New Liberalism Research Paper

New liberals were ultimately unable to sustain their critical assessment of the classical tradition without changing quite fundamentally their understanding of the relationship between society, economy, and state. In an intricate process of reaction and inversion, these changes shifted the meaning of political conservatism in the West, gradually severing it from its basis in quasi-feudal and aristocratic precedents and reorienting it toward a defense of personal, civil, and commercial liberty as it had earlier been defined in the ‘old,’ classical liberalism. The account of new liberalism provided here refers mainly to the American case, with occasional references to other (mainly the British) experiences. It identifies four phases in the development of new liberalism that aid in heightening the visibility of critical moments in its construction. These phases are: (a) market failure and the drive for new social knowledge, (b) conflicting approaches to framing the social question, (c) the ‘turn’ to social insurance, and (d) the social sciences, planning, and the limits of liberal statism.

1. Market Failure And The Drive For New Social Knowledge

The devastating market failures of the late nineteenth century, destabilizing waves of bankruptcies, mass unemployment, and chronic, desperate poverty produced an enormous disappointment of traditional liberal expectations regarding the efficacy of the market. New liberals recognized market failure and attendant social conflicts as evidence of a wider collapse, more disruptive to intellectual, social, and political order and more menacing to communities of a social contract based on unfettered competition between white males that had been implemented during the market revolution of the Jacksonian era. Rejecting the excessive individualism, localism, and states-rights obstructionism of that period as morally and intellectually bankrupt, they put themselves quite deliberately in the business of conceptual innovation, seeking a higher rationality that would place knowledge in the service of a more democratically constituted society, which would maintain itself in part by allotting intellectuals a special role in shaping a more vigorous, capable, developed, and purposeful national government.

Across the range of nations involved, the conceptual revolution that new liberals sought to promote was grounded institutionally in an international social science association movement that fostered transatlantic borrowing, and in critical journalism, settlement houses, and social surveys, all of them cranked up to record, analyse, and disseminate empirical data, propound theory, encourage the development of political leadership responsive to the ‘teachings’ of liberal social knowledge, improve the execution of policy, and advocate reforms intended to renovate and enable Enlightenment ideals of political equality and social justice. Within government, in investigative agencies such as improved censuses, labor, women’s, and children’s bureaus, trade boards, and bureaus of corporations, high-level civil servants such as Llewllyn Smith and Lord Beveridge in England, and Carroll Wright, Francis Amasa Walker, and Julia Lathrop, in the United States provided conduits for policy ideas from those burgeoning ‘parastates’ into the state. Within this ‘great transformation’ in social thought and political practice, crucial early players were the academic social science disciplines, whose missions and boundaries were historically determined, differing from country to country. Academic professionalization proceeded rapidly in the American research universities, fueled by rapid economic growth, academic entrepreneurship, and the relative shortage of other types of creditable specialized intelligence.

But from the beginning, progressive academic economists, political scientists, and sociologists were interested in more than the provision of expertise; even as conservative university trustees (and at times conservative colleagues) disciplined their advocacy, social scientists saw themselves as crucial links in the interpretive processes needed to make the new political and social economy intelligible. Thus their specialized investigations and discourses were a critical factor in reworking the political agenda so that it placed prominently before policy makers and emerging, activist publics as problems urgently needing comprehension the range of issues that came to define the politics and policymaking of the new liberal era. Most prominent among these issues were business cycles and unemployment, rights and conditions of labor, wages and distribution, industrial organization and corporate reorganization, family welfare and gender roles, problems of the low-paid, exploited immigrant work force and—often with disabling assumptions rolled in—issues of race. They also addressed related issues of governance: the detection of wholesale corruption of law and government that inspired the clean government crusade, and the need for methods of building up the cognitive abilities and administrative capacities of public officials.

Strategic rhetorical steps were taken early that shaped the ties between American governance and intellectual life in the period. In the United States, Woodrow Wilson’s early and generative ‘Science of Administration’ (1887) addressed republican fears of bureaucracy by placing a firewall between politics and administration. Reflecting distaste for the intense, tribal partisanship of Gilded Age politics, academics and bureaucrats (unlike many female social scientists and social reformers) adopted nonpartisanship as a standard description of their professional ethic. This pristine canon elevated everyday standards of disciplinary and agency practice, but it often hampered the effectiveness of social scientists as advocates for change, routing their activism through ostensibly apolitical venues such as foundations and think-tanks, which ceded partial control of research agendas to corporate elites.

