Invisible Hands: The Making of the Conservative Movement from the New Deal to Reagan

24

The Du Ponts, lacking many political or even intellectual allies in the wake of the failure of the Liberty League, remained resolute and irascible opponents of liberalism, even after World War II. In the midst of the upheaval of the 1930s, they had kept their plants under control by establishing a network of company-dominated unions. And their company earned phenomenal profits during World War II: they produced 55 percent of all American gunpowder used to fight the war, not to mention paints, dyes, antifreeze, DDT, rubber, and rayon yarn used by the military.

27

After resigning from the NICB, Read visited David Goodrich, the president of the B.F. Goodrich Company. The executive promised to assist him in starting a new organization--one that would live up to Read's ideals. Read named his new group the Foundation for Economic Education (FEE).

28

Following a mid-decade visit to Germany, he lectured on Nazism, which he likened to slavery for its socialism (he did not mention the regime's treatment of Jews). Even in the darkest days of the Depression, he defended capitalism vigorously, attacking anyone who thought economic planning was the answer: "We cannot make progress by the planning of a few. We want planning by the many, by a million planners, self-reliant, ambitious, operating in a free economy."...

...World War II did not change Crane's feelings about the New Deal. The year of his retirement from DuPont, 1946, was also the year of one of the largest strike waves in American history. More than 3 million workers struck between November 1945 and June 1946. Workers in industries across the American economy participated in the strikes--workers in oil, automobiles, steel, electrical products; coal miners and bus drivers and janitors; even coffin makers in New York City

31

The politics of World War II transformed the attitude of the business community toward Keynesian economics and New Deal Liberalism by giving business a chance to lead the nation once again. In 1942, the president of the Advertising Federation of America gave a speech in which he called for the conflict to become known as "the War that Business Helped to Win."

36

For Hayek and Mises, the market meant something more than private property, dispersed ownership, or free competition. As Mises argued in his 1949 book Human Action, "The market is not a place a thing, or a collective entity." The market created a space of freedom, a world in which individual actions could revolutionize society. People in the free market served each other's ends without themselves being turned into nothing but means. Market prices brought individual actions and decisions into harmony with each other, with no guidance from any higher source. The Austrian thinkers romanticized the individual as creative hero, the agent of all society. In their philosophy, individuals trading in a free market took on the world-creating power that Marxists assigned to the working class.

40

But the commonplace faiths of social Darwinism and the new mathematical neoclassical economics alike were shattered by the economic disaster of the Great Depression. The language of economic competition and the moral superiority of the rich suddenly sounded hollow and false. The notion that the market was fair or just seemed nearly masochistic; the defense of the market had grown anemic and thin. It was associated with power and privilege, the trappings of social hierarchy. The great innovation of Hayek and Mises was to create a defense of the free market using the language of freedom and revolutionary change. The free market, not the political realm, enabled human beings to realize their liberty. It could transcend social class; it would liberate everyone. Hayek and Mises did not emphasize efficiency of the free market. They did not promise that it would create material abundance, although they believed it would. They celebrated the market because it made people free.

41

The book thoroughly defied such low expectations. Henry Hazlitt wrote a glowing review in the New York Times, pronouncing The Road to Serfdom "one of the most important books of our generation," a work on liberty equal to that of John Stuart Mill. (Hazlitt, a journalist who was himself a free-market conservative and a founding member of the FEE, had positively reviewed Mises' book Socialism in 1938 and had befriended the Austrian when he came to America in 1940, introducing him to businessmen and journalists--as well as Leonard Read--and helping him gain a foothold in the new country.) Reader's Digest, edited at the time by the ex-leftist Max Eastman, published a condensed version of the manuscript, sending it into the homes of a million Digest subscribers.

42

Luhnow was so eager to get the Austrian to America that he offered to underwrite Hayek's salary at an American university. Luhnow and Hayek investigated a couple of different possible academic homes, and in October 1948 the Committee on Social Thought at the University of Chicago agreed to hire the Austrian economist, with his salary of $15,000 a year for ten years to be fully covered by the Volker Fund.

