WHAT WAS THE "NEW DEAL"?

History: Roosevelt as a role model? Michael Ferschke examines how class struggles in the USA in the 1930s shaped the "New Deal

By Michael Ferschke

[This article published on Oct 28, 2020 is translated from the German on the Internet, https://www.marx21.de/was-war-der-new-deal-roosevelt-usa-gewerkschaften/.]

Climate crisis and the economic crisis of capitalism characterize the current debates. The call for a "Green New Deal" to solve the crisis is being raised worldwide by different green and left voices. The historical reference point is Franklin D. Roosevelt, who became one of the most popular US presidents in the 1930s with his promise of a "New Deal". In fact, Roosevelt is today considered the president who led the United States out of the Great Depression and laid the foundations for a modern welfare state. However, history did not follow a prefabricated plan by Roosevelt, but was marked by massive social protests and a revival of the American trade union movement.

Severe Depression of Capitalism

The term "New Deal" translates as "shuffling the cards anew", and thus metaphorically stands for new beginnings. Hopes for such a new beginning were enormous at the time, given the rampant impoverishment caused by the global economic crisis. After the stock market crash of 1929, capitalism was hit by its worst depression to date. The U.S. economy was similarly hard hit as the German economy. From 1929 to 1932 industrial production halved and in a chain reaction over 5000 banks went bankrupt. Farmers' incomes shrank by 70 percent, unemployment rose to 25 percent, and there were no welfare state measures to cushion the misery.

Hooverville in Portland, Oregon in 1936.

People starved - but at the same time millions of tons of food rotted because it could not be sold profitably. The department stores were full of clothes - but the needy could not afford them. Houses and farms stood empty because the former inhabitants could no longer pay their rent. So more and more people were driven to the "Hoovervilles" - slums of the larger cities, named after President Herbert C. Hoover (1929-1933) - where they had to move into shabby emergency shelters made of tin and wood. Hunger riots and fights against dismissals and forced evictions flared up everywhere and threatened to shake the ruling order.

In the face of this devastating crisis, the desperate desire for radical change not only spread among the ordinary population, but the call for unusual measures also grew louder among sections of capital and the political establishment. The various social groups moved in different directions. It was against this background that the democrat Roosevelt assumed the presidency in 1933. His New Deal was the product of these social conflicts. The shaping of these economic reforms was accompanied and shaped by fierce class struggles.

Roosevelt and the "New Deal

It is often claimed that Roosevelt was a champion of Keynesian economic policy from the outset; that he set out to revive the economy through debt-financed, extensive state intervention. In fact, as late as 1932, Roosevelt and the Democratic Party rejected budget deficits and state interference in market affairs. During the election campaign, Roosevelt accused his opponent, the incumbent President Hoover, of having a budget deficit that was partly responsible for the country's economic problems.

But some more far-sighted representatives of capital, such as the heads of General Electric and Standard Oil, urged that the state must counteract the excessive distortions of the market to prevent the complete collapse of capitalism. The Roosevelt administration responded to this call by significantly expanding the federal government's powers over states and municipalities to intervene in the market to regulate it. The first immediate measures against the crisis were taken in the banking and agricultural sectors.

When Roosevelt took office, it was almost impossible to cash a check because almost all banks were insolvent. The resulting credit crunch threatened to bring the already lame investment activity of entrepreneurs to a complete standstill. One of the first measures taken after Roosevelt took office was the announcement of four-day "bank vacations" to put a stop to the panic and prevent the complete collapse of the banking system. To stabilize the situation, the Roosevelt government provided the banks with capital for bonds and gave a state guarantee on bank deposits. In addition, every fifth agricultural mortgage was refinanced by the state.

Agriculture was one of the sectors of the economy that was hit hardest by the crisis. The prices of agricultural products such as corn, wheat and cotton had more than halved between 1929 and 1932. The government tried to counteract this by offering farmers compensation for the reduction of overcapacity. Large farmers were the main beneficiaries of these payments. In 1933, farmers were paid to destroy large parts of their cotton harvest and to emergency slaughter six million pigs. Such measures aroused the displeasure of the population, with thousands of people nearly starving elsewhere.

