Joe Robinson’s Response to “The Theory of the New Deal”

I found the most interesting aspect of this piece to be Berle’s discussion of income inequality during early 20th century America and how it contributed to the Great Depression.  The unequal distribution of wealth in the U.S. was the source of as much debate then as it is today.  Although there was no single factor that caused the Great Depression, the “vicious spiral” described by Berle certainly played a significant role.  As Berle explains, an insufficient population of consumers resulted in the closings of plants, which lead to layoffs and wage cuts that further reduced the customer base and decreased industrial production.  FDR attempted to redistribute some of this wealth through the National Recovery Administration, which would ensure that “the national income goes not into stagnant pools of unneeded investment but into the hands of people who need goods.”  Although our current economic state is not nearly as poor, recent efforts to increase the minimum wage bear some resemblance to the New Deal’s goal of reducing the income inequality in this country.

I also enjoyed reading about Berle’s alternative to the New Deal, in which the federal government would have done anything in its power “to satisfy the perfectly legitimate needs of a huge mass of people, all of whom were entitled to their right to live.”  This even included the possibility of a Soviet-like government takeover of the entire U.S. economy.  Berle is quick to point out that something like this would have only occurred if the New Deal failed, but it’s nonetheless interesting to consider.  At the time, the New Deal was the greatest exercise of government power in American history.  However, as Berle indicates, the New Deal was not nearly as radical as other economic recovery plans conceived by the Brain Trust.

I wonder how successful this plan would have been, especially in the U.S. where we seem to value economic freedom above all else.  Although it’s hard to imagine the American public being receptive to such a radical proposal, the crippled economic state might have left them with no other choice.  On the other hand, if the New Deal had failed, I doubt there would have been much faith in Roosevelt’s ability to turn the economy around.  We’ll never know whether or not there would have been resistance to Berle’s more extreme alternative.  However, America saw a certain degree of governmental control over the economy less than a decade later with the WWII mobilization effort, an effort which many have attributed to propelling the United States to the top of the industrial world.

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