“The New Deal Worked”: Why Do So Many People Accept that as Fact?
By Jonathan Bean • Monday January 5, 2009 8:35 PM PDT • 18 Comments
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.”
Tags: American History, Economics, Education, Great Depression, Politics 
At least America has intellectual giants such as Murray Rothbard (“America’s Great Depression”) and Robert Higgs (“Depression, War and Cold War”) who are working to dispel these myths. Other countries do not have such sophisticated analyses of their respective Depressions.
The problem is that many economists in other countries have a very shallow understanding of history, and don’t devote as much time to it.
And for those in history departments inclined to write a revisionist account, “economics 101″ often isn’t enough to make an airtight case. Some economics training is also required.
Although, Henry Hazlitt was one who had no formal economics training; so I suppose it can be done.
Sukrit | Jan 6, 2009 | Reply
About Australia:
When I first entered graduate school to study business history, I was surprised to find that the UK and Australia had separate academic units devoted to Economic History. In fact, during my first year at Southern Illinois University, a student at Australian National University contacted me for help with a senior thesis on small business during the Great Depression. (My first book dealt with that topic). His thesis was for a degree in Economic History! The thesis was quite good and 100 pages long. He went on to a career in finance.
As I recall, EH students needed training in history, economics and business. Here is one example:
http://eh.net/pipermail/oznz.society/1996-June/000501.html
Why not contact economic historians in Australia? Go to http://www.eh.net and there is a directory for you to search by nation. If you need help, contact me at jonbean AT siu DOT edu
Jonathan Bean | Jan 6, 2009 | Reply
Jonathan,
Thanks for the link to the Cargill and Mayer piece. In my Am. Econ History course last semester, the “muse” for the section on the GD was what I called the “high school history” version of the GD, unaware of this article. I’m teaching a senior seminar this spring on the GD and this paper will be the perfect first reading, as I intend to use that as a semester-long “muse.”
So thanks.
Steve Horwitz | Jan 6, 2009 | Reply
I think that the reason that most people accept the notion that “The New Deal Worked” is that they have come to view history as being a series of contests between the good guys and the bad guys. (Note that this is how many also view contemporary politics – consider the conservative/liberal divide among partisans, for example).
In this scene, the bad guys are played by Big Business and Herbert Hoover and the good guys are played by FDR and his brain trust. No careful analysis or deep thinking required! The good guys won.
D. Saul Weiner | Jan 6, 2009 | Reply
You can replace “most people” with “most professors” and “most high school teachers”.
Saul writes:
“I think that the reason that most people accept the notion that “The New Deal Worked” is that they have come to view history as being a series of contests between the good guys and the bad guys.”
Greg Ransom | Jan 6, 2009 | Reply
I think it is also due to our nature to try and fix problems, even ones we can’t fix. The economy is bigger than the government and largely outside of government control (well, it was that way). If the government attempted to fix the problem, the depression, and we prove that not only did the government “help” fail, but worsen the depression, then we are admitting what many of us already know... that the government is by and large ineffective, regardless of warm and fuzzy intent.
Matt Copher | Jan 6, 2009 | Reply
I suspect if you separated the “New Deal” into devaluation and going off the Gold Standard (1933) to everything else afterwards (NRA, agriculture subsidies, etc.) then you would pick up more economists who concur that (given the situation) devaluation was a good idea but that cartelizing industry and labor was not such a good idea.
You could also have economists raise negative pre-New Deal policies such as Smoot/Hawley Tariff, monetary contraction, etc.
Mr. Econotarian | Jan 7, 2009 | Reply
Yes, the New Deal was not one thing but many policies, often conflicting (that was the problem).
“You could also have economists raise negative pre-New Deal policies such as Smoot/Hawley Tariff, monetary contraction, etc.”
That is why Herbert Stein began his _Presidential Economics_ book with a chapter devoted to Hoover and FDR together: The Origins of Liberal Economics.
Jonathan Bean | Jan 7, 2009 | Reply
To say the New Deal Failed is unfortunately to prompt conservatives to promote the same fiscal policies that crippled the New Deal in the 30′s. It’s not so hard to list what worked and what didn’t in a way that is instructive for what’s needed now.
The CPA, CWA,and WPA worked. These were spending programs that conservatives deplore and deplored then. Creating the SEC and the Wagner Act worked. We know what conservatives think of them. Conservatives don’t dare touch Social Security which Roosevelt started in the depression, but didn’t pay out until the 40′s.
The National Recovery Act of 1933, constricted the economy with disastrous effect. In the name of “fiscal prudence” the FED then raised taxes, preventing recovery.
One of Roosevelt’s bigger errors was to slash government spending in 1933 in a way that reduced economic activity directly with the Economy Act. In 1937 Roosevelt listened to his Treasury secretary to reduce spending and balance the budget which extended the depression.
Yhr New Deal failed only when it tried for too much fiscal prudence as above, and as conservatives want now. This doesn’t require more than these few sentences to explain and learn from (from Beinkley at Columbia writing in The New Republic).
j.coles.atwood | Jan 8, 2009 | Reply
I find it rather humorous to find someone who will say that the WPA worked. If you believe that digging a ditch and filling it back up again is productive, or that raking leaves from one end of a public park to the other end and then raking them back again is a responsible use of public funds there is probably a job for you in the Obama Administration.
Brian Birdnow | Jan 10, 2009 | Reply
Yes, and why do all of today’s New Dealers skip over the carcass of the Blue Eagle? That baby had claws and a pea brain. Well, they say, that was only two years of the New Deal. FDR had four terms to get it right. Of course, we all knew that in 1933, right?
Jonathan Bean | Jan 10, 2009 | Reply
Saul Weiner wrote:
“In this scene, the bad guys are played by Big Business and Herbert Hoover and the good guys are played by FDR and his brain trust. No careful analysis or deep thinking required! The good guys won.”
And as is so often the case, it is the victors who write the history.
M Sykuta | Jan 13, 2009 | Reply
If only I had a greenback for every time I came to http://www.independent.org... Incredible writing!
Sallie Austin | May 30, 2010 | Reply