Invisible Hands: The Businessmen's Crusade Against the New Deal

INVISIBLE HANDS:Where Fundamentalist Religion Meets Fundamentalist EconomicsNo deep appreciation of the dynamics of the American political economy in 2009-2010 is possible without understanding the importance of economists Friedrich von Hayek and Ludwig von Mises, as well as religious fundamentalists Jerry Falwell and Pat Robertson. Throw in some fascinating background on George Gilder, and the politics of the past two years begin to make much more sense, and we have Kim Phillips-Fein to thank for that. And for pointing out what American Progressives probably don't want to hear, but need to: that "the most striking and lasting victories of the right have come in the realm of political economy rather than that of culture."Phillips-Fein also makes two fascinating observations about these Austrian economists in Invisible Hands, important for the major concerns of this essay: how The Market has assumed religious dimensions and attributes, especially here in the United States, and how it "assumes" different "moods" or attributes - projections if you would prefer - of its human inventors, recalling our wonderment at the anthropomorphic projections upon the Greek or Roman deities, or the Calvinist constructions of the 16th century. The first is Hayek's admission, in his famous Road To Serfdom, that "at times modern man would feel subordinated to the market and would chafe against economic forces that he could not control. But he argued that submission to the marketplace was infinitely preferable to deference to a ruler. `Unless this complex society is to be destroyed, the only alternative to submission to the impersonal and seemingly irrational forces of the market is submission to an equally uncontrollable and therefore arbitrary power of other men.'"(Page 37.) Now that's what I call "market fundamentalism," with not much room left for the politics of democracy (freedom in his view, comes from The Market), much less Social Democracy with its mixed economy and deep and open involvement in a fully recognized "political economy." The other stunning comment here, on what I will call the "brittle Prometheanism" of The Market, is the attribute that insists upon "hands off!" from government interventions. It has two features: that the market is spontaneous, "a complex system that came into existence without forethought or planning...the robust force that generated all of life and human production and a terribly fragile entity, threatened on all sides...in desperate need of protection..."(Ibid.)Although there is a great deal else that happens to build conservative momentum inside the economics profession, especially the development of the rational expectations school and the efficient market hypothesis, readers wondering about our nation's strange 40 years' wanderings towards the edge of the economic cliff won't stray far from the path if they will remember these key features bequeathed by the Austrians. Yet as important as they for our understanding, they nonetheless don't tell the full story. For that, we must turn to the nature of the response from the religious fundamentalists to what is going on in the turbulent world of the 1970's - economic events, certainly, but also cultural ones as well.Building the Conservative CoalitionAs Kim Phillips-Fein lays out for us in Invisible Hands, political conservatives, especially business conservatives, were lamenting their lack of a grass-roots movement to counteract the power of labor which grew out of the organizing successes of the 1930's and the legal sanction bestowed by the New Deal. Protestant churches were the logical place to turn, but the climate in their pulpits, in the wake of the New Deal, and indeed, ever since the rise of the Social Gospel in the late nineteenth century and early twentieth century Progressive Era, was not very receptive. "The basic argument was that Christianity had too long been associated with altruism, selflessness, and a devotion to helping the poor - principles that might lead good Christians to advocate government intervention in the economy. To counter this idea, Spiritual Mobilization insisted that Christianity was rightly associated with shrinking the welfare state." (Page 74). Spiritual Mobilization was, among other things, an attempted collaboration between J.Howard Pew's Sun Oil-generated money and the religious organizing genius of James Fifield, a dynamic Congregational minister with a huge parish in Los Angles, who had originally founded Mobilization in the 1930's. And one of the first outreach efforts is to mail out free copies of Hayek's The Road to Serfdom in an attempt to gauge the mood amongst the ministers. Although it faltered in the 1950's, Spiritual Mobilization foreshadowed the framework for the conservative alliance in the 1980's.Although most of my readers will be familiar with religious fundamentalism's focus on personal morality - crime, sexual transgressions, gender roles and abortion - much less attention has been paid to its attitudes towards economic questions and the role of