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.