43

With founding members from Germany, Switzerland, France, England, Norway, Italy, and the United States, the Mont Pelerin Society provided an international intellectual home for defenders of the free market. Many of those involved were scholars and economists, but conservative journalists (such as Henry Hazlitt, whose 1946 Economics in One Lesson would become one of the classic works of popular free-market economics in the period) also participated.

43

With founding members from Germany, Switzerland, France, England, Norway, Italy, and the United States, the Mont Pelerin Society provided an international intellectual home for defenders of the free market. Many of those involved were scholars and economists, but conservative journalists (such as Henry Hazlitt, whose 1946 Economics in One Lesson would become one of the classic works of popular free-market economics in the period) also participated.

76

W.C. Mullendore, Leonard Read's old teacher, was among those drawn to the new psychedelics. As he wrote to a friend in 1962, "LSD steps up our voltage and frequency. To use the new vision thus made available one must be able to 'plug in,' 'get in tune'--to 'harmonize' with this new environment which LSD opens for us to 'correspond with."

83

Manion chose to work closer to home: he started the Manion Forum of Opinion, a weekly radio program, out of his office in the St. Joseph Bank Building in South Bend. The program painted a dystopian picture of 1950s America as a nation teetering on the brink of totalitarianism. In one prospectus, the Forum expressed its opposition to "the murderously oppressive Marxist Federal Income Tax; gigantic and unnecessary subsidies of tax money for fantastic highway and housing projects; Federal aid to education which would inevitably be followed by Federal Socialist control; tyrannical control of American workers by politically and ruthlessly ambitious union czars; appeasing and fraternizing with Communist mass murderers, thugs and slave masters."

86

The think tanks, radio stations, magazines, and intellectual organizations that were funded by business contributions during the 1950s helped to form the infrastructure for the rise of the conservative movement. From the Mont Pelerin Society to the National Review, from Spiritual Mobilization to the American Enterprise Association, from the Foundation for Economic Education to the Manion Forum, they produced the ideas, popularized the language, and built the support for conservative economic politics at the very height of postwar liberalism.

87

But the company produced more than the material components of the affluent society. During the 1950s, GE also undertook an extensive campaign of political reeducation for the more than 190,000 people who worked for the company, seeking to win their political loyalties back from New Deal liberalism--and especially from the labor unions.

At the time, about one third of the country's workforce belonged to a labor union, more than ever before in American history. Having finally achieved collective bargaining rights after decades of struggle, the leaders of the labor movement no longer sought a radical transformation of American society. They portrayed themselves as common soldiers with management in a war against communism.

88

What is more, although the decade is not often remembered this way, the 1950s were also years of intense industrial conflict. Workers engaged in an average of 352 major authorized strikes a year during the 1950s, a record for the postwar period. In addition to authorized strikes at large companies, there were wildcat work stoppages; in the steel industry alone, according to trade association records, there were 788 unauthorized strikes in the period 1956-1958. Because of this, many working people did not view the steady improvement in their material lives as the inevitable result of better technology or increasing productivity. They knew the intimate and detailed political history behind each wage increase, every pension benefit. Many believed that their higher wages had been won by the strike threat a few years back; they were convinced that attending the union meeting or paying union dues had helped win the health insurance.

90

GE became known throughout the business world for its staunch resistance to union power, and, on a deeper level, to the entire liberal political economy of the New Deal. As the company publicist Edward Langley put it, GE was "so obsessed with conservatism that it was not unlike the John Birch Society."

94

The national strike wave began in September 1945, only one month after V-J Day. The oil workers were the first to strike, 43,000 in 20 states. Then 200,000 coal miners struck to demand collective-bargaining rights for their foremen. Forty-four thousand lumber workers in the Northwest, 70,000 midwestern truckers, and 40,000 machinists in Oakland and San Francisco walked off the job in the fall of 1945.

97

The top executives at GE hired a man by the name of Lemuel Ricketts Boulware to solve their labor criss. Boulware had met Wilson and Cordiner during world War II, when all three worked at the War Production Board.

101

Boulware urged GE's managers to regularly read the editorial page of the Wall Street Journal, the columns of William F. Buckley in the National Review, and The Freeman, a conservative journal published by the FEE. Every supervisor received a copy of John Flynn's The Road Ahead, a short book that portrayed the New Deal as the first nightmarish step toward totalitarianism and slavery.

