The Businessmen's Crusade Against The New Deal

GUEST: Kim Phillips-Fein
VTR: 01/19/2012

I’m Richard Heffner, your host on The Open Mind.

And the brilliant young historian who joins me today is New York University’s Kim Phillips-Fein whose meticulously researched W.W. Norton volume, Invisible Hands – The Businessmen’s Crusade Against The New Deal, is so astutely praised by Princeton historian Sean Wilentz as “essential reading on the history of contemporary American politics”.

Journalist-historian Rick Perlstein wrote about Invisible Hands that “With ferocious archival spadework and a sharply honed critical intelligence, this study shifts the agenda of history-writing about American conservatism and marks a new stage in its maturity.”

Indeed, I understand so much better now, after reading my guest’s seminal study, the historical reasons why – when a few years ago my grandson Alexander Heffner and I presented the 8th revised and updated edition of my 1952 A Documentary History of the United States – I felt constrained to apologize for my easy reference a half century before to a “permanent Roosevelt Revolution”.

Wishful thinking on my part, perhaps. Whatever, I had been wrong…for in so many ways that “Roosevelt Revolution” has been countered, stymied, reversed by partisans on both sides of the aisle… and my guest’s researches into The Businessmen’s Crusade Against The New Deal show how and why.

So, let me begin then by asking Professor Phillips-Fein just what light she believes her researches shed, as Sean Wilentz noted, on contemporary American politics, and how they shift the agenda of history-writing, as Rick Perlstein noted, about American conservatism. How did those researches, which are so wonderful, do that?

PHILLIPS-FEIN: Well, thank you … first let me say, just thank you for having me on the show today. I think that Invisible Hands really tells two stories and they speak to both parts of your question.

First is a story about the political mobilization of business in the post war years. And I think that today the … we’re so deeply aware of the extent to which business is politically mobilized with the … especially after Citizens United … and with the reports … daily … in the past few weeks about Super PACs and the like … that we forget how relatively new this level of political mobilization really is and the ways in which it has shifted both political parties.

And so I think that’s the first thing that, that the book aims … seeks to shed light on … is how is it that business people became as deeply involved in politics as they are today.

The second part of the story is a story about a specific part of the business mobilization which is that connected to the Conservative movement.

And here the book seeks to intervene in a debate about where … what the origins of the American Right really are. A debate that goes back in some ways to the 1950’s and to the writings of people like Richard Hofstadter your, your teacher at Columbia who described the paranoid style of American politics and talked about Conservatives as though … Conservatism as though it was sort of a mental aberration and a, a … a, a really … a marginal group of dispossessed people who were driven by anxiety about their declining social status.

And I think in some ways this depiction of Conservatism, although it shifts somewhat it is still …. you know … it’s still very present even today and the way we all think about and the way Liberals think about the Tea Party for example.

And, I, I think also a lot of thinking about Conservatism has been informed by the sense that the Conservative Movement really grew out of the backlash against the Civil Rights and the Feminist Movements of the 1960’s and 1970’s.

And I think all of this has something to it. I, I love Richard Hofstadter and have nothing … I, I don’t say anything bad about him. But I think that they … what these stories miss, I think, is the extent to which Conservatism as a political movement in the post-war years drew upon the … drew upon the resources of wealthy and powerful people who are not really acting irrationally, but actually had a sense of the ways in which their wealth and their power had been politically constrained by certain aspects of the New Deal and of Liberalism. And who sought to undo those. And I think … so I think that, that … that, that starts to give some sense.

HEFFNER: Well, it’s certainly true that you made me think of Dick Hofstadter as I, as I wrote … years ago, following what Dick had taught me and what was the Liberal’s fancy at that time.

Indeed, as I read your book (cough) … excuse me … with great pleasure, I was thinking of that old New Yorker cartoon of the fat cats in probably the Union League Club sitting around say, “Let’s go down to the Translux and hiss FDR”.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: Ah, the … I wondered as I read your book … why … whether you would have some political motivation to write as you did …

PHILLIPS-FEIN: MmmHmm.

