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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.

Suggested Citation

  • 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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    References listed on IDEAS

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    1. Thomas Uebel, 2008. "Calculation in kind and marketless socialism: On Otto Neurath's utopian economics," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 15(3), pages 475-501.
    2. Veblen, Thorstein, 1904. "Theory of Business Enterprise," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1904.
    3. Eric Tymoigne, 2013. "Job Guarantee and Its Critiques," International Journal of Political Economy, Taylor & Francis Journals, vol. 42(2), pages 63-87.
    4. Dimitri, Carolyn & Effland, Anne & Conklin, Neilson C., 2005. "The 20th Century Transformation of U.S. Agriculture and Farm Policy," Economic Information Bulletin 59390, United States Department of Agriculture, Economic Research Service.
    5. Evelyn L. Forget, 2001. "Jean-Baptiste Say and Spontaneous Order," History of Political Economy, Duke University Press, vol. 33(2), pages 193-218, Summer.
    6. Barber,William J., 1989. "From New Era to New Deal," Cambridge Books, Cambridge University Press, number 9780521367370, Enero.
    7. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
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    More about this item

    Keywords

    Vested Interests; New Deal; Planning; Liberalism;

    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 - Economic Systems - - Capitalist Systems

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