The New Deal is Not Enough

Democratic socialists should support reform fights, but our goal is a new kind of state and a socialist economy.

Millions of Americans were thrilled by Bernie Sanders’ ringing call for a “political revolution” against the “billionaire class” during the 2016 presidential campaign. Sanders, the independent U.S. Senator from Vermont, also proudly described himself as a democratic socialist, ending the decades-long taboo that forbade any advocacy of socialism in American society. Finally, Sanders put forward what was without a doubt the most progressive platform of any major party candidate since the 1960s. These three points—the call for political revolution, the progressive platform, and Sanders’ unashamed advocacy of democratic socialism—not only won millions of supporters, but suggested the possibility of an entirely different sort of politics in this country. For the first time in decades, Sanders made it possible to imagine a government that addressed the needs of the great majority, rather than the interests of a small minority at the very top.

Bernie’s campaign moved many Americans to the left, and helped to bring thousands of new members into Democratic Socialists of America (DSA). We should then ask: What would a political revolution look like in the U.S. today?

What Is Sanders’ “Political Revolution?”

The Occupy Wall Street movement provided the initial political critique and the social energy that made the success of the Sanders campaign possible. The economic crisis of 2008 led to 10% unemployment and bank foreclosures that took the homes of millions. Occupy’s two main issues were the country’s growing economic inequality and getting corporate money out of politics. Across the country we occupied public parks and spoke truth to power, until Barack Obama’s White House-coordinated, national-scale police repression drove us out. Occupy was hostile to political parties and averse to drawing up a program of demands, but Sanders took up the movement’s issues, turned them into a campaign platform, and gave them political expression.

His call for a “political revolution” was intended to mobilize voters but also to channel their hopes and aspirations into a particular conception of political reform. When asked to define “political revolution” and “democratic socialism,” Sanders repeatedly answered that he meant something like an updated version of President Franklin D. Roosevelt’s New Deal. And following her surprising and spectacular Democratic primary victory over Joe Crowley in New York’s 14th Congressional District (Queens-Bronx), Alexandria Ocasio-Cortez told morning talk shows the same thing Sanders had, that Roosevelt’s New Deal represented the kind of political revolution for which she stood.

What Was the Roosevelt New Deal of the 1930s?

Roosevelt was viewed by the Great Depression generation as the man who rescued the American people from the crisis by creating employment programs such as the Works Progress Administration and the Civil Conservation Corps, and passing laws such as the National Labor Relations Act (which recognized unions’ right to exist, organize, bargain, and strike) and the Social Security Act. The country received a knockout blow in 1929, and Roosevelt was given credit for the partial recovery that began to take hold in the mid-1930s.

Sanders tapped into this old idea that Roosevelt saved the country, suggesting that he could do likewise with similar programs. But did Roosevelt’s New Deal save the American people? American historians tell us that FDR’s New Deal actually failed and that the depression returned with a vengeance as unemployment rose again to 19% in 1938. In fact, the Great Depression only began to end when war production to support England began in 1939, and the country’s economy only fully revived with America’s entry into World War II. Many historians would argue that Roosevelt was a savior all right, but that he was the savior of capitalism at a time when socialism could have been an alternative. The era of laissez-faire capitalism that began at the end of the Civil War was replaced by a combination of government intervention and social welfare programs. But these never threatened the capitalists’ control of the economy, while the U.S. war effort of the 1940s and the subsequent victory in World War II led to an economic boom that lasted for the next two decades. The lesson to be drawn from the Roosevelt era is that not the New Deal but a world war brought about U.S. working-class prosperity.

