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Reflections on the New Deal: The Vested Interests, Limits to Reform, and the Meaning of Liberal Democracy

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  • John F. Henry

Abstract

I subject some aspects of Roosevelt's "New Deal" to critical analysis, with particular attention to what is termed "liberal democracy." This analysis demonstrates the limits to reform, given the power of "vested interests" as articulated by Thorstein Veblen. While progressive economists and others are generally favorably disposed toward the New Deal, a critical perspective casts doubt on the progressive nature of the various programs instituted during the Roosevelt administrations. The main constraint that limited the framing and operation of these programs was that of maintaining liberal democracy. The New Deal was shaped by the institutional forces then dominant in the United States, including the segregationist system of the South. In the end, vested interests dictated what transpired, but what did transpire required a modification of the understanding of liberal democracy. The following paper provides a compressed account of this tradition of endogenous financial market instability.

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  • John F. Henry, 2018. "Reflections on the New Deal: The Vested Interests, Limits to Reform, and the Meaning of Liberal Democracy," Economics Working Paper Archive wp_905, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_905
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    5. Price Fishback, 2017. "How Successful Was the New Deal? The Microeconomic Impact of New Deal Spending and Lending Policies in the 1930s," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1435-1485, December.
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    Cited by:

    1. Heise, Arne & Serfraz Khan, Ayesha, 2018. "The welfare state and liberal democracy: A political economy approach," ZÖSS-Discussion Papers 71, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).

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    More about this item

    Keywords

    Vested Interests; New Deal; Planning; Liberalism;
    All these keywords.

    JEL classification:

    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • N2 - Economic History - - Financial Markets and Institutions
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation
    • P1 - Political Economy and Comparative Economic Systems - - Capitalist Economies

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