But the collapse of the Soviet Union also appears to have been tragic for working class and Black Americans. As Gary Gerstle demonstrates in his fascinating book about the rise and fall of America's neoliberal political order, the continued existence of the Soviet Union might have prevented the consolidation of the neoliberal political order that rolled back many New Deal government regulations, assaulted labor unions, and incarcerated Blacks -- all to shape the boundaries within which free market capitalism could flourish.
Unlike advocates of laissez-faire, neoliberals were committed to strengthening the state in areas that would enhance (i.e., bring "order" to, or, better yet, "rig"), the smooth operation of markets. Awarding the state "exclusive control of the money supply through a central bank or a kindred institution, such as the Federal Reserve" (Ibid., p. 89) was one way. Building up the military and expanding the nation's prison system were two more (Ibid., p. 129).
However, the Soviet Union did collapse and neoliberalism, with its massive and malignant redistribution of wealth upward to America's corporations, its CEOs, the banks, and to Wall Street, would dominate American politics and society from the presidency of Ronald Reagan until its disastrous collapse in the wake of the Great Recession.
After the Great Recession, one could no longer fetishize free markets, as had smug neoliberals, given that it was precisely the excesses of the rigged free market that led to its stunning collapse. To save American financial capitalism, a massive infusion of taxpayer money was given to the collapsing institutions. Not loaned, but given! These malefactors of great wealth received a bailout, rather than the criminal prosecution and jail they deserved. Average Americans were left holding the bag -- along with a deep suspicion that the entire system is rigged.
But, this was not the first time that Americans had concluded that free markets could not be trusted. As Professor Gerstle notes, "The New Deal order was founded on the conviction that capitalism left to its own devices spelled economic disaster" (p. 2). That conviction had its origins in the stock market collapse of 1929 -- the culmination of U.S. robber-baron capitalism.
"Between October and December 1929, the market had lost 50 percent of its value. By 1932, the worst year of the Great Depression, the market had fallen by another 30 percent. More than 100,000 businesses went bankrupt and thousands of banks closed their doors, wiping out the savings of millions. Unemployment soared to 25 percent. Prices collapsed in a deflationary spiral. Farmers began killing their cows and hogs because the costs of raising them and transporting them to market exceeded the prices that livestock fetched. The specter of farmers slaughtering their livestock as millions of undernourished Americans lined up at soup kitchens for a dollop of thin gruel seemed to underscore both the irrationality of America's capitalist system and the incompetence of its political class" (p.20). "This level of market breakdown drove a stake through the ideology of laissez-faire" (Ibid., p. 21).
As Professor Gerstle notes, "FDR and the New Dealers unleashed the power of the central state in ways rarely done in peacetime" (p. 21). They rebuilt the country's infrastructure (roads, bridges, airports, dams, schools and libraries); placed extensive controls over America's financial system, including the Glass-Steagall Act, which separated commercial banks from investment banks; and created the Federal Deposit Insurance Corporation "to assure depositors that the federal government would guarantee their savings" (Ibid., pp. 21-22). They passed acts to prevent buying stocks on the margin and established the Securities and Exchange Commission to enforce these new regulations. (Ibid., p. 22).
Faced with the rising appeal of socialism/communism, thanks to the Soviet Union's heralded economic prosperity at the very time that America was experiencing its Great Depression, and faced with a massive number of strikes -- 2000 in 1934 alone -- "the New Deal put in place in 1935 a new labor relations system that compelled employers and unions to negotiate with each other. The system curbed employer power and gave workers more workplace rights than they had previously enjoyed" (Ibid., p. 23).
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