Liberalism's Third Crisis

This is a pivotal moment in our recent political history. The 1994 elections may or may not represent a lasting realignment of party loyalties. But even if they do not, they are clear evidence of something at least equally important. They reveal how massively government, politics, and the liberalism that has for decades largely shaped them have lost popular support, even popular legitimacy.

With their longstanding assumptions about public life under siege, many liberals are in the throes of a crisis of confidence. Whatever forms liberalism takes as a result, they will almost certainly be different from those we have known. But as extraordinary as this moment may seem, it is not unprecedented.

There are at least two examples in the twentieth century of a comparable (if perhaps less abrupt) collapse in popular confidence in a prevailing model of liberal politics and government, and of the creation of another model to replace it. Liberals searching for an answer to their present dilemmas might consider how earlier generations dealt with similar challenges.

At the beginning of the twentieth century, American liberalism remained largely wedded to its Enlightenment roots. Liberals championed personal liberty, human progress, and the pursuit of rational self-interest by individuals as the basis of a free society (values most liberals would still claim to support) and stoutly resisted giving more than minimal authority to the state. This laissez-faire liberalism is often described today as "conservatism," but it was, in fact, a challenge to an earlier, nineteenth-century conservatism (often associated with the ideas of Edmund Burke and never strong in the United States) rooted in the protection of tradition and fixed social hierarchy. Laissez- faire liberalism envisioned a fluid, changing society, in which the state would not protect existing patterns of wealth and privilege and individuals could pursue their goals freely and advance according to their own achievements.

In practice, of course, the theory of laissez-faire liberalism bore little relationship to the realities of industrial society or political life in America. Like most of their contemporaries, liberals tolerated and even actively promoted what by modern standards would seem to be oppressive official restrictions on personal behavior. Ambitious entrepreneurs decried state interference in the name of liberalism when it constrained them, but they welcomed, even demanded, government assistance when it was of use to them. Nor were most liberal capitalists genuinely committed to an open competition for wealth and power. Business champions of laissez faire often benefited, for example, from government intervention that protected them against challenges from their own workers. But the "liberal" idea however inadequately it described social reality became a potent justification for a rapidly expanding capitalist world and for a notion of individual freedom that gained increasing sway within that world.

By the beginning of the twentieth century, the chasm separating the character of industrial society and the liberal vision of it had become too glaring to ignore. A class of corporate titans was emerging with unprecedented wealth and power. Private institutions were attaining sizes never before imagined. The freedom of individuals to pursue their economic self-interest seemed imperiled by these new centers of authority; and many erstwhile champions of laissez faire came to believe that preserving a genuinely free society required somehow constraining the private power that now threatened to dominate it.

The result was the emergence of a new "progressive" or "reform" liberalism, with broad support from across the economic, regional, and political spectrum. It was committed to (among many other things) taming the excesses of industrialism and imposing a measure of social control on capitalism. Reformers set out to protect individuals, communities, and the government itself from excessive corporate power and (more haltingly) to provide citizens basic subsistence and dignity, usually through some form of government intervention. The New Deal emerged out of this tradition of "progressive" reform, attached the word "liberal" to it, and for several years won broad popular approval for its efforts to transform the character of government.

But the New Deal model gradually generated a powerful reaction of its own from corporate forces that felt threatened by its policies, but most of all from ordinary people who began to fear the power of government as much as (if not more than) they had once feared the power of capitalists. Even at the height of Roosevelt's popularity, public opinion surveys (crude as they were in the 1930s) revealed a striking level of concern about public spending, the size of the government bureaucracy, and the burden of federal taxes (which for the middle class were extremely light by later standards). Popular movements emerged denouncing the "dictatorial" aspirations of the president and the "tyrannical" character of the new state bureaucracies. As the 1930s wore on and the New Deal failed to end the Great Depression, such attacks steadily grew. By the beginning of World War II, New Deal liberalism was already on the defensive.

In 1942, finally, the Democratic Party suffered an electoral defeat that contemporaries considered nearly as disastrous as observers now consider the 1994 results. Democrats lost 50 seats in the House (which, when combined with substantial setbacks in 1938, reduced to 10 a majority that six years earlier had stood at 242) and 8 seats in the Senate (reducing their majority to 21 from the 60 they had enjoyed after the 1936 election). Given the power of southern Democrats, conservatives had effective control of the House and close to a majority in the Senate.

