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Is Social Democracy Un-American?

Marc Jampole
August 1, 2016


by Marc Jampole

from the Summer 2016 issue of Jewish Currents

Discussed in this essay: The Great Exception: The New Deal and the Limits of American Politics, by Jefferson Cowie. Princeton University Press, 2016, 438 pages.

greatsociety03a-3-webHISTORIAN JEFFERSON Cowie’s The Great Exception: The New Deal and the Limits of American Politics is a small volume with one big idea: that the period roughly from 1935-1975, dominated by the wealth redistribution policies of FDR and LBJ, was a great exception to the political tradition of the United States. The current era, ushered in by the election of Ronald Reagan in 1980, is more in tune with the flow of American history, says Cowie.

Building on the ground-breaking work on income inequality by Thomas Piketty and Emmanuel Saez, Cowie characterizes the great exception as a period in which the U.S. enjoyed a relative equality of income. The share of the workforce that was unionized was at an all-time high, while the percentage of income and wealth captured by the top 1 percent was at an historic low. Taxation of the wealthy was at its highest point since the establishment of the income tax, especially during and just after World War II, as the U.S. decided to fund the war through increased taxation (which stands in stark contrast to George W. Bush’s administration, which cut taxes on the wealthy while fighting its two wars). In 1939, only 5 percent of the workforce paid income tax; by end of war, it was 74 percent, with marginal tax rates topping out at 90 percent for multimillionaires. The Great Exception also saw, in the early 1970s, the minimum wage come as close to a living wage as it ever has been. Cowie sees it as the only period in American history in which government seemed to work to protect economic security. Polarization between the major political parties was at an all-time low.

In calling the period starting with the New Deal and culmi­nating with the Great Society the “Great Exception,” Cowie, a social and political historian at Vanderbilt, contradicts what he sees as the three current inter­pretations of the New Deal response to the Great Depression:

1. The mainstream liberal consensus, which posits the New Deal as the culmination of the U.S. struggle for reform, a kind of third American revolution. This view informs E. J. Dionne Jr.’s differentiation between “good” and “bad” conservatism in his recent Why the Right Went Wrong; for Dionne, a “bad” conservative does not accept the flow of history towards large government, whereas the “good” conservative merely tries to slow it down and make sure the results of big government are in keeping with American traditions.

2. What Cowie calls the New Left interpretation of history, but which I believe is consistent with a leftist understanding of the New Deal from its very inception: that FDR and his brain trust pursued compromises with the working class on behalf of the capitalist system, and that the New Deal represented corporate liberalism. G. William Domhoff reminded us of the power of such an analysis recently in The Myth of Liberal Ascendancy.

3. The view of the right, that the New Deal (and Medicare) was a disaster that the righteous right has been trying to rectify ever since.

WHEN COWIE WRITES that wealth and income equality reached its high point during the middle of the 20th century, he clearly is relying on the recent research by Piketty, Saez, and others. His theory that government activism to promote economic security was the cause of the great redistribution of wealth that took place between 1935 and the early 1970’s seems self-evident. It is in his explanation of why 1935-1975 was the Great Exception that Cowie breaks new ground. He believes that the political will to provide income protection to Americans and foster a greater equality of wealth through high marginal tax rates, government programs, and pro-union policies came only because our political and public culture in the mid-20th century was homogeneous for the first and only time in U.S. history. When that homogeneity broke apart in the 1960s and 1970s, the impetus for social democracy faded, as the South broke away from the Democratic Party, and the working-class unity that had helped to push the government towards providing economic protections shattered.

By 1935, African-Americans were mostly segregated, thanks to Progressive Era politicians like Woodrow Wilson. Schools, stores, and the workplace, unionized or not, had a fairly homogeneous population, since blacks were segregated both geographically and according to occupation. The New Deal social welfare programs such as Social Security and the minimum wage exempted many occupations dominated by blacks and other minorities, such as agricultural workers and domestics. Cowie doesn’t mention it, but we know from many sources that minority veterans of World War II were denied mortgages and other benefits of the G.I. Bill. Whites received the bulk of the benefits of the Great Exception, especially between 1949-1979, during which time the pretax income of the bottom 60 percent of the income pyramid doubled.

The low level of immigrants in the period 1935-1975 also helped to homogenize the workforce. The U.S. started clamping down on immigration in the early 1920s, and by the time of the New Deal, most immigrants had assimilated into American culture. The Great Exception also saw a temporary relenting of the culture wars that previously had divided much of the working class, as evangelism receded and the ecumenical idea of a universal Judeo-Christian tradition temporarily dominated the mass media and public discourse.

