By Gaius Publius, America Blog
FDR may have saved capitalism from itself.
I’ve been fascinated lately with the meaning of the terms “liberal” and “progressive.” It’s clear that what we now call “liberalism” is really a variant, a side branch of the real thing, and should be more properly named “FDR liberalism” or “social liberalism.” Today’s “liberalism” — FDR-liberalism — is an offshoot of pre-FDR liberalism that diverges from its original meaning in a rather important way, by including a role for government. Prior to FDR, “liberalism” just meant basic free-market capitalism.
That’s why so-called modern (Clintonian) “neoliberals” are so different from FDR liberals, and why they’re so similar to Milton Friedman free-market conservatives. “Classic liberalism” — the pre-FDR version — is best defined below (my paragraphing):
Classical liberalism is a philosophy committed to the ideal of limited government andliberty of individuals including freedom of religion, speech, press, assembly, and free markets.[1]
Classical liberalism developed in the nineteenth century in Western Europe, and theAmericas. Although classical liberalism built on ideas that had already developed by the end of the eighteenth century, it advocated a specific kind of society, government and public policy required as a result of the Industrial Revolution and urbanization.[2]
Notable individuals who have contributed to classical liberalism include Jean-Baptiste Say,Thomas Malthus and David Ricardo.[3] It drew on the economics of Adam Smith, a psychological understanding of individual liberty, natural law and utilitarianism, and a belief in progress.
Classical liberals established political parties that were called “liberal”, although in the United States classical liberalism came to dominate both existing major political parties.[1]There was a revival of interest in classical liberalism in the twentieth century led by Friedrich Hayek and Milton Friedman.[4]
Note the following:
First, the united concepts of “limited government” and “liberty of individuals.” This is the essence of classic liberalism, pre-FDR. Get government off your person; get government out of markets. It’s two parts of one 18th century idea — and I would argue two parts that are in total contradiction to each other, held together only by the arrogance of late-stage (18th century) Calvinism, but that’s for later. (Hint: Read Erich Fromm’s classic Escape from Freedom to see why.)
Second, that those twin concepts are the essence of modern “libertarianism” as well. The labels are similar for a reason.
Third, “classic liberalism” was born in the 18th century with writings by Adam Smith and others, and developed fully in the 19th century, the time of the conversion of farmers, sheep herders and users of “the commons” into property-less, poverty-wage, factory slaves during the first great era of predatory capitalism (ours being the second). Classic liberalism supported those policies and changes.
Fourth, did you see at the end of the quote, the inclusion of the “classic liberal” Hayek and Milton Friedman as brothers-in-thought? They are. When Democrats in the 1930s diverged from “classic liberalism” by admitting a central role for government after all, instead of a limited role — and when this modified “social liberalism” became simply “liberalism” in common parlance — Hayek free-marketeers needed a different name, and post-war Milton Friedman gave them one — “free-market conservatives.”
Fifth, the “neoliberalism” of Bill Clinton, Tony Blair and others (including Hosni Mubarak, by the way) is only “neo” relative to FDR-liberalism. It’s actually a return to pre-FDR liberalism — free markets for all (who can afford to dominate them), and lose those government regulations, please. As the writer says, “in the United States classical liberalism came to dominate both existing major political parties” — but under different labels.
Finally, as many have noted, FDR didn’t have a critique of capitalism. His “liberalism” was a compromise that averted a potential revolution, and preserved capitalism by adding a regulatory regime. (He also added a tax regime aimed at reducing extreme wealth, something modern neoliberals and Friedman free-marketeers alike are dismantling.)
With this in mind, listen to this short excerpt from a recent Virtually Speaking podcast. The historian Kevin C. Murphy discusses his view of the differences between what modern “progressives” believe and what most modern “liberals” believe. The first voice is Murphy; the second is the host, Stuart Zechman. (The full interview is here, and it’s fascinating. Both Murphy and Zechman are good.)
Murphy:
“Liberalism doesn’t carry in its DNA the critique of capitalism that progressivism does.”
And at the close of the clip, Murphy again:
[Near the end of the New Deal era] People who have views about how to change the relationship between government and the economy come to the Keynesian consensus, where instead of trying to change how the pie is divided, they … want to grow the pie.
Which explains why the tax part of the FDR program was the first to be attacked and scuttled.
Zechman disagrees with the first statement above, and they come to a meaning for “liberalism” that satisfies both. But for me, Murphy hits the nail on the head. Liberalism, as vague as the term now is, implies a modified capitalism that reigns in its excesses while accepting its premises.
That’s a compromise, one that some say just doesn’t work. In my view, it’s OK to prefer the compromise; that’s not the issue here. It’s important, however, to recognize that compromise, at least regarding “liberalism” as most people understand it.
Murphy knows his stuff, by the way. He’s the author of a terrific book: Uphill All the Way: The Fortunes of Progressivism 1919-1929. Click and read; it’s nicely chunked out at the link. You can easily hop around as you like.
Side note — Murphy mentions in passing Obama’s recent “income inequality” speech. My thoughts are found in the appendix.
This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.