the federal government. Because they have been part of powerful national political coalition, the Republican Right, since the late 1970's, and one where it is not clear that the leadership positions on economic questions fit comfortably with the economic needs of many in their congregations, nor where the steady green light given to rapid economic changes fits logically with the biblical and theological inflexibility, it behooves Progressives to take a closer look at how this coalition handles these tensions. All the more so during times when core portions of the national identity - the American Way of Life - Economic Abundance and Leadership, Moral Leadership, Success in War - seemed to be in decline. Indeed, as we will see, the relation of alleged moral decline linked to various forms of real or perceived national decline, is a theme that runs right back to the nation's Puritan roots in 17th century New England, and is in turn, closely linked to the Protestant Ethic and the earliest capitalist traditions of the nation.We have stressed the importance of the various national shocks of the 1970's; so how did two of the most important fundamentalist religious leaders react to them, since both Pat Robertson and Jerry Falwell would play key roles in putting together the Republican Right coalition? First, we have to note, in partial answer to the seeming incongruity of fixed-theology fundamentalists advocating a permanent green light for the creative destruction of restless capitalism, that these religious leaders were businessmen as well as evangelists, familiar with the cutting edge technologies they utilized to spread their message by print, radio, and especially, television. It may have been for Falwell the nostalgia dripping title of the "Old-Time Gospel Hour," but it was also an example of electronic savvy and a cash-cow. In 1978, he began publishing a newspaper called the Journal-Champion which went heavily political, with a surprising dose of economic issues. Of course it had the standard pleas to "cleanse America of sexual sin," but it also took positions against federal bureaucratic interventions (OSHA), in favor of the California property tax revolt (Proposition 13), and against a federal bail-out of NY City. On the alarming national inflation of the 1970's, Falwell wrote that "God is bringing the entire nation to its financial knees. If we want to control inflation, we should set our spiritual house in order." (Phillips-Klein, Pages 228-230.) (Contrast that to Galbraith's remedy, never applied, of complex wage and prices controls, structured to account for the large firm/small business dichotomies in the US economy, and biographer Parker's call for - and the implied military threat - to force a roll-back of the OPEC oil price shocks - something he said Kissinger and Nixon wouldn't countenance for fear of roiling the tinderbox of the Middle-East).And 30 years ago, in 1979, Pat Robertson issued his "Christian Action Plan to Heal Our Land in the 1980's." In one respect, it seems like it was a reversal of Falwell's diagnosis of cause-and-effect: "Robertson indicated that the moral illness threatening the United States in the late 1970's had its roots in the nation's political economy." It's timing was 50 years after the onset of the Great Depression, and it's pretty clear that Robertson blamed the liberal tools set in motion by the New Deal for the ills of the 1970's: "`a powerful central government...an anti-business bias in the country...powerful unions' and most important of all, `the belief in the economic policy of British scholar John Maynard Keynes...'" He conceded some positive good to them in curing the Great Depression, but "fifty years later they were responsible for the `sickness of the `70's - the devaluation of the dollar, inflation, the decline in productivity." The remedy? A "`profound moral revival'" and the election of those who would "`reduce the size of government, eliminate federal deficits, free our productive capacity, ensure sound currency.'" (Phillips-Fein, Page 225).As noted, the cause and effect between economic decline and moral failings may get switched with less than airtight rigor within the worldview of even these two major fundamentalist leaders, but if we recall that in the 1970's and 1980's the charge was often made by conservatives that the liberal welfare state, especially its Aid to Families with Dependent Children Program (AFDC), aka as "welfare," was undermining both morals and marriage, then the seeming inconsistency here can be clarified. And who better to further shine a light on these matters of the moral economy, than the fascinating figure of George Gilder.George Gilder and a Morality Enforced by The MarketThis writer didn't know, until reading Invisible Hands, that Mr. Gilder was raised, after the death of his father, with the help of the Rockefeller family, especially David, who was a roommate of his father's at Harvard, nor was I aware of his two books published before the famous Wealth and Poverty of 1981. Wikipedia also notes that he attended a private school in NY City, Hamilton, then