These companies can, in most states, lease factories in prisons or prisoners to work on the outside.  All told, nearly a million prisoners are now making office furniture, working in call centers, fabricating body armor, taking hotel reservations, working in slaughterhouses or manufacturing textiles, shoes and clothing, while getting paid somewhere between 93 cents and $4.73 per day.

Rarely can you find workers so pliable, easy to control, stripped of political rights and subject to martial discipline at the first sign of recalcitrance — unless, that is, you traveled back to the 19th century when convict labor was commonplace nationwide.  Indeed, a sentence of “confinement at hard labor” was then the essence of the American penal system.  More than that, it was one vital way the United States became a modern industrial capitalist economy — at a moment, eerily like our own, when the mechanisms of capital accumulation were in crisis.

A Yankee Invention

What some historians call “the long Depression” of the 19th century, which lasted from the mid-1870s through the mid-1890s, was marked by frequent panics and slumps, mass bankruptcies, deflation and self-destructive competition among businesses designed to depress costs, especially labor costs.  So, too, we are living through a 21st century age of panics and austerity with similar pressures to shrink the social wage.

Convict labor has been and once again is an appealing way for business to address these dilemmas.  Penal servitude now strikes us as a barbaric throwback to some long-lost moment that preceded the industrial revolution, but in that we’re wrong.  From its first appearance in this country, it has been associated with modern capitalist industry and large-scale agriculture.

And that is only the first of many misconceptions about this peculiar institution.  Infamous for the brutality with which prison laborers were once treated, indelibly linked in popular memory (and popular culture) with images of the black chain gang in the American South, it is usually assumed to be a Southern invention.  So apparently atavistic, it seems to fit naturally with the retrograde nature of Southern life and labor, its economic and cultural underdevelopment, its racial caste system and its desperate attachment to the “lost cause.”

As it happens, penal servitude — the leasing out of prisoners to private enterprise, either within prison walls or in outside workshops, factories and fields — was originally known as a “Yankee invention.”

First used at Auburn prison in New York State in the 1820s, the system spread widely and quickly throughout the North, the Midwest and later the West.  It developed alongside state-run prison workshops that produced goods for the public sector and sometimes the open market.

A few Southern states also used it.  Prisoners there, as elsewhere, however, were mainly white men, since slave masters, with a free hand to deal with the “infractions” of their chattel, had little need for prison.  The Thirteenth Amendment abolishing slavery would, in fact, make an exception for penal servitude precisely because it had become the dominant form of punishment throughout the free states.

Nor were those sentenced to “confinement at hard labor” restricted to digging ditches or other unskilled work; nor were they only men.  Prisoners were employed at an enormous range of tasks from rope- and wagon-making to carpet, hat and clothing manufacturing (where women prisoners were sometimes put to work), as well coal mining, carpentry, barrel-making, shoe production, house-building and even the manufacture of rifles.  The range of petty and larger workshops into which the felons were integrated made up the heart of the new American economy.

Observing a free-labor textile mill and a convict-labor one on a visit to the United States, novelist Charles Dickens couldn’t tell the difference.  State governments used the rental revenue garnered from their prisoners to meet budget needs, while entrepreneurs made outsized profits either by working the prisoners themselves or subleasing them to other businessmen.

Convict Labor in the “New South”

After the Civil War, the convict-lease system metamorphosed.  In the South, it became ubiquitous, one of several grim methods — including the black codes, debt peonage, the crop-lien system, lifetime labor contracts and vigilante terror — used to control and fix in place the newly emancipated slave.  Those “freedmen” were eager to pursue their new liberty either by setting up as small farmers or by exercising the right to move out of the region at will or from job to job as “free wage labor” was supposed to be able to do.

If you assumed, however, that the convict-lease system was solely the brainchild of the apartheid all-white “Redeemer” governments that overthrew the Radical Republican regimes (which first ran the defeated Confederacy during Reconstruction) and used their power to introduce Jim Crow to Dixie, you would be wrong again.  In Georgia, for instance, the Radical Republican state government took the initiative soon after the war ended.  And this was because the convict-lease system was tied to the modernizing sectors of the post-war economy, no matter where in Dixie it was introduced or by whom.

So convicts were leased to coal-mining, iron-forging, steel-making and railroad companies, including Tennessee Coal and Iron (TC&I), a major producer across the South, especially in the booming region around Birmingham, Alabama.  More than a quarter of the coal coming out of Birmingham’s pits was then mined by prisoners.  By the turn of the century, TC&I had been folded into J.P. Morgan’s United States Steel complex, which also relied heavily on prison laborers.

All the main extractive industries of the South were, in fact, wedded to the system.  Turpentine and lumber camps deep in the fetid swamps and forest vastnesses of Georgia, Florida and Louisiana commonly worked their convicts until they dropped dead from overwork or disease.  The region’s plantation monocultures in cotton and sugar made regular use of imprisoned former slaves, including women.  Among the leading families of Atlanta, Birmingham and other “New South” metropolises were businessmen whose fortunes originated in the dank coal pits, malarial marshes, isolated forests and squalid barracks in which their unfree peons worked, lived and died.

Because it tended to grant absolute authority to private commercial interests and because its racial make-up in the post-slavery era was overwhelmingly African-American, the South’s convict-lease system was distinctive.  Its caste nature is not only impossible to forget, but should remind us of the unbalanced racial profile of America’s bloated prison population today.

Moreover, this totalitarian-style control invited appalling brutalities in response to any sign of resistance: whippings, water torture, isolation in “dark cells,” dehydration, starvation, ice-baths, shackling with metal spurs riveted to the feet, and “tricing” (an excruciatingly painful process in which recalcitrant prisoners were strung up by the thumbs with fishing line attached to overhead pulleys).  Even women in a hosiery mill in Tennessee were flogged, hung by the wrists and placed in solitary confinement.

Living quarters for prisoner-workers were usually rat-infested and disease-ridden.  Work lasted at least from sunup to sundown and well past the point of exhaustion.  Death came often enough and bodies were cast off in unmarked graves by the side of the road or by incineration in coke ovens.  Injury rates averaged one per worker per month, including respiratory failure, burnings, disfigurement and the loss of limbs.  Prison mines were called “nurseries of death.”  Among Southern convict laborers, the mortality rate (not even including high levels of suicides) was eight times that among similar workers in the North — and it was extraordinarily high there.

The Southern system also stood out for the intimate collusion among industrial, commercial and agricultural enterprises and every level of Southern law enforcement as well as the judicial system.  Sheriffs, local justices of the peace, state police, judges and state governments conspired to keep the convict-lease business humming.  Indeed, local law officers depended on the leasing system for a substantial part of their income.  (They pocketed the fines and fees associated with the “convictions,” a repayable sum that would be added on to the amount of time at “hard labor” demanded of the prisoner.)

The arrest cycle was synchronized with the business cycle, timed to the rise and fall of the demand for fresh labor.  County and state treasuries similarly counted on such revenues, since the post-war South was so capital-starved that only renting out convicts assured that prisons could be built and maintained.

There was, then, every incentive to concoct charges or send people to jail for the most trivial offenses: vagrancy, gambling, drinking, partying, hopping a freight car, tarrying too long in town.  A “pig law” in Mississippi assured you of five years as a prison laborer if you stole a farm animal worth more than $10. Theft of a fence rail could result in the same.

Penal Servitude in the Gilded Age North

All of this was only different in degree from prevailing practices everywhere else: the sale of prison labor power to private interests, corporal punishment and the absence of all rights including civil liberties, the vote and the right to protest or organize against terrible conditions.

