Guns, butter, Leon Keyserling, the AFL-CIO, and the fate of full-employment economics

Historian

Volumn 66, Issue 4, 2004, Pages 730-748

  Wehrle, Edmund F ^a  

^a EASTERN ILLINOIS UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 61249648360     PISSN: 00182370     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1540-6563.2004.00094.x     Document Type: Review

References (68)

1. W. Robert Brazelton, Designing U.S. Economic Policy: An Analytical Biography of Leon Keyserling (New York, 2001). Brazelton focuses largely on the World War II era.
2. Robert Collins, More: The Politics of Economic Growth in Postwar America (New York, 2000).
3. Also see Alonzo L. Hamby, "The Vital Center, the Fair Deal, and the Quest for a Liberal Political Economy," American Historical Review 77 (1972): 653-78. None of these treatments, however, have considered the important role of defense spending or Cold War rhetoric in what Hamby termed the "liberal political economy."
4. David C. Colander and Harry Landreth, The Coming of Keynesianism to America: Conversations with the Founders of Keynesian Economics (Brookfield, Vt., 1996), 218-23.
5. Alvin Cohen, "Leon Keyserling," in Biographical Directory of the Council of Economic Advisers, ed. Robert Sobel and Bernard S. Katz (New York, 1988), 126-30. Keyserling vita, 15 January 1954, 62/17, Meany Papers, George Meany Memorial Archives, Silver Spring, Md. (henceforth GMMA).
6. See for instance John H.G. Pierson, "A Full Employment Program," American Federationist, August 1945.
7. Also see Paul Hoffman, "For More and More Jobs," American Federationist, May 1945
8. and Leon Keyserling, "Housing and Full Employment," American Federationist, June 1946.
9. The Employment Act of 1946 clearly was a weaker version than would have been preferred by organized labor. Karen Orren, "Union Politics and Postwar Liberalism in the US, 1946-1979," Studies in American Political Development 1 (1986): 244. Orren argues that the act represented a significant retreat and actually set the wrong precedent for future action: "it in effect established a public policy wherein employment at some point would be too high or unemployment too low, to justify additional demand stimulation in the form of dollars."
10. Also see Alan Brinkley, The End of Reform (New York, 1995), 260-63. In Colander and Landreth, 230-31, Keyserling, however, argued that the compromise shift during congressional negotiations from the term "full" to "maximum" employment did not represent any weakening the act. As Keyserling explained: "there was a lot of talk about it being watered down. It was absolutely meaningless-the difference. Neither 'maximum' nor 'full employment' means 'no employment.'" Collins sees the Employment Act as an important turning point, "which signaled the formal recognition of 'high' employment and economic stability as the chief aims of macroeconomic policy" (Collins, 16).
11. C. Hargrove and Samuel Morley, eds., The President and the CEA: Interviews with CEA Chairmen (Boulder, Colo., 1984), 74
12. Lester H. Brune, "Guns and Butter: The Pre-Korean War Dispute Over Budget Allocations: Nourse's Conservative Keynesianism Loses Favor against Keyserling's Economics Expansion Plan," American Journal of Economics and Sociology 48 (July 1989): 366
13. Lynn Turgeon, Bastard Keynesianism (Westport, Conn., 1996), 126
14. For a general discussion of the various brands of Keynesianism see John Patrick Diggins, The Rise and Fall of the American Left (New York, 1992), 189-90
15. Margaret Wier and Theda Skocpol, "Social Structures and the Possibilities for Keynesian Responses to the Great Depression in Sweden, Britain, and the United States," in Bringing the State Back In, ed. Evans, et al. (New York, 1985), 108, 137-45.
16. Also see Nelson Lichtenstein, Labor's War at Home: The CIO in World War II (New York, 1982), 233.
17. Edmund F. Wehrle, "Welfare and Warfare: American Organized Labor Approaches the Military-Industrial Complex, 1949-1964," Armed Forces & Society 4 (summer 2003): 525-46.
