Premises of the New Deal

by Michael S. Rozeff
by Michael S. Rozeff

Some of the New Deal’s programs were quickly discarded, but the New Deal survived. It lives on to this day. Every American president who followed FDR has strengthened the New Deal, and every new president will continue to do so. Once we spell out the basic premises of the New Deal, we can see why this is and why matters will not change without deep changes in thinking.

The New Deal fastened the U.S. economy in the chains of government control. Free markets were phased out. This was and is a work-in-progress occupying many years. Liberty remains in name only, as a remnant of past aspirations, primarily located in the gratifications of a circumscribed personal freedom.

New ideas and political changes such as progressivism consciously forged the chains of government power for the half-century preceding the New Deal, as did the enlarged government role in World War I. In the decades following the New Deal, one government after another, accepting the New Deal’s innovations, enlarged and secured the manacles institutionally. No realm of American life was left untouched – legally, economically, politically, educationally, socially, and religiously. Liberty and free markets became empty ideals next to the reality of the unique American fascism. The throttling of the American ideal of liberty was a bi-partisan work of mainstream Democrats and Republicans alike, with token resistance put up by their less powerful and influential splinter groups, wings, and movements. The two parties monopolistically collaborated to build the structure of centralized government control that we live under today.

We now look back on 125 years of a bull market in fascism. The transformation of American life by and into fascism is ongoing. The end stage is the extinction of the person’s decision rights over his life, and his liberty, and his personal pursuit of his own happiness; with that personal control being replaced by the collective and total control of nameless others.

The premises of the New Deal control the ground and direction of American social, economic, and political life. These premises are now identifiable, although only with the passage of time:

1. Centralization. The view that all of the economic activity within U.S. borders, that is, the abstraction that many of us call the economy, is actually a real and single entity; that this whole can be and should be subject to the planning and control of centralized national officials.

2. Collectivization. The view that the life of each person is largely determined by the collective of other persons (and by collective forces beyond his control that induce insecurities); and that the powers of the collective others should be controlled by nationally elected officials so as to enhance the life, progress, happiness, and welfare of each person; that the same officials should create arrangements to reduce the various insecurities of life.

3. Market failure. The view that people in markets, left to themselves, are incapable of sustaining their own investment and employment; leading to the view that government officials need to be the watchdogs, regulators, and controllers over people making exchanges in markets.

4. Insufficiency of social institutions. The view that persons cannot count on other persons, families, churches, clubs, insurers, companies, associations etc. to meet their own needs; leading to the view that national officials acting with the powers of government are essential for meeting people’s needs.

5. Symbiosis of big institutions and big government. The view that government controls the economy by supporting and controlling big business, big labor, big agriculture, big media, big defense companies, big banks, and so on; the view that individuals, small business, independent proprietors, and small institutions of all kinds, are minor.

6. The President as personification of Democracy. The view that national institutions speak for all the people (as opposed to federalism); the view that presidential leadership supercedes national-state government relations; the view of Democracy as a collective government personified by the President, as opposed to democracy viewed as self-government.

7. Inflation is good for the economy. The view that persons should not control what money is, but that government officials should; the view that a growing economy requires depreciation of the currency and that a declining level of prices of goods and services is to be avoided.

8. Rejection of limited government. The view that the powers of the national government are virtually unlimited, or limited only by expediency; that the national government controls the persons and wealth of all of its citizens.

To put these premises into practice required a much more powerful government, which is what we have. But the government can not use its powers without a degree of popular acceptance. A number of elements have contributed to that acceptance, such as the government’s exploitation of patriotism, its use of foreign enemies, and its ability to be heard and set the agenda. A very important element was the supine acceptance of government power by influential organizations of religion. Religion shapes the meaning and direction of many people’s lives. The support of religion for big government provides government with a broad foundation of acceptance that it could not gain if it were on its own.

Religion ties in with social norms. To each person, government offered social "guarantees." The social safety net appealed to wide swaths of the American people (and to many other peoples). They believe in government guarantees because they bring certain satisfactions of norms that they hold. Taking care of the elderly is a social (and religious) norm. So is taking care of the ill. People believe that children should be educated, another norm. The government promises and commitments, however shaky they are or ill-performed, satisfy these desires to meet the norms of good behavior. People feel good thinking this has been done, and they even feel good paying the taxes when they think they are satisfying their moral obligations. They don't think about the hidden costs and bad incentives of something like Social Security. Why should they? All they hear is one side of the story, and the story not only is plausible but it satisfies their norms.

The question then becomes: Why did churches and religious bodies support the collective, centralized, brutal, unjust, and impersonal use of raw government power instead of maintaining traditional methods of meeting norms personally and in justice?

America will not experience a revival or redirection toward liberty and free markets until Americans reject – fully, firmly, and consciously – the premises of the New Deal, for it was the New Deal that codified and institutionalized the American rejection of liberty and its exchange for collectivism and fascism. Before that can happen on any large scale, the alternative of liberty has to have broad appeal as an alternative to government supported by religion and made into a quasi-religious institution. But liberty’s appeal will not bloom in isolation of deeper philosophical and/or religious underpinnings. Liberty in and of itself does not provide enough meaning to most people. It provides a foundation for self-realization, but self-realization for what end? For what purpose? Liberty by itself provides no transcending purpose. That is why agnostic or purely logical and rationalistic libertarianism, even with an appealing moral code of non-aggression, excites only limited interest in the general population. Its social theory is circumscribed. People want more than individualism. Liberty cannot defeat the New Deal and big government without a religious revival that eschews the current connections between religion and government and replaces misguided religious beliefs with beliefs that are more compatible, even though they may not be completely so, with liberty, and incompatible with the power and injustice offered by New Dealism in government.

January 14, 2009

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York.

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