"That the Administration has completely lost control over Congress in the November elections is becoming clearer every day," a British diplomat reported to London early in 1943. "The Republicans will of course have working control of Congress," the New Deal economist Eliot Janeway wrote after the election. "On every issue enough anti-Roosevelt Democrats will be with [the Republicans] to enable Congress to boss the Administration at the point of a gun. . . . The balance of [Roosevelt's] term is going to be an obstacle race."


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Over the next two years, congressional conservatives systematically dismantled substantial elements of the New Deal: the Civilian Conservation Corps, the Works Progress Administration, the National Youth Administration, and virtually every other relief and public works program Roosevelt had created. They abolished the government's first and only planning agency, overturned the president's efforts to limit wartime salaries to $25,000 a year, passed legislation restricting labor's right to strike and contribute to political campaigns, and reduced funding for the Office of Price Administration and the Office of War Informa tion, war agencies conservatives considered centers of liberal sentiment.

The administration and its liberal allies had expected strained relations with Congress. But many were astonished by the intensity and bitterness of the opposition. Congress seemed to many liberals to have launched a frenzy of indiscriminate budget-cutting in an effort, as one New England Republican gloated, to "win the war from the New Deal." Vice President Henry Wallace spoke in 1943 of "powerful groups who hope to take advantage of the President's concentration on the war effort to destroy everything he has accomplished on the domestic front over the last ten years." James F. Byrnes, a former senator who had been at best moderately supportive of the New Deal in the 1930s, confided to Felix Frankfurter early in 1943 (by which time Byrnes was working in the White House) that he had been watching the performance of Congress with dismay. As Frankfurter recorded the conversation in his diary, Byrnes "never had such a sense of intellectual bankruptcy. He said there was not one thought or idea or bit of illumination in the whole outfit, and the only thing they talked about was that they were committed to abolishing bureaucracy.'"

Early in 1944, the poet and Office of War Information administrator Archibald MacLeish told a gathering of politicians and journalists honoring Freda Kirchwey, editor of the Nation, "Liberals meet in Washington these days, if they can endure to meet at all, to discuss the tragic outlook for all liberal proposals, the collapse of all liberal leadership, and the inevitable defeat of all liberal aims. It is no longer feared, it is assumed, that the country is headed back to normalcy, that Harding is just around the corner."

The political setbacks of the 1940s, and the changing political climate they represented, contributed to another redefinition of the liberal idea of the state. By the end of World War II, most liberals had begun to coalesce around a new prescription for government in which calls for structural reforms of capitalism or controls over the behavior of corporate leaders were no longer central. Postwar liberalism attempted, instead, to accommodate itself to the existing structure of American capitalism and to find new vehicles the manipulation of fiscal and monetary levers, as Keynes, among others, had urged by which the federal government could fight recessions and promote economic growth. Stimulating consumption, not regulating production, was the principal economic activity of postwar liberal government. "Full employment" was its goal. A generous welfare state would compensate for the inevitable shortcomings of the "free" economy and would contribute, as well, to the steady increase in purchasing power that the new vision of full employment required.

Into this changing liberal world, a different political language gradually emerged to replace the now-repudiated interest in class and economic power that had dominated the New Deal. It was the language of individual rights a language the war, and the anti-totalitarian sentiment the war had produced, greatly strengthened. The rights-based liberalism of the post-New Deal era eventually helped lead many white liberals into a great if, for some, short-lived alliance with African Americans in the battle for civil rights and racial justice. It led in turn to the mobilization and empowerment of many other groups whose causes liberals generally embraced, among them racial and ethnic minorities, women, gays and lesbians, and people with disabilities. And it led as well to a growing level of tolerance for unconventional forms of personal behavior and morality a cultural relativism that has gradually become one of liberalism's most controversial and politically damaging characteristics.

It is this newer model of liberalism a liberalism related to but substantially different from the New Deal that the electorate seems now to be repudiating. Its collapse is a result of the convergence of several major changes in the social and political landscape:

