The 1930’s saw massive labor upheavals in response to probably the most significant and terrifying economic crisis in Capitalist history. Hoover responded by doing absolutely nothing to relieve the working people, many of whom were on the verge of starvation, particularly after 1930. Partially in response to pressure from organized labor and a militant left and partially with the desire to ‘save capitalism from these leftist elements,’ FDR and the Democrats rejected the trite narrative about the free market[i] and embraced the Welfare State economics of John Maynard Keynes. Keynesian or Welfare State economics advocates/d government economic intervention during recessions, depressions, and booms. Keynesian economics was/is seen as a way to mitigate the adverse effects that capital has on labor by regulating and reigning in partially the ‘free market’ and by theoretically ensuring basic provisions for people at the bottom of and outside of the labor market.
Keynesian economics too has major flaws. Namely, it does not effectively manage major booms, recessions, and depressions, as the 1970 economic crisis demonstrated. Additionally, Keynesian economics is a set of principles premised on governmental and not necessarily democratic control and intervention of the market. Although Keynesian economics arguably created ‘the American middle class, it also left a significant portion of American workers outside of its protection. Keynesian Economics, in its particularly troublesome history as major US economic policy, helped to reinforce the subjugation of the majority of Black Americans by leaving farm workers and domestic workers out of government protection in the 1930’s and 1940’s and by leaving the distribution of many of the provisions ‘to local control’, i.e. leaving space for racist localities to systematically exclude non-white folks.
After 1970 and the rise of the Reagan Right, Keynesian economic policy was replaced anew by freemarketism or neoliberalism. Again this set of economic policies, despite claims for a ‘smaller state’ and ‘better economy,’ obliterated many of the gains made by labor from the 1930’s, broke the back of American labor, defunded major programs that had helped to mitigate capital’s exploitation of labor,[ii] downloaded the tax burden onto workers (as opposed to capital), and shifted more state resources and power toward the military and police apparatuses. The current global crisis seems to have tarnished the image of freemarketism, for a time. But we seem to be back at square one. Obama and the Democratic Party are advocating a regurgitated and watered down version of FDR’s Keynesian State, with important and problematic holdovers from the Reagan/Bush I/ Clinton/ Bush II Fascist State. Specifically, the American police state (police and incarceration apparatuses) was among the first thing insured by the Obama stimulus package. It’s time to move beyond this cycle of Welfare State/ Free Market policy.
We need to be working to create a rich public sphere with powerful unions and strong community organizations, so that we can collectively articulate and create a substantively different and sustainable future.
[i] It is important to say that this was little more than a narrative, because despite the rhetoric about no government intervention, the government had intervened regularly since the 1880’s to enforce labor’s quiescence and to buttress capital’s predominance.
[ii] Capital makes a profit by draining workers of their labor power but not providing sufficiently for labor’s basic necessities. Keynesian policy, theoretically at least, mitigates this exploitation by taxing capital to provide for labor. An example would be public housing.
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