“The New Deal Worked”: Why Do So Many People Accept that as Fact?

Most people, journalists included, accept the notion that the New Deal “worked” to shorten the Depression. Many economists, and to a lesser extent, historians, disagree. Why, then, do criticisms of the New Deal get met with a blank stare akin to stating that the world is flat? Recently, one Salon.com pundit declared the New Deal success a fact; nay, an incontrovertible fact. To argue otherwise is “abject insanity.” Only dim-witted conservatives would believe such nonsense.

At the risk of being labeled “insane,” here goes. . .

In 1995, economic historian Robert Whaples published a survey in the Journal of Economic History asking “Where Is There Consensus Among American Economic Historians?” (Vol. 55, March 1995). Half of the economists and more than a quarter of historians agreed, in whole or in part, that the New Deal prolonged the Great Depression.

Specialists of the period may come to this conclusion but most people get their history from textbooks. A 1998 survey of history textbooks reported how criticism of the New Deal was erased from what most Americans read:

“only about half of the economists and three quarters of the historians disagreed fully with the  statement  that the New Deal lengthened and deepened the Great Depression. Not a hint of that shows up in the textbooks, which cite as criticisms only statements from sources like President  Hoover, the Liberty League, or business interests, that to modern ears sound highly ideological, naive,  or self-serving.  Obviously, such statements were made, and their tone probably represents accurately  the majority of the contemporaneous criticisms. All the same, one might wish that the texts would also discuss some of the more sophisticated criticisms, or else avoid evaluation altogether because of the complexity of the issue.” (Thomas F. Cargill and Thomas Mayer, “The Great Depression and History Textbooks,” The History Teacher (August 1998).

Contemporary critics of the New Deal included John Maynard Keynes (yes, that Keynes). Keynes repeatedly criticized FDR for discouraging private business investment with his regulations and overheated rhetoric (the White House charged that opponents were “Big Business Fascists”). Radical historian Howard Zinn (yes, that Howard Zinn) published Keynes’s criticisms in his New Deal Thought reader (1966).

As one who teaches the economic and business history of the USA, I can say that this subdiscipline is an orphan in the historical profession at large. Most economic history is consigned to Economics departments, rather than History, where fashionable trends in social and cultural studies hold sway. Look for specialty studies of the Great Depression and you will find  them written by economists. That is a good thing but most Americans get their understanding of our economic past from history teachers, both K-12 and post-secondary. Thus the disbelief that any one could seriously criticize the New Deal.

If this country is to have a “New New Deal,” we need a more nuanced understanding of the original New Deal. In arguing for open debate, one might take a page from New Dealer Harry S Truman, who famously stated that “the only thing new in the world is the history that you don’t know.”