I do not remember the New Deal, even though it’s central to my political memory. I’m 63 now, so I wasn’t even alive during the First Great Depression and the presidency of Franklin Roosevelt. For me, memory of the New Deal was transmitted by those who had lived it and embodied it: my foremost formative experience of government was John Kennedy beckoning the nation to put men on the moon.
I grew up in Chicago, at a time the Democratic Party took pride in getting things done. John Kennedy said, “The American, by nature, is optimistic. He is experimental, an inventor and a builder, who builds best when called upon to build greatly.” The construction of O’hare Field was completed while I was a toddler, as well as the Kennedy expressway connecting ORD to the Loop downtown. Construction of a new home for the University of Illinois at Chicago began in 1963; the 244 acre campus opened two years later. Today, UIC is the largest university in the Chicago area, with more than 33,000 students enrolled in 16 colleges. As a kid, I got to watch construction crews working to extend the CTA subway line down the middle of the Kennedy to O’Hare.
Unlike conservatives and libertarians, I have always had faith that government can be an active force for good.
But over two thirds of my fellow citizens are younger than I. They have not had the same experiences. They have not, I fear, the same long-term optimism, which I think may have been the greatest achievement of the New Deal.
In the world I grew up in
- interest rates were strictly regulated;
- the average holding period in the stock market was eight years;
- there was no retail means for investing in foreign economies;
- the only futures contracts in existence were based on physical commodities;
- foreign exchange trading was only for individuals actually traveling overseas; paying the US military and for base leases; and companies importing and exporting; and,
- the Cayman Islands were basically unknown: there were no tens of billions of dollars of dirty money scrambling around the globe for a place to hide.
In other words, well over 200 million of the 327 million Americans alive today have no idea what a well regulated financial and monetary system looks like.
Besides that problem, there is the problem that the rich have assiduously funded and built a massive apparatus for promoting conservatism and libertarianism. The result is a toxic political environment in which bipartisan governance is nearly impossible. Conservatives and libertarians claim that they are the defenders of the original intent of the Constitution, but they have created and promoted a false narrative of American economic history, a fraudulent fabric of historical misinterpretation and outright lies about the origins and Constitutional basis of the US economy. One legal scholar wrote in Dissent in May 2011:
…if one looks carefully at the murky methodology and dubious practices of new originalism, it is clear that its historical foundations are even shakier than that of old originalism. The new theory is little more than an intellectual shell game in which contemporary political preferences are shuffled around and made to appear part of the Constitution’s original meaning….
Following new originalist methodology would not lead to a restoration of the original meaning of the Constitution, but it would give us an Anti-Federalist Constitution that never existed. This is an odd result, given that the Constitution was largely written by Federalists and ratified by state conventions dominated by Federalist majorities, not Anti-Federalist minorities…
In the wacky world of new originalism, dissent becomes assent, minorities become majorities, and the interpretive method of the Anti-Federalist losers supplants the methods of the Federalist winners.
These lies, misinterpretation, and false histories have been peddled and promoted by a conservative and libertarian apparatus that has been lavishly funded by the richest and most reactionary family and business fortunes in America: Adelson, Coors, Koch, Mercer, Singer, Smith-Richardson, and so on. The resulting distortions and contortions of American politics have been massive. The effects are better captured by rephrasing the process of creating movement conservatism as “feeding red meat to the base.”
Look at the issue of gun control. For a full century after its founding in 1871 by former Union Amy officers, the National Rifle Association had focused on shooting, hunting and conservation. But in May 1977, after NRA leadership had decided to retreat from politics and move the NRA headquarters from Washington DC to Colorado, conservative activists from the Second Amendment Foundation and the Citizens Committee for the Right to Keep and Bear Arms seized control of the NRA at its annual meeting. This is now known as the “Revolt at Cincinnati.” These groups were funded by the Adolph Coors Foundation, the Koch brothers, and Richard Mellon Scaife and included on their boards Amway founder Richard DeVos (father in law of Trump’s Education Secretary Betsy DeVos), chemical baron J. Peter Grace, and North Carolina reactionary Republican Senator Jesse Helms. Millions of dollars were disbursed to “scholars” and “journalists” who were loose with facts to create and promote a new misinterpretation of the Second Amendment.
