What if President Obama had rejected conventional political advice and pushed for a new New Deal? What if an effective nonaligned left had pushed for such a program, economist Richard D. Wolff asks.
Once upon a time, long ago in America, another president was elected just as a major economic crisis was deepening fast. Like Barack Obama in 2008, Franklin Roosevelt in 1932 was a typically centrist Democrat. His past, too, offered little reason to expect that he would deviate from the conventional politics that got him the presidency. Moreover, both presidents' conventional advisers and political friends argued against anything other than the usual government response to capitalist economies' recurring downturns.
The advisers' argument was simple and direct. You must wait out the crisis and NOT have government interfere much (after initial emergency government bailouts of failed big corporations). Large corporations, the business community generally, and those they have made rich prefer that course of (in)action. Once the initial emergency is past, they have the resources to wait out the crisis in comfort while grabbing crisis-distressed assets at bargain prices. Most hate the idea of being taxed to pay for taking care of "bums and the unfortunate." In their minds, a government that taxes capital to support labor thereby opens the door to ever more state interventions and ultimately to "socialism." Conventional advisers insist that state interventions (eg., deficit-boosting fiscal stimulus programs, welfare supports to people struggling with unemployment, minimum wage increases, etc.) and socialism only hurt those they claim to help. They repeat as absolute truth the idea that capitalism heals itself better than any government intervention could. They conveniently forget those initial bailouts by the government.
If politicians disobey this conventional advice, corporations, business and the rich will abandon them in favor of their political competitors. Such politicians then lose to those competitors, who in turn, either follow the conventional advice or else they lose too. The lesson: To disregard the conventional advice is to commit political suicide. That threat is always part of the conventional advice, explicitly or implicitly.
Most American politicians routinely get and follow the conventional advice. Obama did. Politicians during economic crises usually do little or nothing once initial bailouts are done, hoping the crisis will pass soon. If it does, and if politicians take credit for its passing, and if people forget or forgive do-little government during most of the crisis, the politicians' careers may continue. But those are many and difficult "ifs." Obama's popularity polls suggest that following the conventional advice badly hurt his reputation with most Americans.
FDR faced a different set of crisis conditions. From initially accepting the conventional advice, once in office, he changed his position and rejected it. Mass organized pressure from below helped to force his change. A labor-left coalition of the new Congress of Industrial Organizations (CIO) with Socialist and Communist parties, flush from stunningly successful labor organizing drives, threatened FDR politically. These organizations were independent from the Democratic Party financially, ideologically and structurally. They had had multiple experiences of differences from, and struggles against, Democratic Party members and groups. That made them skeptical and wary of the Democratic Party's long history of co-opting, undermining, dominating, and/or absorbing movements to its left. Thus most members of the coalition grasped the importance of cooperating and coordinating with one another as a separate force from the Democratic Party.
The coalition had to be reckoned with because the mass working class it had organized independently could possibly abandon FDR and the Democratic Party electorally. When not an explicit threat, that was the implicit risk hovering over politics in the depth of the country's worst-ever economic meltdown. Mounting public rallies, well-organized marches, and the newspaper headlines promoting proliferating them made matters urgent. To prevail politically, the Democrats led by FDR had to reach some sort of accommodation with an independent labor-left coalition's chief stated demands: real government supports for average citizens suffering through the Depression paid for by taxes on corporations and the rich.
That coalition was also engaged with anticapitalism while the Democratic Party was not. True, the CIO expressed its goals chiefly in terms of sharply improving the conditions of working people within capitalism. However, the CIO's socialist and communist coalition partners pushed much further. To varying degrees, they suggested that what working people really needed was system change. Like the antislavery movement before the Civil War, the coalition included two wings: (1) those who wanted better conditions for the exploited within the old system; and (2) those who demanded an end to that system. The abolitionists got Lincoln's Proclamation; that and the North's victory ended slavery. In contrast, the labor-left coalition never got more than FDR's New Deal that preserved capitalism.
