by Michael Lind
Capitalist and managerial elites in the West have often promoted versions of economic liberalism, from the classical liberalism of the early nineteenth century to the globalist neoliberalism of today. In different ways, producerism, socialism, corporatism, and pluralism have rejected the liberal ideal that the economy should be governed on the basis of maximum flexibility for businesses in a free market for labor as well as other inputs to production.
Producerism is the belief that the economy should be structured by the state to maximize the numbers of self-employed family farmers, artisans, and small shopkeepers in society. The moral ideal of this school is the self-sufficient citizen of a republic with a small-producer majority whose economic independence means that they cannot be intimidated or blackmailed by wealthy elites. In the form of Jeffersonian agrarianism, producerism has a rich history in the United States. The rise of mass production in the economy, and the shift from a majority made up of farm owners and farm workers to urban wage earners, rendered the producerist ideal irrelevant in the modern industrialized West. While small-producerism still has appeal to romantics on both the left and the right, it is and will remain anachronistic, and having criticized it elsewhere, I will not discuss it in this book.4
Socialists of various kinds—utopian, Christian, and Marxist—denounced capitalism and private property and proposed public ownership of industry and infrastructure. By the early 1900s, the Marxist school itself had split into several squabbling sects. Revolutionary Marxist-Leninist communists seized power in Russia in 1917 and in China in 1949; by the 1970s their tyrannical regimes ruled a third of the human race. So-called revisionist Marxists favored working for peaceful reform through democratic systems and influenced moderate social democratic parties in Western Europe. Revolutionary syndicalists rejected liberal democracy for militant violence and influenced the fascist ideology of Italy’s Benito Mussolini, a former socialist.5
A fourth philosophy, opposed to free market liberalism and state socialism alike, envisioned a harmonious society of state-supervised but largely self-governing “corporations,” by which was meant entire economic sectors, not individual firms, rather like medieval guilds.6 This tradition influenced Catholic social thought, as expressed in the papal encyclicals Rerum novarum (1891) and Quadragesimo anno (1931). For the French sociologist Émile Durkheim and others in the secular French republican solidarist tradition, the organization of labor and business could be an antidote to “anomie,” a phrase Durkheim devised to describe the isolation and disorientation of many individuals in urban industrial societies.7
The same term, “corporatism,” is often used for both democratic and dictatorial versions of this political tradition. Political scientists have distinguished authoritarian “state” corporatism from “societal” or “social” corporatism, which is compatible with democracy and civil liberties.8 But apart from favoring a few institutions like tripartite business-labor-government negotiations in some industries, so-called state corporatism and social corporatism have little to do with each other. The view of society as a community of self-organized and self-governing communities, under the supervision of a democratic government, is best described as “pluralism,” the term used by the English pluralists of the early twentieth century, like Neville Figgis, F. W. Maitland, G. D. H. Cole, and Harold Laski, and by their late-twentieth-century heirs, including Paul Hirst and David Marquand.9
In the early 1900s, the “national efficiency” school in the UK had affinities with pluralism and, in its more militaristic versions, with state corporatism. The members of the national efficiency school included Fabian socialists like Sidney and Beatrice Webb and conservative imperialists like the editor Leopold Maxse, along with the novelist H. G. Wells. Despite their differences on many issues, all believed that social reform along with rearmament was necessary to maintain Britain’s role in the world, which was threatened by the rise of Imperial Germany.10
Arguments like those of the national efficiency school ultimately prevailed in many Western democracies. British prime minister Lloyd George championed social reforms in 1917 in the midst of World War I on the grounds that “you cannot maintain an A-1 empire with a C-3 population.”11 During the two world wars and the Great Depression of the twentieth century, the deciding vote among competing models of industrial society in the West was cast by war.
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IN MUCH OF EUROPE, World War I was a catalyst for an increased role in economic security and social provision by the state. During and immediately after the war, Britain created ministries of Labour (1916), Reconstruction (1917), and Health (1919). Lloyd George proposed a program of public housing to build “homes fit for heroes.” In France, fear that low fertility might cause military insecurity helped to inspire support for family allowances. In the case of the democratic Weimar Republic in Germany after World War I, the political scientist Gunther Mai observes: “With the exception of the eight-hour day, there is no important social policy innovation in the Weimar Republic that had not been already introduced during wartime on the basis of social rights: unemployment benefits, short-time working benefit, child allowances, labour exchanges, even de facto a sort of minimum wage.”12
After the US entered World War I, the US government adopted wartime corporatism, organizing the economy for military production under dozens of “commodity sections,” under the leadership of the War Industries Board (WIB). To avert strikes that might disrupt war production and transportation, the Wilson administration acted as a broker in labor-management relations through the National War Labor Board. Trade union leaders were appointed along with business executives to the Advisory Commission to the Council of National Defense, the War Industries Board, the Railroad Administration, and other agencies. Thanks to pro-union government policy, between 1913 and 1920 union membership in the US increased by 85 percent.13
Herbert Hoover, the acclaimed head of the Food Administration during the war, became commerce secretary from 1921 to 1928 and president from 1929 to 1933. Although he claimed to be a free market liberal, Hoover supported high tariffs and favored a purely voluntary system of business-labor cooperation known as “associationalism,” under which businesses would maintain high wages and unions would avoid strikes. But wartime trade union gains in the US were reversed by a postwar business offensive against organized labor, and during the Great Depression that began in 1929 many paternalistic employer welfare programs collapsed.