In the North, where 80 percent of all U.S. prison labor was employed after the Civil War and which accounted for over $35 billion in output (in current dollars), the system was reconfigured to meet the needs of modern industry and the pressures of “the long Depression.”  Convict labor was increasingly leased out only to a handful of major manufacturers in each state.  These textile mills, oven makers, mining operations, hat and shoe factories — one in Wisconsin leased that state’s entire population of convicted felons — were then installing the kind of mass production methods becoming standard in much of American industry.  As organized markets for prison labor grew increasingly oligopolistic (like the rest of the economy), the Depression of 1873 and subsequent depressions in the following decades wiped out many smaller businesses that had once gone trawling for convicts.

Today, we talk about a newly “flexible economy,” often a euphemism for the geometric growth of a precariously positioned, insecure workforce.  The convict labor system of the 19th century offered an original specimen of perfect flexibility.

Companies leasing convicts enjoyed authority to dispose of their rented labor power as they saw fit.  Workers were compelled to labor in total silence.  Even hand gestures and eye contact were prohibited for the purpose of creating “silent and insulated working machines.”

Supervision of prison labor was ostensibly shared by employers and the prison authorities.  In fact, many businesses did continue to conduct their operations within prison walls where they supplied the materials, power and machinery, while the state provided guards, workshops, food, clothing and what passed for medical care.  As a matter of practice though, the foremen of the businesses called the shots.  And there were certain states, including Nebraska, Washington and New Mexico, that, like their Southern counterparts, ceded complete control to the lessee.  As one observer put it, “Felons are mere machines held to labor by the dark cell and the scourge.”

Free market industrial capitalism, then and now, invariably draws on the aid of the state.  In that system’s formative phases, the state has regularly used its coercive powers of taxation, expropriation and in this case incarceration to free up natural and human resources lying outside the orbit of capitalism proper.

In both the North and the South, the contracting out of convict labor was one way in which that state-assisted mechanism of capital accumulation arose.  Contracts with the government assured employers that their labor force would be replenished anytime a worker got sick, was disabled, died or simply became too worn out to continue.

The Kansas Wagon Company, for example, signed a five-year contract in 1877 that prevented the state from raising the rental price of labor or renting to other employers.  The company also got an option to renew the lease for 10 more years, while the government was obliged to pay for new machinery, larger workshops, a power supply and even the building of a switching track that connected to the trunk line of the Pacific Railway and so ensured that the product could be moved effectively to market.

Penal institutions all over the country became auxiliary arms of capitalist industry and commerce.  Two-thirds of all prisoners worked for private enterprise.

Today, strikingly enough, government is again providing subsidies and tax incentives as well as facilities, utilities and free space for corporations making use of this same category of abjectly dependent labor.

The New Abolitionism

Dependency and flexibility naturally assumed no resistance, but there was plenty of that all through the 19th century from workers, farmers and even prisoners.  Indeed, a principal objective in using prison labor was to undermine efforts to unionize, but from the standpoint of mobilized working people far more was at stake.

Opposition to convict labor arose from workingmen’s associations, labor-oriented political parties, journeymen unions and other groups which considered the system an insult to the moral codes of egalitarian republicanism nurtured by the American Revolution.  The specter of proletarian dependency haunted the lives of the country’s self-reliant handicraftsmen who watched apprehensively as shops employing wage labor began popping up across the country.  Much of the earliest of this agitation was aimed at the use of prisoners to replace skilled workers (while unskilled prison labor was initially largely ignored).

It was bad enough for craftsmen to see their own livelihoods and standards of living put in jeopardy by “free” wage labor.  Worse still was to watch unfree labor do the same thing.  At the time, employers were turning to that captive prison population to combat attempts by aggrieved workers to organize and defend themselves.  On the eve of the Civil War, for example, an iron-molding contractor in Spuyten Duyvil, north of Manhattan in the Bronx, locked out his unionized workers and then moved his operation to Sing Sing penitentiary, where a laborer cost 40 cents, $2.60 less than the going day rate.  It worked, and Local 11 of the Union of Iron Workers quickly died away.

Worst of all was to imagine this debased form of work as a model for the proletarian future to come.  The workingman’s movement of the Jacksonian era was deeply alarmed by the prospect of “wage slavery,” a condition inimical to their sense of themselves as citizens of a republic of independent producers.  Prison labor was a sub-species of that dreaded “slavery,” a caricature of it perhaps, and intolerable to a movement often as much about emancipation as unionization.

All the way through the Gilded Age of the 1890s, convict labor continued to serve as a magnet for emancipatory desires.  In addition, prisoners’ rebellions became ever more common — in the North particularly, where many prisoners turned out to be Civil War veterans and dispossessed working people who already knew something about fighting for freedom and fighting back.  Major penitentiaries like Sing Sing became sites of repeated strikes and riots; a strike in 1877 even took on the transplanted Spuyten Duyvil iron-molding company.

Above and below the Mason Dixon line, political platforms, protest rallies, petition campaigns, legislative investigations, union strikes and boycotts by farm organizations like the Farmers Alliance and Grange cried out for the abolition of the convict-lease system, or at least for its rigorous regulation.  Over the century’s last two decades, more than 20 coal-mine strikes broke out because of the use of convict miners.

The Knights of Labor, that era’s most audacious labor movement, was particularly exercised.  During the Coal Creek Wars in eastern Tennessee in the early 1890s, for instance, TC&I tried to use prisoners to break a miners’ strike.  The company’s vice president noted that it was “an effective club to hold over the heads of free laborers.”

Strikers and their allies affiliated with the Knights, the United Mine Workers and the Farmers Alliance launched guerilla attacks on the prisoner stockade, sending the convicts they freed to Knoxville.  When the governor insisted on shipping them back, the workers released them into the surrounding hills and countryside.  Gun battles followed.

The Death of Convict Leasing

In the North, the prison abolition movement went viral, embracing not only workers’ organizations, sympathetic rural insurgents and prisoners, but also widening circles of middle-class reformers.  The newly created American Federation of Labor denounced the system as “contract slavery.”  It also demanded the banning of any imports from abroad made with convict labor and the exclusion from the open market of goods produced domestically by prisoners, whether in state-run or private workshops.  In Chicago, the construction unions refused to work with materials made by prisoners.

By the latter part of the century, in state after state penal servitude was on its way to extinction.  New York, where the “industry” was born and was largest, killed it by the late 1880s.  The tariff of 1890 prohibited the sale of convict-made wares from abroad.  Private leasing continued in the North, but under increasingly restrictive conditions, including Federal legislation passed during the New Deal.  By World War II, it was virtually extinct (although government-run prison workshops continued as they always had).

At least officially, even in the South it was at an end by the turn of the century in Tennessee, Louisiana, Georgia and Mississippi.  Higher political calculations were at work in these states.  Established elites were eager to break the inter-racial alliances that had formed over abolishing convict leasing by abolishing the hated system itself.  Often enough, however, it ended in name only.

What replaced it was the state-run chain gang (although some Southern states like Alabama and Florida continued private leasing well into the 1920s). Inmates were set to work building roads and other infrastructure projects vital to the flourishing of a mature market economy and so to the continuing process of capital accumulation.  In the North, the system of “hard labor” was replaced by a system of “hard time,” that numbing, brutalizing idleness where masses of people extruded from the mainstream economy are pooled into mass penal colonies.  The historic link between labor, punishment and economic development was severed, and remained so… until now.

Convict Leasing Rises Again

“Now,” means our second Gilded Age and its aftermath.  In these years, the system of leasing out convicts to private enterprise was reborn.  This was a perverse triumph for the law of supply and demand in an era infatuated with the charms of the free market.  On the supply side, the U.S. holds captive 25 percent of all the prisoners on the planet: 2.3 million people.  It has the highest incarceration rate in the world as well, a figure that began skyrocketing in 1980 as Ronald Reagan became president.  As for the demand for labor, since the 1970s American industrial corporations have found it increasingly unprofitable to invest in domestic production.  Instead, they have sought out the hundreds of millions of people abroad who are willing to, or can be pressed into, working for far less than American workers.

