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Capitalists against MarketsThe Making of Labor Markets and Welfare States in the United States and Sweden$
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Peter A. Swenson

Print publication date: 2002

Print ISBN-13: 9780195142976

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0195142977.001.0001

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The New Deal for Market Security

The New Deal for Market Security

(p.191) 9 The New Deal for Market Security
Capitalists against Markets

Peter A. Swenson (Contributor Webpage)

Oxford University Press

Constructs an explanation of welfare state development in the U.S. from analysis of segmentalism and cartelism, analyzed in earlier chapters, which characterized key components of its labor market system. Segmentalists (implicitly) and cartelists (explicitly) contracted with workers to hold wages and benefits higher than what market mechanisms alone would have set them; thus, these employers were vulnerable to the deflationary macroeconomic shock and unemployment of the Great Depression, which allowed competitors to threaten their profits by more freely lowering wages and therefore charging lower prices. New Dealers, having learned from the Progressive era as well as more recent reform about the potential for capitalist support ignored vocal opposition from business organizations and proceeded with regulatory social security, unemployment insurance, minimum wage, and labor law reform that would level the competitive playing field upward, stabilizing ruinous competition for cartelists and segmentalists, and thereby securing a cross‐class alliance for the New Deal.

Keywords:   cartelism, cross‐class alliances, Great Depression, macroeconomic conditions, minimum wages, Progressive era, regulation, segmentalism, social security, unemployment insurance, United States

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