Postwar Abundance

Leonhardt rightly places power front and center in his story. His broad thesis about how social change occurs is simple and intuitive: sustained, grassroots action coupled with sympathetic politicians can reshape the political order to the benefit of working people. By far the most important example of this combination in the twentieth century was the rise of the labor movement — spurred on, Leonhardt correctly notes, by thousands of radical organizers willing to push the envelope even under harsh conditions.

Yet labor alone, however heroic, was not up to the task of delivering the broad-based economic gains of the postwar era. On the one hand, the Roosevelt administration took the lead on a wide range of social and economic legislation that would comprise the New Deal. But equally important, Leonhardt argues, was that the 1940s and 1950s saw a dramatic reorientation of business elites around government intervention and the labor movement. During this period business leaders became more amenable to unions and to raising worker wages, believing that this was critical for maintaining protracted labor peace.

But of course, as Leonhardt readily acknowledges, business elites didn’t simply “see the light.” To the contrary, fears of militancy and revolution motivated corporate elites to take more moderate positions on labor issues. This is in addition to the fact that postwar unions were a lot stronger than in previous periods of US history, a fact that almost certainly played a role in moderating the anti-union ambitions of corporations.

In addition to shifting power relations between elites and workers, Leonhardt identifies two other interrelated factors that facilitated broad-based postwar prosperity: culture and investment. While Leonhardt duly acknowledges the impact of strategic factors (stronger unions and the threat of communism) in forging a comparatively moderate corporate common sense in the 1940s and 1950s, he also contends that business elites during this period held more communitarian values than their counterparts in later generations, which made them amenable to placing perceived national interests (i.e. stopping communism) over maximizing short-term profits — hence their acceptance of steep corporate and individual tax rates and willingness to make significant concessions to labor.

The final ingredient in Leonhardt’s recipe for the American dream was the surge in government investment in research and development that began during World War II but continued until the 1960s, which, he is quick to acknowledge, was to a large extent driven — like corporate America’s turn away from unfettered laissez-faire dogma — by Cold War anxieties. These investments, which were too large and economically risky for the private sector to make, were crucial in the early development of many key technologies that would come to define American economic innovation in later decades. For instance, Leonhardt describes IBM’s initial unwillingness to invest in computers during the 1940s and 1950s because doing so might have undermined the profitability of the company’s best-selling product, the punch card.

The strength of unions, a more moderate, communitarian value–infused corporate sector, less anti-union presidents, and a Cold War–fueled bonanza of government investment in infrastructure and research and development, Leonhardt concludes, produced the fabled economic high times of the 1950s and 1960s that propelled the United States to higher standards of living than any country had ever known. Even oppressed minorities like black Americans benefited significantly from the boom in important ways. This was particularly true in terms of income: the median wage of black men relative to white men even increased dramatically from the 1940s to the 1970s.

The Fall of the American Dream

Leonhardt’s story of how we got from the Wonder Years to a neoliberal hellscape in a short few decades is essentially an inversion of the factors that produced the American “glorious thirty” — the fall of labor, the resurgence of free-market fundamentalism as the common sense of corporate America, and massive cutbacks in levels of public investment — with crucial assistance from the New Left and the conservative revolution of the 1980s.

For Leonhardt, the steady erosion of labor’s power and influence from the 1970s until the present was the primary driver of our current economic and social woes. Whereas the labor movement of the 1930s and 1940s (particularly the Congress of Industrial Organizations) was a comparatively dynamic champion of broad working-class advancement, by the 1960s it had become a conservative and narrowly focused advocate of the interests of its own members, with little interest in expanding beyond the ever-shrinking pool of American industrial workers. Indeed, as Leonhardt points out, the only major piece of Great Society legislation that failed to pass was a bill that would have strengthened the labor movement by abolishing the open shop. He argues that American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) chief George Meany, basking in the glow of early 1960s economic prosperity, did next to nothing to push for the bill in Congress. In fact, Meany was vocal in his opposition to expanding union membership, which he erroneously thought was unnecessary to maintain labor’s current position in American society.

There were of course some exceptions to the status-quo bias of the 1960s labor movement like United Auto Workers (UAW) chief Walter Reuther and American Federation of State, County and Municipal Employees (AFSCME) president Jerry Wurf, who really did see the need to bring the labor movement to new sectors, but they were not strong enough to overcome the union old guard. As a result, labor was wholly unprepared to pivot in the face of rapidly expanding deindustrialization and an increasingly hostile political climate beginning in the 1980s.

While unions did much to undermine their status as champions of working people, Leonhardt contends that working-class dealignment was also abetted by the rise of the New Left and its increasing influence within the Democratic Party. Leonhardt does not ignore the achievements of the New Left, from the antiwar and environmental movements to feminism and gay rights. Yet his contention is that the rise of the student movement in the 1960s marked a break of the Left from the materially based class focus of previous decades, which led to major rifts between the Left and the working class. The completely justified anger that civil rights and feminist leaders felt toward reactionary elements in the labor movement, he concludes, unfortunately helped to produce a backlash that pushed many unions and working-class people away.

As the New Left gained increasing prominence within the Democratic Party in the 1960s and 1970s (particularly with the nomination of liberal champion George McGovern as the Democratic presidential nominee in 1972), the party’s economic policy focus shifted. The New Deal order had focused on broad-based reforms to improve the lives of the working and middle classes as a whole. Starting in the 1960s, the party pivoted to targeted programs aimed at the most needy, programs that studiously avoided challenging the structural power relations between classes — a trend, he notes, that continued into the Obama administration.