2. Conflicting Approaches To Framing The Social Question

Yet despite frequent and often calculated professions of scholarly and professional neutrality, the building of new liberalism was neither a consensual nor a nonideological process, but rather one in which newly experienced social realities disrupted expectations and categories in different and conflicting, contested ways. Deep divisions over the substance and implications of new empirical and theoretical knowledge led to a branching of new liberalism, early in its American career, into what participants saw as two distinct new liberal movements—a statist-democratic strand of reform thought born in the 1880s, and an opposing, corporateoluntarist analysis that came together around the turn of the century. These conflicting reform discourses, worked out in dialogue with each other between the 1880s and the 1940s, opened up greater possibilities for genuine policy innovation than existed either earlier or since.

Assessing deficiencies in the mechanisms for translating an aroused social conscience into effective social action, the statist strand of new liberalism looked in new ways and on a number of fronts to a redefinition and a principled restriction of the meaning of ‘private’ in many of its applications, and to a corresponding expansion of what were to be taken as proper, morally necessary functions of government. Liberal statists sought more effective methods for mobilizing state agencies in behalf of a reinvigorated national interest, taken as something higher and more ethically compelling than the sum of the separate private, local, class, or sectoral interests.

The competing voluntarist vision rejected with equal conviction what—telegraphing their disapproval—its founders referred to as ‘state interference.’ Seeking ways to insulate and energize civil society, the antistatists preferred to build new ordering strategies upon what they took to be the naturally evolving social institutions of a modern pluralist society, premier among them the corporation, and what they saw as organic, corporate bodies such as trade associations, trade unions, professions, and charitable associations, rather than around invigorated democracy, political mobilization, and a bureaucratic, regulatory state, which they represented as intrusive upon ‘natural’ evolutionary processes and prone to manipulation, most dangerously by social levelers who failed to appreciate the vulnerability of the investment system. More than merely Tocqueville revivalists, they were particularly interested in what could be achieved by way of ordering a chaotic, excessively competitive economy through innovative uses of the business contract, within a rich climate of information about the market, and through enlightened management. This effort culminated in the liberal-corporatist design fleshed out during the 1920s for peak-level business government cooperation in achieving economic and social stabilization through energized philanthropy and local relief in hard times, but mainly preventively, through the development and legitimation of industrial self-government oriented toward controlling chronic instabilities such as overproduction.

The liberal statists placed greater confidence in deliberative democracy than this, and less in capitalist rationality or the unity of the corporate and the public interest. Drawing energy from heartland republicanism, evangelical Christianity, and European socialism, a leading theorist of the new liberal state, political economist Henry Carter Adams, marked out a path that two generations of unapologetically statist progressives would define as a democratic, progressive, collectivist or communitarian public philosophy—a distinctively American middle way between what they framed as the excessive individualism of the British model and the excessive statism of the German. The founding text for the liberal statist approach was Adams’s classic paper, ‘Relation of the State to Industrial Action,’ which interrogated standing assumptions about the beneficence of competition and called into question the fundamental morality and the long-term serviceability to the public interest of the way the modern capitalist market was being constituted in its corporate phase. For those engaged in reflecting on issues of public philosophy, Adams, along with Richard Ely, Florence Kelley, Edmund James, Simon Patten, John R. Commons, and Jane Addams among numerous others, did more than establish a ‘context of refutation’ for socialists and diehard believers in laissez faire. More important, in relation to later developments in theoretical and policy knowledge, they directed their arguments quite explicitly to new-liberal antistatists, who were forming their own intellectual identity in the 1890s as part of a corporate-voluntarist counter-attack on liberal statism.

Reflecting back on the historical construction of the ante-bellum US liberal order, Adams pointed to three deficiencies of a regime of market competition that set the initial terms on which this new, positive vision of liberalism would be built: (a) its failure to allow society to enjoy the benefits of monopolies occurring naturally in increasing-returns industries, and thus to reap the benefits of human genius enacted in advancing technology, (b) the inevitable decline of business ethics to the lowest level, absent a generally credited method for communal determination and legal establishment of labor standards, among them a right to employment, and (c) a corruption and general hollowing out of the substance and potential of representative government in a deliberate, misguided weakening of state capacities, which Adams traced to anti-statism in the Jackson period, the lack of a respectable science of public finance in the United States, the rise of powerful corporations, and a compliant legal profession bent on shaping the protections of the law to private ends.