  • Postwar liberalism has been closely identified with enhancing the role of the federal government. It has fallen victim in part to the widespread perception a greatly exaggerated but not entirely false perception that government itself has become as inefficient, corrupt, and menacing as earlier generations of reformers believed the corporate world had become.
  • Postwar liberalism has embraced the drives for expanded rights by individuals and groups. It has fallen victim to a growing popular fear of cultural disintegration and fragmentation, a belief that the liberal commitment to "rights" has somehow run amok at the expense of society's ability to preserve some elemental sense of community.
  • Postwar liberalism thrived in part on the basis of a vigorous Cold War internationalism, which not only legitimized an activist American foreign policy but also helped legitimize government itself. When the state could be seen as the defender of democracy against communism, when the president was the "leader of the free world," government had a claim to popular loyalty that it can now make with much less authority.
  • Most of all, postwar liberalism flourished on the basis of its promise that government could help sustain high levels of economic growth and security a promise government seemed to keep (even if not through the means most liberals expected) for a generation after World War II. Liberalism flounders today because of a twenty-year shift in the structure of the American economy. This shift, and the way in which the nation has adjusted to it, has weakened the popular support for, and perhaps also the viability of, the Keynesian fiscal policies on which liberals once relied to promote economic growth. It has also weakened political support for those economic tools, such as the minimum wage, that might have some effect on the increasingly unequal distribution of jobs and incomes. It is probably not too much to say that these economic frustrations, and the political world's inability to answer them, lie at the heart of liberalism's current crisis, and at the heart of the larger disillusionment with government and politics that has created that crisis.

In the embittered and ungenerous climate of American public life today, creating a new liberal vision that is both humane and politically viable will be exceptionally difficult. Liberals have been trying to recast themselves and their ideas for a generation (an effort that has been particularly visible in recent years in the pages of this magazine), and they will no doubt continue to do so. But however difficult the task, the challenge facing liberals today is an urgent one and not unlike the challenge that faced progressives early in the twentieth century and New Dealers in the 1940s.

Recreating the New Deal, which was a far-from-perfect answer even to the problems of its own time, is certainly not the solution to liberalism's problems today. But some elements of the New Deal including some of those repudiated and largely forgotten after the wartime redefinition of the liberal state suggest some ways of thinking about the future of liberalism in our own time.

Among the forgotten initiatives of the New Deal was the most ambitious effort to reorganize the federal government ever undertaken by any modern administration. Roosevelt's "executive reorganization plan," the product of an extended study by a commission of distinguished scholars and planners, recommended sweeping changes in the structure of the federal government: reorganizing and relocating agencies and departments; weakening the autonomy of the civil service and the independent regulatory commissions; enhancing the budgetary and administrative capacities of the White House; creating a powerful planning mechanism within the executive branch; and others. The changes would contribute, Roosevelt said, to the "efficient and economical conduct of governmental operations."

Powerful conservatives in Congress, warning of a presidential "dictatorship," greatly weakened these recommendations by the time they were enacted in 1939. But the results were by no means inconsequential. Partly as a result of the reforms, the federal government emerged from the war better equipped than it had been in the 1930s to manage its responsibilities effectively and to assume new ones.

The Clinton administration's underappreciated and underpromoted proposal for "reinventing government" is the first major effort since 1937 to launch a serious reappraisal of how government works and how it might be reorganized. That it has generated so little attention and support from progressives is a sign of the intellectual disarray that has helped discredit liberalism in our time. Liberals now need to make the case, in an inhospitable climate, that government is not intrinsically bad. They must show that it can and must play an ameliorative and progressive role in social and economic life. And they must demonstrate that the efforts of the right to disembowel government through the balanced-budget amendment, the attack on unfunded mandates, the supermajorities for tax increases, and other structural changes are dangerous to society's capacity to respond to social, economic, and international crises.

But to make that case effectively, liberals must also argue with equal force for a reexamination of the way government performs its tasks. They cannot reflexively defend existing agencies and procedures just because conservatives are attacking them or just because the agencies' ostensible purposes are desirable. They must be able to demonstrate that institutions of government are capable of performing their functions effectively and, equally important, that they are capable of continually "reinventing" themselves in response to the changing world around them. In the 1990s, as in the late 1930s, a defense of government must be tightly linked to a commitment to critical thinking about government.

Buried within the confusing maze of New Deal experiments and agencies was a cluster of efforts that attempted to protect and strengthen not just individuals, but communities. The Tennessee Valley Authority, the Resettlement Administration, the Farm Security Administration, and others all experimented with ways of promoting cooperation, community spirit, and mutual responsibility, and even created model towns, communities, and camps that were designed around explicitly communitarian models.

