How World War II forged a liberal (Keynesian) view of government in the United States – Alan Brinkley’s classic account
Alvin hansen had been one of the principal economic advisers to the New Deal for nearly three years when he traveled to Cincinnati in March 1940 to speak to a group of businessmen. After his address, someone in the audience asked him what must have seemed a perfectly reasonable question: “In your opinion is the basic principle of the New Deal economically sound?” Hansen could not answer it. “I really do not know what the basic principle of the New Deal is,” he replied. “I know from my experience in the government that there are as many conflicting opinions among the people in Washington under this administration as we have in the country at large.”
Hansen’s confusion was not uncommon in the cluttered, at times incoherent, political atmosphere of the late New Deal. The Roosevelt administration had moved in so many directions at once that no one could make sense of it all. Everyone was aware, of course, of what the New Deal had done—of the laws it had helped pass, of the programs it had created, of the institutions it had launched or reshaped. But as Hansen suggested, few could discern in all this any “basic principle,” any clear prescription for the future. Only a few years later, however, most American liberals had come to view the New Deal as something more than an eclectic group of policies and programs.
By the end of World War II, it had emerged as an idea: a reasonably coherent creed around which liberals could coalesce, a concept of the state that would dominate their thought and action for at least a generation. To some extent, battered and reviled as it has become, it remains at the center of American political life still. … two broad approaches to the problems of the economy— increased state regulation and increased use of fiscal policy—coexisted relatively easily in the late 1930s. Indeed, most New Dealers considered them two halves of a single strategy and seldom thought very much about the differences between them.
What bound these two strategies together most closely was an assumption about the American economy that suffused liberal thought in the late 1930s and helped drive efforts to discover a new role for the state. Even before the 1937 recession, doubts had been growing within the New Deal about the nation’s capacity ever again to enjoy the kind of economic growth it had experienced in the half-century before the Great Depression. The setbacks of 1937 only reinforced those concerns. The economy had been dragging for nearly a decade; sluggish growth and high unemployment were beginning to seem part of the natural order of things. Out of those fears emerged the concept of the “mature economy.” …
But the partnership of the regulatory and compensatory visions, which for a time had seemed so natural and untroubled, did not last, at least not on equal terms. By 1945, the idea of the administrative state, which had seemed so powerful in the late 1930s* was in decline; and the (Keynesian, AT) faith in fiscal policy, so tentatively embraced in 1938, had moved to the center of liberal hopes. The reason for that change was not simply that the spending initiatives of the late 1930s seemed to work; even when they did, many liberals continued to consider spending little more than a temporary stopgap and continued to believe that more lasting statist solutions were necessary. The change was also a result of the American experience in World War II. …
The labor movement, similarly, encountered during the war intense popular hostility, along with strong pressure from the government to abandon its more ambitious political goals. Its accommodation with the state, and its alliance with the Democratic party, limited its capacity to act as an independent political force and to press for structural economic reforms. Liberals who had once admired the collective character of some European governments looked with horror at the totalitarian states America was now fighting and saw in them a warning about what an excessively powerful state could become. And the emergence of an important American role in the world, which virtually all liberals came to believe must extend indefinitely beyond the end of the war, directed attention and energy away from domestic reform ideas.
But the war had two more direct effects on liberal hopes for the state. It forced American government actually to attempt many of the aggressive managerial tasks that reformers had long advocated. The results of those efforts not only failed to increase faith in the ability of the state to administer a rationalized economy but actually diminished it. At the same time, the war spurred a revival of the economy that dispelled some of the doubts liberals had once harbored about the capacity of capitalism to expand and the ability of private institutions to govern themselves. …
By 1945, however, the wartime experience had led most to conclude … that neither a new economic order nor active state management of the present one were necessary, possible, or desirable; that the existing structure of capitalism (including its relative independence from state control) represented the best hope for social progress; and that the government’s most important task was less to regulate the private economy than to help it expand and to compensate for its occasional failures.
Source: Brinkley, “The New Deal and the Idea of the State” (1990)
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After the truth-shower 