Class Struggle and the New Deal: Industrial Labour, Industrial Capital and the State (Studies in historical social change)

Class Struggle and the New Deal INDUSTRIAL LABOR, I NDUSTRIAL CAPITAL, A ND THE STATE

Rhonda F. Levine

o

University Press of Kansas

© 1�88 by the University Pre$S of Kansas All rights reserved

Published by the University Press of Kansas (Lawrence, Kansas 6604;), which W2S organized by the Kansas Board of Regenls and is operated and funded by Emporia State University, Fort Hays State UniV('csiry, Kansas State University, Pinsburg State University, the University of Kansas, and Wichita State University Library of Congress Cataloging-in-Publication Data Levine, Rhonda F. Class struggle and the New Deal industrial labot, industrial capital, and the state I Rhonda F. Levine. p. cm. - (Studies in historical social change) Bibliography: p. Includes index. ISBN 0-7006-il49Ml (pbk.)

1. United States-Economic policy-1933-194�. 2. Social conflict­ United States-History-20th century. 3. New Deal, 1933-1939. I. Title. U. Serics. HCI06.J.LJ98 1988 88-17183 338.97 J-dcl9 CIP Printcd in the United Statcs of America 10 9 8 7654J2

FOR ROSE ESTHER LEVY my appreciation for the past FOR jEREMY ROBERT LEVlNE-MURRAY my hope for the future

CONTENTS

Preface

IX

The Capitalist State, Class Relations, and the New Deal New Deal Historiography and Problems of Conceptualization State Theory and the New Deal An Alternative Class-Centered Approach The Argument i n Brief 2

3

4

The Process of Capitalist Development: Capital, Labor, and the State, 1890-1929

7 12 14

20

The Tendency toward Concentration and Centralization of Capital Changes in the Labor Process and the Relations of Production The Dynamic of the Class Struggle The Accumulation of Capitalist Contradictions

43

The Crisis and Its Impact on Labor and Capital

47

The The The The

47

Specificity of the Crisis in the United States Crisis and Capi tal Crisis and Labor Political Scene

The National Industrial Recovery Act the Crisis

as

a State Solution

22 27 33

49 52 57 to

Recovery Proposals and the Roosevelt Administration Immediate Stimulus to the NIRA: The Black Thirty Hour Bill Legislating the National Industrial Recovery Act The National Recovery Administration and the Codes of Fair Competition The Demise of the NlRA Contradictions of State Policy 5

4

64 64 69

73 79 85 87

The Monopoly Debate and Imracapitalist Conflict

92

Capital's Response to the NIRA The Monopoly Debate

99

94

V11

VUl

Coments

Monopoly Capital, Nonmonopoly Capital, and the State Apparatus 6 Industrial Labor and the Struggle for Union Recognition The Rejuvenation of Labor Militancy