Naturalizing certain instances of monopoly was a critical step in the modernization of civic republicanism, designed to pull that venerable tradition out of the Jeffersonian, anti-monopoly, anti-statist discourse that had assimilated it to market liberalism. The reshaping of this core category laid an authoritative basis for state supervision of entire segments of the transportation, communication, and production systems, designed to control monopoly power. This strategic conceptual move gathered force in the regulation movements of the early progressive era, and in Theodore Roosevelt’s vision of a national law of corporations, a robust national citizenship, and a muscular ‘new nationalist’ bureaucracy capable of disciplining the modern corporation. Classic texts such as Herbert Croly’s Promise of American Life (1909) and the Progressive Party Platform of 1912 represented the maturing new liberal orientation to planning, in which capable, informed governance could instruct and protect a collective interest in conservation, labor standards, and consumer protection. More than merely an affirmation of the need for aggressive regulation in these regards, Rooseveltian progressivism argued for a public presence in the civic discourses and decisions regarding production, investment, and pricing. This broader vision of a deliberative process that could detect and shape the impact of American capitalism on society was later the unifying insight at work in the planning phases of the New Deal, most evident in the activities and discourses of the Public Works Administration (PWA), the National Resources Planning Board (NRPB), and the Temporary National Economic Committee (TNEC).

The Adams–Ely view was challenged immediately by procorporate academic economists Arthur Hadley and Jeremiah Jenks, close students of the sources of market failure in specific industries, and political advisers to Republican governors and presidents. Though these two extended what they saw as a natural tendency to monopoly even further than Adams did—into the whole broad range of capital-intensive industries, they considered even indirect state control of production and profit a threat to the price and investment systems that neither liberalism, capitalism, nor private morality could long endure. Conservative institutionalists such as these began constructing an alternative, more hierarchical, less democratic discourse of elite responsibility and social control, forming around the institutions of high finance and the corporation. They hoped to make the new corporate elites responsible for transclass and intercorporate cooperation, for personal growth and individual mobility along career ladders provided by corporate business, and even for community economic and moral development—to the extent that experience within a corporate culture would inculcate values of efficiency, cooperation, interdependence, and service.

This rudimentary modernization theory was the founding discourse of corporate liberalism, which down through Herbert Hoover’s associative state to its full flowering in pluralist theory and liberal corporatist public policy during the Eisenhower years equated the (properly enlightened) corporate interest with the (properly conceived and limited) public interest in sustained growth of the economy. Corporate liberalism provided a systematic alternative to liberal statism, supplying a constraint on statist progressive politics in the US that was available, in anything like comparable strength, nowhere else.

More than other distinctive qualities, such as early (white manhood) suffrage, weak parties, weak labor, weak socialism, or state structure and capacities, this continuing tension between statist and corporatist discourses of the public interest, increasingly fleshed out in programmatic terms, explains—along with issues of racial exclusion that new liberals for the most part only minimally addressed—the special character of modern United States liberalism. It also helps to account for the distinctive pattern of US state formation, and particularly welfare-state development, that students of social policy, often taking the more comprehensive European welfare states as the normal path of history, have seen as tardy, insufficient, and incomplete—kept from developing by traditions of individualism and laissez faire.

In reality, such commitments were highly attenuated where they survived at all among the knowledge producing classes most involved in shaping new liberalism. For democratic theorists from Adams to John Dewey, the public interest was a potent category—reclaimed from the republican past, but extensively recast to take account of concentrations of social and economic power that threatened family subsistence, community morals, responsive and responsible governance, and political, social, and economic democracy. In his seminal The Public and Its Problems (1927), another powerful exemplar in the new liberal ‘role of the state’ genre that H. C. Adams inaugurated for Americans, Dewey located the public interest as the place in social relations where effects spilled over from the parties to a contract to third parties, who bore the often devastating ancillary consequences of others’ private bargains.

