Deal Reforms Research Articles

The Most Iniquitous Lobby: The Committee for Constitutional Government and the Shaping of American Politics, 1937–1955

AbstractThis article examines the Committee for Constitutional Government, a conservative organization that spearheaded a novel form of mass-based mobilization and direct-mail propaganda to counter New Deal reforms from 1937 to the late 1950s. I argue that the members of the committee offered a supple and variegated response to New Deal liberalism, one with deep roots in the American past. Organizationally, the committee differed from other conservative groups of the period in the vastly greater reach of its propaganda, the small-donor financial base of its operations, and its extensive cultivation of a grassroots movement committed to right-wing reform. The committee was a critical political actor from 1937 to 1955, systematically shaping legislation and countering the trend toward social democracy in America. The ultimate result of its campaigns was to retard the growth of the administrative state and help formulate a cogent conservative critique of reformist liberalism.

Playing Politics with Natural Disaster: Hurricane Agnes, the 1972 Election, and the Origins of FEMA

Playing Politics with Natural Disaster: Hurricane Agnes, the 1972 Election, and the Origins of FEMA

ОБРАЗ ВІЙНИ В АМЕРИЦІ ТА ОБРАЗ АМЕРИКИ У ВІЙНІ: СТРАТЕГІЇ ВІЗУАЛЬНОЇ ПРОПАГАНДИ США У 1939-1945 РОКАХ

The article explores the strategy of American visual propaganda during World War II. The author demonstrates how the methods and forms of propaganda reflected the general trends in the socio-political life of the United States from 1939 to 1945. The strategies adopted by the state were aimed at shaping the image of the war within the country, which was geographically distant from the theaters of war, as well as creating practices for representing the image of America in the global conflict. This approach was driven by the fact that the issue of relations between the United States and the outside world, particularly with European countries, was traditionally associated with the problem of self-identification of Americans, who were born as a nation in the struggle against the former metropole. It has been established that the success of military propaganda was ensured, in particular, by the infrastructure of social relations in the field of art created by the New Deal reforms, namely, the Federal Art Project (FAP) program. Collaborating with the state in the 1930s, artists emphasised the «American» and democratic nature of US art, which allowed it to be successfully instrumentalised during the war to serve ideological needs. According to the author, one of the most demonstrative examples is the interpretation of the concept of «Four Freedoms» by F. D. Roosevelt in the paintings of N. Rockwell, who «translated» the president's abstract statements into a visual language understandable to the people. Several projects organized by the Museum of Modern Art (MoMA) in New York, which were supported by US ministries, are also indicative. These include the 1941 war poster competition and the exhibition project «Airways to Peace. An Exhibition of Geography for the Future,» featuring politician W. Willkie. Due to the predominant use of radio and cinema in the dissemination of propaganda, the work of MoMA during World War II acquired special significance: both the artist and the viewer were endowed with an important social function of participating in the defense of the country's freedom and independence. The article shows how the direct involvement of the population in the process of propagating (re)production contributed to the rapid acceptance by Americans of the political goals of the United States during the war and in the post-war world.

Money, Power, and the People: The American Struggle to Make Banking Democratic by Christopher W. Shaw

