The Dynamics of Retreat
The same politics that underpinned the welfare state brought about its collapse.
- Interview by
- Bhaskar Sunkara
In 2016, after decades of defeat, it might seem odd to talk about the limits of the New Deal, much less the expansive welfare states constructed in Europe. In fact, to hear the progressive end of American liberalism tell it, all we need today is a return to that less lean era, when at least many workers felt a sense of security and stability.
Yet the original New Deal settlement was not one tilted entirely in ordinary people’s favor — and it housed contradictions that in time would destroy it. What would a more durable justice have looked like? And what social forces made the New Deal and the postwar “Golden Age” possible in the first place? In late December, Jacobin publisher Bhaskar Sunkara spoke to Robert Brenner, a professor of history at University of California Los Angeles, about the myths and realities of this often-romanticized period.
When people think about the New Deal, there are two main accounts. In one of them, Franklin Roosevelt is the hero, leading a band of workers against the big capitalists who had just driven us into an economic depression. On the other extreme, there are those who make it seem like Roosevelt was acting solely in the interest of elites smart enough to want to save capitalism from itself. Which is closer to the truth?
I would say that the key to the emergence of the New Deal reforms was the transformation in the level and character of working-class struggle. Within a year or two of Roosevelt’s election, we saw the sudden emergence of a mass militant working-class movement. This provided the material base, so to speak, for the transformation of working-class consciousness and politics that made Roosevelt’s reforms possible.
Following the labor upsurge and radicalization that came in the wake of World War I, workers’ militancy tailed off, and the 1920s saw the American capitalist class at the peak of its power, confidence, and productiveness, in total command of industry and politics. Manufacturing productivity rose more rapidly during this decade than ever before or since, the open shop (which banned union contracts) prevailed everywhere, the Republican Party of big business reigned supreme, and the stock market broke all records.
The onset of the Great Depression, which followed the stock market crash of 1929, changed everything. The Hoover administration had stood paralyzed in the face of unemployment that reached a record 25 percent and devastated living standards, discrediting the Republican Party for a generation.
Nevertheless, the incoming Roosevelt administration had relatively little to offer working people. Its signature effort, the National Industrial Recovery Act, aimed to revive industry by propping up capitalist prices and profits through cartels and monopolies. But it could not make a dent in the economic crisis.
What transformed the political landscape beyond recognition was the outbreak of what Rosa Luxemburg would have called a “mass strike upsurge,” a phenomenon she had witnessed and analyzed at the time of the 1905 revolution in Russia and the accompanying wave of mass strikes. Out of the blue, starting in Detroit auto plants in spring 1933, you got a series of ever larger and more encompassing strikes, mobilizing ever broader groups of workers on the shop floor and the streets — organized and unorganized, employed and unemployed, in an ascending wave. Programmatic demands and ideas that seemed pie in the sky were now, with the increase in workers power, plausible and actionable.
The strikes soon spread to the Southern textile mills, the Eastern coal mines, and the Midwestern steel mills. But Roosevelt stood aside and did nothing as the companies and the local repressive forces crushed one strike after another.
The miracle year for the workers movement was 1934. Workers fought and won three great urban general strikes: San Francisco (led by longshore workers), Minneapolis (led by teamsters), and Toledo (led by auto parts workers). In these struggles, as well as a series of others that shook cities across the nation, union organizers built their power by reaching out to workers in other industries, mobilizing the citizenry to support their picket lines, allying with unemployed councils, and engaging in pitched battles with the police.
The resulting shift in the balance of power and in political consciousness set the stage for the rise of the Congress of Industrial Organizations (CIO), the ascension of the Democrats to the country’s dominant political party, and the passage of the New Deal reforms.
In November 1934, the Democrats achieved a crushing landslide victory in the midterm congressional elections, increasing the electoral majority they had achieved in 1932. Democrats at the radical end of the political spectrum were elected in disproportionate number, and even a few socialists came to office. Newly active workers entered into urban politics and joined up with the Democrats.
