NJ Protest during the Great Depression

Class Struggle and the New Deal

We are living through a time in which many people have lost all hope in the future. For the average worker, the only certain thing is continued uncertainty. Tens of millions have lost their livelihoods, while the capitalist-party duopoly deprives them of a voice and climate change and the pandemic loom over everything.

It has been nearly 100 years since the capitalist system went into a crisis this deep, and only the bloodbath of World War II “saved” the system at that time—at the cost of 80 million dead. In 1932, Franklin Delano Roosevelt was elected president. He would manage the crisis of capitalism and attempt to save the system from itself over the next decade. There are many lessons for socialists to learn from the Great Depression and how the FDR administration presided over it.

“The Great Crash”—then and now

On “Black Tuesday,” October 29, 1929, the stock market imploded, and the Dow lost nearly a quarter of its value in just two days. In March of this year, we saw several “black” days as the market spiraled downward. Both of these crashes had similar roots.

Capitalism requires profit to survive. It makes profits through the exploitation of labor, whereby the workers produce more value for the bosses than they receive back in wages and benefits. The goods workers produce are then sold on the market to be purchased by other workers, but as they are paid less than the value of the goods produced, they cannot buy back everything they make. This, combined with the unplanned nature of capitalism, eventually leads to a glut of unsold goods—a crisis of overproduction—causing prices to collapse and a knock-on effect throughout the economy.

DOW Market Crash after Black Tuesday
On “Black Tuesday,” October 29, 1929, the stock market imploded, and the Dow lost nearly a quarter of its value in just two days. / Image by Mmaki via Wikimedia Commons

Unable to solve this central problem, capitalism merely kicks it down the road through the mechanism of debt, which artificially increases purchasing power. But the effect is only temporary, as eventually, the debt has to be paid back—with interest. These mountains of debt—and the speculation on debt—played a crucial role in both the 1929 and 2020 crises. When these periodic crises of the system erupt, how does the ruling class cope? By passing the burden onto the workers.

Herbert Hoover, a Republican, was in office during the first phase of the Great Depression. He did little to remedy its effects between 1929 and 1932. He stood by as net income, and industrial production were both halved. Just months before the crash, he had declared that “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”

In 1931, when tens of thousands of struggling veterans and their families organized a “Bonus Army” and marched on Washington, DC, General Douglas MacArthur was ordered by Hoover to clear out their camp with fire, gas, and guns.

For their part, the class-collaborationist labor leaders of the American Federation of Labor (AFL) signed a no-strike “gentleman’s agreement” at the White House with business leaders, who, in turn, promised not to cut wages. Unsurprisingly, only the AFL held up their side of the agreement, and by 1933, wages had imploded, and the AFL unions’ membership had been halved.

Herbert Hoover in his suite at the Waldorf Astoria Hotel
Before the crash, Herbert Hoover said, “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”  / Image: Erinarchivist via Wikimedia Commons

A “New Deal” for the American people?

Franklin Delano Roosevelt was a Harvard and Columbia educated lawyer and career politician. His family traced its roots back to the colonial elite, and he was a fifth cousin to President Theodore Roosevelt. Before entering the White House, he served as a New York State Senator, Assistant Secretary of the Navy during World War I, was a high-level player in the DNC, and a two-term governor of New York. While on the “progressive” side of the Democratic Party, FDR made no claim to being a radical and vehemently denied his opponents’ accusations of “socialism,” which he defined in 1928 as “the government in business.” Roosevelt swept Hoover in the 1932 election, not on a New Deal spending platform, but one of fiscal conservatism and locally coordinated relief efforts.

Roosevelt understood that there is no lasting solution to capitalism’s contradictions and that they can only be temporarily mitigated. As the state’s top executive, his task was to bring to bear his considerable political acumen to stabilize the capitalist crisis and prevent a socialist revolution. Along with the police and National Guard, he leaned on the AFL’s lick-spittle compromisers, as he skillfully exploited the divisions within the workers’ mass organizations. The class struggle was heating up, and between 1932 and 1933, the number of strikes doubled. Roosevelt had to act.

Rather than revolutionizing the economy, however, the New Deal served to speed up the consolidation of manufacturing and agriculture into fewer capitalists’ hands. Roosevelt consistently sided with the large banks against the small, big corporations against petty enterprise, and big agricultural producers against small farmers.

To stabilize the shaky foundations of capitalism, New Deal legislation underwrote the profits of the largest companies with legislation like the National Industrial Recovery Act (NIRA) of 1933. The NIRA was composed of a whopping 600 or so laws that affected 95% of employers. These new laws essentially put capital in the driver’s seat and codified agreements and regulations designed by the largest business associations.