Following his election in 1932, President Franklin Delano Roosevelt, who had served as assistant secretary of the navy under President Woodrow Wilson, sought to revive the US economy by means of a peacetime version of wartime mobilization. The Reconstruction Finance Corporation, created under Hoover and expanded under FDR, was a reincarnation of the War Finance Corporation of World War I, just as the Securities and Exchange Commission was inspired by the World War I–era Capital Issues Committee.
The most important agency inspired by earlier wartime collaboration among business, unions, and government was the National Industrial Recovery Administration, later renamed the National Recovery Administration (NRA), created by the National Industrial Recovery Act (NIRA) of Congress in 1933. Not only was the NRA modeled on the War Industries Board of World War I, but also it was led by General Hugh Johnson, who had worked for the financier Bernard Baruch, the head of the WIB. Under NRA supervision, industries were organized into government-supervised, self-regulating sectors similar to the commodity sections of World War I. With government approval, in return for exemption from antitrust laws, businesses in each sector were to draw up industry-wide codes of conduct, which included sectoral minimum wages. Under section 7(a) of the NIRA, inspired by the wartime model of the National War Labor Board, each industry code had to guarantee labor’s “right to organize and bargain collectively through representatives of their own choosing.”14
In 1935 the NRA was abolished when the Supreme Court struck down its enabling
legislation, on the technical grounds that Congress had delegated too much authority to the president. But the wreckage of the NRA was plundered to construct a system that structured the US economy from the 1930s to the 1970s. NRA industry codes were reborn as regulations in commission-governed industries like aviation, trucking, and coal, which were treated as public utilities. Instead of the sectoral minimum wages and working hours and pensions that were to have been agreed on in each industry by business and labor and ratified by the NRA, the federal government directly imposed a one-size-fits-all national minimum wage and eight-hour day in 1938, in addition to the federal Social Security program that was enacted earlier in 1935. The Wagner Act of 1935 turned section 7(a) of the National Industrial Recovery Act into the statute that, as amended, governs collective bargaining in the United States to this day.
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DURING WORLD WAR II, many Western governments promised their soldiers and workers a better life after the Axis alliance of National Socialist Germany, Fascist Italy, and Imperial Japan was defeated. In Britain the Beveridge Report, calling for a massive expansion of welfare services for the working class, was published in November 1942 and helped to inspire the postwar National Health Service.
In his State of the Union address of January 11, 1944, President Roosevelt called for a Second Bill of Rights, explicitly linking promises of new rights to jobs, adequate wages, homes, medical care, education, and other goods to the wartime effort: “It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. . . . And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.” FDR’s Second Bill of Rights was more an aspiration than a proposal, but its spirit was embodied in the GI Bill (of Rights), passed by the US Congress in 1944. The war effort accelerated reform in other areas, including the tentative beginnings of the federal role in dismantling racial segregation.
The greatest gains for organized labor in American history came during World War II. Using the leverage of defense spending, the War Labor Board enacted a “maintenance of membership” rule mandating that all new employees in a unionized plant belong to the union. Membership in the United Steelworkers grew from 225,000 (in 1939) to 708,000 by 1944, while membership in the United Auto Workers ballooned from 165,000 in 1939 to more than a million.15 More than 35 percent of the nonagricultural labor force was unionized by 1945.