In April 1991, Former Chief Justice Warren Burger, a conservative who had been appointed by Nixon, told a PBS interviewer that the idea that the Second Amendment protected an individual right to bear arms was “one of the greatest pieces of fraud — I repeat the word ‘fraud’ — on the American public by special interest groups that I have ever seen in my lifetime.”
On economics, the conservative and libertarian movements have largely succeeded in getting almost everyone to believe that the US economy was founded on the ideas of Adam Smith. Actually, the US economy was built on the ideas of first Treasury Secretary, Alexander Hamilton, who was also George Washington’s closest and most trusted adviser. In his major reports to Congress, Hamilton explicitly rejected Smith’s ideas. In fact, there were a handful of questions on national economic policy during Washington’s two Presidential terms that were hotly debated between Federalists, led by Hamilton, and Anti-Federalists, led by Secretary of State Thomas Jefferson. Every single one of these questions was decided by Washington agreeing with the policies and arguments of Hamilton.
Liberals and the left have allowed the right to falsely claim the mantle of defenders of the Constitution by dismissing the American Revolution and the adoption of the Constitution as merely a group of white male elites on one side of the Atlantic grabbing power from a different group of white male elites on the other side.
But the creation of the United States was exceptional. The launching of the American experiment in self-government was a culmination of the political and scientific Enlightenment. Key here is the Constitutional commitment to promote the General Welfare. This marks the United States a a sharp break from all previous governments, which were run by monarchs, oligarchs, and aristocrats to only benefit themselves.
But you do not really see that break unless you ask: What is a republic, and what are the proper economic policies of a republic? The right can never answer this question truthfully without jeopardizing its most cherished beliefs about the primacy, legitimacy, and efficacy of capitalism.
It has been observed by many that the current leadership of the Democratic Party rose to power fearfully cowering in the shadow of the Reagan Revolution and are accustomed to ceding public legitimacy to Republicans. But there is a new generation of Democrats who argue that the legitimacy ceded to the opposition was never deserved by Republicans in the first place.
This new generation of Democrats are asking some fundamental questions about what a republic is supposed to be, and arguing that the Democratic Party’s embrace of neoliberal economic policies in the 1980s was a huge mistake.
Rep. Alexandria Ocasio Cortez — whose brief tenure in Congress has already rocked the establishment both sides of the aisle — is being advised by Cornell law professor, Robert Hockett. Hockett has written papers that apply his reflections on classic republicanism to questions of political economy today. A good example is his 2014 article, “Materializing Citizenship: Finance in a Producers’ Republic” :
…the United States actually has a distinguished tradition of what I am calling “productive republican” finance. It is a tradition pursuant to which productive assets were deliberately spread broadly among diligent citizens ready to better the lives of themselves, their families, and ultimately their communities through thoughtful, hard work.
Historically, the tradition is rooted in two complementary sources: first, an implicitly opportunity-egalitarian, “productive yeoman” colonial culture and subsequent national self-image, stemming in large measure from the Civic Republican and Classical Liberal ideological origins of the American republic; and second, an attendant suspicion of large aggregations of financial
capital… The practical and legal consequences of this vision, where American banking and finance are concerned, were pronounced. Banking institutions were, by regulation, deliberately kept small and inherently local…
In January 2019, Hockett spoke at a two-day conference on Money as a Democratic Medium. The conference was hosted by the History Department at Harvard University together with Harvard Law School, and explicitly explored money as a political creation, and how to bring the creation and distribution of money under more democratic control. There were dozens of speakers, but three in particular, like Hockett, are striving to revive the ideas of republicanism and civic virtue to restore political sovereignty over a market economy run amok.
Mehrsa Baradaran is author of the seminal work The Color of Money: Black Banks and the Racial Wealth Gap (Harvard University Press, 2019). When she wrote the book, Baradaran was teaching law at the University of Georgia Law School; she is now at the University of California — Davis. In her Money as a Democratic Medium presentation, Baradaran provided an overview of how the creation and distribution of credit and money were carefully controlled to deny equal opportunity to minority citizens. Here is a YouTube of the presentation by Baradaran.
