Capitalism With Social Values
By Melvin J. Howard
The Great Depression was
basically the same in the United States as other capitalist countries.
High unemployment, lower gross domestic product, and some kind of a government
response to the depression were evident in all the capitalist
countries. However, the United States took a different approach from the rest of the
world powers in their recovery
methods during the depression. Herbert Hoover was the
president from 1928-1932 and had the first opportunity to publicly combat
the depression. His philosophy was simple when speaking of the
American system. “It differs fundamentally from all others in the world.
It is the American system. It is just as definite and positive a political
and social system as has ever been developed on earth. It is founded upon
the conception that self-government can be preserved only by decentralization
of Government in the State and by fixing local responsibility; but further from
this, it is founded upon the social conception that only through ordered
liberty, freedom and equal opportunity to the individual will the initiative
and enterprise drive the march of progress. This is not what the American
people wanted to hear at this time a self sufficient individualism” speech when
many families could not even afford to put food on the table.
Hoover created the Federal Farm Board to try
and improve farm prices. This agency would sometimes pay farmers to not grow
crops to try and raise demand. As soon as the prices started to show some
rebound, farmers would plant crops again against the federal government’s
wishes. The prices would never correct without production and open
foreign markets. He closed foreign markets for agricultural products. In the 1920’s, markets in Europe for
grain were tremendous, but because of the tariffs on American goods, many
countries could not afford them and turned to other suppliers.
By then the recession had grown into a
full-blown depression. Much worse, the depression’s was just getting
started. Now it was Franklin D. Roosevelt (FDR’s) turn he was president from
1932 until his death in 1945.
He was the next American president that had
an opportunity to deal with the depression. “Restoration calls,
however, not for changes in ethics alone. This nation asks for action and
action now….It can be helped by national planning for and supervision of all
forms of transportation and of communications and other utilities which have a
definitely public character. FDR and his advisers believed that Hoover had the
right idea, but they wanted to do more than just follow Hoover’s lead.
FDR’s first New Deal had two very controversial pieces that tried to stimulate
the American economy. The first one was the National Industrial Recovery
Act of 1933. To try and gather an understanding of this act, here is an
excerpt.
To provide for the general welfare by
promoting the organization of industry for the purpose of cooperative action
among trade groups, to induce and maintain united action of labor and
management under adequate governmental sanctions and supervision, and to
eliminate unfair competitive markets. This act has some definite socialist
overtones. FDR wanted the federal government to be very involved in the
public’s lives. The Agricultural Adjustment Act was the other
controversial piece that basically attempted to collectivize the farming
industry to control prices. This was modeled after Hoover’s FFB, but it
had more controls does this sound familiar?
Both leaders realized that something needed
to be done to help the American people. That has been proven.
Hoover attempted to stimulate the economy with tariffs and FDR attempted to
with price and wage controls through the first New Deal. While evaluating
the recovery programs of the two leaders, it is important to keep the American
people’s needs at the top of the list. With that being said, neither
leader kept the basic necessities of the American people in mind when trying to
fix the depression. Food, water, shelter, and heat are things that
people need to survive. Fields of crops were being plowed under while
people were starving to try and fix low prices.
History shows that a capitalist economy needs
time to crawl out of a depression. The political divisions like the
one we are witnessing now prolonged the depression in the United
States until WWII when twelve million men were sent overseas.
Most of the world countries climbed out of the depression sooner than
the United States, so, in essence, political economic formulas prolonged
the depression in the United States.
Too much wealth landed in the hands of too
few people. An article by Ross L. Finney offered a dire prediction in early
1924: "Unless we shift our weight Western civilization will enjoy an
illusive prosperity and greatness for a time, but will then stagger, stumble
and eventually collapse" (January 24, 1924).
Some 19 months before the crash of the
market, editorials scrutinized the problem of unemployment with a growing sense
of urgency. In the face of this "orgy of speculation," editors
argued, religion must "protest a social or industrial order in which men
wallow in sudden wealth which they have not created while their fellows by the
million face want" .The
speculation of the capitalist market allowed for an accumulation of
"undigested wealth" and the separation of means from ends Wall Street
had divorced wealth from activities that led to employment. In addition,
machines had invaded the workplace and massively displaced human labor.