Equally important, the smashing victories in the 1934 strikes endowed the nascent radical-led labor movement with the confidence and capacity to organize the United Auto Workers (UAW) and the CIO over the next three years. Roosevelt was transformed from a standard politician into a reformer, the carrot and stick of the new labor movement inducing the administration to advocate a series of historic sociopolitical reforms that included the Social Security Act, the Fair Labor Standards Act (which set maximum hours and minimum wages for most workers), and the Wagner Act (which extended union recognition and set up routinized collective bargaining).
To what extent did this upsurge rely on preexisting organizations, particularly the Communist Party (CP) and perhaps other socialist forces like the Trotskyists and the Socialist Party of America?
I think Rosa Luxemburg’s understanding of the social psychology of the mass strike must remain the indispensable point of departure.
The point is that no amount of organizing can by itself turn a situation of low activity and consciousness into a mass strike upsurge, and it’s equally difficult to sustain a wave of mass radical activity past a certain point. When people are incapable of taking action together to resist their employers, egoism, stemming from workers’ atomized condition, is the order of the day.
The unexpected and unplanned explosion of workers’ collective action is the key to opening up a new period of mass activity and radical politics, and it’s no accident that the waves of mass activity, political radicalization, and social reform that have marked US history have taken place discontinuously, in a cyclical fashion. Think of the Progressive Era, the New Deal, the Great Society.
That said, organized groups of socialists and revolutionaries have played an indispensable role in unleashing the potential of increased worker self-activity. They have helped provide continuity between temporally disconnected struggles, offered historically grounded analyses of the current moment, and, above all, suggested strategies for action.
The seeds of worker action during the Depression were planted when Communist Party and other radical trade unionists initiated the Trade Union Educational League with the goal of transcending the narrowness and conservatism of American Federation of Labor (AFL) craft unionism and establishing industrial unionism, an idea that had come to the fore in the great strike wave of 1919.
Critically, Communist and Socialist Party members and Trotskyists consolidated strategic positions as worker leaders and worker organizers on the shop floor in various industries in the 1920s and early ’30s. They were therefore perfectly positioned to play the central roles in organizing the three great general strikes of 1934 — Communists in San Francisco, Trotskyists in Minneapolis, followers of A. J. Muste in Toledo.
The same radical political parties and networks of Communists, Trotskyists, and Socialists at the heart of the 1934 general strikes were also responsible for strategizing and organizing a rank-and-file movement in the UAW and the CIO between 1935 and 1937.
For these militants, the defining principle was the independence of the working class. This meant, explicitly, that the new movement could not depend on, and should expect to be opposed by, AFL union officials, the judges who mediated industrial disputes, and Democratic Party elected officials.
Because it had to rely on its own members, it had to amass power through direct action on the shop floor and in the streets, forging ties of solidarity with other groups of workers and preparing itself to confront (and not be bound by the laws of) a state that favored the bosses.
The ensuing series of union recognition strikes organized by these forces culminated in the victory over General Motors (GM), the world’s largest corporation, in the Flint Sit-Down Strike of 1936–37, which ensured the establishment of the CIO.
Elsewhere, throughout the advanced capitalist world, the trade union movement and trade union organizing provided the basis for social-democratic labor parties. But there was no breakthrough in the United States. What accounts for this inability to build a workers party independent of the Democrats in the US?
The rise of the militant mass workers movement of 1933–35 generated the kind of political conditions and radical consciousness that were, and will continue to be, the prerequisite for the formation of an American labor party.
Without this kind of struggle, the winner-take-all, first-past-the-post character of the American electoral system makes any third party, including a labor party, all but impossible. This is because under normal conditions, in which a third party cannot conceivably secure a majority, to vote for it is in effect to throw away your ballot.
To put the point in a more general way, an electoral strategy of voting for a third party could never be sustained, as the right-wing party would typically win greater electoral majorities as the third party increased its vote share. Only if the third party could achieve a majority all at once, perhaps on the back of a titanic mass movement that brought about a sudden lurch to the left among a large section of the citizenry, would it have a chance of succeeding. Otherwise, dull electoral calculation ensures the hegemony of the two-party monopoly.