ABOUT GAIUS PUBLIUS
Gaius Publius is a professional writer living on the West Coast of the United States. Click here for more. Follow him on Twitter @Gaius_Publius and Facebook.
_______________
APPENDIX
Obama could raise minimum wage for federal contract workers today (if he wanted to)
But we know that people’s frustrations run deeper than these most recent political battles. Their frustration is rooted in their own daily battles — to make ends meet, to pay for college, buy a home, save for retirement. It’s rooted in the nagging sense that no matter how hard they work, the deck is stacked against them. And it’s rooted in the fear that their kids won’t be better off than they were. They may not follow the constant back-and-forth in Washington or all the policy details, but they experience in a very personal way the relentless, decades-long trend that I want to spend some time talking about today. And that is a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America’s basic bargain — that if you work hard, you have a chance to get ahead.
I believe this is the defining challenge of our time: Making sure our economy works for every working American.
But his solutions scare me to death, because, well, they’re not solutions, they’re exacerbations to the problem. Like this one — lower taxes for corporations:
And that means simplifying our corporate tax code in a way that closes wasteful loopholes and ends incentives to ship jobs overseas. (Applause.) We can — by broadening the base, we can actually lower rates to encourage more companies to hire here and use some of the money we save to create good jobs rebuilding our roads and our bridges and our airports and all the infrastructure our businesses need.
Or more NAFTA-style “trade” agreements (read, TPP):
It means a trade agenda that grows exports and works for the middle class.
Fewer regulations that stifle our job-creating betters:
It means streamlining regulations that are outdated or unnecessary or too costly.
And he’s still on about deficits as the root of our evil:
And it means coming together around a responsible budget, one that grows our economy faster right now and shrinks our long-term deficits …
We can stop right there, though there’s more where this comes from. He still wants what Robert Rubin wants, and the Rubins of the world don’t want higher minimum wages. Obama just front-loaded his speech with Elizabeth Warren–talk to get there. Nice. Legacy nice.
How does this apply to minimum wages?
We wrote recently about the growing push for higher wages in the country, starting with the minimum wage and fast-food workers. Mr. President, you can’t reverse a “dangerous and growing inequality” if you don’t pay people more money.
And by you, I mean you, Mr. President. The federal government employs millions of workers indirectly, through federal contracts. Yes, Mr. President; millions. You could personally change their wages today according to House Dem. Raúl Grijalva.
Josh Eidelson in Salon:
How Obama can bypass Tea Party Congress (and raise fast food worker wages)
Rep. Raul Grijalva tells Salon that House Democrats are asking “why the hell he just doesn’t do it!”
The White House has offered “no response” to a months-old call from congressional Democrats to bypass Congress and use executive action to raise workers’ wages, the co-chair of the Congressional Progressive Caucus told Salon Tuesday afternoon. …
A man who said “Yes We Can”
Grijalva and 49 House Democrats wrote to Obama in September to urge he use executive authority to require better labor standards for workers employed through federal government contracts with private companies. That letter followed a prior July letter by Grijalva and others, and a handful of one-day strikes since May by cleaning and concessions workers in D.C. federal buildings. A report by the progressive think tank Demos estimated that about 2 million workers with taxpayer-funded jobs make $12 an hour or less.
As I’ve reported, striking workers have also alleged violations of federal law, spurring a Department of Labor investigation and securing a meeting with the administrator of the General Services Administration. The work stoppages were part of an effort backed by the Service Employees International Union, which is also the key national player behind the wave of one-day fast food strikes, which organizers have promised will escalate to involve 100 cities Thursday.
How does this improve the wages of fast-food workers? Like this:
Along with lifting subcontracted workers out of poverty, Grijalva argued a move to raise their standards “would add huge momentum to the effort” by other low-wage workers in industries like fast food to win improvements. “It proves it can be done,” he told Salon, “and it puts the United States government and President Obama at the top of the moral imperative and the economic imperative to do this.”
Real moral leadership would put huge pressure on the low-end (predatory) wage market. Why predatory? Read here, about how your taxes make up the difference when Walmart and McDonalds employees can’t make ends meet.
What’s a president with executive authority to do?
We know Mr. Obama thinks that economic inequality is the “defining challenge of our time” because he said so. But does he himself feel challenged by it? Does Mr. Obama want to be at “the top of the moral imperative and the economic imperative” (quoting Mr. Grijalva)?
More simply, does the president want to put his feet where his mouth just walked, by acting on his words? You could ask him. White House operators are standing by:
Call the President
PHONE NUMBERS
Comments: 202-456-1111
Switchboard: 202-456-1414
The question: “Will you raise wages of federal contract workers by executive order?” If you get an answer, please post it in the comments.
Kudos to Rep. Grijalva, and to Josh Eidelson for covering this story. Mr. President, we can’t fund your library like your other good friends, but many of us believed your other words, and we’re watching too.
GP
To follow or send links: @Gaius_Publius
ABOUT Gaius Publius
Gaius Publius is a professional writer living on the West Coast of the United States. Click here for more. Follow him on Twitter @Gaius_Publius and Facebook.
