How did President Franklin Roosevelt re-define the meaning of economic freedom over the course of the New Deal?
Franklin Roosevelt redefined the concept of economic freedom during the New Deal. Before Franklin Roosevelt became President, President Hoover followed a laissez-faire economic policy. This meant the government had a very limited role in our economy. President Hoover believed our economy would go through good times and bad times. He believed market forces would lead to corrections in our economy. The government needed to stay out of the natural operation of these forces in our economy.
When President Roosevelt took office, he approached things very differently. He believed the government needed to be very involved in the economy. He felt letting things run their course was not possible or acceptable during the Great Depression. Thus, he strongly promoted the cooperation of businesses and industries to adopt codes of operation as part of the National Industrial Recovery Act. Businesses would work with the government and unions to set wages, prices, and hours of work. Instead of letting market forces determines these goals, all three groups would set them.
President Roosevelt also provided funds to create jobs. Various programs like the CWA, CCC, and PWA put people to work. These jobs were created as a result of government action instead of economic forces.
The President took other actions that interfered with the principles of economic freedom. Farmers were paid not to produce crops with the AAA program. The stock market was now regulated as a result of the Securities Act. Banks were closed for a few days, and laws were passed to make banking safer. Workers and employers were taxed to create the Social Security System. All of these actions interfered with the natural operation of the marketplace and the economy. Thus, President Roosevelt and his New Deal programs redefined the meaning of economic freedom. Economic freedom now included much more government involvement and action during the Great Depression.
Franklin Roosevelt redefined the meaning of economic freedom through the New Deal. While it was always a hodgepodge of different programs, many of which were not ideologically consistent, the New Deal was based on the idea that the government had to play a role in restraining the ups and downs of the economy. The point was, as historian David Kennedy has argued, to use the power of the government to minimize the risks of market capitalism.
For example, one of the earliest New Deal programs was the Federal Deposit Insurance Corporation (FDIC). The FDIC used federal money to insure people's bank deposits, thus slowing the run on banks that was leading to bank failures across the country. This was intended to stop the credit freeze that gripped the country, but it also gave people some measure of economic security, without which economic freedom is basically meaningless.
The New Deal had hundreds of other programs: some of which spent government money on public works in order to provide people with jobs, others which gave loans intended to help people keep their homes from being foreclosed, and still others regulated the stock market so as to minimize risk. Each of these programs was intended to minimize and to limit the human impact of the ups and downs of the business cycle in a free market.
So the vision of economic freedom advanced by the New Deal was one which sought to create an economy where the risks taken in a capitalist system were not quite as ruinous, where individuals could weather hard times, and where people could pursue economic opportunity without the threat of economic ruin hanging over them. Above all, the New Deal recognized that the federal government had to play a central role in creating such opportunities.