106 109 109

Labor's Response to the NIRA

III

Labor Militancy under the Blue Eagle

114

A National Policy for Industrial Labor

133

7 Industrial Unionization and the Political Scene Rifts in the Labor Movement and the Emergence of the CIO

137 137

The Struggle for Unionization Continues

139

Capital's Class Struggle against Labor

145

Industrial Labor and the Political Scene

148

The Organization of Basic Industry and Political Incorporation

152

8 Foundations for a Restructuring of the Political and Economic Order

155

Recession, Repression, and Political Incorporation

155

The Reorganization of the State Apparatus

158

The Restructuring of Capitalist Development

171

Notes

177

Bibliography

203

Index

225

PREFACE

The conjoined impact of the 1970s world economic downturn and the persis­ tent business slump in the United States engendered a serious reassessment of the 1930s Great Depression and the lessons that it might contain for contem­ porary policy makers. The apparent inability of Keynesian techniques to provide a lasting solution to business cycles has stimulated radical departures from the prevailing economic orthodoxy. So-called supply-side economics-with its em­ phasis on strict monetary controls, savings and investments. private entrepre­ neurship, and a roll back of state regulations-suddenly emerged as the practical panacea that would arrest and reverse the business downturn. The fortuitous coincidence of this fiscal neopopulism in mainstream economics and the neo­ conservative political resurgence under the Reagan presidency coalesced in a common quest for a broad, all-encompassing paradigm that would displace welfare-state liberalism with an aorisrarism laissez-faire standard. This neacon­ servative backlash has not only challenged existing state-sponsored social pro­ grams but has also questioned the very premises upon which welfare-state lib­ eralism was founded in the first place. Stripped to its essence, neoconservative ideology has not only instinctively targeted the Roosevelt administration's New Deal reforms as the basic foundation for the postwar Democratic party's liberal­ ism but has also placed the blame for the persistent 1970s-1980s "stagflation" on the historical legacy of the New Deal's "Big Government" predilections and antiwbigwbusiness rhetoric. The Roosevelt administration's New Deal recovery program originated in a specific historical conjuncture in world history and politics. The New Deal and the historical legacy that it spawned marked a decisive watershed in the structural relationship between the entire trajectory of capital accumulation and what, loosely speaking, can be termed state interventionism. For the first time in United States history (with the possible exception of the World War I era), top-level state officialdom wrested political authority for the executive branch to actively adjudicate conflicts between labor and capital and between fractions of capital, to establish economic ptiorities and provide the profitable incentives for businessmen to leap at the chance to realize them, to tinker with macroeconomic trends through the judicious use of fiscal and monetary mecha­ nisms, and finally, to establish the programmatic foundation for an envelope of economic security for those who were unable to achieve it through their own devices. The New Deal was anchored in its particular program for industrial recovery, IX

x

Preface

the National Industrial Recovery Act (NIRA), which became the cornerstone of the entire industrial-recovery program_ These elemental features of the New

Deal can be understood sui genens. Yet more importantly, a detailed analysis of the New Deal indu.stcial-n:cO\·tlY prvgram can illuminate a LroaJ range of perplexing questions that were just as appropriate at the time of the Great De­ pression of the 1930s as during other periods of severe business decline. The anal­ ysis of the New Deal industrial-recovery program can provide a starting point for uncovering the structural limits to political decision making during a pe­ riod of severe economic decline. During all economic crises, analysts have come forward with solutions (0 the economic impasse. For state officials, elected repre­ sentatives, and bureaucrats, political solutions (0 economic crises seem not only historically possible but also conceptually unproblematic. The underlying aim of the historical investigation of the New Deal that I undertake in this book is to establish the factors that governed the concrete prerogatives of policy makers in the Roosevelt administration. This explanation of the material and historical preconditions for the New Deal industrial-recovery programs has serious implica­ tions for theories of the capitalist state in general and for the determinants of policy making in particular. This book originated as a doctoral dissertation. There are a number of people whom I would like to thank for their constructive comments at the early stages of my research. Melvyn Dubofsky and Melvin M. Leiman helped me to clarify historical and economic material respectively. James A. Geschwender nO{ only offered helpful comments during the initial stages of writing but he also has supported the process of transforming what was then a dissertation in(O what is now a book. Comments made by Perry Anderson, Suzanne de Brunhoff, and Manuel Castells were panicularly instructive in the process of revising this manu­ script for publication. Manuel Castells was especially supportive of my research, and his continual faith in my work helped me in sustaining the stamina neces­ sary to revise, and revise again, until the project was completed. I am especially grateful for comments by Larry J. Griffin, SCOtt G. McNall, andJill S. Quadagno. Larry Griffin's comments helped me to sharpen my argu­ ment at various places in the manuscript. Although we disagree on a number of matters, his critique has sharpened my appreciation of the strengths and weak­ nesses of this book. I owe more than a mere thanks to SCOlt McNall and Jill Quadagno. Their comments were not only indispensable during the final stages of writing, but [heir emhusiastic support and guidance made the final stages of completing the manuscript an experience I will always treasure. Such collegial support is a rarity in today's academic markecplace. Numerous archivists and librarians at the National Archives, the Tamimem Institute, the Franklin D. Roosevelt Library, the George Arems Research Library, the Jackson Library of Business, the Hoover Institution on War, Revolution and Peace, the Bancroft Library, the AFL-CIO Library, and the International Long­ shoremen's and Wasehouseman's Union Library were especially helpful in locating