In the construction of democratic statism, problems raised by shoddy business ethics and new, manipulative forms of ‘scientific’ management rivaled concerns about monopolistic corruptions of the corporate form. Instituting another enduring theme in new liberal reflection about the role of the state, the second ‘evil of competition’ in Adams’s treatise—pernicious insecurity, exploitative working conditions, and relentless time pressure—he proposed to remedy by labor-standards legislation based on a community moral consensus derived discursively, from detailed knowledge of the impact of industrial labor as then constituted, on the moral, mental, and civic capacities of the working class. The debilitating effect of casual labor, low wages, and chronic unemployment on working class men and women was a constant theme that women’s social investigation and reform activism also did much to develop. But this emphasis on legislated labor standards should not be mistaken for an early blueprint for the welfare state. In the formative moment, the 1880s to 1910s, American statist progressives were looking not to compensatory welfare measures but to independent unions, fostered by public intellectuals and protected by the state, and to community moral pressure and democratic politics, as the means for achieving an ‘economic republic’ and ‘industrial democracy.’ Their vision included recognition of two inalienable rights of worker citizens—a ‘living’ wage, sufficient to support a family in reasonable comfort, and a voice in management.

3. The ‘Turn’ To Social Insurance

Underway in Europe much earlier, the new liberal ‘turn’ to social insurance came in the American case only in the second decade of the twentieth century. Growing up in social work, settlement, bureaucratic, and academic circles, it signaled the onset of a second phase in new liberal thinking, running parallel, but in important respects contrary, to the older movement for industrial democracy, which also continued to gather force through the New Deal and into the late 1940s. Several factors can be seen to have promoted the adoption of a social insurance perspective, among them the arrival of a broad environmentalist consensus on the causes of poverty, accumulating realism about distinctive constraints on labor’s capacity to organize a positive political program, and the social tensions that compelled American cities to provide relief during cyclical downturns from the 1870s onward. Once again, academic and expert knowledge played a major role as well. European reform discourses and precedents, culminating with the British adoption in 1911 of broadly accessible unemployment insurance, were faithfully catalogued in works such as Isaac Rubinow’s Social Insurance (1913). As class conflict accelerated, inquiries staffed by social scientists such as the famous Pittsburgh Survey and the United States Commission on Industrial Relations documented economic insecurity as the central cause, along with corporate arrogance and powerlessness to combat it in their communities, of worker unrest, suggesting an attack on inequality through aggressive labor standards reforms and state policies promoting redistribution.

Contrary to the strong government role envisaged by the USCIR and in wartime programs for improving labor standards, in the post-World War I period, with Herbert Hoover in a prominent organizing role, the Wilson and Harding administrations arranged a series of high-level conferences for planning postwar stabilization. Allied with the President’s Conference on Unemployment, Wesley Mitchell’s National Bureau of Economic Research drew in economists such as Leo Wolman and Wilford I. King for the vital statistical work and propagated new methods for understanding the pesky business cycle. This chain of policy thinking suggested alternative policy options, among them more responsible administration of credit by banks and government, enrichment of the informational climate for business decisions to facilitate a microeconomic approach to steadying output and employment, the accumulation of reserve funding for countercyclical public works by (from Hoover’s perspective, preferably local) government, and an actuarial approach to relieving unemployment through funds amassed by employers, unions, or government. In what must be seen as one of the most significant conceptual innovations in modern governance, these more conservative approaches transformed unemployment from a problem of the political order rooted in inequality into a ‘risk,’ the key policy decision becoming therefore how, and by whom, that risk— understood as a problem in the smooth management of the elastic supply of reserve labor accepted as an indispensable part of the capitalist process—could be insured. In the discourse manufactured in Hooverian circles, most of these remedies could be implemented by informed business decisions and enlightened labormanagement cooperation.

The impulse for what from the perspective of liberalstatist, laborist, and social-feminist proposals for extensive redistribution of income and political voice became a critical retrenchment in social policy thinking arose not only from these liberal corporatist iniatives, but from at least three other, at first glance unlikely sources as well: the maternalist turn in the women’s movement of the progressive era; a vision of the immigrant and non-white poor propagated in the social sciences, by the Chicago school of sociology most particularly; and the appropriation and aggressive expansion of carefully targeted forms of social provision in the private-sector, imagined by corporate liberals in business management, government, and the academy as a strategy for making the ‘modern manors’ of welfare capitalism reliable instruments for securing the loyalty and uninterrupted productive service of industrial employees.