18. John Sloan, Eisenhower and the Management of Prosperity (Lawrence, Kans., 1991), 70.
19. Reuben Slesinger, National Economic Policy: The Presidential Reports (Princeton, N.J., 1968), 36-37. Eisenhower's annual economic reports as president focused much more on the prevention of inflation than creating employment.
20. Also see Iwan W. Morgan, "Eisenhower and the Balanced Budget," in Reexamining the Eisenhower Presidency, ed. Shirley Ann Warshaw (Westport, Conn., 1993), 121-25.
21. Leon Keyserling, "Memorandum re. Project to Encourage Economic Expansion," 15 January 1954, 62/17, Meany Papers, GMMA. Keyserling sent the same proposal to Walter Reuther, president of the CIO.
22. The Conference on Economic Progress, "Toward Full Employment and Full Production" (Washington, D.C., 1954).
23. Leon Keyserling, "Good Times in '54, But ..." The New Republic, 4 January 1954.
24. "AFL Economic Committee Report, National Defense, 1954," 62/17, Meany Papers, GMMA.
25. "Testimony on Defense Production Act to be Presented by the CIO Committee on Economic Policy," 10 March 1953, 6/20 Goldfinger Papers, GMMA.
26. Leon Keyserling, "Nonsense about Inflation and Recession," The New Republic, 10 March 1956.
27. AFL-CIO Press Release, "Statement of the Executive Council: Defense and Economic Growth," 9 February 1958.
28. Herbert Stein, The Fiscal Revolution in America (Chicago, 1969), 320
29. Douglas Kinnard, "President Eisenhower and the Defense Budget," Journal of Politics 39 (August 1977): 611.
30. Also see Robert Divine, The Sputnik Challenge (New York, 1993), 118-28. Divine depicts the defense spending hike of 1958 as largely the result of congressional pressure to address the slumping economy.
31. "Balanced Economic Growth and Full Employment" draft of Walter Reuther statement before Joint Economic Committee, 30 October 1959, 2/12, Ruttenberg Papers, GMMA.
32. " For a contemporary view of the economic implications of Sputnik see James Tobin, "The Eisenhower Economy and National Security: Defense, Dollars, and Doctrines," Yale Review 47 (March 1958): 321-34.
33. " Harold Vatter, The U.S. Economy in the 1950s (New York, 1963), 72, also recognizes the recession of 1957-58 as leading to a new appreciation of defense spending as "a powerful new discretionary stabilizer."
34. John Kenneth Galbraith, The Affluent Society (New York, 1958), 292-307. In a section particularly offensive to trade unionists, Galbraith decried the false urgency and waste of attempting to offer employment to all and instead recommended an expanded program of unemployment insurance.
35. Leon Keyserling, "Investment and Consumption," The New Republic, 10 October 1960.
36. Walter Heller, New Dimensions of Political Economy (New York, 1967), 27-34. Heller notes that Kennedy had some initial doubts about Keynesian economics. Kennedy frequently received phone calls from Galbraith in India urging more public spending and no tax cuts.
37. David Calleo, The Imperious Economy (Boston, Mass., 1982), 11-12.
38. Calleo suggests that to the Kennedy administration "growth seemed the first and best answer to the country's problems" (Leon Keyserling, "JFK Economics: Should We All Stand Up and Cheer?" The New Republic, 9 October 1961). Despite his appreciation for Kennedy's economic program, Keyserling in 1961 urged still more aggressive action. Within months, the AFL-CIO was echoing this new more critical line.
39. U.S. Department of Labor, International Labor (November-December 1963), 9.
40. Leon Keyserling, "Progress or Poverty: The U.S. at a Cross-Roads," (Washington, D.C., 1964)
41. James T. Paterson, America's Struggle against Poverty, 1900-1985 (New York, 1986), 113-14
42. Keyserling, "Progress or Poverty," 1.
43. Leon Keyserling, "'Liberal' and 'Conservative' National Economic Policies and their Consequences" (Washington, D.C., 1979), 50.
44. Also see Keyserling, "Growth with Less Inflation" (Washington, D.C., 1970), 27