At the founding convention of the UAW in 1935, the membership actually did seek to exploit the broad radicalization taking shape and refused to support Roosevelt and the Democrats, seeing them as representatives of capital. But this political act of defiance could not be sustained for more than a brief moment and, before long, the UAW and the CIO more generally had committed themselves to the Democratic Party on a permanent basis.
From this time on, the Democrats became the party of labor in this limited sense — of the trade union movement, but one in which the labor movement was from the start subordinate to capitalist elements.
What have been the consequences of not having a viable independent labor party?
Well, one thing should already be clear. There is no need for a labor or social-democratic party to win important reforms. The mass working-class upsurge brought by itself a sufficient increase in working-class political power and sufficient leftward movement of working-class consciousness to oblige the Roosevelt administration to shift its political position and pass reform legislation.
The same groups of Communists, Trotskyists, socialists, and syndicalists that provided most of the leadership for the 1934 general strikes and the mass workers movement were also behind the fight for the labor party. They saw this as the culmination of their program of creating an independent rank-and-file movement for industrial unionism. In their eyes, the labor party would form the political carapace for the emergent CIO.
In sharp contrast, the social layer that typically formed the core of social-democratic parties — labor officialdom — was completely absent from the struggle for the labor party. The trade union leaders of the established AFL were at all times implacably opposed to it. And even those officers from the AFL unions that would break away to help organize the CIO — and were at first carried along by its militancy — fought from the start to steer the new labor movement into the safe confines of the Democratic Party.
These officials would come to form the heart of the social-democratic mini party that would operate throughout the postwar period inside the Democratic Party.
Though also responsible for much of the reformism the Democratic Party evinced during the postwar epoch, they saw as their first priority repressing insurgencies from below that might lead to confrontations with employers that could be risky for unions and officials’ position within them. With threats neutralized, the route pursued was a safe one: use the postwar boom to (minimally) pressure capital and attempt to gain union membership by adopting the non-threatening tactics of electoral competition, lobbying, and collective bargaining.
Can you sketch out the transition that carried the labor movement from the explosive peak of its power in the mid 1930s to the more routinized politics of the postwar era?
By summer 1937, the movement was already in decline, due in part to objective economic pressures and in part to subjective political decisions. Above all, before the middle of the year, the economy was sinking into the “second depression,” and skyrocketing unemployment was having a devastating impact on worker combativeness.
Well before this time, however, the newly installed officialdom of the CIO had moved to pacify the unruly movement. The ink had barely dried on the historic GM contract granting union recognition when the new leaders of the UAW prevailed upon militants to refrain from seeking better terms elsewhere in the auto industry, in order to avoid undermining weaker companies’ competitiveness and profitability. Simultaneously, these same officers moved to repress the tsunami of sit-ins and wildcat strikes that shop-floor militants, emboldened by their victory at GM, had unleashed.
The coup de grâce came shortly thereafter, when CIO leaders John L. Lewis and Philip Murray ordered their organizers to “trust in Roosevelt” in their campaign to organize the steel industry. The break from the hitherto prevailing strategy of rank-and-file independence could hardly have been more evident. The outcome was the Memorial Day massacre, in which the Chicago Police Department, headed by Democratic mayor Ed Kelley, shot and killed ten unarmed demonstrators and wounded thirty more in May 1937, leading to the crushing defeat of the embryonic United Steel Workers union.
It was the effective end of the mass strike movement of the 1930s and marked what was, in retrospect, the stunningly rapid consolidation of a new CIO bureaucracy. This development was made possible by the shift taking place in the Communist Party’s political line internationally.
After being directed by Stalin’s Comintern, the party switched from a program of working-class independence and self-organization to the so-called Popular Front line, which called for an alliance with “the progressive wing of the bourgeoisie.” In the US, this meant linking up with Roosevelt, the Democratic Party, and the top officials in both the AFL and CIO unions.
In effect, the CP militants subordinated themselves to the emerging layer of top officials, who saw as their highest priority winning acceptance for the new union federation from employers as well as the state, even if that meant undermining the only real source of union power.
So the trade union officials, as well as the party politicians, undermined the very social forces on which those organizations were based and which enabled them to extract gains from capital and the state.