This massive corporate handout contained a single, weakly worded provision, Provision 7a, which opened the door for more workers to organize into officially sanctioned labor unions. Mostly, though, it led to companies setting up “yellow” company unions, which were direct tools of the bosses. It’s wrong to think that 7a, or the Wagner Act after it, “caused” the unionization wave that followed. Instead, these laws funneled an already growing strike movement into official channels to keep them within safer and more easily controlled limits.

“Labor’s giant step”

Inside the stifling atmosphere of the AFL, the winds of change were beginning to blow. The AFL served, and still serves, as a pillar of American capitalism. Its modus operandi was to divide each workplace into small groups of skilled craftsmen, each bargaining separately. This went hand in hand with a policy of making sellout agreements to avoid strikes, not to mention a segregationist and sexist approach towards black and women workers.

All the while, top AFL officials enjoyed handsome salaries paid by their members’ dues and swanky banquets hosted by the bosses. However, capitalism had entered the era of highly rationalized industry, where an ever-more-specialized division of labor was squeezing out the trades and crafts. Old-time labor aristocrats like AFL President William Green, and Daniel Tobin of the Teamsters, opposed organizing the “riff-raff” of industrial proletarians and did everything to sabotage their struggles. Despite their best efforts, however, they could not contain the historical forces at play forever.

The year 1934 was a turning point in the history of the American class struggle. The industrial uprisings of the Toledo Electric Auto-Lite workers, the longshoremen and San Francisco general strike, and the Teamster Rebellion in Minneapolis all happened that year. These strikes all deserve to be studied in detail by today’s Bolshevik workers, but it is enough to touch on their general features here.

Firstly, organized militants from the American Workers Party, the Communist Party, and the Communist League of America (later known as the Socialist Workers Party) played an absolutely key role in each of these three strikes, respectively. Without a coordinating body armed with class-struggle ideas and tactics in place before these events, none of the great victories these strikes achieved could have been gained. These strikes sent a clear message to the AFL leaders: if you don’t organize these workers, left-wing radicals will! Also in 1934, there was a strike of 400,000 textile workers that stretched from New England to the South, led by the mainstream AFL, which ended in bitter defeat. Secondly, they all overcame enormous resistance from their own leaders in the AFL and endured vicious state repression by local police, armed and often deputized strikebreakers, and the National Guard. Thirdly, mass solidarity by the unemployed, strikers’ families, and other workers gave the strikers the support they needed to overcome the repression.

Teamsters strike 1934
The year 1934 was a turning point in the history of the American class struggle featuring the Teamsters Rebellion in Minneapolis, pictured above. / Image by WBUR Boston’s NPR News Station via Flickr

John L. Lewis of the United Mine Workers understood all this, and looking across at fascist Europe, he saw that where there were no industrial unions, there would soon be no unions at all. Lewis and the heads of seven other unions formed the Committee for Industrial Organization in 1935 to play an “educational and advisory role” within the AFL. Immediately, there was stiff opposition from the leaders of the AFL, and CIO-associated unions were eventually expelled from the AFL in 1938.

Massive industrial organizing posed a serious threat to the ruling class. For the most cynical labor leaders, though, it was a gigantic prize, in the form of hundreds of thousands of new dues-paying members. These two interests would soon align against the workers.

The competing class pressures both within and without the newly formed CIO would eventually push it to either break from the political establishment entirely, or towards co-option. John L. Lewis was the president and clear leader of the CIO until 1940. Though he was a moderate, he was independent-minded. But even moderate resistance was too much for the ruling class.

FDR took a consistent approach to containing and controlling the CIO after it emerged. He made hollow promises about the benefits of cooperation with the state, and he isolated Lewis and the radical leaders of the CIO by courting its more conservative leadership. Men like Sidney Hillman of the Amalgamated Clothing Workers belonged body and soul to the “cynical labor leader” category. They would do anything in their power to avoid strikes and gain meager influence with Roosevelt through political favors.

The Stalinist CPUSA was also a significant faction inside the CIO, but it was guided by the narrow foreign policy needs of the Soviet bureaucracy, rather than independent, internationalist class analysis. During the ultraleft “Third Period” of the early thirties, it attempted and failed to establish unions independent of the AFL. Then, in the late 1930s, it uncritically supported FDR as a “popular front” bulwark against fascism. This was then dropped—temporarily but zealously—after the Molotov-Von Ribbentrop non-aggression pact was signed between the USSR and Nazi Germany. These opportunist zig-zags would come back to haunt them when Communists were banned from holding United Auto Worker offices in 1941, and CIO offices in 1947.

