Class and Power in the New Deal: Corporate Moderates, Southern Democrats, and the Liberal-Labor Coalition

Class and Power in the New Deal: Corporate Moderates, Southern Democrats, and the Liberal-Labor Coalition

by G. Domhoff, Michael Webber

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Class and Power in the New Deal provides a new perspective on the origins and implementation of the three most important policies that emerged during the New Deal—the Agricultural Adjustment Act, the National Labor Relations Act, and the Social Security Act. It reveals how Northern corporate moderates, representing some of the largest fortunes and biggestSee more details below


Class and Power in the New Deal provides a new perspective on the origins and implementation of the three most important policies that emerged during the New Deal—the Agricultural Adjustment Act, the National Labor Relations Act, and the Social Security Act. It reveals how Northern corporate moderates, representing some of the largest fortunes and biggest companies of that era, proposed all three major initiatives and explores why there were no viable alternatives put forward by the opposition.

More generally, this book analyzes the seeming paradox of policy support and political opposition. The authors seek to demonstrate the superiority of class dominance theory over other perspectives—historical institutionalism, Marxism, and protest-disruption theory—in explaining the origins and development of these three policy initiatives. Domhoff and Webber draw on extensive new archival research to develop a fresh interpretation of this seminal period of American government and social policy development.

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"In Class and Power in the New Deal, William Domhoff and Michael Webber make the bold claim that it was corporate elites, rather than liberals or labor, who crafted the heart of the New Deal. . . Domhoff and Webber make good use of newly available archival sources to show how involved experts in the think-tank world, whom the authors describe as corporate moderates, influenced major New Deal legislation."—Katherine S. Newman, American Journal of Sociology

"This well-researched book is a very important read for students and scholars of history, as well as those of us who are currently studying and working on the policy issues of the New Deal today. It serves as an important resource of the often unrecognized role of business in shaping the social policy we today tend to think of as 'working families' policy."—Mary Gatta, Contemporary Sociology

"Domhoff and Webber, professors of sociology at two California universities, have produced a thoroughly researched and carefully organized examination of the general philosophy of the New Deal and three major acts: the Agricultural Adjustment Act, the National Labor Relations Act, and the Social Security Act. This is a study with which other scholars may disagree, but it is a work that should not be ignored. An extensive, useful bibliography. . . Highly recommended."—P. L. Silver, Choice

"[Class and Power in the New Deal] provides a valuable service by refocusing historical attention on the often-overlooked role of business in shaping social policy in the twentieth century."—Kim Phillips-Fein, Journal of American History

"Domoff and Webber masterfully demonstrate how economic inequalities and the power of business and conservatives provided the unalterable terrain for those who originally conceptualized the New Deal. Using archival collections, the authors decisively resolve previous controversies and offer fresh insights about the impasse of the welfare state and American liberalism."—Clarence Y.H. Lo, University of Missouri
"In this insightful and well-written book, Domhoff and Webber revisit the sometimes acrimonious debates about the origins of New Deal policies and provide extensive evidence that powerful corporate leaders played a major role in agricultural policy, the National Labor Relations Act and the Social Security Act of 1935. Class and Power in the New Deal provides a welcome refresher course on how the 'ownership class' shaped major political decisions during the New Deal and beyond."—Jill Quadagno, Florida State University
"Drawing on newly available archival evidence, Domhoff and Webber investigate the origins and trajectories of three main policy pillars of the New Deal—the Agricultural Adjustment Act, the National Labor Relations Act, and the Social Security Act. Their account challenges existing approaches and proves that their class-domination theory is a bruising contender in explanations of American policy."—Jeff Manza, New York University

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Stanford University Press
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Studies in Social Inequality
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Corporate Moderates, Southern Democrats, and the Liberal-Labor Coalition
By G. William Domhoff Michael J. Webber


Copyright © 2011 Board of Trustees of the Leland Stanford Junior University
All right reserved.

ISBN: 978-0-8047-7453-6

Chapter One

The Power Actors

Six recognizable networks of power participated in the conflicts concerning the origins, aftermath, and implementation of policies during the New Deal. Three of them—corporate moderates, ultraconservatives, and plantation and agribusiness owners—were segments of an ownership class that was dominant in terms of its power to defeat other power networks and shape government policy to its liking. At the same time, the three segments often had disagreements among themselves even while they agreed wholeheartedly on one crucial issue: for them to maintain class power and high profits, their opponents on the other side of the class divide—primarily the trade unionists and the liberals, but also the Communist Party and other leftist groups—had to be thwarted on all their main policy suggestions.