The New Deal Coalition

The term “New Deal” also often refers not only to the Depression-era welfare programs but also the political coalition that supported Roosevelt’s recovery program. The standard explanation for Roosevelt’s spectacular electoral success and longevity in office is the political strength of this coalition. As William E. Leuchtenburg explained in his classic book on the New Deal, by the mid-1930s Roosevelt “forged a new political coalition firmly based on the masses in the northern cities, and led in Congress by a new political type: the northern urban liberal Democrat typified by New York City’s Robert Wagner.” Leuchtenburg’s explanation is largely cultural and ethnic. He writes, “While old-stock [white, Protestant] Americans in the small towns clung to the [Republican Party], the newer ethnic groups in the cities swung to Roosevelt, mostly out of gratitude for New Deal welfare measures, but partly out of delight at being granted ‘recognition’.” But Leuchtenburg and others have tended to ignore the central role of the capitalist class in Roosevelt’s new Democratic Party.

As Thomas Ferguson has argued, Roosevelt’s administration was based on a constellation of financiers and industrialists as well as the new assemblage of ethnic voters. In fact, Ferguson argues, it was a particular section of the capitalist class that was the most important factor in that coalition: the heads of capital-intensive and internationally-oriented industries. Though labor was tremendously important, it was this group of capitalists that provided the power, influence, and money that came to constitute the core of the party and made FDR’s four successive presidential victories possible, Ferguson argues.

While the core of the Republican Party was made up of bankers and industrialists involved in labor-intensive and domestically-oriented industries like textiles, coal, and steel, Roosevelt’s coalition was composed of the heads of corporations such as Standard Oil, General Electric, Bendix, Remington Rand, and Sears Roebuck. The industrialists associated with the Republican Party were fervently and militantly anti-union, having crushed the upsurge of strikes in 1919, while the capital-intensive industries associated with Roosevelt and the Democrats favored “employee representation” and plant-specific works councils. The capital-intensive industries also favored “scientific management” and were linked to the university-based industrial relations research centers and to the Rockefellers’ Industrial Relations Counselors organization, a kind of liberal alternative to the open shop.

The Republicans were allied with the J.P. Morgan banks, while Roosevelt found allies in the Eastern, internationalist banks—in particular Rockefeller’s Chase National Bank—financial institutions that were linked through the New York Federal Reserve. The capital-intensive industries with an internationalist outlook, which also tended to be oriented to the production of consumer goods, comprised the center of the Roosevelt coalition. Those industries also tended to be associated with the most important foundations, led by the Rockefeller Foundation, as well as mainline Protestant denominations and media outlets with an internationalist outlook such as The New York Times and the magazine that later became Newsweek. The capital-intensive radio industry’s networks tended to be in the Roosevelt camp too.

This capitalist core, together with the “Solid South” and the Democrats’ corrupt big-city political machines, Roosevelt built his vaunted New Deal coalition. Meanwhile, the most important development in buoying up Roosevelt was the working class upheaval that began in earnest in 1934 and continued unabated through 1939. During that period, millions of workers joined the new industrial unions of the Congress of Industrial Organizations (CIO) in the auto, steel, rubber, and electrical industries, while even more joined the craft unions of the American Federation of Labor (AFL). All of the labor unions backed Roosevelt and became integrated into the Democratic Party. By 1936 the Communist and Socialist Parties had also gone over to Roosevelt, basically dissolving themselves into his Democratic Party. And in that same year the black vote went over to the Democrats for the first time. As a result, Roosevelt won 60.8% of the popular vote in the 1936 election and carried all but two states.  

The New Deal welfare state and the New Deal coalition would form the base of Democratic power until the late 1970s. Some on the left have argued that the New Deal coalition constituted a sort of de-facto labor party, but this was not the case. The New Deal coalition was made up of capitalist corporations, racist southern Democrats, big-city machines, labor unions, and black voters (where they were able to vote). The strength of the capitalist core, the southern Democrats, and the political machines explain both the New Deal’s success and its limited character.

If Not the New Deal, What Brought About Prosperity?