As a consequence, those back home — disproportionately African-American workers — who found themselves living in economic exile, scrabbling to get by,  began showing up in similarly disproportionate numbers in the country’s rapidly expanding prison archipelago. It didn’t take long for corporate America to come to view this as another potential foreign country, full of cheap and subservient labor — and better yet, close by.

What began in the 1970s as an end run around the laws prohibiting convict leasing by private interests has now become an industrial sector in its own right, employing more people than any Fortune 500 corporation and operating in 37 states.  And here’s the ultimate irony: Our ancestors found convict labor obnoxious in part because it seemed to prefigure a new and more universal form of enslavement.  Could its rebirth foreshadow a future ever more unnervingly like those past nightmares?

Today, we are being reassured by the president, the mainstream media and economic experts that the Great Recession is over, that we are in “recovery” even though most of the recovering patients haven’t actually noticed significant improvement in their condition.  For those announcing its arrival, “recovery” means that the mega-banks are no longer on the brink of bankruptcy, the stock market has made up lost ground, corporate profits are improving, and notoriously unreliable employment numbers have improved by several tenths of a percent.

What accounts for that peculiarly narrow view of recovery, however, is that the general costs of doing business are falling off a cliff as the economy eats itself alive.  The recovery being celebrated owes thanks to local, state and federal austerity budgets, the starving of the social welfare system and public services, rampant anti-union campaigns in the public and private sector, the spread of sweatshop labor, the coercion of desperate unemployed or underemployed workers to accept lower wages, part-time work and temporary work, as well as the relinquishing of healthcare benefits and a financially secure retirement — in short, to surrender the hope that is supposed to come with the American franchise.

Such a recovery, resting on the stripping away of the hard won material and cultural achievements of the past century, suggests a new world in which the prison-labor archipelago could indeed become a vast gulag of the downwardly mobile.

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Inspired in turn by Swift, I want to suggest that we put in motion a similar undertaking: on Jan. 16, Martin Luther King Day, citizens from around the country should gather at the New York Stock Exchange on Wall Street. Let’s call this macabre gathering — with luck and even worse times, it should be mammoth — “We Surrender” or “Restore Debtor’s Prisons” or “De-Fault Is Ours” or “Collateralize Us.” And plan on a mirthful day of mourning.

The basic idea is that we offer ourselves up, 99 percent of us anyway, on the altar of high finance as a sacrifice to the bond markets. It was Karl Marx who first observed that high finance is “the Vatican of capitalism.” How right he turned out to be — right with a vengeance!

The Death of Democracy

Whole governments, democratically elected, are collapsing, or abdicating on orders from our secular version of the papacy. Who will weep for the passing of Italian Prime Minister Silvio Berlusconi? Not many, surely. Still, it’s appalling that, in Italy as in Greece, governing authority has been usurped by technocrats, elected by no one, answerable only to the European institutions of high finance that installed them in power.

At last count, eight governments of the European Union have come and gone, suffering the wrath of our new god. Other European governments barely hang on and scurry to curry favor with the bond market, proposing in effect to eat their own children and the futures of 99 percent of their people, if that’s what it takes to make high finance happy. More will follow. By the time this piece was published, who would be surprised if yet another government had bitten the dust.

What about here in the USA? That capitalism and democracy go together (like love and marriage in that old song) has been the imperial boast conveyed to the rest of the world by American banks and diplomats and presidents and Marines for a century — and more recently, by crony capitalist outfits like KBR and predator drones. Today, at home and abroad that particular gospel seems a sorry piece of hypocrisy. Capitalism has become a synonym for — to use an old word on its way back just in time — plutocracy, not democracy. The Obama administration like the Bush administration before it, and the one before that, and the one before that, has bent its knee to “the Vatican of capitalism.”

Take Our Children, Please!

Anticipating Swift, we are already eating our own children or, at least, the futures available to them. My suggestion is to make the most of that reality.

When we assemble on Jan. 16, we should arrive as supplicants, bringing the deeds to our homes, if we still have them. We could come dressed as credit-default swaps or collateralized debt obligations. (Use your imagination!)

You’ll want to turn in your subprime mortgage documents. And do you really need that mobile home or tent? And certainly, you’ll want to offer up your children to Wall Street if they’re young enough to make a “delicious” and nourishing meal. If a bit older, haul along that creaky swing set from your backyard, or dilapidated blackboards and outmoded computer consoles from your child’s underfunded, disintegrating school. Bring with you the paints, recorders and stage props once used by art, music and theater teachers, but made superfluous when their programs were cut by schools too poor to afford them.

If your children are older still, and waterlogged from the college loans that put them “underwater” before they even had their first jobs, why not donate those debts as securitized gifts to the Street? Better yet: Give back their college diplomas.

If you can, cart along vats of heating oil or coal bins to symbolize the winter fuel that you can no longer afford. (Thank god for global warming!) Declare yourself undocumented or at the very least “undeserving” (a prematurely retired and wonderfully apt word used by the 1 percent back in the late 19th century to describe those who apparently preferred starving to working). Turn in your food stamps and unemployment insurance checks.

If you happen to have a job, return it or tithe a portion of your wages or pension for the cause.

Give back your votes; they do you no good, but might placate The Street. If you’re not too shy, donate your medical records, X-rays, CAT scans and IV drips; you won’t need them anymore since the odds are you won’t be able to afford healthcare, and Wall Street can use them. After all, who is more endlessly ingenious when it comes to turning misery into money?

Here’s a really big Jan. 16 gesture if you’re up for it: securitize your body parts. What, for example, is a leg- or ear- or brainpan-derivative really worth on the open market? You don’t know, but Wall Street will. And you can think of it as your contribution to solving the deficit dilemma, which keeps the 1 percent awake at night.

My poor imagination is hardly up to the task of imagining all the ways in which we might express our fealty to Wall Street’s financiers. But we, the partisans of OWS, are if nothing else a remarkably creative bunch. I’m confident that, when we get together on the 16th of January, the world will marvel at our inventiveness.

An Archipelago of Isolation Chambers

However “Swiftian” our mood, signage and costumes, however much we retain the vital capacity to laugh at our own predicament and make fun of our tormentors, what I’m proposing is, in the end, serious business. A massive “Collateralize Us” day is doable — and through its wit could embolden us and shame those in charge of the care and feeding of the 1 percent. More important, it could put in the most graphic terms, where everyone could see it, a core indictment of a system in ruins and perhaps even hint at what might replace it.

Why pick a single day and a single place to symbolically immolate our own children (and their children to come)? Why not continue to occupy as many places as we can on all days? We should!

However, the simple epiphany that OWS allowed millions to experience was its blunt discovery that Wall Street, the world of financial mis-engineers and predatory speculators, was the taproot of our multiple dilemmas. For people around the globe, that street remains, at least symbolically, the site where our misbegotten Age of Austerity was born. So it makes continuing sense to persevere in pressing that singular insight, in pursuing a determination to confront a dysfunctional system where it originates.

So, too, local governments around the country have consistently used their police forces to cage, disperse or otherwise fragment local occupations and may even have coordinated their police “occupations” with one another. “Our streets” are ever less “ours” in any meaningful sense. The geography of democracy is being transformed into an archipelago of isolation chambers.

But that won’t be the case if untold numbers assemble in New York on the 16th. If every movement and organization that has had anything to do with OWS over these last months were to collaborate in mobilizing, even on the bitterest of January days, the streets will again be “ours.”

Martin Luther King and Jubilee Day

Then, of course, there is the resonant significance of the day itself. Martin Luther King was a lawbreaker for justice. So, too, were all those who defied “legitimate authority” alongside him. I’m not suggesting we break the law. I do suggest we exercise rights that are growing weak, and will grow weaker, if allowed to atrophy further. And I do suggest as well that we, like King, become the midwives of new law.