Yes. The rise of this militant mass movement threw up a new cadre of radical leaders, while also turning a section of the old official leadership into radicals, at least for a moment. But as the mass movement began to dissipate, the same leaders looked around them and saw that they were in danger of being squeezed between a capitalist class on a warpath and a union membership becoming too demobilized to back up its leaders. To protect the union organization — on which everything depends —it seems only common sense to make a strategic retreat so as work out some sort of modus vivendi with the bosses.
But the conditions that make the union leaders take a conservative stance are not only conjunctural but also structural. Whereas the union membership’s economic fate depends on what they can extract from employers by way of class struggle, and thus on the power they can exert over and against capital, the union officials find their material base in the union organization itself. They can survive, and even do well for themselves, so long as they can win the acceptance of the union by employers.
The point is that the union officials constitute a distinct social layer between capital and labor, with huge advantages compared to ordinary members. Employed by the union rather than corporations, their living standards are no longer as dependent on the outcome of the union’s battles with employers. They have managed to free themselves from having to work on the shop floor, so their working conditions are no longer determined by the brutal day-to-day struggle over the labor process.
It is the union organization that pays officers’ salaries, establishes their career paths, and determines their whole form of life. They there-fore have every incentive to avoid an approach to winning gains for their members that will provoke a threatening response from the bosses.
From the end of the 1930s through the whole of the postwar period, the labor officialdom thus made every effort to confine the union to non-confrontational methods of struggle that would not get out of hand and threaten employers.
Instead, they turned to the electoral road by way of the Democratic Party and collective bargaining within the framework of the National Labor Relations Board. Their highest aspiration was to induce the government and employers to join them in tripartite forms of corporatist cooperation that, by way of Keynesian deficit spending and productivity agreements, could grow the economic pie, allow profits and wages to increase together, and permanently transcend distributional conflict.
Meanwhile, they did everything they could to disrupt rank-and-file mobilization. It was a strategy that, over time, could not but corrode the power and effectiveness of their own organizations.
If the paradox of these reformist elements was that their whole political approach tended to destroy the very forces that provided them with their power, how does one account for their successes in the postwar period?
Well, though few now recall this, it was probably the consensus view that, with the end of World War II, disarmament and the deep decline in military spending would bring a drop off of demand that would return the economy to recession or even depression. Under such conditions, the prospects for a labor movement that had already seen its power fall off precipitously seemed bleak.
But very unexpectedly in the eyes of many, what one got instead was the greatest economic expansion in capitalist history, and this provided the US version of social democracy, inside the Democratic Party, with a new lease on life.
In the United States, as throughout the advanced capitalist economies, the growing surpluses provided by the postwar boom opened the way for workers to enjoy increasing wages and a growing welfare state without much cutting into profits. Employers, for their part, found that they could better maximize profits by granting workers steady gains in the interest of continuous production, rather than redistributing income in their favor at the cost of disruptive strikes and social disorder.
In this situation, the Democratic Party, like its social-democratic counterparts abroad, was able to maintain their position as the dominant party for another quarter century by presenting themselves as the main advocate of labor and social reform, naturally within the strict limits set by the needs of profit and investment. The Republicans, for their part, had no choice but to compete with the Democrats on the latter’s chosen ground, in what was inevitably a subordinate position.
Still, it should not be forgotten that the major pieces of legislation that marked the high point of reform in the 1960s and early 1970s could not have been passed in the absence of the pressure from below from the great social movements of the period — especially the black struggle and the fight against the war in Vietnam.
This trajectory doesn’t seem that much different from that of European social-democratic parties. Obviously, the Democratic Party is a capitalist party, but labor parties, even without representatives of capital in their own ranks, also faced similar constraints. What price has the US working class faced for its failure to win a proper labor party?
I think the way to answer this question is to compare developments in Europe, say England, and the United States in the years after World War II. In the United Kingdom, you have a tremendous mass mobilization behind the war effort, but by the end of the conflict, people are exhausted, tired of the austerity, and expecting major improvements in living standards.
