The US economy’s defining moment across the past century was the 1930s eruption of an organized, self-conscious working class into politics. Massive union organizing drives by the Congress of Industrial Organizations (CIO) allied with massive popular mobilizations by socialist and communist parties. That labor-radical coalition forced huge concessions – the New Deal – from business and the wealthy. They were taxed and regulated to enable major gains for middle- and lower-income citizens. Those gains included establishing Social Security, unemployment compensation, minimum wage, and millions of federal jobs.
Labor-radical explosion from below reversed income and wealth inequalities deepened by capitalism’s development after the Civil War to the 1929 crash. Haunting the historic changes across the 1930s were plausible intimations (by socialists) and occasional threats (by communists) of revolution. Labor-radical pressures generated President Franklin D. Roosevelt’s famous 1944 proposals for a 100 percent top income tax rate and for a Second Bill of Rights.
When war ended and FDR died, reactionaries mobilized to roll back the New Deal and all it represented. Business, the rich and other right-wing social forces organized a conservative coalition to cut regulations, cut taxes or shift them to others, and reduce government services (other than military). Economic history since 1945 charts the reversal of the New Deal domestically alongside developing a global pax Americana.
The domestic campaign largely succeeded despite occasional missteps. Government policies conformed because of (1) financial levers worked by business and the rich, and (2) voting blocs managed by conservative religious and other organizations. The money interest focused chiefly on undoing the New Deal. Social conservatives pushed state favoritism for their institutions and beliefs.
The conservative coalition’s program destroyed the labor-radical coalition. Communists were redefined from radical activists into Moscow’s agents. Socialists were rendered indistinguishable from – or dupes of – successfully demonized communists. Labor unions were harassed, often split, pressured to purge their leftist allies and members, and hobbled legally.Beginning with President Harry Truman, successive presidents played their assigned roles. To assist in rolling back the New Deal, they would reduce taxes and regulations on business and the rich while tilting government supports more toward them. They often actively pursued anti-communist, anti-socialist and anti-union campaigns. Sometimes (more before 1980, less thereafter) they interrupted the conservative program by accommodating some resistance to the rollback, some demands for progressive regulations, etc. Most Republicans enthusiastically pushed the program. Many Democrats did so hesitantly while advocating (and sometimes delivering) accommodations of mass demands. Truman’s administration subsidized and shored up capitalism, worried that troops returning from war would be unemployed and slide with the economy back into depression. Truman prioritized anti-communism and punched down unions via the Taft-Hartley Act. Republican Eisenhower, the kindly grandpa, softened its veneer but sustained the program.
By 1960, relentless retreat from New Deal commitments had built pressures for something “really different.” Americans began to grasp and resent that their “middle class” status was fading. Because equally relentless anti-communism had made criticism of business (let alone capitalism) dangerous, anger focused on government and taxes. Seeing opportunity, the conservative coalition redoubled attacks on the state: tax-and-spend enemies of the “middle-class” wasted money on undeserving welfare recipients who refused work. Buried were the facts that taxes had been shifted since 1945 from corporations and the richest individuals onto lower and especially middle-income Americans.
Such anti-government winds led presidential aspirants increasingly to posture as “outsiders” who would correct Washington’s misbehaviors. John F. Kennedy was younger than previous presidential types and Catholic, someone different who at least verbally respected New Deal ideals. Outsider statuses were claimed by Jimmy Carter as farmer and Southerner, Ronald Reagan as actor and Californian, Bill Clinton as Arkansan and George Bush 2 as a Texas cowboy.
As these presidents advanced the conservative coalition agenda, mass resentment accumulated. Widening income and wealth inequalities generated their usual political and cultural consequences. In 2007-08, their usual economic consequence, a major crisis, arrived. Massive unemployment, home foreclosures, and so on – combined with the long-standing New Deal rollback – required a president with extra outsider dimensions.
Barack Obama fit better than Hillary Clinton. Could he reliably further the conservative coalition’s basic agenda while also symbolizing some link to the New Deal ethos (his vague “community organizer” past)? More importantly, by symbolizing a kind of social arrival/acceptance of African-Americans generally, might he neutralize likely popular oppositions to the next steps in rolling back the New Deal? Capitalism’s crisis since 2007 could have been blamed on the conservative coalition and the system itself. The economically worst-victimized – especially African-Americans – might well have revitalized a new labor-radical coalition, absorbing the mass energies visible in the Occupy movements.
The new, young, different African-American president deflected, deterred and at least delayed all that. Obama’s proven reliability as outsider president extraordinaire is his administration’s economic significance.
Yet continuing crisis makes ever more Americans shed lingering illusions and hopes for better economic futures. So-called “recovery” affects only a small minority. Most people and many businesses face deteriorating jobs and lives. As the most outside of outsider presidents, Obama presided over the awakening of millions to economic declines they find oppressive and unjust. They are not buying the outsider president strategy any more. The outsider mask has lost further political usefulness for the conservative coalition.
That coalition likely will turn next to types like Wisconsin’s Scott Walker and their Koch-type backers. They believe they have the resources, political connections, and accumulated public relations to win – openly and explicitly – against the New Deal’s remaining supporters and beneficiaries. The conservative coalition wants to reconstitute the broad contours of the pre-1929 domestic US economy while sustaining the global pax Americana (given US-based corporations’ growing dependence on foreign workers and markets).
Obama’s economic significance lies in his being the latest and most outsider of postwar presidents serving the conservative agenda and likely the last. Overusing the outsider gambit leads to popular disillusionment, disbelief and disinterest in outsider claims. Much the same happened to the anti-communism crusades.
The crisis since 2007 exposes capitalism’s instability and injustices. It revives interest in the New Deal’s labor-radical coalition and its policy alternatives. Previously effective ways of stifling criticism of capitalism no longer work. The criticisms and critics are finding ways to organize effectively. Meanwhile, the conservative coalition has removed its mask. Sharpening social conflicts loom.
Richard D. Wolff
Republished from Truthout with the author’s permission.