The Ideological Roots of New Deal Statism

Woodrow Wilson may be the worst president in U.S. history, but his ideological heir, Franklin D. Roosevelt, was probably the most important president because he played such a pivotal role.  Unfortunately, the role proved to be tragic for his party and the nation.  If Wilson inflicted the fatal blow against populist decentralism within the Democratic Party, Roosevelt presided over its funeral.

Historians often credit Franklin Roosevelt for having saved capitalism in the 1930s and the credit is deserved.  This would seem to contradict the Jeffersonian progressives-turned-Jeffersonian conservatives who accused the New Deal, at the time, of being “socialistic.”  But the contradiction is not so simple.  In reacting against what Socialist Party leader Norman Thomas called “capitalistic collectivism,” they correctly saw a repudiation of American political and economic traditions, but while Thomas was critical of the capitalistic component, they objected to the collectivism.  Supporters of free enterprise, they assumed its opponents must be socialists.  In general, Roosevelt embraced neither socialism nor laisez faire, but rather state-supervised monopoly capitalism.  This is sometimes referred to as crony capitalism.

In The Communist Manifesto (1848), Marx and Engels seem to glory in the revolutionary nature of the bourgeoisie (upper middle class—i.e., capitalists).  The displacement of feudalism by bourgeois society is depicted as both logical and desirable.  When Marx writes that the bourgeoisie had “left no other bond between man and man than naked self-interest” and had “drowned the most heavenly ecstasies of religious fervour, of chivalrous enthusiasm, of philistine sentimentalism, in the icy water of egotistical calculation,” the reader gets the impression that Marx is not only describing historical developments but also glorifying them as necessary developments on the road of progress.  With his supposedly realistic, pseudo-scientific approach—even as he is creating an ideological cult—Marx continues: “In one word, for exploitation, veiled by religious and political illusions, it has substituted naked, shameless, direct, brutal exploitation. . . . The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation to a mere money relation.”

Every step of the way, Marx celebrates political, economic, and cultural centralization.  He gloats, “The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country.  To the great chagrin of reactionaries, it has drawn from under the feet of industry the national ground on which it stood.  . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal inter-dependence of nations.”  He observes, with apparent admiration, “The bourgeoisie . . . draws all nations, even the most barbarian, into civilisation.  The cheap prices of its commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. . . . It creates a world after its own image.”  Marx continues with his elitist and ethnocentric thought:

The bourgeoisie has subjected the country to the rule of the towns.  It has created enormous cities, has greatly increased the urban population as compared with the rural, and has thus rescued a considerable part of the population from the idiocy of rural life.  Just as it has made the country dependent on the towns, so it has made barbarian and semi-barbarian countries dependent on civilised ones, nations of peasants on nations of bourgeois, the East on the West.  The bourgeoisie keeps more and more doing away with the scattered state of the population, of the means of production, and of property.  It has agglomerated population, centralised means of production, and has concentrated property in a few hands.  The necessary consequence of this was political centralisation.  Independent, or but loosely connected provinces, with separate interests, laws, governments and systems of taxation, became lumped together into one nation, with one government.

He does not lament these developments.  He seems to welcome them.  Together they bring colossal centralization, thereby setting the stage for state socialism.

Sixty years after Marx wrote, William Jennings Bryan perceived a common denominator between government power à la Marx and corporate power à la Morgan: rejection of competition in favor of monopoly.  In a 1906 magazine article, Bryan observed,

The socialist is inclined to support the monopoly, in the belief that it will be easier to induce the government to take over an industry after it has passed into the hands of a few men.  The trust magnates and the socialists unite in declaring monopoly to be an economic development, the former hoping to retain the fruits of monopoly in private hands, the latter expecting the ultimate appropriation of the benefits of monopoly by the government.  The individualist, on the contrary, contends that the consolidation of industries ceases to be an economic advantage when competition is eliminated; and he believes, further, that no economic advantage which could come from the monopolization of all the industries in the hands of the government could compensate for the stifling of individual initiative and independence.

Thirty years later, the New Deal represented a hybrid of the two monopolistic camps: concentrated corporate power acting as a junior partner to concentrated government power in a relation akin to the Mussolini and Hitler variants of socialism (i.e., fascism or state capitalism).

On both domestic and foreign issues, Roosevelt was closer to the Hamiltonian camp than the Jeffersonian.  As leader of the Democratic Party, the president naturally paid homage to the Sage of Monticello but that did not mean he followed his principles.  Ironically, Roosevelt anticipated the New Deal during his Commonwealth Club of San Francisco address, in September 1932, when he summarized Alexander Hamilton’s thought: “Fundamentally he believed that the safety of the republic lay in the autocratic strength of its Government, that the destiny of individuals was to serve that Government, and that fundamentally a great and strong group of central institutions, guided by a small group of able and public-spirited citizens, could best direct all Government.”  It may or may not have been Roosevelt’s intention to preside over an administration that operated in this manner, but that is what happened over the next thirteen years.

