MIA: Encyclopedia of Marxism: Glossary of Events



New Deal

The New Deal” was the program on which Franklin D. Roosevelt was elected President of the United States in 1933 – to reduce unemployment, introduce welfare for the poor and deal with the devastation of the Great Depression and its causes, and in doing so vastly increase the extent of government intervention in the economy. The term comes from Roosevelt’s acceptance speech at the Democratic Convention in July 1932. That November, Roosevelt received a landslide endorsement for the “New Deal”, much of which was enacted within the first one hundred days of his presidency, making Roosevelt a hero to millions of Americans.

The new administration’s first objective was to alleviate the suffering of the nation’s 15 million unemployed. The Works Progress Administration (WPA) and the Civilian Conservation Corps were established to dispense emergency and short-term governmental aid and provide temporary work, employment on construction projects, and youth work in the national forests. Before 1935 the New Deal focused on revitalising business and agriculture. To revive industry, the National Recovery Administration (NRA) was given authority to draft industrial codes to control trade practices, wages, hours, child labour, and collective bargaining. The New Deal also tried to regulate the nation’s financial hierarchy in order to avoid a repetition of the Wall Street Crash of 1929. The Federal Deposit Insurance Corporation (FDIC) granted government insurance for bank deposits in member banks of the Federal Reserve System, and the Securities and Exchange Commission (SEC) was formed to prevent fraudulent stock-market practices. The farm program was centred in the Agricultural Adjustment Administration (AAA), which attempted to raise prices by controlling the production of staple crops through cash subsidies to farmers. In 1933, the Tennessee Valley Authority (TVA) was set up to organise a vast public works program to supply cheap electricity, prevent floods, improve navigation across seven states.

In 1935, the New Deal emphasis shifted to measures designed to assist labour and other urban groups. The National Labor Relations Board (NLRB) was set up to regulate industrial relations and it increased the power of unions to organise in factories where the bosses resisted unionisation. Social Security measures were enacted in 1935 and 1939, to provide for old-age and widows’ benefits, unemployment compensation, and disability insurance. Working hours were limited and minimum wages were set in some industries in 1938. By the end of World War II, nearly one-third of U.S. workers were union members.

The economic ideas of the New Deal closely follow the ideas of John Maynard Keynes and the political logic borrowed much from the British Fabians. The New Deal generated crazed opposition from large sections of the ruling class and the Supreme Court was mobilised to try to over rule some of Roosevelt’s measures, but all such attempts failed, and the majority of the New Deal laws came to be accepted by Democrats and Republican parties alike as permanent features of American life.

In 1933, to all the world it appeared that capitalism had failed – millions lived in miserable poverty, and Europe was racked by civil strife and fascism. Only the most dramatic inroads into “free enterprise” could have avoided world revolution.

After the War, many countries in Europe and elsewhere instituted their own versions of the New Deal to head off threatened revolutionary movements as workers returned from the front, unlikely to return to selling apples on the street corners.