If credit default swaps and structured investment vehicles are legal, as they are, and if marching in the streets is becoming ever less so, as it is, then on Jan. 16 we should begin to turn that kind of preposterous world upside down. What was lawful shall become criminal and what was denied to the people shall be taken by them and made good law.

When we gather on the 16th of January at the corner of Broad and Wall streets — don’t worry, you’ll find it! — in an act of unprecedented symbolic self-sacrifice, we might also make one modest request. With Martin Luther King in mind, let us propose that Jan. 16 also become Jubilee Day.

Such days were a more or less regular part of the calendar in biblical times and long after. It was the moment when common people were relieved of their crushing debts and the world was allowed to start over again. Our own version of such a “day of forgiveness” would focus on all the debts with which the 1 percent have burdened so many working people.

On that day, we might resume a conversation about how to start the world anew. It would undoubtedly be a conversation about all the vital resources that everyone depends on to enjoy life, be healthy and have a future worthy of bequeathing to our children. It would certainly be about how these must never again be allowed to congeal in the hands of an infinitesimal elite organized in a tiny number of private institutions indifferent to the commonweal and immune from censure.

See you on the 16th. Bring your children.

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After an absence of well over half a century, Wall Street is back, center stage, as the preferred American icon of revulsion, a status it held for a fair share of our history. And we can thank a small bunch of campers in Manhattan’s Zuccotti Park for hooking us up to a venerable tradition of resistance and rebellion.

The Street of Torments

Peering back at a largely forgotten terrain of struggle against “the Street,” so full of sound and fury signifying quite a lot, it’s astonishing — to a historian of Wall Street, at least — that the present movement didn’t happen sooner. It’s already hard to remember that only weeks ago, three years into the near shutdown of the world financial system and the Great Recession, an eerie unprotesting silence still blanketed the country.

Stories accumulated of Wall Street greed and arrogance, astonishing tales of incompetence and larceny. The economy slowed and stalled. People lost their homes and jobs. Poverty reached record levels. The political system proved as bankrupt as the big banks. Bipartisan consensus emerged — but only around the effort to save “too big to fail” financial Goliaths, not the legions of victims their financial wilding had left in its wake.

The political class then prescribed what people already had plenty of: yet another dose of austerity plus a faith-based belief in a “recovery” that, for 99 percent of Americans, was never much more than an optical illusion. In those years, the hopes of ordinary people for a chance at a decent future withered, and bitterness set in.

Strangely, however, popular resistance was hard to find. In the light of American history, this passivity was surpassingly odd. From decades before the Gilded Age of the late 19th century through the Great Depression, again and again Wall Street found itself in the crosshairs of an outraged citizenry mobilized thanks to political parties, labor unions, or leagues of the unemployed. Such movements were filled with a polyglot mix of middle-class antitrust reformers, bankrupted small businessmen, dispossessed farmers, tenants and sharecroppers, out-of-work laborers, and so many others.

If Occupy Wall Street signals the end of our own, atypical period of acquiescence, could a return to a version of “class warfare” that would, once upon a time, have been familiar to so many Americans be on the horizon? Finally!

What began as a relatively sparsely attended and impromptu affair has displayed a staying power and magnetic attractiveness that has taken the country, and above all the political class, by surprise. A recent rally of thousands in lower Manhattan, where demonstrators marched from the city’s government center to Zuccotti Park, the location of the “occupiers” encampment, was an extraordinarily diverse gathering by any measure of age, race or class. Community organizations, housing advocates, environmentalists, and even official delegations of trade unionists not normally at ease hanging out with anarchists and hippies gave the whole affair a social muscularity and reach that was exhilarating to experience.

Diversity, however, can cut both ways. Popular protest, to the degree that there’s been much during the recent past — and mainly over the war in Iraq — has sometimes been criticized for the chaotic way it assembled a grab-bag of issues and enemies, diffuse and without focus. Occupy Wall Street embraces diverse multitudes but this time in the interest of convergence. In its targeting of “the street of torments,” this protean uprising has, in fact, found common ground. To a historian’s ear this echoes loudly.

Karl Marx described high finance as “the Vatican of capitalism,” its diktat to be obeyed without question. We’ve spent a long generation learning not to mention Marx in polite company and not to use suspect and nasty phrases like “class warfare” or “the reserve army of labor,” among many others.

In times past, however, such phrases and the ideas that went with them struck our forebears as useful, even sometimes as true depictions of reality. They used them regularly, along with words like “plutocracy,” “robber baron” and “ruling class,” to identify the sources of the economic exploitation and inequality that oppressed them, as well as to describe the political disenfranchisement they suffered and the subversion of democracy they experienced.

Never before, however, has “the Vatican of capitalism” captured quite so perfectly the specific nature of the oligarchy that’s run the country for a generation and has now run it into the ground. Even political consultant and pundit James Carville, no Marxist he, confessed as much during the Clinton years when he said the bond market “intimidates everybody.”

Perhaps that era of everyday intimidation is finally ending. Here are some of the signs of it — literally — from that march I attended: “Loan Sharks Ate My World” (illustrated with a reasonable facsimile of the Great White from “Jaws”), “End the Federal Reserve,” “Wall Street Sold Out, Let’s Not Bail Out,” “Kill the Over the Counter Derivative Market,” “Wall Street Banks Madoff Well,” “The Middle Class Is Too Big to Fail,” “Eat the Rich, Feed the Poor,” “Greed Is Killing the Earth.” During the march, a pervasive chant — “We are the 99 percent” — resoundingly reminded the bond market just how isolated and vulnerable it might become.

And it is in confronting this elemental, determining feature of our society’s predicament, in gathering together all the multifarious manifestations of our general dilemma right there on “the street of torments,” that Occupy Wall Street — even without a program or clear set of demands, as so many observers lament — has achieved a giant leap backward, summoning up a history of opposition we would do well to recall today.

A Century of Our Streets and Wall Street

One young woman at the demonstration held up a corrugated cardboard sign roughly felt-tip-markered with one word written three times: “system,” “system,” “system.” That single word resonates historically, even if it sounds strange to our ears today. The indictment of the presumptive elites, especially those housed on Wall Street, the conviction that the system over which they presided must be replaced by something more humane, was a robust feature of our country’s political and cultural life for a long century or more.

When in the years following the American Revolution, Jeffersonian democrats raised alarms about the “moneycrats” and their counterrevolutionary intrigues — they meant Alexander Hamilton and his confederates in particular — they were worried about the installation in the New World of a British system of merchant capitalism that would undo the democratic and egalitarian promise of the Revolution.

When followers of Andrew Jackson inveighed against the Second Bank of the United States — otherwise known as “the Monster Bank” — they were up in arms against what they feared was the systematic monopolizing of financial resources by a politically privileged elite. Just after the Civil War, the Farmer-Labor and Greenback political parties freed themselves of the two-party runaround, determined to mobilize independently to break the stranglehold on credit exercised by the big banks back East.

Later in the 19th century, Populists decried the overweening power of the Wall Street “devil fish” (shades of Matt Taibbi’s “giant vampire squid” metaphor for Goldman Sachs). Its tentacles, they insisted, not only reached into every part of the economy, but also corrupted churches, the press and institutions of higher learning, destroyed the family, and suborned public officials from the president on down. When, during his campaign for the presidency in 1896, the Populist-inspired “boy orator of the Platte” and Democratic Party candidate William Jennings Bryan vowed that mankind would not be “crucified on a cross of gold,” he meant Wall Street, and everyone knew it.

Around the turn of the century, the antitrust movement captured the imagination of small businessmen, consumers and working people in towns and cities across America. The trust they worried most about was “the Money Trust.” Captained by J.P. Morgan, “the financial Gorgon,” the Money Trust was skewered in court and in print by future Supreme Court justice Louis Brandeis, subjected to withering congressional investigations, excoriated in the exposés of “muckraking” journalists, and depicted by cartoonists as a cabal of prehensile Visigoths in death-heads.