As the central sites for the development of reform discourses that transported women’s issues from the private to the public spheres, the women’s movement and female social science were neither immediately nor exclusively committed to a social insurance perspective. Female social scientists such as Jane Addams, Florence Kelley, Alice Hamilton, Crystal Eastman, and Mary van Kleeck initially broadened the social question to include the appalling conditions faced by working class families in immigrant enclaves, conditions they traced as much to deliberate capitalist exploitation as to the relentless, patterned instability of the capitalist economy. Constitutive new liberal texts such as the pioneering social survey Hull House Maps and Papers (1895) and Margaret Byington’s 1907 study for the Pittsburgh Survey of steel workers’ families traced their poverty to the most discretionary of environmental causes—a calculated policy of exceedingly low wages and insufficient employment, yielding family incomes well below what was needed for subsistence, chosen by leading industrialists as a way to socialize much of the cost of maintaining a low-skilled industrial work force, including a good-sized reserve labor supply.

Female reformers such as these translated their expert knowledge of the working conditions of women and children into an ethic of public responsibility that matched and complemented the initiative of academic new liberals such as H. C. Adams for finding ways of translating communal judgments regarding the ‘moral plane of competition’ into policy. Often promoting and then working in state and national investigative and protective agencies, rights-thinking feminists were thus among the earliest new liberal state-builders. Yet, as conservative opposition accumulated and the suffrage crusade shifted to political mobilization, important segments of mainstream feminism took on a more elitist, exclusionist cast, and the ‘female dominion’ of women’s institutions increasingly followed a separatist course in identifying its reform goals. Leading female reformers, sociologists, and legal realists built a maternalist case for special state-based income assistance to mothers and children, special provisions for safeguarding maternal and infant health, and special protections for republican mothers in the workplace.

Maternalists helped to shape as the American pattern what women’s historians have identified as a two-channel welfare state, in which one channel provided universal coverage for male workers under reasonably generous programs such as workers’ compensation, unemployment insurance, and Social Security, whereas the other offered only meager, meanstested pensions for virtuous poor widows, and little assistance of any kind for most female workers and people of color. Worthwhile in themselves as strategies for meeting real needs among the ‘deserving’ poor, these approaches sidestepped, or confronted only indirectly, and without formulating them as such, issues of monopoly power, proletarianized, low-wage work, and obstacles to unionization for workers of both sexes that had initially been catalysts for the development of democratic-statist new liberalism.

The social sciences provided powerful legitimation for the social insurance track as an alternative to empowering the bottom ranks of the working class. Between the 1890s and the mid-twentieth century, even as institutionalists continued to fashion economic knowledge in forms that emphasized law and capitalist agency as contexts for the political and cultural creation of markets, rival neoclassical economists cultivated statistical and mathematical models of analysis that extracted economic behavior from history and culture, naturalized the workings of the market, and turned the discipline into a potent, technocratically organized form of social engineering. As Dorothy Ross’s account of the rise of scientism also documents, quantitative, behavioristic and functionalist models vied with historicism and institutionalism in other social sciences as well, perhaps most visibly in two massive collaborative efforts in Hooverera policy knowledge, Recent Economic Changes (1929) and Recent Social Trends (1933). The dominant sociological discourse of the 1920s, the ‘Chicago School’ established by Robert Park, W. I. Thomas, and their students at the University of Chicago offered an alternative to the liberal-statist explanation for poverty and urban ills that took the form of a cultural theory of urban family and community ‘disorganization.’ Describing a succession of discrete stages— contact, disorganization, acculturation, assimilation—that accounted for the rise of problems such as dysfunctional families, juvenile delinquency, and crime, these scholars offered a vision of the immigrant, and especially the African-American migrant poor as culturally deficient—whether from environmental, or more enduring cultural causes. They uncovered ‘pathologies’ in Negro personality and family patterns, an alleged inability to defer gratification rooted in the experience of slavery, and a tendency toward male improvidence and female-headed families, for example, that predicted a longer than normal acculturation process for African Americans. Culminating with Gunnar Myrdall’s American Dilemma (1944), this new cultural analysis of poverty separated the poor from the capitalist strategies that shaped their lives, and rendered those historically constituted structures less visible.