108

But the significance of GE's experiments in politics and in labor relations during the 1950s lies not only in the part that it played in this groundswell of open opposition to labor. Boulwarism represented a new way of thinking about workers, as a kind of captive political audience, a group of people who could be organized to oppose the New Deal and liberalism through lectures, reading groups, and political messages. Boulware never believed that the working class was inherently liberal or Democratic. The union organized workers in one way; his program sought to organize them in another. Instead of being radicalized on the job, they could be instructed in the ways of the marketplace. Corporate culture could be used to reinforce a set of conservative political beliefs, and middle managers could be turned into organizers. 129

Short, graceful and easy to read, The Conscience of a Conservative tried to give laissez-faire boilerplate the moral rigor of social philosophy. It translated the ideas of Hayek and Mises into a compressed, elegant credo, accessible to virtually anyone who might pick it up. No longer could conservatism be made to seem only the worldview of a wealthy class of conformists; conservatives would present themselves instead as rebels, individualists, true believers in first principles. The book reversed the old drama of the rich against the poor, the privileged against the powerless, by spelling out a faith for people who saw themselves on the brink of being overpowered by ideological foes but who were determined nonetheless to fight on As the Wall Street Journal put it, Goldwater "boasts conservative principles, yet he confounds his enemies by defending them on strictly humanitarian grounds."

144

With Goldwater's blessing, White decided to make a documentary that would help reorient the Goldwater campaign around the themes of moral decay. To do so, he joined forces with Rus Walton, a Republican activist. Walton was one of the leaders of the United Republicans of California, an organization founded to unify California conservatives, and he had been the head publicist for the National Association of Manufacturers throughout the 1950s.

151

In the early 1970s, antiwar activists pioneered a new kind of protest, one that hinged on exposing the corporate role in the war.

161

Books such as Rachel Caron's Silent Spring introduced an environmentalist analysis of corporate policies to a broad audience. In The Greening of America (first published as a New Yorker article), Yale professor Charles Reich described the "revolution of the new generation" taking shape among hippie youth and challenging the power structure of a country that was "dealing death, not only to people in other lands, but to its own people." Meanwhile, in 1965 a young consumer advocate named Ralph Nader had published a book about the "designed-in dangers" of automobiles, Unsafe at Any Speed, arguing that the absence of legislated safety standards and regulatory oversight for the production of cars meant unnecessary death and injuries to drivers...

154

In 1972, Business Week reported on "America's growing antibusiness mood"; one polling company announced that its surveys found that the 1970s would be "the worst attitude climate in a decade" for big corporations. Only 20 percent of the public described itself as having a great deal of confidence in business leaders.

180

The supply-siders tried to change the very terms of the debate. The real problem, they argued, was not insufficient demand but a lack of investment (the "supply side" of the economy). The economy had become so burdened by the heavy weight of taxes and regulation that people simply no longer had the incentive to invest their money. If the regulatory apparatus could be lifted, then they would once more be inspired to buy equipment and start new companies. Production would then increase so significantly that growth would resume without inflation. The "Laffler Curve" (also publicized by Wanniski) argued that past a certain point, raising taxes would actually cause government revenues to decline, as taxes sapped the willingness of companies to invest and of individuals to work. Governments could best stimulate the economy, then, by cutting tax rates and thus creating incentives to invest.

182

With Wanniski's guidance, Kemp introduced legislation in Congress for an across-the-board tax cut that would slash the top rate from 70 percent to 50 percent, cutting income tax rates across the spectrum by an average of 30 percent. Kemp had no interest in old-fashioned government slashing; in fact, he argued that simply reducing spending, as fiscal conservatives wished to do, was "inhumane" and "barbaric." The economic logic of Wanniski's broad and sweeping tax cuts might be flawed, but politically it offered a way to oppose the welfare state while embracing an even more populist program: making everyone an entrepreneur. No longer did austerity need to be the language of the day--cutting the government only meant returning incentives to the people.

188 1970s as the decade in which corporations turn in earnest to politics.