As the 20th century began, progressive reformers in state houses and city halls, socialists in industrial cities and out on the prairies, strikebound workers from coast to coast, working-class feminists, antiwar activists, and numerous others were still vigorously condemning that same Money Trust for turning the whole country into a closely held system of financial pillage, labor exploitation and imperial adventuring abroad. As the movements made clear, everyone but Wall Street was suffering the consequences of a system of proliferating abuses perpetrated by “the Street.”

The tradition the Occupy Wall Street demonstrators have tapped into is a long and vibrant one that culminated during the Great Depression. Then as now, there was no question in the minds of “the 99 percent” that Wall Street was principally to blame for the country’s crisis (however much that verdict has since been challenged by disputatious academics).

Insurgencies by industrial workers, powerful third-party threats to replace capitalism with something else, rallies and marches of the unemployed, and, yes, occupations, even seizures of private property, foreclosures forestalled by infuriated neighbors, and a pervasive sense that the old order needed burying had their lasting effect. In response, the New Deal attempted to unhorse those whom President Franklin Roosevelt termed “economic royalists,” who were growing rich off “other people’s money” while the country suffered its worst trauma since the Civil War. “The Street” trembled.

“System, System, System”: It would be foolish to make too much of a raggedy sign — or to leap to conclusions about just how lasting this Occupy Wall Street moment will be and just where (if anywhere) it’s heading. It would be crazily optimistic to proclaim that our own pitiful age of acquiescence has ended.

Still, it would be equally foolish to dismiss the powerful American tradition that the demonstrators of this moment have tapped into. In the past, Wall Street has functioned as an icon of revulsion, inciting anger, stoking up energies, and summoning visions of a new world that might save the New World.

It is poised to play that role again. Remember this: In 1932, three years into the Great Depression, most Americans were more demoralized than mobilized. A few years later, all that had changed as “Our Street, Not Wall Street” came alive. The political class had to scurry to keep up. Occupy Wall Street may indeed prove the opening act in an unfolding drama of renewed resistance and rebellion against “the system.”

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Today’s Tea Party movement, like so many of its “populist” predecessors, is a house of contradiction, a bewildering network of crosscutting political emotions, ideas, and institutions. What connects it powerfully to a populist past stretching all the way back to Boston Harbor is, however, a sense of violation: “Don’t Tread on Me.”

Despite a recurring resistance to the impositions of powerful outside forces — anti-elitism has been axiomatic for all such insurgencies — populist movements have differed greatly on just what those forces were and what needed to be done to free people from their yoke. It’s worth noting, for instance, that an earlier invocation of the Boston Tea Party took place at a 1973 rally on a replica of the Dartmouth — a rally called to promote the impeachment of President Richard Nixon.

From the Know-Nothings to the People’s Party

Over the course of American history, the populist instinct, now resurgent in the Tea Party movement, has oscillated between a desire to transform, and so create a new order of things, and a desire to restore a yearned-for (or imagined) old order.

Before the Civil War, one such movement that caught both these urges was colloquially dubbed the “Know-Nothings” (not for any anti-intellectualism, but because its members deliberately conducted much of their business in secret — hence, if questioned, were instructed to say, “I know nothing”). Know-nothing-ism exuded the desire to move forward and backward at the same time. During the 1840s and 1850s, it swept across much of the country, North and South. There were “know-nothing” candies, “know-nothing” toothpicks, and “know-nothing” stagecoaches.

Soon enough, the movement evolved into a national political party, the American Party, that appealed to small farmers, small businessmen, and working people. Its attraction was two-fold. The party vociferously opposed Irish and German Catholic immigration to the U.S. (as well as that of Chinese and Chilean immigrants working in the gold fields of California). Yet, in the North, it also denounced slavery. As planks in a political program, nativism and anti-slavery might seem like an odd couple, but in the minds of the party’s followers they were joined at the hip. As Know-Nothings saw it, the Papacy and the South’s slave-owning planter elite were both conspiring to undermine a democratic society of masterless men.

Keep in mind that conspiratorial thinking has long been deeply embedded in American populist movements (as in the Tea Party today). In nineteenth century protestant America, alleged plots by Vatican hierarchs were a recurrent feature of political life. In the North, a wave of crime and the rise of “poor relief” and other forms of dependency — including wage labor, which accompanied the arrival of a flood of impoverished Catholic immigrants — seemed to threaten an American promise of a society of free, equal, and self-reliant individuals (supposedly so noxious to the priestly elite of the Catholic Church). In the slave South, where the master class was believed to be hard at work subverting the Constitution, conspiratorial machinations were self-evidently afoot. By the mid-1850s, most “Know-Nothings” in the North had found their way into the newborn Republican Party which combined hostility to slavery with a milder form of anti-Catholicism.

Populism with a capital “P,” the great economic and political insurgency of the last third of the nineteenth century that blanketed rural America from the cotton South to the grain-growing Great Plains and the Rocky Mountain West, would bear its own distinctive ambivalence. The People’s Party indicted corporate and finance capitalism for destroying the livelihoods and lives of independent farmers and handicraftsmen. It also attacked big business for subverting the foundations of democracy by capturing all three branches of government and transforming them into coercive instruments of rule by a new plutocracy. Populists sometimes attributed what they termed an American “counterrevolution” to the conspiratorial plots of the “great Devil Fish of Wall Street,” suspected of colluding with Great Britain’s elite to undo the American Revolution.

The remedies proposed, however, were hardly those of Luddites. These instead anticipated many of the fundamental reforms of the next century, including government subsidies for farmers, the graduated income tax, direct election of the Senate, the eight-hour day, and even the public ownership of railroads and public utilities. A tragic movement of the dispossessed, the Populists yearned to restore a society of independent producers, a world without a proletariat and without corporate trusts. Yet they also envisioned something new and transformative, a “cooperative commonwealth” that would escape the barbaric competitiveness and exploitation of free market capitalism.

The Great Plains of Resentment

For the next four decades, populism remained emphatically against corporate capitalism and held on tightly to its resentment of powerful outsiders as well as a penchant for conspiracy mongering. During the 1930s, however, the location of Conspiracy Central began to shift from Wall Street and the City of London to Moscow — and even New Deal Washington. Anti-communism added a new ingredient to an already roiling American politics of fear and paranoia, a toxic element which still inflames the Tea Party imagination two decades after the Berlin Wall was torn down.

During the 1936 presidential campaign, in the midst of the Great Depression, three populist movements — Louisiana Senator Huey Long’s “Share Our Wealth” clubs, the Union for Social Justice formed by the charismatic “radio priest” Father Charles E. Coughlin, and Francis Townsend’s campaign for government pensions for the elderly — coalesced, albeit briefly and uneasily, to form the Union Party. It ran from the left against President Franklin Roosevelt, nominating as its presidential candidate North Dakota Congressman William Lemke, a one-time spokesman for radical farmers. (The vice-presidential candidate was a labor lawyer from Boston.)

The Union Party expressed a broad dissatisfaction with the failure of Roosevelt’s New Deal to relieve economic distress and injustice. Senator Long, the latest in a long line of Southern populist demagogues, had been decrying the power of land barons, “moneycrats,” and big oil since his days as Louisiana’s governor. His “Share Our Wealth” plan called for pensions and public education for all, as well as confiscatory taxes on incomes over $1 million, a minimum wage, and public works projects to give jobs to the unemployed. Townsend’s scheme was designed to solve unemployment and the penury of old age by offering monthly government pensions of $200, financed by taxes on business, to everyone over the age of 60. Coughlin, an early supporter of Roosevelt, trained his fire on finance capitalism, inveighing against its usurious, unchristian “parasitism.”

