The New Deal's True Legacy
Chapter 9 – The
Great Deformation – The Corruption of Capitalism
in America
by David Stockman
THE NEW DEAL’S TRUE LEGACY
Crony Capitalism and Fiscal Demise
The new deal did not address the causes of the depression,
even if its work relief and other humanitarian measures did ameliorate
for millions of citizens the terrible costs of its unnecessary prolongation.
Still, most of this safety net consisted of ad hoc programs, such as
the WPA, which were never institutionalized and did not survive the 1930s.
What did survive is a destructive legacy of fiscal profligacy and crony
capitalist abuse of state power. Policy measures like Fannie Mae, deposit
insurance, social insurance, the Wagner Act, the farm programs, and monetary
activism share a common disability. They fail to recognize that the
state bears an inherent flaw that dwarfs the imperfections purported to afflict
the free market; namely, that policies undertaken in the name of the
public good inexorably become captured by special interests and crony
capitalists who appropriate resources from society’s commons for their
own private ends.
Roosevelt’s unprincipled and unbridled activism is a powerful case in
point. Orthodox historians have positioned FDR as the scourge of “economic
royalists” and the champion of the common man. He was neither.
In fact, he was the patron saint of crony capitalism.
As a power-driven politician he recognized no rules or standards for
public policy or any particular limits on the role of the state. Indeed, FDR
has been nearly defied for being a “pragmatist” who experimented until he
found something that “worked.” Accordingly, it was only a matter of time
before the very capitalists that FDR professed to despise captured for their
own ends the programs he legitimized in the name of the public good.
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