Maternalist social knowledge and the sociology of ethnic difference merged with developments in the new sciences of management to promote the development of corporation-based programs for linking carefully constructed forms of social provision to employment with specific employers. When wartime controls on the economy were quickly abandoned, corporatism flourished in the United States (as it did in different forms during the interwar period in Europe as well). Doctrines of imperfect competition, an institutionalist analysis of the modern corporation’s separation of ownership from control, arts of advertising based on a new consumer psychology that legitimized desire, and theories of an administered market allowed liberal corporatists to proffer a new economy of mass consumption as a palatable alternative to nineteenth century producerist dreams of worker control.

Resisting this trend only formally, the American Federation of Labor, along with industrial relations experts constructing a new profession in the 1920s, recognized productivity increases as the indispensable basis for increases in wages. Where company welfare programs existed, worker loyalties based on them ran quite deep. Thus the shock of the sudden collapse of Hooverian strategies for industrial self-government in the Great Depression crisis, the failure of voluntarism more generally, the welcome proliferation of New Deal programs targeting unemployment and poverty, and the aggressive organizing efforts finally unleashed by national labor-rights legislation helped to ratchet up workers’ expectations of the state, and to reinvigorate impulses, largely quiescent since the immediate postwar era, toward the development within government of planning capacities capable of heading off such emergencies in the future, and of democratizing both industrial governance and the political state.

4. The Social Sciences, Planning, And The Limits Of Liberal Statism

From their beginnings in the Enlightenment and especially since the late nineteenth century, the social sciences were oriented toward planning, defined imprecisely enough to include methods all the way from enriching the informational climate of decision making to managing economic performance and shaping cultural expression. Most centrally a conservationists’ discourse of efficient natural resource management in the 1910s and a welfare corporatists’ discourse about the benefits of social cooperation in the 1920s, the American conversation about planning matured rapidly in the depression emergency. As critics correctly charged, stressing continuities in the development of a national planning capacity that bridged private and public, the National Recovery and Agricultural Adjustment Acts could seem like little more than surreptitious continuations of corporatist strategies for contriving scarcity under the cover of state compulsion. Yet a parallel, consciously statist movement also reappeared in the 1930s, fueled by FDR’s intense commitment to planning, challenges on the left that promised full utilization of idle resources and full employment, and the recruitment to government planning agencies of a social scientists, including a large number of institutionally oriented economists, who energized and updated the democratic statist strand of new liberal thinking. When crisis suddenly opened the way for bureaucratic efforts to comprehend and combat depression, many of the plans necessarily came ‘off the shelf,’ as did the comprehensive programs for national old age, survivors, unemployment, and disability insurance. Yet by the mid-1930s institutional and policy innovations shifted the planning discourse toward methods of using resources efficiently over the long term, expanding public investment, crushing debilitating tendencies toward monopoly, and rekindling demand—policy goals institutionalists insisted were related causally. Social scientists in key nodes of conceptual innovation redefined planning and, within the constraints of opposition that also bedeviled Franklin Roosevelt’s own narrower planning ambitions, attempted to give it an overt civic dimension. Thus, in the early leadership of the National Labor Relations Board, William Leiserson and others experimented with methods for linking the civic and stabilization purposes of the Wagner Act, which its framers intended to ensure the worker’s right to organize independently, but also to equip trade unions to play a role in redistributing income, supporting the workers’ ability to consume, and democratizing industry.

Economists’ knowledge and planners’ leanings toward infusing market structures with civic purposes also blended in agencies such as the venerable Bureau of Agricultural Economics, the path-breaking, community-reconstruction oriented, ultimately disappointing Tennessee Valley Authority, and the Farm Security Administration, which addressed the issue of chronic farm surpluses, but also the economic and social marginality experienced by people at the bottom of rural hierarchies. A major study by TNEC of the concentration of economic power steered by Thurman Arnold and Leon Henderson referred the stickiness of prices, excess saving, and the slow pace of investment back to the monopoly power that allowed large corporations to administer markets and perpetuate extreme maldistribution of income and wealth.