HEFFNER: … and whether Hofstadter teaching me … whether we had some …

PHILLIS-FEIN: Right.

HEFFNER: … political motivation. What do you think about that?

PHILLIPS-FEIN: Right. Well, I think … I mean just to say a little more … just about the book itself … I mean Invisible Hands is so … what Invisible Hands does … is it aims to tell the story of the rise of the Conservative Movement by looking at business activism and at business … at a group … first a small group … a fairly small group of Conservative business people who oppose the New Deal and sought to fight it and then mobilize in different ways over the course of the post-war years.

And so it talks about these business people and how they funded organizations like the American Enterprise Association which later becomes the American Enterprise Institute. It talks about the ways that free market intellectuals like Friedrich von Hayek were part of a community that included some of these disaffected business leaders. It talks about the role of anti-unionism at companies like General Electric where Ronald Reagan kind of got his first public … really became part of the Conservative Movement during his years at General Electric.

It talks about … and then it talks about what happens in the 1970’s which is a sort of a shift but at a deepening level and at a deepening sort of spread of political engagement among business conservatives. So that’s kind of what the book does.

My interest in this subject, I started writing this in the early part of the 2000’s … but I think my interest in it really actually dated back a bit earlier to the 1990’s. And my sense that … the kind of the widespread celebration of capitalism and of the free market in the wake of the fall of the Soviet Union and during the Clinton years. And so and during the stock market craze of those years.

And I think in some ways the ubiquity of that discourse was part of what led me to this subject. It wasn’t just the election of George W. Bush, but the, the sense of the ways in which the broader political climate of the country had changed.

HEFFNER: Well, the word you used … ubiquity … it’s such an important one …

PHILLIPS-FEIN: Right.

HEFFNER: … because you’re talking about both sides of the aisle.

PHILLIPS-FEIN: Yeah. Yeah. No, I think you know … it is … there is a way in which this … I think it’s, it’s … Invisible Hands is focused on Conservatism, but I think the things that I describe in it have affected the Democrats as well.

I mean not, not … you know, not exclusively … but I think it’s, it’s not something that is at all just about the Republican Party. It’s not just a partisan story.

I did …there’s one other thing that led me to this subject, which is, you know, just a, a sense of the ways in which the new Left in the 1960’s had perhaps, I thought, been unfairly criticized for some of the shift towards the Right. I think there’s a sense …

HEFFNER: Now, wait a minute, wait a minute … say that again ….

PHILLIPS-FEIN: Well, this is … that people sometimes think of Conservatism gaining strength out of the 1960’s and 1970’s and developing as a backlash to the radicalism of the anti-war movement, say … or the backlash against Black power and that these types of … and so in a way, the Left is blamed for the tactical failures of the Left …

HEFFNER: The Social Movement …

PHILLIPS-FEIN: Yeah … are seen as responsible for leading to the rise of the Right. And I felt … I think it … in, in a way politically I felt this was … it left out a very important part of the story. And it maybe gave, in some ways, too much agency to the Left.

I think one of the things to understand about Conservatism is its deep roots in American history. And the extent to which, as a movement it’s been able to triumph and survive in part because of its connections to people who are not at all socially marginal.

And so I think it’s, it’s a really … so I was interested in the deep roots of conservatism and in looking at it, not just as a reaction to the developments of the sixties and seventies, but its longer … its, its older past.

HEFFNER: Maybe only old fogies like me can point back to people who were so important in their growing understanding.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: Maybe mis-understanding of the past. What influenced you to think in those terms?

PHILLIPS-FEIN: Well, I think I … a … certainly think my … I … my education at the University of Chicago, which is … was a very conservative institution in a lot of ways, even in the 1990’s … my interest in the Labor Movement, which came out of my reporting background.

HEFFNER: Tell us about that.

PHILLIPS-FEIN: Well, I … I was … I did a lot of journalism in college and afterwards and I quickly became very interested in unions and actually writing about labor unions at the University of Chicago .. the hospital worker’s union, I wrote a whole story … the University of Chicago Hospital I wrote a series of stories about contract negotiations there.