Money, Power, and the People asserts that common Americans fed up with the repeated financial panics and economic downturns of the nineteenth and early twentieth centuries fixed the American banking system with New Deal banking reforms like federal-deposit insurance. In the decades of banking stability that followed World War II, however, the people forgot how to conduct “banking politics,” creating a vacuum that allowed bankers to exert “private power in the pursuit of profit without regard to the public welfare” (12). Another wave of crises and runaway-wealth inequality resulted. Occupy Wall Street and other grassroots movements, however, portend an end of the anomalous postwar detente between Americans and their financiers.Shaw, a historian by training, is silent about his methodology, which, so far as can be ascertained, is that of traditional narrative history. The story begins with the Panic of 1907 (Chapter 1) before moving to the Emergency Currency Act of 1908 (Chapter 2), which established the National Monetary Commission and led to the postal savings system and the Pujo investigation (Chapter 3). Next comes the formation of the Federal Reserve System and the Federal Farm Loan System (Chapter 4). The Federal Reserve System committed “the crime of 1920” and necessitated passage of the 1927 McFadden Act to prevent national banks from switching wholesale to state banking charters (Chapter 5). Depression-era debates about wages and depositor fees follow, as do discussions of bank runs and banking crises, the Reconstruction Finance Corporation, and the ideas of Rev. Charles E. Coughlin and Jacob S. Coxey, Sr. (Chapter 6). Shaw follows with a discussion of the New Deal reforms, including state and federal bank holidays and the Emergency Banking Act (Chapter 7), the Banking Act of 1933, including Glass-Steagall (Chapter 8), and the National Housing Act of 1934 and consumer-oriented financial institutions like credit unions (Chapter 9). Then he describes some non-banking New Deal reforms and calls for the nationalization of credit before moving to the Banking Act of 1935 (Chapter 11) and covering the decline (Chapter 12) and fall (Chapter 13) of banking politics in postwar America and recent signs of its resurrection (Epilogue).Citations (but no bibliography) reveal that Shaw used a mix of archival and printed primary and secondary sources to spin his story without citing, much less seriously engaging, financial, macroeconomic, or monetary histories that come to conclusions diametrically opposed to his. Since he collected no new data and makes no claims about discovering new archival material, readers have no objective reason to prefer Shaw’s interpretation over those of others.Objective reasons for rejecting Shaw’s interpretation, however, abound. Foremost is the large literature, ably summarized by Hogan and Johnson, showing that although federal-deposit insurance reduces the likelihood of bank runs, it also proportionally reduces depositor monitoring of the risks that bankers take and thus does nothing to reduce bank failure rates.1 Postwar banking stability (1940s–1960s) was due to America’s economic dominance and interest-rate regulation, not deposit insurance.Similarly, the Public Choice banking literature, best epitomized by the work of Calomiris and Haber, presents farmers, industrial workers, and other populists not as a sacrosanct majority but as special-interest groups with views that were often wrong or self-serving.2 Intentionally or not, Shaw insinuates that populist proposals represented valid policy choices even though contemporaries knew them to be problematical. He lauds North Dakota’s successful state-owned bank, for example, without noting that many other government-run banks, like one established by Peter Norbeck in South Dakota, failed decisively.In short, Money, Power, and the People cannot be recommended as a work of either interdisciplinary or financial history. Its sole value is as a tolerably well-written and researched social history of common people who disliked official U.S. banking and monetary policy in the first half of the twentieth century.

Subiektywna deprywacja jako determinanta działań Prawa i Sprawiedliwości. Przypadek programu Polski Ład

The aim of the article is to define the meaning of subjective deprivation within the political communication of Law and Justice. The analysis is a case study and concerns the Polish Deal reform program. The article is based on a qualitative approach in research on populism (the subject of the analysis are the statements of PiS leaders). The research problem concerns the question: is there any content that qualifies for the space defined by the category of subjective deprivation in the arguments for the Polish Order? The study shows that the arguments for the Polish Order referred to subjective deprivation in terms of both the improvement of the standard of living in the economic dimension as well as the position in society. PiS leaders announced actions to eliminate the differences between the standard of living in large cities and suburbs, and between Polish and Western society. The category that constituted an important element of the argument was the middle class, the extension and support of which was announced.