In the 1970s, as American businessmen confronted the challenge of the counterculture while facing economic decline, they started to follow the prescriptions of the earlier generation of corporate activists. In 1970 most Fortune 500 companies did not have public affairs offices; ten years later 80 percent did. In 1971 only 175 companies had registered lobbyists, but by the decade's end 650 did, while by 1978 nearly 2,000 corporate trade associations had lobbyists in Washington D.C. Thanks in part to Justin Dart's speeches and the educational seminars sponsored by the Chamber of Commerce and other business organizations, the number of corporate PACs grew from 89 in 1974--the year before the Sun Oil decision--to 821 in 1978.

189

In 1975, two senators--former vice president Hubert Humphrey and liberal New York Republican Jacob Javits--even introduced a bill to create a national planning agency.

190

Then, in the summer of 1970, one of Ralph Nader's public-interest research organizations decided to focus on DuPont for a research study about the relationship between corporations and government. In Delaware, of course, the company's power was closely entwined with the state and local government alike. Eight young men and women (part of a group known as Nader's Raiders) moved into a dilapidated Victorian house in Wilmington and spent the summer interviewing people about DuPont, asking about everything from its policies regarding minority hiring and promotion, to the unusually large number of its employees and former employees holding political office int he state, to its relationship with local newspapers.... The report, released late in 1971, was titled The Company State; it alleged that "in Delaware, the mother state has virtually been replaced by the mother company; corporate power is no longer private, but it has nearly pre-empted public power. It was the perfect illustration of the kind of antibusiness activism that Powell had written about in his memorandum only three months earlier.

199

The Roundtable, with its rhetoric about "capital formation" and its membership of leading CEOs, represented one side of corporate politics during the decade: pragmatic, tough, and powerful. The U.S. Chamber of Commerce embodied another. From the point of view of the leadership of the Chamber of Commerce, the Roundtable wanted to make businessmen into stodgy corporate suits. But the Chamber saw entrepreneurs and executives as the true populists of the nation.

The man most responsible for remarking the Chamber was Richard Lesher, the child of a union plasterer in rural Pennsylvania who had put himself through college and graduate school (he held a Ph.D. in business administration from Indiana University).

203

When Lesher took over at the Chamber, the organization had 1,400 Congressional Action Committees. Each one included about twenty businessmen who were charged with responsibility for lobbying their local representative. When the Chamber headquarters put out an alert, the local Congressional Action Committee would send letters and place phone calls to the politicians. Under Lesher's leadership, the number of Congressional Action Committees rapidly grew, to 2,700 by 1981.

205

Business organizations had previously sought to keep silent on cultural matters, but under the leadership of men such as Richard Lesher and Jay Van Andel, the Chamber of Commerce wanted to make sure that the "voice of business," as it called itself, was unmistakably conservative from a social as well as an economic standpoint.

218

But in 1975 Rusher published The Making of the New Majority Party, a book that made the case for a conservative alliance between businessmen and the working class. Class divisions between "haves" and "have-nots" no longer mattered in America, Rusher argued. Businessmen, manufacturers, hard-hats, blue-collar workers, and farmers were arrayed against a "new class led by elements" that were "essentially non-productive," including academics, government workers, and the media. Liberal "verbalists," Rusher charged, such as sociologists and journalists, had invented the social programs of the Great Society and had "consciously promoted the growth" of a new constituency of poor people that "exists simply as a permanent parasite on the body politic--a heavy charge on both its conscience and its purse, carefully tended and forever subtly expanded by the verbalizers as a justification for their own existence and growth."

227

The evangelical leaders of the 1970s sought to connect the idea of the market and opposition to the power of government tot he war over American culture. In this respect they sounded remarkably similar to the businessmen who were organizing through the chamber of Commerce and even the Business Roundtable at the time--not in their emphasis on social issues (which the Roundtable avoided) but in their mutual insistence on the problem of a too-powerful central government.

229

In May 1978, Falwell began to publish a newspaper titled the Journal-Champion (in 1980 the name of the paper was changed to Moral Majority Report.) The publication explicitly sought to provide Christian insight on matters beyond the specifically religious....