There are hints in the speech that Roosevelt intended to follow a far more Hamiltonian course than assumed by his progressive populist supporters.  He criticized his opponent, President Hoover, for dispensing government subsidies and bailouts to big business:

The same man who tells you that he does not want to see the Government interfere in business . . . is the first to go to Washington and ask the Government for a prohibitory tariff on his product.  When things get just bad enough, as they did two years ago, he will go with equal speed to the United States Government and ask for a loan; and the Reconstruction Finance Corporation is the outcome of it.  Each group has sought protection from the Government for its own special interests, without realizing that the purpose of Government must be to favor no small group at the expense of its duty to protect the rights of personal freedom and of private property of all its citizens.

Roosevelt was speaking like a laissez-faire, special-privileges-to-none Jeffersonian here.  Similarly, he warned, “Put plainly, we are steering a steady course toward economic oligarchy, if we are not there already.”

Yet late in his speech, Roosevelt gingerly turned against the Jeffersonian tradition:

The responsible heads of finance and industry instead of acting each for himself, must work together to achieve the common end.  They must, where necessary, sacrifice this or that private advantage; and in reciprocal self-denial must seek a general advantage. . . . Whenever in the pursuit of this objective the lone wolf . . . declines to join in achieving an end recognized as being for the public welfare, and threatens to drag the industry back to a state of anarchy, the Government may properly be asked to apply restraint.  Likewise, should the group ever use its collective power contrary to public welfare, the Government must be swift to enter and protect the public interest.  The Government should assume the function of economic regulation only as a last resort, to be tried only when private initiative, inspired by high responsibility, with such assistance and balance as Government can give, has finally failed.

On the heels of populist rhetoric that would be understood by the average voter, when disseminated by the national press, Roosevelt closed with a proposal contradicting the free-enterprise, anti-monopoly tradition of his party that would be understood by the sophisticated voter.  He was urging a rejection of competition (“anarchy”) and an embrace of German-style corporate cartels (“work together”).  These would be public cartels, exempt from antitrust laws and enforced by the power of the federal government, which would be the sole determiner of what is and is not in “the public interest.”  Roosevelt implemented this approach after becoming president.  As the political scientists who include the Commonwealth Club address in their anthology note, “Some of his speeches consist of mere rhetoric for purposes of holding popular support, but many provide rich substance and the rationale for a government-business partnership in which the executive branch and the corporate community would be the key elements.”

The elitism and centralization that characterized the New Deal were anticipated by nineteenth-century Marxism.  Karl Marx’s elitism can be seen in his disparagement of “barbarian” nations, rural “idiocy,” the “reactionary” lower-middle-class (small manufacturers, shopkeepers, artisans, peasants), and the lower-working-class “social scum.”  In the 1870s, anarchist Mikhail Bakunin—Marx’s opponent within the Socialist International—wrote,

To me the flower of the proletariat is not, as it is to the Marxists, the upper layer, the aristocracy of labor, those who are the most cultured, who earn more and live more comfortably than all the other workers. . . . By the flower of the proletariat, I mean above all that great mass, those millions of the uncultivated, the disinherited, the miserable, the illiterates, whom Messrs. Engels and Marx would subject to their paternal rule by a strong government—naturally for the people’s own salvation! . . . I mean precisely . . . that great rabble of the people (underdogs, ‘dregs of society’) ordinarily designated by Marx and Engels in the picturesque and contemptuous phrase Lumpenproletariat.

Anticipating Burnham’s Managerial Revolution and Orwell’s 1984 by seventy years, Bakunin wrote, “The State has always been the patrimony of some privileged class: a priestly class, an aristocratic class, a bourgeois class.  And finally, when all the other classes have exhausted themselves, the State then becomes the patrimony of the bureaucratic class and then falls—or, if you will, rises—the position of a machine.”  Bakunin warned, “Marx’s programme is a complete fabric of political and economic institutions strongly centralised and very authoritarian, sanctioned, no doubt, like all despotic institutions in modern society, by universal suffrage, but subordinate nevertheless to a very strong government; to use the very words of Engels, the alter ego of Marx.”  He went on to write, “A universal State, government, dictatorship!  The dream of Popes Gregory VII and Boniface VIII, of the Emperor Charles V, and of Napoleon, reproducing itself under new forms, but always with the same pretensions in the camp of Socialist Democracy!  Can one imagine anything more burlesque, but also anymore more revolting?”