World War II ended the Great Depression. Prosperity continued after the war because the United States, which had hardly been touched at home by the war’s destruction, had a small fraction of the world’s population but the bulk of its wealth. Germany and Japan were obliterated; England and France were badly damaged, while the U.S. economy and technology expanded and advanced thanks to the war. The only other great power was the Soviet Union, which also emerged from the war as an imperial power when it absorbed much of Eastern Europe into the Communist bloc. The Cold War between bureaucratic Communism and capitalism had begun.

To preserve the world capitalist system, the U.S. government invested billions in the reconstruction of Europe through the Marshall Plan and worked to revive the capitalist economy of Japan. In the United States, most of the New Deal’s employment programs ended and were replaced by a military spending program that made up around 10% of gross domestic product for the next few decades. This sort of “military Keynesianism” entailed the use of government arms programs to stimulate the economy during recessions. National prosperity during the 1950s and 1960s was also based on imperialism, with hundreds of military bases around the world that protected U.S. investments and geopolitical interests in Latin America, Africa, and Asia. U.S. economic prosperity in the post-war period was owed only in part to the social programs of the New Deal and the Great Society, for America’s prosperity depended on what was called the “permanent war economy.” The New Deal and postwar orders can be defined as “social imperialism,” that is, a political economy that can offer social reforms only because it is an imperial power. U.S. domination of half the world—economic, political, and military—provided the basis for the “American dream” of a steady job, a home of one’s own in the suburbs, and the consumer paradise of home appliances, televisions, and cars.

By the 1950s the majority of the population was covered by the Social Security system and one-third of the working class was unionized, while many had union health and retirement programs. Almost two-thirds of Americans owned their own homes. The U.S. version of the social welfare state remained quite limited in comparison with many European countries, but with the U.S. as the leading world economic power, most white Americans and many blacks and Latinos enjoyed a far better life than their parents. And national prosperity also provided the context that made the victories of the civil rights movement possible, expanding democracy and rights in the southern states even if racism persisted everywhere.

From the “Golden Age” to Neoliberalism

The era of postwar prosperity – sometimes called the “golden age” of capitalism – lasted less than two generations, and began to unravel under the pressure of international competition from Germany and Japan and falling rates of profit. This resulted in the disintegration of the New Deal coalition and a new era of class struggle. Unfortunately, however, this was largely a class war from above waged by corporations against labor unions, whose leaders had no interest in resisting the onslaught and no ability to do so. Under President Ronald Reagan and British Prime Minister Margaret Thatcher, capital began to resist state regulation and to construct a new worldwide open-market model – neoliberalism on a global scale.

Governments across the advanced capitalist countries privatized, deregulated, opened markets, cut social welfare budgets, and attacked labor unions – including the historic parties of social democracy. The race to the bottom had begun, and those in the developing world often “won” by hitting bottom before the rest of us. As developing countries went into crisis, the world became awash in desperate immigrants in search of safety and needing employment. Like the New Deal order that preceded it, neoliberalism also went into crisis when the global economy crashed in 2008. So we arrived at where we are today, with neoliberalism collapsing and the racist and nationalist far right winning power in many countries around the world.  

So What Should Socialists Say?

Let’s return to Sanders and his call for a “political revolution” and “democratic socialism” and his vision of a new New Deal. Many in DSA will no doubt argue that raising these slogans as Sanders, Ocasio-Cortez, and others have used it is simply a clever way of popularizing our call for economic and social reform. The problem is, however, that it is also a quite misleading and incomplete slogan. More importantly, it is a liberal program of capitalist reform, not a socialist program for social transformation. Given our sudden expansion in membership and our thousands of relatively new socialists, the call for a new New Deal, without any further elaboration or criticism, tends to mis-educate not only our members but the working-class constituencies with whom we come in contact.

While many of us in DSA believe that both the Republicans and the Democrats are capitalist parties that stand in the way of a struggle for socialism, the slogan of the new New Deal tends to reinforce the idea that the Democratic Party will save the country and therefore deserves our support. Equating the New Deal with socialism tends to equate the victory of the Democratic Party and its candidates with the struggle for socialism, while nothing could be further from the truth. Victories by Democrats, even progressive Democrats calling for a new New Deal, strengthen the Democratic Party, not the anti-capitalist left.   

