Being a typical inner-city type, I went to the Wheeler Centre’s Festival of Dangerous Ideas (a wonderful echo chamber) in Melbourne to see the creator of The Wire, David Simon speak. The show is one of the finest critiques of modern capitalism that I have seen on a screen in sometime, so I was expecting some of those same incendiary notions to be raised by Simon himself. What we instead got was the typical, liberal response to the failures of capitalism: Marx had a decent point, but he’s not really worth a deep reading because it is late capitalism that is the failure – thus what we really need is a New Deal-style politics.
My inner-city self piped up, wondering about the criticisms of capitalism the broader media chooses. There are plenty of fine critiques out there, but, mostly, media hegemony focuses on this New Deal-nostalgia or on the suggestion – George Monbiot-style – that the state working for corporate interests is a relatively new aspect of our liberal democratic system.
I don’t want to construct a straw man here: not everyone on the left suffers from this ND nostalgia, but it exists as a strong alternative narrative. When public figures like David Simon – who understands the brutality of capitalism – calls for this type of policy to a two-thousand-person audience, it might be time to correct some historical misreadings.
A look back in history might reveal some of the problems with recollections from the period. Undeniably, Roosevelt’s New Deal, which developed out of the crisis of the Great Depression, started a political transformation in the United States as the Democratic Party incorporated popular sectors into its coalition. The strategy introduced a mass of government bodies, whose responsibility it was to kickstart welfare programs and create regulatory oversight. Essentially, the government was transformed from a mildly interventionist business-dominated regime into an active ‘broker state’ that incorporated entire labour sectors into its political bargaining.
It’s important to recognise that the New Deal failed to do what it set out to – that is, stimulate full economic recovery, or implement a social-democratic regime. It was not until World War II that employment improved and national output was revived.
The liberal reforms of the New Deal did not transform the American system. Rather, the broker interventions conserved and protected corporate capitalism, occasionally even absorbing parts of programs that threatened the business orientation. There was no discernible shifting of power. And not only did the New Deal fail to solve the problems that arose from the Depression, the impoverished remained impoverished, as did the problems with income distribution. Meanwhile, equality remained a pipedream, and segregation and racial discrimination were still parts of the American landscape.
As we use historical models for inspiration, for ways to think about modern capitalism, we must be candid in the lessons we draw from those examples. In ‘The People’s History of the United States’, historian Howard Zinn argues that after the New Deal:
Capitalism remained intact. The rich still controlled the nation’s wealth, as well as its laws, courts, police, newspapers, churches, colleges. Enough help had been given to enough people to make Roosevelt a hero to millions, but the same system that had brought depression and crisis – the system of waste, of inequality, of concern for profit over human need – remained.
Adding to Zinn’s critique, historian Paul Conkin wrote in his book ‘The New Deal’ that the program created a vast apparatus of security – meagre social security for the working class, and large and extensive financial security for established businesses. The New Deal underwrote sustained profits and continual growth, but with no significant levelling through taxes, so the proportional wealth distribution stayed much the same. Even relief expenditures were disguised subsidies to corporations, since they were in large part paid by future taxes on individual salaries or goods. Therefore, instead of higher wages creating a market at the short-term expense of profits, the government subsidised the businessman.
In our modern context, this all sounds very familiar. The main difference back then was that the business capitalist feared the crisis and the communist threat much more and so failed to fully capitalise. Nowadays, large business capitalists are not scared: they learned during the New Deal that government would protect them. Liberal capitalism has always supported corporate interests, and the state remained a lackey to them. This is the case even in the highly regarded liberal-democratic Scandinavian nations.
This reading of capitalism is not a new one. Ralph Miliband, the father of the current UK Labour leader, wrote the influential in ‘The State in Capitalist Society’ in the late sixties:
In an epoch when so much is made of democracy, equality, social mobility, classlessness and the rest, it has remained a basic fact of life in advanced capitalist countries that the vast majority of men and women in these countries has been governed, represented, administered, judged, and commanded in war by people drawn from other, economically superior and relatively distant classes.
This is the history of capitalism and its future. A New Deal-style political system would not change that fundamental inequality.
Two additional points should be noted. First, that increased state intervention does not always mean a more benign capitalism. Such intervention can work in favour of large interests too. Furthermore, putting capital and labour on ‘equal footing’ obstructs the fact that capital already controls labour, so ‘equal footing’ can never really exist.
The longing for the New Deal-era during the past decade is perhaps one of the main barriers in the US, and possibly globally, to the formation of a true left opposition. That the nostalgia has remerged after the fierce counter-revolution that began in the Reagan and Thatcher era reveals a lowering of expectations, perhaps even an acceptance of defeat.
Why this nostalgia exists may stem from the huge positive spin scholarship has placed on the period. When searching for critiques of the New Deal, I came across very little other than the free market ravings. Surprising for such a well-known and important event in Western political history.
One can never, as Karl Marx warns, evaluate an era by concentrating on the consciousness of an era’s major protagonists. The New Deal was, of course, a conservative plan. Its special form of conservatism was the development of reforms that modernised corporate capitalism and introduced corporate law to reflect the system’s changed nature. To many, these reforms seemingly proved that the system had changed its basic essentials. As we move into the era of a fully matured corporate capitalism, the contradictions of which are just becoming clear, it has become easier to see that the longed-for New Deal changed little, and the core essence of relations between the capitalist class and the state remains the same.