Preface

Xl

material pertinent to my research projecr. A grant from the Eleanor Roosevelt Institute helped finance my numerous trips to the FDR Library. The manuscript collection held at the FOR Library proved invaluable for my understanding of the complexities surrounding the policy-making process. My very special thanks go to Margaret Abbott and Thelma Mayer for their secretarial assistance in the final preparation of this book. I am panicularly grate­ ful to Thelma Mayer, who never seemed to lose her patience with what might have seemed like endless revisions. Finally, I wish to thank my family. My parents, Rae and Frank Levine, have been supportive of this project from the beginning. Martin Murray offered con­ structive criticism throughout the writing of this book, and although I am not always willing to admit it, I do appreciate the time and energy he spent wirh me going over various drafts. Last, but cenainly not least, I wish to acknowledge Jeremy Robert Levine-Murray. Although his birth did indeed throw me off my original timetable for completion, his good-natured temperament provided me with the incentive to finish a project that I began long before he was conceived. I am quite confident thatJeremy, along with others in my family, is as relieved as I am that this book is finally completed.

CHA PTER ONE

The Capitalist State, Class Relations, and the New Deal

The Great Depression of the 1930s represented an unparalleled economic crisis in the United States. The "boom years" of the 1920s were characterized by tre­ mendous industrial expansion both in scale and scope, the rapid concentration of social wealth, and an unequal modus vivendi between capital and labor in which the former subjected the latter to an accelerated pace of production. In retrospect, visible signs of the impending economic crisis abounded. Neverthe­ less, the confident optimism in business cycles that was shared almost univer­ sally came to an abrupt halt with the stock-market crash in October 1929. By 1932 the plummeting price of overvalued stocks had brought a decline of more than 38 percent in national income, more than five thousand bank failures and eighty-five thousand business bankruptcies, and an unemployment rate of 23.6 percent of the civilian labor force.' Representatives of small-scale capitalist firms­ nonmonopoly capital-placed the blame for the profit squeeze and the expanded tate of bankruptcies among small-to-medium-sized manufacturing firms on the increased concentration and centralization of capital-monopolization - in the principal branches of industrial production. Consequently, they sought relief from the federal government in the form of revitalized antitrust legislation that would renew competitiveness and profitable opportunities and hence restore economic stability on the basis of a free-market ideology. In contrast, the repre­ sentatives oflarge·scale capitalist firms- monopoly capital-argued quite vocif· erously that huge capital investments in manufacturing plants were responsible for the heightened economic prosperity of the 19205. Hence, the domination of a few large firms in ever-expanding industry was certainly not the source of economic woes; it might even be the solution for them. If economic difficulties did exist, they were caused by unreliable markets. Monopoly capital sought state aid in stabilizing the market by calling for an easing of the antitrust laws and for the self-regulation of industry through price fixing and profit control. As unemployment continued to rise during the early years of the depression, wages fell, and the hours of work increased fot hundreds of thousands of em­ ployed workers. Total wages within the industrial sector had fallen some 20 per­ cent by June 1930, and real weekly earnings of those employed in manufactur­ ing and mining had declined by 15 to 30 percent.' Unemployed workers sought federal aid in relief for unemployed families as leftist political groups became more active in the struggle for relief and unemployment insurance. Employed workers concentrated on defensive goals: resisting wage decreases and demand1