And I think I was very interested in the way that the … I was very drawn to the labor which is kind of an unusual thing in some ways in the mid-1990’s. But I saw the unions there as, as … it was a very … the local … that particular local was a very good local, a very democratic local … it kind of has this group of insurgent reformers in it and it was … just by … it occurred to me how the union was standing up for, sort of individual rights and giving people a certain measure of freedom of expression on the job. So I think I had a sense of idealism about the labor movement … that is one of the things that led me to this subject, I think.

HEFFNER: And the decline of the Labor Movement?

PHILLIPS-FEIN: Yeah. And, and an interest in wanting to explain the reasons for the decline of labor movement.

HEFFNER: So that you feel you can trace it … in part, at least … to the dollars, to the monies …

PHILLIPS-FEIN: MmmHmm.

HEFFNER: … that were spent by business investing in the American Enterprise Institute, putting it into the Chamber of Commerce, the National Association of Manufacturers … and those names loom so large today, too.

PHILLIPS-FEIN: Yes. And I think also in the case of unions the intense interest of companies in fighting the power of unions, you know, at … at … and that the ways in which those … you know, that’s not just an automatic thing … that there are a set of strategies and techniques and tactics that companies develop over the course of the post-war period that stay within the letter of the Wagner Act and of Labor Law, but … may not always stay within the letter of the law … they break it, too.

But that are really, you know, a concerted effort to fight the power of unions.

HEFFNER: One of the most interesting parts of your book has to do with the late Supreme Court Justice, Lewis Powell …

PHILLIPS-FEIN: Mmmm, hmm, mmm.

HEFFNER: How, how could it have been that a newspaper reader … a teacher, in fact, like myself … could not remember what it is you reveal in your book about the importance of what Lewis Powell before he went on the bench … did. Why don’t you describe …

PHILLIPS-FEIN: Right. Well, I guess in … it was a couple of months before … Powell was actually nominated by Nixon for the Supreme Court … he had …

HEFFNER: He had turned him down before …

PHILLIPS-FEIN: Had he? I … I … yeah …

HEFFNER: I believe so … he had been offered the job.

PHILLIPS-FEIN: Uhuh … well he … this time … in, in late ’71 he, he didn’t … he went for it, but he, he was … his friend … a friend of his in Richmond, who was involved with the US Chamber of Commerce … he and his friend were clearly in a dialogue over the course of 1971 about the state of American politics.

And in the Powell archives there are kind of copies of newspaper articles that they must have been reading or discussing and the friend asked him to craft a memorandum which the friend … his friend would then present to the head of the US Chamber of Commerce, which at that time was a fairly sleepy organization, it wasn’t really doing that much.

And Powell agreed and, and wrote this astounding memorandum which people … you know, some people maybe are familiar with this … program … but called it an attack on the free enterprise system.

And in this he talks about what he feels is a growing attack on free enterprise in the early 1970’s. And he said the least of it is the New Left and the radicals. And I think it’s, it’s … we have … you know thinking back to the early 1970’s this is a moment of extraordinary popular upheaval in the United States … the growing unpopularity of the Vietnam War, the mass demonstrations, there are a certain level of, of bombings and the like that are happening … fire bombings at the Bank of America, for example.

So there’s a whole … there’s a really … a very militant and a … an explosive political situation. But Powell said that that’s not actually what the real threat is. The real danger is not just that, but it’s a deepening level of disaffection towards free enterprise and capitalism in business that he says is spreading throughout the population and is associated with the, the kind of developments like the passage of the environment … the creation of the Environmental Protection Agency and OSHA and regulation and so … he, he kind of links these three things that don’t necessarily seem like they should be linked, but he puts them together and says, this is a, a attack on free enterprise and what … and business needs to fight back. Business people need to find a way to fight back in a concerted way, this fight should take place on the ideological level by bringing speakers into classrooms and finding ways to, to effect public debate on campuses. This fight should take place in the courts through appointing … finding ways to use the court, courts to advance a business friendly agenda. And this, this should take place in politics, too. Business people really need to mobilize politically to effect what’s happening to the country.

