Hoping for a new New Deal

November 6, 2007

Many liberals, including commentators such as Paul Krugman, have expressed hope that the 2008 election will mark a progressive political watershed in the US, like the 1932 election that swept Franklin Roosevelt into the White House, and large Democratic majorities into both houses of Congress, setting the stage for the New Deal.

I’ve suggested in a previous post (see Al Gore, Media Pariah) that the recent “Draft Al Gore” boomlet is reflective of this quite understandable widespread longing for a “new FDR” on the part of the liberal electorate.

Lately, I’ve noticed that peak oilers, too, are increasingly citing the New Deal as a hopeful instance of the US political system responding constructively to an enormous challenge facing American society (in that case, of course, the Great Depression). It is not surprising that thinking people are groping for a positive historical reference point, given that we are faced with a bleak contemporary reality characterized by

  1. more and more experts declaring the apparent arrival of Peak Oil;
  2. signs (in particular the 2007 Arctic ice melt) that global climate change may have reached a tipping point, with potentially catastrophic consequences down the road; and
  3. the growing likelihood that the resource wars in Iraq and Afghanistan will shortly be expanded to Iran, possibly even involving the first use of nuclear weapons in more than 60 years, and potentially unleashing World War III.

In this context, it’s no wonder that any sliver of hope that we might be able to find our collective way out of this mess – – and, thereby, avoid Richard Heinberg’s apocalyptic “last one standing” scenario – – is eagerly seized upon.

I’m all for hopefulness, if it’s warranted. But, when we make use of a historical example to build a case for a hopeful outcome to our current dilemma, it is essential that we have an accurate understanding of that history. In this case, before we can posit the emergence of a new New Deal, we had better understand the nature of the old one. Having spent the past couple of years researching the response of business elites to the Great Depression and the New Deal for a history dissertation I’m currently at work on, I think I can offer some insight in this regard.

Richard Heinberg’s current Museletter consists of a thoughtful essay (“Big Melt Meets Big Empty“) concerning the alternative realities of science (physical reality) and politics (political reality). Heinberg identifies the opposition between these two as the key cause of the seeming inability of political institutions in the US and elsewhere to constructively respond to the twin threats of climate change and resource depletion. He advocates working toward overcoming this opposition, to whatever degree that is possible. His key suggestion is that interested groups of citizens develop realistic assessments of the efficacy of various potential policy responses, and that they then use these assessments to create an advocacy program to push for the enactment of desired policies.

Looming in the background for Heinberg, however, are two critical and related specters, either of which would likely doom any constructive initiatives that might be developed:

  1. resource wars; and
  2. implacable opposition on the part of elites.

It seems to me that a fruitful way of looking at these twin threats, is to see resource wars as, in a sense, the bitter consequence of elite opposition to ameliorative policies.  That is to say, if, faced with energy scarcity, elites succeed in blocking serious consideration of “powerdown” approaches (like the oil depletion protocol), resource wars become the likely outcome – – the “default” option, as it were. Conversely, if ameliorative policy options are viable, resort to “last one standing” warfare can hopefully be avoided. If this is so, then the question of the potential for elite acceptance of some such policies seems to be the key factor in assessing the possibility of a hopeful outcome to energy transition.

On this issue, Heinberg expresses a measure of hope, based on the example of the New Deal:

Ultimately, power holders must be convinced that [energy transition] policies, if obnoxious to them now, will be far less destructive to their interests than a complete breakdown of society and biosphere – which is the very real alternative. For a historic example of a similar conversion of elites think of the 1930s New Deal: then the titans of industry had to sacrifice some of their financial power in order to keep from losing it all. Many wealthy individuals never forgave Franklin Roosevelt, whom they regarded as a “traitor to his class,” but most of them reluctantly agreed that redistribution represented the lesser of evils.

The question is, thus, starkly raised: Is Heinberg’s history here an accurate depiction of actual events? Did most “titans of industry” agree (if reluctantly) to New Deal policies as a lesser evil, in view of the potential for utter ruin represented by the Great Depression?

Alas, the historical record provides little basis for this claim. This, obviously, calls into question (though it does not necessarily invalidate) Heinberg’s conclusion that a similar conversion of elite opinion is possible today. I’ll first discuss the actual history of the attitudes of business elites’ toward FDR and the New Deal. Then, based upon this history, I’ll try to assess whether hopefulness seems warranted with respect to powerdown policy initiatives.