Cowie doesn’t mention it, but reinforcing this ostensible political and cultural homogeneity during the Great Exception was the emergence of the first mass media, which promoted the middle-class white suburbs as the ideal and predominant lifestyle.

Thus for the first and, Cowie postulates, the only time in American history, elements of the working class put away differences and cooperated with each other. During the less homogeneous Gilded Age, by contrast, Jay Gould could accurately boast, “I could pay one half the working class to kill the other.”

But as the workforce became more diverse beginning in the 1960’s, the coalition pushing the government to pursue pro-labor policies began to fray. A new wave of immigration, primarily from Latin American and Asian countries, and the integration of the workplace brought about by the civil rights movement, fragmented working-class homogeneity. The culture wars recommenced, revolving around sex-related issues such as abortion, birth control, women’s equality and LGBTQ rights.

The pressure this increased diversity placed on the labor coalition was exacerbated by a concerted business effort, led by the Reagan Administration, to reduce union membership and the political power of unions. For Cowie, the key event marking the end of the prosperity and fairness of the Great Exception was President Ronald Reagan’s firing of the air traffic controllers when they went on strike in 1981, which signaled to the corporate world that the government would not intervene if they also started firing striking workers.

COWIE DEPICTS the federal government during most of American history as large and activist, but always supporting business and corporate interests while fighting organized labor and stressing the rights of individuals. Government has always intervened, but except in the period defined approximately as 1935-1975, it always intervened for business and to protect individual rights, never to provide economic protection or to support labor. Indeed, such elements within the New Deal coalition as Tammany Hall, the South, and the West were at first frightened of government intervention because it had historically only served to help industrialists.

As Cowie says of the Reagan years, the issue never really was — or rarely ever is — whether the ever-expanding government was large or small, as rightwing rhetoric would have us believe. The real issue is towards what ends and whose interest those massive institutions of government are focused. “Comparative history,” he writes, “suggests that strong welfare states tend to be products of vigorous labor movements and densely woven civil societies that could make direct claims for social citizenship,” both of which are “missing in U.S. federal politics.”

The conditions Cowie describes existed in Western Europe, which saw the birth of the first welfare states, producing redistributive social programs that both the New Deal and Great Society used as models for legislation.
Historians often see the Progressive Era as a forerunner of the New Deal, but Cowie stresses the differences, postulating that the political concerns of progressives resembled those of elected officials before and after the Great Exception. In the Progressive Era, middle-class activists thought that individualism would flourish and there would be class harmony if there were greater access to education and to upward mobility. (It sounds a lot like many current Democrats, although both Bernie Sanders and Hillary Clinton have made proposals that explicitly address economic inequality, as opposed to individual access.)

The high-school version of American history praises Progressive Era legislation that constrained big business, such as monopoly and food safety laws. But Cowie makes a strong case that the goal of this legislation was to regulate the new corporate order created by industrialization and the modern corporation, and had nothing to do with seeking economic equity or fostering collective economic security. Rather, progressive legislation set the new ground rules for the new economy.

Progressives such as Woodrow Wilson also saw enforcement of racial boundaries as an achievement. The Progressive Era saw a rise in anti-Semitism and anti-immigrant sentiment, leading to anti-immigration laws that contributed to the homogeneity of the 1930s-1970s. And while there was an uptick in the Democrats’ support of unions during World War I, in contrast to World War II, as soon as the former ended, so did the Democrats’ interest in helping labor. In short, progressives thought in terms of ethnic categories, while New Dealers thought in terms of economic classes.

It’s easy to demonstrate that the past thirty-six years have seen a return to the pro-corporate, pro-individual values that Cowie says characterized American politics and government before the Great Exception. Cowie is not the first to call the Reagan years a restoration, not a revolution. Government policies to lower taxes on the wealthy, cut spending on redistribution programs, and weaken laws and regulations protecting unions restored the wealth and income advantage enjoyed by the top 1 percent and top tenth of 1 percent during the Gilded Age — and in less than four decades.