As it turned out, the trade unionists and liberals had even more disagreements and antagonisms among themselves than did the ownership class at the onset of the Roosevelt Administration. Their differences made it all the more difficult for them to gain any traction against an ownership class that entered into the conflicts with many advantages provided to it by previous generations of wealthy land and business owners, who already had shaped the Constitution for their benefit. Earlier generations of property owners also had passed federal legislation that furthered the interests of private property in general and corporations in particular, and obtained rulings from the Supreme Court—which consisted in large measure of corporate lawyers—that made any attempt to challenge the status quo seem all but impossible (see, for example, Burch 1981a, 1981b; Carp and Stidham 1998, for information on Supreme Court justices).

This chapter focuses mostly on the corporate moderates and the plantation capitalists because they had the most fully developed organizational bases and played the major role in originating—or resisting—the policies that we analyze. Organized labor and the small band of liberals are discussed less fully because their separate histories and their relationship are more brief and less complex. Moreover, their coalition did not develop until the New Deal was under way, which means the story of their relationship is best told in the context of the New Deal itself.

Our consideration later in the chapter of the role of the Communist Party may come as a surprise to many readers, but we think the new information that emerged in the 1990s from previously secret Soviet and American files about its large-scale financial support and extensive union involvements provides support for political scientist Harvey Klehr's (1984, p. ix) earlier contention that the party played "a supporting role" in some of the major conflicts of that era. The Communists possessed a combination of ideological, organizational, and financial resources that gave them the potential to have a significant impact. Moreover, they had a larger hand in the disruption during the 1930s than is emphasized by protest-disruption theorists, who stress the threat of grassroots upheaval in explaining New Deal policies. In the final analysis, though, the party had little or no impact beyond, first, its highly organized demonstrations in the early 1930s that contributed to a growing mood of protest and, second, its substantial contribution to the creation of industrial unions in the late 1930s. The Communists' deference to instructions from the Soviet Union on many key policy issues—but not on joining forces with the new industrial union movement, in which the American leaders took the initiative—and their derisive attitude toward liberals and union leaders made them a very unwelcome ally. The exception to this generalization concerned the union-building efforts after 1935, when the anti-Communist leaders of the industrial unions entered into a secret bargain with Communist officials in order to make use of many dozens of the party's union organizers (Haynes, Klehr, and Anderson 1998, pp. 52–68). As the most exhaustive and convincing study of the complex role of Communists in the union movement in the 1930s concludes, they were the strongest expression of working-class radicalism in the United States "despite the supine and craven obedience" of the party's leaders to the political dictates of Soviet leaders (Stepan-Norris and Zeitlin 2003, p. 1).


The appearance of a reasonably cohesive group of corporate moderates just as the twentieth century began was due to two loosely related developments in the last three decades of the nineteenth century, a period in which major technological and transportation advances and the rise of a factory system transformed the economic landscape. First, there were several intensely violent conflicts between workers and their employees that began in 1877 and erupted periodically thereafter. It was an era characterized by several waves of strikes and work stoppages by workers, fierce resistance to unions by almost all employers, and repressive action against labor militancy by all levels of government and corporate-financed detective agencies.

Second, there was a gradual adoption of the corporate form of ownership by business owners in order to raise more capital, limit liability, and allow businesses to continue after the deaths of their founding owners (Roy 1997). The corporatization process started with textile companies and railroads in the early nineteenth century, then spread to coal and telegraph companies after mid-century, and finally to industrial companies in the late 1880s, leading to the creation of dozens of new manufacturing corporations starting in the 1890s (see, for example, Bunting 1987; Roy 1983). At the same time, commercial and investment banks on Wall Street had an integrative role in these developments through their ability to raise capital in Great Britain, France, and Germany; they also contributed to the general leadership of the corporate community and provided large campaign donations to candidates in both political parties (see, for example, Alexander 1992; Carosso 1970; Overacker 1932). Between 1897 and 1904 alone, $6 billion worth of corporations were organized, six times the worth of all incorporations in the previous eighteen years, leading to a situation in which the top 4 percent of companies produced 57 percent of the industrial output: "By any standard of measurement," concludes historian James Weinstein (1968, p. 63), "large corporations had come to dominate the American economy by 1904" (compare with Roy 1997). The result was the emergence of a corporate community that is defined by overlapping ownership patterns, interlocking boards of directors, a shared concern to limit the power of employees, and a common desire to keep the role of government at a necessary minimum (see Bunting 1983; Roy 1983; Mizruchi 1982; Mizruchi and Bunting 1981 for network analyses of the emerging corporate community).