Public job creation programs were adopted to combat the dramatically high unemployment and to contain the associated social unrest. Hundreds of thousands of unemployed young people set up several thousand recreational and nature parks in work camps. A total of four million "artificial" jobs were created at the federal, state and local levels in the winter of 1933/34. In the following years, these job creation measures were continued by the federal "Works Progress Administration" for up to three million people annually. Activities here ranged from leaf raking in the park, to building and road construction, to writing guidebooks for each state - a project to employ unemployed writers.

Strikes and trade union organization

At the center of the New Deal, however, was a program to stabilize the industrial sector. In 1933, a state planning authority was created to develop framework conditions for prices, production output and wages in consultation with the entrepreneurs in order to minimize destructive competition. The entrepreneurs were allowed to fix prices and in return the government appealed to them to pay minimum wages and to limit the working week to a maximum of 45 hours. Crucial to the further course of events, however, was the seemingly trivial clause 7A of the directives, which granted workers the right to unionization and collective bargaining.

The clause was highly explosive, especially in light of the general hostility among employers toward unions. Many large companies had previously prevented the workforce from organizing themselves into trade unions. The new situation spurred labor disputes throughout the country. In 1934, a total of 1.5 million workers went on strike in many places against entrepreneurs who refused to implement the clause. San Francisco, Minneapolis and Toledo were paralyzed by general strikes. The workers were able to assert themselves against the paid thugs of the entrepreneurs as well as against the armed state power.

For example, although a state of emergency was declared in Minneapolis and the National Guard invaded, the striking transportation workers achieved union recognition and better working conditions through their persistent and well-organized struggle.

This development did not at all correspond to the original ideas of the ruling class. Conservatives and entrepreneurs were now beginning to complain about the "irresponsible budget deficit" of the New Deal, and in June 1935 the Supreme Court declared several of Roosevelt's measures too far-reaching-the government had no authority to intervene in local economic affairs through national laws. This ruling was aimed primarily at Roosevelt's guidelines for economic recovery, which had stimulated labor struggles through social standards and Clause 7A. The establishment hoped to turn the wheel back with this decision.

"Savior of the system from private profit"

The wave of class struggles was so strong, however, that it forced Roosevelt to make several more social reforms in 1935. For the first time, a rudimentary state welfare system was introduced, providing benefits to the unemployed, the needy elderly and those unable to work.

Moreover, massive pressure from below prompted the government - after the "backlash" by the Supreme Court - to enshrine the unions' right to negotiate in law. In July 1935, Roosevelt enacted a law obliging employers to accept the free unionization of their employees. The president was not a socialist. In his own words, he saw himself as the "savior of the system of private profit and free enterprise.” Rather, Roosevelt hoped to contain the spontaneous struggles if he integrated the unions politically. The concessions that this entailed seemed to him a lesser evil than the uncontrollability of wildcat strikes.

This calculation only partially worked out. For at the same time there was a strong dynamic for union renewal within the American labor movement. The old American Federation of Labor (AFL) was mainly supported by unions that organized only skilled workers. Their influence was constantly dwindling in the face of the growing weight of mass production in large enterprises, and the resulting mixed workforces of unskilled, semi-skilled and skilled workers. In 1935, therefore, some non-skilled workers' unions laid the foundation for a new trade union federation - the Congress of Industrial Organizations (CIO). Its goal was to organize workers in the factories on a mass basis, regardless of their job classification or level of education. Forces on the revolutionary left have been instrumental in the militant building of the unions.

New Deal and the Dynamics of Class Struggle

Encouraged by government legislation, the most successful organizing campaign in the history of the American labor movement took place between 1935 and 1937. One of the CIO's slogans was: "Your president wants you to join the union. The number of union members rose from two million in 1933 to seven million by the end of 1937.