Beyond the New Deal Order: US Politics from the Great Depression to the Great Recession

Beyond the New Deal Order: US Politics from the Great Depression to the Great Recession

Contracting COVID: Private Order and Public Good

The novel Coronavirus (2019) (COVID) has created a dilemma: Open the economy and spread disease; quarantine and choke the economy. Thus far, the response has looked to government for health-safety standards and financial subsidies. Although these are necessary steps, they have become politicized, thereby exacerbating severe uncertainties created by the pandemic. While we will surely halt it, we do not know how, when, or what comes next. Many writers are exploring litigation that will flow from COVID. This Article considers the flip side: the important but under-appreciated role that ex ante contracting plays in addressing the COVID dilemma. Liability waivers, for example, will be ubiquitous, but might be misused to shelter poor risk management. This essay argues that these waivers should be enforceable only when coupled with reasonable health-safety precautions, which may appear in contracts such as workplace rules or supply chain agreements. Without such balance—or worse, when imposed by fiat, as President Trump did in the meat processing industry—they can inflame the public health crisis. At the same time, the COVID-induced shutdown has caused most contracts to be in or near breach. This has resulted in responses such as litigation, bankruptcy, and bailouts. While these may be inevitable, second-order contracts such as standstill agreements provide certainty that enables parties to adjust commercial relationships in ways that may preserve more value at lower cost than public interventions.Contract in this context is thus doing more than creating private order; it is also producing public good. This hearkens to Depression-era scholarship which argued that contract had public ramifications. Although modern writers have largely abandoned that view, it reflected a change in mindset that cleared the way for sweeping New Deal reforms. While we do not yet know whether COVID will be as disruptive as the Depression, the uses of contract described here may signal a comparably dramatic realignment of private and public.

Dimensions of Conflict in the Court-Packing Controversy in America 1936-1937

1936 brought a lot more than the re-election of president Franklin Delano Roosevelt. It was also a year which brought a broad and radical challenge to the New Deal reform policies. American democracy demonstrated its com­plexity and unfinishedness. The conflict between FDR and the Supreme Court has many dimensions: institutional – conflict between the govern­ment (the president, Congress and the Administration) and the US Supre­me Court over the range of powers of each actor; political – regarding the accountability of political elites; socio-economic – regarding the direction of development of American democracy; philosophical – over the meaning of liberty; legal – regarding the separation of powers between the levels of government; personal – between persons and personalities represen­ting divergent visions of power; and historical – reviving the constitutional debates from the early republic. For some, the clash between FDR and the USSC touched the very essence of the representative democracy. After a year, the level of tensions subsided and all parties were scarred, yet the po­litical system as such demonstrated its resilience. Its outcome to these days serves as a pretext for deliberations about the relations between leaders and followers. Events in America may be useful for all countries where the auto­nomy of the judicial branch of government becomes a political issue.

Elegy’s Generation: Muriel Rukeyser, M. L. Rosenthal, and Poetry after the Left

Abstract From the late 1930s through midcentury, poets in the United States reckoned with the decline of the political Left through a practice of elegy. The debates of interwar modernism shifted toward those of a postwar culture in which Depression-era aesthetics and politics came under the pressure of anticommunism. The 1940s work of Muriel Rukeyser, turning away from an earlier documentary poetics, exemplifies her generation’s concern with the continuity between the Popular Front and World War II rather than a retreat from New Deal reform to patriotic consensus. During this understudied period in her career spanning U.S. 1 (1938) and Elegies (1949), Rukeyser enthusiastically joined the efforts of radical poets to recover the legacy of the Spanish Civil War while modifying elegy and adapting popular genres such as the soldier’s letter to the struggles of the present. In their counterintuitive figures of address, meter, and rhyme, Rukeyser’s wartime poems offer a revisionary perspective on modern elegy and, in the context of their reception by the critic M. L. Rosenthal, an alternative to the milieus and politics of late modernism in American postwar literary culture.