Anyone who has read John Steinbeck's Grapes of Wrath (or seen John Ford's film version of the novel) may recall the wonder and delight with which the Joad family encountered a federally run camp for migrant workers a camp explicitly designed around a concept of community engagement and shared responsibility, in stark contrast to the grim, competitive environment surrounding it. The scene depicted reasonably accurately the real camps planned and managed by the New Deal's Farm Security Administration. Not all liberals of the 1930s were interested in such goals, certainly, but there was at least a faction within the New Dealers concerned with what today's political theorists would call "civic life" or (to use Robert Putnam's phrase) the creation of "social capital." (See Putnam, "The Prosperous Community: Social Capital and Public Life," TAP, Spring 1993, No. 13.)

In the 1990s, the degradation of civic life the erosion of patterns of interaction capable of creating social bonds among substantial numbers of people is one of our society's most troubling phenomena. And while citizens express their concern about that degradation in many different ways, few are unaware of its costs. It robs individuals of the satisfaction of group activities and shared experiences, and it robs society of the means by which men and women of different backgrounds and perspectives can learn to understand and tolerate one another. It poses a challenge to postwar liberalism's almost exclusive preoccupation with individual rights and invites attention to the problem of creating the basis for a healthier shared life.

There is, of course, a limit to what government can do to create genuine institutions and habits of community in American life. The New Deal experiments were themselves both modest and short lived. But it has surely been one of liberalism's failures to have allowed the language of community to become the almost exclusive property of the right. Political discourse at times seems to have become a stale debate between advocates of the market and advocates of the state, with all other realms of human experience floating irrelevantly in the background as "a thousand points of light."

It is, of course, possible to romanticize the institutions of "civic life." Neighborhoods, churches, schools, and voluntary associations are not only sources of healthy communal experiences. They can also be sources of bigotry and oppression, and government will always need to intervene at times to curb their excesses and injustices. But for liberal government to be credible to and valued by its citizens, it cannot seem uninterested in, or reflexively hostile to, the institutions that define the lives of many, perhaps most, Americans.

The unhappy example of some of the Community Action programs of the War on Poverty discouraged many liberals from pursuing public efforts to restore civic life. But the effort did not die entirely with the 1960s. It survived for more than twenty years in the persistent call from many liberals for a form of national service that would, they insisted, restore a sense of shared purpose to American life. President Clinton's small but promising national service program (explicitly linked in his recent State of the Union address to the idea of "civil life" and the need for the "common bonds of community") is a response to that call.

The effort to enhance community has survived in other ways as well. It has found expression recently in the controversial but at least partially successful efforts in Chicago to transfer authority over schools to local councils of parents and teachers; and even in the attempts to create councils of workers and managers within some industries. More such efforts are surely necessary for liberalism to regain respect and credibility among those who have repudiated it.

Finally, and perhaps most important, the New Dealers viewed themselves and the world they were attempting to reshape in terms of wealth, power, and (although liberals did not often use the word) class. The most progressive New Dealers considered taming the excesses of unbridled capitalism and empowering economically weaker groups at the expense of stronger ones their most important tasks. They carefully avoided the ethnic and cultural issues they believed had done so much damage to the Democratic Party in the 1920s, and in doing so left themselves unable to confront many problems of racial injustice. But they did manage to make the distribution of wealth and power a subject worthy of political discussion and the basis of a broad coalition that sustained the Democratic Party for more than a generation.

Unlike the New Dealers, many postwar liberals were willing and even eager to confront racial, ethnic, gender, and sexual discrimination. Their participation in the successful effort to dismantle the legal structure of segregation and the still-incomplete effort to eliminate other, less formal patterns of discrimination is one of liberalism's proudest achievements, despite the divisiveness it has created and the political costs it has imposed. But the growing commitment to rights seemed to crowd out of the liberal universe the language of class and power that was so crucial to the political success of the New Deal. Who today talks about the extraordinary and growing maldistribution of wealth in America? Why is it so difficult for liberals to articulate a critique of corporate power in an age of falling living standards and rising insecurity among workers? How has it happened that among all the powerful institutions in modern society, government has become the principal, often even the only, target of opprobrium among Americans angry and frustrated about their lack of control over their lives?

Before liberals surrender to the calls for disabling the federal government and devolving authority to states and localities, they would do well to direct attention to the increasingly centralized institutions of private power that will survive that process. It was to counter the power of such institutions that "big government" emerged in the first place. To whom would they answer in a world of weak or nonexistent national authority?

Franklin Roosevelt spoke openly in his 1936 campaign about "economic royalists," "business and financial monopoly," "reckless banking," and "government by organized money." "I should like to have it said of my first administration," he said, "that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second administration that in it these forces met their master." That is the lost language of contemporary American liberalism. We need it back.

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