Phillips Exeter Academy and finally Harvard. I note these biographical features with interest because, as Thomas Frank tells us in One Market Under God (2000), Gilder was a proponent, among many notions, of the idea of class warfare "between righteous new money, the entrepreneurs who created wealth, and bitter frustrated old money..." The new entrepreneurs "were both society's `greatest benefactors' and yet also the `victims of some of society's greatest brutalities'" at the hands of "`the mob'" which turns out to be incited by... "...the very rich, the people of inherited but declining wealth whom, Gilder imagined, controlled `the media and the foundations, the universities and the government.'" (Page 35). Gilder's background is also ironic in light of his high flights into the realm of market populism, especially with the rise of the Internet and its entrepreneurs. But that's a digression from Invisible Hand's reminder of his earlier works.The language Phillips-Fein uses to describe the early Gilder is revealing for the purposes of this essay. Gilder "wrote passionate jeremiads against modern liberalism's effect not only on the economy but on culture, sexual relationships, and morality...His first book, Sexual Suicide (1973), was a harsh critique of the women's movement; his second, Naked Nomads (1974), catalogued the hazard that single, unattached men posed to social order."(Page 177, My Emphasis.) In Wealth and Poverty, however, Gilder was trying "to demonstrate that capitalism was an inherently moral economic order." These were not entrepreneurs driven by greed; "they wanted merely to have the `freedom to consummate their entrepreneurial ideas,'" driven by "a spirit closely akin to altruism...'" (Ibid.) But then, like a turn in Zeus's mood, the market shows us another face, and becomes "a measuring stick for morality that meted out rewards to people who lived virtuous lives while punishing those who violated codes of decency. `Work, family, and faith' were the only solutions to poverty." And now for Gilder's main thrust: that "the real danger of the welfare state was that it created a mode of subsistence and survival free of the morality enforced by the market." (Page 178. My Emphasis.)Readers who would like to read more about the importance of Invisible Hands can find it as part of a longer essay, "Sinners in the Hands of an Angry Market" [...]William NeilRockville, MD

...which our former First Lady so fatuously denounced in defense of her wandering spouse, wasn't really such a flight of fancy. After all, the entire history of partisan politics in America began with the conspiracy of Jefferson, Madison, Gallatin and others which came to be known as the Democratic Republican Party. Author Kim Phillips-Fein presents detailed and thoroughly convincing evidence, in this eye-opening book, that `conspiratorial' activities among a small group of American businessmen opposed to the goals and values of New Deal liberalism succeeded, over decades, in building a political movement and "....changing the world. Long before the `culture wars' of the 1960s sparked the Republican backlash against cultural liberalism, these high-powered individuals actively resisted New Deal economics and sought to educate and organize their peers [i.e. wealthy businessmen] as a political force. They fundraised, helf conferences, supported sympathetic scholars and media outlets, founded institutes, fought unions, and recruited candidates for high office -- all with the aim of rescuing America, and their profit margins...." Author Phillips-Fein, please understand, does not mean to imply that such conspiracy is inherently malicious or misbehavior. Working for one's ideals behind the scenes is obviously a democratic right, indeed, the properest behavior of an individual in a political society. Nevertheless, a very disturbing tale is documented in this book: of deception and hypocricy; of corruption of the electoral, judicial, and legislative processes; of the ruthless use of power and money; of indifference to the welfare of ordinary people; of ideological fanaticism; of the exploitation of dangerous social divisions for political advantage; of skillfully camouflaged Class Warfare against the `lower' classes and their champions; of plutocracy in the saddle.William Baroody? Lemuel Boulware? Ralph Cordiner, Pierre du Pont, Clarence Manion, Leonard Read, Richard Viguerie, F. Clinton White? How many of these names are familiar to most of us, and yet they were all movers and shakers of American politics without ever holding office or confronting an election.ACU? American Conservative Union! AEA, later AEI? American Enterprise Institute! American Liberty League, Business Roundtable, Cato Institute, Committee for Economic Development, Foundation for Economic Education, Hoover Institution, J. Howard Pew Freedom Trust, Manion Forum of Opinion, Mont Pelerin Society, NAIB, NAM, NCAC, NICB, NRWC, Olin Foundation, Ripon Society, and oh yeah, the John Birch Society, let's not forget! These and many others, of transient or permanent influence, were the frontline agencies