The great pyramids of America: A revised history of U.S. business groups, corporate ownership, and regulation, 1926–1950

Research Summary: Control‐magnifying (pyramidal) business groups—multiple tiers of partially‐owned listed affiliates and fully‐owned private affiliates, a dominant organizational form around the world—are virtually absent in America today. Using newly‐assembled historical data, we show that such groups were ubiquitous in the U.S. economy in the 1930s. They came under attack because of their economic and political sway: Some New Deal reforms—proscriptions against public utilities pyramids, intercorporate dividend taxes, and rules governing investment companies—were explicitly aimed at deterring existing groups and preventing new ones from forming. Others, for example, estate taxes and securities law reforms, may have also worked against them. No single reform triggered the immediate dissolution of groups; they broke up under an ongoing anti‐big business sentiment. These events offer lessons for policymakers today. Managerial Summary: Most listed U.S. firms are “standalone”—they do not control, and are not controlled by, other listed firms. Control‐magnifying (pyramidal) business groups—multiple tiers of partially‐owned listed affiliates and fully‐owned private affiliates (e.g., Samsung or Tata)—are ubiquitous around the world but virtually absent in United States. In such groups, the combination of multiple tiers and partial ownership enables control over vast corporate empires. Using newly‐assembled historical data, we show that the U.S. corporate ownership as we know it today is a recent phenomenon: pyramidal groups were common in United States of the 1930s. President Roosevelt, who regarded their economic and political power as excessive, initiated a sequence of reforms which appears to have worn these groups down and probably also kept new ones from forming. JEL CLASSIFICATION: G3, G34, G38, N22.

Boom and Bust Cycles in Financial Markets—Causes and Cures: Multiple Contradictory Functions of Money and Collective Action Problems

The aim of this conceptualization article is to formulate propositions about: (1) systemic faults in established money and financial systems, in particular the mechanisms that make for boom-and-bust cycles; and (2) the cognitive and action factors which limit the central banks capabilities to consistently and effectively to regulate or to limit these cycles. Drawing on earlier research (our own as well as that of others), this conceptualization is presented in Section 1. Section 2 identifies a new design and institutional arrangement, which would minimize the boom-and-bust predispositions in money and financial systems. This work builds on earlier research invested in “the Chicago Plan” (from the 1930s) in addition to our own research. Section 3 considers the expected political and ideological constraints on reforming financial systems. Previously operating constraints—including Neo-liberal erosion of New Deal banking arguments and reforms—make for formidable barriers. The paper concludes that reform is necessary—if boom-and-bust cycles on the scale of those since 1929 are to be effectively regulated; but it is suggested that such reform is politically and ideologically difficult if not impossible in the short-run.

The Age of Anxiety: Patricia Highsmith, Existential Psychology, and the “Decline” Of American Naturalism

This essay charts the development of two entwined intellectual threads during the 1950s: the translation of European existentialism into an American idiom and what Nathan Hale describes as the “golden age of popularization” for psychoanalysis in the United States. I argue that, in concert, these two movements contributed to the erosion of the New Deal regulatory state by elevating psychological—rather than structural or socioeconomic—explanatory templates for social phenomena. In contrast to the literature of the long Progressive Era, in 1950s works the ego and its vicissitudes become the dominant template for understanding society and the self. Patricia Highsmith's novels provide a nodal point for this political and intellectual history as she recasts representations of violence, murder, alienation, class envy, and social mobility in ways that both represent and helped define the legitimation crisis of the regulatory state. Highsmith repudiates a narrative world governed by structural or environmental conditions and—in contrast to literary naturalists like Theodore Dreiser and John Steinbeck—presents the darker corners of human experience as phenomena of the largely autonomous, internal arena of an existential psyche. These shifts in literary tastes, the essay argues, augmented the weakening intellectual purchase of an interventionist New Deal reform agenda during the 1950s.