The tried and tested weapon in the struggle against the employers was the "sit-in" strike. This strategy emerged when, in January 1936, the employees of tire manufacturers Goodyear and Firestone in Akron, Ohio, fought for recognition of their union. Workers sat in the factory and prevented production from continuing. Outside, there were mass pickets to prevent police and scabs from entering the factory. This example was followed by workers in other companies. Forty more sit-ins took place in 1936. The largest one began in December of that year at General Motors in Flint, Michigan, and forced that giant to recognize the union. This was followed in 1937 by another 477 sit-ins that spread to all industries: Car manufacturers at Chrysler, salesgirls at Woolworth, mailmen, workers in restaurants and hotels. Garbage workers, glassblowers and others took part.

The dynamics of the class struggles weakened after their peak in 1937. A major reason for this was the new movement's strong hope for Roosevelt's support. In the 1936 election campaign, the president had positioned himself on the side of "the one third of the nation that is poorly dressed and poorly fed" and had explicitly spoken out for trade union rights. On this basis he finally won the elections.

Reorganization of capitalism

Roosevelt of course liked the idea that the CIO would campaign for him in the future, but he didn't want to risk breaking with the entrepreneurial camp. Thus he and the Democratic Party abandoned the union when a conflict in the steel industry escalated in 1937. The entrepreneurs there had offered bitter resistance to the CIO's large-scale organizing campaign: They used strikebreakers and thugs against the union. The activists hoped that the democratic governors and mayors would support them against the entrepreneurs. Instead, they supported the police and National Guard, who brutally beat down the strikes. In Chicago, 10 strike activists were shot dead.

This development was a major setback for the CIO campaign, and the deep economic crisis (see background), which reappeared in August 1937, did the rest to weaken the momentum of the trade union movement.

The movement was nevertheless strong enough to wrest further concessions from the ruling class: in 1938, the 40-hour week, a ban on child labor and a minimum wage were introduced by law. By this time, however, the euphoria for Roosevelt's policies had already evaporated in the political establishment. In Congress he could no longer find majorities for new regulatory programs.

In most accounts today, Roosevelt is mystified as a great social reformer because of the New Deal. The class struggle as the central driving force of history is mostly ignored. The New Deal did not come about because of a previously secret desire of the ruling class to bring about social improvements for the population. It was primarily intended to help reorganize capitalism to overcome the crisis and restructure the profits of the entrepreneurs. The social reforms and the new bargaining power of the unions were the result of major social disputes that subsequently left a more leftist stamp on the New Deal.

Background: Crisis Solution New Deal?

The extent and impact of Roosevelt's measures are often overestimated. First, the dimensions of state intervention were smaller than they appear at first glance. It is true that the New Deal increased federal spending on public work and financed quite extensive infrastructure measures: 40,000 public buildings and 72,000 schools were built or renovated, roads with a total length of one million kilometers and 77,000 bridges were built, and 8,000 parks were built. Nevertheless, this federal expenditure on public employment could not compensate for the huge cuts in spending that states and municipalities had made, for example, in the construction of public infrastructure. As a result, less money was actually spent on public works during the New Deal than before the crisis.

Second, the New Deal failed to achieve its goal of leading the economy out of the crisis. Unemployment fell only slowly - from 12.8 million (1933) to 11.3 million (1934) to 10.6 million (1935), which was still very high.

When the economy had recovered somewhat in 1936, Roosevelt immediately reduced the budget deficit, because he assumed that the economy would now be more self-sustaining again. As a result, in August 1937 it plunged into a crisis of such severity as no other country was experiencing at that time. Within four months, steel production fell by two-thirds and prices for agricultural products fell by 25 percent. The number of unemployed rose again.

The economic crisis in the USA was ultimately only ended by the mobilization for World War II. In 1939, when unemployment was still at 17 percent, military spending accounted for 1.3 percent of gross national product. By 1944, this share had risen to 42 percent and unemployment fell to 1.2 percent. The price for this was massive national debt. The annual budget deficit, which had always been less than billion during the years of the New Deal, amounted to over billion in each of the years 1943 to 1945.

The crisis of capitalism could not be solved by the economic stimulus programs of the New Deal. Profit rates remained low and investment activity could not be stimulated sustainably. It was only through the gigantic programs of armament and ultimately the destruction caused by the World War that the profit rates for capital were rehabilitated and the foundation for the economic growth of the 1950s and 1960s was laid.