Foreshadowing not only the intelligentsia-led Soviet communism of Lenin and Trotsky but also, in a far-less brutal context, the brain trust of Franklin Roosevelt, Bakunin’s prophecy—breathtaking in its accuracy—deserves extended quotation:

In the People’s State of Marx there will be, we are told, no privileged class at all.  All will be equal, not only from the juridical and political point of view but also from the economic point of view.  At least this is what is promised, though I very much doubt whether that promise could ever be kept.  There will therefore no longer be any privileged class, but there will be a government . . . This government will not content itself with administering and governing the masses politically, as all governments do today.  It will also administer the masses economically, concentrating in the hands of the State the production and division of wealth, the cultivation of land, the establishment and development of factories, the organization and direction of commerce, and finally the application of capital to production by the only banker—the State.  All that will demand an immense knowledge and many heads ‘overflowing with brains’ in this government.  It will be the reign of scientific intelligence, the most aristocratic, despotic, arrogant, and elitist of all regimes.  There will be a new class, a new hierarchy of real and counterfeit scientists and scholars, and the world will be divided into a minority ruling in the name of knowledge, and an immense ignorant majority.  And then, woe unto the mass of ignorant ones!  Such a regime will not fail to arouse very considerable discontent in the masses of the people, and in order to keep them in check, the ‘enlightened’ and ‘liberating’ government of Mr. Marx will have need of a not less considerable armed force.

Bakunin condemned Marx’s desire for a new society led by “Socialistic scientists and professors,” calling the idea “the worst of all despotic government.”  The fathers of fascism—Mussolini and Hitler—considered themselves to be intellectuals and while neither were doctrinaire Marxists both had roots in socialism (Italian Socialist Party and National Socialist German Workers’ Party, respectively).

In his classic 1984 (1949), George Orwell spells out the political philosophy behind Big Brother and his party by sharing fictitious excerpts from The Theory and Practice of Oligarchical Collectivism (i.e., the Goldstein book).   In this way, Orwell was able to share part of his critique of state socialism in its various forms.  Partly indebted to James Burnham’s The Managerial Revolution (1941), the parallels between the description of the sociopolitical structure of the Orwellian dystopia and the New Deal are interesting and deliberate, although the Soviets and Nazis obviously embodied the same tendencies in fuller form.

Referring to the world’s three prevailing philosophies of Ingsoc (English socialism), Neo-Bolshevism (Soviet communism), and Obliteration of Self (Chinese communism), Goldstein remarks, “The citizen of Oceania is not allowed to know anything of the tenets of the other two philosophies, but he is taught to execrate them as barbarous outrages upon morality and common sense.  Actually the three philosophies are barely distinguishable, and the social systems which they support are not distinguishable at all.  Everywhere there is the same pyramidal structure, the same worship of a semi-divine leader, the same economy existing by and for continuous warfare.”  Obviously, FDR did not claim semi-divine status for himself, but the cult of personality that he encouraged was manifested in the hubristic four terms of power he sought and won.  In an age of dictators, both communist and fascist—both with roots in socialism, as in Goldstein’s world—more than a handful of public-minded observers were concerned that Roosevelt’s quest for unprecedented third and fourth terms might be harbingers of dictatorship.  In 1940, The Christian Century magazine entitled a critical editorial “An Ominous Nomination.”  In 1941, Senator Hiram Johnson (R-CA) told Senator Burton Wheeler (D-MT) that he “did not think we would preserve even the forms of another election, and that if one were held, it would simply be to ratify a fourth term for the President.”  Two years later, he privately wrote, “I look to see him [FDR] triumphantly elected next year and enter upon a fourth term, and I very firmly believe this will be the end of democratic America.”

In 1984, Goldstein further explains, “In each variant of Socialism that appeared from about 1900 onwards the aim of establishing liberty and equality was more and more openly abandoned. . . . These new movements, of course, grew out of the old ones and tended to keep their names and pay lip-service to their ideology.  But the purpose of all of them was to arrest progress and freeze history at a chosen moment.”  As quoted above, historian Samuel Francis argued that liberal intellectuals by the 1930s had reformulated “liberalism in a way that muted the radical, progressivist, egalitarian, and utopian premises” and the new type of liberalism, dominated by the managerial elite, sponsored “the ‘Imperial Presidency’ that presided over the regulatory and interventionist bureaucracy, the globalist diplomacy, and the military managers of the mass state.  Referring to the Roosevelt administration, in 1936, John Haynes Holmes, a La Follette ’24 supporter, wrote, “If we are looking for the bankruptcy of liberalism, of the collapse of contemporary middle class intellectualism, here it is. . . . I find scarcely a trace of principle or idea.”