The Wagner Act on Trial: The 1937 'Little Steel' Strike and the Limits of New Deal Reform

The National Labor Relations Act of 1935, or Wagner Act, played a crucial role in shaping the New Deal and eventually transforming the economic, political, and legal foundations of modern America. Although many aspects of the statute’s history, including its relationship to the rise of industrial unionism and the epic struggle to secure its constitutionality, have been well told by historians and legal scholars, key elements of its story remain obscured by misconceptions, oversight, and outright myth. Not least among these areas of uncertainty is how the new law actually functioned in the months and years immediately after the Supreme Court upheld its constitutionality, and what its fate in this crucial time says about the nature of the New Deal itself. This article undertakes to shed light on these questions by unfolding the history of one of the most important events in the Second New Deal period: the “Little Steel” Strike of 1937. Drawing on a host of sources, including five major archival collections, this article tells the story of this dramatic and violent episode, including its legal history. Presenting the strike as a key test of the Wagner Act and a critical bellwether of the New Deal, the article documents not only the virtues of new regime in labor rights just as it emerged from the shadow of unconstitutionality, but also congenital shortcomings in the labor law that have undermined workers’ rights ever since. In a further challenge to conventional narratives of the period, the story of the strike exposes the remarkable degree to which the power of the business community survived, relatively undiminished, the Wagner Act and the political changes that accompanied it. Moreover, giving credence to a broader literature on New Deal law and policy, the article presents the strike and litigation surrounding it as proof of the continuing weakness of the New Deal and as key moments in the conservative turn that marked course of reform in the late 1930s.

The Past, Present, and Future of the American Left

The Past, Present, and Future of the American Left

The War on Poverty: A New Grassroots History, 1964-1980 ed. by Annalise Orleck and Lisa Gayle Hazirjian (review)

Reviewed by: The War on Poverty: A New Grassroots History, 1964-1980 ed. by Annalise Orleck and Lisa Gayle Hazirjian Jonathan Free (bio) The War on Poverty: A New Grassroots History, 1964-1980. By Annalise Orleck and Lisa Gayle Hazirjian, eds. (Athens: University of Georgia Press, 2011. $69.95 cloth; $26.95 paper; $26.95 ebook) Since the moment Lyndon Johnson declared unconditional war on poverty in January 1964, the antipoverty efforts organized under his martial metaphor have been a topic of hot debate. Surprisingly, though, the least contentious aspect of the War on Poverty has often been the conclusions of its critics. For years, both political commentators and historians from either end of the political spectrum have denounced the War on Poverty as either the misguided effort of an overzealous federal state or a coy liberal diversion aimed at quelling radical dissent. Indeed, one of the few conclusions that critics from the left and right can generally agree upon, it seems, is that in the U.S. government’s war on poverty, poverty won. [End Page 322] Recently, however, historians examining the War on Poverty from the perspective of low-income people have begun to amend this conclusion. The consensus emerging from this new scholarship has not been that poverty was defeated in the mid-to-late 1960s, but rather that the countless numbers of low-income people who participated in the federal government’s attempt to battle poverty were often politicized—and in many cases empowered—by the experience. This compilation provides an excellent and timely showcase of this new interpretation, presenting many of the case studies for the first time. Orleck and Hazirjian organize the essays into four thematic sections, emphasizing the authors’ emphasis on conflicts over community action, women’s activism, the civil rights movement, and evolving ideologies of community development. The result is an edited volume that, like the best of the genre, synthesizes and disaggregates to similarly successful degrees. Some issues, like conflict emerging from disconnects in the priorities and politics of government officials and low-income people, resonate across the essays. For example, this theme is not only evident in Baltimore, where Rhonda Williams highlights the friction between government-run social services programs and the desire of low-income people for self-determination, but also in Houston, where Wesley Phillips outlines a political agenda that, at the grassroots, expanded far beyond the moderate liberalism of the Great Society. But because this book is an anthology and not a monograph, the importance of local context in these issues remains in the foreground. In particular, essays like Marc Rodriguez’s chapter on Tejanos in Milwaukee point to this significance by highlighting how community action not only prompted, but also often required, a reconfiguration of the community itself. Although the collection is generally devoted to the efforts by low-income people to take advantage of the War on Poverty, some essays do offer interpretative diversity. Readers of the Register will no doubt be especially interested in Thomas Kiffmeyer’s contribution, “Looking Back to the City in the Hills: The Council of the Southern Mountains and a Longer View of the War on Poverty in the American [End Page 323] South, 1913-1970.” Whereas most authors in the collection initiate their investigations by posing the question of how studying grassroots participation in antipoverty efforts might reshape the conclusion that the War on Poverty was a failure, Kiffmeyer asks why, in Appalachia, it failed. In part, he argues, low-income Appalachians rejected the War on Poverty because, unlike New Deal reforms, Great Society programs tended to privilege cultural and quality-of-life issues over increased employment and infrastructure improvements. Just as importantly, Kiffmeyer points to the long history of paternalistic reformers who contributed to a pernicious “othering” of the region that local people recognized and resented. Appalachian people rejected War on Poverty programs, Kiffmeyer concludes, because they viewed them as merely the newest examples of outsiders attempting to reshape the region. There is little to criticize about this collection as a whole. The most we can suggest is that other historians read this work, take its questions and methods to heart, and get to work producing the next...