Baradaran is on the board of the Public Banking Institute, which in November 2019 succeeded in getting the legislature of California to begin the groundwork for a state controlled public bank in our republic’s largest state. A state controlled bank, of course, threatens the monopoly of private banks over the creation and allocation of money and credit, so the news from California was stifled by the large corporate news media. The only state bank in the USA is in North Dakota, established after the progressive populist Non-Partisan League (NPL) won control of the state for a few years beginning in 1916. The legislators who had pledged support to the NPL (it didn’t matter to the NPL which party you supported; it was support for NPL policies that mattered) proceeded to establish the State Bank of North Dakota as a state-owned, state-run financial institution in 1919. When the New York Times deigned to notice what the NPL was doing, one of its articles was headlined “Bolshevism on the prairie.”(At the beginning of his 2010 book Death of the Liberal Class, Chris Hedges detailed how the east coast elites used the anti-German hysteria of World War One to smother progressive populism, including the Non-Partisan League in North Dakota and Minnesota.)
Joseph R. Blasi teaches at the Rutgers School of Management and Labor Relations. He is co-author of the 2014 book The Citizen’s Share: Reducing Inequality in the 21st Century. The book details the Founders’ original vision of wide spread ownership of the nation’s wealth, avoiding the extremes of poor and rich found in the monarchical nations of Europe.
At the Money as a Democratic Medium conference, Blasi described one of our republic’s first historical examples of direct government interference in the market: the effort to restore the cod fishery, which had been destroyed by the British Royal Navy during the Revolutionary War. Congress passed legislation providing tax credits to the industry, but with the stricture that they had to include workers. The law explicitly directed that owners had to share five-eighths of the credit with the crew. Moreover, the law required the owners to reach a signed agreement with the captain and crew for broad-based profit sharing on the entire catch throughout the voyage. The tax credits were administered by Hamilton’s Treasury Department through the US Customs Houses in each port. The authors argue that similar requirements for sharing ownership and profits can address income and wealth inequality today and help rebuild the middle class.
Jeffrey Sklansky is associate professor of history at the University of Illinois at Chicago. He is the author of The Soul’s Economy: Market Society and Selfhood in American Thought, 1820–1920, and Sovereign of the Market: The Money Question in Early America. His presentation to the Money as a Democratic Medium conference focused on some American history that has been ignored, but is vital to resurrecting a republican approach to political economy: the history of the Sub-Treasury plan for financing farmers, developed by Charles Macune of the populist Farmers Alliances in the 1880s and proposed by the populist People’s Party in 1888. Though never adopted, Macune’s Sub-Treasury plan is an great example of how the banking system can be structured through the use of government agencies to keep predatory private financiers and bankers at bay. This YouTube video includes the presentations by Hockett, Blasi, and Sklansky.
Sen. Elizabeth Warren is being advised by Vanderbilt Law professor Ganesh Sitaraman, author of a 2017 book, The Crisis of the Middle-class Constitution: Why Economic Inequality Threatens Our Republic. I judge Sitaraman’s book to be a badly needed corrective to the false narratives of economic history peddled by the right. Sitaraman examines the history of early republics and democracies the the Founders examined as they carefully structured the new national government. I delighted in Sitaraman’s discussion of the political histories of Athens, Rome, and Florence.
Starting in 462 B.C., the plebians began to demand that Rome’s laws be codified and made publicly available. “When the laws are written down, weak and rich men get equal justice,” Euripides has written. “The weaker, when abused, can respond to the prosperous in kind, and the small man with justice on his side defeats the strong.”
Sitaraman argues that all governments face the problem of maintaining peace between the poor, who are many, and the rich, who are few. “Aristotle, Polybius, Cicero, Machiavelli, and other political thinkers all paid considerable attention to how constitutional structure would intersect with economic inequality,” Sitaraman writes. “They worried that economic inequality would lead to political inequality, and with it, oppression, and ultimately revolution.” History showed that the rich usually rose to control a government, and sooner or later used that control to begin fleecing the rest of the population. Eventually, after depredations by the rich became too much to bear, some means had to be developed to provide political power to the poor. In Rome, the position of Tribune of the people was created, with the plebians pledged to avenge the Tribunes if the nobility harmed or killed them. Political thinkers found that the “primary answer was to develop mixed forms of government that built economic classes directly into the structure of government. Each class would thus have a stake in government and a check on the other.”
