A Cure for the COVID Crisis? Not Another New Deal


In 1933, 17 million American workers were unemployed, following years of economic downturn stemming from the stock market crash of 1929. From March to April 2020, 17 million Americans filed for unemployment following mass layoffs and business closures caused by the coronavirus pandemic. After a weak economic recovery following the recession of 2008-9 that decimated jobs, incomes, and living conditions, the rapid international spread of the virus, combined with the collapse in oil prices, has created a qualitatively new situation of acute crisis.

Today the state is faced with the same dilemma as in the 1930s: how to carry the country through a crisis of historic proportions. The calls for a strengthening of the imperialist state grow louder every day, as progressive media outlets, politicians, and activists insist that the solution is a return to the economic and social policies of the New Deal era. A recent New York Times editorial prescribed a strong welfare state à la FDR as the remedy for not just the economic impact of the coronavirus, but for capitalist excesses and income inequality in general. These proposed solutions may partially alleviate some of the symptoms of the current crisis but are incapable of treating the underlying cause of capitalist crises in general: the fundamental production relation at the heart of our economy—the wage relation—based on the separation of workers from the means of production.

The labeling of FDR’s policies from the 1930s as “socialist”—a label used pejoratively by conservatives and worn proudly by the “left” as a badge of honor—is inaccurate and conceals the true character of these reforms. FDR himself insisted that he was no socialist; his fidelity was to the “American system of initiative and profit.” In reality, the New Deal was a series of bourgeois reforms that promised a mythical harmony of interests between labor and capital, encouraging the working masses to rely on the organized power of the bourgeois state rather than on their own initiative and class organization.

The Historical Origins of the New Deal

The New Deal was preceded by the emergence of monopoly capitalism and the birth of a militant labor movement in the United States. Following the Civil War, the concentration of capital and production developed rapidly. A handful of industrial tycoons like the infamous Vanderbilts, Rockefellers, and Morgans (whose vast hereditary dynasties of wealth still exist today), monopolized production in their sectors. The Rockefellers’ Standard Oil Company, for instance, controlled almost all US oil production. By 1909 the degree of concentration of capital in the United States was very high: 43.8% of total production was carried on by just 1.1% of enterprises. As the strength of capital grew, so did the exploitation of the working class. The antagonistic class interests between labor and capital became more and more pronounced and this conflict produced a broad labor movement. Workers demanded an 8-hour day and led large strikes, starting with the great railroad strike of 1877. The May Day Student Organization takes its name from the heroic labor actions that took place in major cities across America on May 1, 1886.

World War I further reinforced the domination of US capital, both domestically and abroad, as production expanded rapidly to meet the wartime needs of the Allied powers. By 1916, US productive output had surpassed that of the formerly dominant British Empire. After the war was over, the imperialist powers drew up treaties dividing the territories of the world between themselves, guaranteeing to each other military rights and economic interests in various sectors of the global market. This provided a necessary outlet for excess American goods and capital, which the US was prepared to defend with force. While American politicians paid lip service to peace, they profited off the war production machine, intervening against national liberation movements and propping up their European allies against the Soviet Union and the threat of international proletarian revolution.

The wartime boom was temporarily halted by the global economic crisis of 1920-21 but came roaring back with a new period of industrial expansion throughout the 1920s. By 1929, production had bypassed wartime levels and the US had securely established itself as the leading capitalist power in the world. However, the prosperity of enterprise was accompanied by massive unemployment. Capitalist “rationalization” resulted in work speedups and intensified labor, and the increasing mechanization of production pushed masses of workers out of the factory and lowered the purchasing power of the working class as a whole. Mechanization also wreaked havoc on small and medium-sized farms who could not afford the new equipment, facilitating the concentration of agricultural capital in fewer and bigger farms. At the same time, finance capital was experiencing a heyday—the temporary ‘prosperity’ of the 1920s stimulated speculative activity, and the scale of industrial production grew blindly.

On October 24, 1929, known as “Black Thursday,” this expansion was brought to a crashing halt. The US stock market lost 11% of its value, sparking an economic crisis that soon spread to all capitalist countries. The economy was paralyzed. Industrial production declined by about half, and exports fell from $5.2 billion to $1.6 billion. 130,000 industrial and commercial corporations went bankrupt. The money supply decreased considerably between 1929 and 1933 when there were massive bank runs across the country. In that time, five thousand bank failures wiped out 9 million savings accounts. By the end of 1932, 15 million workers, one out of every three, had lost their jobs.

