The New Deal
For a moment, the Great Depression lowered the barriers to building a European-style, welfare state in America. In a few short years, the relationship between the government and the economy changed dramatically: federal cash and work relief programs were established in 1933, social insurance in 1935, federal regulation of working conditions in 1938. Then, in 1946, with the memory of economic collapse still vivid, the Employment Act created policy- planning institutions to monitor and promote economic growth. By the start of the Korean War, the United States finally had a modern welfare state.
Nonetheless, even as it developed powerful new welfare-state institutions, the United States continued down a different path than most other rich capitalist democracies. In several ways, the American welfare state remained different--less national, less comprehensive, less capable of promoting employment security. When the political energy of the New Deal was finally spent in the late 1940s, America had created only a "semi" welfare state, as Michael Katz has put it. 1
Proponents of a class-based approach to politics have suggested two different explanations for why the U.S. welfare state developed differently in the 1930s. The first argues that key capitalists supported Roosevelt and, in so doing, managed to turn reform to their own purposes, simultaneously lessening economic competition, dampening mass discontent, and warding off a more radical restructuring of the political economy. The second emphasizes the weakness of organized labor and the failure of workers and farmers to forge a cross-class, urban-rural alliance that might have supported social- democratic reforms. 2
Class clearly mattered in the 1930s, but neither version of the class-based account is entirely successful. Business did not control the policy process during the New Deal, and while workers and farmers failed to forge a social-democratic alliance, that failure does not explain what did happen. To understand the New Deal's trajectory, we need to look more closely at the precise way in which po