Was the New Deal Socialist?

It has become commonplace for conservatives and libertarians to characterize the New Deal as socialist. Indeed, it was one of the core contentions of the post-WWII conservative movement that the New Deal represented part of a fundamental shift in the American political and economic order, away from the free enterprise system. This skewed and often alarmist interpretation of the New Deal actually originated in criticisms of FDR that surfaced as early as his first presidential term. 

For example, the American Liberty League was created in 1934 by wealthy industrialists (including several members of the DuPont family) and a few disgruntled Democrats (indeed, former President Herbert Hoover declined to join the League because of the prominent role of certain Democrats). The League spent an enormous amount of money (at least one million dollars) on an extensive anti-New Deal campaign. It published dozens of pamphlets that characterized the New Deal as part of a nefarious plot to introduce a kind of anti-capitalist collectivism in America—though sometimes the League’s authors seemed uncertain as to whether FDR was a communist or a fascist.  

For instance, the Liberty League denounced the Agricultural Adjustment Act for reflecting a “trend toward Fascist control of agriculture.” Disgruntled Democrat and League supporter John W. Davis predicted that the role of Congress under Roosevelt would become “little more than that of the present Congress of Soviets, the Reichstag of Germany or the Italian Parliament.”

Most academic historians today, however, don’t concur with this alarmist and partisan interpretation of the New Deal. As one recent anthology puts it, “Few historians accept the view that the New Deal was socialistic either in its goals or its results.” Don’t misunderstand me here –many historians are indeed critical of the New Deal, but they don’t view it as truly radical, or as an attempt to implement socialist ideas in a systematic way.

This essay seeks to answer five basic questions: 1) How should one define socialism?  2) What were FDR’s political and economic views?  3) Were FDR’s advisers (the famed Brain Trust) socialists?  4) Were the chief policies of the New Deal socialist in any meaningful sense?   5) How did some on the bona fide ideological Left evaluate the New Deal?  

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1) The socialist label can be an effective weapon in partisan polemics, but scholars usually endeavor to employ the term with more precision and care. The Oxford Learner's Dictionary, for instance, defines socialism as "a set of political and economic theories based on the belief that everyone has an equal right to a share of a country’s wealth and that the government should own and control the main industries." Meanwhile, Merriam-Webster explains it as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.” Only by embracing an ahistorical and simplistic approach that sees anything that isn’t thoroughly laissez-faire capitalism as “socialistic” can one press FDR’s policies into a socialist pigeon hole.  Nevertheless, for reasons mostly ideological and partisan, many conservatives since the 1930s have unfortunately embraced this sort of either/or binary thinking.

2) As for FDR’s personal ideological orientation, his economic views were notoriously unsystematic and ill-defined. The economic principles he expressed publicly actually sounded pretty conservative. Both as governor of New York and as president, Roosevelt was usually a fiscal conservative and often expressed concerns about big deficits. Roosevelt scholar Frank Friedel describes FDR as always “a staunch believer in a balanced budget.” During the 1932 presidential campaign, Roosevelt often attacked Hoover for reckless spending. Moreover, prior to the late 1930s, President Roosevelt sought to cut federal spending. Several historians have noted his failure to grasp Keynesian theory that the federal government should spend money to prime the pump to promote economic growth and employment. Overall, FDR seemed more committed to saving the existing political and economic order (with some tinkering) rather than adopting a radical alternative. On more than one occasion, FDR spoke of his efforts "to save our system, the capitalist system," while dismissing the "crackpot ideas" of "radicals" on the Left.  

3) Moreover, Roosevelt’s celebrated Brain Trust included Raymond Moley who actually favored a flat tax and who later became a strong critic of the New Deal. Another FDR associate, Hugh Johnson, attacked what he saw as Hoover’s reckless spending and long advocated a conservative fiscal policy. Columbia University professor Adolph A. Berle, Jr. rejected the concept of a planned economy, though he did favor a greater role for the federal government. Some Roosevelt advisers (such as Rexford Tugwell) were indeed fond of national economic planning, but they were far from the majority and exercised limited influence, mostly after 1936.  

4) The actual policies that comprised the New Deal proved mostly unsuccessful in ending the Great Depression (they were especially ineffective in lowering the unemployment rate), and most of them didn’t reflect socialist ideas or models. The Emergency Banking Act of 1933 closed many banks temporarily to calm panicked depositors but, notably, the President resisted nationalizing the banking system, despite calls from many quarters to do so. Strikingly, these banking measures had actually been drafted by Treasury officials in the Hoover administration!  The Securities Act of 1933 was a moderate reform that enjoyed substantial support from big business. Through the ill-fated National Recovery Administration (NRA), the federal government attempted to act as a kind of honest broker between business owners and labor but it mostly benefited large corporations. The heads of several large corporations actually defended the NRA publicly before the Supreme Court ruled one of its key provisions unconstitutional in 1935. 

