "growth returned." Finally, the excerpt dredges up Milton Friedman's old contention that the Federal Reserve monetary policy played a significant role in the the depression crisis,

Actually the statement reflects Milton Friedman's view of the depression along with the Bush-Rove fidelity to factual accuracy. The NRA was abolished by the Supreme Court in 1935 and simply didn't exist when it was supposedly relegated to a minor role after 1937. New Deal policies did bring about a significant revival of the economy in the period 1933 to 1937 from the disastrous lows of 1932. The "recession" of 1937 (the term was coined then) most non conservative historians contend and have contended for generations was the result of the administration's attempts to reduce spending and restrict deficit (its failure to "pump prime" as the term went then or "stimulate" the economy enough).

"Growth" didn't return in 1938 (it didn't return in the sense that it is understood today anywhere in the capitalist world until WWII) and Congress in 1938 sharply increased spending for jobs programs like the WPA which did overcome the "recession," even though the "recession" and a massive counterattack by big business against the CIO organizing drives and strikes(which conservatives at the time also blamed for the "recession") enabled Republicans to make significant gains in the 1938 congressional elections and strengthen their "conservative coalition" with many Southern Democrats. These conservative coalition then opposed new progressive legislation and also sought to undermine existing New Deal programs like the WPA, the National Labor Relations Act, the Farm Security Administration, and other agencies and policies, policies that hurt working people and did nothing to stimulate "economic growth."

While there were aspects of "cartelization" certainly in the NRA, it lasted only two years. The New Deal also was not "socialiism" although it borrowed specific social programs from the Communist and Socialist parties like unemployment insurance, old age pensions, support for public housing, protection for workers rights to join unions, along with progressive capitalist programs to regulate industry and finance in order to both save and reform the existing capitalist system. Most of all, it did work, in that its policies improved the quality of life for the majority of Americans, overcame the worst of the depression, and established institutions that would enable the working class to benefit from the wartime and postwar economic expansion (however the war economy and rightwing cold war ideology compromised those gains in the long-run and set the stage for the last thirty years of reaction)

We can expect mass media and selected pundits of the right, including academics, to seek to denigrate the history of the New Deal today, since, as the old progressive historian Charles Beard understood, history is always about finding a "usable past," or rather the struggle to use the past to influence the course of events in the present. And Marxists, who understand that fully, also understand that history, like everything else, is history for whom? For those who see the New Deal as a failure and want to see the Obama administration also fail, it is history for the exploiting classes. For those who see the New Deal as an example of major victories for labor and the people, it is history that the working class can and must learn and a history that can help teach the Obama administration to succeed and help to forge a new politics in the U.S.