Read more:

Howard Zinn: A History of the American People (2007)

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"TRUMP IS NO BONAPARTE"

[This interview published on Oct 19, 2020 is translated from the German on the Internet, https://www.marx21.de/usa-wahl-trump-ist-kein-bonaparte-interview-charlie-post/.]

Where does the USA stand after four years of Trump? Charlie Post on the limits of the president's power, the problem of the "lesser evil" and the challenges facing the US left

Charlie Post is a socialist and editor of Spectre: A Marxist Journal. He is active in the union on his faculty at City University of New York, a member of the Labor Branch of the Democratic Socialists of America (DSA) in New York City, and the Tempest collective.

marx21: On November 3, people in the United States will have the choice between a right-wing billionaire and a neoliberal hypocrite. How hard is it for you to decide for Joe Biden?

Charlie Post: I won't vote for Biden and will instead cast a protest vote for the green-socialist candidate Howie Hawkins.

Isn't that a vote that's given away?

I am doing this without any illusion that the Greens will have a major influence in the election or that they are the core of an independent socialist labor party in the U.S. My vote is merely a "placeholder" for class political independence in the future.

Do you think it is wrong to vote for Biden?

I do not want to participate in "vote shaming" this year. I understand the fear of many leftists of a second Trump administration and that they are convinced that they would have no choice but to vote for Biden. Although I disagree, this is not an issue that is a priority in these times. What worries me much more is that the new socialist left in the U.S. is spending even a tiny fraction of its political capital or time and energy on Biden's campaign. What comrades do for the minute it takes them to fill out a postal ballot is much less important than whether or not we can stake our political credibility on the "lesser of two rapists" allegations of rape against Trump and Biden. ) who promises to return us to the neoliberal "normality" of the Obama administration - more wars, austerity, privatization of public services, anti-unionism and continued police violence against People of Color.

Couldn't the left call for Trump to be voted out and at the same time prepare for resistance to the new Biden administration?

We must not allow the resurgence of socialism and the sharp increase in struggles in the factories, as well as the anti-racist struggles of recent years, to be diverted back into the election campaign for the "lesser evil" of the Democratic Party. We cannot campaign for Biden and at the same time prepare to build up resistance to his government after January 20.

Why not?

Time spent convincing voters to vote for "shoot 'em in the leg"-Joe Biden is time not spent building resistance at work against the forced return to work in the midst of a deadly pandemic, organizing actions against the police murders of black men and women, or helping to launch militant actions against repression, foreclosures and unemployment. It's impossible to convince someone to vote for Biden - which means presenting him in the best possible light - while at the same time saying that we need to prepare for the fight against his government.

The Black Lives Matter protests following the assassination of George Floyd and the backlash from Trump and the political right have led to a new level of escalation. For a while one could get the impression that the USA is heading for a civil war. Where does the country stand immediately before the 59th presidential election?

Recent months have deepened the political polarization that has marked the U.S. and the entire capitalist world since the beginning of the global economic collapse in 2008. On the one hand, there are explosive outbursts of mass movements and class anger. In the U.S. we saw the Wisconsin uprising in 2011, the Occupy movement in 2011 and 2012, the women's strike in 2017 and the wave of mostly illegal teachers' strikes in 2018 and 2019. In addition, there were attempts to give these movements an electoral expression through the Sanders campaigns in 2016 and 2020.

And now a new level of polarization has been reached?

This year there has been a significant deepening and widening of these movements of class struggle. In the spring we witnessed dozens of wildcat strikes and hundreds of demonstrations in the factories against the demand to return to work during the pandemic. The fact that tens of thousands of workers were willing to risk their jobs rather than their health and lives was even more astonishing given a real unemployment rate of nearly 30 percent. The multiethnic, black-led class uprising against racist police killings was clearly the culmination of this struggle, in which literally millions of people gathered in tens of thousands of cities, suburbs and small towns to demand "Black Lives Matter.

And on the other side of the polarization are Trump and the right wing militias.