By 1933, the Republican Party had been in power for over 10 years and had proven ineffective in handling the crisis. The ruling class was ready for a new strategy and new personnel. For capitalists, it matters little which political party holds power, as long as they operate the machine effectively. In moments of crisis, what counts from the perspective of the capitalists is that the state responds quickly to correct the deviation from the normal accumulation of capital and profits. Democrat FDR became president in March of 1933, and in his inaugural address, he promised to enact drastic measures to protect the ruling class from the economic crisis. “I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.” FDR swiftly undertook a series of New Deal decrees that—via measures of state regulation of the economy—set out to save the ruling class from the crisis and prevent the possibility of revolutionary action from the broad worker and rural masses.

Neutralizing the Threat of the Labor Movement

Workers protesting at the gates of a textile mill (source)

While it claimed to meet the interests of both labor and capital, the New Deal was never intended to serve the working class, but to reinforce the dominant position of the capitalist monopolies. To reach this goal, the state implemented labor reforms and regulations of industry that had wide mass appeal but in actuality served to blunt the revolutionary consciousness of the people. Egregious practices like child labor and 12+ hour working days had crippled the working class for decades, and the crisis was an opportunity for the state to correct the self-destructive tendencies of capitalism while donning the cloak of hero to the laboring masses. The message to workers was clear: you don’t need a revolution to transform your conditions, the state will step in to mediate and take care of you!

The heart of the original New Deal was the National Industrial Recovery Act (NIRA), passed in 1933. The act authorized government regulation of industry, wages, and prices. To combat the disorganization of national industry and prevent workers from organizing independently and disrupting production, the Act set out “to induce and maintain united action of labor and management under adequate governmental sanctions and supervision.”

The Act guaranteed progressive reforms like the right to unionize and the regulation of working standards. However, it granted these rights only in order to channel workers’ struggles into the structure of well-regulated unions, under management supervision and control. When called in to resolve conflicts, NIRA representatives often sided with owners against striking workers, telling them to go back to work. The NIRA failed to enforce many of its own rules and did not prevent capitalists from engaging in the bribery and coercion of workers, violent strike-breaking tactics, and anti-labor practices like forced company unions, individual bargaining, and the open shop. The National Recovery Administration (NRA), which implemented the regulations, became known as the “National Run-Around.”

To see how this new legislation aided the capitalists at the expense of the workers, we can turn to the textile strike of 1934. After the passage of the NIRA in 1933, the United Textile Workers (UTW) union had grown rapidly. The NRA’s Cotton Textile Code provided for a 40-hour workweek, set a minimum weekly wage of $13 in the North and $12 in the South, and abolished child labor. However, employers compensated for the wage increase by intensifying the pace of work. Mill owners required the same amount of work in the newly enforced 40-hour week as they had in the previous 50 to 60-hour week. In mill towns, the companies owned everything, so workers who complained or resisted were fired, blacklisted, and evicted from company housing. The UTW threatened a strike in response to the speedup, but leadership called it off after the NRA offered them a seat on the labor board. However, local labor organizers pushed back and the strike movement spread in spite of this betrayal by the union leadership. By September 1934, it had become the largest strike in US history at that time, with 400,000 strikers participating across the North and South.

Capitalists hired private thugs to threaten the striking workers with violence. The repression of the factory owners was reinforced by the state, who called in the National Guard under instructions that they shoot to kill the striking workers. Many workers were murdered and hospitalized. Fordism—with its highly-integrated factory—reinforced this kind of despotism, both within the factory and without. The equilibrium of the Fordist factory is threatened by any disturbance or unrest, and a strike is particularly costly. The new capitalist methods of organization of labor were thus the material basis of the intensified repression of the state. Ultimately the UTW did not support the strikers in carrying their struggle to completion. A paper federal commission was set up to address worker demands, but no material concessions were made by the mill owners. President Roosevelt urged employees to return to work, but many strikers were never allowed to return to their jobs in retaliation for their militancy.

