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5. Business, Anti-Communism, and the Welfare State, 1945-1958
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chapter five Business, Anti-Communism, and the Welfare State, 1945–1958 In January 1943 a group of top General Motors executives gathered together to discuss the corporation’s plans for the postwar period. Flush with their wartime profits and power, these businessmen might have been expected to gloat in victory. Big business, after all, flourished during the war, averaging a net income during the three years of war production of $22 billion before taxes. As a result of the conflict, General Motors was in “wonderful financial shape.”1 The public’s opinion of business, which had been battered during the depression, was rising at the same time as the American“miracle of production” was proving decisive in battling the Axis powers. However, these architects of the“arsenal of democracy”were surprisingly worried about the future. Donaldson Brown, the vice chairman of GM, warned his fellow members of this Post-war Planning Group that “what we think of as private capitalism and free enterprise are threatened.” This threat came, not from German Fascism or Soviet Communism, but from the American government. Brown argued that, after the war, “under the pressures which will exist it is to be feared that we may come under the blanket of a ‘planned economy,’ and subject to the theories of collectivism in some form or other.”Brown, like many of his contemporaries in Detroit industry, perceived that the postwar period would see a battle between advocates of a planned economy and businessmen who sought to recapture the “right to manage.”2 When Brown portrayed the battle as a stark fight between free enterprise and government planning, he exaggerated the radical nature of the opposition . The 1930s-style government planning fell out of favor during the war among many liberals, who were horrified at the actions of centralized states such as Germany and Japan. By the 1940s, few New Dealers advocated a planned economy that would redistribute wealth. Instead, liberals increasingly sought to create a high-wage, low-price economy that would encourage mass consumption.3 However, businessmen were disturbed by the government’s intervention during both the New Deal and the war, and they worried that liberal policymakers would want to continue wartime economic controls after the fighting ended. Executives during the final years of World War II and the early years of the Cold War peppered their writings and speeches with diatribes against collectivism, planned economies, and Communism.4 Surprisingly, however, they spent little time discussing the Kremlin or the American Communist Party when they warned against the collectivist threat. For most Detroit businessmen, the face of collectivism was UAW President Walter Reuther or Governor G. Mennan Williams, not Josef Stalin. Nor was their perceived sense of threat exaggerated. Business leaders argued that the liberal left sought to increase the power and scope of the state, which it did. Corporate managers discussed such issues as social security, unemployment insurance, and peacetime price controls, all measures that most executives saw as part of the “march toward socialism or collectivism” and that labor-liberals believed were key to creating a modern welfare state.5 Many Detroit business leaders believed that the New Deal state endangered free enterprise.While they were certainly anti-Communist, they talked far more about the threat posed by the welfare state than they did about the Soviet Union. These men made little distinction between the New Deal, Socialism, and Communism.The former, they argued, would ultimately lead to the latter. As a result, Detroit business leaders during the late 1940s and 1950s carried out a campaign to check state power. Like other American businessmen, they believed that they had to sell free enterprise in order to stop the welfare state and ultimately defeat Socialism and Communism. Their libertarian critique of the welfare state became a central component of modern conservatism.6 World War II and Planning The battle to shape the postwar political economy began during WWII and arose in response to the increasing power of both organized labor (as discussed in chapter 1) and the federal government.The Roosevelt administration used its authority to organize the economy to defeat the Axis powers. Federal agencies such as the Office of Price Administration (OPA) set wage guidelines, implemented price controls, and rationed gasoline, rubber, and meat, while the War Production Board (WPB) created production quotas and built new factories throughout the country.7 94 chapter five [3.239.57.87] Project MUSE (2024-03-28 14:53 GMT) The growth in both labor and...