When aligned with FDR, the CIO’s right wing would use the Stalinists to strike blows against Lewis and the radicals. Seeing his options for maneuver running out, Lewis flirted with the idea of abandoning the two-faced Democrats and launching a party of labor. But in the end, he compromised and created the Labor Non-Partisan League PAC, which supported Roosevelt.  They also created the American Labor party in New york, which played a similar role to New York’s Working Families Party today. It would take six years for the labor bureaucracy and FDR’s Democratic Party to totally co-opt the CIO. The final nail in the coffin was a voluntary no-strike pledge made by the AFL and CIO’s leadership during the war.

There is also the matter of New Deal programs like the WPA, Social Security, banking regulation, and the minimum wage. Roosevelt was a genuinely gifted bourgeois politician, and he met “radicalism” skillfully with both carrots and sticks. Many of the New Deal reforms he passed undoubtedly increased the well-being of millions of Americans. Still, his reforms were ultimately intended to defuse worker rebellion, gain support for himself and his party, and, most importantly, to secure his class’s control over society.

FDR April 11, 1945
While FDR’s reforms helped workers, they were ultimately intended to defuse worker rebellion. / Image: FDR Presidential Library & Museum

When the more myopic capitalists attacked him for being too anti-business, his administration would demagogically attack the influence of monopolies and the elite “60 families.” And when radicals attacked him, he could point to his reforms and his labor movement supporters. When the time came for the US to enter World War II, he painstakingly prepared public opinion and invited a direct attack by the Japanese. The labor movement’s almost wholesale capitulation to Roosevelt was arguably American socialism’s most significant setback in the twentieth century and laid the groundwork for all its future defeats.

As social, economic, and political crises unfold, workers tend to look for increasingly radical solutions to their problems, culminating with a turn to socialist revolution if it is presented. This phenomenon’s mirror image is the ruling class’s tendency towards autocracy as their grasp on the economy and political legitimacy becomes ever more tenuous.

In the 1930s, American socialists feared that the ruling class might resort to fascism. It was not an idle fear. The capitalists watched closely as the fascist mayor of Jersey City, Frank Hague, experimented with open reaction. FDR’s close advisor Bernard Baruch even gave every member of Roosevelt’s cabinet a copy of a book by the fascist theoretician Giovanni Gentile to study.

In 1939, Leon Trotsky commented on the New Deal: “Fascist dictatorship means the open acknowledgment of the tendency to impoverishment, which the wealthier imperialist democracies are still trying to disguise … The New Deal policy, with its fictitious achievements and its very real increase in the national debt, leads unavoidably to ferocious capitalist reaction and a devastating explosion of imperialism. In other words, it is directed into the same channels as the policy of fascism.” Were it not for the World War, there may well have been a serious fascist movement in America.

In the end, the US ruling class chose a different course. The national war mobilization eventually pulled the economy out of the depression, and FDR was compelled to wage the war in terms of “democracy” versus “fascism,” which connected with the workers’ instinctive class hatred of the Nazis.

Today, all-out fascism may not be in the cards, but murderous paramilitary reactionaries are already roaming American streets. So what should socialists make of the New Deal and the class struggles of the 1930s, which was the most class-struggle-dense period of American history since the Civil War?

The first lesson is that class struggle—not class collaboration—is how serious reforms are won. Mass mobilizations of the workers, supported by the unemployed and oppressed, won the New Deal reforms. The ruling class knows that there is no way to contain an all-out mass movement of the workers fully, so they may attempt to use partial concessions with co-option to control it. However, this begs the question: where would they find the resources to do anything on a New Deal-type scale given the depth of today’s crisis?

The second lesson is that unless and until capitalism is overthrown through revolution and replaced by socialism, even the most sweeping reforms will always be in danger of being rolled back. Threatened by revolution from below, the modest programs of the New Deal were implemented from above. Without a doubt, this took the edge off some of the Great Depression’s misery—but it left the capitalist cause of periodic crises intact—and passed the buck to future generations.

To help organize the workers for even greater struggles in the future, and ultimately, for revolution, Marxists must patiently explain how past class battles were won and lost. The working class is much stronger in 2020 than in 1936, but even the most massive army can be smashed if it has a wrong strategy, tactics, and leadership. Join Socialist Revolution and help us revive and rekindle the American working class’s militant traditions in the labor movement and beyond!

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