Yes, first we saw the growth of the Tea Party from 2010 to 2014, which laid the foundation for Trump's conquest of the Republican Party and his election in 2016. Since that election, we have also seen a numerical growth and increasing self-confidence of the fascist right. This has led to the assassination of Heather Heyer in Charlottesville in 2017, the armed demonstrations to "reopen the economy" in the spring, the unpunished killings in Kenosha in the summer and fall, and right-wing mobilizations in defense of racism in the police force. But although the political polarization is very real, I do not believe that the US is facing a civil war.

Why not?

The working class and left in the U.S. are not yet a real threat to the political power of capital. And on the other hand, no significant sector of the capitalist class is willing to tolerate a disruption of the "constitutional order. Nor is the emerging fascist movement large enough and unified enough to pose a threat to capitalist democracy.

There are many examples of elected heads of state who are increasingly undermining democratic institutions and the rule of law and rising up to become autocrats: Orbán in Hungary, Putin in Russia, Erdoğan in Turkey. When asked, Trump left it open whether he would accept an electoral defeat. Is he a kind of modern Bonaparte?

Louis-Napoléon Bonaparte, the president of the Second French Republic, who was elected in 1848, established a dictatorship in 1851 with a coup d'état. One year later he proclaimed himself emperor. Photo: Wikipedia

Trump would like to be a Bonapartist dictator - he might even like to be an openly fascist ruler - but that won't work. Trump is not a Bonaparte. The social and political conditions that would allow him and his followers to eliminate the highly undemocratic form of "capitalist democracy" that has existed in the U.S. since 1787 do not exist. Whenever Trump has sought to undermine the structures of capitalist democracy and the rule of law, he has faced significant setbacks from the capitalist state apparatus.

The capitalist state apparatus is generally not a hoard of democracy; on the contrary, it is largely removed from democratic control. What is the attitude of the U.S. state apparatus, the Pentagon, the police and bureaucracy toward President Trump?

Trump has managed to alienate most of the U.S. government's permanent, high-level bureaucracy, particularly in the State, Commerce, Finance and Defense Departments. His support in the repressive apparatus is minimal. Neither the Federal Bureau of Investigation (FBI) nor the military are willing to be used against anti-racist demonstrations. They know that democratic governors and mayors can better enforce repression. Let alone are they willing to keep Trump in office if he loses in November. The fact that Trump had to send the border patrol and other federal marshals to various cities was not a sign of his strength but of his weakness, even within the state apparatus.

Which capital factions support Trump and which are in conflict with him?

Trump has no significant and lasting support in the U.S. capitalist class. In the 2016 election, 92 percent of major donations from corporations and the super-rich went to Clinton. Trump won the temporary support of capital through his massive tax breaks in 2018, but his handling of both the pandemic and the Black Lives Matter Rebellion has led the U.S. capitalists to return to Biden. Of the nearly billion raised and spent in the 2020 election campaign, the Democrats received almost 55 percent. With the exception of the energy sector, they receive more donations from every sector of the economy than the Republicans.

So, Trump's implicit threats not to accept an election defeat are just for show?

It is clear that Trump and his supporters among the older, white, suburban and suburban middle classes and a minority of the working class will do everything in their power to lower voter turnout, especially in the urban centers among the non-white working class. They will probably also try to label a Biden victory as "electoral fraud. Trump and his lackeys, however, have no support in either the state apparatus or the capitalist class to remain in power in the event of a clear Biden victory, which is increasingly likely.

Trump's election victory four years ago was also a consequence of the crisis of the traditional political establishment and political liberalism as a whole. How has this process evolved during his term of office?

Trump's incompetence as a capitalist politician-and, according to his tax returns, also as a capitalist entrepreneur-has helped to temporarily rehabilitate the Democratic Party's neoliberalism. The Democrats, who ran with nothing but "we are not Trump," regained their majority in the House of Representatives and increased their number of senators in the 2018 Congressional election. The Democratic establishment was able to overcome the challenge from the left relatively quickly through Bernie Sanders and rally around the candidacy of Joe Biden. Although Biden is a political zombie, he and Kamala Harris, his candidate for vice president, promise a "return to normality". This is certainly resonating with broad sections of the upper middle class of the electorate.

