Industrialization and the Modern State-The Creation of a Regulated Economy

Industrialization and the Modern State-The Creation of a Regulated Economy

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Industrialization and the Modern State-The Creation of a Regulated Economy

The New Deal was American history’s defining moment in terms of its impact. It saw an extensive change in policy and legislation from the federal government that in became the core of authority of American politics. The progressive era was also distinct because it emerged during the economic collapse. In the past, such crises saw the government curtail reforms and reduce spending in order balance the budget as well as offer the needed stability to resume economic progress. The New Deal inverted that pattern trying to lift the country out of tough times altering the economic and social policy forever. From the Progressive era through the New Deal period, political interventions tended to favor big corporations and hurt the common workers, leading to economic instability.

The progressive era demanded key social reforms as well as an increased governmental role in the regulation of business practices. Before, the government’s attitude was laissez-faire and endorsed a free market, which meant that the government did not regulate business practices. The government believed that the market would adjust itself without government’s help. The Progressive era noticed the corruption, which arose from a free market and its proponents worked to establish regulations against corrupt business practices to safeguard public interests. President Theodore Roosevelt was the first president to be engaged in affairs of the domestic economy. He introduced a novel wave of reforms under the New Nationalism. He promoted the rights of unions to exercise their influence over employers as well as the establishment of government agencies to standardize the market (La Follette, 1924).

Many Progressives reacted to America’s appalling working conditions through trying to make life better for workers, especially the children and women who were deemed the most weak, impressionable, and vulnerable. Women comprised 20 percent the manufacturing labor force, many working wage workers as well as unpaid homemakers responsible for cooking, cleaning, and childcare. By 1913, Progressives helped authorize state legislation, which permitted financial assistance in an early welfare form in eight states. Additionally, some states started to for relief for the elderly poor –and a limited social security version. The Progressives advocated for public accident insurance plans that would offer accident victims as well as their families with financial aid to offset expenses (La Follette, 1924).

The Progressive reformers were not exclusively responsible for enacting compensation laws for workers. Key interest groups such as workers, employers, and insurance companies projected benefits from novel regimented system. Insurance companies and employer were at risk of paying large funds because of state laws on liability of employers, court decisions, which limited the defenses of employers in liability suits, as well as increase in the rates of workplace accidents. In other words, the employers and insurance firms preferred the federal regulation to potentially radical state controls and taxes (La Follette, 1924).

Additionally, a number of small businesses preferred the government railroad regulation because it placed them an advantage in comparison to preferential treatment and rates provided to big industries (Schultz, 2018). Thus, most bankers could concur that the novel federal regulations and controls of Wilson government provided their industry with a crucial stability measure. Besides, such regulations were preferable to public banking ownership. Moreover, executives of public utility opted for governmental controls to avoid ownership by the municipal (Leonard, 2009).

Therefore, business backing of such measures indicates that Progressivism characterized a conservatism triumph as business entities exploited the Progressive Era’s reformist zeal to meet their own need and circumvent more radical or fundamental remedies. Furthermore, the Progressive reforms, which passed prompted responses from other employers along with their alliances, for example, the National Association of Manufacturers. These entities worked to influence legislators in order to stop them from passing laws on working conditions (Leonard, 2009).

Furthermore, employers helped write technically reformist legislations as well as ensured that regulatory boards were filled with people who favored their interests. The industrial giants held overwhelming power and wealth and employers actively diluted or prevented workplace laws while the Supreme Court reversed majority of key legislations, which passed. The Progressive advocate for political and economic reforms resulted in little change. Workers did not benefit much from the passed reforms and without real changes, they turned to spontaneous strikes and unionization to obtain better working conditions and wages. However, the unions persisted in excluding unskilled workers (Jacoby, 1983).

The agenda of the New Deal was grounded on the belief that the forces of free market and common practices of business had great led to the economy failure. It was rooted in the concept that the governed could reform and regulate the economy. Unemployment, poverty, dangerous working conditions, as well as the struggling agricultural industry were to be tackled through government relief and reform programs (Schultz, 2018). Roosevelt Recession, which started in 1937 offered fresh fuel for political and business challengers of the New Deal. For example, extreme decline of the stock market with increasing unemployment as well as decreasing Gross Domestic Product functioned as apparent proof that the reforms and regulations of the New Deal hurt the economy (Rauchway & Eric, 2008).

The New Deal introduced the National Industrial Recovery Act (NIRA) to boost industrial recovery and the National Recovery Administration to implement NIRA. Both NIRA and NRA were criticized because critics contended that the National Industrial Recovery Act endorsed cartels and monopolies, which led to increased prices (Schultz, 2018). Whereas increased prices were one of the explicit goals of NIRA, proof for whether it led to economic recovery was ambiguous. NIRA’s fair competition codes gave disproportional power to every industry most powerful and biggest actors. The codes controlled such issues as working hours, wages, price, and production quotas, which many smaller businesses refused to sanction (Rauchway & Eric, 2008).

Conclusively, this paper has argued that government interventions in the Progressive Era and New Deal favored the industrial actors and hurt workers and the economy. The government interventions did not work because big actors in the industry interfered with the legislations leading to little change in terms of improvement of working conditions and pay increase. The New Deal regulations did not contribute to economic recovery.

References

Jacoby, S. M. (1983). Union-Management Cooperation in the United States: Lessons from the 1920s. Industrial and Labor Relations Review, 37(1), 18. doi:10.2307/2522721

La Follette, R. (1924). La Follette’s Progressive Party Platform of 1924. Retrieved from http://college.cengage.com/history/wadsworth_9781133309888/unprotected/ps/follette.html

Leonard, T. C. (2009). American Economic Reform in the Progressive Era: Its Foundational Beliefs and Their Relation to Eugenics. History of Political Economy, 41(1), 109-141. doi:10.1215/00182702-2008-040

Rauchway, & Eric. (2008). The Great Depression and the New Deal: A Very Short Introduction. Very Short Introduction Series. Oxford University Press, USA.

Schultz, K. M. (2018). HIST5: U.S. History Since 1865 (2nd ed.). Boston: Cengage.