In this context of continuing labor strife and corporatization, along with the return of prosperity in the late 1890s after three years of depression, an "era of good feelings" began to emerge in the nation's factories that encouraged moderate conservatives in some of the new corporations to differentiate themselves from their ultraconservative colleagues. They did so by indicating to union leaders that they might be willing to make bargains with them as a possible way to reduce industrial strife. Then, too, some smaller businesses, especially in bituminous coal mining, thought that unions that could insist on a minimum wage might be one way to limit the vicious wage competition that plagued their industries (Colin Gordon 1994; Ramirez 1978). Moreover, companies were urged by some of the expert advisors of the day to organize themselves into employer associations so they could enter into the multi-employer collective bargaining agreements that are essential in highly competitive industries if unions are going to be useful in helping to stabilize an industry (Swenson 2002).

On the other side of this class warfare, leaders within the most important labor organization of that era, the American Federation of Labor (a federation of craft unions created in 1886), had decided on the basis of several failed efforts that unions could not defeat the burgeoning industrial corporations through ill-timed strikes and spontaneous work stoppages. They also had given up any hope that elected officials or judges might aid them because they saw political entanglements as divisive and were convinced moreover that the new corporate titans dominated government at all levels. They therefore decided it might make sense to react positively to the overtures from corporate moderates. In addition, a few trade union leaders were among the voices encouraging employers to form their own organizations, on the grounds that such organizations would make cooperation and multiemployer bargaining between corporations and labor much easier (Brody 1980, pp. 23–24).

The most visible organization to develop in this changed atmosphere was the National Civic Federation (hereafter usually called the NCF). Formed in 1900 and composed of leaders from both big corporations and major trade unions, it also included well-known leaders from the worlds of finance, academia, and government. Building on this cross-section of leaders, it was the first national-level policy-discussion group formed by the newly emerging corporate community. It therefore has been studied extensively from several different angles (for example, Cyphers 2002; Green 1956; Jensen 1956; Weinstein 1968). The explicit goal of the federation was to develop means to harmonize capital-labor relations, and its chosen instrument for this task was the trade union agreement, or what is now called collective bargaining. The hope for the NCF rested on the fact that some of its corporate leaders stated publicly that the right kind of trade unions could play a constructive part in reducing labor strife and in helping American business sell its products overseas.

In particular, the first president of the NCF, Senator Mark Hanna of Ohio, a mining magnate and Republican kingmaker who had a major role in the election of Republican President William McKinley in 1896 and 1900, was respected by labor leaders for the way he had dealt with striking miners on some of his properties. He also worked to convince his colleagues that the improved productivity and efficiency that would follow from good labor relations would make it possible for American products to compete more effectively in overseas markets because the finished goods would be of both a higher quality and a lower price. In exchange, labor would be able to benefit through employment security and the higher wages that would come with increased productivity and sales (Weinstein 1968, Chapter 1). In terms of present-day theorizing, Hanna and the NCF were trying to create a cross-class coalition or alliance that would be beneficial for both parties (Swenson 2002, pp. 143–144).

Nor did the NCF hesitate to seek the advice of experts, including some who were considered reformers or even liberals, which is another reason for thinking that the corporate moderates were somewhat different from ultraconservatives. The most famous of these reform-oriented experts, who figures in the story of unemployment compensation in Chapter 4, was an atypical economist, John R. Commons, who had been part of many reform efforts in the previous decade. Commons became a researcher and strike mediator for the NCF while managing its New York office from 1902 to 1904. He adopted the NCF emphasis on collective bargaining and championed the concept ever afterward. When he left for a position at the University of Wisconsin, where he trained several of the economists who later worked on the Social Security Act, half of his salary was paid by moderate conservatives in the NCF who admired his efforts. Commons later claimed that his two years with the NCF were among the "five big years" of his life (Commons 1934, p. 133).