Sitaraman calls these class warfare constitutions.
At the creation of the United States, Sitaraman argues, the Founders did not create a class warfare constitutions because there were no extremes of rich and poor. There was no titled nobility, no landed nobility, and no truly massive fortunes as there were in Europe. Nor was there poverty that was so grinding and so brutal that it amounted to subsistence living. (One of the weaknesses of Sitaraman book is that he too easily overlooks the economic reality of the social structure in the slave-holding south.) In America, Sitaraman argues that the framers of the Constitution kept in mind the lessons of John Locke, who prescribed individual rights to life, liberty, and private property, and Machiavelli, who emphasized the need for citizens to be virtuous, that is, be willing to set aside their selfish personal interests when they conflicted with the general welfare. But the framers recognized that there were shortcomings with both Locke and Machiavelli. So, the framers also turned to English republican theorist James Harrington and his 1656 book, The Commonwealth of Oceana, which Lord Protector Oliver Cromwell at first had attempted to censor and suppress.
The basic idea of Harrington is that for a republic to work, there has to be a relatively equal distribution of wealth and income. There had to be what we call today a middle class. The framers of the US Constitution believed that with the lack of rich and poor extremes in the US at its beginning, they could create what Sitaraman calls a middle class constitution instead of a class warfare constitution.
And it basically worked, though there were recurring crises in which economic and political power became so skewed to the top, that basic reforms had to introduced, such as popular election of Senators, the income tax, and anti-trust law.
Not to mention a Civil War had to be fought to vanquish the rich slave-holding neo-fuedal oligarchs of the south.
Economists have called the period from end of the Second World War, to the oil price shocks, stagflation, and world monetary collapse of the 1970s, the golden age of capitalism. Thomas Piketty, in his landmark 2013 book Capital in the 21st Century, argues that this is an unusual period in economic history because the balance of economic and political power was tilted against the rich. This was because the legitimacy of the rich’s preferred ideology of economic organization, free market capitalism, had been shattered by two world wars and the First Great Depression. This had allowed political power to be realigned to favor labor, and a more equitable distribution of economic rewards.
Baradaran points out the US middle class was largely created after World War 2 by government fiat: the GI Bill, which gave widespread access to college and massive financing for new businesses begun by returning servicemen, and the Federal Home Loan Bank Board, which made 30 year home mortgages the crucial bedrock of middle class wealth accumulation.
For his part, Sitaraman focuses on what the post-war period did politically to Americans’ consciousness of their Constitution as a middle class constitution:
It should not be surprising that it was only after World War II that American’s fear of aristocracy waned. The founding generation had revolted against a feudal aristocracy… Their grandchildren… lived in a time when feudal aristocrats still governed much of the Western world. The immigrants of the late nineteenth and early twentieth century fled those very states for a new republic defined by equality and opportunity rather than class hierarchy. By the middle of the twentieth century, the alternative to republican government was no longer aristocracy but authoritarianism. Fascism and then communism, not aristocracy or oligarchy, became the central fear.
To address the economic inequality of our time, Hockett, Blasi, Sklansky, Baradaran, and Sitaraman are all proposing remedies that require an activist national government interfering in the free market to begin countering the power and advantages the rich have heaped up since Ronald Reagan brought into ascendance the ideas, ideologies, and polices of the conservative and libertarian movements. The historical record, and the economic results, show clearly that these conservative and libertarian movements are only tools and weapons in the hands of rich reactionary elites. Their success so far has destroyed the political and economic balance of our republic, created a looming series of Constitutional crises, and left a national government so bereft of funding and leadership that it is now unable to perform its basic duty of protecting its citizens from a deadly viral pandemic.
However grim the daily death toll of COVID19, we should find hope in the fact that there is a new generation of Democratic Party leaders, beginning to succeed in pushing aside the failed neoliberal leadership of the past few decades. They have already proposed a grand vision of the future, the Green New Deal, that is worthy of the American spirit that responded to John Kennedy’s call to build greatly.
And their advisers are building the intellectual foundations for a sweeping and thorough repudiation of modern conservative and libertarian thought. This repudiation will be based on the actual idea and ideals that created the American republic, and set in motion the American experiment in republican and democratic self-government.