And Powell’s memorandum went to the US Chamber of Commerce and never surfaced in his … the hearings around his nomination to the Court …

HEFFNER: Strange.

PHILLIPS-FEIN: Strangely enough. But then about a year later if falls into the hands of Jack Anderson, the Washington Post columnist who publicizes it and actually it’s through that public … I mean that, that level of publicity, you know, many people criticize Powell, but a lot of business people learned about the memorandum that way, many more than would have known about it otherwise, I think. And the Chamber of Commerce does actually take up many of his recommendations and does become much more activist, much more aggressive group by the end of 1970’s … and the idea that Powell talks about also effect people like Joseph Coors who goes on to help fund the Heritage Foundation, so they … and they, they percolate outwards.

I mean I think sometimes people look at the Powell memorandum and say you know, this is, this is crazy and it sounds sort of like, you know, a conspiracy that this man is putting out there. And this, this must have been just rejected … surely nobody actually believed that American capitalism was about to topple in the early 1970’s.

But I think it … what is actually interesting is that if look at it archivally and other historians have been doing this work, too, or kind of have done much more in-depth work than I have, really, on the 1970’s and business politics, and have shown the ways that Powell’s ideas were not, by any means, his alone, but were widely shared by the people who, you know, for example started the Business Roundtable … an organization that’s composed of CEO’s, it’s one of the country’s largest corporations and so they’re not really marginal at all.

HEFFNER: What fascinates me is that you seem to quote, with approval …

PHILLIPS-FEIN: MmmHmm.

HEFFNER: … those people who thought it rather “kooky”.

PHILLIPS-FEIN: No, no. Not with approval. I just think … I think when you’re writing … one of the challenges of writing about this subject actually is that it’s hard sometimes to take seriously the level of fear and anxiety on the part of these business people.

Because with historical retrospect, it’s difficult to believe that people actually thought that capitalism could be in this kind of danger at these moments.

And I think also it’s a little tricky because I think these, these activists … these were activists and they had a vision of what they wanted to achieve. But they aren’t, by any means omnipotent. I mean they have certain kinds of power and certain kinds of resources, but they don’t, you know, it’s not like they can make things happen.

Or they don’t … they don’t … I think they don’t, you know, wield some sort of …

HEFFNER: Yes, but the question I’m asking you is whether you’re willing, quite so quickly to dismiss …

PHILLIPS-FEIN: Right.

HEFFNER: … what Powell was conjuring …

PHILLIPS-FEIN: No, I mean I think …

HEFFNER: … up …

PHILLIPS-FEIN: … Yeah …

HEFFNER: … wasn’t so wrong.

PHILLIPS-FEIN: Yeah. Yeah, well I think … I think it … well thinking back to the early 1970’s … I, I think that’s the thing about that moment … is that it was actually a moment of great social tension.

And it was also a moment when the great … not quite 1971 … but shortly there afterwards, the great … the post war boom, the economic expansion that had powered Liberalism would come to an end.

And I think it … there were fundamental questions about the way forward for the country. And so Powell’s memorandum, you know, becomes part of that struggle.

HEFFNER: But Powell’s memorandum also was drawing upon the past.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: The New Deal past.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: And couldn’t one say, without too much criticism that, indeed though FDR said his mission was to save capitalism … cannibal capitalism, anyway as it has been called …

PHILLIPS-FEIN: MmmHmm.

HEFFNER: … recently … that, in fact, what took place with the strength of labor, with all of the regulations, might be hamstringing capitalism. Now the next thing …

PHILLIPS-FEIN: MmmHmm. MmmHmm.

HEFFNER: … I would say is … so what?

PHILLIPS-FEIN: Right.

HEFFNER: But I wonder whether that concession mustn’t be made.