45. and Keyserling, "Progress or Poverty," 15.
46. Keyserling, "The Economic Record," The New Republic, 24 October 1970. By 1970, however, Keyserling was criticizing economic decisions related to Vietnam, comparing the Vietnam mobilization unfavorably to that of Korea (during which Keyserling sat atop the CEA).
47. Leon Keyserling, "Employment and the 'New Economics'" Annals of the American Academy of Political and Social Science 373 (1967): 102-19.
48. Public Papers of the Presidents of the U.S., Lyndon Baines Johnson, 1966 (Washington, D.C., 1967), 96-109.
49. Califano to Nicholas Katzenbach, 28 July 1966, box 31, White House Central Files, Ex LA 7, LBJ.
50. On inflation, taxes, and the Johnson administration see Irving Bernstein, Guns or Butter: The Presidency of Lyndon B. Johnson (New York, 1996), 358-78
51. and Robert Warren Stevens, Vain Hopes, Grim Realities: The Economic Consequences of the Vietnam War (New York, 1976), 74-81.
52. Robert Collins, "Growth Liberalism in the Sixties: Great Societies at Home and Grand Designs Abroad," in The Sixties: From Memory to History, ed. David Farber (Chapel Hill, N.C., 1994), 30.
53. Donald F. Kettl, "The Economic Education of Lyndon Johnson: Guns, Butter, and Taxes," in The Johnson Years, Volume Two, ed. Robert Divine (Lawrence, Kans., 1987), 54.
54. Also see David Halberstam, The Best and the Brightest (New York, 1972), 733. Halberstam, arguing that the president covered up the real costs of the Vietnam War in order to preserve his war on poverty programs, labeled Johnson's economic program "a living lie." Kettl, however, argues against any deliberate distortions, suggesting that choices were less clear than Halberstam contended.
55. CPR National Journal, 5 September 1970;
56. Kevin Boyle, The UAW and the Heyday of American Liberalism, 1945-1968 (Ithaca, N.Y., 1995), 236.
57. Edmund Gillon, Politics and Vision: The ADA and American Liberalism (New York, 1987), 210-13, 271. The rejected piece included an angry attack on the ADA chairman John Kenneth Galbraith, whom Keyserling blamed for betraying the principles of full-employment economics. Keyserling printed one hundred copies of his critique of the ADA at his own expense and distributed them to the ADA National Board. The AFL-CIO later published his article in Free Trade Union News, March 1968.
58. Proceedings of the Ninth Constitutional Convention of the AFL-CIO, Bal Harbor, Fla., 18-22 November 1971, 13.
59. AFL-CIO News, 9 January 1971.
60. Also see Bayard Rustin, "Black Rage, White Fear: The Full Employment Answer."
61. Jervis Anderson, Bayard Rustin, Troubles I've Seen: A Biography (New York, 1997), 290.
62. Leon Keyserling, "The Scarcity School of Economics" (Washington, 1974), 84
63. Leon Keyserling, "Seminar on Manpower Policy and Program: How Well is the Employment Act of 1946 Working?" (Washington, D.C., 1966), 33. Well before Nixon's program, Keyserling was warning against price and wage controls, "I go along with Adam Smith. ... Let the Government do all these things well within its own established spheres of action before it goes into the additional area of concerning itself with each basic price change and basic collective bargaining contract."
64. Keyserling, "The Scarcity School," 8, 84-86.
65. Leon Keyserling, "Full Employment without Inflation" (Washington, D.C., 1975), 39.
66. Keyserling, "'Liberal' and 'Conservative' National Economic Policies and their Consequences," 3; Collins, 167.
67. Keyserling, "The Scarcity School," 48. Keyserling, however, was no proponent of Reagan-style tax cuts. While he acknowledged that on the surface such tax cuts might seem a negation of "a scarcity approach to economics, because it has put more spendable income into the hands of the private economic community," the "practical consequence has been to feed the fat and starve the lean, by redistributing after-tax income in non-progressive directions."
68. Also see Keyserling, "Progress or Poverty," 117.