Tuesday, November 17, 2015

Economic fascism in American History

In a state of turmoil, victimized by the greatest of economic crisis the world has ever seen that not only ruined the economic life of masses but also endangered the very existence of capitalism and democracy in America, President Franklin D. Roosevelt came into power with some ‘new plans’ to deal with the Great Depression of 1929. These emergency plans had been given the historic name of ‘New Deal’ program.

Although the state’s intervention in the economic affairs of the country was not considered wise, even the progressive movements – advocating federal government’s regulation of businesses – rooted in the late nineteenth century and strengthened in the early 20th century, accepted the doctrine of minimum interference in the free economy of US. But Roosevelt, in his emergency plans to bring America back to the wheels of progress, had taken some intense measures during his presidency which are subjected to moot even today to know whether he was right or he had chosen the wrong path. Was he a radical socialist who bridled the private enterprises moving on their own; whether he stabilized the crippled economy through his New Deal moves; whether he was excessive in his approach to bring social justice; is there any good lesson that is bequeathed by his governance – these are the questions that probably lurk in the mind of every student of history but are very perplexed in nature to be answered in any conclusive manner.

The stock market crash of October 29, 1929 in the US brought a worldwide economic slump. In America, the number of unemployed workers was swiftly rising. When the then serving president, Herbert Hoover, left his office in 1933 about one-fourth of the labor force was idle. And between 1929 and 1933, 100,000 businesses had to close their operations which resulted in the fall of GNP to the half its original value. During the 1930s the Great Depression started displaying its ghastly effects and the common people started criticizing the federal government to directly intervene in the whole state of affairs in order to correct the existing trends.

The government of Herbert Hoover initially believed that it was the job that should be done through associationalism: business and industrial organizations working in unison under the guidance of the federal government to right the wrongs done by the worsening Great Depression. His strategy didn’t work and he was compelled to do more on part of the government. Even then there was no respite which resulted in his failure in the next elections and paved the way for the Democrats to continuously dominate the Congress for the next 20 years or so. After the departure of Herbert Hoover, Roosevelt assumed the presidential position in 1933 and was more willing to take direct and immediate actions to cope with the worsening Great Depression effects than his predecessor was. Due to his notions of ‘greater intervention’ by federal government some feared that he would socialize the country, though others wished him to do so. But he acted contrary to either of the sides expectations.

There is a large amount of criticism leveled against Roosevelt that his New Deal was radical, although it has little grounding given the fact that in his initial reforms through the National Recovery Administration (NRA) the little businesses had been more disadvantageous as the big businesses relatively easily managed the trade restrictions set by the government. Also it was the poor farmers who had to bear the brunt of the whole juggernaut when they had to destroy their crops under the directives of Agricultural Adjustment Act (AAA) which rendered many of them homeless. However, the second New Deal programs, to probably ensure financial security of blue collar workers, were more pro-labor which included the Wagner Act provisions that allowed trade unionization and thus became an obvious cause of business community’s sequester. Labor issues besides the rampant racism did result in severe dichotomy in the American social life, which should have been avoided.

The question that whether Roosevelt had done something remarkable to stabilize economy and to save capitalism is answered in the affirmative by the fact that he appropriated $3.3 billion for public works only in 1933. The number of unemployed workers reduced to 9 million in 1936 than it was 13 million in 1933. It was definitely a huge breakthrough. The Big Bill passed through Emergency Relief Appropriation Act (ERAA) also provided $4 billion for public works. These figures are a clear indication that Roosevelt’s policies were better than any worse that could had happened under the unbridled capitalism at that tumultuous time.

There is less disagreement that Roosevelt was driven by a desire to create a welfare state. However, he was not vastly successful in this aim. Although various efforts were employed to provide relief to the citizens but the racist elements, even in his own party, didn’t tolerate the emancipation of the American blacks and the treatment with them as the equal citizens of US which seriously obstructed such moves. Preference was given to whites in each respite available. The economic downturn at a massive scale also didn’t allow the government to do much for the welfare of the citizens.

Although many of the acts promulgated at the time of FDR were proscribed by the courts, the legacy of Roosevelt’s social and economic reforms in the shape of Social Security system and the Security and Exchange Commission is still a core part of the US economic fabric. Through these measures the social service to the people became possible and corrupt practices at the stock market were scrutinized meticulously. These are indeed the valid and the desired laws even today. Their presence, especially of the social security system, is a psychological bulwark for the citizens as these are always willing to support them if the wolfish capitalism leaves them alone in their troubles.

The decade of 1930s, though some consider it as a period when FDR contrived to bring economic fascism in America, was the most convulsive time US had ever faced. It is true Roosevelt exceeded the constitutional limits in some cases but it was inevitable, especially after the period following 1929 to extend the federal powers to ensure the process of economic healing goes well. Despite its shortcomings, the New Deal had offered much and is a source of learning for the American politics.

Note: This article had appeared in the print version of Dawn Newspaper by same author. 

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