But Long and especially Coughlin were at pains to distinguish their form of radicalism from the collectivism and atheism of the Red menace. Father Coughlin expressed support for labor unions and a just wage. He was, however, an inveterate foe of the left-leaning United Automobile Workers union, and roundly condemned the sit-down strikes which spread like a prairie fire following Roosevelt’s triumphal landslide victory in the 1936 presidential election, as workers across the country occupied everything from auto plants to department stores demanding union recognition.

Indeed, in his radio addresses and his newspaper, Social Justice, the priest ranted about an incongruous conspiracy of Bolsheviks and bankers whose aim was to betray America. He would eventually add a tincture of anti-Semitism to his warnings about a Wall Street cabal. His growing sympathy for Nazism was not so shocking. Fascism, after all, had its roots in a European version of populism that conveyed a post-World War I disgust with the selfishness and incompetence of cosmopolitan ruling elites, a virulent racial nationalism, and a hatred of bankers and especially Bolsheviks.

Followers of Long and Coughlin loathed big business and big government, even though big government — back then anyway — was taking on big business. For them, “Don’t Tread on Me” meant a defense of local economies, traditional moral codes, and established ways of life that seemed increasingly endangered by national corporations as well as the state bureaucracies that began to proliferate under the New Deal. Union Party campaign oratory was filled with references to the “forgotten man,” an image first invoked by Roosevelt on behalf of the working poor.

In the years ahead, kindred images would resurface during a time of turmoil in the late 1960s in Nixon’s appeals to the “silent majority” of “Middle America,” and more recently in the Tea Party’s wounded sense of exclusion. “Forgotten man” populism conveyed the irate politics of resentment of precariously positioned Americans against the organized power blocs of modern industrial society: Big Business, Big Labor, and Big Government.

Race, Resentment, and the Rise of Conservative Populism

Over the last half century populism has drifted steadily rightward, becoming ever more restorationist and ever less transformative, ever more anti-collectivist and ever less anti-capitalist. What were subordinate themes in the older style populism — religious orthodoxy, national chauvinism, phobic racism, and the politics of fear and paranoia — have come to the fore in our time. At least in broad terms, both the Barry Goldwater and the George Wallace insurgencies of the 1960s displayed this trajectory.

Goldwater, the Arizona senator and 1964 Republican candidate for president, an “insurgent”? Yes, if you keep in mind his condemnation of the too-liberal elite running the Republican Party, who, in his eyes, represented a clubby world of Ivy League bankers, corrupt politicians, media lords, and “one-worlders.” Or consider the way he flirted with the freakish John Birch Society (which called President Dwight Eisenhower a “dedicated, conscious agent of the Communist Party” and warned of a Red plot to weaken the minds of Americans by fluoridating the water supply). Or the Senator’s alarming readiness to threaten to push the nuclear button in defense of “freedom,” which could be thought of as the Cold War version of “Don’t Tread on Me.”

Above all, Goldwater was the avatar of today’s politics of limited government. In his opposition to civil rights legislation, he might be called the original “tenther” — that is, a serial quoter of the Tenth Amendment to the Constitution, which reserves for the states all powers not expressly granted to the Federal government, with which he justified hamstringing all efforts by Washington to rectify social or economic injustice. For Goldwater the outlawing of Jim Crow was an infringement of constitutionally protected states’ rights. Moreover, he was an inveterate enemy of all forms of collectivism, including of course unions and the welfare state.

As the Goldwater opposition sank its grassroots into the lush soil of the Sunbelt, its desire to restore an older order of things was palpable. At a time when New Deal liberalism was the reigning orthodoxy, the senator’s reactionary impulses seemed startlingly adrift from the mainstream, and so strange indeed.

Goldwater’s rebellious constituents were an oddly positioned band of rebels. Unlike the declining middling sorts attracted to the Union Party, they came mainly from a rising Sunbelt stratum, a new middle class significantly nourished by the mushrooming military-industrial complex: technicians and engineers, real-estate developers, middle managers, and mid-level entrepreneurs who resented the intrusion of Big Government while in fact being remarkably dependent on it.

They could be described as reactionary modernists for whom liberalism had become the new communism. How shocking when this Arizona “maverick” — he deserved the label far more than John McCain ever did (if he ever did) — won the Republican nomination in a knock-down brawl with the presidium, led by New York Governor Nelson Rockefeller, that had run the party until then. Might the Tea Party accomplish something similar today?

Think of Alabama Governor George Wallace as the other missing link between the economic populism of yesteryear and the cultural populism of the late twentieth century. He was all at once an anti-elitist, a populist, a racist, a chauvinist, and a tribune of the politics of revenge and resentment. “Segregation now, segregation tomorrow, segregation forever”: a line spoken at his inauguration as governor in 1963 that would be his signature defiance of the civil rights revolution and its alliance with the federal government. In no uncertain terms, it signaled the militant racism of his bed-rock supporters.

His appeal, however, ran far deeper than that. The whole tenor of his politicking involved a down-home defense of blue-collar America. Like Huey Long, he was sensitive to the economic predicament of his lower-class constituents. As governor he favored expanded state spending on education and public health, pay raises for school teachers, and free textbooks. When he ran for president as a third party candidate in 1968, he called for increases in social security and Medicare. As late as 1972, Wallace increased retirement pensions and unemployment compensation in Alabama.

Yet he championed the hard-hat American heartland by hailing its ethos of hard work and what today would be known as “family values” far more than by proposing concrete measures to assure its economic well-being. Wallace railed against the know-it-all arrogance of “pointy-headed” Washington bureaucrats, the indolence of “welfare queens,” and the impiety, moral decadence, and disloyalty of privileged long-haired, pot-smoking, anti-war college students.

Bellicose calls for law and order, states’ rights, and a muscular patriotism fueled the revanchist emotions that made Wallace into more than a regional figure. When he ran in the Democratic primaries in 1964 (with the support of the John Birch Society and the White Citizens Council), he won significant numbers of votes not only in the Deep South, but in states like Indiana, Wisconsin, and Maryland, a sign of the Southernization of American politics at a time when the spread of NASCAR, country music, and the blues were Southernizing its culture as well.

Wallace’s venture into third-party politics (on the predictably named American Independent Party ticket) terrified the Democrats, who feared the loss of part of their blue-collar base. He called Vice President Hubert Humphrey, then running for president against Richard Nixon, as well as Northern liberals generally, a “group of god-damned, mealy-mouthed sissy-britches” — shades of Senator Joe McCarthy and the 1950s — and he promised to take the gloves off, if elected, and bomb North Vietnam back to the Stone Age.

Wallace’s popularity revealed a possibility to Nixon and the Republicans denied them since the end of Reconstruction: that, on the road to an Electoral College victory, they might begin to develop a “southern strategy.” In the meantime, his populist cry that there “was not a dime’s worth of difference between the Democratic and Republican parties” won him 10 million votes, 13.5% of the total and 46 votes in the Electoral College. And remember this: a crowd of 20,000 attended a Wallace rally in 1968 at a sold-out Madison Square Garden in New York City.

Don’t Tread on My Taxes

So what does this episodic and checkered history of American populism have to do with the Tea Party?

As a start, the Tea Party movement reminds us that the moral self-righteousness, sense of dispossession, anti-elitism, revanchist patriotism, racial purity, and “Don’t Tread on Me” militancy that were always at least a part of the populist admixture are alive and well. For all the fantastical paranoia that often accompanies such emotional stances, they speak to real experiences — for some, of economic anxiety, insecurity, and loss; for others, of deeper fears of personal, cultural, political, or even national decline and moral disorientation.