Woody Guthrie, American Radical

Woody Guthrie, American Radical

The thousand-year flood: the Ohio-Mississippi disaster of 1937

In the early days of 1937, the Ohio River, swollen by heavy winter rains, began rising. And rising. And rising. By the time the waters crested, the Ohio and Mississippi had climbed to record heights. Nearly four hundred people had died, while a million more had run from their homes. deluge caused more than half a billion dollars of damage at a time when the Great Depression still battered the nation. Timed to coincide with the flood's seventy-fifth anniversary, The Thousand-Year Flood is the first comprehensive history of one of the most destructive disasters in American history. David Welky first shows how decades of settlement put Ohio valley farms and towns at risk and how politicians and planners repeatedly ignored the dangers. Then he tells the gripping story of the river's inexorable rise: residents fled to refugee camps and higher ground, towns imposed martial law, prisoners rioted, Red Cross nurses endured terrifying conditions, and FDR dispatched thousands of relief workers. In a landscape fraught with dangers - from unmoored gas tanks that became floating bombs to powerful currents of filthy floodwaters that swept away whole towns - people hastily raised sandbag barricades, piled into overloaded rowboats, and marveled at water that stretched as far as the eye could see. In the flood's aftermath, Welky explains, New Deal reformers, utopian dreamers, and hard-pressed locals restructured not only the flood-stricken valleys, but also the nation's relationship with its waterways, changes that continue to affect life along the rivers to this day. A striking narrative of danger and adventure - and the mix of heroism and generosity, greed and pettiness that always accompany disaster - The Thousand-Year Flood breathes new life into a fascinating yet little-remembered American story.

What Kind of Country?: Economic Crisis, the Obama Presidency, the Politics of Loathing, and the Common Good

