Thursday, 13 December 2012

On Moderation.

In the midst of the current economic slump it's worth keeping in mind that we've been here before. This recession is not all that different from that of the 1930s, which began with the stock market crash of 1929. The recovery was slow and painful because necessary steps such as financial regulation and government stimuli weren't taken earlier. This time around we bailed out the banks and had a go at stimulus by way of quantitative easing under Brown. Although, we're currently embarking upon a tough austerity, - that has taken us back into a recession from a very brief incursion into a recovery - it's worth noting that we did not enact serious measures to confront the depression head-on in the 30s either. David Lloyd George took the view that we would do better to emulate the model presented by the American government. It wouldn't be until after the war that the Keynesian model of a mixed economy would prevail in Britain and Europe. Today it remains a viable and modest alternative to the international austerity.

In the midst of the recession brought on by the collapse of global financial system in 1929 the Republican President Hoover resorted to the politics of austerity. The Democrats ran Franklin D Roosevelt. The incoming administration was welcomed by a veterans' march on Washington, President Roosevelt arranged to greet the protestors with his aides and coffee. Despite appearances and this gesture Roosevelt shared the same goals as the austerity junkies he had defeated, namely to safeguard American capitalism and prevent further violent outbursts in the street. The best way to do this, in the eyes of FDR, was to reform the system to constrain the destructive tendencies of the market and to address the grievances of people marching on Washington for a decent life. This was nothing radical, it was effectively a means of 'buying-off' socialism in a world where the Soviet Union posed the only standing alternative to a decaying capitalism. Early on Roosevelt sought to craft greater coordination over the economy, to this end he put together planning sessions between government, trade unions and private companies.
Later a trade union leader would sit down with Roosevelt to discuss the conditions endured by black people and white working-class. The President listened intently and then told the trade unionist "I agree with everything you have said. Now, make me do it." The point Roosevelt made is that the President can't simply enact whatever policy they like. Rather the conditions have to be so that the Congress has to acknowledge a problem and then change can be implemented. In the same way that the Russian Revolution scared the British government into give up the vote to working-class men, and to women a dozen years later. It was the acknowledgement of a hard-nosed realist. He understood that to achieve reform the country had to be shaken up. That might explain why Prohibition was the first act to be thrown out under FDR. But at a deeper level the conditions in the US demanded certain reformist measures be implemented. So in 1934 Roosevelt put together the Wagner act to secure workers' rights, to make way for higher wages and improved working conditions. It's no coincidence that there were huge marches and strikes in 1934.
It shouldn't surprise anyone that there was a harsh police repression of strikers supposedly for fear of Communist subversion. Yet Roosevelt took a markedly different approach when the Flint sit-down came around in 1936. That was a strike where hundreds of workers occupied a General Motors factory for 44 days. As the police and hired thugs tried to violently break up the strike Roosevelt supported Governor Murphy and had the National Guard sent in to protect the workers. It was this battle that led to much improved living standards in Flint and ultimately the creation of a now non-existent middle-class. This is a famous instance of the liberal credentials of FDR. However, it wasn't the President who defeated the bosses at a Firestone rubber plant in Akron earlier that year in which the management caved to a sit-down strike in a matter of days. The same can be said of a following strike at Goodyear. These successes were not handed down from above, the pressure came from below and the major achievements were won in this way.
Typically the Democratic administration adjusted its policies to subdue the labour movement in areas where it was most active. Repression wasn't the best tactic to be undertaken in a situation of dire economic stagnancy. So it was logical for the US government to concede ground to particularly strong strikes. The strikers in Flint were privileged by comparison to other workers across the country. A fine demonsrtation of this came later, when the US government established the minimum wage, along with the forty-hour week, and a ban on child labour. The minimum wage was set at twenty-five cents an hour and excluded a great number of the workforce. Even still, it was enough to cool the tensions between workers and bosses. Similarly the housing programmes only provided abodes for a small percentage of the population. But the gesture of federally subsidising housing projects, playgrounds and the construction of clean apartments was not insignificant to the beneficiaries.

Then came the establishment of social security and unemployment insurance, state-funds were matched for mothers and dependent children. The reform excluded farmers, domestic workers and old people, it also offered no health insurance. Comparatively the social security system offered much more security to Big Business in terms of pacifying a portion of the workforce. Though it should be noted that the wealthiest Americans barely get anything out of social security, the benefits are insignificant to them and so they don't see why they should support it. It would be more valuable if it were privatised and handed over to the rapacious forces of financial capital. The social security system also undermines the individualist tenets of American ideology, in that the system potentially fosters a social consciousness that might seek justice and solidarity. Like the NHS in Britain the establishment of social security in the US has been extremely difficult for the wealthy to erode and destroy. Thus, it remains one of the few pillars of the New Deal left standing.
During the Second World War the Roosevelt administration centralised the economy and created millions of new jobs at higher wages, in doing so, the militancy of the labour movement was undermined significantly. The New Deal had only managed to cut unemployment from 13 million to 9 million, while the war economy had almost achieved full employment. At the same time, the country was overtaken by a patriotic fervour that instilled national unity over the apparent sectarianism of classes. The combination of the New Deal reforms and the war effort effectively saved American capitalism. There is an important lesson for social democrats to take from this. The liberals of Rooseveltian ilk acknowledge that the dream of a mixed economy complete with a far-reaching welfare state cannot be achieved without tremendous struggle. Furthermore, this is not a struggle fought by liberals, to the contrary, it is the radicals who fight against capitalism who provide the impetus for the system to be reformed.
In his vision of the post-war world Roosevelt articulated four essential kinds of freedom to underpin the new world order: freedom of speech and expression, freedom to worship, freedom from want and fear. The principles FDR articulated would influence the foundation of the United Nations after the war had ended. Later, Roosevelt would propose a second Bill of Rights to the US Constitution, it was a set of economic rights which would guarantee not only universal health-care and education, but a liveable income, a job and a home. Roosevelt argued these measures would guarantee security, well-being and prosperity for all, as well as lasting peace abroad. President Roosevelt was dead before the war was over and the Bill of Rights would not be implemented. The Marshall Plan would later help to rescuscitate European capitalism, which ultimately eventuated in a social democratic mode of economy, that would safeguard many of the economic rights Roosevelt wanted to implement. It was these post-war achievements that have been eroded in recent times.
See also:
The Untold History of the US -

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