The notion that a significant segment of business elites supported the New Deal is commonly known as the “corporate liberalism” theory. According to this view, forward-thinking business leaders, primarily drawn from the ranks of large-scale Eastern capital-intensive industries, recognized that laissez-faire capitalism was doomed, that flat opposition to unionization and social welfare initiatives risked opening the way to socialism and expropriation of private wealth. As a result, so the theory goes, these corporate liberals made a strategic decision to back New Deal policies, and, in so doing, were able to shape those policies in a business-friendly way, which, ultimately, stabilized capitalism on a new “welfare state” basis, setting the stage for the postwar boom. [Those wanting a more thorough exposition of this theory may wish to consult the essay by Thomas Ferguson entitled “Industrial Conflict and the Coming of the New Deal,” in The Rise and Fall of the New Deal Order, 1930-1980, edited by Fraser and Gerstle].

This theory has been pretty thoroughly demolished over the last decade, for one key reason: notwithstanding the claims of Ferguson and other proponents, the existence of a cadre of New Deal-supporting corporate liberals is not supported by the archival evidence. [The best demolition of the theory is an essay by the brilliant sociologist and political scientist Theda Skocpol, entitled “Political Response to Capitalist Crisis,” in Skocpol and Campbell, eds., American Society and Politics: Institutional, Historical, and Theoretical Perspectives].

The reality is that, if FDR saved capitalism from itself through the New Deal, he did so, not with the support of any significant segment of business elites, but, instead, in the face of continuous, nearly unanimous, exceptionally bitter business opposition. Further, what Roosevelt saved, was probably not capitalism, but, rather, constitutional democracy. That is to say, given the state of American society during the 1930s, the US would have been much more likely to have seen a fascist takeover (which would have largely preserved the power of business elites) than a socialist revolution. [For a highly-readable non-scholarly account of a possible 1934 right-wing coup plot, purportedly led by the DuPonts and Morgan interests, see Archer, The Plot to Seize the White House].

This, of course, raises the question of how the New Deal happened, given broad elite opposition. The answer seems to be that the depth of the economic crisis during the 1930s led to an enormous loss of business prestige, which, in turn, resulted in a decline in the ability of elites to exercise decisive control over the political process. The opening thus created was filled, not by forward-looking corporate liberal business leaders, but rather, by government officials like FDR’s “Brain Trust” (principally  Raymond Moley, Adolf Berle and Rexford Tugwell), cabinet secretaries such as Frances Perkins at Labor and Harold Ickes at Interior, and Congressional liberals such as Senator Robert Wagner of New York. In addition, into this breach created by the decline in business prestige and authority, stepped a resurgent labor movement, led by John L. Lewis and the CIO.

The key lesson that contemporary would-be “powerdown” reformers should take away from the history of the New Deal, then, is that they are highly unlikely to win the approval or support of any significant segment of business elites. Rather, the probable reality will be bitter and unremitting business hostility every step of the way.

“Well,” one might ask, “they (the New Dealers) were able to succeed despite business opposition. Can’t we do the same?”

In my personal assessment, the answer is: Perhaps, but probably not.

First, in the 1930s, business elites were caught by surprise by the relatively sudden, precipitous loss of prestige and decisive influence they suffered. As a result of the (for them) intense trauma of the New Deal, during the intervening decades tremendous intellectual and economic resources have been poured into the development of strategies and social structures intended to insure that it never happens again. These include the massive corporate public relations industry (which, not coincidentally, got its start during the 1930s); the related development of the mass media – – especially television – – and mass advertising, as agencies for shaping mass consciousness; the coalescence of the military-corporate-Congressional complex, with enormous, even decisive influence over government policy in its sphere of interest; the development and implementation, in both the public and private realms, of sophisticated strategies of surveillance and control; and, the capture of the political process, to an unprecedented degree (especially at the federal level), by corporate oligarchic interests.

Second, the US (and the world) faced a very different historical conjuncture in the 1930s, as compared to today. Despite the Depression, the US was the world’s supreme financial power, as well as the richest country in resource terms, particularly fossil fuel resources. In this context, the societal “bargain” that we call the welfare state was a feasible alternative to continuous repression of social unrest. All of this changed in the early 1970s (typified by the peaking of US lower-48 petroleum production). The “richest country in the world” is now a good deal poorer (at least relatively) than it was then. It is no coincidence that no new major social welfare programs have been instituted in the US since the 1960s. The willingness of elites to passively accept any significant constraints on the “free market” (such as energy transition-related public policy initiatives) is open to serious question.

One can, of course, posit that the coming catastrophic impact of resource depletion and climate change will lead to a weakening of several of these structures, much as the Great Depression washed away the edifice of business prestige in the 1930s. Let’s hope so. However, in my view, it is far more likely that, when the coming crisis hits with full force, we’ll see a strengthening of strategies and agencies of repression and control, rather than the advent of a new New Deal.


Tags: Activism, Fossil Fuels, Oil, Politics