The British Labour Party is thus able to win a smashing landslide electoral victory in which it is seen to be representing the aspirations not only of the working class but of the citizenry more generally. In the US, at the same time, the Democratic Party is able to sustain its electoral dominance. What’s the difference in the outcome in the two places?
The advantage possessed by the labor and social-democratic parties of the UK and Western Europe over the Democratic Party is that they not only could present themselves as representing what were more or less politically unified labor movements, but, by way of electoral mobilization and victory, legitimately speak for a broader base across the whole citizenry.
They were therefore in a position to fight in the name of the entire populace for social reforms that spoke to what were in fact common interests and on that basis, to secure decisive advances for everyone — health insurance, retirement pension support, unemployment protection. These provisions came, in retrospect, to be viewed as human needs and have been as a result quite difficult to roll back.
In the US, similar reforms were also adopted, and in a big way. But they were won and put into practice not by national political parties seeking to construct a welfare state benefiting everyone and financed out of taxation, but by individual trade unions who extracted them from employers and got them inserted into union contracts as employee benefits.
So the UAW, the United Electrical Workers, the United Steel Workers, and the other major unions all negotiated what you might call “mini welfare states” for their members. These benefits were then extended to much of the rest of the (less organized) working class, as employers’ costs were more than made up for by gains derived from continuous production and labor peace.
By the early 1970s, the panoply of welfare advances that had been won by way of union contracts had been substantially supplemented by the major pieces of social legislation enacted under Johnson, Nixon, and Ford. And here, too, the union officialdom, working largely though the Democratic Party, rather than as in Europe through social-democratic or labor parties, were central agents of reform — although they could not have succeeded to the extent that they did without the mass movements of the time.
But the fact remains that the failure of the US working class to create its own labor party had undeniably major negative consequences. The US welfare state — constructed largely in an ad hoc manner through the efforts of multiple individual unions acting for themselves — was significantly less complete and durable than that brought into being by unified working-class parties elsewhere.
Moreover, because they had to be defended by the individual unions that had initially secured them, the reform measures attained in the US were also significantly more vulnerable to being rolled back once the crisis hit than in much of the rest of the advanced capitalist world.
But the center-left parties of Europe were also unable to defend living standards and working conditions.
The bottom line is that the deep decline in the rate of profit, beginning in the late 1960s and early 1970s, and the subsequent failure of its recovery, destroyed the precondition for the wage gains and welfare state reforms sought by trade unions and social-democratic parties.
Union officials and parliamentary politicians at the heart of all these organizations, no less than the Democratic Party, accepted unconditionally the capitalist system. They accepted without question that their top priority must be the restoration of their corporations’ profitability.
This is because without a sufficient increase in “their” corporations’ rate of return, these companies could not be expected to increase the investment and employment needed to accommodate adequate wage gains, direct and indirect, for their members.
It’s not surprising, then, that just like the Democrats, social-democratic parties across the advanced capitalist world moved over the past three decades to repress demands from their memberships for increased compensation and social welfare benefits in order to push up profits.
The first manifestation of falling profitability and the slowdown of capital accumulation in Western Europe came in the 1960s. In virtually every country trade union officials, as well as associated social-democratic and labor parties, responded by approving government and corporate cutbacks of various sorts. The aim was to restore international competitiveness and, in turn, manufacturing profitability, at the expense of labor.
But this acceptance of the need for workers to make sacrifices to restore corporate treasuries did not go unchallenged. All across Europe — from Germany to France to Italy to the UK — rank-and-file workers unleashed major revolts from below against the party political and trade union bureaucratic forces that had demanded givebacks in the interest of revitalizing capital accumulation.
In Germany, there was a wave of unofficial strikes that completely destroyed the policy of wage restraint backed by the Social Democrats. In France, there was May ’68; in Italy, the Hot Autumn of 1969. In England, the miners strike brought down the government.
This surge of working-class resistance did slow the employers’ offensive and the revival of profitability. But the deep recession of 1974–75 brought a major reversal, specifically a major increase in unemployment that sapped worker energy and reduced combativeness. The way was thus opened to round after round of wage restraint and spending cuts that, sooner or later, received the backing of the official social-democratic and labor leaderships in every country.