Though such fears and feelings are, in part, legacies of the corporate liberal order — one of the dark sides of “progress” under capitalism — in this new populist moment, anti-capitalism itself barely lingers on. Though outrage at the bank bailout did help propel the Tea Party explosion, anti-big-business sentiment is now a pale shadow of its former self, a muted sub-theme in the movement when compared to the Wallace moment, not to mention those of Huey Long or the Populists.

This is hardly surprising since, at least economically, capitalism has, according to recent surveys of Tea Party membership, served many of them reasonably well. Like Goldwater supporters of the 1960s, those who identify with the Tea Party movement are generally wealthier than the population as a whole, and more likely to be employed. They are also apparently better educated, so their fondness for Sarah Palin’s intellectual debilities may be more a case of resentment of bicoastal cultural snobbery than eye-popping ignorance.

Alongside an exalted rhetoric about threats to liberty lies a sour, narrow-minded defensiveness against any possible threat of income redistribution that might creep into the body politic… and so into their pockets. “Don’t Tread on Me,” once a rebel war cry, has morphed into: “I’ve got mine. Don’t dare tax it.” The state, not the corporation, is now the enemy of choice.

Tea Party populism should also be thought of as a kind of identity politics of the right. Almost entirely white, and disproportionately male and older, Tea Party advocates express a visceral anger at the cultural and, to some extent, political eclipse of an America in which people who looked and thought like them were dominant (an echo, in its own way, of the anguish of the Know-Nothings). A black President, a female Speaker of the House, and a gay head of the House Financial Services Committee are evidently almost too much to bear. Though the anti-immigration and Tea Party movements so far have remained largely distinct (even if with growing ties), they share an emotional grammar: the fear of displacement.

But identity politics aside, Tea Party anger reaches far beyond the ranks of the modest Tea Party movement. It resonates with other Americans who understandably feel that political and economic elites, serving themselves at the expense of everyone else, have failed Americans. The big question is just exactly how (or even if) that private and personal rage gets transformed into moral and political outrage. If the heirs of George Wallace and Barry Goldwater, or the Sarah Palins of today, have their way, the outcome won’t be a tea party.

Steve Fraser is editor-at large of New Labor Forum, co-founder of the American Empire Project, a writer, TomDispatch contributor, and an historian. His latest book is Wall Street: America’s Dream Palace.

Joshua B. Freeman teaches history at the City University of New York. He is currently completing a history of the United States since World War II as part of the Penguin History of the U.S.

This piece is an adaptation of an article that will be published in the Fall 2010 issue of the magazine New Labor Forum.

This is as it should be — and as it once was. When in March 1933, a few months after Coolidge gave up the ghost, Franklin Delano Roosevelt was inaugurated president, people looked forward to audacious changes, even if they had little or no idea just what, in concrete terms, that might mean. If Coolidge, an iconic representative of the old order, knew that the ancien régime was dead, millions of ordinary Americans had drawn the same conclusion years earlier. Full of fear, depressed and disillusioned, they nonetheless had an appetite for the untried. Like Obama, FDR had, during his campaign, encouraged feverish hopes with no less vaporous references to a “new deal” for Americans.

Brain trust versus brainiacs

Yet today, something is amiss. Even if everyone is now using the Great Depression and the New Deal as benchmarks for what we’re living through, Act I of the new script has already veered away from the original.

A suffocating political and intellectual provincialism has captured the new administration in embryo. Instead of embracing a sense of adventurousness, a readiness to break with the past so enthusiastically promoted during the campaign, Obama seems overcome with inhibitions and fears.

Practically without exception he has chosen to staff his government at its highest levels with refugees from the Clinton years. This is emphatically true in the realms of foreign and economic policy. It would, in fact, be hard to find an original idea among the new appointees being called to power in those realms — some way of looking at the American empire abroad or the structure of power and wealth at home that departs radically from views in circulation a decade or more ago. A team photo of Obama’s key Cabinet and other appointments at Treasury, Health and Human Services, Commerce, the President’s Economic Recovery Advisory Board, the State Department, the Pentagon, the National Security Council and in the U.S. Intelligence Community, not to speak of senior advisory posts around the president himself, could practically have been teleported from perhaps the year 1995.

Recycled Clintonism is recycled neo-liberalism. This is change only the brainiacs from Hyde Park and Harvard Square could believe in. Only the experts could get hot under the collar about the slight differences between “behavioral economics” (the latest academic fad that fascinates some high level Obama-ites) and straight-up neo-liberal deference to the market. And here’s the sobering thing: Despite the grotesque extremism of the Bush years, neo-liberalism also served as its ideological magnetic north.

Is this parochialism, this timorousness and lack of imagination, inevitable in a period like our own, when the unknown looms menacingly and one natural reaction is certainly to draw back, to find refuge in the familiar? Here, the New Deal years can be instructive.

Roosevelt was no radical; indeed, he shared many of the conservative convictions of his class and times. He believed deeply in both balanced budgets and the demoralizing effects of relief on the poor. He tried mightily to rally the business community to his side. For him, the labor movement was terra incognita and — though it may be hard to believe today — played no role in his initial policy and political calculations. Nonetheless, right from the beginning, Roosevelt cobbled together a Cabinet and circle of advisors strikingly heterogeneous in its views, one that, by comparison, makes Obama’s inner sanctum, as it is developing today, look like a sectarian cult.

Heterogeneous does not mean radical. Some of FDR’s early appointments — as at the Treasury Department — were die-hard conservatives. Jesse Jones, who ran the Reconstruction Finance Corporation, a Hoover administration creation, retained by FDR, that had been designed to rescue tottering banks, railroads and other enterprises too big to fail, was a practitioner of business-friendly bailout capitalism before present Treasury Secretary Henry Paulson was even born.

But there was also Henry Wallace as secretary of agriculture, a Midwestern progressive who would become the standard bearer for the most left-leaning segments of the New Deal coalition. He was joined at the Agriculture Department — far more important then than now — by men like Mordecai Ezekiel, who was prepared to challenge the power of the country’s landed oligarchs.

Then there were corporatists like Raymond Moley, Donald Richberg and General Hugh Johnson. Moley was an original member of FDR’s legendary “brain trust” (a small group of the president’s most influential advisors who often held no official government position). Richberg and Johnson helped design and run the National Recovery Administration (the New Deal’s first and failed attempt at industrial recovery). All three men were partial to the interests of the country’s peak corporations. All three wanted them released from the strictures of the Sherman Anti-Trust Act so that they could collaborate in setting prices and wages to arrest the killing deflation that gripped the economy. But they also wanted these corporate behemoths and the codes of competition they promulgated subjected to government oversight and restraints.

Meanwhile, Felix Frankfurter (another confidant of FDR’s and a future Supreme Court justice), aided by the behind-the-scenes efforts of Supreme Court Justice Louis Brandeis, fiercely contested the influence of the corporatists within the new administration, favoring anti-trust and then-new Keynesian approaches to economic recovery. Secretary of Labor Frances Perkins used her extensive ties to the social work community and the labor movement to keep an otherwise tone-deaf president apprised of portentous rumblings from that quarter. In this fashion, she eased the way for the passage of the Wagner Act that legislated the right to organize and bargain collectively and that ended the reign of industrial autocracy in the workplace.

Roosevelt’s “brain trust” also included Rexford Tugwell. He was an avid proponent of government economic planning. Another founding member of the “brain trust” was Adolph Berle, who had published a best-selling, scathing indictment of the financial and social irresponsibility of the corporate elite just before FDR assumed office.

People like Tugwell and others, including future Federal Reserve Board chairman Marriner Eccles, were believers in Keynesian deficit spending as the road to recovery and argued fiercely for this position within the inner councils of the administration, even while Roosevelt himself remained, until later in his presidency, an orthodox budget balancer.