The NIRA was declared unconstitutional by the Supreme Court in 1935, but aspects of the NIRA which remained useful to capitalists were preserved in later legislation. The National Labor Relations Act (NLRA) of 1935 (or the Wagner Act) was drafted in direct response to the major strike wave that had mobilized discontented workers across the country. By granting certain rights to organized labor, such as collective bargaining and the right to strike, the NLRA effectively regulated the class struggle, channeling the labor/capital antagonism into the institutions of the capitalist state. The National Labor Relations Board (NLRB) was ostensibly set up to protect workers, but its task of “reconciliation” between labor and capital more effectively served to disarm militant strikers. Later, the Taft–Hartley Act (passed in 1947 under President Truman) amended the National Labor Relations Act. Taft–Hartley prohibited wildcat strikes, solidarity or political strikes, secondary boycotts, secondary and mass picketing, closed shops, and monetary donations by unions to federal political campaigns. In particular, the ban on solidarity strikes and secondary boycotts aimed to further weaken the unity of the working class by focusing the energy of workers on economic reforms within their own sector or individual factory.

Roosevelt’s New Deal taught the American bourgeoisie that by granting partial reforms, it could pacify the mass movement while shifting the burden of an economic crisis onto the backs of working people. The supposed gains made during the New Deal era must be understood in this context; they never placed workers on equal footing with the capitalist class—an impossibility in a capitalist society. Bourgeois history has thoroughly edited this chapter of American labor history to fit its own narrative. Those who celebrate the labor policies of the New Deal era commit treachery against the heroes who gave their lives defending the rights of workers to freely and independently organize against capitalist exploitation.

The New New Deal Is No Deal for the Working Class

Today’s “democratic socialists” within the Democratic Party are especially fond of likening their policy proposals and campaign platforms to the reforms of the New Deal. In her Green New Deal resolution before the House of Representatives, Alexandria Ocasio-Cortez described the program as “a new national, social, industrial, and economic mobilization on a scale not seen since World War II and the New Deal.” In a speech at George Washington University in 2019, Bernie Sanders made the same comparison: “Over eighty years ago Franklin Delano Roosevelt helped create a government that made transformative progress in protecting the needs of working families. Today, in the second decade of the 21st century, we must take up the unfinished business of the New Deal and carry it to completion. This is the unfinished business of the Democratic Party and the vision we must accomplish.”

One of the stated aims of the Green New Deal is to eliminate poverty in the United States through a campaign to provide employment to all Americans in new environmentally sustainable industries. The proposal is premised on the same false idea as the reforms of the New Deal: that the working class and the ruling class can harmonize their interests within the capitalist mode of production. Even if a plan like the Green New Deal does succeed in creating new jobs, it is will never be able to eliminate the phenomenon of unemployment. This would be impossible without eradicating capitalism itself, which relies on a reserve army of unemployed cheap labor to drive wages down and increase profits. Just as the NIRA tried to paper over the inherent contradiction between laborers and their exploiters, the aspiring FDRs of today try to join antagonistic class interests together in an idealistic vision of a capitalism without poverty.

The progressive trend’s proposals for direct state intervention in the economy have been fiercely resisted not only by Republicans and the far-right, but also by the leadership of their own Democratic Party, which has pursued neoliberal policies for decades. But in the wake of the current health crisis, the Trump administration has been forced to implement a massive stimulus program which includes many elements that echo the “left” wing Democrats’ program of reforms. In moments of crisis, political bickering around the size and role of government is exposed as a farcical performance. In moments of crisis, both the right and the “left” can agree on the role of the state: to protect and strengthen capitalism.

We must understand the true character of the “progressive” Democrats’ historical reference, the New Deal. This program of bourgeois reforms primarily set out to mitigate the impact of the economic crisis and its aftermath, the Great Depression. Far from being socialistic, it granted partial reforms in order to pacify the radical labor movement (a threat intensified by the strengthening of the proletariat following the victory of the 1917 October Revolution in Russia) and protect the interests of capital. These goals were achieved through the consolidation and reinforcement of state monopoly capitalism.

FDR’s policies helped business owners regain their profits and increased the concentration of industry into a few hands. Meanwhile, unemployment remained at historically high levels. Once the dominant position of monopolies was secured—at the expense of the vast majority of working Americans—the New Deal had completed its fundamental mission. As WWII approached, the administration reversed their seemingly “pro-labor” stance, banning strikes and suppressing social assistance in order to further shift the burden of the ongoing economic crisis onto the backs of the working class. The New Deal did not represent a high tide of working-class power, but rather a set of partial and temporary reforms which neutralized popular struggle while strengthening the domination of capital. At best, politicians who advocate for a return to this order display a criminal lack of historical memory; at worst, they are traitors to the people who pay lip service to “justice” and “equality” while protecting the interests of the bourgeoisie.