FDR and the Democrats were caught between the conventional advice they had long accepted as the height of political wisdom and major new demands from an independent, well-organized labor-left movement getting stronger as the Depression worsened. Not without trepidation and hesitation, FDR's side of the Democratic Party made the move to reject the conventional advice. His administration thus massively intervened to help people (Social Security, unemployment compensation, minimum wages, millions of federal government jobs, etc.). He imposed higher taxes on business and the rich to pay for much of that intervention. But he also extracted concessions from the labor-left coalition. Its component parts would have to settle for major government supports for average people, downplay efforts to significantly transform the basic ownership and operation of the private capitalist economy, and support FDR electorally. Business and the rich got to keep their ownership and control over the enterprises, the economy's productive core. This political compromise won FDR the support of enough of the corporate leadership and the wealthy to enable his program to prevail in Congress and in the larger society.
Yet many corporate leaders, wealthy people, and the politicians loyal to them deeply opposed and resented FDR's change of position in office. They never stopped repeating the conventional advice. They and their descendants became the carriers of the neoliberal crusade launched against the New Deal after FDR's death (rising in intensity as it became politically possible to do so).
Nor did FDR's remarkable political accomplishments deter them. Far from committing political suicide by rejecting the conventional advice, as those advisoes had threatened, FDR became the most popular president in US history. No other politician had ever won four consecutive presidential elections. None had ever inspired such popular adulation.
Obama faced no comparable threat from below. No surging labor movement confronted him. Communist and socialist parties had long been repressed, deprived of their social influence and barely existed. The US left, while not small and occasionally revitalized, had been largely demobilized, disorganized and demoralized. At the same time, Obama faced a resurgent, self-confidant elite of major corporate executives and those made rich by those corporations. They had cultivated cheering ideologues from Ayn Rand enthusiasts to Wall Street Journal editorial writers and readers to the neoclassical economics establishment that excluded all other approaches from academia and public discourse.
So far, the Berlin wall surrounding capitalism's self-celebration has survived even the post-2007 economic crash. Purveyors of the conventional advice boom their pitches more loudly than ever at and within the Obama administration. It would have taken his administration far more courage than FDR's needed to reject that advice.
Yet Obama's administration could have tried to change the political conditions it inherited by building on the accumulated antipathy to the departing Bush and the huge initial enthusiasm for Obama. A higher minimum wage campaign, support for union organizing, billed as a program to "restore the middle class," tax levies on the just bailed-out corporations and the super rich, and a bold "green" public employment program might have captured and unleashed powerful new political engagements. Advanced by a new president criss-crossing the country, such initiatives might have maintained the momentum and commitments of a mass base that helped sweep Obama into office in 2008.
Yet, none of that was dared. Those opportunities were missed. When, independently and from below, Occupy Wall Street mushroomed into popularity and power, again real momentum might have resulted with even minimal support from above. Instead, Obama helped to undermine the Occupy movement. His administration failed repeatedly to appreciate the lesson of FDR's experience: the need for a mass base to reject the conventional advice and policies for economic crises. Obama could have given significant support to such a mass base's growth. Instead, he used the excuse of an insufficient mass base to justify accepting the conventional advice. He thus guaranteed his own ineffectiveness and those poor polls.
Ironically, without a counterweight to the conventional advice favoring business and the rich, Obama did their bidding with little significant political reward in return. He dutifully waited out the crisis after the initial bailouts. He limited governmental help to the mass of people. He never even proposed, let alone achieved, a federal jobs program such as FDR's. He never proposed, let alone achieved, serious tax increases on business and the rich.
Yet, did Obama's following of conventional advice enable him to avoid political suicide? Not by much, if at all: His polls have fallen to very low levels. He missed a momentous chance to rally Americans against the conventional advice. Had he chosen that different path, as FDR did, might he have found and supported mass allies? Might they have then risen to organize labor and the left better and grown strong enough in time? Might the effort itself have been historic and important, whether or not it succeeded?