2

Chapter One

ing wage rates that would support their families. Leaders of organized labor called on the federal government to institute some son of industrial-planning measure that would benefit workers. The Hoover administration did virtually nothing either to restore business confidence or concretely to relieve the suffering of the impoverished and the bankrupt, believing instead that tinkering with recurrent business cycles would only exacerbate an already difficult situation. Holding on to a laissez-faire ide­ ology, the Hoover administration declared that the depression was temporary. The result of economic recklessness, it could be overcome through voluntary measures adopted by leaders of the banking, business, labor, and agricultural communities. The 1932 presidential election and the victory of Franklin D. Roosevelt in­ dicated the general discontent and the overwhelming repudiation of a state ad­ ministration that based its policies on laissez-faire ideological premises. As soon as Roosevelt had taken office in March 1933, his administration attempted to PUt into motion plans and programs for industrial economic recovery by first concentrating on a policy that would alleviate antitrust provisions. regulate pro­ duction, and control prices to stimulate investments. The National Industrial Recovery Act (NIRA) stood as the centerpiece of this grandiose scheme to over­ come industrial economic decline. Through the "codes of fair competition," rep­ resentatives of firms within a particular branch of industry would come together and establish price- and production-control guidelines for their industrial branch. In exchange for an implicit promise of cooperation with management, the Roose­ velt administration assured industrial labor that it would set minimum wage standards and maximum hours of work through specific codes of fair competi­ tion and that it would also, through section 7a of the NlRA, guarantee indus­ trial workers the formal rights to join unions of their own choosing without management reprisals. The Roosevelt administration theorized that regulated industrial competition, in tandem with a more-or-Iess guaranteed standard of living, would assure the conditions of economic recovery. The formulation of the NIRA appeared to coordinate the perceived interests of both industrial capital and industrial labor within an overall joint project to generate economic recovery. Labor leaders confidently surmised that the provi­ sions of NlRA's section 7a provided the type of protective shield that would guarantee formal rights to form unions and to bargain collectively. It soon be­ came evident, however, that they had misread the signals. Employers, remaining wary of the provisions of section 7a, nevertheless welcomed state-regulated price controls and production-output codes. Monopoly capital received the much­ desired lifting of antitrust provisions. Nonmonopoly capital thought that it re­ ceived protection from monopolies and that it could now remain competitive in the industrial market. Contrary to its design, the NIRA did not effectively stimulate economic re­ covery, it failed to adjudicate the already delicate competitive relations between

The State, Class Relations, and the New Deal

3

monopoly and nonmonopoly capital, and it never convinced an otherwise suspi. cious organized labor movement that the newly created triumvirate - the part· n ership between capital labar, and the state-was in its best interest. The NIRA's ,

performance did not match its promise. While the codes of fair competition were designed to benignly coordinate the market in the interest of both mo­ nopoly and nonmonopoly capital, they actually contributed to the increased con­ centration and centralization of capital. Consequently, large firms found them­ selves in a much more favorable structural position to obtain larger market shares and to expand in size and scale. Small-to-medium capital was unable to withstand the competition. Hence, the NIRA codes of fair competition served to heighten the conflicts between fractions of monopoly and nonmonopoly capi­ tal. Moreover, the refusal of many employers to abide by the labor provisions in section 7 a meant that organized labor was unable to recruit membership wirhout conflict and confrontation. Rebuffed on the shop floor and believing that the Roosevelt administration had ignored their plight, units of industrial labor in the yet-to-be-organized basic, mass-production industries adopted new strategies and tactics to match their perceived enemies. Strike activity took on new proportions as industrial workers demanded the right to organize and join unions of their own choosing. In the face of rising working-class unity coupled with determined militancy, the industrial capitalist class appeared to lose mo­ mentum and to retreat into internecine squabbling. The concatenation of rising labar militancy and of the erstwhile convenience that was uniting the emergent industrial union movement with the Democratic party brought together a unique convergence of social forces. In order to slow the rising tide of labor militancy and class unruliness, the Roosevelt administra· tion enacted the National !.abor Relations Act (NLRA) inJune 1935. The NLRA, by guaranteeing industrial labor the right to join unions of their own choosing and to engage in collective· bargaining arrangements with employers, gave in· dustrial labor the much·desired state machinery to enforce labor's right to orga· nize independent unions and to protect industrial workers from employers' re· fusals to engage in collective· bargaining agreements with unions that were elected by a majority of workers. Moreover, this legislative enactment altered the course of the class struggle. Through the NLRA, the industrial union movement had acquired a special legal standing with both industrial capital and rhe stare ad­ ministration. In addition, organized industrial tabor found a "political voice" through the medium of the Democratic party within the national political arena. On the capitalist ftont, nonmonopoly capital criticized the New Deal industrial­ recovery program for fostering monopoly growth, whereas monopoly capital increasingly became disenchanted with the apparent prolabor policies of the Roosevelt administration. Intracapitalist conflict increased over the "monopoly" issue, and the divisions within the class provided barriers for structural changes within the state apparatus, such as the reorganization of the executive branch. Yet, by the end of the 1930s, the industrial economy was recovering from the

4

Chapter One

worst effects of the depression, primarily because of war· related production; large-scale corporate capital had come co dOlninalt: key state agcnc��s; and in­ dustrial labor had entered into an unequal relationship with industrial capital at the level of the state. In brief, the pclitical and ecc