New Deal Capitalism

In 1933, Franklin Delano Roosevelt referred to a ‘New Deal’ for the American people, which instigated a series of economic countermeasures to promote relief, recovery and reform in The Unites States. His ‘New Deal’ was moderately successful in allowing The United States to emerge from The Great Depression; and, in turn, it addressed the flaws inherent to Capitalism. In the 1920s, the form of Financial Capitalism that operated was unsustainable. The Republican government preceding Roosevelt, through taking action, proved itself to be deficient in handling the crisis of The Great Depression. Further, ‘The New Deal’ attempted to alter the operation of Capitalism with immediate success. This process was further abetted by external, influential
In his treatise, “An Inquiry into the Nature and Causes of the Wealth of Nations,” Adam Smith defined the role of government as ‘Laissez-Faire.’ The chief proponent of this approach, the ‘Invisible Hand’ would, according to Smith, ensure self-regulation of the market. Republican president Calvin Coolidge, advocated Smith’s theory: “If you see ten troubles coming down the road, you can be sure that nine will run into the ditch and you will only have to battle with one.” (Clements, 2001, p. 132). Coolidge’s perspective represents a typical conservative viewpoint from the era; and in light of the prosperity, these views on the role of the president were persuasive. This implies that the majority of problems would be eradicated by self-regulation of the economy. Coolidge’s reliance upon regulatory market-mechanisms and unpreparedness to deal with difficulties can be seen in Hoover’s response, “… when the tenth trouble reached him he was wholly unprepared, and it had by that time acquired such momentum it spelled disaster,” (Sobel, 1998, p. 242). Hoover’s perspective is a far more moderate interpretation of Smith’s theories, in comparison with Coolidge. He explains that if problems in the economy were not countered promptly, they would be exacerbated. Under Coolidge, four problems emerged in Capitalism, but were not addressed: inequality of income
His failure serves to highlight the crucial nature of FDR’s New Deal. Hoover’s concerns were similar to those of his successor, Franklin Roosevelt; however, the means through which they were addressed differed. Hoover believed that the responsibility for the support of the impoverished lay solely in the private sector and voluntarism. Whilst the intended outcomes were the same, this was in direct opposition with Roosevelt’s policy of governmental deficient spending. Hoover’s policy, the ’Paradox of thrift;’ maintained budget surpluses at the expense of aggregate demand (McElvaine, 2000, p. 53). His failure to buoy the economy is apparent in advisor to Roosevelt, William Trufant Foster’s essay, ‘When a Horse Balks,’ which states that, “The administration had no plan to offer except futile reliance on rugged individuals. In place of disappearing dollars, it put into circulation nothing but cheering words…” (Foster, 1932, p. 2). Foster represents Keynesian economic theory, as such has a predisposition to criticise contradictory theories. Despite Hoover’s attempts to protect American jobs from foreign influences, the depression was further exacerbated by the implementation of The Hawley-Smoot Tariff Act of 1930. Tariffs serve to endorse domestic produce and discourage imports; however, the Hawley-Smoot