of the capitalists' crusade against New Deal liberalism. Often the directors and spokesmen they supported turned out to be the campaign managers, advisors, powers behind the thrones of elected "leaders."This is a difficult book to review! I feel I'd need to transcribe half the text of it to do it justice. There's so much that I didn't know in it. So much that I suspected but couldn't prove! So many aha! moments of history revealed! Readers over thirty? You think you know what happened? This is a `story' you'd better read!Let's spot a few key pages:Page 10: In July 1934, the du Pont brothers organized the Liberty League, a "property-holders' association to disseminate information as to the dangers to investors posed by the New Deal...." which they hoped "would be able to make alliance with other organizations... that defended the Constitution, such as the American Legion and even the Ku Klux Klan."Page 57: "The businessmen of the NAM, those who contributed to the Mont pelerin Society, the small manufacturers and retired executives and management men who resnted the power of unions -- all reacted to Eisenhower's endorsement of the basic principles and framework of the New Deal with shocked dismay. Few went as far as Robert Welch... founder of the John Birch Society, who suggested that Eisenhower was literally a communist agent..." [Sound familiar in 2009, when right wing voices are screaming that Barack Obama is another communist agent, i.e. another Eisenhower?] There is no question that a labor union is as much a `conspiracy' as the Chamber of Commerce. Blame isn't the issue here. Anti-union stances and actions have been one of the contants of the Conservative movement, and they have been painfully effective. From Eisenhower's blandly supportive stance toward unionism, to Reagan's vigorous anti-labor interventions, the Republican/conservative movement has used fair and unfair tactics, honest expression and dishonest media manipulation, to curtail the struggles of labor and the employees of America to improve their economic status.Pages 72/73: The alignment of libertarian capitalist ideology with conservative Christian, and later fundamentalist Christian, beliefs has older, deeper roots than most people now suppose. The Mont Pelerin Society and "The Family" have interlocking visions... and donors. Here's Abraham Vereide: "There has always been one man or a small core who have caught the vision for their country and become aware of what `a leadership led by God' could mean spiritually to the nation and the world." the presidency of George W Bush would seem to have been exactly what Vereide had in mind.Page 84/85: The author turns to the example of the Manion Forum to reveal how parallel capitalist/libertarian ideology has always run to racism, to the perverted social Darwinism that rages against "the descent of the Nation into the Marxist Welfare state." Funny isn't it, how libertarianism and eugenicism can blend in operation... Racist and rabid anti-communist Clarence Manion was one of the founders of William Buckley's National Review, while Buckley hismelf donated money to the manion Forum.Some much material! Let's leap toward the present, to 1971:Pages 156/165: Super-rich department store magnate Eugene Sydnor asked his lawyer friend Lewis Powell, his neighbor in Richmond VA, to write a "memorandum for the Chamber of Commerce, outlinig a thoroughgoing political strategy that the business community could use to confront" the threats of liberalism. Powell complied with a bold document titled The Attack on the Free Enterprise System, in which he denounced not only "extremists from the left [but also] perfectly respectable elements of society: from the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians." Among the measures Powell advocated was... JUDICIAL ACTIVISM: "The judiciary may be the most important instrument for social, economic, and political change." Two months after the confidential circulation of Powell's memorandum, Richard Nixon nominated him to the Supreme Court; in the confirmation hearings, Powell was reticent -- read `hypocritical' -- about his ideological positions, making no mention of his Chamber of Commerce memorandum. In fact, that document was not made public until columnist Jack Anderson leaked portions of it in the Washington Post. Powell, the stealth candidate, was of course confirmed and played a major role in Court decisions thwarting campaign finance reform.The culmination of the movement Phillips-Fein chronicles was obviously the election of Ronald Reagan and the installation of anti-New Deal economic conservatism as the orthodoxy of American political thinking, a semi-consensus that lasted through the presidencies of Reagan, Bush, and Clinton. That it finally collapsed under the second Bush is beyond the scope of this book.This is the most enlightening study of American political history I've read in decades. Don't dismiss it on the basis of any established political alignments! It's not an attack on the right wing. It's not a doctrinaire manifesto of any faction. It's good, honest scholarship.