PHILLIPS-FEIN: Yeah, well I think it … the New Deal does. I mean … I think the New Deal is not … it doesn’t end capitalism or it doesn’t completely transform capitalism. I do believe that, you know, FDR meant what he said when he … remember the idea that he acting to save capitalism.

I think is, is true, but I also think that the business … I mean I think the, the business people who reacted against it were not crazy and that they did … and they were actually … their, their power was curtailed and their sense of what they could do in their companies was changed by having to bargain with powerful unions; their sense of what they could do with their profits was changed by extremely high corporate income taxes and personal income taxes in the post war years. Ahemm, that’s less a product of the New Deal years themselves, but of the, the war and the, the legacy, I would say, of the New Deal in the post-war period. So, there is …

HEFFNER: Do you think he turned it around?

PHILLIPS-FEIN: Turned … turned what around?

HEFFNER: Do you think they turned around what Powell was describing … correctly or incorrectly. Do you think …

PHILLIPS-FEIN: Oh, do I think the business … do I think the business …

HEFFNER: Yeah.

PHILLIPS-FEIN: … people have been able …

HEFFNER: Do you think what the invisible hands … that the crusade …

PHILLIPS-FEIN: Has been successful?

HEFFNER: Yeah.

PHILLIPS-FEIN: I mean I think in many ways … yes … I think that the … and again, I mean I think it’s not just … you know I think the context changes as well and that changes the meaning of their activism. So it’s not just a question … I think that it’s not just a question of their success. But, yes, in a, in a … to a large measure I think that the … a lot of the things that they wanted to see realized have actually come to pass.

HEFFNER: And where do you think we’ll go from here?

PHILLIPS-FEIN: Oh, well, I don’t know. I’m a historian so we, we traffic in the past, not the future. I don’t know. I mean I think that the …

HEFFNER: That sounds as though you’ve said it before.

PHILLIPS-FEIN: No, no, no. I haven’t said it before … other people certainly have. But I think that the, the … the … you know I think the events of, I think, last fall … Occupy Wall Street … brought a lot of these questions about economic inequality and the power of business to … into national political conversation the way that they had been … had not, had not been present. I think that that was … felt like a real opening … a breath of … a sense of possibility. So we’ll see what happens. This summer …

HEFFNER: What’s your … as a historian …

PHILLIPS-FEIN: MmmHmm.

HEFFNER: You and I both know that doesn’t mean you’re concerned only with the past …

PHILLIPS-FEIN: Yeah.

HEFFNER: … my bet is if I scratched a little around the surface I’d find that your interest in the past is a function of your interest in the present and the future.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: And that, as you said, your time in Chicago, your work with labor unions … molded your thinking.

PHILLIPS-FEIN: Yeah.

HEFFNER: So I don’t think it’s unfair to ask you …

PHILLIPS-FEIN: Oh, I just mean …

HEFFNER: … what happens next?

PHILLIPS-FEIN: … it’s so hard … it’s, it’s … I just mean it’s so difficult … I, I think there are so … I, I don’t … the future feels open to me, so I have a lot of trouble prognosticating about what will happen.

I mean I guess I also feel … you know, on the one hand I, I have … I think it’s important to have an attitude of hope, but at the same time … easy to have a sense of despair. So I think it’s, it’s … ahem … you know … I’m … I … I’m … I’m interested in seeing what will happen with the … whether the kind of the ferment of the … this past fall will carry forward into the future.

HEFFNER: Wilentz and Perlstein feel that what you’ve done really changes the picture. Have you seen changes … in the historiagraphical picture?

PHILLIPS-FEIN: I have actually. I think that there is … there is a ground swell of work that people are doing both on the role of free market ideas and economic ideas in the development of the Conservative Movement. There’s a real flowering of work on those subjects.

And also there’s a very striking expansion of work on business and conservatism. And I think that … and people are doing … a whole, whole group of people who are finishing their first books, or graduate students working on their dissertations are doing work that, I think, really digs into different parts of what … different areas that I wrote about in Invisible Hands … not that they’re all doing it just because of me or something.

