During his passage on the New Deal, William Leuchtenberg criticizes the cyclical nature of capitalism, claiming that this market is too inefficient in correcting imbalances of supply and demand. The cost of this inefficiency is human lives being torn asunder for years as entire industries adjust at once to changes in market conditions, leaving millions without jobs at the same time, for prolonged periods. However, his government-control “solution” introduces the exact same problem! The passage “This is why, though all of us will undoubtedly have moments of discouragement at the slowness of it…” can be applied with equal validity to the existing industrial system or the proposed government takeovers of the “levers” of the economy.
Leuchtenberg bases his argument on the completely unproven theory that the government will be able to control these levers much better than the private sector has been able to, using recent economic failures as his “proof.” In retrospect, this theory becomes laughable when Leuchtenberg touts “efficiency at least as great as that which we now get out of the United States Postoffice,” an institution losing over billion dollars a quarter currently. In addition to putting too much trust into the government, Leuchtenberg further disproves his own theory by bringing up the unwillingness of the American people to accept the federal government commandeering the levers of the economy. He admits that “people do not change their habits easily,” yet there is an implicit expectation that the government will be able to bend them into compliance for this overhaul. Unfortunately for Leuchtenberg, this assumption, much like all the other ones in this article, is unfounded and detached from reality.
I also found Berle’s mention of the U.S. Post Office to be ironic and his overall argument to be unsound. Oftentimes, I think the federal government is the last thing that comes to mind when it comes to efficiency. Berle’s claims of efficiency are questionable, but I do think there needed to be some level of government intervention in order to revitalize the American economy. However, like you, I doubt the general public would have been receptive to widespread government control of the economy. In my post, I made connections between Berle’s extreme alternative and the U.S. economy prior to and during WWII, in which the federal government controlled nearly all aspects of industrial production. What I didn’t consider was the motivation of the American people in these two instances. During WWII, Americans were willing to relinquish some of their economic freedom in order to contribute to a common goal, which would not have been possible to accomplish without their effort. However, in Berle’s case, there would have been no way to ensure that greater government control would have turned the U.S. economy around. You also need to consider that Berle’s plan would have only come to fruition if the more moderate New Deal had failed. I find it hard to believe there would be much support for any plan proposed by the Roosevelt administration if the promises of the New Deal were not met.