The meaning of planning was shifted most decisively by theoretical, institutional, and practical innovations generated by the NRPB, as that New Deal agency’s role was enlarged by Roosevelt from resource management to guiding government efforts to achieve recovery, and later to maintain prosperity and promote economic democracy after World War II. A body of economic knowledge produced in the early 1930s by economists such as Edward Chamberlain, Joan Robinson, Alvin Hansen, and John Maynard Keynes explained how a stubborn equilibrium, well below the level of full employment of the factors of production, could have been reached and sustained over nearly a decade. Building upon this, economists at NRPB and the Federal Reserve zeroed in on underconsumption as a factor in the slow and uneven pace of recovery and pointed to gains to be achieved by more aggressive deficit financing of public expenditures in the form of worthwhile civil works. By the definition of planning that flowed from this new thinking, the state became responsible for continuously monitoring and occasionally dramatically augmenting or shifting investment flows in socially constructive directions not attractive to the private capital markets, and for limiting entrenched corporate power over prices and redistributing income to support consumption. Among the most advanced elaborations of New Deal statism, Security, Work, and Relief Policies (1942) conveyed NRPB’s synthesis of three related but discrete government roles: guaranteeing work for the segment of the population securely attached to the labor market, financing and extending social insurance to care for those unable to participate in the work economy, and underwriting a still highly contested version of industrial democracy through the NLRB and the self-organization of labor. Through its promotion of this triad, the NRPB enunciated a liberal statist’s vision of a new social contract.

New Deal planners managed only a partial and temporary fulfillment of the moralizing role Henry Carter Adams had charted for knowledge-based civic discourse back in the 1880s, implemented in limited ways through the Fair Labor Standards Act and the Fair Employment Practices Commission. The NRPB’s interest in postwar planning was one of the factors that led to the unceremonious termination of the agency in 1943, a milestone in the history of new liberalism and in the history of the social sciences as well. The commitment of New Deal planners to full employment proved untenable in the face of rising opposition to the New Deal. Though the Council of Economic Advisers authorized by the watered-down Employment Act of 1946 lacked the authority to trigger government spending at a level needed to achieve full employment, the agency continued at least through the Truman era to press for a major government role in the postwar expansion of the economy, and to jawbone against monopoly as an obstacle to growth.

Meanwhile, opponents of planning clustered around nodes represented by the resurgent free market liberalism of Frederich Hayek and by concerns among business conservatives and Southern industrialists, fanned by legal activism and the uproar created by American Dilemma, that federal government controls might invade local prerogatives regarding labor and race. The most influential opponents of government authority in these regards were undoubtedly corporate elites and corporate liberal thinkers who considered the associative vision of business–government cooperation a better method long-term. Herbert Stein, Allan Brinkley, and others have located a ‘fiscal revolution’ in economic policy thinking, underway by 1937, in which a competing body of policy knowledge suggested that the measured use of fiscal and monetary levers would enable macroeconomic stabilization without intrusion into capitalist decision-making processes or extensive interference with labor markets, which in this view could safely be left to private management in the context of ‘commercial Keynesianism’ and a compensatory state.

Whereas the first generation of American liberal statist social scientists had reconstituted government as a knowledgeable, morally responsible regulator, and the second generation of planners had modeled the state as social insurer and mediator of class antagonisms, the third, New Deal generation of planners conceived a state role not well captured as state capitalism. It was closer to older Hamiltonian and Whig models of a development state responsible for liberating and energizing community efforts and for facilitating the balanced economic and civic development of the commonwealth. Policy discourses of the 1950s, developed around Cold War internal security issues, an increasingly consensual growth oriented commercial Keynesianism, modernization theories exported from the United States as technologies for liberal internationalism, and domestic discourses of racial and gender identity, challenged the assumptions of new liberal social science, fostered new methods for interpreting modern social relations, and inaugurated a new ideological era. But embodied in resilient structures of disciplinary knowledge formation, in durable habits that demand grounding of political argument in social empiricism, and in a chastened but resilient Enlightenment tradition of political obligation, the legacy remains—indeed, in important though little recognized ways, recurs in the dialogue between contemporary liberals and communitarians. Absent the polarizing tendencies of a world divided for half a century between capitalism and state communism, and given now the resurgence over recent decades of libertarianism and free market ideology, it becomes ever more obvious that the critical decisions in democratic governance in the West, and beyond, will henceforth be—as they were in the new liberal era, 1880s to 1940s—hard choices between variants of liberalism.

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