New York University professor, occasional contributor to the Baffler and The Nation, Kim Phillips-Fein takes as her subject in "Invisible Hands" the history of the modern Conservative movement in the United States from its origins in opposition to the New Deal to the inauguration of the Reagan administration.While I'm pretty sure Phillips-Feins sympathies are to the left, she manages to deal with the motley crew of Conservative activists, politicians and businessmen who make up the Conservative movement during the half century she covers in an impartial manner. She details the movement from its roots in opposition to the New Deal: that particular change in the political environment after the inauguration of FDR in 1933 to one that was conducive to the growth in the influence of ordinary working people (in particular their Unions), and a growing trend for (some) politicians to recognise that the ordinary Americans interest was not always identical to that of American Businesses.The story continues with the second world war (during which conservative/business interests regained a degree of power and influence), the gradual post-war roll back of Unions and Liberal politics during the oppressive years of McCarthyism, through to the Goldwater run for the presidency in 1964. Goldwater failed in his run, but the victor - Lyndon Johnson - failed to keep out of Vietnam: the growing involvement in that miserable War and the financial costs undermined his "Great Society" program, the last substantial attempt by an American President to govern with a relatively Liberal domestic policy (which in a European sense would be roughly equivalent to a diluted version of Social Democracy). Within fifteen years of the Goldwater failure, the movement is backed by serious money, has parlayed that money into substantially successful attempts to win the war of ideas (through well funded think tanks and foundations), turned the focus of popular politics away from socio-economic issues to those of the so-called "Culture Wars", and has a congenial figurehead for the 1980 election campaign: Ronald Reagan. The rest is another story. . ."Invisible Hands" is also excellent on the individuals involved from the ostensibly cerebral Milton Friedman and the Mont-Pelerin Society of von Hayek and von Mises, to the more combative characters such as Jesse Helms and Barry Goldwater. But this is far more than a study of individuals: it tells the story of the movement as it grew, and how the connections between the disparate elements of the movement coalesced (she plausibly makes a case for the failed Goldwater run for president in 1964 being critically important to that process) eventually leading to the Reagan presidency.Kim Phillips-Fein has written a fine and scholarly work, which contains a substantial amount of research, is written in a clear and comprehensible manner, and it's her first book length publication. It is one I'd thoroughly recommend to anyone who has an interest in how Politics actually functions as opposed to the simplified storytelling which by and large passes for news.Another excellent book on American Conservatism I'd recommend, though it leaps forward to the post-Reagan era, would be Thomas Franks account of Conservatives in power:  The Wrecking Crew . The Wrecking Crew

Very succinct history of the business right and its project to roll back the New Deal up until the Reagan Era. An excellent companion piece to Dark Money. Very worth the read for people interested in the role of the business right in American politics.

This is an excellent survey of US political thought as it was influenced by very conservative businessmen. They certainly seem to have changed the country's conversation to match their world view.