Goldstein’s book continues with its explanation of the move away from utopian socialism and traditional liberalism:

The heirs of the French, English, and American revolutions had partly believed in their own phrases about the rights of man, freedom of speech, equality before the law, and the like, and had even allowed their conduct to be influenced by them to some extent.  But by the fourth decade of the twentieth century all the main currents of political thought were authoritarian.  The earthly paradise had been discredited at exactly the moment when it became realizable.  Every new political theory, by what ever name it called itself, led back to hierarchy and regimentation.  And in the general hardening of outlook that set in round about 1930, practices which had been long abandoned . . . not only became common again, but were tolerated and even defended by people who considered themselves enlightened and progressive.

Goldstein lists a half-dozen specific examples of inhumane practices, but internment camps for citizens of a certain ethnicity, intentional mass killing of foreign civilians in war, and development of a weapon capable of destroying the planet—three accomplishments of the FDR administration—also come to mind.

Referring to English socialism (“Ingsoc”) and its international rivals, Goldstein explains,

They had been foreshadowed by the various systems, generally called totalitarian, which had appeared earlier in the century, and the main outlines of the world which would emerge from the prevailing chaos had long been obvious.  What kind of people would control this world has been equally obvious.  The new aristocracy was made up for the most part of bureaucrats, scientists, technicians, trade-union organizers, publicity experts, sociologists, teachers, journalists, and professional politicians.  These people, whose origins lay in the salaried middle class and the upper grades of the working class, had been shaped and brought together by the barren world of monopoly industry and centralized government.  As compared with their opposite numbers in past ages, they were less avaricious, less tempted by luxury, hungrier for pure power, and above all, more conscious of what they were doing and more intent on crushing opposition.

Dwight Macdonald, whose Politics journal included early writings of Orwell, called New Dealers “totalitarian liberals.”  Forty years later, another astute political writer, Joseph Sobran, put it succinctly: “Roosevelt’s twin legacy is centralized government and permanent militarism.  You are supposedly ‘liberal’ or ‘conservative’ according to which part of this legacy you prefer.”  Senator Barry Goldwater (R-AZ) recalled, “Many of the New Deal-Fair Deal men in government were virtually devoid of philosophical commitment.  They simply asked, ‘What’s in it for me?’  Enlarging the role of government provided more patronage, permitted the distribution of special benefits to easily identified groups.  This, in turn, resulted in favorable political support for their benefactors.”  Referring to FDR’s ideological heirs in the 1950s, C. Wright Mills commented at the time, “Public relations fills any need for ‘ideology,’ and public relations are something you hire.  Just now, the elite of wealth and power do not feel in need of any ideology.”

In a 1946 article, Orwell summarized Burnham’s Managerial Revolution: “Capitalism is disappearing but Socialism is not replacing it.  What is now arising is a new kind of planned, centralised society which will be neither capitalist nor, in any accepted sense of the word, democratic.  The rulers of this new society will be the people who effectively control the means of production: that is, business executives, technicians, bureaucrats and soldiers, lumped together by Burnham under the name of ‘managers.’” Orwell noted that Burnham, writing in 1940, saw full-blown managerialism in Communist Russia and Nazi Germany and “primitive managerialism” in the New Deal of the United States.  He also noted that the thesis is not completely new, that “it has always been obvious that a planned and centralised society is liable to develop into an oligarchy or a dictatorship,” regardless of the label attached.

For a description by an old Bryan Democrat of the New Deal as incipient fascism, see John Flynn’s As We Go Marching (1944).  It is also true that New Dealers openly collaborated with American Stalinists as part of the “Popular Front” during World War II.  The Communist Party USA did not run a presidential candidate in 1944, choosing instead to endorse FDR for reelection.  Roosevelt and Truman affectionately referred to Stalin as “Uncle Joe.”  Obviously there were major differences between the workings of the New Deal and those of European totalitarian governments.  To claim otherwise would be absurd.  Yet underlying similarities, recognized by Burnham and discernible in Orwell’s novel, tell us something about manifestations of centralized power divorced from traditional liberal values of individual liberty, social ethics, natural rights, popular sovereignty, and limited government.

There were superficial similarities between the platforms of William Jennings Bryan, Robert La Follette, and other early-twentieth-century prairie populists and the presidency of Franklin D. Roosevelt but the differences were not only of magnitude but of kind.  There was an ideological kinship between pragmatic, power-centric forms of mid-century statism—Soviet, German, and American.  In the United States, we are still living with that legacy of statism.  Knowing our history can help us ameliorate its effects and perhaps move in a better direction.