The New Deal: history and economic impact

New Deal

Politically-motived objections to President Roosevelt's "New Deal" would long outlive FDR himself. In 2003, when Nobel Prize-winning economist Paul Krugman was looking for a term to describe the ideologically-driven motivations of President George W. Bush and his administration, the phrase he selected was "the great unraveling" -- Krugman's image saw Roosevelt's New Deal programs (above all Social Security) as having become the very fabric of the society in which we live, and the simpleminded libertarianism of the GOP attitude toward the social programs of the New Deal was a mistaken . Yet I think it would be easiest to answer the question of whether Republicans' libertarian objections to the New Deal are genuinely based on the New Deal's curtailment of actual liberty. I hope an examination of campaign speeches by both FDR and Roosevelt from the 1932 Presidential election will elucidate the relationship between individual freedom and the government that would be offered by the New Deal.

Certainly it was a form of libertarian ideology on Herbert Hoover's part that marked his unwillingness to invervene effectively in the wake of the Great Depression. One of the tremendous ironies of Hoover's long life (he would outlive JFK) and ideological career is that before his Presidency, when he was merely a private citizen and charitably-motivated Quaker in the wake of Europe's devastation during World War I, he was widely credited with having saved all of Europe from starvation after the Armistice: that, more than anything else, made Hoover's willingness to preside over starvation in the United States all the more outrageous in the eyes of the public. Yet Hoover objected to the social welfare programs of the New Deal more or less on principle. As he would say in his 1932 campaign speech,

This question is the basis upon which our opponents are appealing to the people in their fears and distress. They are proposing changes and so-called new deals which would destroy the very foundations of our American system. Our people should consider the primary facts before they come to the judgment -- not merely through political agitation, the glitter of promise, and the discouragement of temporary hardships -- whether they will support changes which radically affect the whole system which has been builded up by 150 years of the toil of our fathers.

From Hoover's perspective, the laissez-faire capitalism which had turned the U.S. Senate into a "billionaire boys' club" by the end of the nineteenth century, and was deemed to be sufficiently exploitative for Alexander Berkman to fire a bullet into the skull of Henry Clay Frick, was somehow the necessary essence of the American system. As Hoover put it:

It is founded on the conception that only through ordered liberty, through freedom to the individual, and equal opportunity to the individual will his initiative and enterprise be summoned to spur the march of progress…It is by the maintenance of equality of opportunity and therefore of a society absolutely fluid in freedom of the movement of its human particles that our individualism departs from the individualism of Europe. We resent class distinction because there can be no rise for the individual through the frozen strata of classes, and no stratification of classes can take place in a mass livened by the free rise of its particles. Thus in our ideals the able and ambitious are able to rise constantly from the bottom to leadership in the community.

Hoover's surreal rebuke to Marxist analysis here -- which swallows the myth of a class-free America whole -- surely could not have persuaded many Americans in 1932. The only way whereby Hoover could have employed this rhetoric with a straight-face is if he himself believed it, which indeed he did: Hoover's training as a mining engineer and his vast global success in the period immediately preceeding World War I had persuaded him of the reality of the American Dream (or day-dream) that he prefers to the New Deal.

But to compound the ironies of the 1932 campaign, Franklin Delano Roosevelt was precisely the opposite from Hoover: he was the scion of a rich and long-established American family, and was related to a former President. If any example could have disproven Hoover's broad insistence on a "class-free America," it was that of the patrician FDR. Like Hoover, FDR in his 1932 campaign speech to the Commonwealth Club would employ a tendentious and largely mythical version of history to bolster his points (and promote the New Deal). It is extraordinary to see how FDR manages in the speech to transform the New Deal into the moral and political equivalent of the Magna Carta:

When the development among the nations of Europe, however, has been completed, ambition, and ruthlessness, having served its term tended to overstep its mark. There came a growing feeling that government was conducted for the benefit of a few who thrived unduly at the expense of all. The people sought a balancing- a limiting force. There came gradually, through town councils, trade guilds, national parliaments, by constitution and by popular participation and control, limitations on arbitrary power.

FDR's comparison of the predations of consumer capitalism in the early 20th century with the predations of the monarchy before the barons forced King John into concessions at Runnemeade may be rhetorically effective, but it basically compares the predations of a tyrannical governmental system (such as the British monarchy) with the predations of capitalism: the "few" who "thrive unduly at the expense of all" in the twentieth century are not a royal court but those captains of industry who think nothing of pursuing policies designed to maximize what libertarian economist Joseph Schumpeter would call "creative destruction."

Obviously it would be a bigger surprise if Roosevelt and Hoover had not engaged in any misrepresentations and distortions of the record in their campaign speeches. Yet in their rhetorical stances we can easy see the differences in ideological approach. Hoover had sound autobiographical reasons for believing in the accessibility of the "American dream," and Hoover's eleemosynary activity as a private citizen in the wake of World War One was enough to explain his firm belief that charitable enterprise would provide a sufficient social safety net:

This freedom of the individual creates of itself the necessity and the cheerful willingness of men to act cooperatively in a thousand ways and for every purpose as occasion arises; and it permits such voluntary cooperations to be dissolved as soon as they have served their purpose, to be replaced by new voluntary associations for new purposes.