Cowie makes a convincing case that during the current era, the government has supported other trends that tend to fragment the working class and deny them the power to make economic equity an important concern of government. Many post-1960s political concerns of the left have revolved around individual rights, including the opportunity to compete in a tighter job market. The New Deal democratized economic security, whereas beginning sometime in the 1970s, the left began to emphasize the democratization of access to the market, i.e., for minorities, women and LGBTQ individuals. Rights became the dominant political theme, even for the right, which pursued religious rights, school choice, and gun rights. Cowie notes that while African-Americans, women and LGBTQ individuals began to receive equal treatment with white males in the workplace, all groups suffered from the growing inequality of wealth and income.

THE RELIGION-INFUSED culture wars of the past four decades are also reminiscent of virtually all eras of American history, and certainly the Gilded Age and Progressive Era, when Republicans combined “moral uplift” with pro-buisiness policies. Cowie quotes Richard Viguerie, the dean of contemporary rightwing fundraising: “We never really won until we stressed issues like busing, abortion, school prayer and gun control.”

The current preoccupation with “moral” issues, Cowie observes, has fragmented the working class into a number of special-interest groups, for whom one issue dominates all others.These include groups who fear or dislike African-Americans and other minorities; want to see a revival of religion in American culture; want to escape state structures and state control; and want to control immigration and immigrants.

Unions themselves get some of the blame for ending the Great Exception. Cowie suggests that one reason the Great Exception did not continue is that unions negotiated for benefits and wages only, not for managerial input, as they did in Europe. Without a say in corporate policy, unions were powerless to prevent boards from resorting to policies, encouraged by the Reagan Administration, that did not have the interests of the workers in mind. The Obama years then saw the Supreme Court, which previously had upheld most of the New Deal, give new rights to corporations in the Citizens United and Hobby Lobby cases, much as it gave new rights to corporations in the 19th and early 20th centuries.

Cowie’s argument stands or falls on his demonstrating that both before and after the Great Exception, the U.S. political culture was not interested in fostering an equitable distribution of wealth. At 288 pages, however, including notes and other back-of-the-book material, the length of The Great Exception works against achieving this goal. Cowie is able to give only high points, with sparse detail and no time to consider events that might seem to contradict his premise. While needing to flesh out his narrative, however, Cowie does make his case that in the New Deal and Great Society years, the political dynamic was different from and more left-looking than in the periods before and after. For leftists, it’s depressing to consider the idea that the redistributive politics of the middle of the 20th century was the exception and not the natural evolution of the American experience.
But one interesting phenomenon of the Great Exception era offers hope that we may be on the verge of returning the United States to the path towards a social democracy with an activist welfare state. The legislation that produced the Great Exception came in two short bursts: in 1935-1938, after voters gave FDR overwhelming majorities in the House and Senate; and in 1964-1965, after voters did the same thing for LBJ and before he lost the support of the country because of the Vietnam War and the reaction of whites to civil-rights unrest. In both cases, the Republican Party was in a shambles, and special circumstances had given the Democrats their huge majorities. In both cases, the Democratic president was a left-looking centrist with years of experience in the corridors of power.

The Great Recession of 2008 presented the country with another opportunity to push economic equity, when the Democrats won majorities in both houses and another left-looking centrist became president. While we shouldn’t downgrade the importance of the Patient Protection and Affordable Care Act, President Obama spent a lot of political capital pushing it through and the Democrats didn’t spend enough real money trying to maintain majorities in both houses in 2010. A golden opportunity was missed.

THE LEFT has another chance in 2016. Both Bernie Sanders and Hillary Clinton have specific proposals that address income and wealth inequality, including new taxes on the wealthy. The basic contradiction of the Republican Party — that its economic policies hurt a majority of Republican voters — is coming back to haunt them in the candidacy of Donald Trump, which is built, like the GOP’s long-standing economic and social policies, on a web of lies. With any luck, voters will not only elect the Democratic nominee, but also give her or him a majority in both houses (studies show that ticket-splitting is down). If the nominee is Clinton, moreover, we will have the other key element in the confluence of circumstances that led to the New Deal and Great Society legislation — a long-time insider who knows how to push through legislation.

Maybe my horror at thinking that the mid-20th century really was a great exception has disoriented me and made me spin an overly optimistic fantasy in my mind. Still, I like the odds that we’ll soon have a Clinton presidency and a Democratic Congress passing legislation that reverses the course of the last forty years and helps to foster the collective economic security of all our citizens.

Marc Jampole, a member of our editorial board, is a poet and writer who runs Jampole Communications, a public relations and communications firm in Pittsburgh. He blogs several times a week at OpEdge.