Early issues of the Journal-Champion carried numerous articles calling the faithful to the fight to cleanse America of sexual sin: homosexuality, pornography, and abortion. But interwoven with this campaign were descriptions of the economic and political crisis facing the United States. "The greatest threat to the average American's liberty does not come from Communist aggression, crime in the decaying cities or any other external cause," read an article in the June 1979 issue. "It comes from the growing internal encroachments of government bureaucrats as they limit the freedom of Americans through distribution of rules and regulations, many times called guidelines." The newspaper criticized OSHA's "insulting or silly" regulations, and published an open letter to Congress denouncing the "faceless bureaucrats who sit in strategy meetings and formulate federal guidelines," saying that they "pinch our pocket books, restrict our work privileges, govern our spending habits, determine the 'safety' restrictions of our businesses and influence the types of homes we live in."

234

The controversy over the schools had managed to unify the leaders of the Christian conservatives and the broader antigovernment right. Congress prevented the IRS from implementing its guidelines. In 1980 the Republican party platform contained a plank promising to "halt the unconstitutional regulatory vendetta" against the Christian private schools. In later years, New Right leaders such as Paul Weyrich would say that the fight against the IRS was what had really galvanized evangelical Christians and made them enter politics--not the Equal Rights Amendment, not abortion, but the fight against the tax man.

245

In 1978 [Simon] published a manifesto (ghostwritten by a young acolyte of Ayn Rand) entitled A Time for Truth, which called for "a massive and unprecedented mobilization of the moral, intellectual and financial resources of business to "aid the intellectuals and writers" who were fighting on the side of capitalism. "The alliance between the theorists and the man of action in the capitalist world is long overdue," Simon wrote, adding that he thought "any businessman with the slightest impulse for survival" would help the cause. Friedrich von Hayek wrote a generous foreward to the book. A Time for Truth resonated with executives; the National Federation of Independent Business distributed tens of thousands of copies to its members, as did the National Association of Manufacturers, and the Farm Bureau advertised the book in its newsletter.

250

The Republican convention in 1980 was held in Detroit, where the city's deserted factories formed a strange backdrop tot he revelry of the delegates. Reagan gave two additional speeches in the city during the 1980 campaign....Despite the differences in the audience, his message to both groups was the same. The decline of Detroit--the bombed-out windows of downtown and the abandoned buildings and empty lots spreading through the city--was not caused by the automakers, which had for decades been slowly moving production away to low-wage regions and the suburbs while subcontracting out union jobs to small non-union auto part plants. Nor was competition from Europe or Asia the largest problem. Rather, Detroit's decline was ultimately the responsibility of the federal government, which, with its heavy-handed regulation inspired by the likes of Ralph Nader and the EPA, was strangling the industry. "The U.S. auto industry is virtually being regulated to death," he said in May, calling for "the freedom to compete, unhindered by whimsical bureaucratic changes in energy, environmental and safety regulations."

264

The Clinton years of the 1990s symbolized the success of the new order, not the restoration of the old. The end of the cold war meant that there seemed no longer to be any real alternative to capitalism; if that was the case, what now stood in the way of unrestrained laissez-faire? In the frenzy that followed, the CEO and the entrepreneur came to be seen as folk heroes, much as the Business Roundtable once hoped they might--risk-taking daredevils whose brave and courageous acts perennially revolutionized American society. The market was the truly democratic sphere, the state for plodding bureaucrats only. The new economic order was one without a place for unions or much role for the government in shaping economic ends. As president, Bill Clinton accomplished much of what Reagan could not: the dismantling of welfare, the deregulation of Wall Street, the expansion of free trade.

268 Consider this is the context of earlier interest in worker as a creative individual.

Over the course of the 1980s and 1990s, the number of major strikes declined sharply, as did the proportion of the workforce represented by unions--one outcome being the return of levels of economic inequality not seen since before the New Deal. The decline of labor was not only institutional: the very idea of the working class, as a distinct group with its own interests different from those of its employers, also seemed to recede, yielding to a new vision of workers as entrepreneurs themselves, always engaged in selling their talents, their future tied to the stock market instead of their collective efforts.