All of these people — the corporatists and the Keynesians, the planners and the anti-trusters — were there at the creation. They often came to blows. A genuine administration of “rivals” didn’t faze FDR. He was deft at borrowing all of, or pieces of, their ideas, then jettisoning some when they didn’t work, and playing one faction against another in a remarkable display of political agility. Roosevelt’s tolerance of real differences stands in stark contrast to the new administration’s cloning of the Clinton-era brainiacs.

It was this openness to a variety of often untested solutions — including at that point Keynesianism — that helped give the New Deal the flexibility to adjust to shifts in the country’s political chemistry in the worst of times. If the New Deal came to represent a watershed in American history, it was in part due to the capaciousness of its imagination, its experimental elasticity and its willingness to venture beyond the orthodox. Many failures were born of this, but so, too, many enduring triumphs.

Beyond the bailout state

Why, at least so far, is the Obama approach so different? Some of it no doubt has to do with the same native caution that caused FDR to navigate carefully in treacherous waters. But some of it may result from the fallout of history. Because the Great Depression and the New Deal happened, nothing can ever really be the same again.

We are accustomed to thinking of the Bush years — maybe even the whole era from the presidency of Ronald Reagan on — as a throwback to the ’20s or even the laissez-faire golden years of the Gilded Age of the late nineteenth century. In some respects, that’s probably accurate, but in at least one critical way it’s not. Back in those days, faced with a potentially terminal financial crisis, the government did nothing, simply letting the economy plunge into depression. This happened repeatedly until 1929, when it happened again.

Since the New Deal, however, inaction has ceased to be a viable option for Washington. State intervention to prevent catastrophe has become an unspoken axiom of political life in perilous times. Of course, thanks to regulatory mechanisms installed during the New Deal years, there was no need to engage in heroic rescues — not, at least, until the triumph of deregulation in our own time.

Then crises began to erupt with ever greater frequency — the stock market crash of 1987, the savings and loan collapse at the end of that decade, the massive Latin-American debt defaults of the early 1990s, the collapse of the economies of the Asian “tigers” in the mid-1990s, the near bankruptcy of the then-huge hedge fund, Long Term Capital Management, later in that decade, the dot-com implosion at the turn of the century, climaxing with the general global collapse of the present moment. Beginning perhaps with the bailout of the Chrysler Corporation in the late 1970s, these recurring crises have been met with increasingly strenuous efforts to stop the bleeding by what some have called “the bailout state.”

The Resolution Trust Corporation, created to rescue the savings and loan industry, first institutionalized what Kevin Phillips has since described as a new political economy of “financial mercantilism.” Under this new order the state stands ready to backstop the private sector — or at least the financial sub-sector which, for the past quarter century, has been the driving engine of economic growth — whenever it undergoes severe stress.

Today, the starting point for all mainstream policymakers, even those who otherwise preach the virtues of the free market and the evils of big government, is the active intervention of the state to prevent the failure of private-sector institutions considered “too big to fail” (as with most recently Citigroup and the insurance company AIG). So, too, the tolerance level for deficit spending, not only for military purposes but, in extremis, to help stop ordinary people from going under, is infinitely higher than in 1932. Ronald Reagan was prepared to live with such spending, if necessary, even as he removed portraits of Thomas Jefferson and Harry S. Truman from the Cabinet Room and replaced them with a canvas of Calvin Coolidge.

The question for our “new era” — not one our New Deal ancestors would have thought to ask — has become: How do we get beyond the bailout state? This is one crucial realm where genuinely new thinking and new ideas are badly needed.

At the moment, as best we can make out, the bailout state is being managed in secret and apparently in the interests, above all, of those who run the financial institutions being “rescued.” Often, we don’t actually know who is getting what from the Federal Reserve and the Treasury, or on what terms, or even which institutions are being helped and which aren’t, or  what our public monies are actually being used for.

What we do know, however, is anything but encouraging. It includes tax exemptions for merging banks, prices for public-equity stakes in failing outfits that far exceed what is being paid by governments (or even private investors) abroad for similar holdings. Add to this a stark lack of accountability, aggravated by the fact that the U.S. government has neither voting rights (nor even a voice) on boards of directors whose firms would be in bankruptcy court without Washington’s aid.

Living in an empire of depression

Are we, then, witnessing the birth of some warped, exceedingly partial version of state capitalism — partial, that is, to the resuscitation of the old order? If so, lurking within this string of bum deals might there not be a great opportunity? Putting the economy and country back together will require massive resources directed toward common purposes. There is no more suitable means of mobilizing and steering those resources than the institutions of democratic government.

Under the present dispensation, the bailout state makes the government the handmaiden of the financial sector. Under a new one, the tables might be turned. But who will speak for that option within the limited councils of the Obama team?

A real democratic nationalization of the banks — good value for our money rather than good money to add to their value — should be part of the policy agenda up for discussion in the Obama era. As things now stand, the public supplies the loans and the investment capital, but the key decisions about how they are to be deployed remain in private hands. A democratic version of nationalizing the financial system would transfer these critical decisions to new institutions created by Congress and designed to pursue public, not private, objectives. How to subject the flow of credit and investment capital to public control ought to be on the drawing boards if we are to look beyond the old New Deal to a new one.

Or, for instance, if we are to bail out the auto industry, which we should — millions of jobs, businesses, communities and what’s left of once powerful and proud unions are at stake — then why not talk about its nationalization, too? Why not create a representative body of workers, consumers, environmentalists, suppliers and other interested parties to supervise the industry’s reorganization and retooling to produce, just as the president-elect says he wants, new green means of transportation — and not just cars?

Why not apply the same model to the rehabilitation of the nation’s infrastructure; indeed, why not to the reindustrialization of the country as a whole? If, as so many commentators are now claiming, what lies ahead is the kind of massive, crippling deflation characteristic of such crises, then why not consider creating democratic mechanisms to impose an incomes policy on wages and prices that works against that deflation?

Overseas, if everything isn’t up for discussion — and it most certainly isn’t — it ought to be. What happens there bears directly on our future here at home. After all, we live in the empire of depression. America’s favorite export for more than a decade has been a toxic lineup of securitized debt. Having ingested it in lethal amounts, every economy in the world from Iceland’s and Germany’s to Russia’s and Indonesia’s is either folding up or threatening to fold up like an accordion under the pressure of economic disaster.

Until now, the American way of life, including its economy of mass consumption, has depended on maintaining the country’s global preeminence by any means possible: economic, political and, in the end, military. The news of the Bush years was that, in this mix, Washington reached for its six-guns so much more quickly.

A global depression will challenge that fundamental hierarchy in every conceivable way. The United States can try to recapture its imperiled hegemony by methods familiar to the Obama-Clinton-Bush (the father) foreign policy establishment, that is, by using the country’s waning but still intimidating economic and military muscle. But that’s a devil’s game played at exorbitant cost which will further imperil the domestic economy.

It might, of course, be possible, as in domestic affairs, to try something new, something that embraces the public redevelopment of America in concert with the global South. This would entail at a minimum a radical break with the “Washington Consensus” of the Clinton years in which the United States insisted that the rest of the world conform to its free market model of economic behavior. It would establish multilateral mechanisms for regulating the flow of investment capital and severe penalties and restrictions on speculation in international markets. Most of all, it would mean lifting the strangulating grip of American military might that now girdles the globe.

All of this would require a capacity for reimagining foreign affairs as something other than a zero-sum game. So far, nothing in Obama’s lineup of foreign policy and national security mandarins suggests this kind of potential policy deviance. Again, no Rooseveltian “brain trust” is in sight, even though unorthodoxies are called for, not just because of the hopes Obama’s victory have aroused, but because of the urgency of our present circumstances.

If original thinking doesn’t find a home somewhere within this forming administration soon, it will be an omen of an even more troubled future to come, when options not even being considered today may be unavailable tomorrow. Certainly, Americans ought to expect something better than a trip down (the grimmest of) memory lanes into the failed neo-liberalism of yesteryear.