As a result, despite the New Left’s many successes, the movement contributed to a breakdown of the Democrats’ broad class-based coalition, a problem that Democrats still struggle to address today. As a brief counterfactual exercise to imagine what an alternative scenario might have looked like, Leonhardt points to Robert Kennedy’s 1968 presidential campaign. For Leonhardt, Kennedy’s attempt to forge a genuinely cross-class and multiracial coalition by focusing on economic justice and populism was a lost opportunity that may have saved the Democrats from their subsequent working-class woes. Instead, the decline of labor and rise of what would come to be known as the “Brahmin” (highly-educated, affluent) left in the Democratic Party — a problem made much worse by the rise of the Bill Clinton’s New Democrats in the 1980s and 1990s — left the working class without a consistent champion in national politics focused on fighting for the interests of ordinary people.

The increasing rift between the Democratic Party and the working class in the 1960s, Leonhardt asserts, was compounded by the party’s unwillingness to tackle the increasingly serious problem of crime. Democrats’ insistence that the rise in crime — caused by many factors, including anomie around the Kennedy assassination and the Vietnam War, the exhaustion of the civil rights movement, a larger share of the population being young, and concentrated poverty brought on by deindustrialization — was just Republican hyperbole that allowed Nixon in 1968 to present himself as the enemy of disorder and champion of stability. Republicans won five of the next six presidential elections. Leonhardt views the Democrats’ response to the 1960s crime wave as an early example of what he sees as the progressive wing of the party’s contemporary intransigence around key cultural issues, which he thinks has driven many working-class voters of all backgrounds away from the Democrats.

All of Left’s and labor’s woes, in addition to cultural malaise and a steadily deteriorating economic outlook, helped to produce fertile ground for the coming neoliberal revolution. After years in the political wilderness when they were viewed as too extreme by the postwar liberal consensus in both parties, market fundamentalists like Milton Friedman began to gain mainstream attention in the 1970s. With the election of Ronald Reagan in 1980, neoliberal radicals — who championed deregulation, limited government, and weak unions — were placed at the center of government decision-making. Through their concerted efforts, including cultivating generations of young lawyers through the Federalist Society who would in time help to enshrine the conservative revolution from their perches on the federal bench, neoliberals were able to roll back the common sense of the postwar order and usher in a new period of anti-worker corporate dominance.

The result was that workers lost power and influence. Soon neoliberal orthodoxy would penetrate the Democratic Party as well through the Democratic Leadership Council. This process culminated in the presidency of Bill Clinton and the 1994 passage of the disastrous North American Free Trade Agreement, which put the final nail in the coffin of many of the country’s struggling industrial towns.

Is There a Way Forward?

Despite the force of his narrative about how far we’ve fallen from the promise of realizing the American dream in the postwar decades, Leonhardt does not despair over the future. He calls for a transition to “democratic capitalism,” which is something close to social democracy, in which government manages capitalism to generate broad-based economic flourishing. He’s optimistic about its prospects. Even though we’ve seen total domination of the economy by the rich in recent decades, it wasn’t like that after World War II, and there is no reason to think the common sense of American politics and society could not swing back to a more humane, pro-worker position in the future.

After all, before the rise of the union movement in the 1930s, few anticipated the historic changes to come with the New Deal and the dramatic resurgence of the labor movement. Perhaps we are in the beginning stages of a new transition period, in which profound changes to the popular and intellectual commonsense are possible, and a door to a post-neoliberal era of widely enjoyed economic security and opportunity is open.

If so, however, Leonhardt does not offer a plausible story to explain how this might be accomplished. Despite his valiant effort to present changes in the common sense of elites and in the strength of labor over time as at least partially exogenous factors that can shift independently of broader economic and geopolitical trends, his own assessment of the elements that produced the American Dream after World War II largely suggest the contrary. The war itself reshaped relationships among government, business, and labor in the United States and of course also the United States’ role in the global economy in ways that virtually no other event could have.

Perhaps even more importantly, the Cold War and the specter of communism incentivized a degree of cross-class cooperation that would have been difficult to imagine under any other conditions. This is not to mention another critically important factor that is (thankfully) unlikely to reappear anytime soon: economic growth fueled by a dramatic increase in defense spending to combat real or perceived existential enemies around the world. Throw in severe restrictions on immigration between the 1920s and mid-1960s that placed upward pressure on wages in many industries and you get what Jefferson Cowie has aptly called “The Great Exception.”

In short, it is not easy to imagine a reproduction of anything like the conditions that made the political economy of postwar America possible in the foreseeable future. Nor is it at all obvious we would want to reproduce those conditions, dependent as they were on the military, economic, and political hegemony of the United States around the world — another point understated in Leonhardt’s account.

Of course, just as the Cold War once spurred government investment in research and development, there is evidence that pressure to address climate change and increasing tension with China are pushing the United States in a new economic direction. This includes the adoption of policies aimed at shoring up American manufacturing and increasing government investment in infrastructure and strategic industries like microchips and semiconductors. Indeed, the Biden administration has moved leftward on a range of economic policies to a degree we haven’t seen from Democrats in decades.

And despite the US labor movement’s continued weakness in terms of membership, the past few years have witnessed a surge in major strike activity and union victories against historically invincible corporate opponents like Amazon and Volkswagen. Plus, Americans’ support for labor unions is at a sixty year high.

However, any sober assessment of current economic and political realities must concede that these modest steps in the right direction face daunting headwinds they are unlikely to overcome in the short to medium term. These include a national political system so polarized that the chances of seeing anything like the commanding congressional Democratic majorities that made the New Deal and Great Society possible are remote, a Democratic Party whose political brand is increasingly toxic among working-class voters of all races, and the obvious absence of any meaningful alternative political force capable of championing working-class interests.

Yet despite the many challenges that stand in the way of realizing Leonhardt’s version of social democracy, his book provides a clear and generally compelling account of the fleeting time in US history when the American dream seemed in reach for most, and offers important lessons for how it might be again.