Do you think that a Biden victory could actually bring a return to normality?

No. Biden and the Democrats have even less to offer the vast majority of working and oppressed people in the US than Obama. Biden and Harris not only oppose all of Sanders' popular reform proposals such as "Medicare for All" or the cancellation of the student debt mountain. They have also promised to increase funding for the police and stand for a radical policy of austerity in social spending - and this in the face of a deepening recession. A Biden Harris government will continue and deepen the neoliberal offensive that is causing insecurity and poverty for the vast majority of people in the US.

These realities make the logic of the "lesser evil" even more self-destructive. If the left in the U.S. again pulls down its tents to promote a neoliberal Democrat, our ability to present an alternative to the new government will be further weakened. Not only will the pressure on the Democrats not to move any further to the "center" become even less. Moreover, the loudest voices denouncing the failure of neoliberalism will be those of the nationalist right.

The Left in the United States has experienced a noticeable upswing in recent years. However, with the defeat of Bernie Sanders in the race for the Democratic Party's presidential candidacy, the great hope for change was dashed. Where does the American Left stand today?

Sanders' defeat put the main organization of the US left, the Democratic Socialists of America (DSA), on the defensive. Despite the claimed goal of building an "independent" campaign in support of Sanders, a campaign that would help recruit for the DSA and organize activists for off-campaign struggles, the DSA's campaign was deeply integrated into Sanders' candidacy for the Democrats. His rapid elimination from the pre-election campaign left the DSA without a clear perspective on what to do next. In most places, it was unprepared for the massive extra-parliamentary protest that followed the police murder of George Floyd. And even now it is not preparing for the mobilization in defense of the election results, neither against the oppression of voters nor against Trump's ultimately futile efforts to remain in office.

Is that then the task of the DSA?

The DSA and the rest of the socialist left in the U.S. stand at a crossroads. It may very well be that we must organize demonstrations immediately after the election to demand that Trump respect the election results. The DSA is the only organization capable of initiating such demonstrations in the major cities and possibly in Washington, DC. We can't expect either the Democrats or the union officials to do this for the DSA - remember their capitulation to Bush in 2000.

What other tasks does the left face?

Once the dust settles after the election, the left will face a number of challenges. The first is the continuation of the movement to disarm and disband the police. Capital and its political representatives were caught cold by the rebellion. They are trying to regain the initiative by making demands that cost little, such as removing statues and flags or renaming sports teams and stadiums, while at the same time opposing the radical demands to disband the police, redistribute, finance social services, health care, schools and jobs.

What is the role of the Corona pandemic, which continues to rage in the USA and has triggered a massive social crisis?

This is the second priority: we must prevent working people from having to pay for the pandemic and the costs of the crisis. This double crisis hits hardest the people who suffer most from exploitation and oppression anyway - it is especially women and people affected by racism, who work in the poorly paid, unorganized sectors of the economy and bear a large part of the responsibility for privatized social reproduction. Not only are we forced to return to insecure jobs and sacrifice our lives for the profits of our employers, but we are also threatened by a wave of evictions, foreclosures and homelessness. In the 1930s, anti-capitalists organized mass demonstrations, occupations of government offices and direct resistance to evictions. They demanded jobs, the right to unionize, unemployment benefits and a permanent moratorium on rent and mortgage payments. We must do the same today.

What is the key to a return to such strength?

We must bring the uprising into the factories. Nothing frightens the capitalist class more than the prospect of a new generation of multiethnic agitators reorganizing warehouses, factories, schools, hospitals and offices across the U.S. Through these struggles and in order to build new struggles, the U.S. left will need a new socialist party that organizes itself in the mass movements and agitates for socialism. Such a party can and should begin today to put up independent candidates for state office, especially in areas where only one party has run so far, thus avoiding the accusation that we are "splitting". Only campaigns that are independent of the Democrats have the potential to make the candidates accountable to our socialist organizations so that they represent the demands of our movement rather than do what they want in office. The question is whether the DSA will be able to transform itself into such a party next year.