The Chronicle Review

Was the New Deal a Fluke?

The Granger Collection, New York

Women employed by the WPA sew flags in Miami, circa 1938.
January 31, 2016

Jefferson Cowie’s most ambitious book to date, The Great Exception, is a re-examination of the New Deal. Many scholars have seen that bundle of progressive initiatives as a high-water mark for federal intervention, one that has receded over time but might return. Don’t hold your breath, Cowie counters.

A labor historian at Cornell University, he elaborates here on an argument that he and his Cornell colleague Nick Salvatore sketched more than a decade ago. The New Deal, they argue, was a peculiar exception in American history resulting from a confluence of circumstances from 1935 to 1938. Left and labor forces hoping for a New Deal Redux will be bitterly disappointed. The American default, Cowie and Salvatore say, was the Gilded Age, with its extreme inequality, lax labor standards, and pitched battles between old and new immigrants. We’re heading into another such age, they contend.


The Great Exception: The New Deal and the Limits of American Politics
By Jefferson Cowie

(Princeton University Press)

Even before Franklin Roosevelt’s 1932 election, three years of sustained depression had already made federal intervention seem acceptable. The reduction in immigration after 1924 relieved tensions between native-born and immigrant Americans that had dominated American politics, and the lull between the Scopes Monkey Trial (1925) and the creation of the National Association of Evangelicals (1942) dampened the religious culture wars that were, and are again, a volatile staple of American politics. The oddest factor was Northern black voters’ joining a Democratic Party long dominated by white Southerners. This combination, which Cowie calls a "political hat trick," lasted only a few years.

The resulting New Deal led to a flowering of working-class engagement and a decline in inequality that lasted from 1940 until the early 1980s. Here Cowie amends Thomas Piketty’s argument in Capital in the Twenty-First Century. Where Piketty sees war and taxation as the only methods to eliminate inequality, Cowie rightly emphasizes the significance of the Social Security Act, a minimum wage set by the Fair Labor Standards Act, and a place for labor at the bargaining table made possible by the National Labor Relations Act.

The growing inequality beginning in the 1980s, Cowie tells us, resulted from the New Deal’s unraveling. The unions failed to fully battle discrimination in their ranks; immigrant Catholics who had been staunchly New Deal came to fear Soviet intentions in their homelands by the 1950s; a growing rights-based liberalism rejected the New Deal’s cooperative sentiments; Southern states with right-to-work laws lured industries into the Sun Belt; and aggressive employers (after Reagan crushed the air-traffic controllers’ strike) began to see fines for unfair labor practices as "the cost of doing business."

Cowie rejects the arguments that the Cold War, the civil-rights movement, the antiwar movement, or the women’s movement broke the New Deal coalition. It was a fundamental American individualism, he writes, that rose to sunder progressive solidarity. The New Right, he suggests, wasn’t new at all, emphasizing Gilded Age political themes common to 1890s Republicans, including anti-immigrant sentiment, Protestant respectability, and a pro-business embrace of free-market values that conveniently ignored government handouts to entrenched elites.

The book is most impressive in its clear and passionate tone and its attention to religion and culture. Cowie shows a mastery of the fierce debates in labor history, political history, women’s history, and political theory. He’s weaker, however, in his discussions of the South, economic issues, and the Gilded Age.

Part of the problem is Cowie’s restricted vision of the New Deal. By defining it as wage and industrial-labor legislation, he makes white Southern Democrats into bit players who gave Roosevelt the votes he needed but then blocked the New Deal for Southern black agricultural and service workers. But the New Deal was more than labor measures. Redistributive taxation, particularly the income tax, had been strongly favored by Southern Democrats since the 1890s. Southern Democrats also pushed for antitrust enforcement, and much of the strongest antitrust case law was forged during this period, for while the anticorporate aspects of the New Deal were weak in Cowie’s labor heartlands of Detroit, Chicago, and New York City, the rural Western and Southern wings of the Democratic Party demanded the breakup of trusts in bananas, oil refining, chemical engineering, and explosives manufacture.

Cowie dismissively refers to the antitrust Democrats as the "Jefferson and Jesus" parts of the party, but remnants are visible in Bernie Sanders’s presidential campaign, the Occupy movement, and even the Tea Party. Dismissing the Southern Democrats as racists (which they were), he also dismisses the antimonopolistic elements that may be one of the New Deal’s lasting legacies.

He also briefly examines, then dismisses, the international economy by saying that Gilded Age America sat behind a tariff wall. In fact, American tariffs in the 1880s were tiny compared with those of Germany, France, Russia, and the Ottoman Empire.

Cowie’s Gilded Age pits workers against robber barons, who used the labor efficiencies of steam engines and huge factories to play one ethnic group against the other. That’s true enough but also a cliché. The biggest Gilded Age productivity gains were in smaller Northern industries where skilled German immigrants supervised Eastern European semi-skilled, literate, and numerate machine operators. The standard of living in the South, which had neither, fell behind for half a century.

This is not to romanticize the Gilded Age, which saw atrocious death rates in industrial accidents and brutal attacks on strikers. But workers’ standard of living was, by international standards, rising compared with its low point in the 1850s.

Cowie further suggests that a pivotal national election in 1896 allowed workers to be "incorporated" into the Republican Party, thus destroying the Populist coalition. But the critical election was actually 1894, and it followed an international financial crisis for which workers blamed Democrats.

If understanding the American Gilded Age requires seeing the international scene, so does understanding the New Deal. As Eric Hobsbawm, Alfred Chandler, and Thomas Sugrue have separately argued, the New Deal high-wage system succeeded only between 1945 to 1973 when the United States had few international competitors. By 1973, Japanese and German firms had retooled to challenge American monopoly power in world markets, forcing U.S. plant closings, loss of union jobs, and an international redistribution of labor.

Cowie likewise dismisses the international oil shocks of 1973 and 1979 as only contributing to the inflation of the 1970s; America’s war in Vietnam was the primary culprit, he asserts. But the oil shocks and the retooling of Germany and Japan together contributed to the failure of the American steel, auto, chemical, and appliance industries.

He is right that Democrats who anticipate a resurgent labor-based New Deal coalition may be deluding themselves. He may also be right that organized labor’s declining influence in politics exacerbates inequality. Reagan-era tax shifts away from top earners certainly made the one percent richer.

But equally important, and underplayed in his book, are the oil shocks that made the upper Midwest uncompetitive, a semiconductor industry that produced gales of creative destruction in manufacturing, and the rise of statistical process controls in petrochemical industries that gutted jobs and made the Kochs billionaires.

Domestic politics are important, but the international economy is a mightier force still.

Scott Reynolds Nelson is a professor of history at the College of William and Mary. His books include A Nation of Deadbeats (Knopf, 2012).