Did it all have to collapse? Was there a reformist path out of the contradictions that you’re talking about? Or can we say that, unless there had been some kind of anticapitalist break sometime in the 1970s, we were unlikely to prevent the situation we’re suffering through today?
I do think it’s clear today that, short of the overthrow of the capitalist order, there were powerful economic and political pressures that make it unsurprising that we’ve ended up where we are.
On the one hand, the economic responses of capital itself to its profitability problem have only made things worse. The reduced rate of return has decreased the incentives for capitalists to invest and employ. It has, at the same time, motivated capital and the state to cut back on the growth of compensation and social spending so as to jack up profits by reducing the cost of production. The outcome has been ever-slower growth in demand for investment goods, consumer goods, and state services, and this has put further downward pressures on the rate of return.
The political responses by social-democratic and labor parties, as well as of the Democratic Party, have been similarly self-undermining. For these forces, the acceptance of the inviolability of capitalist property and profitability has made a break from austerity unthinkable.
Nevertheless, the resulting continuation of the plunge in aggregate demand has meant that protecting corporations’ rate of return has become ever less compatible with even the most minimal increases in wages or social spending and has seemed to require their absolute reduction.
It’s because the operation of the financial sector makes possible the most extreme and dramatic upward distributions of income — to the top 1 percent, above and away from almost everyone else — that the turn to finance has been so widespread. It appears, for those who have access, to be the most effective way to protect and increase capitalist profits, the sine non qua for everyone and everything under the prevailing more of production. That financial expansion goes together with increasingly severe financial-economic meltdowns, as well as absolute declines in income for increasingly large sections of the population, is understood to be the unavoidable cost of keeping the economy healthy.
That social-democratic parties of Western Europe, as well as the Democratic Party, have not hesitated to throw in their lot with the financial sector seems superficially paradoxical. But it follows logically from their unwillingness to question capitalist property relations and their acceptance, like every other player in the capitalist political game, of the primacy of profits for the dynamism of the economy and thus working-class living standards. Acknowledging that the ascent of finance today is part and parcel of the descent of workers’ incomes is simply to accept the unavoidability of what is seen as collateral damage.
Still, the fact remains that the willingness of official social democracy and labor to ally with financial capital has enormous implications for politics going forward, as it is creating real openings for resistance. Support for capitalist profitability has always been justified by the apparent requirement of rising surpluses for rising investment and rising living standards. But today, with the expansion of the financial sector, the link between profits, growth, and worker compensation has been broken to a significant degree.
Reformist forces have thus become engines of predation overseeing the massive transfer of income from the pockets of millions of workers to the purses of a handful of financiers. This is ever more obvious to ever larger sections of the population. These background conditions could help us see a break to the left of a traditional reformism that has all but given up the fight for reforms.
It’s extremely important, it seems to me, that Bernie Sanders goes from one place to another getting thirty thousand people at meetings. And Jeremy Corbyn the same. These are very important indicators of a changing ground, so to speak, for actual organizing.
And even without this organizing, what’s great about Corbyn and Sanders is the seeming rejection of the whole political scene by their supporters.
he mass upsurges of 2011–12 focused on the squares in Greece and Spain already posed the need to cleanly break to the left, beyond social democracy, and begin to challenge capitalism from a position of direct democracy. But they were never able to mobilize the strength to force through major reforms from the outside in the manner of the US labor rebellion of the mid 1930s, let alone constitute institutions of workers power like factory committees.
Syriza and Podemos did aim to take power, but they have defined taking power almost entirely in electoral terms and failed entirely to carry through the indispensable task of rebuilding mass movements in factories, offices, and the streets. As a result, their tendency has been to replace a financialized and neoliberalized social democracy with the traditional version, despite the fact that for close to forty years the latter has capitulated ever more completely to austerity.
Today we face a bit of a lull, but it is not indicative of defeat. It seems clear to me that alienation from and opposition to the system is growing rapidly. What needs to be pondered is where the new movements are going to come from and what the form of organization is going to be that can sustain the level of militancy and political innovation needed to challenge capitalism.