What Kind of Country?: Economic Crisis, the Obama Presidency, the Politics of Loathing, and the Common Good Gary Dorrien The story of our time is that the common good has been getting hammered for 30 years. Wages have been flat for 35 years, and inequality has worsened dramatically. One percent of the American population controls nearly 40 percent of America’s wealth and a bigger chunk of its politics. The crash of 2008 wiped out $8 trillion of home value, crushing the nest eggs of wage‐earners. The banks that frothed up the crash are doing just fine. Much of the Republican Party is committed to delegitimizing Obama’s presidency, and most of the Republican Party wants to bust public unions and break America’s social contract with the poor and elderly. All of this has created an opening for a democratic surge for social justice and equality. Mercifully, the Occupy Wall Street movement has made a start, but so far, the common good is still getting hammered, and Obama has spent most of his presidency cleaning up an economic disaster. Throughout American history, Americans have debated about the kind of country they want to be. Today, America stands at the crossroads of a decision about the kind of country that America should be, which does not mean that a decision is necessarily imminent, since Americans are deeply polarized. According to the theory of “realignment” favored in political science textbooks, American politics decidedly “realigns” every 30 or 40 years in the wake of a breakthrough election. In 1800, Thomas Jefferson’s Democratic‐Republicans overturned the rule of the Federalists. In 1828, the Democratic‐Republicans split into Democrats and Whigs. In 1860, Abraham Lincoln’s Republicans pulled off the last third‐party triumph, finishing off the Whigs. In 1896, William McKinley consolidated the Republicans as America’s majority party. In 1932, Franklin Roosevelt’s election paved the way to the New Deal. In 1980, Ronald Reagan’s election paved the way to the capitalist blowout of the past generation.1 There is still time for 2008 to be transformational in the sense of these historic elections, ending an era of American politics. But time and opportunity are running out as the Reagan era endures in bizarre forms. Economic inequality, always steep in the United States, got much steeper after Reagan’s policies took hold. In 1981, the top 1 percent of the U.S. population held 32 percent of the nation’s wealth and took in 11 percent of its annual income. Today, these corresponding figures are 39 percent and 25 percent. The top 10 percent of the population hold more than 70 percent of the wealth. The bottom 50 percent hold 2 percent of the wealth. The share of America’s income held by the top 1 percent has more than doubled since 1980, while the bottom 90 percent has, since 1975, coped with flat wages and mounting debt. 2 For thirty years, we have had perplexed debates about how to account for this trend line in an advanced democracy. How could a nation possessing a strong tradition of middle‐class democracy allow the middle class to be eviscerated? Economic globalization, to be sure, unleashed the predatory logic of capitalism, setting off a race to the bottom that feeds on inequality and obliterates cultural values and communities that get in the way. But globalization alone does not account for the American willingness to turn American society into a pyramid. From the late 1940s to 1975, productivity and wages soared together in the United States, creating a middle‐class society. Meanwhile, there were no bank crises, as New Deal reforms kept commercial banks out of the investment business. But wages flattened in the mid‐1970s and have stayed that way ever since, while productivity kept soaring and commercial banks got deeply into the investment business. The rich got fantastically richer in the 1980s and 1990s, while everyone else fell behind, taking on debt to keep from drowning and to keep up appearances, as urged by the advertising industry. During this period, nearly every manufacturing‐oriented society outperformed the United States in income growth and did so with more equitable distributions of...

The Theory of the Firm: The Corporation as Sole-Proprietor Surrogate

The Theory of the Firm: The Corporation as Sole-Proprietor Surrogate

The Past and Future of American Finance: American Experimentalism Without American Exceptionalism

This piece introduces the distinction between financial regulatory reform and institutional reconstruction and argues that efforts in the US and other countries to reform the regulation of finance can and should serve as a first step towards institutional reconstruction. The financial crisis has revealed a series of problems that can be adequately addressed only by initiatives designed to reorganize the relation of finance to the real economy. These problems, we now understand, apply to every country in the world, including the United States. To illustrate the nature and range of alternatives that can serve as points of departure in the project of institutional reconstruction, I contrast three different programs of reform in the area of finance in the US setting: the New Deal reforms; the current regulatory reform agenda (i.e. the “current deal”); and an alternative approach, which I call the “better deal.” I develop the contrast among the three projects by considering five dimensions of change in the basic organization of finance. The purpose of this simple typology is to encourage and to guide us in the search for usable institutional innovations. Two main premises underlie the development of my argument here. A first premise is that the contemporary debates about the adequacy of established institutional arrangements apply to the United States just as much as they do to any other country. A second premise is that many of the concepts and categories required both to understand and to reshape established institutional arrangements exist in the form of legally-defined institutional detail. They are inevitably informed by conceptions of law as well as by ideas about the role of finance in our democracy and in our economy. Legal analysis matters; it has an indispensable – and misunderstood – role to play. It represents a starting point for the disciplinary approach we need in order to understand opportunities and constraints in the world today for transforming finance and other areas of social practice.