How Champions of Neoliberalism are Reversing New Deal Economics
Back to Market Fundamentalism
By ISMAEL HOSSEIN-ZADEH
The “golden” years of the U.S. economy in the immediate post-WW II period, along with the recovery and expansion of the economies of other industrialized countries, afforded the working class of these countries a decent, even middle-class, standard of living. Combined with extensive social safety-net programs such as the New Deal reforms in the U.S. and Social-Democratic reforms in Europe, the economic recovery and high employment rates of that period paved the way for a relatively cooperative relationship between the working and capitalist classes in these countries.
This led many pundits of historical developments to argue that perhaps Karl Marx had underestimated capitalism’s ability to carry out reform and share the fruits of economic progress with the poor and working class, thereby obviating revolution. They pointed to guaranteed employment and labor-management cooperation in a number of industrialized countries such as Germany and Japan as indications of “erroneous” Marxian judgment of the antagonistic capital-labor relationship.
These pundits failed, however, to point out the fact that the New Deal and Social-Democratic reforms that evolved out of the Great Depression and World War II were not courtesy of “benevolent” capitalism, voluntarily bestowed upon the poor and working people. They did not bother to explain that those reforms were, rather, the product of years of struggle by the working class and their allies against the brutalities of the capitalist system—struggle that often entailed great sacrifices, including occasional loss of life. The anti-Depression and anti-war struggles of the 1930s and 1940s compelled the capitalist class to “carry out reform in order to prevent revolution,” to paraphrase President Franklin D. Roosevelt.
The laissez-faire doctrine, which firmly believed in the self-correcting ability of unbridled market mechanism, was the dominant economic principle before to the Great Depression. The financial crash of 1929 and the consequent long Depression shattered this long-held, religious-like belief. The Depression, precipitated largely by predatory loan-pushing and the resulting unsustainable bubble of asset (stock) prices, made living conditions for the overwhelming majority of people extremely difficult. The ensuing economic distress, in turn, precipitated popular unrest. moreI have tried to tell this story too. Here is a video outline I made four years ago. This story must still be told.