May 2026, Economic Theory Part VIII Implementation of Social Reform and Labor Law By David Kowalski.

Disclaimer: These words are the author’s personal views and do not reflect the Labor Guild’s opinion.

I want to take a moment to reflect on the two economic theories. Remember we talked  about the Federalist (conservatives) Alexander Hamilton and the more liberal  Democratic-Republican Party of Madison and Jefferson, and the dichotomy that  developed? Where both parties were trying to figure out how best to run America but  never compromised or agreed to. Well now you see what I was talking about. The  Federalist knew from history that unrestricted capital would provide vast wealth and their ideas on currency, taxation and centralized banking could quickly solidify their power.  They were criticized for making rules in favor of the elite and causing a rift between “the  haves and have nots”.  On the other hand, the idea of a central bank was seen by the  opponents as having too much growth too quickly and power that could easily be  centralized. These opponents, mostly large landowners and farmers, could see  themselves swallowed up by such a rule, moving America away from an agrarian  economy to an economy run by elites. Even during these early years there was a century of history regarding unrestricted capitalism. I refer back to the East India  Company; where the Corporation accumulated so much wealth, they created their own  army, lent money back to Britain, occupied India and starved its population. Under  capitalism, accumulated wealth surfaces to the elites and the imbalance of that wealth  ebbed to the most in need, and in many instances in the 19^th century hit farmers  particularly hard. There was no middle ground.

The conservative economic model worked. It worked very well, transforming our nation  from an agrarian culture into a modern world-class industrial power. However, yet again, left to its own the laissez-faire (hands off) unregulated approach to regulating capitalism, gave a free hand for abuse and manipulation. However, it had glaring flaws: First it was  blind to the people who were producing their products leaving the poor with no time to  engage in social activities to improve the community and society. The wealthy had an  elaborate social arena, the workers had work and religion, where they worked and  prayed for a better future. Secondly, it did not recognize the externalities of their theory  such as pollution. They felt the profits they earned were theirs and theirs alone. Cleaning up polluted air and water that caused workers and public health hazards was an issue for tax dollars and not being paid for by corporate dollars.

The radical economic model also proved some basic points. On a planned economy  Marx was wrong. An economy of this size cannot be planned because consumer goods  and needs are infinite. A demand for certain products comes because there is a societal  need and then developed by individuals who invent, develop and produce them. Such  abundancy of products cannot be planned because the need for consumer goods is  infinite. Rather, it is better suited to come from a free marketplace; for its need cannot be foreseen. Another truth is, when workers in a population do not have enough money to meet the needs of their families, they revolt. Again, both models had their merits, but  the big money could not compromise.  

The depression years brought with it the reality that big money was beginning to get a  haircut and to this point conceded nothing without a struggle. Thus, it was FDR that  established Social Security and began a social safety net for workers.

This is important and I would like you to really think about it. Maybe scholars have talked about this point, but I am not a historical scholar. What I have come to realize is  this. For the first time in American economic history FDR forced a merger between the  dichotomies. With the National Industria Recovery Act (NIRA) he forced business on to a playing field along with their Labor counterparts and forced them to treat workers and  their Unions with respect and dignity with better pay and working conditions. It gave  workers time, time to be active and contributing members of the community and their  religions. He established a social safety net like Social Security, (pensions,  unemployment insurance aid to dependents), Civilian Conservation Corps (national parks jobs), Works Progress Administration (public works jobs) Federal Deposit  Insurance Corporation, (bank security), Federal Housing Administration, (mortgage  relief), Fair Labor Standards Act, (minimum wage, 40-hour week). He also tried to exert  control over Business as I repeat from last month. The President was given the authority to regulate oil pipelines and the price of transportation of all petroleum products in it. If a company did not comply with the law, the President had the right to take it over. With  such far-reaching power of the President, it is not surprising the Supreme Court declared this portion of the NIRA unconstitutional. However, these revisions created jobs, stabilized the economy as some of these programs still exist today. It begs the  question. Do you think Industrialist would have done this to be benevolent? Perhaps it  was a sign that we needed a merger of the two theories to create balance, because to  this point capitalism had very little oversight.

A very bold move given the economic history of our country. A forced merger, and it  worked. I cannot emphasize this point enough. Make no mistake. These reforms  created an economic middle class. 

The 1930’s and 1940’s brought massive union growth and the beginning of some  balance of power between workers and capitalist. I say the beginnings because we have never achieved balance with them. Along with that came the beginning of the  middle class. Workers had time and money so they could devote time to being coaches,  Sunday school teachers, join groups that did benevolent civic work and become active  members within society. Rather than starving working zombies. Yes, unions were  proliferating as United Mine Workers’, John L. Lewis, working with the Steelworkers Organizing Committee, was busy forming and developing the Congress of Industrial Organizations (CIO). Adding more allies to the cause of the workers.