The Social Security Act of 1935 was a very modest old-age pension scheme that contrasted dramatically with ambitious government pension systems in Western Europe. SSA was, after all, financed by a regressive payroll tax on employees. This sort of tax normally hits the poor especially hard.  As Ronald Radosh wrote in 1972: “Social Security may have been a symbolic measure of the new Welfare State. But, to the corporate liberals in the governing class, it served as the type of legislation that eased tension, created stability, and prevented or broke any movements for radical structural change. Hence, it served an essentially conservative purpose because it helped maintain the existing system of production and distribution.” Nor were New Deal programs successful at lowering unemployment—which remained unusually high as late as 1940 and was finally reduced only by America’s participation in World War II.

Presumably, a socialist or socialist-leaning government would have been very interested in redistributing incomes to correct a maldistribution that had long favored the top earners.  As Norman Thomas (the Socialist Party’s perennial presidential candidate) declared in 1934:  redistribution represented “the essential feature of any immediate program for Socialism.” The New Deal, however, does not appear to have achieved any significant redistribution.  Distinguished economic historian Douglas C. North studied this question and concluded that FDR’s programs did not significantly alter income distribution; indeed, it does not appear to have even been a clearly targeted administrative goal. 

FDR and most of his advisors seemed uninterested in tax policies of any kind. Neither did the New Deal’s pro-organized labor policies improve incomes in the lowest brackets. The share of income earned by the very top bracket did decrease slightly between 1933 and 1939 but that was mostly the product of the Depression itself; North concludes, “the significant decline in inequality” came instead during “the war years.” The welfare payments that some conservatives love to hate were never during the 1930s, in fact, large enough to produce a significant shift of income from high to low brackets. As North explains: “It is not at all clear that the New Deal measures provided any significant redistribution of income. The really significant fall [in income inequality] is clearly related to the high progressive tax rates imposed during World War II.”

5) Moreover, one might have thought that committed socialists would have supported the New Deal. Many did not. Instead, bona fide socialists such as Socialist Party of America presidential candidate Norman Thomas were often very sharp critics of the New Deal. Thomas was the son and grandson of Presbyterian ministers and was ordained in the northern Presbyterian Church shortly after graduating from Princeton in 1905. His pastoral ministry in New York convinced Thomas of the need for social reform. Although sympathetic to FDR’s concerns, Thomas wrote a book eviscerating New Deal policies and once famously quipped that FDR was "trying to treat tuberculosis with a cough drop.” Thomas’s assessment of the New Deal was consistently pointed and dismissive.  A few humorous examples may suffice here: 

“Emphatically, Mr. Roosevelt did not carry out the Socialist platform, unless he carried it out on a stretcher.”

“…there is nothing Socialist about trying to regulate or reform Wall Street. Socialism wants to abolish the system of which Wall Street is an appropriate expression.” 

“There is no socialism at all about taking over all the banks which fell in Uncle Sam's lap, putting them on their feet again, and turning them back to the bankers to see if they can bring them once more to ruin.” 

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To conclude, a dispassionate assessment of the New Deal does not support the extreme characterizations of conservative editorialists and talk radio polemics. Indeed, many of Roosevelt’s goals can actually be described as conservative—in that he sought to conserve key features of the American economic order through some regulatory tinkering and the introduction of several modest reforms. As Stanford University’s Barton Bernstein argued back in the 1960s: 

Though vigorous in rhetoric and experimental in tone, the New Deal was narrow in its goals and wary of bold economic reform. Roosevelt's sense of what was politically desirable was frequently more restricted than others' views of what was possible and necessary… Operating within very safe channels, Roosevelt not only avoided Marxism and the socialization of property, but he also stopped far short of other possibilities… The President and many of his associates were doctrinaires of the center, and their maneuvers in social reform were limited to cautious excursions.

In short, a thoughtful historical assessment of the New Deal confirms that it wasn’t socialist by design or intent. While its failures were significant, it would be more honest and constructive for conservatives to evaluate those problematic policies (such as the National Recovery Administration, ruled unconstitutional by the Supreme Court), rather than simply continuing the sort of polemical and inaccurate name calling that first began back in 1933.