But I think that there’s a real expansion of work in this field and that it’s by no means … I mean I think it was … when I started work on this … there were a couple of other books that were very useful and important for me. But there just was nothing like the, the expansion … nothing like the volume of scholarship that I know of myself now and that will be published in the next few years.

HEFFNER: You know, it’s so interesting that when I was a young man … and that’s a long, long time ago … I think I took for granted what you’re writing about … the businessman’s crusade against the New Deal.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: That’s what I saw it … because I was there. And I assume that what you write about now … about the individuals from GE and GM and so forth and so on, that they were doing what they did. We knew that then.

PHILLIPS-FEIN: MmmHmm.

HEFFNER: What happened to that knowledge?

PHILLIPS-FEIN: Well, that’s a great question and I think it, it comes … I, I think is actually … you know part of what … I think a lot of the material in this book is interesting to people because they have … I mean to a general readership because people have some intimation that this is happening and the book helps them kind of flesh that out or give them concrete evidence about it. About something that they had some impulse might be true, anyway. I think that in the historical profession, there had been much less attention paid to business people as political actors and that … that’s actually something that’s also starting to change a bit. Not just with regard to conservatism, but a whole range of different issues.

The, the field … in a way this is … you know, there had been a lot of interest in writing about subaltern groups … writing about women, writing about working class people, writing about African American politics and all of this … and, and looking at the politics of the dispossessed. The politics of the powerless. And I think I am a very big … I believe in that work. I mean I think it’s politically important … and … but I think that …

HEFFNER: Wait a minute … let me interrupt you and say what I believe is that I asked you too large a question at the very end …

PHILLIPS-FEIN: (Laugh)

HEFFNER: … of our program.

PHILLIPS-FEIN: Oh, dear.

HEFFNER: … so you’ve got to promise to come back again.

PHILLIPS-FEIN: Oh, I will certainly. Yeah.

HEFFNER: And thank you for joining me today, Kim Phillips-Fein.

PHILLIPS-FEIN: Well, thank you for having me.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. Meanwhile, as an old friend used to say, “Good night and good luck.

And do visit the Open Mind Website at thirteen.org/openmind to reprise this program online right now or to draw upon our Archive of 1,500 or so other Open Mind and related programs. That’s thirteen.org/openmind.

  • E.Patrick Mosman

    Mr.Heffner,
    It would be interesting if Ms. Phillips-Fein could spend the next two or three years studying the political influence of the big unions and liberal organization such as those funded by George Soros, the McArthur Foundation, Hollywood moguls, business leaders(GE for example), liberal Super PACs and the like who far outspend conservative organizations such as the Heritage Foundation, the Business Round Table and the Chamber of Commerce, conservative Super PACs et al. It would appear that there are many “Invisible Hands” behind the liberal political causes that would be revealed in an effort to steer government policies towards more government control of businesses by mandates, rules and regulation written by bureaucrats in the various agencies, EPA,DOE, HHS and anti-business actions by the DOJ, the IRS, the NLRB and the SEC.
    The union influence is highlighted by the ownership interests awarded to them in the GM and Chrysler government bailouts at the expense of capitalist investors in those companies.
    The idea that business leaders took actions to protect and maintain their fiduciary responsibilities and abilities to act on behalf of their owners, shareholders, against over bearing government efforts to control them should be praised not presented as a hidden recently discovered plot.
    Here is what Henry Morganthau FDRs Secretary of the Treasury testified to in 1939 about the “New Deal”
    “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong … somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started. … And an enormous debt to boot.”
    FDR’s New Deal did little or nothing to save “save capitalism” during the 1930s, WW II ended the high unemployment rate by the draft and in manufacturing for war effort.
    It is said that President Reagan once said the most frightening words are “I am from the government
    and I am here to help you.” The industrial might of the United States did not result from government leadership but from the government getting out of the way of inventors, investors and entrepreneurs. Today the industrial might of the United States is slowly but surely being tied down by ill-conceived and unnecessary rules, regulations and mandates as surely as Gulliver was tied-up by the Lilliputians.
    A gold mine for further study.

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