To one degree or another, every economy in Western Europe and North America after 1945 was based on tripartite economic bargaining, of a kind compatible with representative democracy, as opposed to the authoritarian state corporatism adopted by interwar fascist regimes and by dictatorships in Spain, Portugal, and Latin America. In a democratic pluralist system, occupational representation does not replace representative democracy based on free elections of representatives from territorial districts or the country as a whole. But the unregulated labor market is partly replaced by a state-brokered system of bargaining over wages and working conditions among employers or employer associations and independent trade unions or other labor organizations.16
Elaborate forms of national sectoral bargaining among employers and labor unions were created in postwar Sweden and Austria. In the Federal Republic of Germany, collective bargaining was supplemented by codetermination, the practice of having union representatives on the boards of large corporations. In France, union membership has always been relatively low, but the results of employer-union bargaining have covered great numbers of workers. One study notes: “The shadows of Fascism and/or foreign threat were decisive or at least significant in all the most successful and enduring peace settlements.”17
The labor historian Nelson Lichtenstein points out: “Building upon the framework established by the National War Labor Board, the big industrial unions settled into a postwar collective-bargaining routine that increased real weekly wages some 50% in the next two decades and greatly expanded their fringe benefit welfare packages.”18 Following the Treaty of Detroit in 1950—a five-year contract negotiated by the United Auto Workers with General Motors—and similar deals, the US had a de facto system of democratic corporatism in its concentrated manufacturing sector, which by means of “pattern bargaining” informally set standards for wages and benefits in many nonunionized sectors. Union membership in the US peaked in the 1950s at around a third of the workforce. Meanwhile, the long-struggling farm sector was stabilized and integrated with government by means of a system of price supports and subsidies.
While many business executives continued to grumble, on both sides of the Atlantic the legitimacy of labor-capital bargaining was accepted by mainstream conservatives as well as progressives. Dwight Eisenhower told his brother Edgar: “Should any political party attempt to abolish Social Security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.”19 The historian Robert Griffith notes the sources of Eisenhower’s vision of what Griffith calls a “corporate commonwealth”: “Common to all of these activities was an attempt to fashion a new corporative economy that would avoid both the destructive disorder of unregulated capitalism and the threat to business autonomy posed by socialism.”20
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IN POLITICS, THE equivalents of strong unions in the post–World War II era in North America and Europe were mass-membership parties. Despite the beginnings of suburbanization, national politicians were still connected with local voters by several layers of regional, urban, and neighborhood party officials—urban “bosses” and rural “courthouse gangs” in the United States. Intellectuals tended to sneer at these provincial power brokers, some of whom were indeed ignorant or corrupt or racist. But the existence of this layer of petty tribunes ensured that politicians would not ignore the interests and values of local working-class constituencies in local, state, and national politics.
The democratic pluralism of the New Deal was reflected in the very structure of post-1945 American government. Early-twentieth-century American progressives like Woodrow Wilson had combined their contempt for legislators with idealization of altruistic, nonpartisan civil servants, protected from political interference, who would apply expertise in social science to the making of policy in the public interest.
Whether they were supporters or opponents of New Deal liberal policies, southern Democrats and northern Catholics in the dominant New Deal Democratic coalition refused to increase the discretionary power of elite federal bureaucrats who would probably be recruited disproportionately from the educated Protestant upper middle class of the North and Midwest and educated at a handful of Ivy League universities. Successive plans for executive reorganization, which would have put the president in charge of a rationalized continental European–style administrative state, never made it through Congress. Agrarian populists, sometimes allied with organized labor in the factory cities, sought to expand the capacities of the federal government in key areas, while avoiding the creation of a European-style generalist civil service with substantial independent policy-making authority. They achieved their goal by the creation of sector-specific agencies like the US Department of Agriculture and the Civil Aeronautics Board with narrow mandates that worked closely with a sector’s stakeholders, including in some cases farm organizations and unions. A necessary corollary of this approach was judicial deference to the decisions of Congress and congressionally supervised federal agencies.21
The system that emerged in the US by the 1940s came to be known as “interest group liberalism,” a pluralist system in which public policy emerged from negotiations among economic interest groups, each with its own power brokers, rather than from a technocratic mandarinate of all-wise, altruistic experts insulated from popular pressure, or from the “invisible hand” of the free market.
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IN THE REALM of culture or civil society, including the mass media and education, as well as in the economy and politics, a system of democratic pluralism that empowered the working class coalesced in the United States and other Western democracies in the mid-twentieth century. The clergy and zealous citizens and civic groups policed the mass media and the educational system to ensure that they did not offend the largely traditional values of the working-class majority.
Beginning in 1933, the National Legion of Decency, organized by Catholics, won the privilege of having Hollywood films submitted for their approval or condemnation. Meanwhile, in suburbs and small towns, Protestant “church ladies” scoured public libraries and school libraries for books they considered subversive and obscene. Often they invited the derision of metropolitan elites with campaigns to ban literary classics like J. D. Salinger’s Catcher in the Rye. But these parochial and provincial activists undoubtedly represented the values and views of large numbers of Americans, who in their absence, as today, would have been passive recipients of whatever content distant commercial media corporations in Los Angeles or New York chose to offer in a media market that rewarded sensationalism, obscenity, and violence.
In the Western democracies, Catholics played a role out of proportion to their numbers in postwar democratic systems. Germany’s Christian Democrats were inspired by Catholic social thought with its strong prolabor and corporatist themes, and so were the founders of the early European Common Market. In the United States, the lesser power brokers who acted as tribunes of the urban white working class—political bosses, trade union officials, and clergy—were disproportionately Catholic.