This antagonism toward capitalism surfaced
regularly after October 1929. Given its socialist sensibilities, there were
many people that interpreted the crash of the stock market as an opportunity to
begin a new form of capitalisms. People could no longer ignore the growing and
devastating problem of unemployment. This awareness opened the door to social
solutions most Americans would have rejected as unacceptable only a few years
before. Editorials supported legislation designed to account for the
unemployed, to establish public works projects to enable their return to work,
to provide for newly unemployed through a national unemployment insurance
program, and to create a national bureau of unemployment to stay on top of the
problem.
The crash of the market also offered
Americans the opportunity to reflect on a new understanding of the problem of
greed. Americans, said some editorials, have been too quick to condemn
racketeering, "the poor boy’s easy road to quick wealth," while
ignoring ways "the son of a comfortable home seeks to make his pile and
make it quickly". In addition, the country’s obsession with its
"standard of living" had to be balanced against the needs of the rest
of the world. Standing pat on the traditions under which the present absurd
inequities have grown up” would not solve problems like these, concluded. Editors
grew impatient with President Hoover’s unwillingness to use federal means to
address the social crisis. Hoover urged private charities, and the
organizations of local communities where hunger existed, to step up to meet the
need. Many people judged the president’s response entirely inadequate. His fear
of the dangers associated with the federal "dole," argued editorials,
ignored the fact that poverty emerged more from the defects of the system than
from the "personal shortcomings of the sufferers.
The depth of the depression demanded a
federal response, one that would establish a "permanent deposit of
advanced social legislation." Hoover, to the growing dismay of editors,
ruled such legislation out of bounds. "How bad must things become,"
asked one editorial, "before the nation is ready" to enact legislation? Hoover’s local-community approach
would "prove to be not only tragically inefficient but scandalously
inequitable". Roosevelt’s landslide victory was a sign that Hoover got it
wrong in some people’s eyes. Once elected, and once the extent of his program
to deal with the depression became evident, Roosevelt quickly gained
enthusiastic endorsement. With 16 million people out of work, editors declared
Roosevelt’s "readiness to experiment with new policies his greatest asset
and the nation’s greatest ground of hope". As Roosevelt exercised
emergency power to deal with the banking crisis, revise the relationship
between American currency and gold, and establish the Tennessee Valley
Authority, editors hailed the arrival of "a new United States.
Editors interpreted the administration’s orchestration
of the national recovery act as a commitment to graft socialistic principles
into the American capitalist system.
This philosophy of "socialized
capitalism" encouraged the idea that "business exists for the
community" instead of "the principle that a business exists for
itself, that is, for the profits it can make for its owners. But editorials
simultaneously noted that the National Recovery Administration (NRA) depended
too much on voluntary compliance. Ultimately, Roosevelt’s new system set no restrictions
upon profits. And here it necessarily faltered. "Can human nature which has been so long conditioned by the
stimuli of capitalism," discipline itself while still subject to the same
stimuli, to the point of curtailing its greed for profits when profits are to
be had?"
In addition to anxiety about the overwhelming
influence of the profit motive, many also worried about whether the power of
labor organizations could develop rapidly enough to counter the autonomous
industrial associations. Small businesses also tended to suffer under
self-regulation provisions that favored the efficiency of the mass-producing
abilities of larger businesses. This weakness surfaced more clearly as time
passed. Editors also knew that the extension to the South of NRA codes
mandating minimum wages would likely cause displacement of black workers
without creating an effective remedy.
At a time when the vast majority of clergy in
America disapproved of Roosevelt’s New Deal reforms. By 1937, many aspects of
Roosevelt’s New Deal had successfully taken root. Labor gained strength.
Legislative checks against the worst abuses of big business seemed securely in
place. Social Security provided unemployment and pension insurance. Welfare
programs eased the suffering of the poor. Roosevelt’s domestic policy had
produced a reformation of American capitalism.
