Chapter

The New Deal for Market Security

Peter A. Swenson

in Capitalists against Markets

Published in print October 2002 | ISBN: 9780195142976
Published online November 2003 | e-ISBN: 9780199872190 | DOI: http://dx.doi.org/10.1093/0195142977.003.0009
 The New Deal for Market Security

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Constructs an explanation of welfare state development in the U.S. from analysis of segmentalism and cartelism, analyzed in earlier chapters, which characterized key components of its labor market system. Segmentalists (implicitly) and cartelists (explicitly) contracted with workers to hold wages and benefits higher than what market mechanisms alone would have set them; thus, these employers were vulnerable to the deflationary macroeconomic shock and unemployment of the Great Depression, which allowed competitors to threaten their profits by more freely lowering wages and therefore charging lower prices. New Dealers, having learned from the Progressive era as well as more recent reform about the potential for capitalist support ignored vocal opposition from business organizations and proceeded with regulatory social security, unemployment insurance, minimum wage, and labor law reform that would level the competitive playing field upward, stabilizing ruinous competition for cartelists and segmentalists, and thereby securing a cross‐class alliance for the New Deal.

Keywords: cartelism; cross‐class alliances; Great Depression; macroeconomic conditions; minimum wages; Progressive era; regulation; segmentalism; social security; unemployment insurance; United States

Chapter.  14614 words. 

Subjects: US Politics

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