Let’s take the demand for universal health care. It is a fine slogan, and even better when defined as Medicare for All. But even that important reform were implemented the healthcare system would still be owned and controlled by capitalists through the continued existence of private medical insurance, the private hospitals and medical practices, the pharmaceutical companies, the manufacturers of medical devices, the owners of the property who lease the spaces for medical facilities, and so on. Socialists should demand not only Medicare for All but a national health care system (similar to Britain’s NHS), one that exists and functions within the context of a democratically elaborated national plan for the country’s entire economic system. Putting health care in the hands of the people will require an enormous social mobilization by the nation’s working-class majority, a majority that includes what is usually called the middle class as well as the poor and the socially marginal.

While socialists should definitely support the kind of reforms that Sanders advocates, we must be honest with ourselves and with the working class and make clear that these kinds of reforms alone will not solve everyone’s problems, will not be permanent, and will not change the capitalist system. Why not? First, as Trump, the Republicans, and the neoliberal Democrats have made clear, they will wage a continual battle to prevent us from winning such reforms and do everything possible to take them away if we win them. Second, because capitalism is a system of periodic crises, which bring unemployment and social misery with them; these also threaten any reforms we might win. Third, the reforms of the New Deal era were based on a social pact between the capitalist class and the working class made possible by U.S. ascension to global military, political, and economic domination, while today the country is in a period of economic decline. The widespread prosperity of the postwar order is unthinkable without the Democrats’ support for U.S. imperialism.

We should stand with Bernie’s supporters in the struggle against the billionaire class, in the fight for a “political revolution” and for “democratic socialism,” but we must give those terms another content. Socialists should stand for the collectivization of the economy, for taking the banks from the bankers and bringing corporations under social control. We also want to take money out of politics and democratize the political system. But we socialists do not believe that the government we have today could ever serve the interests of working people. The country’s working people must put this political system behind us and create a new kind of state, one based on democratic institutions through which workers exercise power. Based on radical experiments of the past, we can envision a state based on neighborhood or workplace councils or on cooperatives. Perhaps our social media will provide us with new ways to organize our society. We have no blueprint for all of this. The working class will have to work this out for itself. But with the principle of collective ownership and democratic decision making as its guide, we believe this can be done.

We cannot change the country and carry out a political revolution unless we also bring the banks and corporations at the center of the economy under social and democratic control. The simplest and most direct way to begin that process is by nationalizing the banks and industries, though only a government of working people could democratically manage them. Nationalization of industry in itself does not necessarily lead to socialism, as the experiences of the Soviet Union, China, and Cuba demonstrate. At the same time, socialist or labor party governments don’t guarantee socialism either, as has been shown by the postwar experience of social democracy in Europe and elsewhere. The genuine socialization of industry will require a new sort of government, based on democratic institutions that can take over finance and industry and subordinate them to the needs of the people, while also working in solidarity with the other nations and peoples of the world. To get to that point we will need powerful working class and social movements that can form the basis for working-class parties and, eventually, a working-class government.

When we look at things this way, it becomes clear that the confiscation of the property of the capitalist class cannot be achieved solely through the building of social movements and participation in electoral politics. Certainly no rational person would think that if we just win the elections, get a majority in Congress, and pass our program, that the capitalists will throw up their hands and turn over their property. No social class in history has ever given up its property without a tremendous struggle. Look back to the southern aristocrats who owned plantations and held human beings as slaves. When confronted with a challenge to their slavery-based system, the slave-owning class was prepared to fight a civil war to save it. The capitalist class, which today rules the country and dominates the global economic system, will be just as intransigent. They will not give up their wealth without a fight. A “political revolution” cannot be achieved  unless working people and all of the oppressed in our society rise up and take power into their own hands. We need to confront this reality and to create an organization that understands its mission as playing a leading role in such a revolution.