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The illusion of a New Deal for today

The American radical tradition

In the first of two articles about the American radical tradition, Phil Sharpe differs with Nancy Rose’s assessment of US government relief projects in the 1930s. He argues that the American working class cannot rely on a renewal of the New  Deal to introduce anti-capitalist policies

Nancy Rose’s account of the New Deal of the 1930’s has a distinct relevance in the light of today’s recession. She points to the need for the New Deal because the automatic operation of the market had led to Wall Street crash. President Hoover relied on a policy of balanced budgets and deflation. The result was a continual rise in unemployment, which led to mass discontent and a serious challenge to the capitalist system. She argues that ‘the time was ripe for change’.  Newly-elected President Roosevelt introduced the National Industrial Recovery Act, which established a precedent for state-sponsored work projects.

The most spectacular of these was the Tennessee Valley Authority, which built an impressive dam system. Relief was based on the Federal Emergency Relief Administration Act (FERA), which established rates at levels comparable with wages, and a minimum level was 30 cents per hour for work performed.

The main work projects were established by the Civil Works Administration. Most ambitious of all was the development of production-for-use projects, which used derelict factories and workplaces in order to revive production. Wages in these projects were generous and compared favourably with the private sector. Predictably there were protests from big business:

“Production-for-use projects came up against the most fundamental contradiction of all FERA’s policies and projects: they challenged the logic of production-for-profit, and business and industry rose up in protest. The problem was that in production-for-use projects, goods were produced under the aegis of the government, which made its decisions on the basis of people’s needs instead of business profits. Thus it exposed the inability of the existing system to provide necessary goods as well as jobs. And it raised ominous fears of government taking over whole sectors of the economy, leading to the system most feared by profit orientated capitalists – socialism.”

In her strongest chapter, Rose outlines how the pressure of big business led to the end of federal relief for strikers. The minimum rate of relief was abandoned, and the production-for use projects became increasingly cut, and the most ambitious production for use project, the Ohio Project, was terminated. The most ambitious character of the New Deal was replaced by the more limited Social Security Act and the Work Progress Administration. The work that could be carried out on the WPA was more restricted and work relief was  often below the previous 30 cents level. Also, the work was not supposed to compete with the private sector, and was not supposed to pay relief wages that would compete with the private sector.  Rose outlines how the New Deal often discriminated against black people, who tended to be paid at the lowest rates. The New Deal Projects were finally wound up in 1943 when full employment began to be realised.

Rose has outlined how the ruling class was effectively split over the New Deal. The representatives of the state promoted the New Deal as the only alternative to mass unemployment, but the private capitalists considered that the New Deal projects  ought to be replaced by reliance on the operation of the market. They wanted the role of government to serve the private sector, and feared that the mass extension of jobs through the public sector would result in socialism.

Rose seems to accept this argument, but inverts it and argues that the importance and necessity of the New Deal in the present is that it could have an anti-capitalist logic. She advocates an ambitious public works programme that would emulate the New Deal, and reject the limitations of the present Recovery Act that aims to only provide for 3-5 million jobs. This public works programme would be generous in its relief levels and would not be restricted to those jobs that the private sector is unwilling to provide. Instead it would represent, via the development of a modern form of production-for-use the basis of transition to a different system. In this context, a permanent public works programme could be established based on generous levels that amount to a living wage, and promoting ecologically sustainable production. The programme could be financed by the introduction of a progressive income tax system. In other words, planning and nationalisation would be promoted by the state, and supported by the revival of a mass left-wing that could support these measures. Indeed, she suggests that the development of a radical movement could force Obama to introduce these ambitious measures that would transform the system and undermine the existing emphasis on profit at the expense of need.

Rose seems unable to contemplate a system that would go beyond the limitations of the New. Instead she argues for the effective reintroduction of a better and more radical New Deal. The assumption is that such a New Deal would be able to develop a different economic logic based on the role of a benevolent state. This perspective is very flawed. The original New Deal was based on the need to defend the capitalist system in conditions of mass unemployment, and the inability of the market to provide the conditions for an end to depression. The protests of big business did not alter this fact. The state acted in the overall interests of the capitalists as a class, and so the New Deal did not develop any logic of change towards socialism. It would only have been possible for working people to  develop anti-capitalist politics by opposing the role of the state, by developing the approach of socialism from below and not relying on socialism via the actions of the capitalist state.

This does not mean that principled Marxists are indifferent to the introduction of reforms that may improve the material standards of working people. In this context, it would have been necessary to oppose reactionary ruling class opposition to the New Deal, and instead call for the implementation of the most radical form of New Deal, which would be based on generous relief levels and the struggle for workers to control the public sector work projects. However, this does not meant that the New Deal could have represented the process of transition to socialism. Instead it amounted to a limited reform that should have been critically defended, and extended.

Does the contemporary struggle for an alternative to capitalism require the renewal of the New Deal? The problem with this perspective is that it depends on the view that the capitalist state can acquire an anti-capitalist logic. This is an illusion. The focus of a principled programme should not be about how to improve the state by the introduction of a New Deal, but instead how we can promote democratic and accountable organisations that can establish the conditions to transform society. In this context, the reforms associated with the New Deal would become part of the struggle for a socialism from below.

28 January 2010

Nancy E Rose, Put to Work: The WPA and Public Employment in the Great Depression (2nd Edition) Monthly Review Press, New York £10.95

Ray says:

It is completely inconceivable that the USA could inaugurate a new 'New Deal' with the ease and simplicitude that the latest president was installed last January. Basically America is bankrupt with no saved layers of accumulated wealth - the Emperors home is mortgaged to the holders of pieces of paper - Bonds (overwhelmingly to China and Japan). The economic difference between the 1930's and the 21st century is enormous, principally for the un-shame-faced manner of executive's bombastic chest-beating about the vital role that the American market holds on the world arena. To obtain some perspective today, read Leon Trotsky on the differing governments 'help' available to capitalism 70 years ago and now. His remarks on "Fascism and the New Deal" are in a preface he wrote to Volume 1 of Capital published in 1939 and are some of Trotsky's last writings on Marxism before he was assassinated.


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