At first glance the NCF focus on collective bargaining may seem to reflect the corporate moderate's acceptance of an equal relation between capital and labor in a pluralistic American context, which would not fit with our theory of corporate dominance. In our view, however, collective bargaining is the outcome of a power struggle that reflects the underlying balance of power in favor of the corporations. From the corporate point of view, a focus on collective bargaining involved a narrowing of demands by skilled workers to a manageable level. It held out the potential for satisfying most of them at the expense of the unskilled workers and socialists in the workforce, meaning that it decreased the possibility of a challenge to the capitalist system itself. However farfetched in hindsight, the possibility of such a challenge seemed to have some validity in the early twentieth century due to the volatility of capitalism, the seeming plausibility of at least some aspects of Marx's theory of inevitable capitalist collapse, and the strong socialist sentiments of a growing minority of intellectuals and workers. In this context, it is understandable that moderate conservatives in the corporate community preferred unions for skilled workers to periodic disruption by frustrated workers or constant political challenges from socialists, who won an increasing number of city and state elections in the first twelve years after they founded a new political party in 1901 (see, for example, Weinstein 1967).

From the labor standpoint, collective bargaining over wages, hours, and working conditions seemed to be the best that it could do at that juncture. Despite the growing agitation by socialists, most workers apparently did not think it was worth the costs to organize a political challenge to capitalism, or even to continue to attempt to organize unions that included both skilled and unskilled workers, as some activists had tried to do between 1869 and 1886. They therefore decided to fight for what their power to disrupt forced the corporate leaders to concede in principle; this strategic decision to work toward unions based on bargaining for better wages, hours, and working conditions was embraced even by the committed socialists who predominated in a handful of unions, including the Brewery Workers Union and the International Association of Machinists (Laslett 1970). More generally, sociologist Howard Kimeldorf (1999, p. 149) has shown that both the leftist and apolitical unions that often fought each other very vigorously "relied on labor solidarity, mass mobilization, and unrestricted direct action to find their way across what was still a largely uncharted organizational landscape."

Thus, from our perspective, the process and content of collective bargaining is actually a complicated power relationship that embodies the strengths and weaknesses of both sides. Its existence reveals the power of labor, but the narrowness of the unions and the substance of what is bargained about reflect the power of capital. Collective bargaining is "both a result of labor's power as well as a vehicle to control workers' struggles and channel them in a path compatible with capitalist development" (Ramirez 1978, p. 215).

Drawing on a new formulation by Kimeldorf (2010, p. 1), we would generalize Ramirez's point to say that unionization is possible when workers in any given industry can find "forms of disruptive potential that threaten employer profits." More specifically:

The industries that organized earliest and most completely in the United States typically displayed a high disruptive capacity rooted in the difficulty of finding replacement workers ("scabs") in the event of a strike or less formal job action. In turn, the difficulty of finding scabs can be a result of skill barriers to entering the trade (e.g., construction workers, machinists, typographers), the importance of a fast turn-around in services rendered that makes the search for replacement workers too time consuming and costly (e.g., shipping and railroads), or simply the inability to recruit strikebreakers due to the geographic isolation of the workplace (e.g., mining, logging, and other extractive industries) or the fear of violence that keeps scabs away (Kimeldorf 2010, p. 1).

According to this perspective, violence may play a role in organizing a union, but primarily as a means of keeping replacement workers from entering job sites, not as the main strategy. Most of this violence is between strikers and scabs or police and strikers, with destruction of equipment and other forms of sabotage relatively rare even though it is sometimes threatened.

However, it is important to add that the unionization and collective bargaining that sometimes developed in industries in which workers had disruptive potential is not quite a standoff with both sides having the same amount of power. They are close to equal when it comes to collective bargaining once the ability of workers to organize and disrupt has been demonstrated, but it is also the case that it is very difficult to sustain most unions if the legal or coercive power of government is employed to support employers in their refusal to recognize unions or in their use of physical violence to disperse striking workers and their sympathizers. Thus political power has to be added to the collective bargaining equation and can serve as the tipping point if and when collective bargaining fails and one or both sides of an open class struggle resorts to disruption or organized violence. In this context, the matter of who controls key government offices, starting with the presidency, becomes critical, contrary to the structural Marxists of the 1970s, who were extremely critical of a non-Marxian class dominance perspective (for example, Gold, Lo, and Wright 1975; Mollenkopf 1975).


Excerpted from CLASS AND POWER IN THE NEW DEAL by G. William Domhoff Michael J. Webber Copyright © 2011 by Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of STANFORD UNIVERSITY PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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