I think I have given you enough proof through the examples I have provided so far of  Capitalism when it is unbridled. The fact is, we have really never seen it contained to the point of balance in its place with societal needs; and that’s why we keep fighting. Sure, if you talk to any CEO they will rattle you for days on the harness of regulations, they are a slave too. Come on, they make the regulations. Name the industry, energy,  entertainment, utilities, banking, even down to the baby formulars and coffee shops, they are all owned by only a few of the largest in their industry. That is called an oligopoly and that’s who run this country today. They buy the power, the regulations and as in the oxycontin scandal, the regulators. They buy the lobbyist to structure laws to  their benefit and of course all the corruption necessary to see it through.

Wow, I laid it on pretty heavily there, but you have to look at it through the eyes of a guy who has lived through, worked through and studied through quite a few of these cycles. I think you’re getting a pretty good idea why a blue-collar guy who has studied the history of Labor questions the equity of capitalism, even though I too am a recipient of its benefits. I am a retiree of the fossil fuel industry and receive retirement benefits from  them; as well as the fact that they paid for my college education, and I am grateful to  them for that. However, that does not change the system we as workers have been  herded into and have been steeped in for centuries. For this is the only system in place, and we have had to do our best to work within it. However, we can’t go along knocking  down social reforms that smash our social safety networks or deny people from  procuring affordable healthcare and forcing them into bankruptcy. That was the genius of the New Deal. It forced a merger between the two theories. However, even today the  conservatives continue to fight, to repeal social protections such as, cutbacks in Social  Security which they call “entitlements” even though every worker in the country pays for it.

I mentioned syndicalism was used in Germany. Where 50% of the Board of Directors  come from the Union ranks. Think about doing that in America, only changing it from  50% to at least 50%. Do you think CEO’s and top executives would be pulling down the kind of money their getting now? Do you think as many patients would be denied health  care if the board of directors’ seats were filled with more rank and-file members? Would they not allow rules that would be more benevolent; and not cause patients to declare  bankruptcy? Something to ponder. I would like you take what you have learned from my  writings and use it as a transparent flowchart for future use. If the experts are correct in  their analysis, about Artificial Intelligence (AI). They say the current workforce in this  country and others will be only a fraction of what it is today. So, let’s play that out with the examples that I have given you.

Corporate investors lay out billions of dollars to purchase labor saving Artificial  Intelligence equipment as they lay off millions of employees. When enough of them get  laid off they will need compensation, which places a burden on the government and the  deficit. With enough people out of work, who will consume the product they make?  Then, the crescendo. People, former workers, will need money to sustain the substance for everyday life. Will there be a need for a baseline governmental monthly pay so that  people can consume? This is not a joke; it is being talked about today. Sound a bit like  the “Gilded Age”? Do you think those same corporate investors are going to allow laid off employees to share the wealth of their investments. Or will workers revolt once again, and the rise of Socialism begins again. This is a lesson in history, and it is about  to happen again. This time, be ready for it because the corporate “think tanks” are way  ahead of it and got it all figured out.

We had an arena where workers could adjudicate their grievances and stand on equal  footing to procure fairness and dignity in the workplace. Which, at first, worked pretty well depending on who controlled the Supreme Court. You saw similar circumstances  with integration, voting rights, and yes Labor’s rights law. The concept of these laws is  altruistic, yet depending on the Court, get watered down to where they are almost non—existent. These examples are similar to Labor’s experience. Laws change the way people are treated but over time their influence is diminished. You can’t tell me, right now in our real time, that integration, affirmative action and voting rights law have not  been affected. Between Supreme Court decisions and Republican dominated  Congresses, the balance today has shifted toward wealth and power. Labor is no  different. I always believed that laws were not made to be broken but rather; made to  maintain order in a civil society. Today those laws seem so unjust that they demand  disorder. So, whose side do you think the Courts, the Legislatures and the Regulators  will be on when it comes to AI? That depends on how you vote. The Senate decides on who is on the Supreme Court. You decide on the President and Legislature, and the  President decides on who makes the Regulations. Will they, be people who support the  workers, or as it is now; those that support corporations? 

Listen, America will never be a Marx driven Socialist economy. It can’t, because it is too  dependent on the basics of Capitalism. However, the greater good of the people  depends on the social networks of Socialism, and this is where the dichotomies demand balance. So don’t believe the opponents that scare you away from a merger. The fact is, some of the Capitalist’s model work and so do some of the Socialist models. So, let’s  figure it out, or do like FDR did and force a merger. Because that, was the most  successful economic experiment ever developed. As President Joe Biden has said many times, “Capitalism without competition is exploitation”.  As I have said so many  times before: “Those who do not heed the lessons of history are destined to repeat them”. So, don’t. There is nothing wrong with Capitalism that a strong dose of regulation can’t cure.