Have Corporate Interests Controlled U.S. Economic Policy Since the New Deal?

by Randy Shaw on September 5, 2013

G. William “Bill” Domhoff is among the leading intellectual figures of the past fifty years. Best known for his 1967 book “Who Rules America,” Domhoff has long combined meticulous research with persuasive reasoning to reach conclusions about politics in the United States that overturn conventional wisdom. Domhoff’s latest book, “The Myth of Liberal Ascendancy: Corporate Dominance from the Great Depression to the Great Recession,” may be his most contrarian book yet. Domhoff challenges the thousands of books and articles that see the New Deal through the 1960’s as an era of progressive gains, with corporate dominance not holding sway until the 1970’s. Instead, he argues that corporate interests won on all major issues from 1939 through today, and have been particularly successful at rolling back labor rights and the original 1935 National Labor Relations Act. Domhoff’s focus is on economic policies, and he does not question the major progressive gains in areas of civil and human rights, environmental protection, and other issues not directly related to the distribution of America’s wealth. But for those who have been frustrated with President Obama’s surrender to corporate interests, and who believe things were different under FDR and LBJ, Domhoff mounts a powerful case to the contrary.

If Bill Domhoff were at Harvard instead of UC Santa Cruz, his new book would be a hot topic among the eastern news media. But despite being among the preeminent scholars of our time, Domhoff’s book has gotten little attention despite its upending conventional wisdom about the rise of corporate power in the U.S.

The Real New Deal

Domhoff makes a persuasive case that, for all of its progressive advances, FDR’s acclaimed New Deal was retrenching by 1937 and under firm corporate control by 1939. He is not the first to note that Roosevelt’s decision in 1937 to balance the budget and cut back on jobs programs reversed the progress of his first term. Susan Quinn’s highly recommended Furious Improvisation: How the WPA and a Cast of Thousands Made High Art out of Desperate Times describes how Southern legislators opposed to racial integration led to the killing of the Federal Theater Project in 1937, and how right-wing conservatives—many of whom were Southern Democrats– were already rolling back the New Deal by that time.

Corporate interests were not an ideological monolith in the 1930’s, and Domhoff spends considerable pages throughout the book describing the work of the Committee for Economic Development (CED) that formally began in 1942. CED represented corporate moderates who held enormous sway over the nation’s economic policy into the Reagan era.

Domhoff recognizes that income inequality and prosperity increased from 1939-1945, but associates this with World War II. He makes a convincing case that the great gains in labor union membership during this period was solely attributable to the ramping up of union worker industries to fight the war, rather than to a pro-union political environment.

Post-War Reversals

After establishing that the Roosevelt years were not the progressive ascendency that many now romanticize, Domhoff moves to the Truman and Eisenhower years. The 1945-1960 period saw major rollbacks to labor union power (Taft-Hartley passed in 1947 and Landrum-Griffin in 1959). Both measures weakened union power and reversed decisions by Roosevelt’s pro-union NLRB that had bolstered organizing by limiting employer opposition. These rollbacks opened the door to the intensive and well-financed anti-union opposition campaigns that have greatly reduced private sector union membership.

Significantly, corporate America did not vigorously fight the rise of public sector unions. Instead, it remained focus on weakening membership in powerful construction and industrial unions, and by the 1960’s private sector union membership was already declining.

To my great surprise, labor’s strongest power since 1939 occurred under President Jimmy Carter, when in 1978 a critical package of labor law reforms easily passed the House and got 58 votes in the Senate. But as Domhoff regularly reminds us, the United States is not a country governed by majority rule, and the 58 votes were insufficient to break the 60 vote threshold for a filibuster (so much for claims that the misuse of the filibuster to prevent progressive change in the Obama years is something new; it is used more often, but has long been used to protect racial injustice and corporate power).

Understanding the Corporate Scorecard

Domhoff applies the equivalent of baseball’s sabermetrics to evaluate corporate America’s success over the past seventy years. Rather than simply examine whether a bill the corporate opposed eventually passed, he examines whether it was so watered down prior to enactment that what is described by others as a corporate “defeat” was actually a victory.

He also notes that prominent progressive gains, such as the creation of the Environmental Protection Agency, were strongly backed by corporate moderates. And entities corporations now routinely demonize —such as the Occupational Safety and Health Administration (OSHA)—had their backing when created.

Domhoff does not dispute that corporate moderates have backed many progressive causes, from opposition to the Vietnam War to marriage equality and comprehensive immigration reform today. He focuses on the economic and tax policies that have brought us in 2013 to the greatest economic inequality since the pre-New Deal era.

This is not an easy book to read. While Domhoff is an engaging writer, he marshals so much complex economic data to prove his arguments that the book bogs down in parts.

But Domhoff’s analysis would have predicted that the Obama Adminstration would allow the corporate and banking sector to call the shots. It also would also have foreseen the inability of unions to even get a Senate vote on the Employee Free Choice Act in 2009-10.

So while many believe that economic fairness and equality in the United States was on a progressive ascendency until the Nixon years, Domhoff’s recitation of the tax and spending battles prior to Nixon (and Reagan) says otherwise.

Randy Shaw is Editor of BeyondChron. He is the author of the newly released, The Activist’s Handbook, Second Edition: Winning Social Change in the 21st Century.

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